<PAGE>
As filed with the Securities and Exchange Commission on February 20, 1998
File Nos. 33-6540
811-5033
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 24*
AND
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 25
LANDMARK FIXED INCOME FUNDS**
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 617-423-1679
PHILIP W. COOLIDGE, 6 ST. JAMES AVENUE,
BOSTON, MASSACHUSETTS 02116
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM DANA LLP, 150 FEDERAL STREET,
BOSTON, MASSACHUSETTS 02110
It is proposed that this filing will become effective on March 2, 1998
pursuant to paragraph (b) of Rule 485.
This filing also has been executed by The Premium Portfolios, on behalf of
Government Income Portfolio.
================================================================================
* Filing relates only to Landmark Intermediate Income Fund and
Landmark U.S. Government Income Fund.
** Formerly, Landmark U.S. Government Income Fund.
<PAGE>
LANDMARK FIXED INCOME FUNDS
(LANDMARK INTERMEDIATE INCOME FUND AND
LANDMARK U.S. GOVERNMENT INCOME FUND)
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
N-1A
ITEM NO. N-1A ITEM LOCATION
- -------- --------- --------
PART A PROSPECTUS
- ------ ----------
Item 1. Cover Page............................ Cover Page
Item 2. Synopsis.............................. Expense Summary
Item 3. Condensed Financial Information....... Condensed Financial
Information
Item 4. General Description of Registrant..... Investment Information;
General Information;
Appendix
Item 5. Management of the Fund................ Management; Expenses
Item 5A. Management's Discussion of Fund Not Applicable
Performance...........................
Item 6. Capital Stock and Other Securities.... General Information; Voting
and Other Rights; Purchases;
Exchanges; Redemptions;
Dividends and Distributions;
Tax Matters
Item 7. Purchase of Securities Being Offered.. Purchases; Exchanges;
Redemptions
Item 8. Redemption or Repurchase.............. Purchases; Exchanges;
Redemptions
Item 9. Pending Legal Proceedings............. Not Applicable
STATEMENT OF
ADDITIONAL
PART B INFORMATION
- ------ -----------
Item 10. Cover Page............................ Cover Page
Item 11. Table of Contents..................... Cover Page
Item 12. General Information and History....... The Funds
Item 13. Investment Objectives and Policies.... Investment Objectives,
Policies and Restrictions
Item 14. Management of the Fund................ Management
Item 15. Control Persons and Principal Holders of Management
Securities............................
Item 16. Investment Advisory and Other Services Management
Item 17. Brokerage Allocation and Other Practices Portfolio Transactions
Item 18. Capital Stock and Other Securities.... Description of Shares,
Voting Rights and
Liabilities
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered.............. Description of Shares,
Voting Rights and
Liabilities; Determination
of Net Asset Value;
Valuation of Securities;
Additional Purchase and
Redemption Information
Item 20. Tax Status............................ Certain Additional Tax
Matters
Item 21. Underwriters.......................... Management
Item 22. Calculation of Performance Data....... Performance Information
Item 23. Financial Statements.................. Independent Accountants and
Financial Statements
PART C Information required to be included in Part C is set forth under the
- ------ appropriate Item, so numbered, in Part C to this Registration
Statement.
<PAGE>
PROSPECTUS
- --------------------------------------------------------------------------------
March 2, 1998
CITIFUNDS(SM) SHORT-TERM U.S. GOVERNMENT INCOME PORTFOLIO
CITIFUNDS(SM) INTERMEDIATE INCOME PORTFOLIO
This Prospectus describes two diversified mutual funds in the CitiFunds
(SM) Family of Funds: CitiFunds(SM) Short-Term U.S. Government Income
Portfolio and CitiFunds(SM) Intermediate Income Portfolio. Each Fund has its
own investment objectives and policies. Citibank, N.A. is the investment
adviser.
- --------------------------------------------------------------------------------
UNLIKE OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIOS OF SECURITIES, CITIFUNDS(SM) SHORT-TERM U.S. GOVERNMENT INCOME
PORTFOLIO SEEKS ITS INVESTMENT OBJECTIVES BY INVESTING ALL OF ITS INVESTABLE
ASSETS IN A PORTFOLIO WITH THE SAME INVESTMENT OBJECTIVES AND POLICIES. SEE
"SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE" ON PAGE 10.
- --------------------------------------------------------------------------------
REMEMBER THAT SHARES OF THE FUNDS:
o ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY
o ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, CITIBANK OR
ANY OF ITS AFFILIATES
o ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED
This Prospectus concisely sets forth information about the Funds that a
prospective investor should know before investing. A
Statement of Additional Information dated March 2, 1998 (and incorporated by
reference in this Prospectus) has been filed with the Securities and Exchange
Commission. Copies of the Statement of Additional Information may be obtained
without charge, and further inquiries about the Funds may be made, by contact-
ing the investor's shareholder servicing agent (see inside back cover for
address and phone number). The Statement of Additional Information and other
related materials are available on the SEC's Internet website (http://
www.sec.gov).
TABLE OF CONTENTS
2 Prospectus Summary
- --------------------------------------------------------------------------------
4 Expense Summary
- --------------------------------------------------------------------------------
5 Condensed Financial Information
- --------------------------------------------------------------------------------
7 Investment Information
- --------------------------------------------------------------------------------
9 Risk Considerations
- --------------------------------------------------------------------------------
10 Valuation of Shares
- --------------------------------------------------------------------------------
Purchases
11 Exchanges
Redemptions
- --------------------------------------------------------------------------------
12 Dividends and Distributions
Management
- --------------------------------------------------------------------------------
15 Tax Matters
Performance Information
- --------------------------------------------------------------------------------
16 General Information
- --------------------------------------------------------------------------------
18 Appendix -- Permitted Investments and
Investment Practices
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
See the body of the Prospectus for more information on the topics
discussed in this summary.
THE FUNDS: This Prospectus describes two diversified mutual funds: CitiFunds
(SM) Short-Term U.S. Government Income Portfolio and CitiFunds(SM)
Intermediate Income Portfolio. Each Fund has its own investment objectives and
policies. There can be no assurance that either Fund will achieve its
objectives.
INVESTMENT OBJECTIVES AND POLICIES:
CITIFUNDS(SM) SHORT-TERM U.S. GOVERNMENT INCOME PORTFOLIO. The Fund's
objectives are to generate current income and preserve the value of its
shareholders' investment. Through Government Income Portfolio, the Fund
invests in debt securities backed by the full faith and credit of the U.S.
Government with a dollar weighted average maturity that is generally three
years or less. Because the Fund invests through Government Income Portfolio,
all references in this Prospectus to the Fund include Government Income
Portfolio, except as otherwise noted.
CITIFUNDS(SM) INTERMEDIATE INCOME PORTFOLIO. The Fund's objectives are to
generate a high level of current income and preserve the value of its
shareholders' investment. The Fund invests in a broad range of fixed income
securities, including preferred stock and debt securities issued by U.S. and
non-U.S. companies and debt securities of the U.S. Government and governments
of other countries, including developing countries. Under normal market
conditions, the Fund's dollar weighted average portfolio maturity will be from
three to ten years.
INVESTMENT ADVISER AND DISTRIBUTOR: Citibank, N.A. ("Citibank" or the
"Adviser"), a wholly-owned subsidiary of Citicorp, is the investment adviser.
Citibank and its affiliates manage more than $88 billion in assets worldwide.
CFBDS, Inc. ("CFBDS" or the "Distributor") is the distributor of shares of
each Fund. See "Management."
PURCHASES AND REDEMPTIONS: Customers of Shareholder Servicing Agents may
purchase and redeem shares of the Funds on any Business Day. See "Purchases"
and "Redemptions."
PRICING: Shares of the Funds are purchased and redeemed at net asset value
without a sales load or redemption fees. Shares are subject to a distribution
fee at the annual rate of 0.15% of the average daily net assets of each Fund.
See "Purchases" and "Management -- Distribution Arrangements."
EXCHANGES: Shares may be exchanged for shares of the CitiSelect(R) Portfolios
and certain other CitiFunds. See "Exchanges."
DIVIDENDS: Dividends are declared and paid monthly for each Fund. Net capital
gains are distributed at least annually. See "Dividends and Distributions."
REINVESTMENT: All dividend and capital gain distributions may be received
either in cash or in Fund shares at net asset value, subject to the policies
of a shareholder's Shareholder Servicing Agent. See "Dividends and
Distributions."
WHO SHOULD INVEST: Each Fund has its own suitability considerations and risk
factors, as summarized below and described in more detail in "Investment
Information" and "Risk Considerations." No single Fund is intended to provide
a complete investment program.
SHORT-TERM U.S. GOVERNMENT INCOME PORTFOLIO. The Fund is designed for
investors seeking a higher level of current income than is generally available
from money market funds, but who do not want the price fluctuations that are
inherent in longer-term securities. Investors should still be willing to
accept fluctuation in the price of shares of the Fund.
INTERMEDIATE INCOME PORTFOLIO. The Fund is designed for investors seeking a
higher level of current income than is generally available from shorter-term
securities, and who are willing to accept the greater price fluctuations
associated with higher levels of income.
RISK FACTORS: There can be no assurance that either Fund will achieve its
investment objectives, and each Fund's net asset value will fluctuate based on
changes in the values of the underlying portfolio securities. As a result, an
investor's shares may be worth more or less at redemption than at the time of
purchase.
The value of fixed income securities, including those backed by the U.S.
Government, generally goes down when interest rates go up, and vice versa.
Changes in interest rates will generally cause bigger changes in the prices of
longer-term securities than in the prices of shorter-term securities.
Investors in the Intermediate Income Portfolio should be aware that prices
of fixed income securities also fluctuate based on changes in the actual and
perceived creditworthiness of issuers. The prices of lower rated securities
often fluctuate more than those of higher rated securities. Also, it is
possible that some issuers will be unable to make required payments on fixed
income securities held by the Intermediate Income Fund. Securities that are
backed by the full faith and credit of the U.S. Government are generally
thought to have minimal credit risk.
The Intermediate Income Portfolio may invest a portion of its assets in non-
U.S. securities. The special risks of investing in non-U.S. securities
include possible adverse political, social and economic developments abroad,
the difficulties of enforcing legal rights under some non-U.S. legal systems
and against some non-U.S. governments and different characteristics of non-
U.S. economies and markets. Non-U.S. securities often will trade in non-U.S.
currencies, which can be volatile and may be subject to governmental controls
or intervention. In addition, securities of non-U.S. issuers may be less
liquid and their prices more volatile than those of comparable U.S. issuers.
Certain investment techniques, such as repurchase agreements, forward
delivery contracts and loans of securities, also may entail special risks.
Investors should read "Risk Considerations" for more information about risk
factors.
<PAGE>
EXPENSE SUMMARY
- ------------------------------------------------------------------------------
The following table summarizes estimated shareholder transaction and annual
operating expenses for shares of each Fund and, for the Short-Term U.S.
Government Income Portfolio, Government Income Portfolio. For more information
on costs and expenses, see "Management" -- page 12 and "General Information-
Expenses" -- page 17.*
-----------------------------------
SHORT-TERM
U.S. GOVERNMENT INTERMEDIATE
INCOME PORTFOLIO INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES: ........... None None
ANNUAL FUND OPERATING EXPENSES, (AS A
PERCENTAGE OF AVERAGE NET ASSETS):
Investment Management Fees (after fee waivers
and reimbursements)(2) .................... 0.12% 0.08%
12b-1 Fees (including service fees)(1)(2).... 0.05% 0.05%
Administrative Services Fees (after fee
waiver)(2) ................................ 0.05% 0.07%
Shareholder Servicing Agent Fees ............ 0.25% 0.25%
Other Operating Expenses .................... 0.33% 0.45%
Total Fund Operating Expenses (including
service fees)(2) .......................... 0.80% 0.90%
* This table is intended to assist investors in understanding the various
costs and expenses that a shareholder of a Fund will bear, either directly
or indirectly. The table shows the fees paid to various service providers
after giving effect to expected voluntary partial fee waivers and
reimbursements. There can be no assurance that the fee waivers and
reimbursements reflected in the table will continue at these levels.
(1) 12b-1 distribution fees are asset-based sales charges. Long-term
shareholders in a Fund could pay more in sales charges than the economic
equivalent of the maximum front-end sales charges permitted by the
National Association of Securities Dealers, Inc.
(2) Absent fee waivers and reimbursements, management fees, 12b-1 fees,
administrative services fees and total fund operating expenses would be
.35%, .20%, .30% and 1.43% for CitiFunds Short-Term U.S. Government Income
Portfolio; and .35%, .20%, .25% and 1.47% for CitiFunds Intermediate
Income Portfolio.
EXAMPLE: A shareholder would pay the following expenses on a $1,000
investment, assuming, except as otherwise noted, redemption at the end of each
period indicated below:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT INCOME
PORTFOLIO ........................... $ 8 $26 $44 $ 99
INTERMEDIATE INCOME PORTFOLIO ....... $ 9 $29 $50 $111
The Example assumes a 5% annual return and that all dividends are reinvested and
reflects certain voluntary fee waivers. If waivers were not in place, the
amounts in the example would be $15, $45, $78 and $171 for Short-Term U.S.
Government Income Portfolio and $15, $46, $80 and $176 for Intermediate Income
Portfolio. The assumption of a 5% annual return is required by the Securities
and Exchange Commission for all mutual funds, and is not a prediction of any
Fund's future performance. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OF ANY FUND. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
The following tables provide condensed financial information about the Funds
for the periods indicated. The information below should be read in conjunction
with the financial statements appearing in the Funds' Annual Reports to
Shareholders, which are incorporated by reference in the Statement of
Additional Information. The financial statements and notes for the year ended
December 31, 1997, as well as the table below, of Short-Term U.S. Government
Income Portfolio have been audited by Price Waterhouse LLP, independent
accountants (for the fiscal years after December 31, 1993) and Deloitte &
Touche (for periods prior to the fiscal year ended December 31, 1994). The
report of Price Waterhouse LLP is included in the Fund's Annual Report. The
financial statements and notes, as well as the table below, of Intermediate
Income Portfolio have been audited by Deloitte & Touche LLP, independent
accountants. The report of Deloitte & Touche is included in the Fund's Annual
Report. Copies of the Annual Reports may be obtained without charge from an
investor's Shareholder Servicing Agent (see inside of back cover for address
and phone number).
<TABLE>
<CAPTION>
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SHORT-TERM U.S. GOVERNMENT INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
FOUR
MONTHS
ENDED
YEAR ENDED DEC. 31, DEC. 31, YEAR ENDED AUGUST 31,
1997 1996 1995 1994 1993(A) 1993 1992 1991 1990 1989 1988
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning
of period .............. $ 9.55 $ 9.78 $ 9.28 $ 9.91 $10.01 $ 9.85 $ 9.42 $ 8.93 $ 9.08 $ 9.03 $ 9.16
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Operations:
Net investment income .... 0.504 0.516 0.543 0.466 0.183 0.448 0.591 0.710 0.653 0.770 0.763
Net realized and
unrealized gain (loss)
on investments ......... 0.064 (0.232) 0.500 (0.635) (0.138) 0.183 0.413 0.499 (0.148) 0.052 (0.114)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from operations 0.568 0.284 1.043 (0.169) 0.045 0.631 1.004 1.209 0.505 0.822 0.649
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less Dividends and
Distributions From:
Net investment income .. (0.508) (0.514) (0.543) (0.461) (0.145) (0.464) (0.574) (0.719) (0.655) (0.772) (0.779)
In excess of net
investment income .... -- -- -- -- -- (0.007) -- -- -- -- --
-------- -------- ------- ------- ------- ------- ------- -------
Total from dividends . (0.508) (0.514) (0.543) (0.461) (0.145) (0.471) (0.574) (0.719) (0.655) (0.772) (0.779)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, end of
period ................. $ 9.61 $ 9.55 $ 9.78 $ 9.28 $ 9.91 $10.01 $ 9.85 $ 9.42 $ 8.93 $ 9.08 $ 9.03
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) ........ $20,237 $26,744 $35,325 $52,933 $79,306 $82,114 $56,159 $25,556 $21,521 $24,834 $31,733
Ratio of expenses to
average net assets ..... 0.80%(B) 0.80%(B) 0.80%(B) 0.80%(B) 0.80%+ 0.80% 0.51% 0.97% 1.88% 1.73% 1.29%
Ratio of net investment
income to average net
assets 5.20% 5.31% 5.38% 4.72% 4.34%+ 4.46% 6.03% 7.71% 7.19% 8.55% 8.31%
Portfolio turnover (C) ... -- -- -- 22% 26% 111% 161% 42% 14% 151% 283%
Total return ............. 6.11% 3.02% 11.48% (1.72%) 0.45%** 6.59% 10.94% 14.04% 5.73% 9.66% 7.18%+
Note: If certain agents of the Fund for the periods indicated and certain agents of Government Income Portfolio for periods after
May 1, 1994 had not waived a portion of their fees and assumed Fund expenses, the net investment income per share and the ratios
would have been as follows:
Net investment income per
share .................. $0.442 $0.460 $0.499 $0.421 $0.164 $0.400 $0.503 $0.659 $0.648 * $0.762
RATIOS:
Expenses to average net
assets ................. 1.43%(B) 1.38%(B) 1.23%(B) 1.26%(B) 1.27%+ 1.27% 1.41% 1.52% 1.94% * 1.30%
Net investment income to
average net assets ..... 4.57% 4.73% 4.95% 4.26% 3.88%+ 3.98% 5.13% 7.16% 7.13% * 8.30%
* No waivers or assumption of expenses during the period.
** Not annualized.
+ Annualized.
++ For the period from the start of business, September 8, 1986 to August 31, 1987.
(A) Effective September 1, 1993, the Fund changed its fiscal year end from August 31 to December 31.
(B) Includes the Fund's share of Government Income Portfolio's allocated expenses for periods subsequent to May 1,
1994.
(C) Represents the rate of portfolio activity for the period while the Fund was making investments directly in
securities. The portfolio turnover rates for the fiscal years on or after December 31, 1995 are included under
"Investment Information -- Certain Additional Investment Policies."
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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INTERMEDIATE INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR THE PERIOD
JUNE 25, 1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
1997 1996 1995 1994 DECEMBER 31, 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ......... $ 9.48 $ 9.77 $ 8.91 $ 9.88 $10.00
------ ------ ------ ------ ------
Income from Operations:
Net investment income ........................ 0.575 0.54 0.57 0.521 0.261
Net realized and unrealized gain (loss) on
investments ................................ 0.239 (0.29) 0.86 (0.959) 0.037
------ ------ ------ ------ ------
Total from operations .................... 0.814 0.25 1.43 (0.438) 0.298
------ ------ ------ ------ ------
Less Dividends and Distributions From:
Net investment income ...................... (0.574) (0.54) (0.57) (0.516) (0.261)
In excess of net investment income ......... -- -- -- -- (0.006)
Net realized gain on investments ........... -- -- -- (0.016) (0.151)
------ ------ ------ ------ ------
Total from distributions ................. 0.574 (0.54) (0.57) (0.532) (0.418)
------ ------ ------ ------ ------
Net Asset Value, end of period ............... $ 9.72 $ 9.48 $ 9.77 $ 8.91 $ 9.88
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) .... $36,702 $43,919 $49,618 $47,582 $61,183
Ratio of expenses to average net assets(A).... 0.92% 0.90% 0.90% 0.90% 0.90%*
Ratio of expenses to average net assets after
fees paid indirectly (A) ................... 0.90% 0.90% 0.90% 0.90% 0.90%
Ratio of net investment income to average
net assets ................................. 5.92% 5.72% 5.97% 5.52% 4.95%*
Portfolio turnover ........................... 146% 495% 396% 291% 103%
Total return ................................. 8.87% 2.73% 16.45% (4.48)% 2.99%+
Note: If certain agents of the Fund had not voluntarily agreed to waive a portion of their fees for the periods
indicated and expenses were not reduced for fees paid indirectly for the years after December 31, 1994, the net
investment income per share and the ratios would have been as follows:
Net investmen t income per share ............. $ 0.522 $ 0.50 $ 0.52 $ 0.475 $0.236
RATIOS:
Expenses to average net assets ............... 1.47% 1.39% 1.42% 1.39% 1.38%*
Net investment income to average net assets .. 5.37% 5.23% 5.45% 5.03% 4.47%*
* Annualized.
+ Not annualized.
(A) The expense ratios for the year ended December 31, 1995 and the periods thereafter have been adjusted to reflect a
change in reporting requirements. The new reporting guidelines require the Fund to increase its expense ratio by
the effect of any expense offset arrangements with its service providers. The expense ratios for each of the
periods ended before December 31, 1995 have not been adjusted to reflect this change.
</TABLE>
<PAGE>
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES: The investment objectives of the SHORT-TERM U.S.
GOVERNMENT INCOME PORTFOLIO are to generate current income and preserve the
value of its shareholders' investment.
The investment objectives of the INTERMEDIATE INCOME PORTFOLIO are to
generate a high level of current income and preserve the value of its
shareholders' investment.
The investment objectives of each Fund may be changed by its Trustees
without approval by that Fund's shareholders, but shareholders will be given
written notice at least 30 days before any change is implemented. Of course,
there can be no assurance that either Fund will achieve its investment
objectives.
INVESTMENT POLICIES: The SHORT-TERM U.S. GOVERNMENT INCOME PORTFOLIO seeks
its objectives by investing through the Portfolio in debt securities that are
backed, as to timely repayment of principal and interest, by the full faith
and credit of the U.S. Government. The dollar weighted average maturity of
securities held by the Fund is generally three years or less.
Through the Portfolio, the Fund invests in both direct obligations of the
U.S. Treasury and obligations issued or guaranteed by U.S. Government
agencies, including mortgage-backed securities, that are backed by the full
faith and credit of the U.S. Government as to the timely payment of principal
and interest. Up to 80% of the Fund's assets may be invested in direct pass-
through certificates guaranteed by the Government National Mortgage
Association ("GNMA"). See "U.S. Government Securities" and "Asset-Backed
Securities."
The Fund is designed to provide a higher level of current income than is
generally available from money market funds. Through the Portfolio, the Fund
invests in securities with prices that tend to vary more than the prices of
money market instruments but less than the prices of intermediate and long-
term bonds.
The INTERMEDIATE INCOME PORTFOLIO seeks its objectives by investing 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. As a non-fundamental policy, under normal
circumstances, at least 65% of the Fund's total assets are invested in fixed
income securities, but the Fund expects that substantially all of its assets
generally will be invested in fixed income securities.
The Fund will invest in debt obligations of U.S. companies only if they
carry at least a Baa rating from Moody's Investors Service, Inc. ("Moody's")
or a BBB rating from Standard & Poor's Rating Services ("S&P"), or if the
Adviser determines that they are of comparable quality. Securities rated Baa
or BBB have speculative characteristics, and changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments on bonds rated Baa or BBB than is the case for
higher grade securities. Investors should review Appendix A to the Statement
of Additional Information for a description of these ratings.
The Fund may invest up to 20% of its assets in non-U.S. securities,
including securities of issuers in developing countries. See "Risk
Considerations -- Non-U.S. Securities."
The Fund is designed to provide a higher level of current income than is
generally available from shorter-term securities, but investors should be
willing to accept the greater price fluctuations associated with higher levels
of income. Under normal market conditions, the Fund's dollar weighted average
portfolio maturity will be from three to ten years.
U.S. GOVERNMENT SECURITIES: Each Fund may invest in U.S. Government
securities, including (1) U.S. Treasury obligations, such as Treasury bills,
notes and bonds, which are backed by the full faith and credit of the United
States; and (2) obligations issued or guaranteed by U.S. Government agencies
or instrumentalities that are backed by the full faith and credit of the U.S.
Government. The Intermediate Income Portfolio may also invest in other
obligations issued by agencies or instrumentalities of the U.S. Government,
some of which are supported by the right of the issuer to borrow from the U.S.
Treasury and some of which are backed only by the credit of the issuer itself.
ASSET-BACKED SECURITIES: Each Fund may purchase mortgage-backed securities
issued or guaranteed as to payment of principal and interest by the U.S.
Government or one of its agencies and backed by the full faith and credit of
the U.S. Government, including direct pass-through certificates of GNMA. The
Intermediate Income Portfolio may also invest in mortgage-backed securities
for which principal and interest payments are backed by the credit of
particular agencies of the U.S. Government. Mortgage-backed securities are
generally backed or collateralized by a pool of mortgages. These securities
are sometimes called collateralized mortgage obligations or CMOs.
Even if the U.S. Government or one of its agencies guarantees principal
and interest payments of a mortgage-backed security, the market price of a
mortgage-backed security is not insured and may be subject to market
volatility. When interest rates decline, mortgage-backed securities experience
higher rates of prepayment, because the underlying mortgages are refinanced to
take advantage of the lower rates. Thus the prices of mortgage-backed
securities may not increase as much as prices of other debt obligations when
interest rates decline, and mortgage-backed securities may not be an effective
means of locking in a particular interest rate. In addition, any premium paid
for a mortgage-backed security may be lost when it is prepaid. When interest
rates go up, mortgage-backed securities experience lower rates of prepayment.
This has the effect of lengthening the expected maturity of a mortgage-backed
security. As a result, prices of mortgage-backed securities may decrease more
than prices of other debt obligations when interest rates go up.
The Intermediate Income Portfolio may also invest in corporate asset-
backed securities and collateralized mortgage obligations that are rated no
lower than Baa by Moody's or BBB by S&P, or are judged by the Adviser to be of
comparable quality. These securities are backed by pools of assets, including,
among other things, mortgage loans, automobile loans or credit card
receivables. These securities are not backed by the U.S. Government and have
special risks, including inherent difficulties in enforcing rights against the
underlying assets.
Determinations of average maturity of asset-backed securities take into
account expectations of prepayments, which may change in different interest
rate environments. A Fund will not consider it a violation of policy if its
average maturity deviates from its normal range as a result of actual or
expected changes in prepayments.
ZERO-COUPON OBLIGATIONS: The Intermediate Income Portfolio may invest up to
15% of its assets in zero-coupon obligations, such as zero-coupon bonds issued
by companies and securities representing future principal and interest
installments on debt obligations of the U.S. Government and governments of
other countries. Zero-coupon obligations pay no current interest, and as a
result their prices tend to be more volatile than those of securities that
offer regular payments of interest. In order to pay cash distributions
representing income on zero-coupon obligations, the Intermediate Income
Portfolio may have to sell other securities on unfavorable terms, and these
sales may generate taxable gain for investors.
CERTAIN ADDITIONAL INVESTMENT POLICIES:
TEMPORARY INVESTMENTS. During periods of unusual economic or market
conditions or for temporary defensive purposes or liquidity, each Fund may
invest without limit in cash and in U.S. dollar-denominated high quality money
market and short-term instruments. These investments may result in a lower
yield than would be available from investments with a lower quality or longer
term.
OTHER PERMITTED INVESTMENTS. For more information regarding the Funds'
permitted investments and investment practices, see the Appendix -- Permitted
Investments and Investment Practices on page 18. The Funds will not
necessarily invest or engage in each of the investments and investment
practices in the Appendix but reserve the right to do so.
INVESTMENT RESTRICTIONS. The Statement of Additional Information contains
a list of specific investment restrictions which govern the investment
policies of the Funds, including a limitation that each Fund may borrow money
from banks in an amount not to exceed 33 1/3% of the Fund's net assets for
extraordinary or emergency purposes (e.g., to meet redemption requests).
Except as otherwise indicated, the Funds' investment objectives and policies
may be changed without shareholder approval. If a percentage or rating
restriction (other than a restriction as to borrowing) is adhered to at the
time an investment is made, a later change in percentage or rating resulting
from changes in a Fund's securities will not be a violation of policy.
PORTFOLIO TURNOVER. Securities of each Fund will be sold whenever the
Adviser believes it is appropriate to do so in light
of the Fund's investment objectives, without regard to the length of time a
particular security may have been held. For the fiscal year ended December 31,
1997, the portfolio turnover rates for each of Short-Term U.S. Government
Income Portfolio and Intermediate Income Portfolio were 126% and 146%,
respectively. The amount of transaction costs and realization of taxable
capital gains will tend to increase as the level of portfolio activity
increases.
BROKERAGE TRANSACTIONS. The primary consideration in placing each Fund's
security transactions with broker-dealers for execution is to obtain and
maintain the availability of execution at the most favorable prices and in the
most effective manner possible.
RISK CONSIDERATIONS
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The risks of investing in each Fund vary depending upon the nature of the
securities held, and the investment practices employed, on its behalf. Certain
of these risks are described
below.
CHANGES IN NET ASSET VALUE. Each Fund's net asset value will fluctuate
based on changes in the values of the underlying portfolio securities. This
means that an investor's shares may be worth more or less at redemption than
at the time of purchase.
INTEREST RATE RISK. The value of fixed income securities, including those
backed by the U.S. Government, generally goes down when interest rates go up,
and vice versa. Furthermore, the value of fixed income securities may vary
based on anticipated or potential changes in interest rates. Changes in
interest rates will generally cause bigger changes in the prices of longer-
term securities than in the prices of shorter-term securities.
CREDIT RISK. Investors in the Intermediate Income Portfolio should be
aware that prices of fixed income securities fluctuate based on changes in the
actual and perceived creditworthiness of issuers. The prices of lower rated
securities often fluctuate more than those of higher rated securities. It is
possible that some issuers will be unable to make required payments on fixed
income securities held by the Intermediate Income Portfolio. Securities that
are backed by the full faith and credit of the U.S. Government are generally
thought to have minimal credit risk.
NON-U.S. SECURITIES. Investors in the Intermediate Income Portfolio also
should be aware that investments in non-U.S. securities involve risks relating
to political, social and economic developments abroad. These risks may include
expropriation, confiscatory taxation, withholding taxes on dividends and
interest, limitations on the use or transfer of portfolio assets and political
or social instability. Enforcing legal rights may be difficult, costly and
slow in non-U.S. countries, and there may be special problems enforcing claims
against non-U.S. governments. In addition, non-U.S. companies may not be
subject to accounting standards or governmental supervision comparable to U.S.
companies, and there may be less public information about their operations.
Non-U.S. markets may be less liquid and more volatile than U.S. markets, and
may offer less protection to investors such as the Fund. These risks are
increased for investments in issuers in developing countries.
Because non-U.S. securities often are denominated in currencies other than
the U.S. dollar, changes in currency exchange rates will affect the investment
performance of the Intermediate Income Portfolio. In addition, some non-U.S.
currency values may be volatile and there is the possibility of governmental
controls on currency exchanges or governmental intervention in currency
markets.
The costs attributable to non-U.S. investing, such as the costs of
maintaining custody of securities in non-U.S. countries, frequently are higher
than those of U.S. investing. As a result, the operating expense ratios of the
Intermediate Income Portfolio may be higher than those of investment companies
investing exclusively in U.S. securities.
INVESTMENT PRACTICES. Certain of the investment practices employed for the
Funds may entail certain risks. These risks are in addition to risks described
above and are described in the Appendix. See the Appendix -- Permitted
Investments and Investment Practices on page 18.
SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE: The Short-Term U.S.
Government Income Portfolio does not invest directly in securities. Instead,
the Fund invests all of its investable assets in Government Income Portfolio,
which is a mutual fund having the same investment objectives and policies as
the Fund. The Portfolio, in turn, buys, holds and sells securities in
accordance with these objectives and policies. Of course, there can be no
assurance that the Fund or the Portfolio will achieve their objectives. The
Trustees of the Fund believe that the aggregate per share expenses of the Fund
and the Portfolio will be less than or approximately equal to the expenses
that the Fund would incur if the assets of the Fund were invested directly in
the types of securities held by the Portfolio. The Fund may withdraw its
investment in the Portfolio at any time, and will do so if the Fund's Trustees
believe it to be in the best interest of the Fund's shareholders. If the Fund
were to withdraw its investment in the Portfolio, the Fund could either invest
directly in securities in accordance with the investment policies described
above or invest in another mutual fund or pooled investment vehicle having the
same investment objectives and policies. If the Fund were to withdraw, the
Fund could receive securities from the Portfolio instead of cash, causing the
Fund to incur brokerage, tax and other charges or leaving it with securities
which may or may not be readily marketable or widely diversified.
Government Income Portfolio may change its investment objective and
certain of its investment policies and restrictions without approval by its
investors, but the Portfolio will notify the Short-Term U.S. Government Income
Portfolio (which in turn will notify its shareholders) and its other investors
at least 30 days before implementing any change in its investment objective. A
change in investment objective, policies or restrictions may cause the Fund to
withdraw its investment in the Portfolio.
Certain investment restrictions of Government Income Portfolio cannot be
changed without approval by the investors in the Portfolio. These policies are
described in the Statement of Additional Information. When the Short-Term U.S.
Government Income Portfolio is asked to vote on matters concerning the
Portfolio (other than a vote to continue the Portfolio following the
withdrawal of an investor), the Fund will hold a shareholder meeting and vote
in accordance with shareholder instructions. Of course, the Fund could be
outvoted, or otherwise adversely affected, by other investors in its
Portfolio.
Government Income Portfolio may sell interests to investors in addition to
the Short-Term U.S. Government Income Portfolio. These investors may be mutual
funds which offer shares to their shareholders with different costs and
expenses than the Fund. Therefore, the investment returns for all investors in
funds investing in the Portfolio may not be the same. The differences in
returns are also present in other mutual fund structures.
Information about other holders of interests in Government Income
Portfolio is available from the Fund's distributor, CFBDS (see back cover for
address and phone numbers).
The Intermediate Income Portfolio may at some time invest all or
substantially all of its investable assets in another mutual fund that has the
same investment objectives and policies as that Fund. In that case, some or
all of the considerations described above might also apply.
VALUATION OF SHARES
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Net asset value per share of each Fund is determined each day the New York
Stock Exchange is open for trading (a "Business Day"). This determination is
made once each day as of the close of regular trading on the Exchange
(normally 4:00 p.m. Eastern time) by adding the market value of all securities
and other assets of a Fund (including, in the case of the Short-Term U.S.
Government Income Portfolio, its interest in the Portfolio), then subtracting
the Fund's liabilities, and then dividing the result by the number of the
Fund's outstanding shares. The net asset value per share is effective for
orders received and accepted by the Distributor prior to its calculation.
Portfolio securities and other assets are valued primarily on the basis of
market quotations, or if quotations are not available, by a method believed to
accurately reflect fair value. Non-U.S. securities are valued based on
quotations from the primary market in which they are traded and are translated
from the local currency into U.S. dollars using current exchange rates. In
light of the non-U.S. nature of some investments of the Intermediate Income
Portfolio, trading may take place in securities held by that Fund on days
which are not Business Days and on which it will not be possible to purchase
or redeem shares of that Fund.
PURCHASES
- --------------------------------------------------------------------------------
Shares of the Funds are offered continuously and may be purchased on any
Business Day at the public offering price either through a securities broker
which has a sales agreement with the Distributor or through a bank or other
financial institution which has an agency agreement with the Distributor. Such
a bank or financial institution will receive transaction fees that are equal
to the commissions paid to securities brokers. Shares of the Funds are being
offered exclusively to customers of a Shareholder Servicing Agent (i.e., a
financial institution, such as a federal or state- chartered bank, trust
company, savings and loan association or savings bank, or a securities broker,
that has entered into a shareholder servicing agreement concerning a Fund). A
securities broker may receive both commissions and shareholder servicing fees.
Each Shareholder Servicing Agent is required to promptly forward orders for
Fund shares to the Distributor. Each Fund and the Distributor reserve the
right to reject any purchase order and to suspend the offering of Fund shares
for a period of time.
Each shareholder's account is established and maintained by his or her
Shareholder Servicing Agent, which will be the shareholder of record of the
Fund. Each Shareholder Servicing Agent may establish its own terms, conditions
and charges with respect to services it offers to its customers. Charges for
these services may include fixed annual fees and account maintenance fees. The
effect of any such fees will be to reduce the net return on the investment of
customers of that Shareholder Servicing Agent.
Shareholder Servicing Agents will not transmit purchase orders to the
Distributor unless they are in proper form.
EXCHANGES
- --------------------------------------------------------------------------------
Shares of each Fund may be exchanged for shares of the CitiSelect
Portfolios and certain other CitiFunds that are made available by a
shareholder's Shareholder Servicing Agent, or may be acquired through an
exchange of shares of those funds.
Shareholders must place exchange orders through their Shareholder
Servicing Agents, and may do so by telephone if their account applications so
permit. For more information on telephone transactions see "Redemptions." All
exchanges will be effected based on the relative net asset values per share
next determined after the exchange order is received and accepted by the
Distributor. See "Valuation of Shares."
This exchange privilege may be modified or terminated at any time, upon at
least 60 days' notice when such notice is required by SEC rules, and is
available only in those jurisdictions where such exchanges legally may be
made. See the Statement of Additional Information for further details.
An exchange is treated as a sale of the shares exchanged and could result
in taxable gain or loss to the shareholder making the exchange.
REDEMPTIONS
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Fund shares may be redeemed at their net asset value next determined after
a redemption request in proper form is received by a shareholder's Shareholder
Servicing Agent. Shareholders may redeem shares of a Fund only by authorizing
their Shareholder Servicing Agents to redeem such shares on their behalf
through the Distributor.
A redemption is treated as a sale of the shares redeemed and could result
in a taxable gain or loss to the shareholder making the redemption.
REDEMPTIONS BY MAIL. Shareholders may redeem Fund shares by sending
written instructions in proper form (as determined by a shareholder's
Shareholder Servicing Agent) to their Shareholder Servicing Agents.
Shareholders are responsible for ensuring that a request for redemption is in
proper form.
REDEMPTIONS BY TELEPHONE. Shareholders may redeem or exchange Fund shares
by telephone, if their account applications so permit, by calling their
Shareholder Servicing Agents. During periods of drastic economic or market
changes or severe weather or other emergencies, shareholders may experience
difficulties implementing a telephone exchange or redemption. In such an
event, another method of instruction, such as a written request sent via an
overnight delivery service, should be considered. The Funds and each
Shareholder Servicing Agent will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. These procedures may
include recording of the telephone instructions and verification of a caller's
identity by asking for his or her name, address, telephone number, Social
Security number, and account number. If these or other reasonable procedures
are not followed, the Fund or the Shareholder Servicing Agent may be liable
for any losses to a shareholder due to unauthorized or fraudulent
instructions. Otherwise, the shareholder will bear all risk of loss relating
to a redemption or exchange by telephone.
PAYMENT OF REDEMPTIONS. The proceeds of a redemption are paid in federal
funds normally on the next Business Day, but in any event within seven days.
If a shareholder requests redemption of shares which were purchased recently,
a Fund may delay payment until it is assured that good payment has been
received. In the case of purchases by check, this can take up to ten days. See
"Determination of Net Asset Value; Valuation of Securities; Additional
Purchase and Redemption Information" in the Statement of Additional
Information regarding the Funds' right to pay the redemption price in kind
with securities (instead of cash).
Questions about redemption requirements should be referred to the
shareholder's Shareholder Servicing Agent. The right of any shareholder to
receive payment with respect to any redemption may be suspended or the payment
of the redemption price postponed during any period in which the New York
Stock Exchange is closed (other than weekends or holidays) or trading on the
Exchange is restricted or if an emergency exists.
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
Substantially all of each Fund's net income from dividends and interest is
paid to its shareholders of record as a dividend on a monthly basis on or
around the last day of each month.
Each Fund's net realized short-term and long-term capital gains, if any,
will be distributed to the Fund's shareholders at least annually. Each Fund
may also make additional distributions to its shareholders to the extent
necessary to avoid the application of the 4% non-deductible excise tax on
certain undistributed income and net capital gains of mutual funds.
Subject to the policies of the shareholder's Shareholder Servicing Agent,
a shareholder may elect to receive dividends and capital gains distributions
in either cash or additional shares of the same class issued at net asset
value without a sales charge.
MANAGEMENT
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TRUSTEES AND OFFICERS: Each Fund is supervised by a Board of Trustees. The
Portfolio is also supervised by a Board of Trustees. In each case, a majority
of the Trustees are not affiliated with the Adviser. In addition, a majority
of the disinterested Trustees of the Short-Term U.S. Government Income
Portfolio are different from a majority of the disinterested Trustees of
Government Income Portfolio. More information on the Trustees and officers of
the Funds and the Portfolio appears under "Management" in the Statement of
Additional Information.
INVESTMENT ADVISER: CITIBANK. Each Fund draws on the strength and experience
of Citibank. Citibank offers a wide range of banking and investment services
to customers across the United States and throughout the world, and has been
managing money since 1822. Its portfolio managers are responsible for
investing in money market, equity and fixed income securities. Citibank and
its affiliates manage more than $88 billion in assets worldwide. Citibank is a
wholly-owned subsidiary of Citicorp. Citibank's address is 153 East 53rd
Street, New York, New York 10043.
Citibank manages the Funds' assets pursuant to separate Investment
Advisory Agreements. Subject to policies set by the Trustees, Citibank makes
investment decisions for the Funds.
SHORT-TERM U.S. GOVERNMENT INCOME PORTFOLIO. Denise Guetta, a Vice
President of Citibank, has served as manager of the Short-Term U.S. Government
Income Portfolio since April 1997. Ms. Guetta is a Senior Portfolio Manager
responsible for managing institutional liquidity and short-duration
portfolios. Ms. Guetta has over ten years investment experience. Prior to
joining Citibank in 1996, she was a portfolio manager at Fischer Francis Trees
and Watts, Inc. managing leveraged risk positions in the U.S. Treasury and
Canadian markets. She began her career as an account executive at Drexel
Burnham Lambert, Inc. managing fixed income and equity portfolios.
INTERMEDIATE INCOME PORTFOLIO. Mark Lindbloom, a Vice President of
Citibank, has served as manager of the Intermediate Income Portfolio since
June 1993. Mr. Lindbloom has more than 12 years of investment management
experience. Prior to joining the Adviser 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.
Management's discussion of performance of the Funds is included in the
Funds' Annual Reports to Shareholders, which investors may obtain without
charge by contacting their Shareholder Servicing Agents.
ADVISORY FEES. For its services under the Investment Advisory Agreements,
the Adviser receives investment advisory fees, which are accrued daily and
paid monthly, of 0.35% of each Fund's average daily net assets on an
annualized basis for that Fund's then-current fiscal year. The Adviser has
voluntarily agreed to waive a portion of its investment advisory fee from each
Fund.
For the fiscal year ended December 31, 1997, the investment advisory fee
paid to Citibank for the U.S. Government Income Portfolio, after waivers, was
0.12% of the Fund's average daily net assets for that fiscal year.
For the fiscal year ended December 31, 1997, the investment advisory fee
paid to Citibank for the Intermediate Income Portfolio, after waivers, was
0.11% of the Fund's average daily net assets for that fiscal year.
BANKING RELATIONSHIPS. Citibank and its affiliates may have deposit, loan
and other relationships with the issuers of securities purchased on behalf of
the Funds, including outstanding loans to such issuers which may be repaid in
whole or in part with the proceeds of securities so purchased. Citibank has
informed the Funds that, in making its investment decisions, it does not
obtain or use material inside information in the possession of any division or
department of Citibank or in the possession of any affiliate of Citibank.
BANK REGULATORY MATTERS. The Glass-Steagall Act prohibits certain
financial institutions, such as Citibank, from underwriting securities of
open-end investment companies, such as the Funds. Citibank believes that its
services under the Investment Advisory Agreements and the activities performed
by it or its affiliates as Shareholder Servicing Agents and sub-administrator
are not underwriting and are consistent with the Glass-Steagall Act and other
relevant federal and state laws. However, there is no controlling precedent
regarding the performance of the combination of investment advisory,
shareholder servicing and sub-administrative activities by banks. State laws
on this issue may differ from applicable federal law, and banks and financial
institutions may be required to register as dealers pursuant to state
securities laws. Changes in either federal or state statutes or regulations,
or in their interpretations, could prevent Citibank or its affiliates from
continuing to perform these services. If Citibank or its affiliates were to be
prevented from acting as the Adviser, sub-administrator or a Shareholder
Servicing Agent, the Funds would seek alternative means for obtaining these
services. The Funds do not expect that shareholders would suffer any adverse
financial consequences as a result of any such occurrence.
ADMINISTRATIVE SERVICES PLANS: The Funds and the Portfolio have Administrative
Services Plans which provide that the Funds and the Portfolio may obtain the
services of an administrator, a transfer agent, a custodian, and, in the case
of the Funds, one or more Shareholder Servicing Agents, and may enter into
agreements providing for the payment of fees for such services. Under the
Administrative Services Plan, the total of the fees paid to the Funds'
Administrator and Shareholder Servicing Agents may not exceed 0.65% of each
Fund's average daily net assets on an annualized basis for the Fund's then-
current fiscal year. Any distribution fees (other than any fee concerning
electronic or other media advertising) payable under the Distribution Plan are
included in this expense limitation. Within this overall limitation,
individual fees may vary. Under the Portfolio's Administrative Services Plan,
fees paid to the Portfolio's Administrator may not exceed 0.05% of the
Portfolio's average daily net assets on an annualized basis for the
Portfolio's then-current fiscal year. See "Administrators," "Shareholder
Servicing Agents" and "Transfer Agent, Custodian and Fund Accountant."
ADMINISTRATORS: CFBDS and Signature Financial Group (Cayman) Ltd. ("SFG")
provide certain administrative services to the Funds and the Portfolio under
administrative services agreements. These administrative services include
providing general office facilities, supervising the overall administration of
the Funds and the Portfolio, and providing persons satisfactory to the Boards
of Trustees to serve as Trustees and officers of the Funds and Portfolio.
These Trustees and officers may be directors, officers or employees of CFBDS,
SFG or their affiliates.
For these services, the Administrators receive fees accrued daily and paid
monthly of 0.25% of the average daily net assets of each Fund, and 0.05% of
the average daily net assets of the Government Income Portfolio, in each case
on an annualized basis for the Fund's or the Portfolio's then-current fiscal
year. However, each of the Administrators has voluntarily agreed to waive a
portion of the fees payable to it. See "General Information -- Expenses."
CFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group,
Inc.
SUB-ADMINISTRATOR: Pursuant to sub-administrative services agreements,
Citibank performs such sub-administrative duties for the Funds and Portfolio
as from time to time are agreed upon by Citibank and CFBDS or SFG. Citibank's
compensation as sub-administrator is paid by CFBDS or SFG.
SHAREHOLDER SERVICING AGENTS: The Funds have entered into separate shareholder
servicing agreements with each Shareholder Servicing Agent pursuant to which
that Shareholder Servicing Agent provides shareholder services, including
answering customer inquiries, assisting in processing purchase, exchange and
redemption transactions and furnishing Fund communications to shareholders.
For these services, each Shareholder Servicing Agent receives a fee from each
Fund at an annual rate of 0.25% of the average daily net assets of the Fund
represented by shares owned by investors for whom such Shareholder Servicing
Agent maintains a servicing relationship.
Some Shareholder Servicing Agents may impose certain conditions on their
customers in addition to or different from those imposed by the Funds, such as
requiring a minimum initial investment or charging their customers a direct
fee for their services. Each Shareholder Servicing Agent has agreed to
transmit to its customers who are shareholders of a Fund appropriate prior
written disclosure of any fees that it may charge them directly and to provide
written notice at least 30 days prior to imposition of any transaction fees.
TRANSFER AGENT, CUSTODIAN AND FUND ACCOUNTANT: State Street Bank and Trust
Company acts as transfer agent and dividend disbursing agent for each Fund and
as the custodian of each Fund's assets. The principal business address of
State Street Bank and Trust Company is 225 Franklin Street, Boston,
Massachusetts 02110. Securities may be held by a sub-custodian bank approved
by the Trustees. State Street also provides fund accounting services and
calculates the daily net asset value for the Funds.
DISTRIBUTION ARRANGEMENTS: CFBDS, 6 St. James Avenue, Boston, MA 02116, (617)
423-1679, is the distributor of shares of each Fund and also serves as
distributor for each of the other CitiFunds and as a Shareholder Servicing
Agent for certain investors. CFBDS receives distribution fees from the Funds
pursuant to Distribution Plans adopted in accordance with Rule 12b-1 under the
Investment Company Act of 1940. In those states where CFBDS is not a
registered broker-dealer, shares of the Funds are sold through Signature
Broker-Dealer Services, Inc., as dealer.
The Funds' Distribution Plans provide that the Funds may pay the
Distributor a monthly distribution fee at an annual rate not to exceed 0.15%
of the average daily net assets. The Plan also permits the Funds to pay the
Distributor an additional fee not to exceed 0.05% of each Fund's average daily
net assets in anticipation of or as reimbursement for print or electronic
media advertising expenses incurred in connection with the sale of Fund
shares. The Funds did not pay anything under this provision during 1997 and do
not anticipate doing so during the current fiscal year.
The Distributor uses the distribution fees under the Plans to offset each
Fund's marketing costs attributable to the Funds, such as preparation of sales
literature, advertising, and printing and distributing prospectuses and other
shareholder materials to prospective investors. In addition, the Distributor
may use the distribution fees to pay costs related to distribution activities,
including employee salaries, bonuses and other overhead expenses. The Funds
and the Distributor provide to the Trustees quarterly a written report of
amounts expended pursuant to the Plans and the purposes for which the
expenditures were made.
During the period they are in effect, the Plans and related Distribution
Agreements obligate the Funds to pay distribution fees to CFBDS as
compensation for its distribution activities, not as reimbursement for
specific expenses incurred. Thus, even if CFBDS's expenses exceed its
distribution fees for any Fund, the Fund will not be obligated to pay more
than those fees and, if CFBDS's expenses are less than such fees, it will
retain its full fees and realize a profit. Each Fund will pay the distribution
fees to CFBDS until either the applicable Plan or Distribution Agreement is
terminated or not renewed. In that event, CFBDS's expenses in excess of
distribution fees received or accrued through the termination date will be
CFBDS's sole responsibility and not obligations of the Fund. In their annual
consideration of the continuation of the Plans for each Fund, the Trustees
will review each Plan and CFBDS's expenses for each class separately.
TAX MATTERS
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This discussion of taxes is for general information only. Investors should
consult their own tax advisers about their particular situations.
Each Fund intends to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies so that it will not be liable for
any federal and state income or federal excise taxes.
Fund dividends and capital gains distributions are subject to federal
income tax and may also be subject to state and local taxes. Dividends and
distributions are treated in the same manner for federal tax purposes whether
they are paid in cash or as additional shares. Generally, distributions from a
Fund's net investment income and short-term capital gains will be taxed as
ordinary income. A portion of the Intermediate Income Portfolio's
distributions from net investment income may be eligible for the dividends-
received deduction available to corporations. Distributions of long-term net
capital gains will be taxed as such regardless of how long the shares of a
Fund have been held. Such capital gains may be taxable to shareholders that
are individuals, estates, or trusts at maximum rates of 20%, 25%, or 28%,
depending upon the source of the gains.
Fund distributions will reduce the distributing Fund's net asset value per
share. Shareholders who buy shares just before a Fund makes a distribution may
thus pay the full price for the shares and then effectively receive a portion
of the purchase price back as a taxable distribution.
The Intermediate Income Portfolio may pay withholding or other taxes to
foreign governments during the year. These taxes will reduce that Fund's
dividends.
Early each year, each Fund will notify its shareholders of the amount and
tax status of distributions paid to shareholders for the preceding year.
Investors should consult their own tax advisers regarding the status of
their accounts under state and local laws.
PERFORMANCE INFORMATION
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Fund performance may be quoted in advertising, shareholder reports and
other communications in terms of yield, effective yield or total rate of
return. All performance information is historical and is not intended to
indicate future performance. Yields and total rates of return fluctuate in
response to market conditions and other factors, and the value of a Fund's
shares when redeemed may be more or less than their original cost.
Each Fund may provide its period and average annualized "total rates of
return." The "total rate of return" refers to the change in the value of an
investment in the Fund over a stated period which was made at the maximum
public offering price and reflects any change in net asset value per share and
is compounded to include the value of any shares purchased with any dividends
or capital gains declared during such period. Period total rates of return may
be "annualized." An "annualized" total rate of return assumes that the period
total rate of return is generated over a one-year period. These total rate of
return quotations may be accompanied by quotations which do not reflect the
reduction in value of the investment due to the initial or contingent deferred
sales charges, and which are thus higher.
Each Fund may provide annualized "yield" and "effective yield" quotations.
The "yield" of a Fund refers to the income generated by an investment in the
Fund over a 30-day or one-month period (which period is stated in any such
advertisement or communication). This income is then annualized; that is, the
amount of income generated by the investment over that period is assumed to be
generated each month over a one-year period and is shown as a percentage of
the maximum public offering price on the last day of that period. The
"effective yield" is calculated similarly, but when annualized the income
earned by the investment during that 30-day or one-month period is assumed to
be reinvested. The effective yield is slightly higher than the yield because
of the compounding effect of this assumed reinvestment. A "yield" quotation,
unlike a total rate of return quotation, does not reflect changes in net asset
value.
Each Fund will include performance data for Fund shares in any
advertisements, reports or communications including Fund performance data. Of
course, any fees charged by a shareholder's Shareholder Servicing Agent will
reduce that shareholder's net return on his or her investment. See the
Statement of Additional Information for more information concerning the
calculation of yield and total rate of return quotations for the Funds.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION: Each Fund is a series of CitiFundsSM Fixed Income Trust (the
"Trust"), which is a Massachusetts business trust that was organized on June
23, 1986. Prior to March 2, 1998, the Trust was known as "Landmark Fixed
Income Funds." The Trust was known as "Landmark U.S. Government Income Fund"
until its name was changed effective June 11, 1992. The Trust is an open-end
management investment company registered under the 1940 Act. Prior to March 2,
1998, the Intermediate Income Portfolio was called Landmark Intermediate
Income Fund and the Short-Term U.S. Government Income Portfolio was called
Landmark U.S. Government Income Fund.
Each Fund is a diversified mutual fund. Under the 1940 Act, a diversified
mutual fund must invest at least 75% of its assets in cash and cash items,
U.S. Government securities, investment company securities and other securities
limited as to any one issuer to not more than 5% of the total assets of the
mutual fund and not more than 10% of the voting securities of the issuer.
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for the trust's
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the trust itself was unable to meet its
obligations.
The Portfolio is a series of The Premium Portfolios, a trust organized
under the laws of the State of New York. The Declaration of Trust of The
Premium Portfolios provides that the Short-Term U.S. Government Income
Portfolio and other entities investing in the Portfolio are each liable for
all obligations of the Portfolio. It is not expected that the liabilities of
the Portfolio would ever exceed its assets.
PROPOSED CHANGES: Currently, the Intermediate Income Portfolio operates on a
stand-alone basis; that is, it invests directly in investment securities. The
Intermediate Income Portfolio has the ability to convert to a two-tier,
master/feeder structure whereby the Fund would invest all of its investable
assets in a single investment company. At a meeting held on October 24, 1997,
shareholders of the Intermediate Income Portfolio approved an amendment to the
Fund's Declaration of Trust and fundamental investment restrictions to allow
the Intermediate Income Portfolio to invest in one or more investment
companies. Shareholders also approved a new Management Agreement with Citibank
and a new Rule 12b-1 Service Plan for the Intermediate Income Portfolio. The
new Management Agreement and Service Plan are not yet effective, and the
proposed restructuring has not yet taken place.
Under the new Management Agreement, Citibank will be responsible for the
overall management of the Intermediate Income Portfolio's business affairs,
and will provide investment advisory as well as administrative services to the
Fund. If the restructuring takes place and the new Management Agreement
becomes effective, the Intermediate Income Portfolio's existing advisory and
administrative services agreements will be terminated.
Under the new Management Agreement, the Intermediate Income Portfolio will
pay Citibank management fees equal on an annual basis to 0.70% of the Fund's
average daily net assets. Advisory and administrative services fees currently
payable by the Intermediate Income Portfolio equal 0.60% of the Fund's average
daily net assets on an annual basis.
Under the Intermediate Income Portfolio's existing Rule 12b-1 Distribution
Plan, the Intermediate Income Portfolio may pay its distributor a monthly
distribution fee at an annual rate not to exceed 0.15% of the Fund's average
daily net assets. The existing Distribution Plan also permits the Intermediate
Income Portfolio to pay the distributor an additional fee (not to exceed on an
annual basis 0.05% of average daily net assets) in anticipation of or as
reimbursement for print or electronic media advertising expenses incurred in
connection with the sale of Fund shares. Under the new Service Plan, the
Intermediate Income Portfolio may pay monthly fees in an amount not to exceed
0.25% per annum of the Fund's average daily net assets for both distribution
and service matters. If the restructuring takes place and the new Service Plan
becomes effective, the Intermediate Income Portfolio's existing Distribution
Plan will be terminated.
If the restructuring takes place, it is not expected that the Intermediate
Income Portfolio's total expense ratio will increase.
VOTING AND OTHER RIGHTS: The Trust may issue an unlimited number of shares,
may create new series of shares and may divide shares in each series into
classes. Each share of each Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All shares of
each series of the Trust have equal voting rights except that, in matters
affecting only a particular Fund or class, only shares of that particular Fund
or class are entitled to vote.
At any meeting of shareholders of any Fund, a Shareholder Servicing Agent
may vote any shares of which it is the holder of record and for which it does
not receive voting instructions proportionately in accordance with the
instructions it receives for all other shares of which that Shareholder
Servicing Agent is the holder of record.
As a Massachusetts business trust, the Funds are not required to hold
annual shareholder meetings. Shareholder approval will usually be sought only
for changes in a Fund's or Portfolio's fundamental investment restrictions and
for the election of Trustees under certain circumstances. Trustees may be
removed by shareholders under certain circumstances. Each share of each Fund
is entitled to participate equally in dividends and other distributions and
the proceeds of any liquidation of that Fund.
CERTIFICATES: The Funds' Transfer Agent maintains a share register for
shareholders of record, i.e., Shareholder Servicing Agents. Share certificates
are not issued.
RETIREMENT PLANS: Investors may be able to establish new accounts in a Fund
under one of several tax-sheltered plans. Such plans include IRAs, Keogh or
Corporate Profit-Sharing and Money-Purchase Plans, 403(b) Custodian Accounts,
and certain other qualified pension and profit-sharing plans. Investors should
consult with their Shareholder Servicing Agents and tax and retirement
advisers.
EXPENSES: In addition to amounts payable as described above under the Advisory
Agreements, the Administrative Services Plans and the Distribution Plans, each
Fund and the Portfolio is responsible for its own expenses, including, among
other things, the costs of securities transactions, the compensation of
Trustees that are not affiliated with the Adviser, government fees, taxes,
accounting and legal fees, expenses of communicating with shareholders,
interest expense, and insurance premiums. All fee waivers are voluntary and
may be reduced or terminated at any time.
For the fiscal year ended December 31, 1997, the total expenses of the
Funds were .80% of the average daily net assets of the Short-Term U.S.
Government Income Portfolio and .90% of the average daily net assets of the
Intermediate Income Portfolio, in each case for that fiscal year.
COUNSEL AND INDEPENDENT AUDITORS: Bingham Dana LLP, 150 Federal Street,
Boston, MA 02110, is counsel for each Fund. Price Waterhouse LLP, located at
160 Federal Street, Boston, MA 02110, serves as independent auditors for
CitiFunds Short-Term U.S. Government Income Portfolio. Deloitte & Touche LLP,
located at 125 Summer Street, Boston, MA 02110, serves as independent auditors
for CitiFunds Intermediate Income Portfolio.
----------------
The Statement of Additional Information dated the date hereof contains
more detailed information about the Funds and the Portfolio, including
information related to (i) investment policies and restrictions, (ii) the
Trustees, officers, Adviser and Administrators, (iii) securities transactions,
(iv) the Funds' shares, including rights and liabilities of shareholders, (v)
the method used to calculate performance information, and (vi) the
determination of net asset value.
No person has been authorized to give any information or make any
representations not contained in this Prospectus or the Statement of
Additional Information in connection with the offering made by this Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Funds or their distributor. This
Prospectus does not constitute an offering by the Funds or their distributor
in any jurisdiction in which such offering may not lawfully be made.
APPENDIX
- --------------------------------------------------------------------------------
PERMITTED INVESTMENTS AND
INVESTMENT PRACTICES
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements in order
to earn a return on temporarily available cash. The Short-Term U.S. Government
Income Portfolio will only enter into repurchase agreements that cover
securities that are backed by the full faith and credit of the U.S.
Government. Repurchase agreements are transactions in which an institution
sells the Fund a security at one price, subject to the Fund's obligation to
resell and the selling institution's obligation to repurchase that security at
a higher price normally within a seven day period. There may be delays and
risks of loss if the seller is unable to meet its obligation to repurchase.
REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into reverse repurchase
agreements. Reverse repurchase agreements involve the sale of securities held
by the Fund and the agreement by the Fund to repurchase the securities at an
agreed-upon price, date and interest payment. When a Fund enters into reverse
repurchase transactions, securities of a dollar amount equal in value to the
securities subject to the agreement will be maintained in a segregated account
with the Fund's custodian. The segregation of assets could impair the Fund's
ability to meet its current obligations or impede investment management if a
large portion of the Fund's assets are involved. Reverse repurchase agreements
are considered to be a form of borrowing.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements and in order to generate additional income, each Fund may lend
its portfolio securities to broker-dealers and other institutional borrowers.
Such loans must be callable at any time and continuously secured by collateral
(cash or U.S. Government securities) in an amount not less than the market
value, determined daily, of the securities loaned. It is intended that the
value of securities loaned by a Fund would not exceed 30% of the Fund's total
assets.
In the event of the bankruptcy of the other party to a securities loan, a
repurchase agreement or reverse repurchase agreement, the Fund could
experience delays in recovering either the securities or cash. To the extent
that, in the meantime, the value of the securities loaned or sold has
increased or the value of the securities purchased has decreased, the Fund
could experience a loss.
RULE 144A SECURITIES. Each Fund may purchase restricted securities that
are not registered for sale to the general public. If the Adviser determines
that there is a dealer or institutional market in the securities, the
securities will not be treated as illiquid for purposes of the Fund's
investment limitations. The Trustees will review these determinations. These
securities are known as "Rule 144A securities," because they are traded under
SEC Rule 144A among qualified institutional buyers. Institutional trading in
Rule 144A securities is relatively new, and the liquidity of these investments
could be impaired if trading in Rule 144A securities does not develop or if
qualified institutional buyers become, for a time, uninterested in purchasing
Rule 144A securities.
PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS. Each Fund may invest up to
15% of its net assets (taken at market value) in securities for which there is
no readily available market. These illiquid securities may include privately
placed restricted securities for which no institutional market exists. The
absence of a trading market can make it difficult to ascertain a market value
for illiquid investments. Disposing of illiquid investments may involve time-
consuming negotiation and legal expenses, and it may be difficult or
impossible for a Fund to sell them promptly at an acceptable price.
"WHEN-ISSUED" SECURITIES. In order to ensure the availability of suitable
securities, each Fund may purchase securities on a "when-issued" or on a
"forward delivery" basis, which means that the securities would be delivered
to the Fund at a future date beyond customary settlement time. Under normal
circumstances, the Fund takes delivery of the securities. In general, the Fund
does not pay for the securities until received and does not start earning
interest until the contractual settlement date. While awaiting delivery of the
securities, the Fund establishes a segregated account consisting of cash, cash
equivalents or high quality debt securities equal to the amount of the Fund's
commitments to purchase "when-issued" securities. An increase in the
percentage of the Fund's assets committed to the purchase of securities on a
"when-issued" basis may increase the volatility of its net asset value.
CURRENCY EXCHANGE CONTRACTS. Forward currency exchange contracts may be
entered into for the Intermediate Income Portfolio for the purchase or sale of
non-U.S. currency for hedging purposes against adverse rate changes or
otherwise to achieve the Fund's investment objectives. A currency exchange
contract allows a definite price in dollars to be fixed for securities of non-
U.S. issuers that have been purchased or sold (but not settled) for the Fund.
Entering into such exchange contracts may result in the loss of all or a
portion of the benefits which otherwise could have been obtained from
favorable movements in exchange rates. In addition, entering into such
contracts means incurring certain transaction costs and bearing the risk of
incurring losses if rates do not move in the direction anticipated.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. Each of the Funds may
use financial futures in order to protect the Fund from fluctuations in
interest rates (sometimes called "hedging") without actually buying or selling
debt securities, or to manage the effective maturity or duration of fixed-
income securities in the Fund's portfolio in an effort to reduce potential
losses or enhance potential gain. Futures contracts provide for the future
sale by one party and purchase by another party of a specified amount of a
security at a specified future time and price, or for making payment of a cash
settlement based on changes in the value of a security or an index of
securities. Because the value of a futures contract changes based on the price
of the underlying security, futures contracts are considered to be
"derivatives." Futures contracts are a generally accepted part of modern
portfolio management and are regularly utilized by many mutual funds and other
institutional investors. The futures contracts that may be purchased by the
Funds are standardized contracts traded on commodities exchanges or boards of
trade.
When a Fund purchases or sells a futures contract, it is required to make
an initial margin deposit. Although the amount may vary, initial margin can be
as low as 1% or less of the face amount of the contract. Additional margin may
be required as the contract fluctuates in value. Since the amount of margin is
relatively small compared to the value of the securities covered by a futures
contract, the potential for gain or loss on a futures contract is much greater
than the amount of a Fund's initial margin deposit. Neither Fund currently
intends to enter into a futures contract if, as a result, the initial margin
deposits on all of that Fund's futures contracts would exceed approximately 5%
of the Fund's net assets. Also, each Fund intends to limit its futures
contracts so that the value of the securities covered by its futures contracts
would not generally exceed 50% of the Fund's other assets and to segregate
sufficient assets to meet its obligations under outstanding futures contracts.
The ability of a Fund to utilize futures contracts successfully will
depend on the Adviser's ability to predict interest rate movements, which
cannot be assured. In addition to general risks associated with any
investment, the use of futures contracts entails the risk that, to the extent
the Adviser's view as to interest rate movements is incorrect, the use of
futures contracts, even for hedging purposes, could result in losses greater
than if they had not been used. This could happen, for example, if there is a
poor correlation between price movements of futures contracts and price
movements in a Fund's related portfolio position. Also, although the Funds
will purchase only standardized futures traded on regulated exchanges, the
futures markets may not be liquid in all circumstances. As a result, in
certain markets, a Fund might not be able to close out a transaction without
incurring substantial losses, if at all. When futures contracts are used for
hedging, even if they are successful in minimizing the risk of loss due to a
decline in the value of the hedged position, at the same time they limit any
potential gain which might result from an increase in value of such position.
The use of futures contracts potentially exposes a Fund to the effects of
"leveraging", which occurs when futures are used so that the Fund's exposure
to the market is greater than it would have been if the Fund had invested
directly in the underlying securities. "Leveraging" increases the Fund's
potential for both gain and loss. As noted above, each of the Funds intends to
adhere to certain policies relating to the use of futures contracts, which
should have the effect of limiting the amount of leverage by the Fund. The use
of futures contracts may increase the amount of taxable income of a Fund and
may affect in other ways the amount, timing and character of a Fund's income
for tax purposes, as more fully discussed in the section entitled "Certain
Additional Tax Matters" in the Statement of Additional Information.
The use of futures by the Funds and some of their risks are described more
fully in the Statement of Additional Information.
SHORT SALES "AGAINST THE BOX." In a short sale, a Fund sells a borrowed
security and has a corresponding obligation to the lender to return the
identical security. Each Fund may engage in short sales only if at the time of
the short sale it owns or has the right to obtain, at no additional cost, an
equal amount of the security being sold short. This investment technique is
known as a short sale "against the box." A Fund may make a short sale as a
hedge, when it believes that the value of a security owned by the Fund (or a
security convertible or exchangeable for such security) may decline. Not more
than 40% of a Fund's total assets would be involved in short sales "against the
box."
<PAGE>
SHAREHOLDER
SERVICING AGENTS
- --------------------------------------------------------------------------------
For Citibank Retail Banking and
Business and Professional Clients:
Citibank, N.A.
111 Wall Street, New York, NY 10043
(212) 820-2383 or (800) 846-5300
For Citigold Clients:
Citigold
P.O. Box 5130, New York, NY 10126-5130
Call Your Citigold Executive or, in NY or CT, (800) 285-1701,
or for all other states, (800) 285-1707
For Citibank Private Banking Clients:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
Investment Specialist or (212) 559-5959
For Citibank Global Asset Management
Clients:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117
For Citibank North American Investor
Services Clients:
Citibank, N.A.
Master Trust Accounts
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9659
For Citicorp Investment Services Customers:
Citicorp Investment Services
One Court Square, Long Island City, NY 11120
Call Your Investment Consultant or (800) 846-5200,
(212) 820-2380 in New York City
CITIFUNDS(SM)
Money Market Funds:
Cash Reserves
Premium Liquid Reserves
Institutional Liquid Reserves
Institutional Cash Reserves
U.S. Treasury Reserves
Premium U.S. Treasury Reserves
Institutional U.S. Treasury Reserves
Tax Free Reserves
Institutional Tax Free Reserves
California Tax Free Reserves
Connecticut Tax Free Reserves
New York Tax Free Reserves
Stock & Bond Funds:
Short-Term U.S. Government Income
Portfolio
Intermediate Income Portfolio
National Tax Free Income Portfolio
New York Tax Free Income Portfolio
Balanced Portfolio
Large Cap Growth Portfolio
International Equity Portfolio
Small Cap Growth Portfolio
Emerging Asian Markets Equity Portfolio
<PAGE>
CITIFUNDS(SM)
================================================================================
CITIFUNDS(SM)
SHORT-TERM
U.S. GOVERNMENT
INCOME PORTFOLIO
CITIFUNDS(SM)
INTERMEDIATE
INCOME PORTFOLIO
- -------------
PROSPECTUS
March 2, 1998
- -------------
Printed on Recycled Paper [recycle symbol]
FI/P.1/97/PB
<PAGE>
Statement of
Additional Information
March 2, 1998
CITIFUNDS(SM) SHORT-TERM U.S. GOVERNMENT INCOME PORTFOLIO
CITIFUNDS(SM) INTERMEDIATE INCOME PORTFOLIO
Each of CITIFUNDS(SM) SHORT-TERM U.S. GOVERNMENT INCOME PORTFOLIO (the
"Government Income Fund") and CITIFUNDS(SM) INTERMEDIATE INCOME PORTFOLIO (the
"Intermediate Income Fund", and together with the Government Income Fund, the
"Funds") is a series of CitiFunds(SM) Fixed Income Trust (the "Trust"). The
address and telephone number of the Trust are 6 St. James Avenue, Boston,
Massachusetts 02116, (617) 423-1679. The Trust invests all of the investable
assets of the Government Income Fund in the Government Income Portfolio (the
"Portfolio"), which is a separate series of The Premium Portfolios (the
"Portfolio Trust"). The address of the Portfolio Trust is Elizabethan Square,
George Town, Grand Cayman, British West Indies.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
CITIBANK, N.A. OR ANY OF ITS AFFILIATES, ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
TABLE OF CONTENTS PAGE
1. The Funds ............................................................. 2
2. Investment Objectives, Policies and Restrictions ...................... 2
3. Performance Information ................................................ 15
4. Determination of Net Asset Value; Valuation of Securities;
Additional Purchase and Redemption Information ..................... 16
5. Management ............................................................. 17
6. Portfolio Transactions ................................................. 24
7. Description of Shares, Voting Rights and Liabilities ................... 25
8. Certain Additional Tax Matters ......................................... 26
9. Independent Accountants and Financial Statements ....................... 28
Appendix A ................................................................ 29
This Statement of Additional Information sets forth information which may
be of interest to investors but which is not necessarily included in the
Funds' Prospectus, dated March 2, 1998, by which shares of the Funds are
offered. This Statement of Additional Information should be read in
conjunction with the Prospectus, a copy of which may be obtained by an
investor without charge by contacting the Funds' distributor, CFBDS, Inc., at
6 St. James Avenue, Boston, MA 02116, (617) 423-1679.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1. THE FUNDS
CitiFunds(SM) Fixed Income Trust (the "Trust") is an open-end management
investment company which was organized as a business trust under the laws of
the Commonwealth of Massachusetts on June 23, 1986. Prior to March 2, 1998,
the Trust was known as "Landmark Fixed Income Funds." The Trust was known as
"Landmark U.S. Government Income Fund" until its name was changed effective
June 11, 1992. This Statement of Additional Information describes CitiFunds(SM)
Short-Term U.S. Government Income Portfolio and CitiFunds(SM) Intermediate
Income Portfolio, each of which is a separate series of the Trust. Prior to
March 2, 1998, the Government Income Fund was called "Landmark U.S. Government
Income Fund," and the Intermediate Income Fund was called "Landmark
Intermediate Income Fund." References in this Statement of Additional
Information to the "Prospectus" are to the Prospectus, dated March 2, 1998, of
the Trust by which shares of the Funds are offered.
The Trust seeks the investment objectives of the Government Income Fund by
investing all of its investable assets in Government Income Portfolio (the
"Portfolio"). The Portfolio is a series of The Premium Portfolios (the
"Portfolio Trust") and is an open-end, diversified management investment
company. The Portfolio has the same investment objectives and policies as the
Government Income Fund. Because the Government Income Fund invests through the
Portfolio, all references in this Statement of Additional Information to the
Government Income Fund include the Portfolio, except as otherwise noted. In
addition, references to the Trust, insofar as they relate to the Government
Income Fund, include the Portfolio Trust, except as otherwise noted.
Citibank, N.A. ("Citibank" or the "Adviser") is investment adviser to the
Intermediate Income Fund and the Portfolio. The Adviser manages the
investments of the Intermediate Income Fund and the Portfolio from day to day
in accordance with such Fund's and the Portfolio's investment objectives and
policies. The selection of investments for the Intermediate Income Fund and
the Portfolio and the way they are managed depend on the conditions and trends
in the economy and the financial marketplaces.
CFBDS, Inc. ("CFBDS" or the "Administrator"), the administrator of each
Fund, and Signature Financial Group (Cayman) Ltd. ("SFG"), the administrator
of the Portfolio (the "Portfolio Administrator"), supervise the overall
administration of each Fund and the Portfolio, respectively. The Boards of
Trustees of the Trust and the Portfolio Trust provide broad supervision over
the affairs of the Funds and the Portfolio, respectively. Shares of the Funds
are continuously sold by CFBDS, the Funds' distributor (the "Distributor"),
only to investors who are customers of a financial institution, such as a
federal or state-chartered bank, trust company, savings and loan association
or savings bank, or a securities broker, that has entered into a shareholder
servicing agreement with the Trust (collectively, "Shareholder Servicing
Agents"). Shares of each Fund are sold at net asset value. CFBDS receives a
distribution fee from each Fund pursuant to a Distribution Plan adopted with
respect to shares of the Funds in accordance with Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act").
2. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
The investment objectives of CITIFUNDS(SM) SHORT-TERM U.S. GOVERNMENT INCOME
PORTFOLIO are to generate current income and preserve the value of its
shareholders' investment.
The investment objectives of CITIFUNDS(SM) INTERMEDIATE INCOME PORTFOLIO are
to generate a high level of current income and preserve the value of its
shareholders' investment.
The investment objectives of each Fund may be changed without approval by
the Fund's shareholders, but shareholders will be given written notice at
least 30 days before any change is implemented. Of course, there can be no
assurance that either Fund will achieve its investment objectives.
INVESTMENT POLICIES
The Prospectus contains a discussion of the various types of securities in
which each Fund and the Portfolio may invest and the risks involved in such
investments. The following supplements the information contained in the
Prospectus concerning the investment objectives, policies and techniques of
each Fund.
The Trust may withdraw the investment of Government Income Fund from the
Portfolio at any time, if the Board of Trustees of the Trust determines that
it is in the best interests of the Government Income Fund to do so. Upon any
such withdrawal, the Government Income Fund's assets would continue to be
invested in accordance with the investment policies described herein with
respect to that Fund. The policies described below are not fundamental and may
be changed without shareholder approval.
U.S. GOVERNMENT SECURITIES
Each of the Funds may invest in debt obligations that are backed, as to
the timely payment of interest and principal, by the full faith and credit of
the U.S. Government. The Government Income Fund invests only in debt
obligations that are backed, as to the timely payment of interest and
principal, by the full faith and credit of the U.S. Government.
The debt obligations in which assets of the Funds are invested include (1)
U.S. Treasury obligations, which differ only in their interest rates,
maturities and times of issuance: U.S. Treasury bills (maturities of one year
or less), U.S. Treasury notes (maturities of one to 10 years), and U.S.
Treasury bonds (generally maturities of greater than 10 years); and (2)
obligations issued or guaranteed by U.S. Government agencies, authorities or
instrumentalities. The Government Income Fund may only invest in obligations
issued or guaranteed by U.S. Government agencies if such obligations are
backed, as to the timely payment of interest and principal, by the full faith
and credit of the U.S. Government, e.g., direct pass-through certificates of
the Government National Mortgage Association.
When and if available, U.S. Government obligations may be purchased at a
discount from face value. However, it is not intended that such securities
will be held to maturity for the purpose of achieving potential capital gains,
unless current yields on these securities remain attractive.
Although U.S. Government obligations which are purchased for the Funds may
be backed, as to the timely payment of interest and principal, by the full
faith and credit of the U.S. Government, shares of the Funds are neither
insured nor guaranteed by the U.S. Government or its agencies, authorities or
instrumentalities.
The Adviser intends to fully manage the investments of the Portfolio by
buying and selling U.S. Government obligations, and by entering into
repurchase agreements covering such obligations, as well as by holding
selected obligations to maturity. In managing the Portfolio's investments, the
Adviser seeks to maximize the return for the Portfolio by taking advantage of
market developments and yield disparities, which may include use of the
following strategies:
(1) shortening the average maturity of the Portfolio's securities in
anticipation of a rise in interest rates so as to minimize depreciation of
principal;
(2) lengthening the average maturity of the Portfolio's securities in
anticipation of a decline in interest rates so as to maximize appreciation
of principal;
(3) selling one type of U.S. Government obligation (e.g., Treasury
bonds) and buying another (e.g., GNMA direct pass-through certificates)
when disparities arise in the relative values of each; and
(4) changing from one U.S. Government obligation to an essentially
similar U.S. Government obligation when their respective yields are
distorted due to market factors.
In order to enhance the stability of the value of the beneficial interests in
the Portfolio by reducing volatility resulting from changes in interest rates
and other market conditions, the dollar weighted average maturity of the
Portfolio's investment securities is generally three years or less. These
strategies may result in increases or decreases in the Portfolio's current
income and in the holding for the Portfolio of obligations which sell at
moderate to substantial premiums or discounts from face value. Moreover, if
the Adviser's expectations of changes in interest rates or its valuation of
the normal yield relationship between two obligations proves to be incorrect,
the Portfolio's income, net asset value and potential capital gain may be
decreased or its potential capital loss may be increased.
The Portfolio is managed to provide an income yield that is generally
higher than those offered by money market funds (which have a share price
which is more stable than the value of an investment in the Portfolio and
which have a portfolio of investments with an average maturity which is
shorter than the Portfolio's securities) with a value of an investment in the
Portfolio that is more stable than the share price of other fixed income funds
that have a longer term investment focus. Debt securities with longer
maturities than those in which the assets of the Portfolio are invested
generally tend to produce higher yields and are subject to greater market
fluctuation as a result of changes in interest rates than debt securities with
shorter maturities. At the same time, the securities in which the assets of
the Portfolio are invested tend to produce lower yields and are subject to
lower market fluctuation as a result of changes in interest rates than debt
securities with longer maturities that tend to be purchased by longer term
bond funds than the Portfolio. However, since available yields vary over time,
no specific level of income can be assured. The income derived from an
investment in the Portfolio increases or decreases in relation to the income
received by the Portfolio from its investments, which in any case is reduced
by the Portfolio's expenses.
REPURCHASE AGREEMENTS
Each of the Funds may invest in repurchase agreements collateralized by
securities in which that Fund may otherwise invest. Repurchase agreements are
agreements by which a Fund purchases a security and simultaneously commits to
resell that security to the seller (which is usually a member bank of the U.S.
Federal Reserve System or a member firm of the New York Stock Exchange (or a
subsidiary thereof)) at an agreed-upon date within a number of days (usually
not more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed-upon market rate of interest which is unrelated
to the coupon rate or maturity of the purchased security. A repurchase
agreement involves the obligation of the seller to pay the agreed upon price,
which obligation is in effect secured by the value of the underlying security,
usually U.S. Government or government agency issues. Under the 1940 Act,
repurchase agreements may be considered to be loans by the buyer. A Fund's
risk is limited to the ability of the seller to pay the agreed-upon amount on
the delivery date. If the seller defaults, the underlying security constitutes
collateral for the seller's obligation to pay although that Fund may incur
certain costs in liquidating this collateral and in certain cases may not be
permitted to liquidate this collateral. All repurchase agreements entered into
by the Funds are fully collateralized, with such collateral being marked to
market daily.
FUTURES CONTRACTS
A futures contract is an agreement between two parties for the purchase or
sale for future delivery of securities or for the payment or acceptance of a
cash settlement based upon changes in the value of the securities or of an
index of securities. A "sale" of a futures contract means the acquisition of a
contractual obligation to deliver the securities called for by the contract at
a specified price, or to make or accept the cash settlement called for by the
contract, on a specified date. A "purchase" of a futures contract means the
acquisition of a contractual obligation to acquire the securities called for
by the contract at a specified price, or to make or accept the cash settlement
called for by the contract, on a specified date. Futures contracts have been
designed by exchanges which have been designated "contract markets" by the
Commodity Futures Trading Commission ("CFTC") and must be executed through a
futures commission merchant, or brokerage firm, which is a member of the
relevant contract market. Futures contracts trade on these markets, and the
exchanges, through their clearing organizations, guarantee that the contracts
will be performed as between the clearing members of the exchange.
While futures contracts based on debt securities do provide for the
delivery and acceptance of securities, such deliveries and acceptances are
very seldom made. Generally, a futures contract is terminated by entering into
an offsetting transaction. Brokerage fees will be incurred when a Fund
purchases or sells a futures contracts. At the same time such a purchase or
sale is made, the Fund must provide cash or securities as a deposit ("initial
deposit") known as "margin." The initial deposit required will vary, but may
be as low as 1% or less of a contract's face value. Daily thereafter, the
futures contract is valued through a process known as "marking to market," and
the Fund may receive or be required to pay additional "variation margin" as
the futures contract becomes more or less valuable. At the time of delivery of
securities pursuant to such a contract, adjustments are made to recognize
differences in value arising from the delivery of securities with a different
interest rate than the specific security that provides the standard for the
contract. In some (but not many) cases, securities called for by a futures
contract may not have been issued when the contract was entered into.
A Fund may purchase or sell futures contracts to attempt to protect the
Fund from fluctuations in interest rates, or to manage the effective maturity
or duration of the Fund's portfolio in an effort to reduce potential losses or
enhance potential gain, without actually buying or selling debt securities.
For example, if interest rates were expected to increase, the Fund might enter
into futures contracts for the sale of debt securities. Such a sale would have
much the same effect as if the Fund sold bonds that it owned, or as if the
Fund sold longer-term bonds and purchased shorter-term bonds. If interest
rates did increase, the value of the Fund's debt securities would decline, but
the value of the futures contracts would increase, thereby keeping the net
asset value of the Fund from declining as much as it otherwise would have.
Similar results could be accomplished by selling bonds, or by selling bonds
with longer maturities and investing in bonds with shorter maturities.
However, by using futures contracts, the Fund avoids having to sell its
securities.
Similarly, when it is expected that interest rates may decline, a Fund
might enter into futures contracts for the purchase of debt securities. Such a
transaction would be intended to have much the same effect as if the Fund
purchased bonds, or as if the Fund sold shorter-term bonds and purchased
longer-term bonds. If interest rates did decline, the value of the futures
contracts would increase.
Although the use of futures for hedging should tend to minimize the risk
of loss due to a decline in the value of the hedged position (e.g., if a Fund
sells a futures contract to protect against losses in the debt securities held
by the Fund), at the same time the futures contracts limit any potential gain
which might result from an increase in value of a hedged position.
In addition, the ability effectively to hedge all or a portion of a Fund's
investments through transactions in futures contracts depends on the degree to
which movements in the value of the debt securities underlying such contracts
correlate with movements in the value of the Fund's securities. If the
security underlying a futures contract is different than the security being
hedged, they may not move to the same extent or in the same direction. In that
event, the Fund's hedging strategy might not be successful and the Fund could
sustain losses on these hedging transactions which would not be offset by
gains on the Fund's other investments or, alternatively, the gains on the
hedging transaction might not be sufficient to offset losses on the Fund's
other investments. It is also possible that there may be a negative
correlation between the security underlying a futures contract and the
securities being hedged, which could result in losses both on the hedging
transaction and the securities. In these and other instances, the Fund's
overall return could be less than if the hedging transactions had not been
undertaken. Similarly, even where a Fund enters into futures transactions
other than for hedging purposes, the effectiveness of its strategy may be
affected by lack of correlation between changes in the value of the futures
contracts and changes in value of the securities which the Fund would
otherwise buy and sell.
The ordinary spreads between prices in the cash and futures markets, due
to differences in the nature of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial deposit
and variation margin requirements. Rather than meeting additional variation
margin requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship between
the cash and futures markets. Second, there is the potential that the
liquidity of the futures market may be lacking. Prior to expiration, a futures
contract may be terminated only by entering into a closing purchase or sale
transaction, which requires a secondary market on the contract market on which
the futures contracts was originally entered into. While a Fund will establish
a futures position only if there appears to be a liquid secondary market
therefor, there can be no assurance that such a market will exist for any
particular futures contract at any specific time. In that event, it may not be
possible to close out a position held by the Fund, which could require the
Fund to purchase or sell the instrument underlying the futures contract or to
meet ongoing variation margin requirements. The inability to close out futures
positions also could have an adverse impact on the ability effectively to use
futures transactions for hedging or other purposes.
The liquidity of a secondary market in a futures contract may be adversely
affected by "daily price fluctuation limits" established by the exchanges,
which limit the amount of fluctuation in the price of a futures contract
during a single trading day and prohibit trading beyond such limits once they
have been reached. The trading of futures contracts also is subject to the
risk of trading halts, suspensions, exchange or clearing house equipment
failures, government intervention, insolvency of a brokerage firm or clearing
house or other disruptions of normal trading activity, which could at times
make it difficult or impossible to liquidate existing positions or to recover
excess variation margin payments.
Investments in futures contracts also entail the risk that if the
Adviser's investment judgment about the general direction of interest rates is
incorrect, the Fund's overall performance may be poorer than if any such
contract had not been entered into. For example, if a Fund hedged against the
possibility of an increase in interest rates which would adversely affect the
price of the Fund's bonds and interest rates decrease instead, part or all of
the benefit of the increased value of the Fund's bonds which were hedged will
be lost because the Fund will have offsetting losses in its futures positions.
Similarly, if a Fund purchases futures contracts expecting a decrease in
interest rates and interest rates instead increased, the Fund will have losses
in its futures positions which will increase the amount of the losses on the
securities in its portfolio which will also decline in value because of the
increase in interest rates. In addition, in such situations, if the Fund has
insufficient cash, the Fund may have to sell bonds from its investments to
meet daily variation margin requirements, possibly at a time when it may be
disadvantageous
to do so.
Each contract market on which futures contracts are traded has established
a number of limitations governing the maximum number of positions which may be
held by a trader, whether acting alone or in concert with others. The Adviser
does not believe that these trading and position limits would have an adverse
impact on a Fund's strategies involving futures.
CFTC regulations require compliance with certain limitations in order to
assure that the Fund is not deemed to be a "commodity pool" under such
regulations. In particular, CFTC regulations prohibit the Fund from purchasing
or selling futures contracts (other than for bona fide hedging transactions)
if, immediately thereafter, the sum of the amount of initial margin required
to establish the Fund's non-hedging futures positions would exceed 5% of the
Fund's net assets.
Each Fund will comply with this CFTC requirement, and each Fund currently
intends to adhere to the additional policies described below. First, an amount
of cash or cash equivalents will be maintained by each Fund in a segregated
account with the Fund's custodian so that the amount so segregated, plus the
initial margin held on deposit, will be approximately equal to the amount
necessary to satisfy the Fund's obligations under the futures contract. The
second is that a Fund will not enter into a futures contract if immediately
thereafter the amount of initial margin deposits on all the futures contracts
held by the Fund would exceed approximately 5% of the net assets of the Fund.
The third is that the aggregate market value of the futures contracts held by
a Fund not generally exceed 50% of the market value of the Fund's total assets
other than its futures contracts. For purposes of this third policy, "market
value" of a futures contract is deemed to be the amount obtained by
multiplying the number of units covered by the futures contract times the per
unit price of the securities covered by that contract.
The use of futures contracts may increase the amount of taxable income of
a Fund and may affect the amount, timing and character of a Fund's income for
tax purposes, as more fully discussed herein in the section entitled "Certain
Additional Tax Matters."
WHEN-ISSUED SECURITIES
Each of the Funds may purchase securities on a "when-issued" or on a
"forward delivery" basis. It is expected that, under normal circumstances, the
applicable Fund would take delivery of such securities. When a Fund commits to
purchase a security on a "when-issued" or on a "forward delivery" basis, it
sets up procedures consistent with Securities and Exchange Commission ("SEC")
policies. Since those policies currently require that an amount of a Fund's
assets equal to the amount of the purchase be held aside or segregated to be
used to pay for the commitment, the Fund expects always to have cash, cash
equivalents or high quality debt securities sufficient to cover any
commitments or to limit any potential risk. However, even though the Funds do
not intend to make such purchases for speculative purposes and intend to
adhere to the provisions of SEC policies, purchases of securities on such
bases may involve more risk than other types of purchases. For example, a Fund
may have to sell assets which have been set aside in order to meet
redemptions. Also, if the Adviser determines it is advisable as a matter of
investment strategy to sell the "when-issued" or "forward delivery"
securities, a Fund would be required to meet its obligations from the then
available cash flow or the sale of securities, or, although it would not
normally expect to do so, from the sale of the "when-issued" or "forward
delivery" securities themselves (which may have a value greater or less than
the Fund's payment obligation).
SECURITIES OF NON-U.S. ISSUERS
The Intermediate Income Fund may invest in securities of non-U.S. issuers.
Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in U.S. investments. For example, the value of such securities
fluctuates based on the relative strength of the U.S. dollar. In addition,
there is generally less publicly available information about non-U.S. issuers,
particularly those not subject to the disclosure and reporting requirements of
the U.S. securities laws. Non-U.S. issuers are generally not bound by uniform
accounting, auditing and financial reporting requirements comparable to those
applicable to U.S. issuers. Investments in securities of non-U.S. issuers also
involve the risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the removal
of funds or other assets of a Fund, political or financial instability or
diplomatic and other developments which would affect such investments.
Further, economies of other countries or areas of the world may differ
favorably or unfavorably from the economy of the U.S.
It is anticipated that in most cases the best available market for
securities of non-U.S. issuers would be on exchanges or in over-the-counter
markets located outside the U.S. Non-U.S. securities markets, while growing in
volume and sophistication, are generally not as developed as those in the
U.S., and securities of some non-U.S. issuers (particularly those located in
developing countries) may be less liquid and more volatile than securities of
comparable U.S. companies. Non-U.S. security trading practices, including
those involving securities settlement where a Fund's assets may be released
prior to receipt of payments, may expose the Fund to increased risk in the
event of a failed trade or the insolvency of a non-U.S. broker-dealer. In
addition, non-U.S. brokerage commissions are generally higher than commissions
on securities traded in the U.S. and may be non-negotiable. In general, there
is less overall governmental supervision and regulation of non-U.S. securities
exchanges, brokers and listed companies than in the U.S.
It is the Trust's policy to invest not more than 5% of the Intermediate
Income Fund's assets in closed-end investment companies which primarily hold
foreign securities. Investments in closed-end investment companies which
primarily hold securities of non-U.S. issuers may entail the risk that the
market value of such investments may be substantially less than their net
asset value and that there would be duplication of investment management and
other fees and expenses. The Trust may invest a portion of the Intermediate
Income Fund's assets in foreign securities that impose restrictions on
transfer within the United States or to United States persons. Although
securities subject to such transfer restrictions may be marketable abroad,
they may be less liquid than foreign securities of the same class that are not
subject to such restrictions.
The Trust's policy is not to invest more than 50% of the Intermediate
Income Fund's assets in the securities of foreign issuers. It is the intention
of the Trust to limit the Intermediate Income Fund's investments in non-U.S.
obligations to securities rated A or better and securities which, in the
opinion of the Adviser, are of comparable quality to such rated securities.
CURRENCY EXCHANGE TRANSACTIONS
Because the Intermediate Income Fund may buy and sell securities
denominated in currencies other than the U.S. dollar, and receive interest and
sale proceeds in currencies other than the U.S. dollar, that Fund may enter
into currency exchange transactions to convert U.S. currency to non-U.S.
currency and non-U.S. currency to U.S. currency, as well as convert one non-
U.S. currency to another non-U.S. currency. The Intermediate Income Fund
either enters into these transactions on a spot (i.e., cash) basis at the spot
rate prevailing in the currency exchange markets, or uses forward contracts to
purchase or sell non-U.S. currencies. The Intermediate Income Fund may also
enter into currency hedging transactions in an attempt to protect the value of
its assets as measured in U.S. dollars from unfavorable changes in currency
exchange rates and control regulations. (Although the Intermediate Income
Fund's assets are valued daily in terms of U.S. dollars, the Trust does not
intend to convert the Fund's holdings of non-U.S. currencies into U.S. dollars
on a daily basis.) It is not intended that the Intermediate Income Fund
speculate in currency exchange rates or forward contracts.
The Intermediate Income Fund may convert currency on a spot basis from
time to time, and investors should be aware of the costs of currency
conversion. Although currency exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a currency at one rate, while offering a
lesser rate of exchange should the Intermediate Income Fund desire to resell
that currency to the dealer.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
fees or commissions are charged at any stage for trades.
When the Intermediate Income Fund enters into a contract for the purchase
or sale of a security denominated in a non-U.S. currency, it may desire to
"lock in" the U.S. dollar price of the security. By entering into a forward
contract for the purchase or sale, for a fixed amount of U.S. dollars, of the
amount of non-U.S. currency involved in the underlying security transaction,
the Intermediate Income Fund may be able to protect against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar
and the non-U.S. currency during the period between the date the security is
purchased or sold and the date on which payment is made or received.
When the Adviser believes that the currency of a particular country may
suffer a substantial decline against the U.S. dollar, the Intermediate Income
Fund may enter into a forward contract to sell, for a fixed amount of U.S.
dollars, the amount of non-U.S. currency approximating the value of some or
all of its respective securities denominated in such non-U.S. currency. The
precise matching of the forward contract amounts and the value of the
securities involved is not generally possible since the future value of such
securities in non-U.S. currencies changes as a consequence of market movements
in the value of those securities between the date the forward contract is
entered into and the date it matures. The projection of a short-term hedging
strategy is highly uncertain. The Intermediate Income Fund does not enter into
such forward contracts or maintain a net exposure to such contracts where the
consummation of the contracts obligates the Fund to deliver an amount of non-
U.S. currency in excess of the value of the Fund's securities or other assets
denominated in that currency. Under normal circumstances, consideration of the
prospect for currency parities will be incorporated in the investment
decisions made with regard to overall diversification strategies. However, the
Adviser believes that it is important to have the flexibility to enter into
such forward contracts when it determines that the best interests of the
Intermediate Income Fund will be served.
The Intermediate Income Fund generally would not enter into a forward
contract with a term greater than one year. At the maturity of a forward
contract, the Intermediate Income Fund will either sell the security and make
delivery of the non-U.S. currency, or retain the security and terminate its
contractual obligation to deliver the non-U.S. currency by purchasing an
"offsetting" contract with the same currency trader obligating it to purchase,
on the same maturity date, the same amount of the non-U.S. currency. If the
Fund retains the security and engages in an offsetting transaction, the Fund
will incur a gain or a loss (as described below) to the extent that there has
been movement in forward contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
non-U.S. currency. Should forward prices decline during the period between the
date the Fund enters into a forward contract for the sale of the non-U.S.
currency and the date it enters into an offsetting contract for the purchase
of such currency, the Fund will realize a gain to the extent the selling price
of the currency exceeds the purchase price of the currency. Should forward
prices increase, the Fund will suffer a loss to the extent that the purchase
price of the currency exceeds the selling price of the currency.
It is impossible to forecast with precision the market value of the
Intermediate Income Fund's securities at the expiration of a forward contract.
Accordingly, it may be necessary for the Intermediate Income Fund to purchase
additional non-U.S. currency on the spot market if the market value of the
security is less than the amount of non-U.S. currency the Fund is obligated to
deliver and if a decision is made to sell the security and make delivery of
such currency. Conversely, it may be necessary to sell on the spot market some
of the non-U.S. currency received upon the sale of the security if its market
value exceeds the amount of such currency the Fund is obligated to deliver.
The Intermediate Income Fund may also purchase put options on a non-U.S.
currency in order to protect against currency rate fluctuations. If the Fund
purchases a put option on a non-U.S. currency and the value of the U.S.
currency declines, the Fund will have the right to sell the non-U.S. currency
for a fixed amount in U.S. dollars and will thereby offset, in whole or in
part, the adverse effect on the Fund which otherwise would have resulted.
Conversely, where a rise in the U.S. dollar value of another currency is
projected, and where the Fund anticipates investing in securities traded in
such currency, the Fund may purchase call options on the non-U.S. currency.
The purchase of such options could offset, at least partially, the effects
of adverse movements in exchange rates. However, the benefit to the
Intermediate Income Fund from purchases of non-U.S. currency options will be
reduced by the amount of the premium and related transaction costs. In
addition, where currency exchange rates do not move in the direction or to the
extent anticipated, the Intermediate Income Fund could sustain losses on
transactions in non-U.S. currency options which would require it to forgo a
portion or all of the benefits of advantageous changes in such rates.
The Intermediate Income Fund may write options on non-U.S. currencies for
hedging purposes or otherwise to achieve its investment objectives. For
example, where the Intermediate Income Fund anticipates a decline in the value
of the U.S. dollar value of a non-U.S. security due to adverse fluctuations in
exchange rates it could, instead of purchasing a put option, write a call
option on the relevant currency. If the expected decline occurs, the option
will most likely not be exercised, and the diminution in value of the security
held by the Fund will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the cost of a non-U.S. security to be acquired because
of an increase in the U.S. dollar value of the currency in which the
underlying security is primarily traded, the Intermediate Income Fund could
write a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium. However, the writing of a currency
option will constitute only a partial hedge up to the amount of the premium,
and only if rates move in the expected direction. If this does not occur, the
option may be exercised and the Fund would be required to purchase or sell the
underlying currency at a loss which may not be offset by the amount of the
premium. Through the writing of options on currencies, the Intermediate Income
Fund also may be required to forgo all or a portion of the benefits which
might otherwise have been obtained from favorable movements in exchange rates.
Put and call options on non-U.S. currencies written by the Intermediate
Income Fund will be covered by segregation of cash, short-term money market
instruments or high quality debt securities in an account with the custodian
in an amount sufficient to discharge the Fund's obligations with respect to
the option, by acquisition of the non-U.S. currency or of a right to acquire
such currency (in the case of a call option) or the acquisition of a right to
dispose of the currency (in the case of a put option), or in such other manner
as may be in accordance with the requirements of any exchange on which, or the
counterparty with which, the option is traded and applicable laws and
regulations.
The Intermediate Income Fund's dealings in non-U.S. currency contracts are
limited to the transactions described above. As stated above, the Government
Income Fund will not deal in such contracts. Of course, the Intermediate
Income Fund is not required to enter into such transactions and does not do so
unless deemed appropriate by the Adviser. It should also be realized that
these methods of protecting the value of the Intermediate Income Fund's
securities against a decline in the value of a currency do not eliminate
fluctuations in the underlying prices of the securities. Additionally,
although such contracts tend to minimize the risk of loss due to a decline in
the value of the hedged currency, they also tend to limit any potential gain
which might result should the value of such currency increase.
The Intermediate Income Fund has established procedures consistent with
policies of the SEC concerning forward contracts. Since those policies
currently recommend that an amount of a fund's assets equal to the amount of
the purchase be held aside or segregated to be used to pay for the commitment,
the Intermediate Income Fund is expected always to have cash, cash equivalents
or high quality debt securities available sufficient to cover any commitments
under these contracts or to limit any potential risk.
SHORT SALES "AGAINST THE BOX"
In a short sale, a Fund sells a borrowed security and has a corresponding
obligation to the lender to return the identical security. Each of the Funds,
in accordance with applicable investment restrictions, may engage in short
sales only if at the time of the short sale it owns or has the right to
obtain, at no additional cost, an equal amount of the security being sold
short. This investment technique is known as a short sale "against the box."
In a short sale, the seller does not immediately deliver the securities
sold and is said to have a short position in those securities until delivery
occurs. If a Fund engages in a short sale, the collateral for the short
position is maintained for the Fund by the custodian or qualified sub-
custodian. While the short sale is open, an amount of securities equal in kind
and amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities are maintained in a segregated
account for the Fund. These securities constitute the Fund's long position.
The Funds do not engage in short sales against the box for investment
purposes. A Fund may, however, make a short sale against the box as a hedge,
when it believes that the price of a security may decline, causing a decline
in the value of a security owned by the Fund (or a security convertible or
exchangeable for such security). In such case, any future losses in the Fund's
long position should be reduced by a gain in the short position. Conversely,
any gain in the long position should be reduced by a loss in the short
position. The extent to which such gains or losses are reduced depends upon
the amount of the security sold short relative to the amount the Fund owns.
There are certain additional transaction costs associated with short sales
against the box, but the Funds endeavor to offset these costs with the income
from the investment of the cash proceeds of short sales.
The Adviser does not expect that more than 40% of each Fund's total assets
would be involved in short sales against the box. The Adviser does not
currently intend to engage in such sales.
CORPORATE ASSET-BACKED SECURITIES
As described in the Prospectus, certain of the Intermediate Income Fund's
assets may be invested in corporate asset-backed securities. These securities,
issued by trusts and special purpose corporations, are backed by a pool of
assets, including but not limited to credit card and automobile loan
receivables, representing the obligations of a number of different parties.
Corporate asset-backed securities present certain risks. For instance, in
the case of credit card receivables, these securities may not have the benefit
of any security interest in the related collateral. Credit card receivables
are generally unsecured and the debtors are entitled to the protection of a
number of state and federal consumer credit laws, many of which give such
debtors the right to set off certain amounts owed on the credit cards, thereby
reducing the balance due. Most issuers of automobile receivables permit the
servicers to retain possession of the underlying obligations. If the servicer
were to sell these obligations to another party, there is a risk that the
purchaser would acquire an interest superior to that of the holders of the
related automobile receivables. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have a
proper security interest in all of the assets backing such receivables.
Therefore, there is the possibility that recoveries on repossessed collateral
may not, in some cases, be available to support payments on these securities.
The underlying assets (e.g., loans) are also subject to prepayments which
shorten the securities, weighted average life and may lower their return.
Corporate asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, the
securities may contain elements of credit support which fall into two
categories: (i) liquidity protection and (ii) protection against losses
resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of
payments on the underlying pool occurs in a timely fashion. Protection against
losses resulting from ultimate default ensures payment through insurance
policies or letters of credit obtained by the issuer or sponsor from third
parties. No additional or separate fees will be paid for credit support. The
degree of credit support provided for each issue is generally based on
historical information respecting the level of credit risk associated with the
underlying assets. Delinquency or loss in excess of that anticipated or
failure of the credit support could adversely affect the return on an
investment in such a security. It is intended that no more than 5% of the
Intermediate Income Fund's total assets would be invested in corporate asset-
backed securities.
COLLATERALIZED MORTGAGE OBLIGATIONS
As described in the Prospectus, a portion of each Fund's assets may be
invested in collateralized mortgage obligations ("CMOs"), which are debt
obligations collateralized by mortgage loans or mortgage pass-through
securities; provided, however, that, in the case of the Government Income
Fund, the CMOs are backed as to the timely payment of interest and principal
by the full faith and credit of the U.S. Government. Typically, CMOs are
collateralized by certificates issued by the Government National Mortgage
Association, the Federal National Mortgage Association or the Federal Home
Loan Mortgage Corporation but also may be collateralized by whole loans or
private mortgage pass-through securities (such collateral collectively
hereinafter referred to as "Mortgage Assets"). Each of the Funds may also
invest a portion of the their assets in multi-class pass-through securities
which are interests in a trust composed of Mortgage Assets; provided, however,
that, in the case of the Government Income Fund, the Mortgage Assets are
backed as to the timely payment of interest and principal by the full faith
and credit of the U.S. Government. CMOs (which include multi-class pass-
through securities) may be issued by agencies, authorities or
instrumentalities of the U.S. Government or by private originators of or
investors in mortgage loans, including savings and loan associations, mortgage
banks, commercial banks, investment banks and special purpose subsidiaries of
the foregoing. Payments of principal of and interest on the Mortgage Assets,
and any reinvestment income thereon, provide the funds to pay debt service on
the CMOs or make scheduled distributions on the multi-class pass-through
securities. In a CMO, a series of bonds or certificates is usually issued in
multiple classes with different maturities. Each class of a CMO, often
referred to as a "tranche," is issued at a specific fixed or floating coupon
rate and has a stated maturity or final distribution date. Principal
prepayments on the Mortgage Assets may cause the CMOs to be retired
substantially earlier than their stated maturities or final distribution
dates, resulting in a loss of all or part of the premium if any has been paid.
Interest is paid or accrues on all classes of the CMOs on a monthly, quarterly
or semiannual basis. The principal of and interest on the Mortgage Assets may
be allocated among the several classes of a series of a CMO in various ways.
In a common structure, payments of principal, including any principal
prepayments, on the Mortgage Assets are applied to the classes of the series
of a CMO in the order of their respective stated maturities or final
distribution dates, so that no payment of principal will be made on any class
of CMOs until all other classes having an earlier stated maturity or final
distribution date have been paid in full.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to
generate income, each of the Funds may lend its securities to broker-dealers
and other institutional borrowers. Such loans will usually be made only to
member banks of the U.S. Federal Reserve System and to member firms of the New
York Stock Exchange (and subsidiaries thereof). Loans of securities would be
secured continuously by collateral in cash, cash equivalents, or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested
in high quality short-term instruments. Either party has the right to call a
loan at any time on customary industry settlement notice (which will not
usually exceed three business days). During the existence of a loan, a Fund
would continue to receive the equivalent of the interest or dividends paid by
the issuer on the securities loaned and with respect to cash collateral would
also receive compensation based on investment of the collateral (subject to a
rebate payable to the borrower). Where the borrower provides a Fund with
collateral consisting of U.S. Treasury obligations, the borrower is also
obligated to pay the Fund a fee for use of the borrowed securities. The Fund
would not, however, have the right to vote any securities having voting rights
during the existence of the loan, but would call the loan in anticipation of
an important vote to be taken among holders of the securities or of the giving
or withholding of their consent on a material matter affecting the investment.
As with other extensions of credit, there are risks of delay in recovery or
even loss of rights in the collateral should the borrower fail financially.
However, the loans would be made only to entities deemed by the Adviser to be
of good standing, and when, in the judgment of the Adviser, the consideration
which can be earned currently from loans of this type justifies the attendant
risk. In addition, a Fund could suffer a loss if the borrower terminates the
loan and the Fund is forced to liquidate investments in order to return the
cash collateral to the buyer. If the Adviser determines to make loans, it is
not intended that the value of the securities loaned by a Fund would exceed
30% of the value of its total assets.
RULE 144A SECURITIES
Each of the Funds may purchase securities that are not registered ("Rule
144A securities") under the Securities Act of 1933 (the "Securities Act"), but
can be offered and sold to "qualified institutional buyers" under Rule 144A
under the Securities Act. However, each Fund will not invest more than 15% of
its net assets in illiquid investments, which include securities for which
there is no readily available market, securities subject to contractual
restrictions on resale and Rule 144A securities, unless the Trustees of the
Trust determine, based on the trading markets for the specific Rule 144A
security, that it is liquid. The Trustees may adopt guidelines and delegate to
the Adviser the daily function of determining and monitoring liquidity of Rule
144A securities. The Trustees, however, retain oversight and are ultimately
responsible for the determinations.
Since it is not possible to predict with assurance exactly how the market
for Rule 144A securities will develop, the Trustees will carefully monitor
each Fund's investments in Rule 144A securities, focusing on such factors,
among others, as valuation, liquidity and availability of information. The
liquidity of investments in Rule 144A securities could be impaired if trading
in Rule 144A securities does not develop or if qualified institutional buyers
become for a time uninterested in purchasing Rule 144A securities.
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
The Trust, on behalf of the Funds, and the Portfolio Trust, on behalf of
the Portfolio, have each adopted the following policies which may not be
changed with respect to either Fund or the Portfolio without approval by
holders of a majority of the outstanding voting securities of that Fund or
Portfolio, which as used in this Statement of Additional Information means the
vote of the lesser of (i) 67% or more of the outstanding voting securities of
the respective Fund or Portfolio present at a meeting at which the holders of
more than 50% of the outstanding voting securities of the Fund or Portfolio
are present or represented by proxy, or (ii) more than 50% of the outstanding
voting securities of the respective Fund or Portfolio. The term "voting
securities" as used in this paragraph has the same meaning as in the 1940 Act.
Neither of the Funds nor the Portfolio may:
(1) Borrow money or pledge, mortgage or hypothecate assets of the Fund
or Portfolio, 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 or the Portfolio's net assets, including the
amount borrowed, and may pledge, mortgage or hypothecate not more than 1/3
of such assets to secure such borrowings (it is intended that money would
be borrowed for the Fund or Portfolio only from banks and only to
accommodate requests for the repurchase of shares of the Fund or
beneficial interests in the Portfolio while effecting an orderly
liquidation of portfolio securities), provided that collateral
arrangements with respect to futures contracts, including deposits of
initial and variation margin, are not considered a pledge of assets for
purposes of this restriction; for additional related restrictions, see
clause (i) under the caption "Non-Fundamental Restrictions" hereafter.
(2) Purchase any security or evidence of interest therein on margin,
except that such short-term credit may be obtained for the Fund or
Portfolio 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 or Portfolio in connection with the purchase, ownership,
holding or sale of futures contracts.
(3) Write, purchase or sell any put or call option or any combination
thereof, provided that this shall not prevent (i) the writing, purchasing
or selling of puts, calls or combinations thereof with respect to U.S.
Government securities or with respect to futures contracts, or (ii) the
writing, purchase, ownership, holding or sale of futures contracts.
(4) Underwrite securities issued by other persons except insofar as
either the Trust or the Portfolio Trust 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")).
(5) Make loans to other persons except (a) through the lending of the
Fund's or Portfolio's securities and provided that any such loans not
exceed 30% of a Fund's or Portfolio's total assets, as the case may be
(taken at market value), (b) through the use of repurchase agreements or
the purchase of short-term obligations (and, in the case of the
Intermediate Income Fund, provided that not more than 15% of the total
assets of the Fund, as the case may be, will be invested in repurchase
agreements maturing in more than seven days), or (c) by purchasing a
portion of an issue of debt securities of types commonly distributed
privately to financial institutions, for which purposes the purchase of
short-term commercial paper or a portion of an issue of debt securities
which are part of an issue to the public shall not be considered the
making of a loan.
(6) 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 and Portfolio Trust reserve the freedom of action to
hold and to sell real estate acquired as a result of the ownership of
securities by the Fund or Portfolio).
(7) With respect to the Government Income Fund or the Portfolio,
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 or Portfolio, except that all of the assets of the
Government Income Fund may be invested in a Qualifying Portfolio.
(8) With respect to 75% of the assets of the Intermediate Income 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.
(9) With respect to the Government Income Fund or the Portfolio,
purchase securities of any issuer if such purchase at the time thereof
would cause more than 5% of the assets of the Fund or Portfolio (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 Government Income Fund may be invested in a Qualifying Portfolio.
(10) With respect to 75% of the assets of the Intermediate Income
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.
(11) Make short sales of securities or maintain a short position,
unless at all times when a short position is open the Fund or Portfolio
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 or Portfolio
(taken at market value), is held as collateral for such sales at any one
time.
(12) Concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of the investment objective of
the Fund or Portfolio 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.
(13) 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.
The Trust, with respect to the Government Income Fund, and the Portfolio
Trust, with respect to the Portfolio, have each also adopted a policy which is
fundamental and which provides that all of the assets of the Government Income
Fund or Portfolio will be invested in obligations that are backed by the full
faith and credit of the U.S. Government except that all of the assets of the
Government Income Fund may be invested in a Qualifying Portfolio all of whose
assets will be invested in obligations that are backed by the full faith and
credit of the U.S. Government. This policy is not intended to prohibit the use
of futures contracts on fixed income securities by the Government Income Fund.
Investment Restriction (11) above applies only to short sales of or short
positions in securities, and does not prevent the writing, purchase,
ownership, holding or sale of futures contracts.
NON-FUNDAMENTAL RESTRICTIONS
The Trust, on behalf of each Fund, and the Portfolio Trust, on behalf of
the Portfolio, will not, as a matter of operating policy:
(i) borrow money for any purpose in excess of 10% of the total assets
of the Fund or Portfolio (taken at cost) (moreover, the Trust or Portfolio
Trust will not purchase any securities for the Fund or Portfolio at any
time at which borrowings exceed 5% of the total assets of the Fund or
Portfolio, as the case may be (taken at market value)),
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10%
of the net assets of the Fund or Portfolio (taken at market value),
provided that collateral arrangements with respect to futures contracts,
including deposits of initial and variation margin, are not considered a
pledge of assets for purposes of this restriction,
(iii) sell any security which the Fund or Portfolio does not own
unless by virtue of the ownership of other securities there is at the time
of sale a right to obtain securities, without payment of further
consideration, equivalent in kind and amount to the securities sold and
provided that if such right is conditional the sale is made upon the same
conditions,
(iv) invest for the purpose of exercising control or management,
except that all of the assets of the Fund may be invested in a Qualifying
Portfolio,
(v) purchase securities issued by any registered investment company,
except that all of the assets of the Fund may be invested in a Qualifying
Portfolio and except by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchase other than the
customary broker's commission, or except when such purchase, though not
made in the open market, is part of a plan of merger or consolidation;
provided, however, that the Trust, on behalf of the Fund, and the
Portfolio Trust, on behalf of the Portfolio, will not purchase the
securities of any registered investment company (other than a Qualifying
Portfolio in which all the assets of the Fund are invested) if such
purchase at the time thereof would cause more than 10% of the total assets
of the Fund or Portfolio (taken in each case at the greater of cost or
market value) to be invested in the securities of such issuers or would
cause more than 3% of the outstanding voting securities of any such issuer
to be held for the Fund or Portfolio (the Portfolio Trust, on behalf of
the Portfolio, shall not purchase securities issued by any open-end
investment company),
(vi) knowingly invest in securities which are subject to legal or
contractual restrictions on resale (other than repurchase agreements
maturing in not more than seven days) if, as a result thereof, more than
15% of the Fund's or Portfolio's net assets (taken at market value) would
be so invested (including repurchase agreements maturing in more than
seven days),
(vii) purchase securities of any issuer if such purchase at the time
thereof would cause the Fund or Portfolio to hold more than 10% of any
class of securities of such issuer, for which purposes all indebtedness of
an issuer shall be deemed a single class and all preferred stock of an
issuer shall be deemed a single class, except that all of the assets of
the Fund may be invested in a Qualifying Portfolio and except that Futures
Contracts shall not be subject to this restriction,
(viii) invest more than 5% of the assets of the Fund or Portfolio in
companies which, including predecessors, have a record of less than three
years' continuous operation, except that all of the assets of the Fund may
be invested in a Qualifying Portfolio, or
(ix) purchase or retain any securities issued by an issuer any of
whose officers, directors, trustees or security holders is an officer or
Trustee of the Trust or of the Portfolio Trust, or is an officer or
director of the Adviser, if after the purchase of the securities of such
issuer one or more of such persons owns beneficially more than 1/2 of 1%
of the shares or securities, or both, all taken at market value, of such
issuer, and such persons owning more than 1/2 of 1% of such shares or
securities together own beneficially more than 5% of such shares or
securities, or both, all taken at market value.
These policies are not fundamental and may be changed by the Trust with
respect to a Fund or the Portfolio Trust with respect to the Portfolio without
approval of its shareholders (or holders of beneficial interests).
PERCENTAGE AND RATING RESTRICTIONS
If a percentage restriction on investment or utilization of assets set
forth above or referred to in the Prospectus is adhered to at the time an
investment is made or assets are so utilized, a later change in percentage
resulting from changes in the value of the securities held for a Fund is not
considered a violation of policy.
3. PERFORMANCE INFORMATION
A total rate of return quotation for a Fund is calculated for any period
by (a) dividing (i) the sum of the net asset value per share on the last day
of the period and the net asset value per share on the last day of the period
of shares purchasable with dividends and capital gains distributions declared
during such period with respect to a share held at the beginning of such
period and with respect to shares purchased with such dividends and capital
gains distributions, by (ii) the public offering price per share on the first
day of such period, and (b) subtracting 1 from the result. Any annualized
total rate of return quotation is calculated by (x) adding 1 to the period
total rate of return quotation calculated above, (y) raising such sum to a
power which is equal to 365 divided by the number of days in such period, and
(z) subtracting 1 from the result.
Any current yield quotation for a Fund consists of an annualized
historical yield, carried at least to the nearest hundredth of one percent,
based on a 30 calendar day or one month period and is calculated by (a)
raising to the sixth power the sum of 1 plus the quotient obtained by dividing
the Fund's net investment income earned during the period by the product of
the average daily number of shares outstanding during the period that were
entitled to receive dividends and the maximum public offering price per share
on the last day of the period, (b) subtracting 1 from the result, and (c)
multiplying the result by 2.
Any tax equivalent yield quotation of a Fund is calculated as follows: If
the entire current yield quotation for such period is state tax-exempt, the
tax equivalent yield would be the current yield quotation divided by 1 minus a
stated income tax rate or rates. If a portion of the current yield quotation
is not state tax-exempt, the tax equivalent yield would be the sum of (a) that
portion of the yield which is state tax-exempt divided by 1 minus a stated
income tax rate or rates and (b) the portion of the yield which is not state
tax-exempt.
Set forth below is total rate of return information for shares of the
Government Income Fund and the Intermediate Income Fund for the periods
indicated, assuming that dividends and capital gains distributions, if any,
were reinvested.
REDEEMABLE VALUE
OF A HYPOTHETICAL
ANNUALIZED $1,000 INVESTMENT
TOTAL AT THE END
GOVERNMENT INCOME FUND RATE OF RETURN OF THE PERIOD
Ten years ended December 31, 1997 6.80% $1,930
Five years ended December 31, 1997 4.59% $1,251
One year ended December 31, 1997 4.52% $1,045
INTERMEDIATE INCOME FUND
June 25, 1993 (commencement of operations)
to December 31, 1997 5.64% $1,281
One year ended December 31, 1997 8.87% $1,089
The annualized yields of shares of the Government Income Fund and the
Intermediate Income Fund for the 30-day period ended December 31, 1997 were,
respectively, 5.03% and 5.24%.
Comparative performance information may be used from time to time in
advertising shares of the Funds, including data from Lipper Analytical
Services, Inc. and other industry sources and publications. From time to time
a Fund may compare its performance against inflation with the performance of
other instruments against inflation, such as FDIC-insured bank money market
accounts. In addition, advertising for the Funds may indicate that investors
should consider diversifying their investment portfolios in order to seek
protection of the value of their assets against inflation. From time to time,
advertising materials for the Funds may refer to or discuss current or past
economic or financial conditions, developments and events. The Intermediate
Income Fund's advertising materials also may refer to the integration of the
world's securities markets, discuss the investment opportunities available
worldwide and mention the increasing importance of an investment strategy
including non-U.S. investments.
4. DETERMINATION OF NET ASSET VALUE; VALUATION OF SECURITIES;
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The net asset value of each share of a Fund is determined each day during
which the New York Stock Exchange (the "Exchange") is open for trading. As of
the date of this Statement of Additional Information, the Exchange is open for
trading every weekday except for the following holidays (or the days on which
they are observed): New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. This determination is made once each day as of the close of
regular trading on the Exchange (normally 4:00 p.m. Eastern time) by adding
the market value of all securities and other assets of a Fund (including in
the case of Government Income Fund its interest in the Portfolio), then
subtracting the liabilities of a Fund, and then dividing the result by the
number of outstanding shares of the Fund. The net asset value per share is
effective for orders received and accepted by the Distributor prior to its
calculation.
The value of the Portfolio's net assets (i.e., the value of its securities
and other assets less its liabilities, including expenses payable or accrued)
is determined at the same time and on the same days as the net asset value per
share of the Government Income Fund is determined. The net asset value of the
Government Income Fund's investment in the Portfolio is equal to the Fund's
pro rata share of the net assets of the Portfolio.
Bonds and other fixed income securities (other than short-term
obligations) held for each Fund are valued on the basis of valuations
furnished by a pricing service, use of which has been approved by the Board of
Trustees of the Trust. In making such valuations, the pricing service utilizes
both dealer-supplied valuations and electronic data processing techniques
which take into account appropriate factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type
of issue, trading characteristics and other market data, without exclusive
reliance upon quoted prices or exchange or over-the-counter prices, since such
valuations are believed to reflect more accurately the fair value of such
securities. Short-term obligations (maturing in 60 days or less) are valued at
amortized cost, which constitutes fair value as determined by the Board of
Trustees of the Trust. Futures Contracts are normally valued at the settlement
price on the exchange on which they are traded. Securities for which there are
no such valuations are valued at fair value as determined in good faith by or
at the direction of the Board of Trustees of the Trust.
Trading in securities on most non-U.S. exchanges and over-the-counter
markets is normally completed before the close of regular trading on the
Exchange and may also take place on days on which the Exchange is closed. If
events materially affecting the value of non-U.S. securities occur between the
time when the exchange on which they are traded closes and the time when a
Fund's net asset value is calculated, such securities may be valued at fair
value in accordance with procedures established by and under the general
supervision of the Board of Trustees of the Trust.
Interest income on long-term obligations held for a Fund is determined on
the basis of interest accrued plus amortization of "original issue discount"
(generally, the difference between issue price and stated redemption price at
maturity) and premiums (generally, the excess of purchase price over stated
redemption price at maturity). Interest income on short-term obligations is
determined on the basis of interest accrued less amortization of any premium.
Subject to compliance with applicable regulations, the Trust and the
Portfolio Trust have each reserved the right to pay the redemption or
repurchase price of shares of the Funds or of beneficial interests in the
Portfolio, either totally or partially, by a distribution in kind of readily
marketable securities (instead of cash). The securities so distributed would
be valued at the same amount as that assigned to them in calculating the net
asset value for the shares or beneficial interests being sold. If a holder of
shares or beneficial interests received a distribution in kind, such holder
could incur brokerage or other charges in converting the securities to cash.
The Trust or the Portfolio Trust may suspend the right of redemption or
postpone the date of payment for shares of a Fund or beneficial interests in
the Portfolio more than seven days during any period when (a) trading in the
markets the Fund or the Portfolio normally utilizes is restricted, or an
emergency, as defined by the rules and regulations of the SEC exists making
disposal of a Fund's or Portfolio's investments or determination of its net
asset value not reasonably practicable; (b) the Exchange is closed (other than
customary weekend and holiday closings); or (c) the SEC has by order permitted
such suspension.
5. MANAGEMENT
The Trustees and officers of the Trusts and the Portfolio Trust, their
ages and their principal occupations during the past five years are set forth
below. Their titles may have varied during that period. Asterisks indicate
that those Trustees and officers are "interested persons" (as defined in the
1940 Act) of the Trust or the Portfolio Trust. Unless otherwise indicated
below, the address of each Trustee and officer is 6 St. James Avenue, Boston,
Massachusetts. The address of the Portfolio Trust is Elizabethan Square,
George Town, Grand Cayman, British West Indies.
TRUSTEES OF THE TRUST
PHILIP W. COOLIDGE*; 46 -- President of the Trust and the Portfolio Trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.
RILEY C. GILLEY; 71 -- Vice President and General Counsel, Corporate Property
Investors (November 1988 to December 1991); Partner, Breed, Abbott & Morgan
(Attorneys) (retired, December 1987). His address is 4041 Gulf Shore Boulevard
North, Naples, Florida.
DIANA R. HARRINGTON; 57 -- Professor, Babson College (since September 1993);
Visiting Professor, Kellogg Graduate School of Management, Northwestern
University (September 1992 to September 1993); Professor, Darden Graduate
School of Business, University of Virginia (September 1978 to September 1993);
Trustee, The Highland Family of Funds (since March 1997). Her address is 120
Goulding Street, Holliston, Massachusetts.
SUSAN B. KERLEY; 46 -- President, Global Research Associates, Inc. (Investment
Research) (since August 1990); Manager, Rockefeller & Co. (March 1988 to July
1990); Trustee, Mainstay Institutional Funds (since December 1990). Her
address is P.O. Box 9572, New Haven, Connecticut.
C. OSCAR MORONG, JR.; 62 -- Chairman of the Board of Trustees of the Trust;
Managing Director, Morong Capital Management (since February 1993); Senior
Vice President and Investment Manager, CREF Investments, Teachers Insurance &
Annuity Association (retired January 1993); Director, Indonesia Fund;
Director, MAS Funds. His address is 1385 Outlook Drive West, Mountainside, New
Jersey.
E. KIRBY WARREN; 63 -- Professor of Management, Graduate School of Business,
Columbia University (since 1987); Samuel Bronfman Professor of Democratic
Business Enterprise (1978 to 1987). His address is Columbia University,
Graduate School of Business, 725 Uris Hall, New York, New York.
WILLIAM S. WOODS, JR.; 77 -- Vice President-Investments, Sun Company, Inc.
(retired, April 1984). His address is 35 Colwick Road, Cherry Hill, New
Jersey.
TRUSTEES OF THE PORTFOLIO TRUST
ELLIOTT J. BERV; 54 -- Chairman and Director, Catalyst, Inc. (Management
Consultants)(since June 1992); President, Chief Operating Officer and
Director, Deven International, Inc. (International Consultants)(June 1991 to
June 1992); President and Director, Elliott J. Berv & Associates (Management
Consultants)(since May 1984). His address is 15 Stornoway Drive, Cumberland
Foreside, Maine.
PHILIP W. COOLIDGE*; 46 -- President of the Trust and the Portfolio Trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.
MARK T. FINN; 54 -- President and Director, Delta Financial, Inc. (since June
1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd.
(Commodity Trading Advisory Firm)(since April 1990); Director, Vantage
Consulting Group, Inc. (since October 1988). His address is 3500 Pacific
Avenue, P.O. Box 539, Virginia Beach, Virginia.
C. OSCAR MORONG, JR.; 62 -- Chairman of the Board of Trustees of the Trust;
Managing Director, Morong Capital Management (since February 1993); Senior
Vice President and Investment Manager, CREF Investments, Teachers Insurance &
Annuity Association (retired January 1993); Director, Indonesia Fund;
Director, MAS Funds. His address is 1385 Outlook Drive West, Mountainside, New
Jersey.
WALTER E. ROBB, III; 71 -- President, Benchmark Consulting Group, Inc. (since
1991); Principal, Robb Associates (corporate financial advisers) (since 1978);
President, Benchmark Advisors, Inc. (Corporate Financial Advisors)(since
1989); Trustee of certain registered investment companies in the MFS Family of
Funds. His address is 35 Farm Road, Sherborn, Massachusetts.
OFFICERS OF THE TRUST AND THE PORTFOLIO TRUST
PHILIP W. COOLIDGE*; 46 -- President of the Trust and the Portfolio Trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.
CHRISTINE A. DRAPEAU*; 27 -- Assistant Secretary and Assistant Treasurer of
the Trust and the Portfolio Trust; Assistant Vice President, Signature
Financial Group, Inc. (since January 1996); Paralegal and Compliance Officer,
various financial companies (July 1992 to January 1996); Graduate Student,
Bentley College (prior to December 1994).
TAMIE EBANKS-CUNNINGHAM*; 25 -- Assistant Secretary of the Trust and the
Portfolio Trust; Office Manager, Signature Financial Group (Cayman)
Ltd. (Since April 1995); Administrator, Cayman Islands Primary School
(prior to April 1995). Her address is P.O. Box 2494, Elizabethan Square,
George Town, Grand Cayman, Cayman Islands, B.W.I.
JOHN R. ELDER*; 49 -- Treasurer of the Trust and the Portfolio Trust; Vice
President, Signature Financial Group, Inc. (since April, 1995); Treasurer,
CFBDS (since April 1995); Treasurer of the Phoenix Family of Mutual Funds,
Phoenix Home Life Mutual Insurance Company (1983 to March 1995).
LINDA T. GIBSON*; 32 -- Secretary of the Trust and the Portfolio Trust; Vice
President, Signature Financial Group, Inc. (since May 1992); Assistant
Secretary, CFBDS, Inc. (since October 1992).
JOAN R. GULINELLO*; 42 -- Assistant Secretary and Assistant Treasurer of the
Trust and the Portfolio Trust; Vice President, Signature Financial Group, Inc.
(since October 1993); Secretary, CFBDS, Inc. (since October 1995); Vice
President and Assistant General Counsel, Massachusetts Financial Services
Company (prior to October 1993).
JAMES E. HOOLAHAN*; 51 -- Vice President, Assistant Secretary and Assistant
Treasurer of the Trust and the Portfolio Trust; Senior Vice President,
Signature Financial Group, Inc.
SUSAN JAKUBOSKI*; 33 -- Vice President, Assistant Treasurer and Assistant
Secretary of the Portfolio Trust (since August 1994); Manager, Signature
Financial Group (Cayman) Ltd. (since August 1994); Fund Compliance
Administrator, Concord Financial Group (November 1990 to August 1994). Her
address is Suite 193, 12 Church Street, Hamilton HM11, Bermuda.
MOLLY S. MUGLER*; 46 -- Assistant Secretary of the Trust and the Portfolio
Trust; Vice President, Signature Financial Group, Inc.; Assistant Secretary,
CFBDS.
CLAIR TOMALIN*; 29 -- Assistant Secretary of the Trust and the Portfolio
Trust; Office Manager, Signature Financial Group (Europe) Limited (since
1993). Her address is 117 Charterhouse Street, London ECIM 6AA.
SHARON M. WHITSON*; 49 -- Assistant Secretary and Assistant Treasurer of the
Trust and the Portfolio Trust; Assistant Vice President, Signature Financial
Group, Inc.
JULIE J. WYETZNER*; 38 -- Vice President, Assistant Secretary and Assistant
Treasurer of the Trust and the Portfolio Trust; Vice President, Signature
Financial Group, Inc.
The Trustees and officers of the Trust and the Portfolio Trust also hold
comparable positions with certain other funds for which CFBDS, SFG or their
affiliates serve as the distributor or administrator.
The following table shows Trustee compensation for the periods indicated.
TRUSTEE COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE
COMPENSATION COMPENSATION TOTAL
FROM THE FROM THE COMPENSATION
GOVERNMENT INTERMEDIATE FROM TRUST AND
TRUSTEE INCOME FUND (1) INCOME FUND (1) COMPLEX (2)
<S> <C> <C> <C>
H. B. Alvord(3) ........................................... $ 730 $1,170 $32,000
Philip W. Coolidge ........................................ $ 0 $ 0 $ 0
Riley C. Gilley ........................................... $1,440 $2,306 $50,000
Diana R. Harrington ....................................... $1,501 $2,408 $57,000
Susan B. Kerley ........................................... $1,510 $2,422 $59,000
C. Oscar Morong, Jr. ...................................... $1,553 $2,492 $70,000
E. Kirby Warren ........................................... $1,451 $2,325 $50,000
William S. Woods, Jr. ..................................... $1,500 $2,408 $58,000
</TABLE>
- ----------
(1) For the fiscal year ended December 31, 1997.
(2) Information relates to the fiscal year ended December 31, 1997. Messrs.
Coolidge, Gilley, Morong, Warren and Woods, and Mses. Harrington and
Kerley are Trustees of 57, 31, 28, 28, 30, 29, and 29 funds or portfolios,
respectively, in the CitiFunds Family of Funds.
(3) Mr. Alvord retired as a Trustee on May 31, 1997.
As of February 1, 1998, all Trustees and officers as a group owned less
than 1% of the outstanding shares of the Funds. As of the same date, more than
95% of the outstanding shares of each Fund were held of record by Citibank,
N.A. or its affiliates, as Shareholder Servicing Agents of the Funds for the
accounts of their respective clients.
The Declaration of Trust of each of the Trust and the Portfolio Trust
provides that each of the Trust and the Portfolio Trust, respectively, will
indemnify its Trustees and officers against liabilities and expenses incurred
in connection with litigation in which they may be involved because of their
offices with the Trust or the Portfolio Trust, as the case may be, unless, as
to liability to the Trust, the Portfolio Trust or their respective investors,
it is finally adjudicated that they engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in their
offices, or unless with respect to any other matter it is finally adjudicated
that they did not act in good faith in the reasonable belief that their
actions were in the best interests of the Trust or the Portfolio Trust, as the
case may be. In the case of settlement, such indemnification will not be
provided unless it has been determined by a court or other body approving the
settlement or other disposition, or by a reasonable determination, based upon
a review of readily available facts, by vote of a majority of disinterested
Trustees of the Trust or the Portfolio Trust, or in a written opinion of
independent counsel, that such officers or Trustees have not engaged in
willful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
ADVISER
Citibank manages the assets of the Intermediate Income Fund and the
Portfolio pursuant to separate investment advisory agreements (the "Advisory
Agreements"). Subject to such policies as the Board of Trustees of the Trust
or the Portfolio Trust, as the case may be, may determine, the Adviser manages
the securities of the Intermediate Income Fund and the Portfolio and makes
investment decisions for the Intermediate Income Fund and the Portfolio. The
Adviser furnishes at its own expense all services, facilities and personnel
necessary in connection with managing the Intermediate Income Fund's and the
Portfolio's investments and effecting securities transactions for the
Intermediate Income Fund and the Portfolio. The Portfolio's Advisory Agreement
will continue in effect as long as such continuance is specifically approved
at least annually by the Board of Trustees of the Portfolio Trust or by a vote
of a majority of the outstanding voting securities of the Portfolio, and, in
either case, by a majority of the Trustees of the Portfolio Trust who are not
parties to the Advisory Agreement or interested persons of any such party, at
a meeting called for the purpose of voting on the Advisory Agreement. The
Advisory Agreement of the Intermediate Income Fund will continue in effect as
long as such continuance is specifically approved at least annually by the
Board of Trustees of the Trust or by a vote of a majority of the outstanding
voting securities of the Intermediate Income Fund, and, in either case, by a
majority of the Trustees of the Trust who are not parties to the Advisory
Agreement or interested persons of any such party, at a meeting called for the
purpose of voting on the Advisory Agreement.
Each of the Advisory Agreements provides that the Adviser may render
services to others. Each Advisory Agreement is terminable without penalty on
not more than 60 days' nor less than 30 days' written notice by the Trust or
the Portfolio Trust, as the case may be, when authorized either by a vote of a
majority of the outstanding voting securities of the Intermediate Income Fund
or Portfolio or by a vote of a majority of the Board of Trustees of the Trust
or Portfolio Trust, as appropriate, or by the Adviser on not more than 60
days' nor less than 30 days' written notice, and will automatically terminate
in the event of its assignment. Each Advisory Agreement provides that neither
the Adviser nor its personnel shall be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in the execution and management of the Intermediate Income Fund or
Portfolio, as the case may be, except for willful misfeasance, bad faith or
gross negligence or reckless disregard of its or their obligations and duties
under the Advisory Agreement.
The Prospectus contains a description of the fees payable to the Adviser
for services under the Advisory Agreements. For the fiscal years ended
December 31, 1995, 1996 and 1997 the fees payable to the Adviser under the
Portfolio's Advisory Agreement were $179,525 (of which $1,055 was voluntarily
waived), $198,024 (of which $2,044 was voluntarily waived) and $196,529 (of
which $5,466 was voluntarily waived), respectively. For the fiscal years ended
December 31, 1995, 1996 and 1997, the fees payable from the Intermediate
Income Fund to the Adviser under its Advisory Agreement were $171,213 (of
which $115,475 was voluntarily waived), $162,525 (of which $80,994 was
voluntarily waived) and $137,525 (of which $82,010 was voluntarily waived),
respectively.
ADMINISTRATOR
Pursuant to administrative services agreements (the "Administrative
Services Agreements"), CFBDS and SFG provide the Trust and the Portfolio
Trust, respectively, with general office facilities and CFBDS and SFG
supervise the overall administration of the Trust or the Portfolio Trust,
including, among other responsibilities, the negotiation of contracts and fees
with, and the monitoring of performance and billings of, the Trust's or the
Portfolio Trust's independent contractors and agents; the preparation and
filing of all documents required for compliance by the Trust or the Portfolio
Trust with applicable laws and regulations; and arranging for the maintenance
of books and records of the Trust or the Portfolio Trust. The Administrator
and the Portfolio Administrator provide persons satisfactory to the Board of
Trustees of the Trust or the Portfolio Trust to serve as Trustees and officers
of the Trust and the Portfolio Trust, respectively. Such Trustees and
officers, as well as certain other employees and Trustees of the Trust and the
Portfolio Trust, may be directors, officers or employees of CFBDS, SFG or
their affiliates.
The Prospectus contains a description of the fees payable to the
Administrator and the Portfolio Administrator under the Administrative
Services Agreements. For the fiscal years ended December 31, 1995, 1996 and
1997, the fees payable to CFBDS from the Government Income Fund under the
Administrative Services Agreement were $72,047 (all of which was voluntarily
waived), $74,177 (all of which was voluntarily waived) and $58,254 (all of
which was voluntarily waived), respectively. For the fiscal years ended
December 31, 1995, 1996 and 1997, the fees payable to SFG from the Portfolio
under the Administrative Services Agreement with the Portfolio Trust were
$25,646 (of which $18,221 was voluntarily waived), $28,289 (of which $27,649
was voluntarily waived) and $28,076 (of which $27,174 was voluntarily waived),
respectively. For the fiscal years ended December 31, 1995, 1996 and 1997, the
fees payable to CFBDS from the Intermediate Income Fund were $97,836 (of which
$38,337 was voluntarily waived), $116,090 (of which $72,966 was voluntarily
waived) and $98,232 (of which $75,116 was voluntarily waived), respectively.
By agreement, the Trust acknowledges that the name "CitiFunds" is the
property of the Adviser and provides that if Citibank ceases to serve as the
Adviser of the Trust, the Trust would change its name and the name of the
Funds so as to delete the word "CitiFunds". The agreement with the Trust also
provides that Citibank may render investment advisory services to others and
may permit other investment companies to use the word "CitiFunds" in their
names.
The Administrative Services Agreement with the Trust continues in effect
with respect to each Fund if such continuance is specifically approved at
least annually by the Board of Trustees of the Trust or by a vote of a
majority of the outstanding voting securities of the Trust and, in either
case, by a majority of the Trustees who are not parties to the Administrative
Services Agreement or interested persons of any such party. The Administrative
Services Agreement with the Trust terminates automatically if it is assigned
and may be terminated without penalty by vote of a majority of the outstanding
voting securities of the Trust or by either party on not more than 60 days'
nor less than 30 days' written notice. The Administrative Services Agreement
with the Trust also provides that neither CFBDS, as the Administrator, nor its
personnel shall be liable for any error of judgment or mistake of law or for
any act or omission in the administration or management of the Trust, except
for willful misfeasance, bad faith or gross negligence in the performance of
its or their duties or by reason of reckless disregard of its or their
obligations and duties under the Administrative Services Agreement.
The Administrative Services Agreement with the Portfolio Trust provides
that SFG may render administrative services to others. The Administrative
Services Agreement with the Portfolio Trust terminates automatically if it is
assigned and may be terminated without penalty by a vote of a majority of the
outstanding voting securities of the Portfolio Trust or by either party on not
more than 60 days' nor less than 30 days' written notice. The Administrative
Services Agreement with the Portfolio Trust also provides that neither SFG, as
the Portfolio Administrator, nor its personnel shall be liable for any error
of judgment or mistake of law or for any act or omission in the administration
or management of the Portfolio Trust, except for willful misfeasance, bad
faith or gross negligence in the performance of its or their duties or by
reason of reckless disregard of its or their obligations and duties under the
Portfolio Trust's Administrative Services Agreement.
CFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group,
Inc. SFG is a company organized under the laws of the Cayman Islands. Its
principal place of business is in George Town, Grand Cayman, British West
Indies.
Pursuant to sub-administrative services agreements, Citibank performs such
sub-administrative duties for the Trust and the Portfolio Trust as from time
to time are agreed upon by Citibank and, respectively, CFBDS or SFG.
Citibank's sub-administrative duties may include providing equipment and
clerical personnel necessary for maintaining the Trust's or the Portfolio
Trust's organization, participation in the preparation of documents required
for compliance by the Trust or the Portfolio Trust with applicable laws and
regulations, the preparation of certain documents in connection with meetings
of Trustees and shareholders, and other functions which would otherwise be
performed by the Administrator. For performing such sub-administrative
services, Citibank receives compensation as from time to time is agreed upon
by Citibank and, respectively, CFBDS or SFG, not in excess of the amount paid
to CFBDS or SFG for its respective services under the Administrative Services
Agreements with the Trust and the Portfolio Trust. All such compensation is
paid by CFBDS or SFG.
DISTRIBUTOR
CFBDS serves as the Distributor of each Fund's shares pursuant to
Distribution Agreements with the Trust with respect to each class of shares of
each Fund. Unless otherwise terminated, the Distribution Agreement remains in
effect from year to year upon annual approval by the Trust's Board of
Trustees, or by the vote of a majority of the outstanding voting securities of
the Trust and by the vote of a majority of the Board of Trustees of the Trust
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
The Agreement will terminate in the event of its assignment, as defined in the
1940 Act.
The Trust has adopted a Distribution Plan (each a "Distribution Plan") in
accordance with Rule 12b-1 under the 1940 Act with respect to each class of
shares of the Funds after concluding that there is a reasonable likelihood
that the Distribution Plans will benefit each Fund and its shareholders. The
Distribution Plan provides that each Fund shall pay a distribution fee to the
Distributor at an annual rate not to exceed 0.15% of each Fund's average daily
net assets. The Distributor receives the distribution fees for its services
under the Distribution Agreements in connection with the distribution of each
Fund's shares. The Distributor may use all or any portion of such distribution
fee to pay for expenses of printing prospectuses and reports used for sales
purposes, expenses of the preparation and printing of sales literature,
commissions to dealers who sell shares of the applicable class of the Fund and
other distribution-related expenses.
Each Distribution Plan also permits the Funds to pay the Distributor an
additional fee (not to exceed 0.05% of the average daily net assets of the
Fund) in anticipation of or as reimbursement for print or electronic media
advertising expenses incurred in connection with the sale of Fund shares.
The Distribution Plans continue in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Trust's Trustees and a majority of the Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial interest in
the operation of the Distribution Plans or in any agreement related to the
Plans (for purposes of this paragraph "Qualified Trustees"). Each Distribution
Plan requires that the Trust and the Distributor provide to the Board of
Trustees, and the Board of Trustees review, at least quarterly, a written
report of the amounts expended (and the purposes therefor) under the
Distribution Plan. Each Distribution Plan further provides that the selection
and nomination of the Qualified Trustees is committed to the discretion of the
disinterested Trustees (as defined in the 1940 Act) then in office. The
Distribution Plans may be terminated with respect to any class of shares of
any Fund at any time by a vote of a majority of the Trust's Qualified Trustees
or by a vote of a majority of the outstanding voting securities of that class
of shares of the Fund. The Distribution Plan applicable to a Fund may not be
amended to increase materially the amount of a Fund's permitted expenses
thereunder without the approval of a majority of the outstanding securities of
that Fund and may not be materially amended in any case without a vote of a
majority of both the Trustees and Qualified Trustees. The Distributor will
preserve copies of any plan, agreement or report made pursuant to each
Distribution Plan for a period of not less than six years from the date of the
Plan, and for the first two years the Distributor will preserve such copies in
an easily accessible place.
As contemplated by the Distribution Plans, CFBDS acts as the agent of the
Trust in connection with the offering of shares of the Funds pursuant to the
Distribution Agreements. After the prospectuses and periodic reports of the
Funds have been prepared, set in type and mailed to existing shareholders, the
Distributor pays for the printing and distribution of copies thereof which are
used in connection with the offering of shares of the Funds to prospective
investors. The Prospectus contains a description of fees payable to the
Distributor under the Distribution Agreements. For the fiscal years ended
December 31, 1995, 1996 and 1997, the fees payable to the Distributor by the
Government Income Fund under the Distribution Agreement were $22,576 (all of
which was voluntarily waived), $44,506 (all of which was voluntarily waived)
and $34,953 (all of which was voluntarily waived), respectively, no portion of
which was applicable to reimbursement for expenses incurred in connection with
print or electronic media advertising. For the fiscal years ended December 31,
1995, 1996 and 1997, the fees payable to the Distributor from the Intermediate
Income Fund under the Distribution Plan were $24,459 (all of which was
voluntarily waived), $69,654 (of which $67,679 was voluntarily waived) and
$58,940 (all of which was voluntarily waived), respectively.
SHAREHOLDER SERVICING AGENTS, TRANSFER AGENT AND CUSTODIAN
The Trust has adopted an administrative services plan (the "Administrative
Services Plan") after having concluded that there is a reasonable likelihood
that the Administrative Services Plan will benefit the Funds and their
shareholders. The Administrative Services Plan provides that the Trust may
obtain the services of an administrator, a transfer agent, a custodian and one
or more Shareholder Servicing Agents, and may enter into agreements providing
for the payment of fees for such services. Under the Trust's Administrative
Services Plan, the total of the fees paid from a Fund to the Trust's
Administrator and Shareholder Servicing Agents may not exceed 0.65% of the
Fund's average daily net assets on an annualized basis for the Fund's then-
current fiscal year. Any distribution fees (other than any fee concerning
electronic or other media advertising) payable under the Distribution Plan are
included in this expense limitation. The Administrative Services Plan
continues in effect if such continuance is specifically approved at least
annually by a vote of both a majority of the Trustees and a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct
or indirect financial interest in the operation of the Administrative Services
Plan or in any agreement related to such Plan (for purposes of this paragraph
"Qualified Trustees"). The Administrative Services Plan requires that the
Trust provide to its Board of Trustees and the Board of Trustees review, at
least quarterly, a written report of the amounts expended (and the purposes
therefor) under the Administrative Services Plan. The Administrative Services
Plan may be terminated at any time by a vote of a majority of the Qualified
Trustees of the Trust or as to each Fund by a vote of a majority of the
outstanding voting securities of the Fund. The Administrative Services Plan
may not be amended to increase materially the amount of permitted expenses
thereunder without the approval of a majority of the outstanding voting
securities of the Funds. The Administrative Services Plan with respect to each
Fund may not be materially amended in any case without a vote of the majority
of both the Trustees and the Qualified Trustees.
The Trust has entered into a shareholder servicing agreement (a "Servicing
Agreement") with each Shareholder Servicing Agent and a Transfer Agency and
Service Agreement with State Street Bank and Trust Company ("State Street")
pursuant to which State Street acts as transfer agent for each Fund. The Trust
has entered into a Custodian Agreement with State Street Bank and Trust
Company pursuant to which custodial and fund accounting services are provided
for each Fund. See "Shareholder Servicing Agents" and "Transfer Agent,
Custodian and Fund Accountant" in the Prospectus for additional information,
including a description of fees paid to the Shareholder Servicing Agents under
the Servicing Agreements. For the fiscal years ended December 31, 1995, 1996
and 1997, aggregate fees payable to Shareholder Servicing Agents by the
Government Income Fund under the Administrative Services Plan were $180,611
(of which $67,730 was voluntarily waived), $74,177 and $58,254, respectively.
For the fiscal years ended December 31, 1995, 1996 and 1997, aggregate fees
payable to Shareholder Servicing Agents by the Intermediate Income Fund under
the Administrative Services Plan were $195,673 (of which $73,377 was
voluntarily waived), $116,090 and $98,232, respectively.
The Portfolio Trust has also adopted an administrative services plan (the
"Portfolio Administrative Plan"), which provides that the Portfolio Trust may
obtain the services of an administrator, a transfer agent and a custodian and
may enter into agreements providing for the payment of fees for such services.
Under the Portfolio Administrative Plan, the administrative services fee
payable to the Portfolio Administrator from the Portfolio may not exceed 0.05%
of the Portfolio's average daily net assets on an annualized basis for its
then-current fiscal year.
The Portfolio Administrative Plan continues in effect if such continuance
is specifically approved at least annually by a vote of both a majority of the
Portfolio Trust's Trustees and a majority of the Portfolio Trust's Trustees
who are not "interested persons" of the Portfolio and who have no direct or
indirect financial interest in the operation of the Portfolio Administrative
Plan or in any agreement related to such Plan (for purposes of this paragraph
"Qualified Trustees"). The Portfolio Administrative Plan requires that the
Portfolio Trust provide to the Board of Trustees and the Board of Trustees
review, at least quarterly, a written report of the amounts expended (and the
purposes therefor) under the Portfolio Administrative Plan. The Portfolio
Administrative Plan may not be amended to increase materially the amount of
permitted expenses thereunder without the approval of a majority of the
outstanding voting securities of the Portfolio Trust and may not be materially
amended in any case without a vote of the majority of both the Portfolio
Trust's Trustees and the Portfolio Trust's Qualified Trustees.
State Street acts as transfer agent, dividend disbursing agent and custodian
for each Fund's assets. The Portfolio Trust, on behalf of the Portfolio has
entered into a Custodian Agreement with State Street pursuant to which State
Street acts as custodian for the Portfolio. The Portfolio Trust, on behalf of
the Portfolio also has entered into a Fund Accounting Agreement with State
Street Cayman Trust Company, Ltd. ("State Street Cayman") pursuant to which
State Street Cayman provides fund accounting services for the Portfolio. State
Street Cayman also provides transfer agency services to the Portfolio Trust. See
"Shareholder Servicing Agents" and "Transfer Agent, Custodian and Fund
Accountant" in the Prospectus for additional information.
The principal business address of State Street is 225 Franklin Street,
Boston, Massachusetts 02110. The principal business address of State Street
Cayman is P.O. Box 2508 GT, Grand Cayman, British West Indies.
AUDITORS
Price Waterhouse LLP are the independent accountants for the Government
Income Fund, providing audit services and assistance and consultation with
respect to the preparation of filings with the SEC. The address of Price
Waterhouse LLP is 160 Federal Street, Boston, Massachusetts 02110. Price
Waterhouse are the chartered accountants for the Portfolio Trust. The address
of Price Waterhouse is Suite 3000, Box 82, Royal Trust Towers, Toronto
Dominion Center, Toronto, Ontario, Canada M5X 1G8.
Deloitte & Touche LLP are the independent accountants for the Intermediate
Income Fund, providing audit services and assistance and consultation with
respect to the preparation of filings with the SEC. The address of Deloitte &
Touche LLP is 125 Summer Street, Boston, Massachusetts 02110.
COUNSEL
Bingham Dana LLP, 150 Federal Street, Boston, MA 02110, acts as counsel
for the Funds.
6. PORTFOLIO TRANSACTIONS
The Trust trades securities for a Fund if it believes that a transaction
net of costs (including custodian charges) will help achieve the Fund's
investment objectives. Changes in each Fund's investments are made without
regard to the length of time a security has been held, or whether a sale would
result in the recognition of a profit or loss. Therefore, the rate of turnover
is not a limiting factor when changes are appropriate. Specific decisions to
purchase or sell securities for each Fund are made by a portfolio manager who
is an employee of the Adviser and who is appointed and supervised by its
senior officers. The portfolio manager may serve other clients of the Adviser
in a similar capacity.
The primary consideration in placing portfolio securities transactions
with broker-dealers for execution is to obtain and maintain the availability
of execution at the most favorable prices and in the most effective manner
possible. The Adviser attempts to achieve this result by selecting broker-
dealers to execute transactions on behalf of each Fund and other clients of
the Adviser on the basis of their professional capability, the value and
quality of their brokerage services, and the level of their brokerage
commissions. In the case of securities traded in the over-the-counter market
(where no stated commissions are paid but the prices include a dealer's markup
or markdown), the Adviser normally seeks to deal directly with the primary
market makers, unless in its opinion, best execution is available elsewhere.
In the case of securities purchased from underwriters, the cost of such
securities generally includes a fixed underwriting commission or concession.
From time to time, soliciting dealer fees are available to the Adviser on the
tender of a Fund's securities in so-called tender or exchange offers. Such
soliciting dealer fees are in effect recaptured for the Fund by the Adviser.
At present no other recapture arrangements are in effect.
Under the Advisory Agreements, in connection with the selection of such
brokers or dealers and the placing of such orders, the Adviser is directed to
seek for each Fund in its best judgment, prompt execution in an effective
manner at the most favorable price. Subject to this requirement of seeking the
most favorable price, securities may be bought from or sold to broker-dealers
who have furnished statistical, research and other information or services to
the Adviser or the Funds, subject to any applicable laws, rules and
regulations.
The investment advisory fee that each Fund pays to the Adviser will not be
reduced as a consequence of the Adviser's receipt of brokerage and research
services. While such services are not expected to reduce the expenses of the
Adviser, the Adviser would, through the use of the services, avoid the
additional expenses which would be incurred if it should attempt to develop
comparable information through its own staff or obtain such services
independently.
In certain instances there may be securities that are suitable as an
investment for a Fund as well as for one or more of the Adviser's other
clients. Investment decisions for each Fund and for the Adviser's other
clients are made with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for
only one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling the same security. Some simultaneous
transactions are inevitable when several clients receive investment advice
from the same investment adviser, particularly when the same security is
suitable for the investment objectives of more than one client. When two or
more clients are simultaneously engaged in the purchase or sale of the same
security, the securities are allocated among clients in a manner believed to
be equitable to each. It is recognized that in some cases this system could
adversely affect the price of or the size of the position obtainable in a
security for a Fund. When purchases or sales of the same security for a Fund
and for other portfolios managed by the Adviser occur contemporaneously, the
purchase or sale orders may be aggregated in order to obtain any price
advantages available to large volume purchases or sales.
For the fiscal years ended December 31, 1995, 1996 and 1997, the Portfolio
paid no brokerage commissions. For the fiscal years ended December 31, 1995,
1996 and 1997, the Intermediate Income Fund paid no brokerage commissions.
7. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional Shares of Beneficial Interest (without
par value) of each series and to divide or combine the shares of any series
into a greater or lesser number of shares of that series without thereby
changing the proportionate beneficial interests in that series. The Trust has
reserved the right to create and issue additional series and classes of
shares. Each share of each class of each Fund represents an equal
proportionate interest in the Fund with each other share of that class. Shares
of each series participate equally in the earnings, dividends and distribution
of net assets of the particular series upon liquidation or dissolution (except
for any differences among classes of shares in a series). Shares of each
series are entitled to vote separately to approve advisory agreements or
changes in investment policy, but shares of all series may vote together in
the election or selection of Trustees and accountants for the Trust. In
matters affecting only a particular Fund or class, only shares of that
particular Fund or class are entitled to vote.
Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the Trust do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the Trust may elect all of the Trustees of the Trust if
they choose to do so and in such event the other shareholders in the Trust
would not be able to elect any Trustee. The Trust is not required to hold, and
has no present intention of holding, annual meetings of shareholders but the
Trust will hold special meetings of shareholders when in the judgment of the
Trustees it is necessary or desirable to submit matters for a shareholder
vote. Shareholders have, under certain circumstances (e.g., upon the
application and submission of certain specified documents to the Trustees by a
specified number of shareholders), the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees. Shareholders also have under certain
circumstances the right to remove one or more Trustees without a meeting by a
declaration in writing by a specified number of shareholders. No material
amendment may be made to the Trust's Declaration of Trust without the
affirmative vote of the holders of a majority of the outstanding shares of
each series affected by the amendment. (See "Investment Objectives, Policies
and Restrictions--Investment Restrictions.") At any meeting of shareholders of
any Fund, a Shareholder Servicing Agent may vote any shares of which it is the
holder of record and for which it does not receive voting instructions
proportionately in accordance with the instructions it receives for all other
shares of which that Shareholder Servicing Agent is the holder of record.
Shares have no preference, pre-emptive, conversion or similar rights. Shares,
when issued, are fully paid and non-assessable, except as set forth below.
The Trust may enter into a merger or consolidation, or sell all or
substantially all of its assets (or all or substantially all of the assets
belonging to any series of the Trust), if approved by a vote of the holders of
two-thirds of the Trust's outstanding shares, voting as a single class, or of
the affected series of the Trust, as the case may be, except that if the
Trustees of the Trust recommend such sale of assets, merger or consolidation,
the approval by vote of the holders of a majority of the Trust's (or the
affected series') outstanding shares would be sufficient. The Trust or any
series of the Trust, as the case may be, may be terminated (i) by a vote of a
majority of the outstanding voting securities of the Trust or the affected
series or (ii) by the Trustees by written notice to the shareholders of the
Trust or the affected series. If not so terminated, the Trust will continue
indefinitely.
Share certificates will not be issued.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business
trust may, under certain circumstances, be held personally liable as partners
for its obligations and liabilities. However, the Declaration of Trust of the
Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Trust and provides for indemnification and reimbursement of
expenses out of Trust property for any shareholder held personally liable for
the obligations of the Trust. The Declaration of Trust of the Trust also
provides that the Trust may maintain appropriate insurance (e.g., fidelity
bonding and errors and omissions insurance) for the protection of the Trust,
its shareholders, Trustees, officers, employees and agents covering possible
tort and other liabilities. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which both inadequate insurance existed and the Trust itself was unable to
meet its obligations.
The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the
property of the Trust and that the Trustees will not be liable for any action
or failure to act, but nothing in the Declaration of Trust of each Trust
protects a Trustee against any liability to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
The Portfolio is a series of the Portfolio Trust, organized as a trust
under the laws of the State of New York. The Portfolio Trust's Declaration of
Trust provides that investors in the Portfolio (e.g., other investment
companies (including the Government Income Fund), insurance company separate
accounts and common and commingled trust funds) are each liable for all
obligations of the Portfolio. However, the risk of the Government Income Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Portfolio
itself was unable to meet its obligations. It is not expected that the
liabilities of the Portfolio would ever exceed its assets.
Each investor in the Portfolio, including the Government Income Fund, may
add to or withdraw from its investment in the Portfolio on each Business Day.
As of the close of regular trading on each Business Day, the value of each
investor's beneficial interest in the Portfolio is determined by multiplying
the net asset value of the Portfolio by the percentage, effective for that
day, that represents that investor's share of the aggregate beneficial
interests in the Portfolio. Any additions or withdrawals that are to be
effected on that day are then effected. The investor's percentage of the
aggregate beneficial interests in the Portfolio is then re-computed as the
percentage equal to the fraction (i) the numerator of which is the value of
such investor's investment in the Portfolio as of the close of regular trading
on such day plus or minus, as the case may be, the amount of any additions to
or withdrawals from the investor's investment in the Portfolio effected on
such day, and (ii) the denominator of which is the aggregate net asset value
of the Portfolio as of the close of regular trading on such day plus or minus,
as the case may be, the amount of the net additions to or withdrawals from the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage so determined is then applied to determine the value of the
investor's interest in the Portfolio as of the close of regular trading on the
next following Business Day.
8. CERTAIN ADDITIONAL TAX MATTERS
Each Fund has elected to be treated, and intends to qualify each year, as
a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), by meeting all applicable requirements
of Subchapter M, including requirements as to the nature of the Fund's gross
income, the amount of Fund distributions, and the composition of the Fund's
portfolio assets. Provided all such requirements are met and all of a Fund's
net investment income and net realized capital gains are distributed to
shareholders in accordance with the timing requirements imposed by the Code,
no federal or state income or federal excise taxes generally will be required
to be paid by the Fund, although foreign source income earned by the Fund may
be subject to non-U.S. taxes. If any Fund should fail to qualify as a
"regulated investment company" for any year, the Fund would incur a regular
corporate federal income tax upon its taxable income and Fund distributions
would generally be taxable as ordinary dividend income to shareholders. The
Portfolio Trust believes the Portfolio also will not be required to pay any
federal or state income or federal excise taxes.
Shareholders of a Fund will generally have to pay federal income taxes and
any state or local income taxes on the dividends and capital gain
distributions they receive from the Fund. Dividends from ordinary income and
any distributions from net short-term capital gains are taxable to
shareholders as ordinary income for federal income tax purposes, whether the
distributions are made in cash or in additional shares. Because each Fund
expects to earn primarily interest income, it is expected that no Fund
dividends will qualify for the dividends received deduction for corporations;
however, a portion of the Intermediate Income Fund's ordinary income dividends
may be eligible for this deduction for corporations if the recipient otherwise
qualifies for that deduction with respect to its holding of Fund shares.
Availability of the deduction for particular shareholders is subject to
certain limitations, and deducted amounts may be subject to the alternative
minimum tax or result in certain basis adjustments. Distributions of net
capital gains (i.e., the excess of net long-term capital gains over net short-
term capital losses), whether made in cash or in additional shares, are
taxable to shareholders as long-term capital gains without regard to the
length of time the shareholders have held their shares. Such capital gains may
be taxable to shareholders that are individuals, estates, or trusts at maximum
rates of 20%, 25%, or 28%, depending upon the source of the gains. Any Fund
dividend that is declared in October, November or December of any calendar
year, that is payable to shareholders of record in such a month, and that is
paid the following January will be treated as if received by the shareholders
on December 31 of the year in which the dividend is declared.
Any Fund distribution will have the effect of reducing the per share net
asset value of shares in the Fund by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of any
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of shares
of a Fund by a shareholder that holds such shares as a capital asset will be
treated as a long-term capital gain or loss if the shares have been held for
more than twelve months and otherwise as a short-term capital gain or loss; a
long-term capital gain realized by an individual shareholder will be eligible
for reduced tax rates if the shares were held for more than 18 months.
However, any loss realized upon a redemption of shares in a Fund held for six
months or less will be treated as a long-term capital loss to the extent of
any distributions of net capital gain made with respect to those shares. Any
loss realized upon a disposition of shares may also be disallowed under rules
relating to wash sales.
Any investments in zero coupon bonds and certain securities purchased at a
market discount will cause the applicable Fund or Portfolio to recognize
income prior to the receipt of cash payments with respect to those securities.
In order to distribute this income and avoid a tax, the Trust or Portfolio
Trust may be required to liquidate securities of a Fund or Portfolio that it
might otherwise have continued to hold and thereby potentially cause the Fund
or the Portfolio to realize additional taxable gain or loss.
Each Fund's and the Portfolio's transactions in options, Futures Contracts
and forward contracts will be subject to special tax rules that may affect the
amount, timing, and character of Fund or Portfolio income and distributions to
holders of beneficial interests. For example, certain positions held by a Fund
or the Portfolio on the last business day of each taxable year will be marked
to market (i.e., treated as if closed out) on that day, and any gain or loss
associated with the positions will be treated as 60% long-term and 40% short-
term capital gain or loss. Certain positions held by a Fund or the Portfolio
that substantially diminish its risk of loss with respect to other positions
in its portfolio may constitute straddles, and may be subject to special tax
rules that would cause deferral of Fund or Portfolio losses, adjustments in
the holding periods of securities held by the Fund or the Portfolio and
conversion of short-term into long-term capital losses. Certain tax elections
exist for straddles which may alter the effects of these rules. Each of the
Funds and the Portfolio will limit its investment activities in options,
Futures Contracts and forward contracts to the extent necessary to meet the
requirements of Subchapter M of the Code.
Special tax considerations apply with respect to foreign investments of
the Funds. Foreign exchange gains and losses realized by a Fund will generally
be treated as ordinary income and losses. Each Fund's use of non-U.S.
currencies for non-hedging purposes may be limited in order to avoid a tax on
the Fund. Investment by a Fund in certain "passive foreign investment
companies" may also be limited in order to avoid a tax on the Fund. Investment
income received by a Fund from non-U.S. securities may be subject to foreign
income taxes withheld at the source. The United States has entered into tax
treaties with many other countries that may entitle a Fund to a reduced rate
of tax or an exemption from tax on such income. The Funds intend to qualify
for treaty reduced rates where available. It is not possible, however, to
determine the Funds' effective rate of foreign tax in advance since the amount
of the Funds' respective assets to be invested within various countries is not
known. The Funds generally do not expect to be able to pass through to
shareholders foreign tax credits with respect to any foreign taxes imposed on
non-U.S. investments.
The Fund will withhold tax payments at the rate of 30% (or any lower rate
permitted under an applicable treaty) on taxable dividends and other payments
subject to withholding taxes that are made to persons who are not citizens or
residents of the United States. Distributions received from the Fund by non-
U.S. persons also may be subject to tax under the laws of their own
jurisdiction.
The account application asks each new shareholder to certify that the
shareholder's Social Security or taxpayer identification number is correct and
that the shareholder is not subject to 31% backup withholding for failing to
report income to the IRS. If a shareholder fails to provide this information,
or otherwise violates IRS regulations, the Fund may be required to withhold
tax at the rate of 31% on certain distributions and redemption proceeds paid
to that shareholder.
Distributions of a Fund that are derived from interest on obligations of
the U.S. Government and certain of its agencies and instrumentalities (but not
generally from capital gains realized upon the dispositions of such
obligations) may be exempt from state and local taxes. Shareholders are urged
to consult their tax advisers regarding the possible exclusion of such portion
of their dividends for state and local income tax purposes.
9. INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Price Waterhouse LLP are the independent accountants for the CitiFunds
Short-Term U.S. Government Income Portfolio, providing audit services and
assistance and consultation with respect to the preparation of filings with
the SEC. Price Waterhouse are the chartered accountants for the Portfolio
Trust. Deloitte & Touche LLP are the independent accountants for the CitiFunds
Intermediate Income Portfolio.
The audited financial statements of the CitiFunds Short-Term U.S. Government
Income Portfolio (Statement of Assets and Liabilities at December 31, 1997,
Statement of Operations for the year ended December 31, 1997, Statement of
Changes in Net Assets for the years in the two-year period ended December 31,
1997, Financial Highlights for each of the years in the four-year period ended
December 31, 1997, for the four-month period ended December 31, 1993 and the
year ended August 31, 1993, Notes to Financial Statements and Independent
Auditors' Report), each of which is included in the Annual Report to
Shareholders of the CitiFunds Short-Term U.S. Government Income Portfolio, are
incorporated by reference into this Statement of Additional Information and
have been so incorporated in reliance upon the report of Price Waterhouse LLP,
on behalf of the CitiFunds Short-Term U.S. Government Income Portfolio.
The audited financial statements of the Portfolio (Portfolio of
Investments at December 31, 1997, Statement of Assets and Liabilities at
December 31, 1997, Statement of Operations for the year ended December 31,
1997, Statement of Changes in Net Assets for the years in the two-year period
ended December 31, 1997, Financial Highlights for each of the years in the
three-year period ended December 31, 1997 and for the period May 1, 1994
(commencement of operations) to December 31, 1994, Notes to Financial
Statements and Independent Auditors' Report), each of which is included in the
Annual Report to Shareholders of the CitiFunds Short-Term U.S. Government Income
Portfolio, are incorporated by reference into this Statement of Additional
Information and have been so incorporated in reliance upon the report of Price
Waterhouse, chartered accountants, on behalf of the Portfolio.
The audited financial statements of the CitiFunds Intermediate Income
Portfolio (Portfolio of Investments at December 31, 1997, Statement of Assets
and Liabilities at December 31, 1997, Statement of Operations for the year ended
December 31, 1997, Statement of Changes in Net Assets for the years ended
December 31, 1997 and 1996, Financial Highlights for each of the years in the
four-year period ended December 31, 1997 and for the period June 25, 1993
(commencement of operations) to December 31, 1993, Notes to Financial Statements
and Independent Auditors' Report), each of which is included in the Annual
Report to Shareholders of the CitiFunds Intermediate Income Portfolio, are
incorporated by reference into this Statement of Additional Information and have
been so incorporated in reliance upon the report of Deloitte & Touche LLP,
independent accountants, on behalf of the CitiFunds Intermediate Income
Portfolio.
Copies of the Annual Reports to Shareholders of each of the Funds
accompany this Statement of Additional Information.
<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS*
The ratings of Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's Rating Services ("S&P") represent their opinions as to the quality of
various debt securities. It should be emphasized, however, that ratings are
not absolute standards of quality. Consequently, debt securities with the same
maturity, coupon and rating may have different yields while debt securities of
the same maturity and coupon with different ratings may have the same yield.
MOODY'S INVESTORS SERVICE, INC.
Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and generally are referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Note: Those bonds in the Aa, A and Baa groups which Moody's believes possess
the strongest investment attributes are designated by the symbols Aa1, A1 and
Baa1.
STANDARD & POOR'S RATINGS GROUP
AAA An obligation rated AAA has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA An obligation rated AA differs from the highest rated issues only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories. However, the obligor's capacity to meet its financial commitment
on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity of the obligor to meet its financial commitment on the
obligation.
* As described by the rating agencies. Ratings are generally given to
securities at the time of issuance. While the rating agencies may from time to
time revise such ratings, they undertake no obligation to do so.
<PAGE>
SHAREHOLDER SERVICING AGENTS
FOR CITIBANK RETAIL BANKING AND
BUSINESS AND PROFESSIONAL CUSTOMERS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
(212) 820-2383 or (800) 846-5300
FOR CITIGOLD CUSTOMERS:
Citigold
P.O. Box 5130, New York, NY 10126-5130
Call Your Citigold Executive or, in NY or CT, (800) 285-1701
or for all other states, (800) 285-1707
FOR CITIBANK PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
Investment Specialist or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT
CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117
FOR CITIBANK NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
Master Trust Accounts
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9659
FOR CITICORP INVESTMENT SERVICES CUSTOMERS:
Citicorp Investment Services
One Court Square, Long Island City, NY 11120
Call Your Investment Consultant or (800) 846-5200,
(212) 820-2380 in New York City
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements Included in Part A:
Condensed Financial Information - Financial Highlights of
Landmark U.S. Government Income Fund (for each of the years in
the four-year period ended December 31, 1997, for the four months
ended December 31, 1993 and for each of the years in the
seven-year period ended August 31, 1993) and of Landmark
Intermediate Income Fund (for the each of the years in the
four-year period ended December 31, 1997 and for the period from
June 25, 1993 (commencement of operations) to December 31, 1993).
Financial Statements Included in Part B:
LANDMARK U.S. GOVERNMENT INCOME FUND
Statement of Assets and Liabilities at December 31, 1997*
Statement of Operations for the year ended December 31, 1997*
Statement of Changes in Net Assets for the years ended December
31, 1996 and 1997*
Financial Highlights for each of the years in the four-year period
ended December 31, 1997, for the four months ended December 31,
1993 and for the year ended August 31, 1993*
GOVERNMENT INCOME PORTFOLIO
Portfolio of Investments at December 31, 1997*
Statement of Assets and Liabilities at December 31, 1997*
Statement of Operations for the year ended December 31, 1997*
Statement of Changes in Net Assets for the years ended December
31, 1996 and 1997*
Financial Highlights for each of the years in the three-year
period ended December 31, 1997 and for the period from May 1,
1994 (commencement of operations) to December 31, 1994*
LANDMARK INTERMEDIATE INCOME FUND
Portfolio of Investments at December 31, 1997**
Statement of Assets and Liabilities at December 31, 1997**
Statement of Operations for the year ended December 31, 1997**
Statement of Changes in Net Assets for the years ended December
31, 1996 and 1997**
Financial Highlights for each of the years in the four-year
period ended December 31, 1997 and for the period from
June 25, 1993 (commencement of operations) to December 31,
1993**
------------------
*Financial Information is incorporated by reference to the
Registrant's Annual Reports to Shareholders of Landmark U.S.
Government Income Fund (Accession Number 0000950156-98-000154) for the
fiscal year ended December 31, 1997.
**Financial Information is incorporated by reference to the
Registrant's Annual Reports to Shareholders of Landmark
Intermediate Income Fund (Accession Number 0000950156-98-000154) for
the fiscal year ended December 31, 1997.
(b) Exhibits
1(a) Declaration of Trust of Registrant
1(b) Amendments to Registrant's Declaration of Trust
2(a) Amended and Restated By-Laws of Registrant
2(b) Amendments to Amended and Restated By-Laws of
Registrant
** 4(a) Form of Certificate representing ownership of Class A
shares of Landmark Intermediate Income Fund and
Landmark U.S. Government Income Fund (the "Funds")
** 4(b) Form of Certificate representing ownership of Class B
shares of the Funds
5 Investment Advisory Agreement between the Registrant
and Citibank, N.A., as adviser to Landmark
Intermediate Income Fund
6(a) Amended and Restated Distribution Agreement
between the Registrant and CFBDS, Inc. (formerly
known as The Landmark Funds Broker-Dealer Services,
Inc.) ("CFBDS"), as distributor, with respect to
Class A Shares of the Funds
6(b) Distribution Agreement between the Registrant
and CFBDS, as distributor, with respect to Class B
Shares of the Funds
8 Custodian Agreement between the Registrant, on behalf
of the Funds, and State Street Bank and Trust
Company, as custodian
9(a) Amended and Restated Administrative Services
Plan of the Registrant
9(b) Administrative Services Agreement between the
Registrant and CFBDS, as administrator
9(c) Sub-Administrative Services Agreement between
Citibank, N.A. and CFBDS
* 9(d)(i) Form of Shareholder Servicing Agreement between the
Registrant and Citibank, N.A., as shareholder
servicing agent
* 9(d)(ii) Form of Shareholder Servicing Agreement between
the Registrant and a federal savings bank, as
shareholder servicing agent
* 9(d)(iii) Form of Shareholder Agreement between the Registrant
and CFBDS, as shareholder servicing agent
*** 9(d)(iv) Form of Shareholder Servicing Agreement between
the Registrant and a national banking association or
subsidiary thereof or state chartered banking
association, as shareholder servicing agent
9(e) Transfer Agency and Servicing Agreement between the
Registrant and State Street Bank and Trust Company,
as transfer agent
** 9(f) Form of Exchange Privilege Agreement between each of
the trusts in the Landmark Family of Funds, including
the Registrant, and CFBDS, as distributor
9(g) Accounting Services Agreement between the Registrant
and State Street Bank and Trust Company, as Fund
accounting agent
11(a) Consent of Price Waterhouse LLP, independent auditors
of Landmark U.S. Government Income Fund
11(b) Consent of Price Waterhouse, independent auditors of
Government Income Portfolio
11(c) Consent of Deloitte & Touche LLP, independent
auditors of Landmark Intermediate Income Fund
15(a) Amended and Restated Distribution Plan of the
Registrant with respect to Class A Shares of the Fund
15(b) Distribution Plan of the Registrant with
respect to Class B Shares of the Fund
** 16 Performance Calculations
25(a) Powers of Attorney for the Registrant
25(b) Powers of Attorney for The Premium Portfolios
27 Financial Data Schedules
- ---------------------
* Incorporated herein by reference to Post-Effective Amendment No. 18
to the Registrant's Registration Statement on form N-1A (File No.
33-6540) as filed with the Securities and Exchange Commission on
April 18, 1994.
** Incorporated herein by reference to Post-Effective Amendment No. 19
to the Registrant's Registration Statement on form N-1A (File No.
33-6540) as filed with the Securities and Exchange Commission on
October 14, 1994.
*** Incorporated herein by reference to Post-Effective Amendment No. 22
to the Registrant's Registration Statement on Form N-1A (File No.
33-6540) as filed with the Securities and Exchange Commission on
April 29, 1996.
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
Title of Class Number of Record Holders
Shares of Beneficial Interest As of February 2, 1998
(without par value)
Landmark U.S. Government Income Fund
Class A 7
Class B 0
Landmark Intermediate Income Fund
Class A 7
Class B 0
Item 27. Indemnification.
Reference is hereby made to (a) Article V of the Registrant's Declaration
of Trust, filed as an Exhibit to Post-Effective Amendment No. 8 to its
Registration Statement on Form N-1A; (b) Section 4 of the Distribution Agreement
between the Registrant and CFBDS, filed as an Exhibit to Post-Effective
Amendment No. 19; and (c) the undertaking of the Registrant regarding
indemnification set forth in its Registration Statement on Form N-1A.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
Citibank, N.A. ("Citibank") is a commercial bank offering a wide range of
banking and investment services to customers across the United States and around
the world. Citibank is a wholly-owned subsidiary of Citicorp, a registered bank
holding company. Citibank also serves as investment adviser to the following
registered investment companies (or series thereof): Asset Allocation Portfolios
(Large Cap Value Portfolio, Small Cap Value Portfolio, International Portfolio,
Foreign Bond Portfolio, Intermediate Income Portfolio and Short-Term Portfolio),
The Premium Portfolios (Growth & Income Portfolio, Balanced Portfolio, Large Cap
Growth Portfolio, International Equity Portfolio, Government Income Portfolio,
Emerging Asian Markets Equity Portfolio and Small Cap Growth Portfolio), Tax
Free Reserves Portfolio, U.S. Treasury Reserves Portfolio, Cash Reserves
Portfolio, CitiFundsSM Multi-State Tax Free Trust (CitiFundsSM New York Tax Free
Reserves, CitiFundsSM Connecticut Tax Free Reserves and CitiFundsSM California
Tax Free Reserves), Landmark Tax Free Income Funds (Landmark National Tax Free
Income Fund and Landmark New York Tax Free Income Fund), CitiFundsSM
Institutional Trust (CitiFundsSM Institutional Cash Reserves) and Variable
Annuity Portfolios (CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP Folio 300,
CitiSelect(R) VIP Folio 400, CitiSelect(R) VIP Folio 500 and Landmark Small Cap
Equity VIP Fund). Citibank and its affiliates manage assets in excess of $88
billion worldwide. The principal place of business of Citibank is located at 399
Park Avenue, New York, New York 10043.
John S. Reed is the Chairman of the Board and a Director of Citibank.
The following are Vice Chairmen of the Board and Directors of Citibank:
Paul J. Collins and William R. Rhodes. Other Directors of Citibank are D.
Wayne Calloway, former Chairman and Chief Executive Officer, PepsiCo, Inc.;
John M. Deutch, Institute Professor, Massachusetts Institute of Technology;
Reuben Mark, Chairman and Chief Executive Officer, Colgate-Palmolive
Company; Richard D. Parsons, President, Time Warner, Inc.; Rozanne L.
Ridgway, Former Assistant Secretary of State for Europe and Canada; Robert
B. Shapiro, Chairman, President and Chief Executive Officer, Monsanto
Company; Frank A. Shrontz, Chairman Emeritus, The Boeing Company; and
Franklin A. Thomas, former President, The Ford Foundation.
Each of the individuals named above is also a Director of Citicorp. In
addition, the following persons have the affiliations indicated:
D. Wayne Calloway Director, Exxon Corporation
Director, General Electric Company
Retired Chairman and Chief Executive
Officer and Director, PepsiCo, Inc.
Paul J. Collins Director, Kimberly-Clark Corporation
John M. Deutch Director, Ariad Pharmaceuticals, Inc.
Director, CMS Energy
Director, Palomar Medical Technologies, Inc.
Director, Cummins Engine Company, Inc.
Director, Schlumberger, Ltd.
Reuben Mark Director, Chairman and Chief Executive
Officer Colgate-Palmolive Company
Director, New York Stock Exchange
Director, Time Warner, Inc.
Non-Executive Director, Pearson, PLC
Richard D. Parsons Director, Federal National Mortgage
Association
Director, Philip Morris Companies
Incorporated
Member, Board of Representatives, Time
Warner Entertainment Company, L.P.
Director and President, Time Warner, Inc.
John S. Reed Director, Monsanto Company
Director, Philip Morris Companies
Incorporated
Stockholder, Tampa Tank & Welding, Inc.
William R. Rhodes Director, Private Export Funding
Corporation
Rozanne L. Ridgway Director, 3M
Director, Bell Atlantic Corporation
Director, Boeing Company
Director, Emerson Electric Company
Member-International Advisory Board,
New Perspective Fund, Inc.
Director, RJR Nabisco, Inc.
Director, Sara Lee Corporation
Director, Union Carbide Corporation
Robert B. Shapiro Director, Chairman and Chief Executive
Officer, Monsanto Company
Director, Silicon Graphics
Frank A. Shrontz Director, 3M
Director, Baseball of Seattle, Inc.
Director and Chairman Emeritus, Boeing
Company
Director, Boise Cascade Corp.
Director, Chevron Corporation
Franklin A. Thomas Director, Aluminum Company of America
Director, Cummins Engine Company, Inc.
Director, Lucent Technologies
Director, PepsiCo, Inc.
Item 29. Principal Underwriters.
(a) CFBDS, the Registrant's Distributor, is also the distributor for
CitiFundsSM International Growth & Income Portfolio, Landmark International
Equity Fund, Landmark Emerging Asian Markets Equity Fund, CitiFundsSM U.S.
Treasury Reserves, CitiFundsSM Cash Reserves, CitiFundsSM Premium U.S. Treasury
Reserves, CitiFundsSM Premium Liquid Reserves, CitiFundsSM Institutional U.S.
Treasury Reserves, CitiFundsSM Institutional Liquid Reserves, CitiFundsSM
Institutional Cash Reserves, CitiFundsSM Tax Free Reserves, CitiFundsSM
Institutional Tax Free Reserves, CitiFundsSM California Tax Free Reserves,
CitiFundsSM Connecticut Tax Free Reserves, CitiFundsSM New York Tax Free
Reserves, Landmark Balanced Fund, CitiFundsSM Small Cap Value Portfolio,
CitiFundsSM Growth & Income Portfolio, Landmark Equity Fund, Landmark Small Cap
Equity Fund, Landmark National Tax Free Income Fund, Landmark New York Tax Free
Income Fund, CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP Folio 300,
CitiSelect(R) VIP Folio 400, CitiSelect(R) VIP Folio 500, Landmark Small Cap
Equity VIP Fund, CitiSelect(R) Folio 200, CitiSelect(R) Folio 300, CitiSelect(R)
Folio 400, and CitiSelect(R) Folio 500. CFBDS is also the placement agent for
Large Cap Value Portfolio, Small Cap Value Portfolio, International Portfolio,
Foreign Bond Portfolio, Intermediate Income Portfolio, Short-Term Portfolio,
Growth & Income Portfolio, Large Cap Growth Portfolio, Small Cap Growth
Portfolio, International Equity Portfolio, Balanced Portfolio, Government Income
Portfolio, Emerging Asian Markets Equity Portfolio, Tax Free Reserves Portfolio,
Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio.
(b) The information required by this Item 29 with respect to each director
and officer of CFBDS is incorporated by reference to Schedule A of Form BD filed
by CFBDS pursuant to the Securities and Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
NAME ADDRESS
CFBDS, Inc. 6 St. James Avenue
(administrator and distributor) Boston, MA 02116
State Street Bank and Trust Company 1776 Heritage Drive
(transfer agent, custodian and fund North Quincy, MA 02171
accounting agent)
Citibank, N.A. 153 East 53rd Street
(investment adviser) New York, NY 10043
SHAREHOLDER SERVICING AGENTS
Citibank, N.A. 450 West 33rd Street
New York, NY 10001
Citibank, N.A. -- Citigold Citicorp Mortgage Inc. -
Citigold
15851 Clayton Road
Ballwin, MO 63011
Citibank, N.A. -- The Citibank 153 East 53rd Street
Private Bank New York, NY 10043
Citibank, N.A. -- Citibank Global 153 East 53rd Street
Asset Management New York, NY 10043
Citibank, N.A. -- North American 111 Wall Street
Investor Services New York, NY 10094
Citicorp Investment Services One Court Square
Long Island City, NY 11120
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes, if requested to do so by the
record holders of not less than 10% of the Registrant's
outstanding shares, to call a meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or
trustees, and to assist in communications with other shareholders
as required by Section 16(c) of the Investment Company Act of
1940. The Registrant further undertakes to furnish to each
person to whom a prospectus of the Landmark Intermediate Income
Fund is delivered with a copy of the Fund's latest Annual Report
to Shareholders, upon request without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Boston and
Commonwealth of Massachusetts on the 17th day of February, 1998.
LANDMARK FIXED INCOME FUNDS
By: Philip W. Coolidge
-------------------------
Philip W. Coolidge
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated below on February 17, 1998.
Signature Title
--------- -----
President, Principal Executive
Philip W. Coolidge Officer and Trustee
- -----------------------------
Philip W. Coolidge
Principal Financial Officer and
John R. Elder Principal Accounting Officer
- -----------------------------
John R. Elder
Riley C. Gilley* Trustee
- -----------------------------
Riley C. Gilley
Diana R. Harrington* Trustee
- -----------------------------
Diana R. Harrington
Susan B. Kerley* Trustee
- -----------------------------
Susan B. Kerley
C. Oscar Morong, Jr.* Trustee
- -----------------------------
C. Oscar Morong, Jr.
E. Kirby Warren* Trustee
- -----------------------------
E. Kirby Warren
William S. Woods, Jr.* Trustee
- -----------------------------
William S. Woods, Jr.
*By: Philip W. Coolidge
------------------------
Philip W. Coolidge
Executed by Philip W. Coolidge
on behalf of those indicated
pursuant to Powers of Attorney.
<PAGE>
SIGNATURES
The Premium Portfolios, on behalf of Government Income Portfolio, has duly
caused this Post-Effective Amendment to the Registration Statement on Form N-1A
of Landmark Fixed Income Funds to be signed on its behalf by the undersigned,
thereunto duly authorized, in Southampton, Bermuda, on the 19th day of February,
1998.
THE PREMIUM PORTFOLIOS
on behalf of Government Income Portfolio
By: Philip W. Coolidge
-------------------------
Philip W. Coolidge
President of The Premium Portfolios
This Post-Effective Amendment to the Registration Statement on Form N-1A
of Landmark Fixed Income Funds has been signed by the following persons in the
capacities indicated on February 19, 1998.
Signature Title
--------- -----
President, Principal Executive
Philip W. Coolidge Officer and Trustee
- -----------------------------
Philip W. Coolidge
Principal Financial Officer and
John R. Elder* Principal Accounting Officer
- -----------------------------
John R. Elder
Elliott J. Berv* Trustee
- -----------------------------
Elliott J. Berv
Mark T. Finn* Trustee
- -----------------------------
Mark T. Finn
C. Oscar Morong, Jr.* Trustee
- -----------------------------
C. Oscar Morong, Jr.
Walter E. Robb, III* Trustee
- -----------------------------
Walter E. Robb, III
*By: Philip W. Coolidge
------------------------
Philip W. Coolidge
Executed by Philip W. Coolidge
on behalf of those indicated
as attorney in fact.
<PAGE>
EXHIBIT INDEX
Exhibit
No.: Description:
---- ------------
1(a) Declaration of Trust of Registrant
1(b) Amendments to Registrant's Declaration of Trust
2(a) Amended and Restated By-Laws of Registrant
2(b) Amendments to Amended and Restated By-Laws of
Registrant
5 Investment Advisory Agreement between the Registrant
and Citibank, N.A., as adviser to Landmark
Intermediate Income Fund
6(a) Amended and Restated Distribution Agreement
between the Registrant and CFBDS, Inc. (formerly
known as The Landmark Funds Broker-Dealer Services,
Inc.) ("CFBDS"), as distributor, with respect to
Class A Shares of the Funds
6(b) Distribution Agreement between the Registrant
and CFBDS, as distributor, with respect to Class B
Shares of the Funds
8 Custodian Agreement between the Registrant, on behalf
of the Funds, and State Street Bank and Trust
Company, as custodian
9(a) Amended and Restated Administrative Services
Plan of the Registrant
9(b) Administrative Services Agreement between the
Registrant and CFBDS, as administrator
9(c) Sub-Administrative Services Agreement between
Citibank, N.A. and CFBDS
9(e) Transfer Agency and Servicing Agreement between the
Registrant and State Street Bank and Trust Company,
as transfer agent
9(g) Accounting Services Agreement between the Registrant
and State Street Bank and Trust Company, as Fund
accounting agent
11(a) Consent of Price Waterhouse LLP, independent auditors
of Landmark U.S. Government Income Fund
11(b) Consent of Price Waterhouse, independent auditors of
Government Income Portfolio
11(c) Consent of Deloitte & Touche LLP, independent
auditors of Landmark Intermediate Income Fund
15(a) Amended and Restated Distribution Plan of the
Registrant with respect to Class A Shares of the Fund
15(b) Distribution Plan of the Registrant with
respect to Class B Shares of the Fund
25(a) Powers of Attorney for the Registrant
25(b) Powers of Attorney for The Premium Portfolios
27 Financial Data Schedules
<PAGE>
Exhibit 1(a)
LANDMARK U.S. GOVERNMENT INCOME FUND
-----------------------
DECLARATION OF TRUST
Dated June 23, 1986
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I--Name and Definitions 1
Section 1.1 Name
Section 1.2 Definitions
ARTICLE II--Trustees 3
Section 2.1 Number of Trustees
Section 2.2 Term of Office of Trustees
Section 2.3 Resignation and Appointment of Trustees
Section 2.4 Vacancies
Section 2.5 Delegation of Power to Other Trustees
ARTICLE III--Powers of Trustees 4
Section 3.1 General -
Section 3.2 Investments
Section 3.3 Legal Tltle
Section 3.4 Issuance and Repurchase of Securities
Section 3.5 Borrowing Money; Lending Trust Property
Section 3.6 Delegation; Committees -
Section 3.7 Collection and Payment
Section 3.8 Expenses
Section 3.9 Manner of Acting; By-Laws
Section 3.10 Miscellaneous Powers
Section 3.11 Principal Transactions
Section 3.12 Trustees and Officers as Shareholders
ARTICLE IV-- Investment Advise, Distributor, Administrator Transfer
Agent and Shareholder Servicing Agents 8
Section 4.1 Investment Adviser
Section 4.2 Distributor
Section 4.3 Administrator Section 4.4 Transfer Agent and
Shareholder Servicing Agents
Section 4.5 Parties to Contract
ARTICLE V--Limitations of Liability of Shareholders,
Trustees and Others 10
Section 5.1 No Personal Liability of Shareholders,
Trustees, etc.
Section 5.2 Non-Liability of Trustees, etc.
Section 5.3 Mandatory Indemnification
Section 5.4 No Bond Required of Trustees
Section 5.5 No Duty of Investigation; Notice in Trust
Instruments, etc.
Section 5.6 Reliance on Experts, etc.
ARTICLE VI--Shares of Beneficial Interest 13
Section 6.1 Beneficial Interest
Section 6.2 Rights of Shareholders
Section 6.3 Trust Only
Section 6.4 Issuance of Shares
Section 6.5 Register of Shares
Section 6.6 Transfer of Shares
Section 6.7 Notices
Section 6.8 Voting Powers
Section 6.9 Series Designation
ARTICLE VII--Redemptions 18
Section 7.1 Redemptions
Section 7.2 Suspension of Right of Redemption
Section 7.3 Redemption of Shares; Disclosure of Holding
Section 7.4 Redemptions in Kind
ARTICLE VIII--Determination of Net Asset Value, Net Income
and Distributions 20
<PAGE>
ARTICLE IX--Duration; Termination of Trust; Amendment;
Mergers, Etc. 20
Section 9.1 Duration
Section 9.2 Termination of Trust
Section 9.3 Amendment Procedure
Section 9.4 Merger, Consolidation and Sale of Assets
Section 9.5 Incorporation, Reorganization
Section 9.6 Incorporation or Reorganization of Series
ARTICLE X--Reports to Shareholders and Shareholder
Communications 23
ARTICLE XI--Miscellaneous 24
Section 11.1 Filing
Section 11.2 Governing Law
Section 11.3 Counterparts
Section 11.4 Reliance by Third Parties
Section 11.5 Provisions in Conflict with Law or
Regulations
SIGNATURE PAGE 25
<PAGE>
DECLARATION OF TRUST
OF
LANDMARK U.S. GOVERNMENT INCOME FUND
-----------------------
Dated June 23, 1986
-----------------------
DECLARATION OF TRUST, made June 23, 1986, by Arnold D. Scott, W. Thomas
London, Stephen G. Moorhead and Philip W. Coolidge (the "Trustees"):
WHEREAS, the Trustees desire to establish a trust for the investment
and reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable Shares of Beneficial Interest (without par
value) issued in one or more series as hereinafter provided;
NOW THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of holders, from time to time, of the Shares of Beneficial
Interest (without par value) issued hereunder and subject to the provisions
hereof.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is the
"Landmark U.S. Government Income Fund".
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "Administrator" means a party furnishing services to the Trust
pursuant to any contract described ln Section 4.3 hereof.
(b) "By-Laws" means the By-laws referred to in Section 3.9 hereof, as
from time to time amended.
(c) "Commission" has the meaning given that term in the 1940 Act.
(d) "Custodian" means a party employed by the Trust to furnish services
as described in Article X of the By-Laws.
(e) "Declaration" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "Declaration", "hereof",
"herein", and "hereunder" shall be deemed to refer to this Declaration rather
than the article or section in which such words appear.
(f) "Distributor" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.2 hereof.
(g) "Interested Person" has the meaning given that term in the 1940
Act.
(h) "Investment Adviser" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.1 hereof.
(i) "Majority Shareholder Vote" has the same meaning as the phrase
"vote of a majority of the outstanding voting securities" as defined in the 1940
Act, except that such term may be used herein with respect to the Shares of the
Trust as a whole or the Shares of any particular series, as the context may
require.
(j) "1940 Act" means the Investment Company Act of 1940 and the Rules
and Regulations thereunder, as amended from time to time.
(k) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other enti ties, whether
or not legal entities, and governments and agencies and political subdivisions
thereof, whether domestic or foreign.
(l) "Shareholder" means a record owner of outstanding Shares.
(m) "Shares" means the Shares of Beneficial Interest into which the
beneficial interest in the Trust shall be divided from time to time or, when
used in relation to any particular series of Shares established by the Trustees
pursuant to Section 6.9 hereof, equal proportionate transferable units into
which such series of Shares shall be divided from time to time. The term
"Shares" includes fractions of Shares as well as whole Shares.
(n) "Shareholder Servicing Agent" means a party furnishing services to
the Trust pursuant to any shareholder servicing contract described tn Section
4.4 hereof.
(o) "Transfer Agent" means a party furnishing services to the Trust
pursuant to any transfer agency contract described in Section 4.4 hereof.
(p) "Trust" means the trust created hereby.
(q) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees, including, without limitation, any and all property
allocated or belonging to any series of Shares pursuant to Section 6.9 hereof.
(r) "Trustees" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who may from time to time be duly elected or appointed,
qualified and serving as Trustees in accordance with the provisions hereof, and
reference herein to a Trustee or the Trustees shall refer to such person or
persons in their capacity as trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than three nor more than 15.
Section 2.2. Term of Office of Trustees. Subject to the provisions of
Section 16(a) of the 1940 Act, the Trustees shall hold office during the
lifetime of this Trust and until its termination as hereinafter provided; except
(a) that any Trustee may resign his trust (without need for prior or subsequent
accounting) by an instrument in writing signed by him and delivered to the other
Trustees, which shall take effect upon such delivery or upon such later date as
is specified therein; (b) that any Trustee may be removed with cause, at any
time by written instrument, signed by at least two-thirds of the remaining
Trustees, specifying the date when such removal shall become effective; (c) that
any Trustee who requests in writing to be retired or who has become
incapacitated by illness or injury may be retired by written instrument signed
by a majority of the other Trustees, specifying the date of his retirement; and
(d) a Trustee may be removed at any meeting of Shareholders by a vote of
two-thirds of the outstanding Shares of each series. Upon the resignation or
removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute
and deliver such documents as the remaining Trustees shall require for the
purpose of conveying to the Trust or the remaining Trustees any Trust Property
held in the name of the resigning or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver on his
behalf such documents as the remaining Trustees shall require as provided in the
preceding sentence.
Section 2.3. Resignation and Appointment of Trustees. In case of the
declination, death, resignation, retirement, removal or inability of any of the
Trustees, or in case a vacancy shall, by reason of an increase in number, or for
any other reason, exist, the remaining Trustees shall fill such vacancy by
appointing such other individual as they in their discretion shall see fit. Such
appointment shall be evidenced by a written instrument signed by a majority of
the Trustees in office. Any such appointment shall not become effective,
however, until the person named in the written instrument of appointment shall
have accepted in writing such appointment and agreed in writing to be bound by
the terms of the Declaration. Within twelve months of such appointment, the
Trustees shall cause notice of such appointment to be mailed to each Shareholder
at his address as recorded on the books of the Trustees. An appointment of a
Trustee may be made by the Trustees then in office and notice thereof mailed to
Shareholders as aforesaid in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. The power of appointment is subject to the provisions of Section
16 (a) of the 1940 Act.
Section 2.4. Vacancies. The death, declination, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall not
operate to annul the Trust or to revoke any existing agency created pursuant to
the terms of this Declaration. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in Section 2.3, the
Trustees in office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by the Declaration. A written instrument certifying the existence of
such vacancy signed by a majority of the Trustees shall be conclusive evidence
of the existence of such vacancy.
Section 2.5. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six months at
any one time to any other Trustee or Trustees; provided that in no case shall
fewer than two Trustees personally exercise the powers granted to the Trustees
under the Declaration except as herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as the Trustees deem necessary, proper or desirable in order to
promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In construing the
provisions of the Declaration, the presumption shall be in favor of a grant of
power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 3.2. Investments. (a) The Trustees shall have the power:
(i) to conduct, operate and carry on the business of an investment
company;
(ii) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, lend
or otherwise deal in or dispose of U.S. and foreign currencies, any form of gold
or other precious metal, commodity contracts, contracts for the future
acquisition or delivery of fixed income or other securities, and securities of
every nature and kind, including, without limitation, all types of bonds,
debentures, stocks, negotiable or non-negotiable instruments, obligations,
evidences of indebtedness, certificates of deposit or indebtedness, commercial
paper, repurchase agreements, bankers' acceptances, and other securities of any
kind, issued, created, guaranteed or sponsored by any and all Persons,
including, without limitation,
(A) states, territories and possessions of the United States and the
District of Columbla and any political subdivision, agency or instrumentality of
any such Person,
(B) the U. S. Government, any foreign government, any political
subdivision or any agency or instrumentality of the U. S. Government, any
foreign government or any political subdivision of the U. S. Government or any
foreign government,
(C) any international instrumentality,
(D) any bank or savings institution, or
(E) any corporation or organization organized under the laws of the
United States or of any state, territory or possession thereof, or under any
foreign law;
or in "when issued" contracts for any such securities, to retain Trust assets in
cash and from time to time change the securities or obligations in which the
assets of the Trust are invested; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such investments
of every kind and description, including, without limitation, the right to
consent and otherwise act with respect thereto, with power to designate one or
more Persons to exercise any of said rights, powers and privileges in respect of
any of said investments; and
(iii) to carry on any other business in connection with or incidental
to any of the foregoing powers, to do everything necessary, proper or desirable
for the accomplishment of any purpose or the attainment of any object or the
furtherance of any power hereinbefore set forth, and to do every other act or
thing incidental or appurtenant to or connected with the aforesaid purposes,
objects or powers.
(b) The Trustees shall not be limited to investing in securities or
obligations maturing before the possible termination of the Trust, nor shall the
Trustees be limited by any law limiting the investments which may be made by
fiduciaries.
Section 3.3. Legal Title. Legal title to all Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person or nominee, on such terms as the Trustees may determine. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee, such Trustee shall automatically
cease to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
Section 3.4. Issuance and Repurchase of Securities. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII, VIII and IX and Section 6.9
hereof, to apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds of the Trust or other Trust Property whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of the Commonwealth of Massachusetts governing business
corporations.
Section 3.5. Borrowing Money; Lending Trust Property. The Trustees
shall have power to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the Trust
Property, to endorse, guarantee, or undertake the performance of any obligation,
contract or engagement of any other Person and to lend Trust Property.
Section 3.6. Delegation; Committees. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient.
Section 3.7. Collection and Payment. Subject to Section 6.9 hereof,
the Trustees shall have power to collect all property due to the Trust; to pay
all claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations, by virtue of which any property
is owed to the Trust; and to enter into releases, agreements and other
instruments.
Section 3.8. Expenses. Subject to Section 6.9 hereof, the Trustees
shall have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shal1 fix the compensation of all officers,
employees and Trustees.
Section 3.9. Manner of Acting; By-Laws. Except as otherwise provided
herein or in the By-Laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees at which a quorum is
present, including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of all the Trustees.
The Trustees may adopt By-Laws not inconsistent with this Declaration to provide
for the conduct of the business of the Trust and may amend or repeal such
By-Laws to the extent such power is not reserved to the Shareholders.
Section 3.10. Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, and
appoint from their own number, and terminate, any one or more committees which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine; (d) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, the Administrator, Trustees,
officers, employees, agents, the Investment Adviser, the Distributor, selected
dealers or independent contractors of the Trust against all claims arising by
reason of holding any such position or by reason of any action taken or omitted
by any such Person in such capacity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such Person against
such liability; (e) establish pension, profit-sharing, Share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees or
agents of the Trust; (f) to the extent permitted by law, indemnify any person
with whom the Trust has dealings, including any Investment Adviser,
Administrator, Custodian, Distributor, Transfer Agent, Shareholder Servicing
Agent and any dealer, to such extent as the Trustees shall determine; (g)
guarantee indebtedness or contractual obligations of others; (h) determine and
change the fiscal year of the Trust and the method by which its accounts shall
be kept; and (i) adopt a seal for the Trust, provided, that the absence of such
seal shall not impair the validity of any instrument executed on behalf of the
Trust.
Section 3.11. Principal Transactions. Except in transactions permitted
by the 1940 Act, or any order of exemption issued by the Commission, the
Trustees shall not, on behalf of the Trust, buy any securities (other than
Shares) from or sell any securities (other than Shares) to, or lend any assets
of the Trust to, any Trustee or officer of the Trust or any firm of which any
such Trustee or officer is a member acting as principal, or have any such
dealings with any Investment Adviser, Administrator, Shareholder Servicing
Agent, Custodian, Distributor or Transfer Agent or with any Interested Person of
such Person; but the Trust may, upon customary terms, employ any such Person, or
firm or company in which such Person is an Interested Person, as broker, legal
counsel, registrar, transfer agent, dividend disbursing agent or custodian.
Section 3.12. Trustees and Officers as Shareholders. Except as
hereinafter provided, no officer, Trustee or Member of the Advisory Board of the
Trust, and no member, partner, officer, director or trustee of the Investment
Adviser, Administrator or of the Distributor, and no Investment Adviser,
Administrator or Dlstributor of the Trust, shall take long or short positions in
the securities issued by the Trust. The foregoing provision shall not prevent:
(a) The Distributor from purchasing Shares from the Trust if such
purchases are limited (except for reasonable allowances for clerical errors,
delays and errors of transmission and cancellation of orders) to purchases for
the purpose of filling orders for Shares received by the Distributor and
provided that orders to purchase from the Trust are entered with the Trust or
the Custodian promptly upon receipt by the Distributor of purchase orders for
Shares, unless the Distributor is otherwise instructed by its customer;
(b) The Distributor from purchasing Shares as agent for the account of
the Trust;
(c) The purchase from the Trust or from the Distributor of Shares by
any officer, Trustee or member of the Advisory Board of the Trust or by any
member, partner, officer, director or trustee of the Investment Adviser or of
the Distributor at a price not lower than the net asset value of the Shares at
the moment of such purchase, provided that any such sales are only to be made
pursuant to a uniform offer described in the Trust's current prospectus or
statement of additional information; or
(d) The Investment Adviser, the Distributor, or any of their officers,
partners, directors or trustees from purchasing Shares prior to the effective
date of the Trust's Registration Statement under the Securities Act of 1933, as
amended, relating to the Shares.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR, ADMINISTRATOR, TRANSFER AGENT
AND SHAREHOLDER SERVICING AGENTS
Section 4.1. Investment Adviser. Subject to a Majority Shareholder
vote of the Shares of each series affected thereby, the Trustees may in their
discretion from time to time enter into one or more investment advisory or
management contracts whereby the other party to each such contract shall
undertake to furnish the Trust such management, investment advisory, statistical
and research facilities and services, promotional activities, and such other
facilities and services, if any, with respect to one or more series of Shares,
as the Trustees shall from time to time consider desirable and all upon such
terms and conditions as the Trustees may in their discretion determine.
Notwithstanding any provision of the Declaration, the Trustees may delegate to
the Investment Adviser authority (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales, loans or exchanges of assets of the Trust on behalf of the Trustees or
may authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of the Investment Adviser (and
all without further action by the Trustees). Any of such purchases, sales, loans
or exchanges shall be deemed to have been authorized by all the Trustees. Such
services may be provided by one or more Persons.
Section 4.2. Distributor. The Trustees may in their discretion from
time to time enter into one or more distribution contracts providing for the
sale of Shares whereby the Trust may either agree to sell the Shares to the
other party to any such contract or appoint any such other party its sales agent
for such Shares. In either case, any such contract shall be on such terms and
conditions as the Trustees may in their discretion determine, provided that such
terms and conditions are not inconsistent with the provisions of the Declaration
or the By-Laws; and such contract may also provide for the repurchase or sale of
Shares by such other party as principal or as agent of the Trust and may provide
that such other party may enter into selected dealer agreements with registered
securities dealers to further the purpose of the distribution or repurchase of
the Shares. Such services may be provided by one or more Persons.
Section 4.3. Administrator. The Trustees may in their discretion from
time to time enter into one or more administrative services contracts whereby
the other party to each such contract shall undertake to furnish such
administrative services to the Trust as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may in
their discretion determine, provided that such terms and conditions are not
inconsistent with the provisions of this Declaration or the By-Laws. Such
services may be provided by one or more persons.
Section 4.4. Transfer Agent and Shareholder Servicing Agents. The
Trustees may in their discretion from time to time enter into one or more
transfer agency and shareholder servicing contracts whereby the other party to
each such contract shall undertake to furnish such transfer agency and/or
shareholder services to the Trust as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may in
their discretion determine, provided that such terms and conditions are not
inconsistent with the provisions of this Declaration or the By-Laws. Such
services may be provided by one or more Persons.
Section 4.5. Parties to Contract. Any contract of the character
described in Section 4.1, 4.2, 4.3 or 4.4 of this Article IV or any Custodian
contract may be entered into with any Person, although one or more of the
Trustees or officers of the Trust may be an officer, partner, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship; nor shall any Person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of any such contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of the Article IV or the By-Laws. The same
Person may be the other party to contracts entered into pursuant to Sections
4.1, 4.2, 4.3 and 4.4 above or any Custodian contract, and any individual may be
financially interested or otherwise affiliated with Persons who are parties to
any or all of the contracts mentioned in this Section 4.5.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 5.1. No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard for his duty to such Person; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee, officer,
employee, or agent, as such, of the Trust, is made a party to any suit or
proceeding to enforce any such liability, he shall not, on account thereof, be
held to any personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities to which such
Shareholder may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1 shall not
exclude any other right to which such Shareholder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein. Notwithstanding any other provision of this
Declaration to the contrary, no Trust Property shall be used to indemnify or
reimburse any Shareholder of any Shares of any series other than Trust Property
allocated or belonging to such series.
Section 5.2. Non-Liability of Trustees, etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee, or agent thereof for any
action or failure to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, wilful misfeasance, gross negligence or reckless disregard of
his duties.
Section 5.3. Mandatory Indemnification. (a) Subject to the exceptions
and limitations contained in paragraph (b) below:
(i) every person who is or has been a Trustee or officer of the Trust
shall be indemnified by the Trust against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof;
(ii) the words "claim", "action", "suit", or "proceeding" shall apply
to all claims, actions, suits or proceedings (civi1, criminal, administrative or
other, including appeals), actual or threatened; and the words "1iabi1ity" and
"expenses" shall include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any 1iability to the Trust or the Shareholders by reason of
a final adjudication by the court or other body before which the proceeding was
brought that he engaged in wi1ful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his off1ce;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(iii) in the event of a settlement involv1ng a payment by a Trustee or
officer or other disposition not involving a final adjudication as provided in
paragraph (b) (i) or (b) (ii) above resulting in a payment by a Trustee or
officer, unless there has been either a determination that such Trustee or
officer did not engage in wi1ful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or by a
reasonable determination, based upon a review of readi1y avai1able facts (as
opposed to a full trial-type inquiry) that he did not engage in such conduct:
(A) by vote of a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested Trustees
then in office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a Person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs, executors and
administrators of such Person. Nothing contained herein shall affect any rights
to indemnification to which personnel other than Trustees and officers may be
entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnification
under this Section 5.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 5.3 a "Disinterested Trustee" is one (i) who is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending.
Section 5.4. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust Instruments,
etc. No purchaser, lender, Shareholder Servicing Agent, Transfer Agent or other
Person dealing with the Trustees or any officer, employee or agent of the Trust
shall be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent or
be liable for the application of money or property paid, loaned, or delivered to
or on the order of the Trustees or of said officer, employee or agent. Every
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking, and every other act or thing whatsoever executed in
connection with the Trust shall be conclusively presumed to have been executed
or done by the executors thereof only in their capacity as Trustees under the
Declaration or in their capacity as officers, employees or agents of the Trust.
Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking made or issued by the Trustees shall recite
that the same is executed or made by them not individually, but as Trustees
under the Declaration, and that the obligations of any such instrument are not
binding upon any of the Trustees or Shareholders individually, but bind only the
trust estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind any of
the Trustees or Shareholders individually. The Trustees shall at all times
maintain insurance for the protection of the Trust Property, the Trust's
Shareholders, Trustees, officers, employees and agents in such amount as the
Trustees shall deem adequate to cover possible tort liability, and such other
insurance as the Trustees in their sole Judgment shall deem advisable.
Section 5.6. Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
Transfer Agent, any Shareholder Servicing Agent, selected dealers, accountants,
appraisers or other experts or consultants selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether such counsel
or expert may also be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1. Beneficial Interest. The interest of the beneficiaries
hereunder may be divided into transferable Shares of Beneficial Interest
(without par value), all of one class, which may be divided into one or more
series as provided in Section 6.9 hereof. The number of Shares authorized
hereunder is unlimited. All Shares issued hereunder including, without
limitation, Shares issued in connection with a dividend in Shares or a split of
Shares, shall be fully paid and non-assessable.
Section 6.2. Rights of Shareholders. The ownership of the Trust
Property of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
Shares, and they shall have no right to call for any partition or division of
any property, profits, rights or interests of the Trust nor can they be called
upon to assume any losses of the Trust or suffer an assessment of any kind by
virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights specifically set forth in the Declaration. The Shares
shall not entitle the holder to preference, pre-emptive, appraisal, conversion
or exchange rights, except as the Trustees may determine with respect to any
series of Shares.
Section 6.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 6.4. Issuance of Shares. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held In the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times, and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection, with the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares. The Trustees may from time to time divide or combine the
Shares of any series into a greater or lesser number without thereby changing
their proportionate beneficial interests in Trust Property allocated or
belonging to such series. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/l,000ths of a Share or
integral multiples thereof.
Section 6.5. Register of Shares. A register or registers shall be kept
at the principal office of the Trust or at an office of the Transfer Agent or
any one or more Shareholder Servicing Agents which register or registers, taken
together, shall contain the names and addresses of the Shareholders and the
number of Shares held by them respectively and a record of all transfers
thereof. Such register or registers shall be conclusive as to who are the
holders of the Shares and who shall be entitled to receive dividends or
distributions or otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein or in the By-Laws
provided, until he has given his address to the Transfer Agent, the Shareholder
Servicing Agent which is the agent of record for such Shareholder, or such other
officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of Share
certificates and promulgate appropriate rules and regulations as to their use.
Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees, the Transfer Agent or
the Shareholder Servicing Agent which is the agent of record for such
Shareholder, of a duly executed instrument of transfer, together with any
certificate or certificates (if issued) for such Shares and such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent, Shareholder Servicing Agent or
registrar nor any officer, employee or agent of the Trust shall be affected by
any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees, the Transfer
Agent or the Shareholder Servicing Agent which is the agent of record for such
Shareholder; but until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereunder and neither
the Trustees nor any Transfer Agent, Shareholder Servicing Agent or registrar
nor any officer or agent of the Trust shall be affected by any notice of such
death, bankruptcy or incompetence, or other operation of law.
Section 6.7. Notices. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
Section 6.8. Voting Powers. The Shareholders shall have power to vote
only (i) for the removal of Trustees as provided in Section 2.2 hereof, (ii)
with respect to any investment advisory or management contract as provided in
Section 4.1 hereof, (iii) with respect to termination of the Trust as provided
in Section 9.2 hereof, (iv) with respect to any amendment of this Declaration to
the extent and as provided in Section 9.3 hereof, (v) with respect to any
merger, consolidation or sale of assets as provided in Sections 9.4 and 9.6
hereof, (vi) with respect to incorporation of the Trust or any series to the
extent and as provided in Sections 9.5 and 9.6 hereof, (vii) to the same extent
as the stockholders of a Massachusetts business corporation as to whether or not
a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (viii) with respect to such additional matters relating to the
Trust as may be required by the Declaration, the By-Laws or any registration of
the Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote, except that Shares
held in the treasury of the Trust shall not be voted. Shares shall be voted by
individual series on any matter submitted to a vote of the Shareholders of the
Trust except as provided in Section 6.9(g) hereof. There shall be no cumulative
voting in the election of Trustees. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law, the
Declaration or the By-Laws to be taken by Shareholders. At any meeting of
shareholders of the Trust or of any series of the Trust, a Shareholder Servicing
Agent may vote any shares as to which such Shareholder Servicing Agent is the
agent of record and which are not otherwise represented in person or by proxy at
the meeting, proportionately in accordance with the votes cast by holders of all
shares otherwise represented at the meeting in person or by proxy as to which
such Shareholder Servicing Agent is the agent of record. Any shares so voted by
a Shareholder Servicing Agent will be deemed represented at the meeting for
quorum purposes. The By-Laws may include further provisions for Shareholder
votes and meetings and related matters.
Section 6.9. Series Designation. Shares of the Trust may be divided
into series, the number and relative rights, privileges and preferences of which
shall be established and designated by the Trustees, in their discretion, in
accordance with the terms of this Section 6.9. The Trustees may from time to
time exercise their power to authorize the division of Shares into one or more
series by establishing and designating one or more series of Shares upon and
subject to the following provisions:
(a) All Shares shall be identical except that there may be such
variations as shall be fixed and determined by the Trustees between different
series as to purchase price, right of redemption and the price, terms and manner
of redemption, and special and relative rights as to dividends and on
liquidation.
(b) The number of authorized Shares and the number of Shares of each
series that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any series into one or more series that may be established and designated from
time to time. The Trustees may hold as treasury shares (of the same or some
other series), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any series reacquired by the Trust at their
discretion from time to time.
(c) All consideration received by the Trust for the Issue or sale of
Shares of a particular series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series for all purposes, subject only to the rights
of creditors of such series, and shall be so recorded upon the books of account
of the Trust. In the event that there are any assets, income, earnings, profits,
and proceeds thereof, funds, or payments which are not readily identifiable as
belonging to any particular series, the Trustees shall allocate them among any
one or more of the series established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all series for all purposes. No holder of Shares of any
particular series shall have any claim on or right to any assets allocated or
belonging to any other series of Shares.
(d) The assets belonging to each particular series shall be charged
with the liabilities of the Trust in respect of that series and all expenses,
costs, charges and reserves attributable to that series, and any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular series shall be allocated
and charged by the Trustees to and among any one or more of the series
established and designated from time to time in such manner and on such basis as
the Trustees in their sole discretion deem fair and equitable. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of all series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding upon the Shareholders. Under no circumstances shall the assets allocated
or belonging to any particular series be charged with liabilities attributable
to any other series. All Persons who have extended credit which has been
allocated to a particular series, or who have a claim or contract which has been
allocated to any particular series, shall look only to the assets of that
particular series for payment of such credit, claim or contract.
(e) The power of the Trustees to invest and reinvest the Trust Property
allocated or belonging to any particular series shall be governed by Section
3.2 hereof unless otherwise provided in the instrument of the Trustees
establishing such series which is hereinafter described.
(f) Each Share of a series shall represent a beneficial interest in the
net assets allocated or belonging to such series only, and such interest shall
not extend to the assets of the Trust generally. Dividends and distributions on
Shares of a particular series may be paid with such frequency as the Trustees
may determine, which may be monthly or otherwise, pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the
Trustees may determine, to the holders of Shares of that series only, from such
of the income and capital gains, accrued or realized, from the assets belonging
to that series, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that series. All dividends and distributions on
Shares of a particular series shall be distributed pro rata to the holders of
that series in proportion to the number of Shares of that series held by such
holders at the date and time of record established for the payment of such
dividends or distributions. Shares of any particular series of the Trust may be
redeemed solely out of Trust Property allocated or belonging to that series.
Upon liquidation or termination of a series of the Trust, Shareholders of such
series shall be entitled to receive a pro rata share of the net assets of such
series only.
(g) Notwithstanding any provision hereof to the contrary, on any matter
submitted to a vote of the Shareholders of the Trust, all Shares then entitled
to vote shall be voted by individual series, except that (i) when required by
the 1940 Act to be voted in the aggregate, Shares shall not be voted by
individual series, and (ii) when the Trustees have determined that the matter
affects only the interests of Shareholders of one or more series, only
Shareholders of such series shall be entitled to vote thereon.
(h) The establishment and designation of any series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such series, or as otherwise provided in such instrument. At any
time that there are no Shares outstanding of any particular series previously
established and designated, the Trustees may by an instrument executed by a
majority of their number abolish that series and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration.
ARTICLE VII
REDEMPTIONS
Section 7.1 Redemptions. In case any Shareholder at any time desires to
dispose of his Shares, he may deposit his certificate or certificates therefor,
duly endorsed in blank or accompanied by an instrument of transfer executed in
blank, or if the Shares are not represented by any certificates, a written
request or other such form of request as the Trustees may from time to time
authorize, at the office of the Transfer Agent, the Shareholder Servicing Agent
which is the agent of record for such Shareholder, or at the office of any bank
or trust company, either in or outside of Massachusetts, which is a member of
the Federal Reserve System and which the said Transfer Agent or the said
Shareholder Servicing Agent has designated in writing for that purpose, together
with an irrevocable offer in writing in a form acceptable to the Trustees to
sell the Shares represented thereby to the Trust at the net asset value thereof
per Share, determined as provided in Section 8.1 hereof, next after such
deposit. Payment for said Shares shall be made to the Shareholder within seven
days after the date on which the deposit is made, unless (i) the date of payment
is postponed pursuant to Section 7.2 hereof, or (ii) the receipt, or
verification of receipt, of the purchase price for the Shares to be redeemed is
delayed, in either of which events payment may be delayed beyond seven days.
Section 7.2 Suspension of Right of Redemption. The Trust may declare a
suspension Of the right Of redemption or postpone the date of payment of the
redemption proceeds for the whole or any part of any period (i) during which the
New York Stock Exchange is closed other than customary week-end and holiday
closings, (ii) during which trading on the New York Stock Exchange is
restricted, (iii) during which an emergency exists as a result of which disposal
by the Trust of securities owned by it is not reasonably practicable or it is
not reasonably practicable for the Trust fairly to determine the value of its
net assets, or (iv) during any other period when the Commission may for the
protection of security holders of the Trust by order permit suspension of the
right of redemption or postponement of the date of payment of the redemption
proceeds; provided that applicable rules and regulations of the Commission shall
govern as to whether the conditions prescribed in (ii), (iii) or (iv) exist.
Such suspension shall take effect at such time as the Trust shall specify but
not later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment of the redemption proceeds until the Trust shall declare the
suspension at an end, except that the suspension shall terminate in any event on
the first day on which said stock exchange shall have reopened or the period
specified in (ii) or (iii) shall have expired (as to which, in the absence of an
official ruling by the Commission, the determination of the Trust shall be
conclusive). In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the net asset value existing after the termination of the suspension.
Section 7.3. Redemption of Shares; Disclosure of Holding. If the
Trustees shall, at any time and in good faith, be of the opinion that direct or
indirect ownership of Shares or other securities of the Trust has or may become
concentrated in any Person to an extent which would disqualify the Trust as a
regulated investment company under the Internal Revenue Code of 1954, as amended
(the "Code"), then the Trustees shall have the power by lot or other means
deemed equitable by them (i) to call for redemption by any such Person a number,
or principal amount, of Shares or other securities of the Trust sufficient to
maintain or bring the direct or indirect ownership of shares or other securities
of the Trust into conformity with the requirements for such qualification, and
(ii) to refuse to transfer or issue Shares or other securities of the Trust to
any Person whose acquisition of the Shares or other securities of the Trust in
question would result in such disqualification. The redemption shall be effected
at the redemption price and in the manner provided in Section 7.1 hereof.
The holders of Shares or other securities of the Trust shall upon
demand disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares or other securities of the Trust as the
Trustees deem necessary to comply with the provisions of the Code, or to comply
with the requirements of any other authority. Upon the failure of a Shareholder
to disclose such information and to comply with such demand of the Trustees, the
Trust shall have the power to redeem such Shares at a redemption price
determined in accordance with Section 7.1 hereof.
Section 7.4. Redemptions of Accounts of Less than $500. The Trustees
shall have the power at any time to redeem Shares of any Shareholder at a
redemption price determined in accordance with Section 7.1 hereof if at such
time the aggregate net asset value of the Shares in such Shareholder's account
is less than $500. A Shareholder shall be notified that the value of his account
is less than $500 and allowed 60 days to make an additional investment before
redemption is processed.
Section 7.5 Redemptions Pursuant to Constant Net Asset Value Formula.
The Trust may also reduce the number of outstanding Shares pursuant to the
provisions of Section 8.3 hereof.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
The Trustees, in their absolute discretion, may prescribe and shall set
forth in the By-laws or in a duly adopted vote of the Trustees such bases and
times for determining the per Share net asset value of the Shares or net income,
or the declaration and payment of dividends and distributions, as they may deem
necessary or desirable.
ARTICLE IX
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
Section 9.1. Duration. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
Section 9.2. Termination of Trust. (a) The Trust may be terminated (i)
by a Majority Shareholder Vote of the holders of its Shares, or (ii) by the
Trustees by written notice to the Shareholders. Any series of the Trust may be
terminated (i) by a Majority Shareholder Vote of the holders of Shares of that
series, or (ii) by the Trustees by written notice to the Shareholders of that
series. Upon the termination of the Trust or any series of the Trust:
(i) The Trust or series of the Trust shall carry on no business except
for the purpose of winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust or
series of the Trust and all the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust or series of the Trust shall have
been wound up, including the power to fulfill or discharge the contracts of the
Trust or series of the Trust, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part of the remaining
Trust Property or Trust Property of the series to one or more persons at public
or private sale for consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay its liabilities, and
to do all other acts appropriate to liquidate its business; provided, that any
sale, conveyance, assignment, exchange, transfer or other disposition of all or
substantially all the Trust Property shall require Shareholder approval in
accordance with Section 9.4 hereof, and any sale, conveyance, assignment,
exchange, transfer or other disposition of all or substantially all of the Trust
Property allocated or belonging to any series shall require the approval of the
Shareholders of such series as provided in Section 9.6 hereof; and
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or Trust Property of the series, in cash
or in kind or partly in cash and partly in kind, among the Shareholders of the
Trust or the series according to their respective rights.
(b) After termination of the Trust or series and distribution to the
Shareholders of the Trust or series as herein provided, a majority of the
Trustees shall execute and lodge among the records of the Trust an instrument in
writing setting forth the fact of such termination, and the Trustees shall
thereupon be discharged from all further liabilities and duties hereunder with
respect to the Trust or series, and the rights and interests of all Shareholders
of the Trust or series shall thereupon cease.
Section 9.3. Amendment Procedure. (a) This Declaration may be amended
by a Majority Shareholder Vote of the Shareholders of the Trust or by any
instrument in writing, without a meeting, signed by a majority of the Trustees
and consented to by the holders of not less than a majority of the Shares of the
Trust. The Trustees may also amend this Declaration without the vote or consent
of Shareholders to designate series in accordance with Section 6.9 hereof, to
change the name of the Trust, to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, or if they
deem it necessary or advisable to conform this Declaration to the requirements
of applicable federal laws or regulations or the requirements of the regulated
investment company provisions of the Internal Revenue Code of 1954, as amended,
but the Trustees shall not be liable for failing so to do.
(b) No amendment which the Trustees shall have determined shall affect
the rights, privileges or interests of holders of a particular series of Shares,
and which would otherwise require a Majority Shareholder Vote under paragraph
(a) of this Section 9.3, but not the rights, privileges or interests of holders
of Shares of the Trust generally, may be made except with the vote or consent by
a Majority Shareholder Vote of such series.
(c) Notwithstanding any other provision hereof, no amendment may be
made under this Section 9.3 which would change any rights with respect to the
Shares, or any series of Shares, by reducing the amount payable thereon upon
liquidation of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the Majority Shareholder Vote of the Shares or
that series of Shares. Nothing contained in this Declaration shall permit the
amendment of this Declaration to impair the exemption from personal liability of
the Shareholders, Trustees, officers, employees and agents of the Trust or to
permit assessments upon Shareholders.
(d) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
(e) Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be amended in any respect by the affirmative
vote of a majority of the Trustees or by an instrument signed by a majority of
the Trustees.
Section 9.4. Merger, Consolidation and Sale of Assets. The Trust may
merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property (or all or substantially all of the Trust Property allocated or
belonging to a particular series of the Trust) including its good will, upon
such terms and conditions and for such consideration when and as authorized at
any meeting of Shareholders called for such purpose by the vote of the holders
of two-thirds of the outstanding shares of all series of the Trust voting as a
single class, or of the affected series of the Trust, as the case may be, or by
an instrument or instruments in writing without a meeting, consented to by the
vote of the holders of two-thirds of the outstanding Shares of all series of the
Trust voting as a single class, or of the affected series of the Trust, as the
case may be; provided, however, that if such merger, consolidation, sale, lease
or exchange is recommended by the Trustees, the vote or written consent by
Majority Shareholder Vote shall be sufficient authorization; and any such
merger, consolidation, sale, lease or exchange shall be deemed for all purposes
to have been accomplished under and pursuant to the statutes of the Commonwealth
of Massachusetts. Nothing contained herein shall be construed as required
approval of Shareholders for any sale of assets in the ordinary course of the
business of the Trust.
Section 9.5. Incorporation, Reorganization. With the approval of the
holders of a majority of the Shares outstanding and entitled to vote, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any Jurisdiction, or any other trust, unit
investment trust, partnership, association or other organization to take over
all of the Trust Property or to carry on any business in which the Trust shall
directly or indirectly have any interest, and to sell, convey and transfer the
Trust Property to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Trust holds or is about to acquire shares or any other
interest. Subject to Section 9.4 hereof, the Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law. Nothing contained in this Section 9.5 shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organization or entities.
Section 9.6. Incorporation or Reorganization of Series. With the
approval of a Majority Shareholder Vote of any series, the Trustees may sell,
lease or exchange all of the Trust Property allocated or belonging to that
series, or cause to be organized or assist in organizing a corporation or
corporations under the laws of any other Jurisdiction, or any other trust, unit
investment trust, partnership, association or other organization, to take over
all of the Trust Property allocated or belonging to that series and to sell,
convey and transfer such Trust Property to any such corporation, trust, unit
investment trust, partnership, association, or other organization in exchange
for the shares or securities thereof or otherwise.
ARTICLE X
REPORTS TO SHAREHOLDERS AND SHAREHOLDER COMMUNICATIONS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
Whenever 10 or more Shareholders of record who have been such for at
least six months preceding the date of application, and who hold in the
aggregate either Shares having a net asset value of at least $25,000 or at least
1% of the Shares outstanding, whichever is less, shall apply to the Trustees in
writing, stating that they wish to communicate with other Shareholders with a
view to obtaining signatures to a request for a meeting of Shareholders for the
purpose of removing one or more Trustees pursuant to Section 2.2 hereof and
accompany such application with a form of communication and request which they
wish to transmit, the Trustees shall within five business days after receipt of
such application either (a) afford to such applicants access to a list of the
names and addresses of all Shareholders as recorded on the books of the Trust;
or (b) inform such applicants as to the approximate number of Shareholders of
record, and the approximate cost of mailing to them the proposed communication
and form of request. If the Trustees elect to follow the course specified in (b)
above, the Trustees, upon the written request of such applicants, accompanied by
a tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record, unless within five business days after such tender the Trustees mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement signed by at least a majority of the
Trustees to the effect that in their opinion either such material contains
untrue statements of fact or omits to state facts necessary to make the
statements contained therein not misleading, or would be in violation of
applicable law, and specifying the basis of such opinion.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Filing. This Declaration, as amended, and any subsequent
amendment hereto shall be filed in the office of the Secretary of the
Commonwealth of Massachusetts and in such other place or places as may be
required under the laws of the Commonwealth of Massachusetts and may also be
filed or recorded in such other places as the Trustees deem appropriate. Each
amendment so filed shall be accompanied by a certificate signed and acknowledged
by a Trustee stating that such action was duly taken in a manner provided
herein, and unless such amendment or such certificate sets forth some later time
for the effectiveness of such amendment, such amendment shall be effective upon
its filing. A restated Declaration, integrating into a single instrument all of
the provisions of the Declaration which are then in effect and operative, may be
executed from time to time by a majority of the Trustees and shall, upon filing
with the Secretary of the Commonwealth of Massachusetts, be conclusive evidence
of all amendments contained therein and may thereafter be referred to in lieu of
this original Declaration and the various amendments thereto.
Section 11.2. Governing Law. This Declaration is executed by the
trustees and delivered in the Commonwealth of Massachusetts and with reference
to the laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said Commonwealth.
Section 11.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 11.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying to: (i) the number or identity of Trustees or
Shareholders, (ii) the due authorization of the execution of any instrument or
writing, (iii) the form of any vote passed at a meeting of Trustees or
Shareholders, (iv) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (v) the form of any By-Laws adopted by or the identity of any
officers elected by the Trustees, or (vi) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
Section 11.5. Provisions in Conflict with Law or Regulations. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code of 1954, as amended, or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this instrument this 23rd day
of June, 1986.
/s/ Arnold D. Scott
---------------------------------
Arnold D. Scott
as Trustee
and not individually
200 Berkeley Street
Boston, Massachusetts
/s/ W. Thomas London
---------------------------------
W. Thomas London
as Trustee
and not individually
200 Berkeley Street
Boston, Massachusetts
/s/ Stephen G. Moorhead
---------------------------------
Stephen G. Moorhead
as Trustee
and not individually
200 Berkeley Street
Boston, Massachusetts
/s/ Philip W. Coolidge
---------------------------------
Philip W. Coolidge
as Trustee
and not individually
200 Berkeley Street
Boston, Massachusetts
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, SS.
June 23, 1986
Then personally appeared the above-named Arnold D. Scott, W. Thomas
London, Stephen G. Moorhead and Philip W. Coolidge, who severally acknowledged
the foregoing instrument to be their free act and deed.
Before me,
/s/ Patricia C. Houl
---------------------------------
Notary Public
My commission expires: 6/8/90
<PAGE>
Exhibit 1(b)
LANDMARK FlXED INCOME FUNDS
CERTIFICATE OF AMENDMENT
TO DECLARATION OF TRUST
The undersigned, constituting a majority of the Trustees of Landmark
Fixed Income Funds (the "Trust"), a business trust organized under the laws of
the Commonwealth of Massachusetts, pursuant to a Declaration of Trust dated June
23, 1986 (the "Declaration"), as amended, do hereby certify, as provided by the
provisions of Section 9.3(a) of the Declaration, that:
(i) in accordance with the provisions of the first sentence of Section
9.3(a) of the Declaration, pursuant to a vote duly adopted by a
majority of the Trustees of the Trust on September 13, 1993 and further
approved by a Majority Shareholder Vote, as defined in the Declaration,
of each series affected by the amendment on December 21, 1993, the
Declaration was amended as follows:
Section 3.2 of the Declaration is amended by adding the following paragraph
(d) immediately following paragraph (c) thereof:
"(d) 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 series of the Trust, or sell all
of the Trust Property of U.S. Government Income Fund, or sell all of
such Trust Property and invest the proceeds of such sales, in another
investment company that is registered under the 1940 Act."
IN WITNESS WHEREOF, the undersigned have executed this certificate as
of the 21st day of October, 1993.
H. B. Alvord Diana R. Harrington
------------------------ ------------------------
H. B. Alvord Diana R. Harrington
Elliott J. Berv Susan B. Kerley
------------------------ ------------------------
Elliott J. Berv Susan B. Kerley
Philip W. Coolidge C. Oscar Morong, Jr
------------------------ ------------------------
Philip W. Coolidge C. Oscar Morong, Jr
Mark T. Finn Walter E. Robb, III
------------------------ ------------------------
Mark T. Finn Walter E. Robb, III
Riley C. Gilley E. Kirby Warren
------------------------ ------------------------
Riley C. Gilley E. Kirby Warren
William S. Woods, Jr.
------------------------
William S. Woods, Jr.
<PAGE>
LANDMARK FIXED INCOME FUNDS
ESTABLISHMENT AND
DESIGNATION OF SERIES OF SHARES OF
BENEFICIAL INTEREST (WITHOUT PAR VALUE)
The Establishment and Designation of Series of Shares filed on June 26,
1992, is hereby amended and restated as follows: Pursuant to Section 6.9 of the
Declaration of Trust, as amended (the "Declaration of Trust"), of Landmark Fixed
Income Funds (the "Trust"), the Trustees of the Trust hereby establish and
designate the following series of Shares (as defined in the Declaration of
Trust) (each, a "Fund") to have the following special and relative rights:
1. Each Fund shall be designated as follows:
Landmark U.S. Government Income Fund
Landmark Intermediate Income Fund
Landmark Long-Term U.S. Government Income Fund
Landmark Global Governments Income Fund and
Landmark Global Emerging Markets Income Fund.
2. Each Fund shall be authorized to hold cash, invest in securities,
instruments and other property and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Securities Act of 1933 to the extent pertaining to the offering of
Shares of such Fund. Each share of each Fund shall be redeemable, shall be
entitled to one vote (or a fraction thereof in respect of a fractional share) on
matters on which Shares of each Fund shall be entitled to vote, shall represent
a pro rata beneficial interest in the assets allocated or belonging to each
Fund, and shall be entitled to receive its pro rata share of the net assets of
each Fund upon liquidation of each Fund, all as provided in Section 6.9 of the
Declaration of Trust. The proceeds of sales of Shares of each Fund, together
with any income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to each Fund, unless otherwise required by law.
3. Shareholders of each Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall have been deemed
effectively acted upon with respect to such Fund as provided in, Rule 18f-2, as
from time to time in effect, under the Investment Company Act of 1940, as
amended, or any successor rule, and the Declaration of Trust.
4. The assets and liabilities of the Trust shall be allocated among the
Funds as set forth in Section 6.9 of the Declaration of Trust.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall have
the right at any time and from time to time to change the designation of any
Fund now or hereafter created, or to otherwise change the special and relative
rights of any Fund.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 21st day of October, 1993.
H. B. Alvord Diana R. Harrington
------------------------ ------------------------
H. B. Alvord Diana R. Harrington
Elliott J. Berv Susan B. Kerley
------------------------ ------------------------
Elliott J. Berv Susan B. Kerley
Philip W. Coolidge C. Oscar Morong, Jr
------------------------ ------------------------
Philip W. Coolidge C. Oscar Morong, Jr
Mark T. Finn Walter E. Robb, III
------------------------ ------------------------
Mark T. Finn Walter E. Robb, III
Riley C. Gilley E. Kirby Warren
------------------------ ------------------------
Riley C. Gilley E. Kirby Warren
William S. Woods, Jr.
------------------------
William S. Woods, Jr.
<PAGE>
LANDMARK FIXED INCOME FUNDS
ESTABLISHMENT AND
DESIGNATION OF SERIES OF SHARES OF
BENEFICIAL INTEREST (WITHOUT PAR VALUE)
The Establishment and Designation of Series of Shares filed on June 26,
1992, is hereby amended and restated as follows: Pursuant to Section 6.9 of the
Declaration of Trust, as amended (the "Declaration of Trust"), of Landmark Fixed
Income Funds (the "Trust"), the Trustees of the Trust hereby establish and
designate the following series of Shares (as defined in the Declaration of
Trust) (each, a "Fund") to have the following special and relative rights:
1. Each Fund shall be designated as follows:
Landmark U.S. Government Income Fund
Landmark Intermediate Income Fund and
Landmark Long-Term U.S. Government Income Fund.
2. Each Fund shall be authorized to hold cash, invest in securities,
instruments and other property and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Securities Act of 1933 to the extent pertaining to the offering of
Shares of such Fund. Each share of each Fund shall be redeemable, shall be
entitled to one vote (or a fraction thereof in respect of a fractional share) on
matters on which Shares of each Fund shall be entitled to vote, shall represent
a pro rata beneficial interest in the assets allocated or belonging to each
Fund, and shall be entitled to receive its pro rata share of the net assets of
each Fund upon liquidation of each Fund, all as provided in Section 6.9 of the
Declaration of Trust. The proceeds of sales of Shares of each Fund, together
with any income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to each Fund, unless otherwise required by law.
3. Shareholders of each Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall have been deemed
effectively acted upon with respect to such Fund as provided in, Rule 18f-2, as
from time to time in effect, under the Investment Company Act of 1940, as
amended, or any successor rule, and the Declaration of Trust.
4. The assets and liabilities of the Trust shall be allocated among the
Funds as set forth in Section 6.9 of the Declaration of Trust.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall have
the right at any time and from time to time to change the designation of any
Fund now or hereafter created, or to otherwise change the special and relative
rights of any Fund.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 13th day of September, 1993.
H. B. Alvord Diana R. Harrington
------------------------ ------------------------
H. B. Alvord Diana R. Harrington
Elliott J. Berv Susan B. Kerley
------------------------ ------------------------
Elliott J. Berv Susan B. Kerley
Philip W. Coolidge C. Oscar Morong, Jr
------------------------ ------------------------
Philip W. Coolidge C. Oscar Morong, Jr
Mark T. Finn Walter E. Robb, III
------------------------ ------------------------
Mark T. Finn Walter E. Robb, III
Riley C. Gilley E. Kirby Warren
------------------------ ------------------------
Riley C. Gilley E. Kirby Warren
William S. Woods, Jr.
------------------------
William S. Woods, Jr.
<PAGE>
LANDMARK FIXED INCOME FUNDS
ESTABLISHMENT AND
DESIGNATION OF SERIES OF SHARES OF
BENEFICIAL INTEREST (WITHOUT PAR VALUE)
Pursuant to Section 6.9 of the Declaration of Trust, as amended (the
"Declaration of Trust"), of Landmark Fixed Income Funds (the "Trust"), the
Trustees of the Trust hereby establish and designate the following series of
Shares (as defined in the Declaration of Trust) (each, a "Fund") to have the
following special and relative rights:
1. Each Fund shall be designated as follows:
Landmark U.S. Government Income Fund and
Landmark Intermediate Income Fund.
2. Each Fund shall be authorized to hold cash, invest in securities,
instruments and other property and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Secunties Act of 1933 to the extent pertaining to the offering of
Shares of such Fund. Each share of each Fund shall be redeemable, shall be
entitled to one vote (or a fraction thereof in respect of a fractional share) on
matters on which Shares of each Fund shall be entitled to vote, shall represent
a pro rata beneficial interest in the assets allocated or belonging to each
Fund, and shall be entitled to receive its pro rata share of the net assets of
each Fund upon liquidation of each Fund, all as provided in Section 6.9 of the
Declaration of Trust. The proceeds of sales of Shares of each Fund, together
with any income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to each Fund, unless otherwise required by law.
3. Shareholders of each Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall have been deemed
effectively acted upon with respect to such Fund as provided in, Rule 18f-2, as
from time to time in effect, under the Investment Company Act of 1940, as
amended, or any successor rule, and the Declaration of Trust.
4. The assets and liabilities of the Trust shall be allocated between
the Funds as set forth in Section 6.9 of the Declaration of Trust except that
all existing assets and liabilities of the Trust as of the date of this
Designation of Series shall be deemed to be the assets and liabilities of
Landmark U.S. Government Income Fund, and all shares of the Trust outstanding as
of the date of this Designation of Series shall be deemed to be outstanding
shares of Landmark U.S. Government Income Fund.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall have
the right at any time and from time to time to change the designation of any
Fund now or hereafter created, or to otherwise change the special and relative
rights of any Fund.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 11th day of June, 1992.
H. B. Alvord C. Oscar Morong, Jr.
------------------------ ------------------------
H. B. Alvord C. Oscar Morong, Jr.
Elliott J. Berv Walter E. Robb, Iii
------------------------ ------------------------
Elliott J. Berv Walter E. Robb, Iii
Philip W. Coolidge E. Kirby Warren
------------------------ ------------------------
Philip W. Coolidge E. Kirby Warren
Mark T. Finn T. Dean Williams
------------------------ ------------------------
Mark T. Finn T. Dean Williams
Riley C. Gilley William S. Woods, Jr.
------------------------ ------------------------
Riley C. Gilley William S. Woods, Jr.
<PAGE>
LANDMARK U.S. GOVERNMENT INCOME FUND
CERTIFICATE OF AMENDMENT
TO DECLARATION OF TRUST
The undersigned, constituting a majority of the Trustees of Landmark
U.S. Government Income Fund (the "Trust"), a business trust organized under the
laws of the Commonwealth of Massachusett pursuant to a Declaration of Trust
dated June 23, 1986 (the "Declaration"), do hereby certify, as provided the
provisions of Section 9.3(a) of the Declaration, that:
(i) in accordance with the provisions of the last sentence of Section
9.3(a) of the Declaration, a majority of the Trustees of the Trust, by
vote duly adopted on June 11, 1992, amended the Declaration as follows:
Section 1.1 is amended to read in its entirety:
"Section 1 1. Name The name of the trust created hereby is 'Landmark
Fixed Income Funds."
(ii) in accordance with the provisions of the first sentence of Section
9.3(a) of the Declaration, majority of the Trustees of the Trust, by
vote duly adopted on June 11, 1992, amended the Declaration as follows,
subject to the consent of a majority of the shareholders of each series
affected by the amendment:
Section 3.2 of the Declaration is amended by adding the following
paragraph (c) immediately following paragraph (b) thereof:
"(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 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."
IN WITNESS WHEREOF, the undersigned have executed this certificate as
of the 11th day June, 1992.
Elliott J. Berv C. Oscar Morong, Jr.
------------------------ ------------------------
Elliott J. Berv C. Oscar Morong, Jr.
H.B. Alvord Walter E. Robb, III
------------------------ ------------------------
H.B. Alvord Walter E. Robb, III
Philip W. Coolidge E. Kirby Warren
------------------------ ------------------------
Philip W. Coolidge E. Kirby Warren
Mark T. Finn T. Dean Williams
------------------------ ------------------------
Mark T. Finn T. Dean Williams
Riley C. Gilley William S. Woods, Jr.
------------------------ ------------------------
Riley C. Gilley William S. Woods, Jr.
<PAGE>
LANDMARK U.S. GOVERNMENT INCOME FUND
CERTIFICATE OF AMENDMENT
TO DECLARATION OF TRUST
The undersigned, constituting a majority of the Trustees of Landmark,
U.S. Government Income Fund (the "Trust"), a business trust organized
under the laws of the Commonwealth of Massachusetts, pursuant to a
Declaration of Trust dated June 23, 1986 (the "Declaration"), do hereby
certify, as provided by Section 9.3 (d) of the Declaration, that, in
accordance with the provisions of Section 9.3(a) of the Declaration, a
majority of the Shareholders of the Trust, by vote duly adopted on
February 23, 1989, amended the Declaration as follows:
Section 6.9 of the Declaration is amended by adding the following
paragraph (i) immediately following paragraph (h) thereof:
"(i) Notwithstanding anything in this Declaration to the contrary, the
Trustees may, in their discretion, authorize the division of
Shares of any series into Shares of one or more classes or
subseries of such series. All Shares of a class or a subseries
shall be identical with each other and with the shares of each
other class or subseries of the same series except for such
variations between classes or subseries as may be approved by the
Board of Trustees and permitted under the 1940 Act or pursuant to
any exemptive order issued by the Securities and Exchange
Commission.
IN WITNESS WHEREOF, the undersigned have executed this certificate as
of the 16th day of January, 1992.
H. B. Alvord C. Oscar Morong, Jr.
------------------------ ------------------------
H. B. Alvord C. Oscar Morong, Jr.
Elliott J. Berv Walter E. Robb, Iii
------------------------ ------------------------
Elliott J. Berv Walter E. Robb, Iii
Philip W. Coolidge E. Kirby Warren
------------------------ ------------------------
Philip W. Coolidge E. Kirby Warren
Mark T. Finn T. Dean Williams
------------------------ ------------------------
Mark T. Finn T. Dean Williams
Riley C. Gilley William S. Woods, Jr.
------------------------ ------------------------
Riley C. Gilley William S. Woods, Jr.
<PAGE>
LANDMARK FIXED INCOME FUNDS
Certificate of Amendment
to Declaration of Trust
The undersigned, constituting a majority of the Trustees of Landmark Fixed
Income Funds (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts pursuant to a Declaration of Trust, dated June 23,
1986, as amended (the "Declaration"), do hereby certify, as provided by the
provisions of Section 9.3(d) of the Declaration, that in accordance with the
provisions of the second sentence of Section 9.3(a), a majority of the Trustees
of the Trust, by vote duly adopted by a majority of the Trustees, amended the
Declaration effective February 10, 1995 as follows:
Section 6.5 is amended to read in its entirety:
Section 6.5 Register of Shares. A register or registers shall
be kept at the principal office of the Trust or at an office of the
Transfer Agent or, upon the vote of a majority of the Trustees of
the Trust, at an office of any one or more Shareholder Servicing
Agents, which register or registers, taken together, shall contain
the names and addresses of the Shareholders and the number of Shares
held by them respectively and a record of all transfers thereof.
Such register or registers shall be conclusive as to who are the
holders of the Shares and who shall be entitled to receive dividends
or distributions or otherwise to exercise or enjoy the rights of
Shareholders. Unless the Trustees have authorized a Shareholder
Servicing Agent to keep a register of Shares, that Shareholder
Servicing Agent shall be the holder of record of all outstanding
Shares shown on the records of the Transfer Agent as being held by
such Shareholder Servicing Agent. No Shareholder shall be entitled
to receive payment of any dividend or distribution, nor to have
notice given to him as herein or in the By-Laws provided, until he
has given his address to the Transfer Agent or such other officer or
agent of the Trustees as shall keep the said register for entry
thereon, or, if the Trustees have authorized a Shareholder Servicing
Agent to keep the register for the Shares of such Shareholder, such
Shareholder Servicing Agent (as used in this Declaration, such
Shareholder's "agent of record"). It is not contemplated that
certificates will be issued for the Shares; however, the Trustees,
in their discretion, may authorize the issuance of Share
certificates and promulgate appropriate rules and regulations as to
their use.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this certificate on
separate counterparts this 10th day of February, 1995.
H. B. Alvord Susan B. Kerley
------------------------ ------------------------
H. B. Alvord Susan B. Kerley
C. Oscar Morong, Jr.
Philip W. Coolidge ------------------------
------------------------ C. Oscar Morong, Jr.
Philip W. Coolidge
Donald B. Otis
Riley C. Gilley ------------------------
------------------------ Donald B. Otis
Riley C. Gilley
E. Kirby Warren
Diana R. Harrington ------------------------
------------------------ E. Kirby Warren
Diana R. Harrington
William S. Woods, Jr.
------------------------
William S. Woods, Jr.
<PAGE>
LANDMARK FIXED INCOME FUNDS
AMENDMENT TO
DECLARATION OF TRUST
The undersigned, constituting a majority of the Trustees of Landmark Fixed
Income Funds (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts, pursuant to a Declaration of Trust dated June 23,
1986, as amended (the "Declaration"), do hereby amend Section 3.2 of the
Declaration by deleting paragraph (c) thereof and replacing it in its entirety
with the following, such amendment to be subject to approval in accordance with
the Declaration of the shareholders of Landmark Intermediate Income Fund, a
series of the Trust:
(c) Notwithstanding any other provision of this Declaration to the
contrary, the Trustees shall have the power in their discretion without
any requirement of approval by Shareholders to either invest all or a
portion of the Trust Property of each Series of the Trust (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 one or more
investment companies to the extent not prohibited by the 1940 Act and
exemptive orders granted under such Act.
IN WITNESS WHEREOF, the undersigned have executed this Amendment this 8th
day of August, 1997.
Philip W. Coolidge Riley C. Gilley
------------------------ ------------------------
Philip W. Coolidge Riley C. Gilley
As Trustee and Not Individually As Trustee and Not Individually
Diana R. Harrington Susan B. Kerley
------------------------ ------------------------
Diana R. Harrington Susan B. Kerley
As Trustee and Not Individually As Trustee and Not Individually
C. Oscar Morong, Jr. E. Kirby Warren
------------------------ ------------------------
C. Oscar Morong, Jr. E. Kirby Warren
As Trustee and Not Individually As Trustee and Not Individually
William S. Woods, Jr.
------------------------
William S. Woods, Jr.
As Trustee and Not Individually
<PAGE>
Exhibit 2(a)
AMENDED AND RESTATED
BY-LAWS
OF
LANDMARK U.S. GOVERNMENT INCOME FUND
(AMENDED AND RESTATED AS OF JULY 18, 1991)
ARTICLE I
DEFINITIONS
The terms "Commission", "Declaration", "Distributor", "Investment
Adviser", "Majority Shareholder Vote", "1940 Act", "Shareholder", "Shares",
"Transfer Agent", "Trust", "Trust Property" and "Trustees" have the respective
meanings given them in the Declaration of Trust of Landmark U.S. Government
Income Fund, as amended and restated on June 23, 1986, as amended from time to
time.
ARTICLE II
Offices
Section 1. Principal Office. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be in
the City of Boston, County of Suffolk.
Section 2. Other Offices. The Trust may have offices in such other
places without as well as within the Commonwealth of Massachusetts as the
Trustees may from time to time determine.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. Meetings of Shareholders may be called at any
time by a majority of the Trustees and shall be called by any Trustee upon
written request, which shall specify the purpose or purposes for which such
meeting is to be called, of Shareholders holding in the aggregate not less than
10% of the outstanding Shares entitled to vote on the matters specified in such
written request. Any such meeting shall be held within or without the
Commonwealth of Massachusetts on such day and at such time as the Trustees shall
designate. The holders of a majority of outstanding Shares entitled to vote
present in person or by proxy shall constitute a quorum at any meeting of
Shareholders, except that where any provision of law, the Declaration or these
By-Laws permit or require that holders of any series shall vote as a series,
then a majority of the aggregate number of Shares of that series entitled to
vote shall be necessary to constitute a quorum for the transaction of business
by that series. In the absence of a quorum, a majority of outstanding Shares
entitled to vote present in person or by proxy may adjourn the meeting from time
to time until a quorum shall be present.
Whenever a matter is required to be voted by Shareholders of the Trust
in the aggregate under Section 6.8 and Section 6.9(g) of the Declaration, the
Trust may either hold a meeting of Shareholders of all series, as defined in
Section 6.9 of the Declaration, to vote on such matter, or hold separate
meetings for Shareholders of each of the individual series to vote on such
matter, provided that (1) such separate meetings shall be held within one year
of each other, (ii) a quorum consisting of the holders of the majority of
outstanding Shares of the individual series entitled to vote present in person
or by proxy shall be present at each such separate meeting and (iii) a quorum
consisting of the holders of the majority of all Shares of the Trust entitled to
vote present in person or by proxy shall be present in the aggregate at such
separate meetings, and the votes of Shareholders at all such separate meetings
shall be aggregated in order to determine if sufficient votes have been cast for
such matter to be voted.
Section 2. Notice of all meetings of Shareholders, stating the time,
place and purposes of the meeting, shall be given by the Trustees by mail to
each Shareholder entitled to vote at such meeting at his address as recorded on
the register of the Trust, mailed at least 10 days and not more than 60 days
before the meeting. Only the business stated in the notice of the meeting shall
be considered at such meeting. Any adjourned meeting may be held as adjourned
without further notice. No notice need by given to any Shareholder who shall
have failed to inform the Trust of his current address or if a written waiver of
notice, executed before or after the meeting by the Shareholder or his attorney
thereunto authorized, is filed with the records of the meeting. Where separate
meetings are held for Shareholders of each of the individual series to vote on a
matter required to be voted on by Shareholders of the Trust in the aggregate, as
provided in Article III, Section 1 above, notice of each such separate meeting
shall be provided in the manner described above in this Section 2.
Section 3. Record Date. For the purpose of determining the
Shareholders who are entitled to notice of and to vote at any meeting, or to
participate in any distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such period, not
exceeding 30 days, as the Trustees may determine; or without closing the
transfer books the Trustees may fix a date not more than 60 days prior to the
date of any meeting of Shareholders or distribution or other action as a record
date for the determination of the persons to be treated as Shareholders of
record for such purpose. Where separate meetings are held for Shareholders of
each of the individual series to vote on a matter required to be voted on by
Shareholders of the Trust in the aggregate, as provided in Article III, Section
1 above, the record date of each such separate meeting shall be determined in
the manner described above in this Section 3.
Section 4. Proxies. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a vote of a majority of the Trustees, proxies may be solicited in
the name of one or more Trustees or one or more of the officers of the Trust.
Only Shareholders of record shall be entitled to vote. Each full Share shall be
entitled to one vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Share, but if more
than one of them shall be present at such meeting in person or by proxy, and
such Joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such Share,
such Share may be voted by such guardian or such other person appointed or
having such control, and such vote may be given in person or by proxy.
Section 5. Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 6. Action without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
<PAGE>
ARTICLE IV
Trustees
Section 1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the Chairman or
by any Trustee. Notice of the time and place of each meeting other than regular
or stated meetings shall be given by the Secretary or an Assistant Secretary or
by the officer or Trustee calling the meeting and shall be mailed to each
Trustee at least two days before the meeting, or shall be telegraphed, cabled,
or wirelessed to each Trustee at his business address, or personally delivered
to him at least one day before the meeting. Such notice may, however, be waived
by any Trustee. Notice of a meeting need not be given to any Trustee if a
written waiver of notice, executed by him before or after the meeting is filed
with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him. A notice or waiver of notice need not specify the purpose of any meeting.
The Trustees may meet by means of a telephone conference circuit or solar
communications equipment by means of which all persons participating in the
meeting can hear each other, which telephone conference meeting shall be deemed
to have been held at a place designated by the Trustees at the meeting.
Participation in a telephone conference meeting shall constitute presence in
person at such meeting. Any action required or permitted to be taken at any
meeting of the Trustees may be taken by the Trustees without a meeting if all
the Trustees consent to the action in writing and the written consents are filed
with the records of the Trustees' meetings. Such consents shall be treated as a
vote for all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees
present in person at any regular or special meeting of the Trustees shall
constitute a quorum for the transaction of business at such meeting and (except
as otherwise required by law, the Declaration or these By-Laws) the act of a
majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.
ARTICLE V
COMMITTEES AND ADVISORY BOARD
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three Trustees to hold office at the
pleasure of the Trustees. While the Trustees are not in session, the Executive
Committee shall have the power to conduct the current and ordinary business of
the Trust, including the purchase and sale of securities and the designation of
securities to be delivered upon redemption of Shares of the Trust, and such
other powers of the Trustees as the Trustees may, from time to time, delegate to
the Executive Committee except those powers which by law, the Declaration or
these By-Laws the Trustees are prohibited from so delegating. The Trustees may
also elect from their own number other Committees from time to time, the number
composing such Committees, the powers conferred upon the same (subject to the
same limitations as with respect to the Executive Committee) and the term of
membership on such committees to be determined by the Trustees. The Trustees may
designate a chairman of any such Committee. In the absence of such designation a
Committee may elect its own chairman.
Section 2. Meeting, Quorum and Manner of Acting. The Trustees may (i)
provide for stated meetings of any Committee, (ii) specify the manner of calling
and notice required for special meetings of any Committee, (iii) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (iv) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (v) authorize the members of a Committee to meet by means
of a telephone conference circuit.
Each Committee shall keep regular minutes of its meetings and records
of decisions taken without a meeting and cause them to be recorded in a book
designated for that purpose and kept in the office of the Trust.
Section 3. Advisory Board. The Trustees may appoint an Advisory Board
to consist in the first instance of not less than three members. Members of such
Advisory Board shall not be Trustees or officers and need not be Shareholders. A
member of such Advisory Board shall hold office for such period as the Trustees
may by vote provide and may resign therefrom by a written instrument signed by
him which shall take effect upon its delivery to the Trustees. The Advisory
Board shall have no legal powers and shall not perform the functions of Trustees
in any manner, such Advisory Board being intended merely to act in an advisory
capacity. Such Advisory Board shall meet at such times and upon such notice as
the Trustees may by resolution provide.
Section 4. Chairman. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to hold office until his
successor shall have been duly elected and qualified. The Chairman shall not
hold any other office. The Chairman may be, but need not be, a shareholder. The
Chairman shall preside at all meetings of the Trustees and shall have such other
duties as may be assigned to him from time to time by the Trustees.
ARTICLE VI
Officers
Section 1. General Provisions. The officers of the Trust shall be
President, a Treasurer and a Secretary, and shall be elected by the Trustees.
The Trustees may elect or appoint such other officers or agents as the business
of the Trust may require, including one or more Vice Presidents, one or more
Assistant Treasurers and one or more Assistant Secretaries. The Trustees may
delegate to any officer or committee the power to appoint any subordinate
officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise
provided by law, the Declaration or these By-Laws, the President, the Treasurer
and the Secretary shall be in office until his respective successor shall have
been duly elected and qualified, and all other officers shall hold office at the
pleasure of the Trustees. The Secretary and Treasurer may be the same person. A
Vice President and the Treasurer or a Vice President and the Secretary may be
the same person. but the offices of Vice President, Secretary and Treasurer
shall not be held by the same person. The President shall not hold any other
office. Except as above provided, any two offices may be held by the same
person. Any officer may be, but none need be, a Trustee or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer with or without cause by a vote of a
majority of the Trustees. Any officer or agent appointed by any officer or
committee may be removed with or without cause by such appointing officer or
committee.
Section 4. Powers and Duties of the President. The President shall be
the principal executive officer of the Trust. Subject to the control of the
Trustees and any committee of the Trustees, the President shall at all times
exercise a general supervision and direction over the affairs of the Trust. The
President shall have the power to employ attorneys and counsel for the Trust and
to employ such subordinate officers, agents, clerks and employees as he may find
necessary to transact the business of the Trust. The President shall also have
the power to grant, issue, execute or sign such powers of attorney, proxies or
other documents as may be deemed advisable or necessary in the furtherance of
the interests of the Trust. The President shall have such other powers and
duties as, from time to time, may be conferred upon or assigned to him by the
Trustees.
Section 5. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there are more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees or the President.
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be
the principal financial and accounting officer of the Trust. The Treasurer shall
deliver all funds of the Trust which may come into his hands to such custodian
as the Trustees may employ pursuant to Article X hereof. The Treasurer shall
render a statement of condition of the finances of the Trust to the Trustees as
often as they shall require the same and shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required to do so by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.
Section 7. Powers and Duties of the Secretary. The Secretary shall
keep the minutes of all meetings of the Shareholders in proper books provided
for that purpose; shall keep the minutes of all meetings of the Trustees; shall
have custody of the seal of the Trust; and shall have charge of the Share
transfer books, lists and records unless the same are in the charge of the
Transfer Agent. The Secretary shall attend to the giving and serving of all
notices by the Trust in accordance with the provisions of these By-Laws and as
required by law; and subject to these By-Laws, shall in general perform all
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the Trustees.
Section 8. Powers and Duties of Assistant Treasurers. In the absence
or disability of the Treasurer, any Assistant Treasurer designated by the
Trustees shall perform all the duties, and may exercise any of the powers, of
the Treasurer. Each Assistant Treasurer shall perform such other duties as from
time to time may be assigned to him by the Trustees. Each Assistant Treasurer
shall give a bond for the faithful discharge of his duties, if required to do so
by the Trustees, in such sum and with such surety or sureties as the Trustees
shall require.
Section 9. Powers and Duties of Assistant Secretaries. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all of the duties, and may exercise any of the powers, of
the Secretary. Each Assistant Secretary shall perform such other duties as from
time to time may be assigned to him by the Trustees.
Section 10. Compensation of Officers and Trustees and Members of the
Advisory Board. Subject to any applicable law or provision of the Declaration,
the compensation of the officers and Trustees and members of the Advisory Board
shall be fixed from time to time by the Trustees or, in the case of officers, by
any Committee or officer upon whom such power may be conferred by the Trustees.
No officer shall be prevented from receiving such compensation as such officer
by reason of the fact that he is also a Trustee.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of September
in each year and shall end on the last day of August in the succeeding year,
provided, however, that the Trustees may from time to time change the fiscal
year.
ARTICLE VIII
SEAL
The Trustees shall adopt a seal which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice is required to be given by law, the Declaration or
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. A notice shall be deemed to have been telegraphed,
cabled or wirelessed for the purposes of these By-Laws when it has been
delivered to a representative of any telegraph, cable or wireless company with
instruction that it be telegraphed, cabled or wirelessed. Any notice shall be
deemed to be given at the time when the same shall be mailed, telegraphed,
cabled or wirelessed.
ARTICLE X
CUSTODIAN
Section 1. Appointment and Duties. The Trustees shall at all times
employ a bank or trust company having a capital, surplus and undivided profits
of at least $5,000,000 as custodian with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in the Declaration, these By-Laws and the 1940 Act:
(i) to hold the securities owned by the Trust and deliver the same
upon written order;
(ii) to receive and receipt for any monies due to the Trust and
deposit the same in its own banking department or elsewhere as
the Trustees may direct;
(iii) to disburse such funds upon orders or vouchers;
(iv) if authorized by the Trustees, to keep the books and accounts of
the Trust and furnish clerical and accounting services; and
(v) if authorized to do so by the Trustees, to compute the net income
of the Trust and the net asset value of Shares;
all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank or trust company organized under
the laws of the United States or one of the states thereof and having capital,
surplus and undivided profits of at least $5,000,000.
Section 2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person may
be permitted by the Commission, or otherwise in accordance with the 1940 Act,
pursuant to which system all securities of any particular class or series of any
issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodian.
Section 3. Acceptance of Receipts in Lieu of Certificates. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
Section 4. Provisions of Custodian Contract. The following provisions
shall apply to the employment of a custodian pursuant to this Article X and to
any contract entered into with the custodian so employed:
(a) The Trustees shall cause to be delivered to the custodian all
securities owned by the Trust or to which it may become entitled,
and shall order the same to be delivered by the custodian only
upon completion of a sale, exchange, transfer, pledge, or other
disposition thereof, and upon receipt by the custodian of the
consideration therefor or a certificate of deposit or a receipt
of an issuer or of its Transfer Agent, all as the Trustees may
generally or from time to time require or approve, or to a
successor custodian; and the Trustees shall cause all funds owned
by the Trust or to which it may become entitled to be paid to the
custodian, and shall order the same disbursed only for investment
against delivery of the securities acquired, or in payment of
expenses, including management compensation, and liabilities of
the Trust, including distributions to Shareholders, or to a
successor custodian; provided however, that nothing herein shall
prevent delivery of securities for examination to the broker
purchasing the same in accord with the "street delivery" custom
whereby such securities are delivered to such broker in exchange
for a delivery receipt exchanged on the same day for an
uncertified check of such broker to be presented on the same day
for certification.
(b) In case of the resignation, removal or inability to serve of any
such custodian, the Trust shall promptly appoint another bank or
trust company meeting the requirements of this Article X as
successor custodian. The agreement with the custodian shall
provide that the retiring custodian shall, upon receipt of notice
of such appointment, deliver all Trust Property in its possession
to and only to such successor, and that pending appointment of a
successor custodian, or a vote of the Shareholders to function
without a custodian, the custodian shall not deliver any Trust
Property to the Trust, but may deliver all or any part of the
Trust Property to a bank or trust company doing business in
Boston, Massachusetts, of its own selection, having an aggregate
capital, surplus and undivided profits (as shown in its last
published report) of at least $5,000,000; provided that
arrangements are made for the Trust Property to be held under
terms similar to those on which they were held by the retiring
custodian.
ARTICLE XI
Sale of Shares of the Trust
The Trustees may from time to time issue and sell or cause to be
issued and sold Shares for cash or other property, which shall in every case be
paid or delivered to the Custodian as agent of the Trust before the delivery of
any certificate for such shares. The Shares, including such shares which may
have been repurchased by the Trust (herein sometimes referred to as "treasury
Shares"), may be sold at a price based on the net asset value thereof (as
defined in Article XII hereof) determined by or on behalf of the Trustee next
after the sale is made or at some later time after such sale.
When a distribution contract is in effect pursuant to Section 4.2 of
Article IV of the Declaration, the time of sale shall be the time when an
unconditional order is placed with the distributor or with a dealer with whom
the underwriter shall have a sales agreement whichever first occurs. Such
contract may provide for the sale of Shares either at a price based on the net
asset value determined next after the order is placed with said distributor or
dealer or at a price based on a net asset value to be determined at some later
time. No Shares need be offered to existing Shareholders before being offered to
others. No Shares shall be sold by the Trust (although Shares previously
contracted to be sold may be issued upon payment therefor) during any period
when the determination of net asset value is suspended by declaration of the
Trustees pursuant to the provisions of Article XII hereof. In connection with
the acquisition by merger or otherwise of all or substantially all the assets of
an investment company (whether a regulated or private investment company or a
personal holding company), the Trustees may issue or cause to be issued, Shares
and accept in payment therefor such assets at not more than market value in lieu
of cash, notwithstanding that the federal income tax basis to the Trust of any
assets so acquired may be less than the market value, provided that such assets
are of the character in which the Trustees are permitted to invest the funds of
the Trust.
ARTICLE XII
NET ASSET VALUE OF SHARES
Section 1. Time of Determination. The net asset value of each Share
outstanding shall be determined by the Trustees on each business day (which term
shall, whenever it appears in these By-Laws, be deemed to mean each day when the
New York Stock Exchange is open for trading) as of the close of trading on the
New York Stock Exchange. The power and duty to determine net asset value may be
delegated by the Trustees from time to time to one or more of the Trustees or
officers of the Trust, to the other party to any contract entered into pursuant
to Section 4.1 of Article IV of the Declaration, or to the custodian or the
Transfer Agent. The Trustees may also determine or cause to be determined the
net asset value as of any particular time in addition to the closing time of
each business day. Such additional or interim determination may be made either
by appraisal or by calculation or estimate. Any such calculation or estimate
shall be based on changes in the market value of representative or selected
securities or on changes in recognized market averages since the last closing
appraisal, and made in a manner which in the opinion of the Trustees will fairly
reflect the changes in the net asset value. At any time when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), the
Trustees may cause the net asset value to be determined by appraising all
securities at last sale prices, or at not more than the current asked nor less
than the current bid prices, in the over-the-counter or other market, and all
other assets at fair value in the best judgment of the Trustees, and otherwise
proceeding as above stated. For the purposes of Article VII of the Declaration
and Articles XI and XII hereof, any reference to the time at which a
determination of net asset value is made shall mean the time as of which the
determination is made.
Section 2. Suspension of Determination. The Trustees may declare a
suspension of the determination of net asset value to the extent permitted by
the 1940 Act and rules, regulations and orders promulgated by the Commission
thereunder.
Section 3. Computation. The net asset value of each Share as of any
particular time shall be the quotient (adjusted to the nearer cent) obtained by
dividing the value, as of such time, of the net assets of the Trust (i.e., the
value of the assets of the Trust less its liabilities exclusive of capital and
surplus) by the total number of Shares outstanding (exclusive of treasury
Shares) at such time, all determined and computed as follows:
A. The assets of the Trust shall be deemed to include (i) all cash
on hand, on deposit or on call, including any interest accrued
thereon, (ii) all bonds, debentures, bills and notes and accounts
receivable and other evidences of indebtedness, (iii) all shares
of stock, subscription rights, warrants and other securities,
other than its own Shares, (iv) all stock and cash dividends or
distributions receivable by the Trust which have been declared
and are ex-dividend to Shareholders of record at or before the
time as of which the net asset value is being determined, (v) all
interest accrued on any interest-bearing securities owned by the
Trust, and (vi) all other property of every kind and nature
including prepaid expenses, the value of such assets to be
determined as follows:
(a) The value of any cash on hand, on deposit or on call, bills and
notes and accounts receivable, prepaid expenses, cash dividends
and interest declared or accrued as aforesaid and not yet
received, shall be deemed to be the face amount thereof unless
the Trustees shall have determined that any such item is not
worth the face amount thereof, in which event the value thereof
shall be determined in good faith by or at the direction of the
Trustees;
(b) The value of any security which is listed or dealt in upon the
New York Stock Exchange or upon the American Stock Exchange shall
be determined by taking the latest sale price (or, lacking any
sales, not less than the closing bid price nor more than the
closing asked price therefor) at the time as of which the net
asset value is being determined, all as reported by any report in
common use or authorized by the New York Stock Exchange or the
American Stock Exchange, as the case may be; provided, however,
that prices on such exchanges need not be used to determine the
value of debt securities owned by the Trust if, in the opinion of
the Trustees, some other method would more accurately reflect the
fair market value of such debt securities;
(c) The value of any security which is not listed or dealt in on
either of such Exchanges shall be determined in the manner
described in the next preceding paragraph if listed or dealt in
on any other Exchange;
(d) The value of any security not listed or dealt in on any Exchange
and for which market quotations are readily available shall be
determined by taking not less than the closing bid price nor more
than the closing asked price therefor on the date as of which the
net asset value is being determined; and
(e) In the case of any security or other property for which no price
quotations are available as above provided, the value thereof
shall be determined from time to time in such manner as is
specified from time to time by vote of the Trustees.
B. The liabilities of the Trust shall be deemed to include (i) all
bills, notes and accounts payable, (ii) all administrative
expenses payable and/or accrued, (iii) all contractual
obligations for the payment of money or property, including the
amount of any unpaid dividends upon the Shares, declared to
Shareholders of record at or before the time as of which the net
asset value is being determined, (iv) all reserves authorized or
approved by the Trustees for taxes or contingencies, and (v) all
other liabilities of the Trust of whatsoever kind and nature
except liabilities represented by outstanding Shares and capital
surplus of the Trust.
C. For the purposes of this Article XII
(i) Shares sold shall be deemed to become outstanding immediately
after the close of business on the day on which the contract of
sale is made, and the sale price thereof (less commission, if
any, and less any stamp or other tax payable by the Trust in
connection with the issuance thereof) shall thereupon be deemed
an asset of the Trust.
(ii) Shares tendered for purchase by the Trust under Section 7.1 of
Article VII of the Declaration shall be deemed to be outstanding
at the close of business on the day as of which the purchase
price is determined, and thereafter they shall be deemed treasury
stock and until paid, the price thereof shall be deemed a
liability of the Trust.
(iii) Credits and contractual obligations payable to the Trust in
foreign currency and liabilities and contractual obligations
payable by the Trust in foreign currency shall be taken at the
current cable rate of exchange as nearly as practicable at the
time as of which the net asset value is computed.
(iv) Portfolio securities owned by the Trust which the Trustees or
their delegate shall, pursuant to Section 7.4 of Article VII of
the Declaration, have selected for distribution in redemption or
repurchase of Shares tendered to it pursuant to Section 7.1 of
Article VII of the Declaration at any time shall be included in
determining the price of such shares, and thereafter neither such
securities nor such Shares shall be included in determinations of
net asset value pursuant to this Article XII.
ARTICLE XIII
DIVIDENDS AND DISTRIBUTION
Section 1. Limitations on Distributions. The total of distributions to
Shareholders paid in respect of any one fiscal year, subject to the exceptions
noted below, shall, when and as declared by the Trustees be approximately equal
to the sum of
(A) The net income, exclusive of the profits or losses realized upon
the sale of securities or other property, for such fiscal year,
determined in accordance with generally accepted accounting
principles (which, if the Trustees so determine, may be adjusted
for net amounts included as such accrued net income in the price
of Shares issued or repurchased), but if the net income exceeds
the amount distributed by less than one cent per share
outstanding at the record date for the final dividend, the excess
shall be treated as distributable income for the following fiscal
year, and
(B) in the discretion of the Trustees, an additional amount which
shall not substantially exceed the excess of profits over losses
on sales of securities or other property for such fiscal year.
The decision of the Trustees as to what, in accordance with generally
accepted accounting principles, is income and what is principal shall be final,
and except as specifically provided herein the decision of the Trustees as to
what expenses and charges of the Trust shall be charged against principal and
what against income shall be final, all subject to any applicable provisions of
the 1940 Act and rules, regulations and orders of the Commission promulgated
thereunder. For the purposes of the limitation imposed by this Section 1, Shares
issued pursuant to Section 2 of this Article XIII shall be valued at the amount
of cash which the Shareholders would have received if they had elected to
receive cash in lieu of such Shares.
Inasmuch as the computation of net income and gains for federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give to the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes. Any payment made to
Shareholders pursuant to clause (B) of this Section 1 shall be accompanied by a
written statement showing the source or sources of such payment, and the basis
of computation thereof.
Section 2. Distributions Payable in Cash or Shares. The Trustees shall
have power, to the fullest extent permitted by the laws of the Commonwealth of
Massachusetts but subject to the limitation as to cash distributions imposed by
Section 1 of this Article XIII, at any time or from time to time to declare and
cause to be paid distributions payable at the election of any Shareholder
(whether exercised before or after the declaration of the distribution) either
in cash or in Shares, provided that the sum of (i) the cash distribution
actually paid to any Shareholder and (ii) the net asset value of the Shares
which that Shareholder elects to receive, in effect at such time at or after the
election as the Trustees may specify, shall not exceed the full amount of cash
to which that Shareholder would be entitled if he elected to receive only cash.
In the case of a distribution payable in cash or Shares at the election of a
Shareholder, the Trustees may prescribe whether a Shareholder, failing to
express his election before a given time shall be deemed to have elected to take
Shares rather than cash, or to take cash rather than Shares, or to take Shares
with cash adjustment for fractions.
Section 3. Stock Dividends. Anything in these By-Laws to the contrary
notwithstanding, the Trustees may at any time declare and distribute pro rata
among the Shareholders a "stock dividend" out of either authorized but unissued
Shares or treasury Shares of the Trust or both.
ARTICLE XIV
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or
new By-Laws may be adopted (a) by Majority Shareholder Vote, or (b) by the
Trustees, provided, however, that no By-Law may be amended, adopted or repealed
by the Trustees if such amendment, adoption or repeal requires, pursuant to law,
the Declaration or these By-Laws, a vote of the Shareholders.
<PAGE>
Exhibit 2(b)
Article III Section 3 of the By-laws has been amended to read in its
entirety as follows:
"Section 3 Record Date. The Trustees may fix a date not more than 60
days prior to the date of any meeting of Shareholders or
distribution or other action as a record date for the purpose of
determining the Shareholders who are entitled to notice of and to
vote at such meeting or any adjournment thereof or to participate in
such distribution or for the purpose of such other action; or
without fixing such record date the Trustees may for any of such
purposes from time to time close the transfer books for such period,
not exceeding 30 days as the Trustees may determine. Where separate
meetings are held for Shareholders of each of the individual series
to vote on a matter required to be voted on by Shareholders of the
Trust in the aggregate, as provided in Article III, Section 1 above,
the record date of each such separate meeting, for purposes of
determining the Shareholders who are entitled to notice of and to
vote at such meeting or any adjournment thereof, SHALL BE determined
in the manner described above in this Section 3."
<PAGE>
AMENDMENT TO THE BY-LAWS OF LANDMARK FUNDS I, LANDMARK FUNDS II, LANDMARK
INTERNATIONAL FUNDS, LANDMARK FIXED INCOME FUNDS, LANDMARK TAX FREE INCOME
FUNDS, LANDMARK FUNDS III, LANDMARK PREMIUM FUNDS, LANDMARK MULTI-STATE TAX FREE
FUNDS, LANDMARK INSTITUTIONAL TRUST, LANDMARK TAX FREE RESERVES AND VARIABLE
ANNUITY PORTFOLIOS - AS ADOPTED BY THE BOARDS OF TRUSTEES ON AUGUST 8, 1997:
VOTED: That Article III, Section 4 of the By-Laws of the Trust be and
hereby is amended in its entirety to read as follows*:
Section 4. Proxies. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no proxy
shall be voted at any meeting unless it shall have been placed on file
with the Secretary, or with such other officer or agent of the Trust as
the Secretary may direct, for verification prior to the time at which such
vote shall be taken. [Any Shareholder may give authorization through
telephonic or telegraphic methods of communication for another person to
execute his or her proxy.] Pursuant to a vote of a majority of the
Trustees, proxies may be solicited in the name of one or more Trustees or
one or more of the officers of the Trust. Only Shareholders of record
shall be entitled to vote. Each full Share shall be entitled to one vote
and fractional Shares shall be entitled to a vote of such fraction. When
any Share is held jointly by several persons, any one of them may vote at
any meeting in person or by proxy in respect of such Share, but if more
than one of them shall be present at such meeting in person or by proxy,
and such joint owners or their proxies so present disagree as to any vote
to be cast, such vote shall not be received in respect of such Share. A
proxy purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise, and the burden
of proving invalidity shall rest on the challenger. If the holder of any
such Share is a minor or a person of unsound mind, and subject to
guardianship or to the legal control of any other person as regards the
charge or management of such Share, such Share may be voted by such
guardian or such other person appointed or having such control, and such
vote may be given in person or by proxy. [Unless otherwise specifically
limited by their terms, proxies shall entitle the holder thereof to vote
at any adjournment of a meeting.]
*New language is bracketed.
<PAGE>
Exhibit 5
INVESTMENT ADVISORY AGREEMENT
LANDMARK FIXED INCOME FUNDS -
LANDMARK INTERMEDIATE INCOME FUND
INVESTMENT ADVISORY AGREEMENT, dated as of October 27, 1992, by and
between Landmark Fixed Income Funds, a Massachusetts business trust (the
"Trust"), and CITIBANK, N.A., a national banking association ("Citibank" or the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage the Adviser to provide certain
investment advisory services for the series of the Trust designated as Landmark
Intermediate Income Fund (the "Fund"), and the Adviser is willing to provide
such investment advisory services for the Fund on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Adviser. The Adviser shall provide the Fund with
such investment advice and supervision as the Trust may from time to
time consider necessary for the proper supervision of the Fund's
investment assets. Citibank shall act as the Adviser for the Fund and
as such shall furnish continuously an investment program and shall
determine from time to time what securities shall be purchased, sold or
exchanged and what portion of the assets of the Fund shall be held
uninvested, subject always to the restrictions of the Trust's
Declaration of Trust, dated June 23, 1986, and By-laws, as each may be
amended from time to time (respectively, the "Declaration" and the
"By-Laws"), to the provisions of the 1940 Act, and to the then-current
Prospectus and Statement of Additional Information with respect to the
Fund. The Adviser shall also make recommendations as to the manner in
which voting rights, rights to consent to corporate action and any
other rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Board of Trustees of the Trust at any time,
however, make any definite determination as to investment policy
applicable to the Fund and notify the Adviser thereof in writing, the
Adviser shall be bound by such determination for the period, if any,
specified in such notice or until similarly notified that such
determination has been revoked. The Adviser shall take, on behalf of
the Fund, all actions which it deems necessary to implement the
investment policies determined as provided above, and in particular to
place all orders for the purchase or sale of portfolio securities for
the Fund's account with the brokers or dealers selected by it, and to
that end the Adviser is authorized as the agent of the Trust to give
instructions to the custodian of the Fund as to deliveries of
securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the
placing of such orders, the Adviser is directed to seek for the Fund,
in its best judgment, prompt execution in an effective manner at the
most favorable price. Subject to this requirement of seeking the most
favorable price, securities may be bought from or sold to
broker-dealers who have furnished statistical, research and other
information or services to the Adviser or the Fund, subject to any
applicable laws, rules and regulations. In making purchases or sales of
securities or other property for the account of the Fund, the Adviser
may deal with itself or with the Trustees of the Trust or the Trust's
principal underwriter or distributor, to the extent such actions are
permitted by the 1940 Act.
2. Al]ocation of Charges and Expenses. The Adviser shall furnish at
its own expense all necessary services, facilities and personnel in
connection with its responsibilities under Section 1 above. It is
understood that the Trust will pay from the assets of the Fund all of
its own expenses allocable to the Fund including, without limitation,
compensation of Trustees not "affiliated" with the Adviser;
governmental fees; interest charges; taxes; membership dues in the
Investment Company Institute allocable to the Fund; fees and expenses
of independent auditors, of legal counsel and of any transfer agent,
administrator, distributor, shareholder servicing agent, registrar or
dividend disbursing agent of the Trust; expenses of distributing and
redeeming shares and servicing shareholder accounts; expenses of
preparing, printing and mailing prospectuses, statements of additional
information, shareholder reports, notices, proxy statements and reports
to governmental officers and commissions and to shareholders of the
Fund; expenses connected with the execution, recording and settlement
of portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Fund, including
safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of shares of the
Fund; expenses of shareholder meetings; and expenses relating to the
issuance, registration and qualification of shares of the Fund.
3. Compensation of the Adviser. For the services to be rendered,
the Trust shall pay to the Adviser from the assets of the Fund an
investment advisory fee computed and paid monthly at an annual rate
equal to 0.35% of the Fund's average daily net assets for the Fund's
then-current fiscal year. If Citibank serves as Adviser for less than
the whole of any period specified in this Section 3, the compensation
to Citibank, as Adviser, shall be prorated.
4. Covenants of the Adviser. The Adviser agrees that it will not
deal with itself, or with the Trustees of the Trust or the Trust's
principal underwriter or distributor, as principals in making purchases
or sales of securities or other property for the account of the Fund,
except as permitted by the 1940 Act, will not take a long or short
position in the shares of the Fund except as permitted by the
Declaration, and will comply with all other provisions of the
Declaration and By-Laws and the then-current Prospectus and Statement
of Additional Information applicable to the Fund relative to the
Adviser and its Directors and officers.
5. Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the
execution of portfolio transactions for the Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and
duties hereunder. As used in this Section 5, the term "Adviser" shall
include Directors, officers and employees of the Adviser as well as
Citibank itself.
6. Activities of the Adviser. The services of the Adviser to the
Fund are not to be deemed to be exclusive, Citibank being free to
render investment advisory and/or other services to others. It is
understood that Trustees, officers, and shareholders of the Trust are
or may be or may become interested in the Adviser, as Directors,
officers, employees, or otherwise and that Directors, officers and
employees of the Adviser are or may become similarly interested in the
Trust and that the Adviser may be or may become interested in the Trust
as a shareholder or otherwise.
7. Duration. Termination and Amendments of this Agreement. This
Agreement shall become effective as of the day and year first above
written and shall govern the relations between the parties hereto
thereafter, and shall remain in force until September 30, 1994, on
which date it will terminate unless its continuance after September 30,
1994 is "specifically approved at least annually" (a) by the vote of a
majority of the Trustees of the Trust who are not "interested persons"
of the Trust or of the Adviser at a meeting specifically called for the
purpose of voting on such approval, and (b) by the Board of Trustees of
the Trust or by "vote of a majority of the outstanding voting
securities" of the Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Fund, or by the Adviser, in each case on not more than 60
days' nor less than 30 days' written notice to the other party. This Agreement
shall automatically terminate in the event of its "assignment".
This Agreement may be amended, only if such amendment is approved by
the "vote of a majority of the outstanding voting securities" of the Fund.
The terms "specifically approved at least annually", "vote of a
majority of the outstanding voting securities", "assignment", "affiliated
person", and "interested persons", when used in this Agreement, shall have the
respective meanings specified in, and shall be construed in a manner consistent
with, the 1940 Act, subject, however, to such exemptions as may be granted by
the Securities and Exchange Commission under said Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
The undersigned Trustee of the Trust has executed this Agreement not
individually, but as Trustee under the Trust's Declaration of Trust, dated June
23, 1986, as amended, and the obligations of this Agreement are not binding upon
any of the Trustees or shareholders of the Trust individually, but bind only the
Trust estate.
LANDMARK FIXED INCOME FUNDS CITIBANK, N.A.
By: /s/ Philip Coolidge By: /s/ Robert P. Wallace
--------------------------- --------------------------
Title: President Title: Vice President
------------------------ -----------------------
<PAGE>
Exhibit 6(a)
AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of June 24, 1986, and amended and
restated as of August 19, 1994 by and between LANDMARK FIXED INCOME FUNDS, a
Massachusetts business trust (the "Trust"), and THE LANDMARK FUNDS BROKER DEALER
SERVICES, INC., a Massachusetts corporation ("LFBDS" or the "Distributor") with
respect to Shares of Beneficial Interest to be designated "Class A".
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act");
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into
one or more separate series (together with any series which may in the future be
established, the "Funds");
WHEREAS, the Board of Trustees of the Trust has adopted an Amended and
Restated Distribution Plan, dated as of August 19, 1994 (the "Distribution
Plan"), which is incorporated herein by reference and pursuant to which the
Trust desires to enter into this Distribution Agreement; and
WHEREAS, the Trust wishes to engage LFBDS to provide certain services with
respect to the distribution of shares designated Class A Shares (the "Shares")
of each Fund, and LFBDS is willing to provide such services to the Trust on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. The Trust grants to the Distributor the right, as agent of the
Trust, to sell Shares of each Fund upon the terms hereinbelow set forth
during the term of this Agreement. While this Agreement is in force, the
Distributor agrees to use its best efforts to find purchasers for Shares
of each Fund.
The Distributor shall have the right, as agent of the Trust, to
order from the Trust the Shares needed, but not more than the Shares
needed (except for clerical errors and errors of transmission), to fill
unconditional orders for Shares of each Fund placed with the Distributor
by any dealer, all such orders to be made in the manner set forth in the
Trust's then-current prospectus (the "Prospectus") and then-current
statement of additional information (the "Statement of Additional
Information") relating to such Shares. The price which shall be paid to
the Trust for the Shares of each Fund so purchased shall be the net asset
value per Share as determined in accordance with the provisions of the
Trust's Declaration of Trust and by-laws, as each may from time to time be
amended (collectively, the "Governing Instruments") plus the amount of the
applicable sales charge, as provided in the Trust's currently effective
prospectus relating to the Trust or such Fund. The Distributor shall
notify the Custodian of the Trust, at the end of each business day, or as
soon thereafter as the orders placed with the Distributor have been
compiled, of the number of Shares of each Fund and the prices thereof
which have been ordered through the Distributor since the end of the
previous business day.
The right granted to the Distributor to place orders for Shares with
the Trust shall be exclusive, except that this exclusive right shall not
apply to Shares issued in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is
merged WITH AND INTO OR consolidated with the Trust or any Fund or in the
event that the Trust or any Fund acquires, by purchase or otherwise, all
(or substantially all) the assets or the outstanding shares of any such
company; nor shall it apply to Shares issued by the Trust as a dividend or
stock split. The exclusive right to place orders for Shares granted to the
Distributor may be waived by the Distributor by notice to the Trust in
writing, either unconditionally or subject to such conditions and
limitations as may be set forth in such notice to the Trust. The Trust
hereby acknowledges that the Distributor may render distribution and other
services to other parties, including other investment companies. In
connection with its duties hereunder, the Distributor shall also arrange
for computation of performance statistics with respect to each Fund and
arrange for publication of current price information in newspapers and
other publications.
2. The Shares may be sold by the Distributor on behalf of the Trust
to or through any dealer having a sales agreement with the Distributor
upon the following terms and conditions:
The public offering price of the Shares, including the Shares of
each Fund, i.e., the price per Share at which the Distributor or dealer
purchasing Shares through the Distributor may sell shares to the public,
shall be the net asset value of such Shares plus the amount of the
applicable sales charge, as provided in the Trust's currently effective
Prospectus relating to the Trust or such Fund. The difference between the
public offering price and net asset value (which amount shall not be in
excess of that set forth in the Prospectus) may be retained by the
Distributor or all or any part thereof may be paid by the Distributor to a
broker-dealer registered as such under the Securities Exchange Act of 1934
in accordance with the Prospectus and the Distribution Plan.
The net asset value of Shares of each Fund shall be determined by
the Trust, or by an agent of the Trust, as of the close of trading on the
New York Stock Exchange on each day on which the New York Stock Exchange
is open for trading (and on such other days as the Trustees deem necessary
in order to comply with Rule 22c-1 under the 1940 Act), in accordance
with the method established pursuant to the Governing Instruments. The
Trust shall have the right to suspend the sale of Shares of any Fund if,
because of some extraordinary condition, the New York Stock Exchange shall
be closed, or if conditions existing during the hours when the Exchange is
open render such action advisable or for any other reason deemed adequate
by the Trust.
3. The Trust agrees that it will, from time to time, but subject to
the necessary approval, if any, of its shareholders, take all necessary
action to register such number of Shares of each Fund under the Securities
Act of 1933, as amended (the "1933 Act"), as the Distributor may
reasonably be expected to sell.
The Distributor shall be an independent contractor and neither the
Distributor nor any of its Directors, officers or employees as such, is or
shall be an employee of the Trust. It is understood that Trustees,
officers and shareho1ders of the Trust are or may become interested in the
Distributor, as Directors, officers, employees, or otherwise and that
Directors, officers and employees of the Distributor are or may become
similarly interested in the Trust and that the Distributor may be or
become interested in the Trust as a shareholder or otherwise. The
Distributor is responsible for its own conduct and the employment, control
and conduct (but only with respect to the duties and obligations of the
Distributor hereunder) of its agents and employees and for any injury to
any of such agents or employees or to others through its agents or
employees. The Distributor assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all employer taxes
thereunder.
4. The Distributor covenants and agrees that, in selling Shares, it
will use its best efforts in all respects duly to conform with the
requirements of all state and federal laws and the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. relating to the
sale of Shares, and will indemnify and hold harmless the Trust and each of
its Trustees and officers and each person, if any, who controls the Trust
within the meaning of Section 15 of the 1933 Act (the "Indemnified
Parties") against all losses, liabilities, damages or expenses (including
the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith) arising from any claim, demand, action or suit
(collectively, "Claims"), arising by reason of any person's acquiring any
of the Shares through the Distributor, which may be based upon the 1933
Act or any other statute or common law, on account of any wrongful act of
the Distributor or any of its employees (including any failure to conform
with any requirement of any state or federal law or the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. relating
to the sale of Shares) or on the ground that the registration statement
under the 1933 Act, including all amendments thereto (the "Registration
Statement"), or Prospectus or previous prospectus or Statement of
Additional Information or previous statement of additional information,
with respect to such Shares, includes or included an untrue statement of a
material fact or omits or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, if and only if any such act, statement or omission was made in
reliance upon information furnished by the Distributor to the Trust;
provided, however, that in no case (i) is the indemnity of the Distributor
in favor of any Indemnified Party to be deemed to protect any such
Indemnified Party against liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its or his duties or by reason of its or
his reckless disregard of its or his obligations and duties under this
Agreement, or (ii) is the Distributor to be liable under its indemnity
agreement contained in this Section 4 with respect to any Claim made
against any Indemnified Party unless such Indemnified Party shall have
notified the Distributor in writing within a reasonable time after the
summons or other first legal process giving information of the nature of
the Claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Distributor of any such Claim
shall not relieve it from any liability which it may have to any
Indemnified Party otherwise than on account of its indemnity agreement
contained in this Section 4. The Distributor shall be entitled to
participate, at its own expense, in the defense, or, if it so elects, to
assume the defense, of any suit brought to enforce any such Claim, and, if
the Distributor elects to assume the defense, such defense shall be
conducted by counsel chosen by it and satisfactory to each Indemnified
Party. In the event that the Distributor elects to assume the defense of
any such suit and retain such counsel, each Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it but, in
case the Distributor does not elect to assume the defense of any such
suit, it shall reimburse the Indemnified Parties for the reasonable fees
and expenses of any counsel retained by them. Except with the prior
written consent of the Distributor, no Indemnified Party shall confess any
Claim or make any compromise in any case in which the Distributor will be
asked to indemnify such Indemnified Party. The Distributor agrees promptly
to notify the Trust of the commencement of any litigation or proceeding
against it in connection with the issuance and sale of any of the Shares.
Neither the Distributor nor any dealer nor any other person is
authorized to give any information or to make any representation on behalf
of the Trust in connection with the sale of Shares of any Fund, other than
those contained in the Registration Statement or Prospectus or Statement
of Additional Information relating to such Fund.
5. The Trust will pay, or cause to be paid --
(i) all costs and expenses of the Trust, including fees and
disbursements of its counsel, in connection with the preparation and
filing of the Registration Statement, Prospectus and Statement of
Additional Information with respect to Shares of each Fund, and
preparing and mailing to shareholders Prospectuses, Statements of
Additional Information, statements and confirmations and periodic
reports (including the expense of setting in type the Registration
Statement, Prospectus and Statement of Additional Information or any
periodic report with respect to Shares of each Fund);
(ii) the cost of preparing temporary or permanent certificates
for Shares;
(iii) the cost and expenses of delivering to the Distributor
at its office in Boston, Massachusetts all Shares purchased through
it as agent hereunder;
(iv) a distribution fee periodically at an annual rate not to
exceed 0.15% of the portion of the average daily net assets of such
Fund that is represented by Shares for its then-current fiscal year,
subject to the Distribution Plan, and, under certain circumstances,
the Distributor may impose certain deferred sales charges in
connection with the repurchase of Shares of each Fund and the
Distributor may retain (or receive from each Fund, as the case may
be) all such deferred sales charges;
(v) all fees and disbursements of the Transfer Agent and
Custodian with respect to each Fund, subject to the Trust's
Administrative Services Plan;
(vi) a fee to each Shareholder Servicing Agent (pursuant to a
shareholder servicing agreement with each such Agent), subject to
the Trust's Administrative Services Plan;
(vii) a fee to the Administrator of the Trust (pursuant to the
Administrative Services Agreement), subject to the Trust's
Administrative Services Plan; and
(viii) a fee to the investment adviser of each Fund, if any
(pursuant to the Investment Advisory Agreement with any such
Adviser).
The Distributor agrees that, with respect to the sale of Shares of
each Fund, after the Prospectus and Statement of Additional Information
and periodic reports with respect to such Fund have been set in type, it
will bear the expense (other than the cost of mailing to shareholders of
the Trust) of printing and distributing any copies thereof which are to be
used in connection with the offering or sale of Shares of such Fund to any
dealer or prospective investor. The Distributor further agrees that it
will bear the expenses of preparing, printing and distributing any other
literature used by the Distributor or furnished by it for use by any
dealer in connection with the offering of the Shares of such Fund for sale
to the public and any expense of sending confirmations and statements to
any dealer having a sales agreement with the Distributor. The Distributor
will also bear the cost of any compensation paid to dealers in connection
with the sale of Shares of such Fund. The Distributor also agrees to bear
the expenses of qualification of Shares of such Fund for sale in the
various states and, if necessary or advisable in connection therewith, of
qualifying the Trust as a broker or dealer in any such state.
6. If, at any time during the term of this Agreement, the Trust
shall deem it necessary or advisable in the best interests of the Trust
that any amendment of this Agreement be made in order to comply with any
recommendation or requirement of the Securities and Exchange Commission or
other governmental authority or to obtain any advantage under
Massachusetts or federal tax laws, it shall notify the Distributor of the
form of amendment which it deems necessary or advisable and the reasons
therefor. If the Distributor declines to assent to such amendment (after a
reasonable time), the Trust may terminate this Agreement forthwith by
written notice to the Distributor without payment of any penalty. If, at
any time during the term of this Agreement, the Distributor requests the
Trust to make any change in its Governing Instruments or in its methods of
doing business which are necessary in order to comply with any requirement
of federal law or regulations of the Securities and Exchange Commission or
of a national securities association of which the Distributor is or may
become a member, relating to the sale of Shares, and the Trust fails
(after a reasonable time) to make any such change as requested, the
Distributor may terminate this Agreement forthwith by written notice to
the Trust without payment of any penalty.
7. The Distributor agrees that it will not take any long or short
position in the Shares of any Fund and that, so far as it can control the
situation, it will prevent any of its Directors or officers from taking
any long or short position in the Shares of such Fund, except as permitted
by the Governing Instruments.
8. This Agreement shall become effective upon its execution and
shall continue in force indefinitely unless its continuance thereafter is
specifically approved at least annually (i) by the vote of a majority of
the Trustees of the Trust who are not "interested persons" of the Trust or
of the Distributor at a meeting specifically called for the purpose of
voting on such approval, and (ii) by the Board of Trustees of the Trust,
or by the "vote of a majority of the outstanding voting securities" of the
Shares of each Fund as to which this Agreement is to continue. The
aforesaid requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with
the 1940 Act.
This Agreement may be terminated as to any Fund at any time by
either party without payment of any penalty on not more than 60 days' nor
less than 30 days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment.
9. LFBDS may subcontract for the performance of LFBDS' obligations
hereunder with any one or more persons; provided, however, that LFBDS
shall not enter into any such subcontract unless the Trustees of the Trust
shall have found the subcontracting party to be qualified to perform the
obligations sought to be subcontracted; and provided, further, that,
unless the Trust otherwise expressly agrees in writing, LFBDS shall be as
fully responsible to the Trust for the acts and omissions of any
subcontractor as it would be for its own acts or omissions.
10. The terms "vote of a majority of the outstanding voting
securities", "interested person", "assignment" and "specifically approved
at least annually" shall have the respective meanings specified in, and
shall be construed in a manner consistent with, the 1940 Act, subject,
however, to such exemptions as may be granted by the Securities and
Exchange Commission thereunder, and provided, however, that the term
"assignment" shall include (without limitation) any sale, transfer or
conversion of a controlling interest of any class of voting stock of LFBDS
or of any entity which holds a controlling interest of any class of voting
stock of LFBDS or another such entity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first above written. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the Trust's
Declaration of Trust, dated June 23, 1986, and the obligations of this Agreement
are not binding upon any of the Trustees or shareholders of the Trust
individually, but bind only the Trust estate.
LANDMARK FIXED INCOME FUNDS THE LANDMARK FUNDS BROKER-
DEALER SERVICES, INC.
By: Philip Coolidge By: Philip Coolidge
----------------------------------- -----------------------------------
Title: President Title: Chief Executive Officer
-------------------------------- --------------------------------
<PAGE>
Exhibit 6(b)
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of AUGUST 19, 1994, by and between
LANDMARK FIXED INCOME FUNDS, a Massachusetts business trust (the "Trust"), and
THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC., a Massachusetts corporation
("LFBDS" or the "Distributor") with respect to Shares of Beneficial Interest to
be designated "Class B".
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940 (collectively with the rules
and regulations promulgated thereunder, the "1940 Act");
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into
one or more separate series (together with any series which may in the future be
established, the "Funds");
WHEREAS, the Board of Trustees of the Trust has adopted a Distribution
Plan, dated as of August 19, 1994 (the "Distribution Plan"), which is
incorporated herein by reference and pursuant to which the Trust desires to
enter into this Distribution Agreement; and
WHEREAS, the Trust wishes to engage LFBDS to provide certain services with
respect to the distribution of shares designated Class B Shares (the "Shares")
of each Fund, and LFBDS is willing to provide such services to the Trust on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. The Trust grants to the Distributor the right, as agent of the Trust,
to sell Shares of each Fund upon the terms hereinbelow set forth during the
term of this Agreement. While this Agreement is in force, the Distributor
agrees to use its best efforts to find purchasers for Shares of each Fund.
The Distributor shall have the right, as agent of the Trust, to order
from the Trust the Shares needed, but not more than the Shares needed
(except for clerical errors and errors of transmission), to fill
unconditional orders for Shares of each Fund placed with the Distributor by
any dealer, all such orders to be made in the manner set forth in the
Trust's then-current prospectus (the "Prospectus") and then-current
statement of additional information (the "Statement of Additional
Information") relating to such Shares. The price which shall be paid to the
Trust for the Shares of each Fund so purchased shall be the net asset value
per Share as determined in accordance with the provisions of the Trust's
Declaration of Trust and By-Laws, as each may from time to time be amended
(collectively, the "Governing Instruments"). The Distributor shall notify
the Custodian of the Trust, at the end of each business day, or as soon
thereafter as the orders placed with the Distributor have been compiled, of
the number of Shares of each Fund and the prices thereof which have been
ordered through the Distributor since the end of the previous business day.
The right granted to the Distributor to place orders for Shares with the
Trust shall be exclusive, except that this exclusive right shall not apply
to Shares issued in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is
merged with and into or consolidated with the Trust or any Fund or in the
event that the Trust or any Fund acquires, by purchase or otherwise, all
(or substantially all) the assets or the outstanding shares of any such
company; nor shall it apply to Shares issued by the Trust as a dividend or
stock split. The exclusive right to place orders for Shares granted to the
Distributor may be waived by the Distributor by notice to the Trust in
writing, either unconditionally or subject to such conditions and
limitations as may be set forth in such notice to the Trust. The Trust
hereby acknowledges that the Distributor may render distribution and other
services to other parties, including other investment companies. In
connection with its duties hereunder, the Distributor shall also arrange
for computation of performance statistics with respect to each Fund and
arrange for publication of current price information in newspapers and
other publications.
2. The Shares may be sold by the Distributor on behalf of the Trust to
or through any dealer having a sales agreement with the Distributor upon
the following terms and conditions:
The public offering price of the Shares, including the Shares of each
Fund, i.e., the price per Share at which the Distributor or dealer
purchasing Shares through the Distributor may sell shares to the public,
shall be the net asset value of such Shares.
The net asset value of Shares of each Fund shall be determined by the
Trust, or by an agent of the Trust, as of the close of trading on the New
York Stock Exchange on each day on which the New York Stock Exchange is
open for trading (and on such other days as the Trustees deem necessary in
order to comply with Rule 22c-1 under the 1940 Act), in accordance with the
method established pursuant to the Governing Instruments. The Trust shall
have the right to suspend the sale of Shares of any Fund if, because of
some extraordinary condition, the New York Stock Exchange shall be closed,
or if conditions existing during the hours when the Exchange is open render
such action advisable or for any other reason deemed adequate by the Trust.
3. The Trust agrees that it will, from time to time, but subject to the
necessary approval, if any, of its shareholders, take all necessary action
to register such number of Shares of each Fund under the Securities Act of
1933, as amended (the "1933 Act"), as the Distributor may reasonably be
expected to sell.
The Distributor shall be an independent contractor and neither the
Distributor nor any of its Directors, officers or employees as such, is or
shall be an employee of the Trust. It is understood that Trustees, officers
and shareholders of the Trust are or may become interested in the
Distributor, as Directors, officers, employees, or otherwise and that
Directors, officers and employees of the Distributor are or may become
similarly interested in the Trust and that the Distributor may be or become
interested in the Trust as a shareholder or otherwise. The Distributor is
responsible for its own conduct and the employment, control and conduct
(but only with respect to the duties and obligations of the Distributor
hereunder) of its agents and employees and for any injury to any of such
agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employer taxes thereunder.
4. The Distributor covenants and agrees that, in selling Shares, it will
use its best efforts in all respects duly to conform with the requirements
of all state and federal laws and the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. relating to the sale of
Shares, and will indemnify and hold harmless the Trust and each of its
Trustees and officers and each person, if any, who controls the Trust
within the meaning of Section 15 of the 1933 Act (the "Indemnified
Parties") against all losses, liabilities, damages or expenses (including
the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith) arising from any claim, demand, action or suit
(collectively, "Claims"), arising by reason of any person's acquiring any
of the Shares through the Distributor, which may be based upon the 1933 Act
or any other statute or common law, on account of any wrongful act of the
Distributor or any of its employees (including any failure to conform with
any requirement of any state or federal law or the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. relating to the
sale of Shares) or on the ground that the registration statement under the
1933 Act, including all amendments thereto (the "Registration Statement"),
or Prospectus or previous prospectus or Statement of Additional Information
or previous statement of additional information, with respect to such
Shares, includes or included an untrue statement of a material fact or
omits or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, if and
only if any such act, statement or omission was made in reliance upon
information furnished by the Distributor to the Trust; provided, however,
that in no case (i) is the indemnity of the Distributor in favor of any
Indemnified Party to be deemed to protect any such Indemnified Party
against liability to which such Indemnified Party would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its or his duties or by reason of its or his reckless
disregard of its or his obligations and duties under this Agreement, or
(ii) is the Distributor to be liable under its indemnity agreement
contained in this Section 4 with respect to any Claim made against any
Indemnified Party unless such Indemnified Party shall have notified the
Distributor in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the Claim shall
have been served upon such Indemnified Party (or after such Indemnified
Party shall have received notice of such service on any designated agent),
but failure to notify the Distributor of any such Claim shall not relieve
it from any liability which it may have to any Indemnified Party otherwise
than on account of its indemnity agreement contained in this Section 4. The
Distributor shall be entitled to participate, at its own expense, in the
defense, or, if it so elects, to assume the defense, of any suit brought to
enforce any such Claim, and, if the Distributor elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to each Indemnified Party. In the event that the Distributor
elects to assume the defense of any such suit and retain such counsel, each
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it but, in case the Distributor does not elect to
assume the defense of any such suit, it shall reimburse the Indemnified
Parties for the reasonable fees and expenses of any counsel retained by
them. Except with the prior written consent of the Distributor, no
Indemnified Party shall confess any CLAIM OR MAKE any compromise in any
case in which the Distributor will be asked to indemnify such Indemnified
Party. The Distributor agrees promptly to notify the Trust of the
commencement of any litigation or proceeding against it in connection with
the issuance and sale of any of the Shares.
Neither the Distributor nor any dealer nor any other person is
authorized to give any information or to make any representation on behalf
of the Trust in connection with the sale of Shares of any Fund, other than
those contained in the Registration Statement or Prospectus or Statement of
Additional Information relating to such Fund.
5. The Trust will pay, or cause to be paid--
(i) all costs and expenses of the Trust, including fees and
disbursements of its counsel, in connection with the preparation and
filing of the Registration Statement, Prospectus and Statement of
Additional Information with respect to Shares of each Fund, and
preparing and mailing to shareholders Prospectuses, Statements of
Additional Information, statements and confirmations and periodic
reports (including the expense of setting in type the Registration
Statement, Prospectus and Statement of Additional Information or any
periodic report with respect to Shares of each Fund);
(ii) the cost of preparing temporary or permanent certificates for
Shares;
(iii) the cost and expenses of delivering to the Distributor at its
office in Boston, Massachusetts all Shares purchased through it as
agent hereunder;
(iv) a distribution fee periodically at an annual rate equal to
0.75% of the portion of the average daily net assets of such Fund
that is represented by Shares for its then-current fiscal year,
subject to the Distribution Plan, and, under certain circumstances,
the Distributor may impose certain deferred sales charges in
connection with the repurchase of Shares of each Fund and the
Distributor may retain (or receive from each Fund, as the case may
be) all such deferred sales charges;
(v) at such time as may be agreed upon by the Trust and the
Distributor, a service fee from the assets of such Fund to the
Distributor at an annual rate not to exceed 0.25% of the portion of
the average daily net assets of such Fund that is represented by
Shares that are owned by investors for whom a broker-dealer who has
performed personal services and/or account maintenance services under
a dealer agreement with the Distributor is the holder or dealer of
record, subject to the Distribution Plan; and the Distributor shall
be entitled to be paid any fees payable under this paragraph (v)
hereof with respect to Shares for which no broker-dealer of record
exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance
services provided by the Distributor with respect to the Shares;
(vi) all fees and disbursements of the Transfer Agent and Custodian
with respect to each Fund, subject to the Trust's Administrative
Services Plan;
(vii) a fee to each Shareholder Servicing Agent (pursuant to a
shareholder servicing agreement with each such Agent), subject to the
Trust's Administrative Services Plan;
(viii) a fee to the Administrator of the Trust (pursuant to the
Administrative Services Agreement), subject to the Trust's
Administrative Services Plan; and
(ix) a fee to the investment adviser of each Fund, if any (pursuant
to the Investment Advisory Agreement with any such Adviser)
The Distributor agrees that, with respect to the sale of Shares of each
Fund, after the Prospectus and Statement of Additional Information and
periodic reports with respect to such Fund have been set in type, it will
bear the expense (other than the cost of mailing to shareholders of the
Trust) of printing and distributing any copies thereof which are to be used
in connection with the offering or sale of Shares of such Fund to any
dealer or prospective investor. The Distributor further agrees that it will
bear the expenses of preparing, printing and distributing any other
literature used by the Distributor or furnished by it for use by any dealer
in connection with the offering of the Shares of such Fund for sale to the
public and any expense of sending confirmations and statements to any
dealer having a sales agreement with the Distributor. The Distributor will
also bear the cost of any compensation paid to dealers in connection with
the sale of Shares of such Fund. The Distributor also agrees to bear the
expenses of qualification of Shares of such Fund for sale in the various
states and, if necessary or advisable in connection therewith, of
qualifying the Trust as a broker or dealer in any such state.
6. If, at any time during the term of this Agreement, the Trust shall
deem it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with any
recommendation or requirement of the Securities and Exchange Commission or
other governmental authority or to obtain any advantage under Massachusetts
or federal tax laws, it shall notify the Distributor of the form of
amendment which it deems necessary or advisable and the reasons therefor.
If the Distributor declines to assent to such amendment (after a reasonable
time), the Trust may terminate this Agreement forthwith by written notice
to the Distributor without payment of any penalty. If, at any time during
the term of this Agreement, the Distributor requests the Trust to make any
change in its Governing Instruments or in its methods of doing business
which are necessary in order to comply with any requirement of federal law
or regulations of the Securities and Exchange Commission or of a national
securities association of which the Distributor is or may become a member,
relating to the sale of Shares, and the Trust fails (after a reasonable
time) to make any such change as requested, the Distributor may terminate
this Agreement forthwith by written notice to the Trust without payment of
any penalty.
7. The Distributor agrees that it will not take any long or short
position in the Shares of any Fund and that, so far as it can control the
situation, it will prevent any of its Directors or officers from taking any
long or short position in the Shares of such Fund, except as permitted by
the Governing Instruments.
8. This Agreement shall become effective upon its execution and shall
continue in force until August 19, 1996, on which date it will terminate
unless its continuance thereafter is specifically approved at least
annually (i) by the vote of a majority of the Trustees of the Trust who are
not "interested persons" of the Trust or of the Distributor at a meeting
specifically called for the purpose of voting on such approval, and (ii) by
the Board of Trustees of the Trust, or by the "vote of a majority of the
outstanding voting securities" of the Shares of each Fund as to which this
Agreement is to continue. The aforesaid requirement that continuance of
this Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act.
This Agreement may be terminated as to any Fund at any time by either
party without payment of any penalty on not more than 60 days' nor less
than 30 days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment.
9. LFBDS may subcontract for the performance of LFBDS' obligations
hereunder with any one or more persons; provided, however, that LFBDS shall
not enter into any such subcontract unless the Trustees of the Trust shall
have found the subcontracting parry lo be qualified to perform the
obligations sought to be subcontracted; and provided, further, that, unless
the Trust otherwise expressly agrees in writing, LFBDS shall be as fully
responsible to the Trust for the acts and omissions of any subcontractor as
it would be for its own acts or omissions.
10. The terms "vote of a majority of the outstanding voting securities",
"interested person", "assignment" and "specifically approved at least
annually" shall have the respective meanings specified in, and shall be
construed in a manner consistent with, the 1940 Act, subject, however, to
such exemptions as may be granted by the Securities and Exchange Commission
thereunder, and provided, however, that the term "assignment" shall include
(without limitation) any sale, transfer or conversion of a controlling
interest of any class of voting stock of I,FBDS or of any entity which
holds a controlling interest of any class of voting stock of LFBDS or
another such entity.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first above written. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the Trust's
Declaration of Trust dated June 23, 1986, and the obligations of this Agreement
are not binding upon any of the Trustees or shareholders of the Trust
individually, but bind only the Trust estate.
LANDMARK FIXED INCOME FUNDS THE LANDMARK FUNDS BROKER-
DEALER SERVICES, INC.
By: Philip Coolidge By: Philip Coolidge
---------------------- ----------------------------
Title: President Title: Chief Executive Officer
---------------------- ----------------------------
<PAGE>
FIRST AMENDMENT TO DISTRIBUTION AGREEMENT
THIS FIRST AMENDMENT TO DISTRIBUTION AGREEMENT, dated as of May 5, 1995
(this "Amendment"), by and between Landmark Fixed Income Funds, a Massachusetts
business trust (the "Trust"), and THE LANDMARK FUNDS BROKER-DEALER SERVICES,
INC., a Massachusetts corporation (the "Distributor");
WITNESSETH:
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into
one or more separate series (together with any series which may in the future be
established, the "Funds");
WHEREAS, pursuant to that certain Distribution Agreement dated as of
August 19, 1994 (the "Original Agreement") between the Trust and the
Distributor, the Trust has granted the Distributor the right, as agent of the
Trust, to sell Shares of Beneficial Interest of each Fund to be designated
"Class B"; and
WHEREAS, the Trust and the Distributor desire to amend the Original
Agreement to provide for the payment to the Distributor of a service fee on the
terms and conditions specified below;
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual covenants and agreements set forth below,
the parties hereto do hereby amend the Original Agreement as follows:
1. DEFINITIONS.
Capitalized terms used in this Amendment without definition shall have
the respective meanings assigned to them in the Original Agreement.
2. AMENDMENT.
Section 5(v) of the Original Agreement is hereby deleted in its entirety
and replaced with the following:
(v) a service fee from the assets of such Fund to the Distributor at an
annual rate not to exceed 0.25% of the portion of the average daily net assets
of such Fund that is represented by Shares, such fee to be (A) paid to the
Distributor in consideration of personal services and/or the maintenance of
shareholder accounts as provided or arranged by the Distributor, including the
maintenance of a telephone inquiry service for Fund investors, (B) paid to the
Distributor for its own account subject to
3. CONFIRMATION AGREEMENT
As amended hereby, the Original Agreement is confirmed and reaffirmed in
every particular.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered in their names and on their behalf by the undersigned
thereunto duly authorized, and their seals to be hereto affixed, all as of the
day and year first above written. The undersigned Trustee of the Trust has
executed this Amendment not individually but as Trustee under the Trust's
Declaration of Trust dated June 23, 1986, and the obligations of this Amendment
or of the Original Agreement, as amended hereby, are not binding upon any of the
Trustees or shareholders of the Trust individually, but bind only the Trust
estate.
LANDMARK FIXED INCOME FUNDS
By: Philip Coolidge
--------------------------
THE LANDMARK FUNDS
BROKER-DEALER SERVICES, INC.
By: Philip Coolidge
--------------------------
<PAGE>
Exhibit 8
CUSTODIAN CONTRACT
Between
LANDMARK FIXED INCOME FUNDS
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held By
It.....................................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States.................2
2.1 Holding Securities...............................................2
2.2 Delivery of Securities...........................................2
2.3 Registration of Securities.......................................4
2.4 Bank Accounts....................................................4
2.5 Availability of Federal Funds....................................5
2.6 Collection of Income.............................................5
2.7 Payment of Fund Monies...........................................5
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased.............................................7
2.9 Appointment of Agents............................................7
2.10 Deposit of Fund Assets in U.S. Securities System.................7
2.11 Fund Assets Held in the Custodian's Direct
Paper System.....................................................8
2.12 Segregated Account...............................................9
2.13 Ownership Certificates for Tax Purposes.........................10
2.14 Proxies.........................................................10
2.15 Communications Relating to Portfolio
Securities......................................................10
3. Duties of the Custodian with Respect to Property of the Fund Held Outside
of the United States..................................................10
3.1 Appointment of Foreign Sub-Custodians...........................10
3.2 Assets to be Held...............................................10
3.3 Foreign Securities Systems......................................11
3.4 Holding Securities..............................................11
3.5 Agreements with Foreign Banking Institutions....................11
3.6 Access of Independent Accountants of the Fund...................11
3.7 Reports by Custodian............................................12
3.8 Transactions in Foreign Custody Account.........................12
3.9 Liability of Foreign Sub-Custodians.............................12
3.10 Liability of Custodian..........................................12
3.11 Reimbursement for Advances......................................13
3.12 Monitoring Responsibilities.....................................13
3.13 Branches of U.S. Banks..........................................13
3.14 Tax Law.........................................................14
4. Payments for Sales or Repurchases or Redemptions
of Shares of the Fund.................................................14
5. Proper Instructions...................................................14
6. Actions Permitted Without Express Authority...........................15
7. Evidence of Authority.................................................15
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income.....................15
9. Records...............................................................16
10. Opinion of Fund's Independent Accountants.............................16
11. Reports to Fund by Independent Public Accountants.....................16
12. Compensation of Custodian.............................................17
13. Responsibility of Custodian...........................................17
14. Effective Period, Termination and Amendment...........................18
15. Successor Custodian...................................................19
16. Interpretive and Additional Provisions................................19
17. Additional Funds......................................................20
18. Massachusetts Law to Apply............................................20
19. Prior Contracts.......................................................20
20. No Liability of Other Series..........................................20
21. Shareholder Communications Election...................................20
<PAGE>
CUSTODIAN CONTRACT
This Contract between Landmark Fixed Income Funds, a business trust
organized and existing under the laws of Massachusetts, having its principal
place of business at 6 St. James Avenue, Boston, Massachusetts 02116 hereinafter
called the "Fund", and State Street Bank and Trust Company, a Massachusetts
trust company, having its principal place of business at 225 Franklin Street,
Boston, Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund currently offers shares in one or more series,
including, the Landmark U.S. Government Income Fund (such series together with
all other series subsequently established by the Fund and made subject to this
Contract in accordance with paragraph 17, being herein referred to as the
"Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Declaration of
Trust. The Fund on behalf of the Portfolio(s) agrees to deliver to the Custodian
all securities and cash of the Portfolios, and all payments of income, payments
of principal or capital distributions received by it with respect to all
securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury
and certain federal agencies (each, a "U.S. Securities System") and (b)
commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the Custodian
(the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of such securities
prior to receiving payment for such securities except as may arise
from the Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of
the Portfolio, which may be in the form of cash or obligations
issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for
which collateral is to be credited to the Custodian's account in the
book-entry system authorized by the U.S. Department of the Treasury,
the Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the receipt
of such collateral;
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may
be described from time to time in the currently effective prospectus
and statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board of Trustees
or of the Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary, specifying the
securities of the Portfolio to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper purpose, and naming the person or persons to
whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the Custodian
on behalf of the Portfolio under the terms of this Contract shall be in
"street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on
such securities and to notify the Fund on a best efforts basis only of
relevant corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for the
account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for a
Portfolio may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies as
it may in its discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each such bank
or trust company and the funds to be deposited with each such bank or
trust company shall on behalf of each applicable Portfolio be approved by
vote of a majority of the Board of Trustees of the Fund. Such funds shall
be deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf of
a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of such
Portfolio which are deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on the
date of payment by the issuer, such securities are held by the Custodian
or its agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Fund. The Custodian
will have no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of
the income to which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of
title to such options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as amended, to
act as a custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Portfolio or
in the name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case of a
purchase involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of repurchase
agreements entered into between the Fund on behalf of the Portfolio
and the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Portfolio
of securities owned by the Custodian along with written evidence of
the agreement by the Custodian to repurchase such securities from
the Portfolio or (e) for transfer to a time deposit account of the
Fund in any bank, whether domestic or foreign; such transfer may be
effected prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the Fund as
defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio
as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for
the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses of
the Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom such payment is to
be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of domestic securities for the account of
a Portfolio is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from
the Fund on behalf of such Portfolio to so pay in advance, the Custodian
shall be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such of
the provisions of this Article 2 as the Custodian may from time to time
direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "U.S. Securities System" in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in
an account ("Account") of the Custodian in the U.S. Securities
System which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Portfolio.
The Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S. Securities System
that payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of
the Portfolio. Copies of all advices from the U.S. Securities System
of transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with any
report obtained by the Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial certificate required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from use
of the U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents or
of any of its or their employees or from failure of the Custodian or
any such agent to enforce effectively such rights as it may have
against the U.S. Securities System; at the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of any
such loss or damage if and to the extent that the Portfolio has not
been made whole for any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by a Portfolio in the Direct
Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions from the Fund
on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities
sold for the account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transaction in the U.S.
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with
any report on its system of internal accounting control as the Fund
may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on behalf
of each such Portfolio, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper purposes, but
only, in the case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or purposes
of such segregated account and declaring such purposes to be proper
purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency
of calls and maturities of domestic securities and expirations of rights
in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from issuers
of the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer or
any other similar transaction, the Portfolio shall notify the Custodian at
least three business days prior to the date on which the Custodian is to
take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt
of "Proper Instructions", as defined in Section 5 of this Contract,
together with a certified resolution of the Fund's Board of Trustees, the
Custodian and the Fund may agree to amend Schedule A hereto from time to
time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the employment
of any one or more such sub-custodians for maintaining custody of the
Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Portfolio's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the
foreign securities of the Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or
in a book-entry system for the central handling of securities located
outside the United States (each a "Foreign Securities System") only
through arrangements implemented by the foreign banking institutions
serving as sub-custodians pursuant to the terms hereof (Foreign Securities
Systems and U.S. Securities Systems are collectively referred to herein as
the "Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of the Fund which are maintained in such account shall identify
by book-entry those securities and other non-cash property belonging to
the Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the foreign sub-custodian be held separately
from any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution or
its creditors or agent, except a claim of payment for their safe custody
or administration; (b) beneficial ownership for the assets of each
Portfolio will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records will
be maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e)
assets of the Portfolios held by the foreign sub-custodian will be subject
only to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian
insofar as such books and records relate to the performance of such
foreign banking institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of the Portfolio(s) held by foreign sub-custodians, including
but not limited to an identification of entities having possession of the
Portfolio(s) securities and other assets and advices or notifications of
any transfers of securities to or from each custodial account maintained
by a foreign banking institution for the Custodian on behalf of each
applicable Portfolio indicating, as to securities acquired for a
Portfolio, the identity of the entity having physical possession of such
securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities of the Fund held outside the United States by foreign
sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for the account
of each applicable Portfolio may be effected in accordance with the
customary established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering securities
to the purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer. (c)
Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract, and the Fund agrees to hold any
such nominee harmless from any liability as a holder of record of such
securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.13 hereof, the Custodian shall not be liable
for any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this
paragraph 3.10, in delegating custody duties to State Street London Ltd.,
the Custodian shall not be relieved of any responsibility to the Fund for
any loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose for the benefit of a Portfolio
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of
such Portfolio's assets to the extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection with
the initial approval of this Contract. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian learns of a
material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the United Kingdom shall
be maintained in an interest bearing account established for the Fund with
the Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of the Fund to notify the Custodian of the obligations imposed on the Fund
or the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental
charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to
use reasonable efforts to assist the Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which the Fund
has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three - party agreement which requires a segregated asset account in
accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Trustees of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of each Portfolio or, if directed in writing to do so
by the Fund on behalf of the Portfolio, shall itself keep such books of account
and/or compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of the Portfolio as described in the
Fund's currently effective prospectus related to such Portfolio and shall advise
the Fund and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to do so, shall advise
the Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share and the
daily income of each Portfolio shall be made at the time or times described from
time to time in the Fund's currently effective prospectus related to such
Portfolio.
9. Records
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge or
registering or transferring securities in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits;
(vi) delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract.
If the Fund on behalf of the Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated with respect to any Portfolio by either party by an instrument in
writing delivered or mailed, postage prepaid to the other party, such
termination to take effect not sooner than thirty (30) days after the date of
such delivery or mailing; provided, however that the Custodian shall not with
respect to a Portfolio act under Section 2.10 hereof in the absence of receipt
of an initial certificate of the Secretary or an Assistant Secretary that the
Board of Trustees of the Fund has approved the initial use of a particular
Securities System by such Portfolio, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not with
respect to a Portfolio act under Section 2.11 hereof in the absence of receipt
of an initial certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has approved the initial use of the Direct Paper System by
such Portfolio ; provided further, however, that the Fund shall not amend or
terminate this Contract in contravention of any applicable federal or state
regulations, or any provision of the Declaration of Trust, and further provided,
that the Fund on behalf of one or more of the Portfolios may at any time by
action of its Board of Trustees (i) substitute another bank or trust company for
the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to the Landmark U.S. Government Income Fund with respect to which it
desires to have the Custodian render services as custodian under the terms
hereof, it shall so notify the Custodian in writing, and if the Custodian agrees
in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
20. No Liability of Other Series
Notwithstanding any other provision of this Agreement, the parties agree
that the assets and liabilities of each Portfolio are separate and distinct from
the assets and liabilities of each other Portfolio and that no Portfolio shall
be charged for any debt, obligation or liability of any other Portfolio, whether
arising under this Agreement or otherwise.
21. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Custodian is not authorized to release the Fund's
name, address, and share positions.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of September, 1997.
ATTEST LANDMARK FIXED INCOME FUNDS
Christine A. Drapeau By Philip Coolidge
- --------------------------------- ---------------------------------
President
ATTEST STATE STREET BANK AND TRUST COMPANY
Thomas Forrester By Ronald E. Logue
- --------------------------------- ---------------------------------
Executive Vice President
<PAGE>
Exhibit 9(a)
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES PLAN
AMENDED AND RESTATED ADMINISTRATIVE SERVICES PLAN, dated as of June 24,
1986 and amended and restated as of February 9, 1996, of Landmark Fixed Income
Funds, a Massachusetts business trust (the "Trust").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Shares of Beneficial Interest (without par value) of the
Trust (the "Shares") are divided into one or more separate series (together with
any series which may in the future be established, the "Funds"); and
WHEREAS, the Trust desires to adopt this Amended and Restated
Administrative Services Plan (the "Plan") in order to provide for certain
administrative services to the Trust and holders of Shares of each Fund; and
WHEREAS, the Trust desires to enter into a transfer agency agreement
(in such form as may from time to time be approved by the Board of Trustees of
the Trust) with a financial institution, as transfer agent for the Trust (the
"Transfer Agent"), whereby the Transfer Agent will provide transfer agency
services to the Trust (the "Transfer Agency Agreement"); and
WHEREAS, the Trust desires to enter into a custodian agreement (in such
form as may from time to time be approved by the Board of Trustees of the Trust)
with a financial institution, as custodian for the Trust (the "Custodian"),
whereby the Custodian will provide custodial services to the Trust with respect
to each Fund (the "Custodian Agreement"); and
WHEREAS, the Trust desires to enter into an administrative services
agreement (in such form as may from time to time be approved by the Board of
Trustees of the Trust) with The Landmark Funds Broker-Dealer Services, Inc., a
Massachusetts corporation, as administrator of the Trust (the "Administrator"),
whereby the Administrator will provide certain administrative and management
services to the Trust (the "Administrative Services Agreement"); and
WHEREAS, the Trust also desires to enter into shareholder servicing
agreements (in such form as may from time to time be approved by the Board of
Trustees of the Trust) with certain financial institutions, as shareholder
servicing agents ("Shareholder Servicing Agents"), whereby each Shareholder
Servicing Agent will perform certain administrative and service functions (the
"Shareholder Servicing Agreements"); and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of each Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and each Fund
and its shareholders.
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Trust, on the following terms and conditions:
1. As specified in the Transfer Agency Agreement, the Transfer Agent shall
act as dividend disbursing agent for the Trust and perform transfer agency
functions for each Fund. The Trust shall pay to the Transfer Agent such
compensation from the assets of each Fund as may from time to time be agreed to
by the Trust and the Transfer Agent.
2. As specified in the Custodian Agreement, the Custodian shall safeguard
and control the cash and securities of each Fund, handle receipt and delivery of
securities for each Fund, determine income and collect interest on the
investments of each Fund, maintain books of original entry for Fund and Trust
accounting and other required books and accounts, calculate the daily net asset
value of Shares of each Fund and, in general, act as the custodian of the assets
of the Trust pertaining to each Fund, but the Custodian shall have no power to
determine the investment policies of the Trust or to determine which securities
the Trust will buy or sell on behalf of any Fund. The Trust shall pay to the
Custodian such compensation as may from time to time be agreed to by the Trust
and the Custodian.
3. As specified in the Administrative Services Agreement, the Administrator
shall perform certain administrative and management services on behalf of the
Trust, including: providing office space, equipment and clerical personnel
necessary for maintaining the organization of the Trust and for providing the
administrative and management services to be performed by the Administrator;
arranging, if desired by the Trust, for Directors, officers and employees of the
Administrator to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law; supervising the overall administration of
the Trust, including negotiation of contracts and fees with and the monitoring
of performance and billings of the Trust's Transfer Agent, Shareholder Servicing
Agents, Custodian and other independent contractors or agents; preparing and, if
applicable, filing all documents required for compliance by the Trust with
applicable laws and regulations, including registration statements,
prospectuses, statements of additional information, semi-annual and annual
reports to shareholders, proxy statements and tax returns; preparation of
agendas and supporting documents for and minutes of meetings of Trustees,
committees of Trustees and shareholders; arranging for computation of
performance statistics with respect to each Fund and arranging for publication
of current price information in newspapers and other publications; and arranging
for maintenance of books and records of the Trust and each Fund. As
consideration for services performed under the Administrative Services
Agreement, the Trust shall, subject to paragraph 5 hereof, periodically pay to
the Administrator such fee from the assets of each Fund as may from time to time
be agreed to by the Trust and the Administrator.
4. As specified in each Shareholder Servicing Agreement, each Shareholder
Servicing Agent shall, with respect to one or more Funds, perform certain
administrative and service functions, which may include, among others: answering
customer inquiries or inquiries of broker/dealers which have entered into sales
agreements with the Fund's Distributor or of banks or other financial
institutions which have entered into agency agreements with a Fund's Distributor
(such entities collectively referred to herein as "Third Party Firms") regarding
the manner in which purchases and redemptions of Shares may be effected, and
with regard to certain other matters pertaining to the Trust or such Fund;
assisting customers or Third Party Firms in designating and changing dividend
options, account designations and addresses; providing necessary personnel and
facilities to maintain certain shareholder accounts and records, as specified
from time to time by the Trust; assisting in processing purchase and redemption
transactions; assisting in or arranging for the wiring of funds; transmitting
and receiving funds or assisting in connection with customer orders to purchase
and redeem Shares; verifying and guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; furnishing periodic statements showing customer
account balances, and to the extent practicable, integrating such information
with other client transactions effected with or through the Shareholder
Servicing Agent; furnishing monthly and annual statements and confirmations of
purchases and redemptions of Shares in a customer's account; transmitting or
assisting in the transmission of proxy statements, annual reports, updating
prospectuses, statements of additional information and other communications from
the Trust to shareholders of such Fund; and providing such other related
services as the Trust, a Third Party Firm or a shareholder may request. Each
Shareholder Servicing Agreement shall provide that the Shareholder Servicing
Agent shall provide all personnel and facilities necessary in order for it to
perform the functions described in the applicable Shareholder Servicing
Agreement with respect to its customers who purchase Shares or the services it
has agreed to provide to Third Party Firms, as applicable. As consideration for
services performed under the Shareholder Servicing Agreements, the Trust shall,
subject to paragraph 5 hereof, periodically pay to each Shareholder Servicing
Agent such fee from the assets of each such Fund as may from time to time be
agreed to by the Trust and such Shareholder Servicing Agent. Each Shareholder
Servicing Agent will be permitted to charge its customers direct fees for the
same or similar services as provided pursuant to a Shareholder Servicing
Agreement.
5. Notwithstanding paragraphs 3 and 4 hereof, the aggregate of the fee
payable from a Fund to the Administrator pursuant to the Administrative Services
Agreement, the fees payable from such Fund to the Shareholder Servicing Agents
pursuant to the Shareholder Servicing Agreements and the Basic Distribution Fees
(as defined in the Trust's Distribution Plan) payable from such Fund to the
Distributor pursuant to the Trust's Distribution Plan may not exceed an amount
equal to .65% of such Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year.
6. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the Trust of the
responsibility for and control of the conduct of the affairs of the Trust.
7. This Plan shall become effective upon (a) approval by a vote of at least
a "majority of the outstanding voting securities" of each Fund, and (b) approval
by a vote of the Board of Trustees of the Trust and vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any of the
agreements related to the Plan (the "Qualified Trustees"), such votes to be cast
in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely, provided that such
continuance is subject to annual approval by a vote of the Board of Trustees of
the Trust and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire on the
date which is 15 months after the date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the amount to be
expended from the assets of any Fund for the services described herein shall be
effective only upon approval by a vote of a "majority of the outstanding voting
securities" of such Fund, and (b) any material amendment of this Plan shall be
effective only upon approval by a vote of the Board of Trustees of the Trust and
a majority of the Qualified Trustees, such votes to be cast in person at a
meeting called for the purpose of voting on such amendment. This Plan may be
terminated at any time with respect to any Fund by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of such Fund.
10. The Treasurer of the Trust shall provide the Board of Trustees of the
Trust, and the Board of Trustees of the Trust shall review, at least quarterly,
a written report of the amounts expended under the Plan and the purposes for
which such expenditures were made.
11. While this Plan is in effect, the selection and nomination of Qualified
Trustees shall be committed to the discretion of the Trustees who are not
"interested persons" of the Trust.
12. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are areas defined in the 1940
Act. In addition, for purposes of determining the fees payable to the
Administrator and each Shareholder Servicing Agent, the value of a Fund's net
assets shall be computed in the manner specified in the Trust's then-current
prospectus and statement of additional information applicable to that Fund for
the computation of the net asset value of Shares of that Fund.
13. The Fund shall preserve copies of this Plan, and each agreement related
hereto and each report referred to in paragraph 10 hereof (collectively the
"Records"), for a period of six years from the end of the fiscal year in which
such Record was made and each such Record shall be kept in an easily accessible
place for the first two years of said record-keeping.
14. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
15. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
<PAGE>
Exhibit 9(b)
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT, dated as of April 15, 1993, by and
between Landmark Fixed Income Funds, a Massachusetts business trust (the
"Trust"), and THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC., a Massachusetts
corporation ("LFBDS" or the "Administrator").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940 (collectively with the rules
and regulations promulgated thereunder, the "1940 Act");
WHEREAS, the shares of Beneficial Interest of the Trust (the "Shares") are
divided into one or more separate series (together with any series which may in
the future be established, the "Funds");
WHEREAS, the Board of Trustees of the Trust has adopted an Administrative
Services Plan, dated as of June 24,1986 (as amended and in effect from time to
time, the "Plan"), which is incorporated herein by reference and pursuant to
which the Trust desires to enter into this Administrative Services Agreement;
and
WHEREAS, the Trust wishes to engage LFBDS to provide certain administrative
and management services, and LFBDS is willing to provide such administrative and
management services to the Trust, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Administrator. Subject to the direction and control of
the Board of Trustees of the Trust, the Administrator shall perform such
administrative and management services as may from time to time be
reasonably requested by the Trust, which shall include without limitation:
(a) providing office space, equipment and clerical personnel necessary for
maintaining the organization of the Trust and for performing the
administrative and management functions herein set forth; (b) arranging, if
desired by the Trust, for Directors, officers and employees of the
Administrator to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual
consent and to any limitations imposed by law; (c) supervising the overall
administration of the Trust, including negotiation of contracts and fees
with and the monitoring of performance and billings of the Trust's transfer
agent, shareholder servicing agents, custodian and other independent
contractors or agents; (d) preparing and, if applicable, filing all
documents required for compliance by the Trust with applicable laws and
regulations, including registration statements, prospectuses and statements
of additional information, semi-annual and annual reports to shareholders,
proxy statements and tax returns; (e) preparation of agendas and supporting
documents for and minutes of meetings of Trustees, committees of Trustees
and shareholders; and (f) arranging for maintenance of books and records of
the Trust. Notwithstanding the foregoing, the Administrator shall not be
deemed to have assumed any duties with respect to, and shall not be
responsible for, the management of the Trust's assets or the rendering of
investment advice and supervision with respect thereto or the distribution
of Shares of any Fund, nor shall the Administrator be deemed to have
assumed or have any responsibility with respect to functions specifically
assumed by any transfer agent, custodian or shareholder servicing agent of
the Trust.
2. Allocation of Charges and Expenses. LFBDS shall pay the entire
salaries and wages of all of the Trust's Trustees, officers and agents who
devote part or all of their time to the affairs of LFBDS or its affiliates,
and the wages and salaries of such persons shall not be deemed to be
expenses incurred by the Trust for purposes of this Section 2. Except as
provided in the foregoing sentence, the Trust will pay all of its own
expenses including, without limitation, compensation of Trustees not
affiliated with the Administrator; governmental fees; interest charges;
taxes; membership dues in the Investment Company Institute allocable to the
Trust; fees and expenses of each Fund's investment adviser or advisers;
fees and expenses of independent auditors, of legal counsel and of any
transfer agent, distributor, shareholder servicing agent, registrar or
dividend disbursing agent of the Trust; expenses of distributing and
redeeming Shares and servicing shareholder accounts; expenses of preparing,
printing and mailing prospectuses and statements of additional information,
reports, notices, proxy statements and reports to shareholders and
governmental officers and commissions; expenses connected with the
execution, recording and settlement of portfolio security transactions;
insurance premiums; fees and expenses of the Trust's custodian for all
services to the Trust, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net
asset value of shares of each Fund; expenses of shareholder meetings; and
expenses relating to the issuance, registration and qualification of shares
of each Fund.
3. Compensation of Administrator. Subject to paragraph 5 of the Plan,
for the services to be rendered and the facilities to be provided by the
Administrator hereunder, the Trust shall pay to the Administrator an
administrative fee from the assets of each Fund as may be agreed to from
time to time by the Trust and the Administrator. If LFBDS serves as
Administrator for less than the whole of any period specified in this
Section 3, the compensation to LFBDS, as Administrator, shall be prorated.
For purposes of computing the fees payable to the Administrator hereunder,
the value of the net assets of any Fund shall be computed in the manner
specified in the Trust's then-current prospectus and statement of
additional information.
4. "Landmark Funds" Name. The Trust hereby acknowledges that any and all
rights in or to the names "Landmark" and "Landmark Funds" which exist on
the date of this Agreement or which may arise hereafter are, and under any
and all circumstances shall continue to be, the sole property of LFBDS;
that LFBDS may assign any or all of such rights to another party or parties
without the consent of the Trust; and that LFBDS may permit other parties,
including other investment companies, to use the word "Landmark" or the
words "Landmark Funds" in their names. If LFBDS, or its assignee as the
case may be, ceases to serve as the Administrator of the Trust, the Trust
hereby agrees to take promptly any and all actions which are necessary or
desirable to change its name and the name of each Fund so as to delete the
word "Landmark" or the words "Landmark Funds".
5. Limitation of Liability of the Administrator. The Administrator shall
not be liable for any error of judgment or mistake of law or for any act or
omission in the administration or management of the Trust or the
performance of its duties hereunder, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
the reckless disregard of its obligations and duties hereunder. As used in
this Section 5, the term "Administrator" shall include LFBDS and/or any of
its affiliates and the Directors, officers and employees of LFBDS and/or
any of its affiliates.
6. Activities of the Administrator The services of the Administrator to
the Trust are not to be deemed to be exclusive, LFBDS being free to render
administrative and/or other services to other parties. It is understood
that Trustees, officers, and shareholders of the Trust are or may become
interested in the Administrator and/or any of its affiliates, as Directors,
officers, employees, or otherwise, and that Directors, officers and
employees of the Administrator and/or any of its affiliates are or may
become similarly interested in the Trust and that the Administrator and/or
any of its affiliates may be or become interested in the Trust as a
shareholder or otherwise.
7. Subcontracting by LFBDS. LFBDS may subcontract for the performance of
LFBDS' obligations hereunder with any one or more persons; provided,
however, that LFBDS shall not enter into any such subcontract unless the
Trustees of the Trust shall have found the subcontracting party to be
qualified to perform the obligations sought to be subcontracted; and
provided, further, that, unless the Trust otherwise expressly agrees in
writing, LFBDS shall be as fully responsible to the Trust for the acts and
omissions of any subcontractor as it would be for its own acts or
omissions.
8. Duration and Termination of this Agreement. This Agreement shall
become effective as of the day and year first above written and shall
govern the relations between the parties hereto thereafter, and shall
remain in force indefinitely, provided that its continuance is
"specifically approved at least annually" (a) by the vote of a majority of
the Board of Trustees of the Trust who are not "interested persons" of the
Trust or of the Administrator at a meeting specifically called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by the "vote of a majority of the outstanding voting securities"
of each Fund as to which this Agreement is to continue, and provided,
however, that the term "assignment" shall include (without limitation) any
sale, transfer or conversion of a controlling interest of any class of
voting stock of LFBDS or of any entity which holds a controlling interest
of any class of voting stock of LFBDS or another such entity.
This Agreement may be terminated as to any Fund at any time, without the
payment of any penalty, by the Board of Trustees of the Trust or by the "vote of
a majority of the outstanding voting securities" of such Fund, or by the
Administrator, in each case on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall automatically terminate
in the event of its "assignment'.
The terms "specifically approved at least annually", "vote of a majority of
the outstanding voting securities", "assignment", and "interested persons", when
used in this Agreement, shall have the respective meanings specified in, and
shall be construed in a manner consistent with, the 1940 Act, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written. The
undersigned Trustee or officer of the Trust has executed this Agreement not
individually, but as Trustee or officer under the Trust's Declaration of Trust,
dated June 23,1986, as amended, and the obligations of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the Trust
individually, but bind only the Trust estate.
LANDMARK FIXED INCOME FUNDS THE LANDMARK FUNDS BROKER-
DEALER SERVICES, INC.
By: Philip Coolidge By: Philip Coolidge
-------------------------------- ----------------------------
Title: President Title: Chief Executive Officer
-------------------------------- ----------------------------
<PAGE>
Exhibit 9(c)
SUB-ADMINISTRATIVE SERVICES AGREEMENT
SUB-ADMINISTRATIVE SERVICES AGREEMENT, dated as of July 1, 1989, and
amended and restated as of July 16, 1992, by and between THE LANDMARK FUNDS
BROKER-DEALER SERVICES, INC., a Massachusetts corporation ("LFBDS" or the
"Administrator"), and CITIBANK, N.A., a national banking association ("Citibank"
or the "Sub-Administrator").
WITNESSETH:
WHEREAS, LFBDS has entered into an Administrative Services Agreement as
amended (the "Administrative Agreement") with Landmark Fixed Income Funds (the
'`Trust"); and
WHEREAS, as permitted by Section 7 of the Administrative Agreement, as
amended, Citibank desires to subcontract some or all of the performance of the
Administrator's obligations thereunder to Citibank, and Citibank desires to
accept such obligations; and
WHEREAS, LFBDS wishes to engage Citibank to provide certain administrative
services on the terms and conditions hereinafter set forth, so long as the
Trustees of the Landmark Funds shall have found Citibank to be qualified to
perform the obligations sought to be subcontracted.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Sub-Administrator. The Sub-Administrator shall perform
such administrative and management services as may from time to time be
agreed to between the Administrator and the Sub-Administrator so long as
the Trustees of the Landmark Funds shall have found the
Sub-Administrator to be qualified to perform the obligations sought to
be subcontracted, which may include (a) providing office space,
equipment and clerical personnel necessary for maintaining the
organization of the Landmark Funds and for performing the administrative
functions herein set forth; (b) participation in the preparation of
documents required for compliance by the Landmark Funds with applicable
laws and regulations, including registration statements, prospectuses,
semi-annual and annual reports to shareholders, proxy statements and tax
returns; (c) preparation of agendas and supporting documents for and
minutes of meetings of the Trustees, Committees of Trustees and
shareholders; (d) arranging for maintenance of books and records of the
Landmark Funds; and (e) any other functions or obligations permitted to
or required by the Administrator. Notwithstanding the foregoing, the
Sub-Administrator under this Agreement shall not be deemed to have
assumed any duties with respect to, and shall not be responsible for,
the management of the Trust, or the distribution of Shares of Beneficial
Interest of the Trust ("Shares"), nor shall the Sub-Administrator be
deemed to have assumed or have any responsibility with respect to
functions specifically assumed by any transfer agent, custodian or
shareholder servicing agent of the Trust.
2. Compensation of Sub-Administrator. For the services to be rendered and
the facilities to be provided by the Sub-Administrator hereunder, the
Sub-Administrator shall be paid an administrative fee as may from time
to time be agreed to between the Administrator and the
Sub-Administrator.
3. Additional Terms and Conditions. The parties may amend this agreement
and include such other terms and conditions as may from time to time be
agreed to between the Administrator and the Sub-Administrator, so long
as the Trustees of the Trust shall have found the subcontracting party
to be qualified to perform the obligations sought to be subcontracted.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC.
By: /s/ Philip Coolidge
--------------------------------
Title: Chief Executive Officer
--------------------------------
CITIBANK, N.A.
By: Robert P. Wallace
--------------------------------
Title: Vice President
--------------------------------
<PAGE>
Exhibit 9(e)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
LANDMARK U.S. GOVERNMENT INCOME FUND
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 Terms of Appointment; Duties of the Bank .................... 1
ARTICLE 2 Fees and Expenses ........................................... 7
ARTICLE 3 Representations and Warranties of the Bank .................. 8
ARTICLE 4 Representations and Warranties of the Fund .................. 8
ARTICLE 5 Indemnification ............................................. 9
ARTICLE 6 Covenants of the Fund and the Bank .......................... 12
ARTICLE 7 Termination of Agreement .................................... 13
ARTICLE 8 Assignment .................................................. 14
ARTICLE 9 Amendment ................................................... 15
ARTICLE 10 Massachusetts Law to Apply .................................. 15
ARTICLE 11 Merger of Agreement ......................................... 15
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 21st day Of August, 1986, by and between LANDMARK
U.S. GOVERNMENT INCOME FUND, a Massachusetts business trust, having its
principal office and place of business at 200 Berkeley Street, Boston,
Massachusetts 02117 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts corporation having its principal office and place of business at
225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WITNESSETH:
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent ant agent in connection with certain other activities,
and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of the Bank
1.01 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby, employs and appoints the Bank to act as, and the Bank agrees to act
as transfer agent for the Fund's authorized and issued shares of its beneficial
interest ("Shares"), dividend disbursing agent and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of the
Fund ("Shareholders") and set out in the currently effective prospectus of the
Fund, including without limitation any periodic investment plan or periodic
withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefor to
the Custodian of the Fund authorised pursuant to the Declaration of
Trust of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of Shares
and hold such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation therefor to
the Custodian;
(iv) At the appropriate time as and when it receives monies paid to it
by the Custodian with respect to any redemption, pay over or cause
to be paid over in the appropriate manner such monies as instructed
by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Fund; and
(vii) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(viii) Record the issuance of shares of the Fund and maintain pursuant to
SEC Rule 17Ad-10(e) a record of the total number of shares of the
Fund which are authorized, based upon data provided to it by the
Fund, and issued and outstanding. Bank shall also provide the Fund
on a regular basis with the total number of shares which are
authorized and issued and outstanding and shall have no obligation,
when recording the issuance of shares, to monitor the issuance of
such shares or to take cognizance of any laws relating to the issue
or sale of such shares, which functions shall be the sole
responsibility, of the Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), the Bank shall: (i) perform all of the customary services of a
transfer agent, dividend disbursing agent and, as relevant, agent in connection
with accumulation, open-account or similar plans (including without limitation
any periodic investment plan or periodic withdrawal program); including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes on
non-resident alien accounts, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and mailing
confirmations forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each State. The
Fund shall (i) identify to the Bank in writing those transactions and assets to
be treated as exempt from the blue sky reporting for each State and (ii) verify
the establishment of transactions for each State on the system prior to
activation and thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State registration status is
solely limited to the initial establishment of transactions subject to blue sky
compliance by the Fund and the reporting of such transactions to the Fund as
provided above.
(c) Additionally, the Bank shall:
(i) Utilize a system to identify all share transactions which involve
purchase and redemption orders that are processed at a time other than the time
of the computation of net asset value per share next computed after receipt of
such orders, and shall compute the net effect upon the Fund of such transactions
so identified on a daily and cumulative basis.
(ii) If upon any day the cumulative net effect of such transactions upon
the Fund is negative and exceed a dollar amount equivalent to 1/2 of 1 cent per
share, the Bank shall promptly make a payment to the fund in cash or through the
use of a credit, in the manner described in paragraph (iv) below, in such amount
as may be necessary to reduce the negative cumulative net effect to less than
1/2 of 1 cent per share.
(iii) If on the last business day of any month the cumulative net effect
upon the Fund (adjusted by the amount of all prior payments and credits by the
Bank and the Fund) is negative, the Fund shall be entitled to a reduction in the
fee next payable under the Agreement by an equivalent amount, except as provided
in paragraph (iv) below. If on the last business day in any month the cumulative
net effect upon the Fund (adjusted by the amount of all prior payments and
credits by the Bank and the Fund) is positive, the Bank shall be entitled to
recover certain past payments and reductions in fees, and to credit against all
future payments and fee reductions that may be required under the Agreement as
herein described in paragraph (iv) below.
(iv) At the end of each month, any positive cumulative net effect upon the
Fund shall be deemed to be a credit to the Bank which shall first be applied to
permit the Bank to recover any prior cash payments and fee reductions made by it
to the Fund under paragraphs (ii) and (iii) above during the calendar year, by
increasing the amount of the monthly fee under the Agreement next payable in an
amount equal to prior payments and fee reductions made by the Bank during such
calendar year, but not exceeding the sum of that month's credit and credits
arising in prior months during such calendar year to the extent such prior
credits have not previously been utilized as contemplated by this paragraph. An,
portion of a credit to the Bank not so used by it shall remain as a credit to be
used as payment against the amount of any future negative cumulative net effects
that would otherwise require a cash payment or fee reduction to be made to the
Fund pursuant to paragraphs (ii) or (iii) above (regardless of whether or not
the credit or any portion thereof arose in the same calendar year as that in
which the negative cumulative net effects or any portion thereof arose).
(v) The Bank shall supply to the Fund from time to time, as mutually agreed
upon, reports summarizing the transactions identified pursuant to paragraph (i)
above, and the daily and cumulative net effects of such transactions, and shall
advise the Fund at the end of each month of the net cumulative effect at such
time. The Bank shall promptly advise the Fund if at any time the cumulative net
effect exceeds a dollar amount equivalent to 1/2 of 1 cent per share.
(vi) In the event that this Agreement is terminated for whatever cause, or
this provision 1.02 (c) is terminated pursuant to paragraph (vii) below, the
Fund shall promptly pay to the Bank an amount in cash equal to the amount by
which the cumulative net effect upon the Fund is positive or, if the cumulative
net effect upon the Fund is negative, the Bank shall promptly pay to the Fund an
amount in cash equal to the amount of such cumulative net effect.
(vii) This provision 1.02 (c) of the Agreement may be terminated by the
Bank at any time without cause, effective as of the close of business on the
date written notice (which may be by telex) is received by the Fund.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Fund and the Bank.
Article 2 Fees and Expenses
2.01 For performance by the Bank pursuant to this Agreement, the Fund
agrees to pay the Bank an annual maintenance fee for each Shareholder account as
set out in the initial fee schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees
to reimburse the bank for out-of-pocket expenses or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within five
days following the mailings of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to the Bank by the Fund at least seven
(7) days prior to the mailing date of such materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.03 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Massachusetts.
4.02 It is empowered under applicable laws and by its Declaration of Trust
and By-laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Declaration of Trust and
By-laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified investment company registered under
the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is currently
effective and will remain effective, and appropriate state securities law
filings have been made and will continue to be made, with respect to all Shares
of the Fund being offered for sale.
Article 5 Indemnification
5.01 The Bank shall not be responsible for, and the Fund shall indemnify
and hold the Bank harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of the Bank or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.
(b) The Funds' refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records and documents which (i) are received by the Bank or its
agents or subcontractors and furnished to it by or on behalf of the Fund, and
(ii) have been prepared and/or maintained by the Fund or any other person or
firm on behalf of the Fund.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 The Bank shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributed to any action or failure or omission
to act by the Bank as a result of the Bank's lack of good faith, negligence or
willful misconduct.
5.03 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected ant indemnified in acting upon
any paper or document furnished by or on behalf of the Fund, reasonably believed
to be genuine and to have been signed by the proper person or persons, or upon
any instruction, information, data, records or documents provided the bank or
its agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officer of the
Fund, and the proper countersignature of any former transfer agent or registrar,
or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article
5 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Fund and the Bank
6.01 The Fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Trustees of the Fund
authorizing the appointment of the Bank and the execution and delivery of this
Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto.
6.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered to the Fund on and in accordance with its request.
6.04 The Bank and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
instruction. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
Article 7 Termination of Agreement
7.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
7.02 Should the Fund exercise its right to terminate all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, the Bank reserves the right to charge for any other
reasonable expenses associated with such termination and/or a charge equivalent
to the average of three (3) months' fees.
Article 8 Assignment
8.01 Except as provided in Section 8.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
8.03 The Bank, may without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A (c)(l) of the Securities Exchange Act of
1934 ("Section 17A (c)(1)"), or (ii) a BFDS subsidiary duly registered as a
transfer agent pursuant to Section 17A (c)(l); provided, however, that the Bank
shall be as fully responsible to the Fund for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
Article 9 Amendment
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Trustees of the Fund.
Article 10 Massachusetts Law to Apply
10.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 11 Merger of Agreement
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
LANDMARK U.S. GOVERNMENT INCOME FUND
BY: Richard B. Bailey
-------------------------------
ATTEST:
Philip Coolidge
- ------------------------------------
STATE STREET BANK AND TRUST COMPANY
BY: Timothy B. Hagerty
-------------------------------
Vice President
ATTEST:
Kathleen M. Kubit
- -------------------------------------
Assistant Secretary
<PAGE>
Exhibit 9(g)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of the 1st day of September, 1997 by and between
STATE STREET BANK AND TRUST COMPANY, a trust company duly organized under the
laws of the Commonwealth of Massachusetts (the "ACCOUNTING AGENT") and LANDMARK
FIXED INCOME FUNDS, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "FUND").
W I T N E S S E T H:
WHEREAS, the Fund is authorized to issue beneficial interests in separate
series, with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund currently offers beneficial interests in one or more
series, including, Landmark U.S. Government Income Fund (such series, together
with all other series subsequently established by the Fund and made subject to
this Agreement in accordance with Section 7.1 below, each a "PORTFOLIO" and
collectively, the "PORTFOLIOS");
WHEREAS, each Portfolio will invest all or substantially all of its assets
in a series of beneficial interests issued by a multi-series master fund (the
"MASTER FUND"), with each such series representing interests in a separate
portfolio of securities and other assets of the Master Fund (each a "MASTER
PORTFOLIO"); and
WHEREAS, the Fund desires to retain the Accounting Agent to perform
certain accounting and recordkeeping duties on behalf of each Portfolio and the
Accounting Agent is willing to perform such services upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein (the adequacy of which consideration with respect to each party
is hereby mutually admitted), the parties hereto hereby agree as follows:
Section 1. DUTIES OF THE ACCOUNTING AGENT.
Section 1.1 BOOKS OF ACCOUNT.
The Accounting Agent shall maintain the books of account of each Portfolio
and shall perform the following duties, using information provided to the
Accounting Agent by the Fund and others, in the manner prescribed by each
Portfolio's currently effective Registration Statement and the Declaration of
Trust of the Fund, certified copies of which have been supplied to the
Accounting Agent (with respect to each Portfolio, the "CONSTITUTIVE DOCUMENTS")
and in accordance with such written procedures as may be agreed upon by the Fund
and the Accounting Agent from time to time:
(a) Record general ledger entries;
(b) Record daily net income;
(c) Reconcile activity to the trial balance;
(d) Calculate and publish daily net asset value; and
(e) Prepare account balances.
The Fund shall provide timely prior notice to the Accounting Agent of any
modification in the manner in which such calculations are to be performed
pursuant to any revision to the Constitutive Documents of a Portfolio and shall
supply the Accounting Agent with certified copies of all amendments and/or
supplements to each Portfolio's Constitutive Documents in a timely manner. For
purposes of calculating the net asset value of each Portfolio, the Accounting
Agent shall value such Portfolio's capital ownership in its corresponding Master
Portfolio utilizing the allocation supplied by the Master Fund or its designated
agent and shall value other portfolio securities of such Portfolio, if any,
utilizing prices obtained from sources designated by the Fund on a Price Source
Authorization substantially in the form attached hereto as Exhibit A, as the
same may be amended by the Fund and the Accounting Agent from time to time, or
otherwise designated by means of Proper Instructions (as such term is defined in
Section 2.2 below) (collectively, the "AUTHORIZED PRICE SOURCES"). The
Accounting Agent shall not be responsible for any revisions to the methods of
calculation prescribed by the Constitutive Documents of any Portfolio unless and
until such revisions are communicated in writing to the Accounting Agent. The
Accounting Agent represents and warrants to the Fund that it has all consents,
approvals, licenses, rights and authority necessary to perform the services to
be provided hereunder.
Section 1.2 RECORDS.
The Accounting Agent shall create and maintain all records relating to its
activities and obligations under this Agreement with respect to each Portfolio
in a manner which shall meet the obligations of such Portfolio under its
Constitutive Documents. All such records shall be the property of the relevant
Portfolio and shall at all times during the regular business hours of the
Accounting Agent be open for inspection by duly authorized officers, employees
or agents of the Fund and employees and agents of the regulatory agencies having
jurisdiction over the Portfolio. Subject to Section 3 below, the Accounting
Agent shall preserve the records required to be maintained thereunder for the
period required by law.
Section 1.3 APPOINTMENT OF AGENTS.
The Accounting Agent may at is own expense employ agents in the
performance of its duties and the exercise of its rights under this Agreement,
provided that the employment of such agents shall not reduce the Accounting
Agent's obligations or liabilities hereunder.
Section 2. DUTIES OF THE FUND.
Section 2.1 PROVISION OF INFORMATION.
The Fund shall provide to the Accounting Agent, or shall cause a third
party to so provide, certain data with respect to each Portfolio as a condition
to the Accounting Agent's obligations under Section 1 above. The data required
to be provided with respect to each Portfolio pursuant to this Section is set
forth on Schedule A hereto, which schedule may be separately amended or
supplemented by the Fund and the Accounting Agent from time to time.
The Accounting Agent is authorized and instructed to rely upon the
information it receives from the Fund or any third party authorized by the Fund
(a "THIRD PARTY AGENT") to provide such information to the Accounting Agent. The
Accounting Agent shall have no responsibility to review, confirm or otherwise
assume any duty with respect to the accuracy or completeness of any information
supplied to it by the Fund or any Third Party Agent.
Section 2.2 PROPER INSTRUCTIONS.
The term "PROPER INSTRUCTIONS" shall mean instructions received by the
Accounting Agent from the Fund, the investment advisor of the Portfolios
appointed by the Fund from time to time (the "INVESTMENT ADVISOR") or any person
duly authorized by them. Such instructions may be in writing signed by the
authorized person or may be in a tested communication or in a communication
utilizing access codes effected between electro-mechanical or electronic devices
or may be by such other means as may be agreed upon from time to time by the
Accounting Agent and the party giving such instructions (including, without
limitation, oral instructions). All oral instructions shall be promptly
confirmed in writing. The Fund and the Investment Advisor shall each cause its
duly authorized representative to certify to the Accounting Agent in writing the
names and specimen signatures of persons authorized to give Proper Instructions.
The Accounting Agent shall be entitled to rely upon the identity and authority
of such persons until it receives written notice from the Fund or the Investment
Advisor, as the case may be, to the contrary. The Accounting Agent may rely upon
any Proper Instruction reasonably believed by it to be genuine and to have been
properly issued by or on behalf of the Fund or the Investment Advisor, as the
case may be. The Fund shall give timely Proper Instructions to the Accounting
Agent in regard to matters affecting accounting practices and the Accounting
Agent's performance pursuant to this Agreement.
Section 3. SUCCESSOR AGENT.
If a successor accounting agent for the Portfolios shall be appointed by
the Fund, the Accounting Agent shall upon termination of this Agreement deliver
to such successor agent at the office of the Accounting Agent all books and
records of account of each Portfolio maintained by the Accounting Agent
hereunder. In the event this Agreement is terminated by either party without the
appointment of a successor agent, the Accounting Agent shall, upon receipt of
Proper Instructions, deliver such properties at its office in accordance with
such instructions.
In the event that no written order designating a successor agent or Proper
Instructions shall have been delivered to the Accounting Agent on or before the
effective date of such termination, then the Accounting Agent shall have the
right to deliver to a bank or trust company of its own selection, having
aggregate capital, surplus and undivided profits, as shown by its last published
report, of not less than $2,000,000, all property of the Portfolios held by the
Accounting Agent hereunder. Thereafter, such bank or trust company shall be the
successor of the Accounting Agent under this Agreement.
Section 4. STANDARD OF CARE; LIMITATION ON LIABILITY.
The Accounting Agent shall at all times exercise reasonable care and
diligence and act in good faith in the performance of its duties hereunder,
provided, however, that the Accounting Agent shall assume no responsibility and
shall be without liability for any loss, damage or expense suffered or incurred
by the Fund or any Portfolio unless caused by its own fraud, wilful default,
negligence or wrongful act or that of its agents or employees.
Without in any way limiting the generality of the foregoing, the
Accounting Agent shall in no event be liable for any loss or damage arising from
causes beyond its reasonable control, including, without limitation, delay or
cessation of services hereunder or any damages to the Fund or any Portfolio
resulting therefrom as a consequence of any work stoppage, power or other
mechanical failure, natural disaster, governmental action, communications
disruption or other impossibility of performance. The Accounting Agent shall not
be liable for any special, indirect, incidental, or consequential damages of any
kind whatsoever (including, without limitation, attorneys' fees) in any way due
to any Portfolio's use of the accounting services or the performance of or
failure to perform the Accounting Agent's obligations under this Agreement.
The Fund and any Third Party Agents or Authorized Price Sources from which
the Accounting Agent shall receive or obtain certain records, reports and other
data included in the accounting services provided hereunder are solely
responsible for the contents of such information, including, without limitation,
the accuracy thereof. The Accounting Agent shall have no responsibility to
review, confirm or otherwise assume any duty with respect to the accuracy or
completeness of any such information and shall be without liability for any loss
or damage suffered by the Fund or any Portfolio as a result of the Accounting
Agent's reasonable reliance on and utilization of such information, except as
otherwise required by the terms of the Price Source Authorization form attached
hereto as Exhibit A with respect to the use of data obtained from Authorized
Price Sources. The Accounting Agent shall have no responsibility and shall be
without liability for any loss or damage caused by the failure of the Fund or
any Third Party Agent to provide it with the information required by Section 2.1
hereof.
Section 5. INDEMNIFICATION.
The Fund hereby agrees to indemnify and hold harmless the Accounting Agent
from and against any loss, liability, claim or expense (including reasonable
attorney's fees and disbursements) suffered or incurred by the Accounting Agent
in connection with the performance of its duties hereunder, including, without
limitation, any liability or expense suffered or incurred as a result of the
acts or omissions of the Fund or any Third Party Agent or Authorized Price
Source whose data or services, including records, reports and other information,
the Accounting Agent must rely upon in performing accounting services hereunder.
Notwithstanding the immediately preceding sentence, the Fund in no event shall
indemnify or hold harmless the Accounting Agent from any loss, liability, claim
or expense involving any breach or alleged breach or violation of U.S. Patent
No. 5,193,056, entitled Data Processing System for Hub and Spoke Financial
Services Configuration.
Section 6. DATA ACCESS AND PROPRIETARY INFORMATION.
The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals which may be furnished to it by the Accounting Agent as part of the
Fund's ability to access certain Portfolios-related data ("CUSTOMER DATA")
maintained by the Accounting Agent on data bases under the control and ownership
of the Accounting Agent ("DATA ACCESS SERVICES") constitute copyrighted, trade
secret, or other proprietary information (collectively, "PROPRIETARY
INFORMATION") of substantial value to the Accounting Agent. The Fund agrees to
treat all Proprietary Information as proprietary to the Accounting Agent and
further agrees that it shall not divulge any Proprietary Information to any
person or organization except as may be provided hereunder. Without limiting the
foregoing, the Fund agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be designated
in writing by the Accounting Agent and solely in accordance with the
Accounting Agent's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently
obtained, to inform the Accounting Agent in a timely manner of such
fact and dispose of such information in accordance with the
Accounting Agent's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of the
Accounting Agent;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties; and
(f) to honor all reasonable written requests made by the Accounting
Agent to protect at the Accounting Agent's expense and risk the
rights of the Accounting Agent in Proprietary Information at common
law, under federal copyright law and under other federal or state
law.
Each party shall take reasonable efforts to advise its employees and agents of
their obligations pursuant to this Section 6. The obligations of this Section
shall survive for a period of five years any earlier termination of this
Agreement.
The Fund hereby acknowledges that the data and information it may access
from the Accounting Agent utilizing the Data Access Services will be unaudited
and may not be accurate due to inaccurate pricing of securities, delays of a day
in updating a Portfolio's account and other causes for which Accounting Agent
will not be liable to the Fund or any Portfolio.
If the Fund notifies the Accounting Agent that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Accounting Agent shall use its best
efforts to correct such failure as promptly as possible. Data access services
and all computer programs and software specifications used in connection
therewith are provided on an as is, as available basis. The Accounting Agent
expressly disclaims all warranties except those expressly stated herein
including, but not limited to, the implied warranties of merchantability and
fitness for a particular purpose.
If the transactions available to the Fund include the ability to originate
electronic instructions to the Accounting Agent in order to (i) effect the
transfer or movement of cash or beneficial interests or (ii) transmit interest
holder information or other information (such transactions constituting a
"COEFI"), then in such event the Accounting Agent shall be entitled to rely on
the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity with
mutually acceptable security procedures established by the Accounting Agent and
the Fund from time to time.
Notwithstanding anything to the contrary in this Section 6, the Fund and
its employees and agents may copy and duplicate Proprietary Information for its
own internal use in a manner consistent with this Agreement.
The Fund and its employees and agents may disclose any Proprietary
Information (i) if and to the extent the Fund and its employees and agents are
required to do so by applicable law or an order of a court of competent
jurisdiction or other government agency having appropriate authority, in which
case the Fund shall provide the Accounting Agent with timely notice prior to
such disclosure and (ii) to the extent any of such documents, materials and
information are made public by means other than a breach by the Fund or its
respective employees and agents of the obligations hereunder.
Notwithstanding anything in this Section 6 to the contrary, the Fund and
its employees and agents shall have the right to independently develop products,
provided they do so without any misappropriation of the Proprietary Information
or violation of the Accounting Agent's copyright or patent rights or interests.
Section 7. GENERAL.
Section 7.1 ADDITIONAL PORTFOLIOS
In the event that the Fund establishes one or more series of beneficial
interests in addition to the Landmark U.S. Government Income Fund, with respect
to which it desires to have the Accounting Agent render services under the terms
of this Agreement, it shall so notify the Accounting Agent in writing, and if
the Accounting Agent agrees in writing to provide such services, such series
shall become a Portfolio hereunder.
Section 7.2 TERM OF AGREEMENT.
This Agreement shall be effective from the date first stated above and
shall remain in full force and effect until terminated as hereinafter provided.
Either party may, in its discretion, terminate this Agreement with respect to
any Portfolio for any reason by giving the other party at least sixty (60) days
prior written notice of termination.
Section 7.3 FEES AND EXPENSES.
The Fund agrees to pay the Accounting Agent such reasonable compensation
for its services and expenses as may be agreed upon from time to time in a
written fee schedule approved by the Fund and the Accounting Agent.
Section 7.4 CONFIDENTIALITY.
The Accounting Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relating to the Fund and each
Portfolio, except where required to be disclosed by law or where the Accounting
Agent has determined that such disclosure is necessary for the protection of its
interests or has received the prior written consent of the Fund, which consent
shall not be unreasonably withheld.
Section 7.5 NOTICES.
All notices shall be in writing and shall be deemed given when delivered
in person, by facsimile, by overnight delivery through a commercial courier
service, or by registered or certified mail, return receipt requested. Notices
shall be addressed to each party at its address set forth below, or such other
address as the recipient may have specified by earlier notice to the sender.
If to the Accounting Agent: STATE STREET BANK AND TRUST COMPANY
1776 Heritage Drive
North Quincy, MA 02171
Attention:
Telephone:
Telecopy:
With a copy to: STATE STREET FUND SERVICES TORONTO INC.
100 King Street, West
Suite 3600
Toronto, Ontario
Canada M5X 1A9
Attention: Mike Larkin
Telephone: (416) 956-2987
Telecopy: (416) 956-2874
If to the Fund: LANDMARK FIXED INCOME FUNDS
6 St. James Avenue
Boston, MA 02116
Attention: Philip Coolidge
Telephone: 617-423-1679
Telecopy: 617-542-5815
With a copy to: CITIBANK GLOBAL ASSET MANAGEMENT
153 East 53rd Street
New York, NY 10043
Attention: Andrew Shoup
Telephone: 212-559-1177
Telecopy: 212-793-1812
Section 7.6 ASSIGNMENT; SUCCESSORS.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign its
rights and obligations hereunder to a party controlling, controlled by, or under
common control with such party.
Section 7.7 ENTIRE AGREEMENT.
This Agreement (including all schedules and attachments hereto)
constitutes the entire Agreement between the parties with respect to its subject
matter.
Section 7.8 AMENDMENTS.
No amendment to this Agreement shall be effective unless it is in writing
and signed by a duly authorized representative of each party. The term
"Agreement", as used herein, includes all schedules and attachments hereto and
any future written amendments, modifications, or supplements made in accordance
herewith.
Section 7.9 HEADINGS NOT CONTROLLING.
Headings used in this Agreement are for reference purposes only and shall
not be deemed a part of this Agreement.
Section 7.10 SURVIVAL.
All provisions regarding indemnification, warranty, liability and limits
thereon shall survive following the expiration or termination of this Agreement.
Section 7.11 SEVERABILITY.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
Section 7.12 COUNTERPARTS.
This Agreement may be simultaneously executed in several counterparts,
each of which shall be deemed to be an original, and all such counterparts shall
together constitute but one and the same Agreement.
Section 7.13 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
<PAGE>
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
STATE STREET BANK AND TRUST COMPANY
By: Ronald E. Logue
----------------------------------
Its: Executive Vice President
LANDMARK FIXED INCOME FUNDS
By: Philip Coolidge
----------------------------------
Its: President
<PAGE>
SCHEDULE A
REQUIRED INFORMATION RESPONSIBLE PARTY
- -------------------- -----------------
Portfolio Trade Authorizations Investment Adviser
Currency Transactions Investment Adviser
Cash Transaction Report Custodian
Portfolio Prices Third Party Vendors/Investment Adviser
Exchange Rates Third Party Vendors/Investment Adviser
Capital Stock Activity Report Transfer Agent
Dividend/Distribution Schedule Fund
Dividend/Distribution Declaration Fund
Dividend Reconciliation/Confirmation Transfer Agent
Corporate Actions Third Party Vendors/Custodian
Service Provider Fee Schedules Fund
Expense Budget Fund
Expense Payments and other
Cash Disbursements Fund
Amortization Policy Fund
Accounting Policy/Complex Investments Fund
Audit Management Letter Auditor
Annual Interest holder Letter Fund
Annual/Semi-Annual Reports Fund
Allocation of Capital Ownership
in Master Portfolios Master Fund
<PAGE>
EXHIBIT A
ACCOUNTING SERVICES AGREEMENT
dated
September 1, 1997
by and between
LANDMARK FIXED INCOME FUNDS
and
STATE STREET BANK TRUST COMPANY
(the "ACCOUNTING AGENT")
Pursuant to the terms of the Accounting Services Agreement, the Fund has
directed the Accounting Agent to calculate the net asset value of each Portfolio
and to perform certain other accounting services in accordance with the
Constitutive Documents (as such term is defined therein) of each Portfolio. The
Fund hereby authorizes and instructs the Accounting Agent to utilize the pricing
sources specified on the attached forms as sources for securities prices in
calculating the net asset value of each Portfolio and acknowledges and agrees
that the Accounting Agent shall have no liability for any incorrect data
provided by pricing sources selected by the Fund or otherwise authorized by
Proper Instructions (as such term is defined in the Accounting Services
Agreement), except as may arise from the Accounting Agent's lack of reasonable
care in performing the agreed-upon tolerance checks as to the data furnished and
calculating the net asset value of a Portfolio in accordance with the data
furnished and the Accounting Agent's performance of the agreed-upon tolerance
checks.
LANDMARK FIXED INCOME FUNDS
By: Philip Coolidge
--------------------------------
Title: President
Date: September 1, 1997
------------------------------
<PAGE>
Exhibit 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 24 to the registration statement on Form N-1A (the "Registration
Statement") of Landmark Fixed Income Funds of our report dated February 2, 1998,
relating to the financial statements and financial highlights of Landmark U.S.
Government Income Fund appearing in the December 31, 1997 Annual Report of
Landmark U.S. Government Income Fund, which are also incorporated by reference
into the Registration Statement. We also consent to the references to us under
the headings "Condensed Financial Information" and "Counsel and Independent
Auditors" in the Prospectus and under the headings "Auditors" and "Independent
Accountants and Financial Statements" in the Statement of Additional
Information.
Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 18, 1998
<PAGE>
EXHIBIT 11(B)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this Post-Effective Amendment No. 24
to the registration statement on Form N-1A (the "Registration Statement") of
Landmark Fixed Income Funds of our report dated February 2, 1998, relating to
the financial statements and financial highlights of the Government Income
Portfolio appearing in the December 31, 1997 Annual Report of Landmark U.S.
Government Income Fund, which are also incorporated by reference into the
Registration Statement. We also consent to the references to us under the
headings "Auditors" and "Independent Accountants and Financial Statements" in
the Statement of Additional Information.
Price Waterhouse
Chartered Accountants
Toronto, Ontario
February 18, 1998
<PAGE>
EXHIBIT 11(C)
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Post Effective Amendment
No. 24 to Registration Statement No. 33-6540 of CitiFunds Fixed Income Trust
(formerly known as Landmark Fixed Income Funds) of our report dated January 30,
1998 appearing in the annual report to shareholders for the year ended December
31, 1997 of CitiFunds Intermediate Income Portfolio (formerly Landmark
Intermediate Income Fund), (a separate series of CitiFunds Fixed Income Trust),
and to the references to us under the headings "Condensed Financial Information"
in the Prospectus and "Independent Accountants and Financial Statements" in the
Statement of Additional Information, both of which are part of such Registration
Statement.
Deloitte & Touche LLP
Boston, Massachusetts
February 17, 1998
<PAGE>
Exhibit 15(a)
AMENDED AND RESTATED
DISTRIBUTION PLAN
DISTRIBUTION PLAN, dated as of June 24, 1986, and amended and restated as
of August 19, 1994 of Landmark Fixed Income Funds, a Massachusetts business
trust (the "Trust") with respect to Shares of Beneficial Interest to be
designated "Class A".
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into
one or more separate series (together with any series which may in the future be
established, the "Funds"); and
WHEREAS, the Trust intends to distribute the shares of each Fund designated
Class A Shares (the "Shares") in accordance with Rule 12b-1 under the 1940 Act
("Rule 12b-1"), and desires to adopt this Distribution Plan (the "Plan") as a
plan of distribution pursuant to such Rule; and
WHEREAS, the Trust desires to engage The Landmark Funds Broker-Dealer
Services, Inc., a Massachusetts corporation ("LFBDS"), to provide certain
distribution services for the Trust (the "Distributor"); and
WHEREAS, the Trust desires to enter into an amended and restated
distribution agreement (in such form as may from time to time be approved by the
Board of Trustees of the Trust in the manner specified in Rule 12b-1) with the
Distributor, whereby the Distributor will provide facilities and personnel and
render services to the Trust in connection with the offering and distribution of
the Shares of each Fund (the "Distribution Agreement"); and
WHEREAS, the Trust recognizes and agrees that the Distributor may retain
the services of any one or more broker-dealers registered as such under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), banks and
other financial intermediaries, to act as dealer or agent in connection with the
offering of Shares of a Fund, and the Distributor may make periodic payments,
out of the fee paid to the Distributor, its profits or any other source
available to it, to such broker-dealer, bank or other intermediary for such
services; and
WHEREAS, the Distribution Agreement provides that a sales charge may be
paid by investors who purchase Shares and that the Distributor and
broker-dealers, banks and other financial intermediaries, may receive such sales
charge as partial compensation for their services in connection with the sale of
Shares; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of each Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and each Fund
and its shareholders;
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan
for the Trust as a plan for distribution in accordance with Rule 12b-1, on the
following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the
offering and sale of Shares of each Fund to customers of financial
institutions which have entered into shareholder servicing agreements
with the Trust applicable to such Fund. Among other things, the
Distributor shall be responsible for all expenses of printing
(excluding typesetting) and distributing prospectuses, and, upon
request, statements of additional information, to prospective
shareholders of each Fund and providing such other related services as
are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses described
in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel,
office expenses (including rent and overhead), equipment, printing,
delivery and mailing costs.
3. It is understood that, under certain circumstances, the Distributor may
impose certain deferred sales charges in connection with the repurchase
of Shares of each Fund and the Distributor may retain (or receive from
each Fund, as the case may be) all such deferred sales charges. As
additional consideration for services performed and expenses incurred
in the performance of its obligations under the Distribution Agreement,
except in connection with print or electronic media advertising, the
Trust shall pay the Distributor from the assets of each Fund a
distribution fee periodically at an annual rate not to exceed 0.15% of
the average daily net assets of such Fund for its then-current fiscal
year attributable to the Shares of that Fund (the "Basic Distribution
Fee"). The Trust shall pay the Distributor an additional fee from the
assets of each Fund at an annual rate not to exceed 0.05% of the
average daily net assets of such Fund for its then-current fiscal year
attributable to the Shares of that Fund in anticipation of, or as
reimbursement for, expenses incurred by the Distributor in connection
with print or electronic media advertising in connection with the sale
of Shares of such Fund.
4. As partial consideration for the personal services and/or account
maintenance services performed by each broker-dealer, bank or other
financial intermediary in the performance of its obligations under its
dealer or agency agreement with the Distributor, each Fund (excluding
only the U.S. Government Income Fund and the Intermediate Income Fund)
may pay each broker-dealer, bank or other financial intermediary a
service fee periodically at a rate not to exceed 0.25% per annum of the
portion of the average daily net assets of such Fund that is
represented by Shares that are owned by investors for whom such
broker-dealer, bank or other financial intermediary is the holder or
intermediary of record ("Service Fees"). That portion of each such
Fund's average daily net assets on which the fees payable under this
paragraph 4 hereof are calculated may be subject to certain minimum
amount requirements as may be determined and additional or different
dealer qualification standards that may be established from time to
time by the Distributor. The Distributor shall be entitled to be paid
any fees payable under this paragraph 4 hereof with respect to Shares
for which no intermediary of record exists or qualification standards
have not been met as partial consideration for personal services and/or
account maintenance services provided by the Distributor with respect
to the Shares. The Service Fees payable pursuant to this paragraph 4
may from time to time be paid by each Fund (excluding only the U.S.
Government Income Fund and the Intermediate Income Fund) to the
Distributor and the Distributor will then pay these fees on behalf of
such Fund.
5. The Trust understands that an agreement between the Distributor and any
broker-dealer registered as such under the Exchange Act, bank or other
financial intermediary may provide for a portion (which may be
substantially all) of the fees payable to the Distributor under the
Distribution Agreement to be paid by the Distributor to such
broker-dealer, bank or other financial intermediary in consideration of
services in connection with the sale of the Shares of any Fund. Nothing
in this Plan shall be construed as requiring the Trust to make any
payment to any such broker-dealer, bank or other financial intermediary
or to have any obligation to such broker-dealer, bank or other
financial intermediary in connection with its services. The Distributor
agrees and hereby undertakes that any agreement entered into between
the Distributor and any such broker-dealer, bank or other financial
intermediary shall provide that such broker-dealer, bank or other
financial intermediary shall look solely to the Distributor for
compensation for its services thereunder and that in no event shall
such broker-dealer, bank or other financial intermediary seek any
payment from the Trust or its shareholders.
6. The Trust shall pay all fees and expenses of any independent auditor,
legal counsel, administrator, transfer agent, custodian, shareholder
servicing agent, registrar or dividend disbursing agent of the Trust;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses and
statements of additional information, shareholder reports, notices,
proxy statements and reports to government officers and commissions and
to shareholders of the Trust except that the Distributor shall be
responsible for the expenses of printing (excluding typesetting) and
distributing prospectuses and statements of additional information to
prospective shareholders as provided in paragraphs 1 and 2 hereof;
expenses connected with the execution, recording and settlement of
portfolio security transactions; insurance premiums; expenses of
calculating the net asset value of Shares; expenses of shareholder
meetings; and expenses relating to the issuance, registration and
qualification of Shares.
7. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject
or by which it is bound, or to relieve or deprive the Board of Trustees
of the responsibility for and control of the conduct of the affairs of
the Trust.
8. This Plan shall become effective as to any Fund upon (a) approval by a
vote of at least a "majority of the outstanding voting securities" of
the Shares of that Fund, and (b) approval by a vote of the Board of
Trustees and vote of a majority of the Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at
a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the
Board of Trustees of the Trust and a majority of the Qualified
Trustees, such votes to be cast in person at a meeting called for the
purpose of voting on continuance of this Plan. If such annual approval
is not obtained, this Plan shall expire on the date which is 15 months
after the date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the
amount to be expended from the assets of any Fund attributable to the
Shares for the services described herein shall be effective only upon
approval by a vote of a "majority of the outstanding voting securities"
of the Shares of such Fund, and (b) any material amendment of this Plan
shall be effective only upon approval by a vote of the Board of
Trustees of the Trust and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of
voting on such amendment. This Plan may be terminated at any time with
respect to any Fund by vote of a majority of the Qualified Trustees or
by a vote of a "majority of the outstanding voting securities" of the
Shares of such Fund.
11. The Trust and the Distributor each shall provide the Board of Trustees
of the Trust, and the Board of Trustees of the Trust shall review, at
least quarterly, a written report of the amounts expended under the
Plan and the purposes for which such expenditures were made.
12. While this Plan is in effect, the selection and nomination of Qualified
Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons" and
"majority of the outstanding voting securities" are used as defined in
the 1940 Act. In addition, for purposes of determining the fees payable
to the Distributor, the value of the net assets of any Fund shall be
computed in the manner specified in the Trust's then-current prospectus
and statement of additional information applicable to that Fund for
computation of the net asset value applicable to Shares of that Fund.
14. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 11 hereof
(collectively, the "Records") for a period of six years from the end of
the fiscal year in which such Record was made and each such Record
shall be kept in an easily accessible place for the first two years of
said record-keeping.
15. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
16. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall
not be affected thereby.
<PAGE>
Exhibit 15(b)
AMENDED AND RESTATED
DISTRIBUTION PLAN-CLASS B
DISTRIBUTION PLAN, dated as of August 19, 1994, and amended and restated on
May 5, 1995 of Landmark Fixed Income Funds, a Massachusetts business trust (the
"Trust") with respect to Shares of Beneficial Interest to be designated "Class
B".
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into
one or more separate series (together with any series which may in the future be
established, the "Funds"); and
WHEREAS, the Trust intends to distribute the shares of each Fund designated
Class B Shares (the "Shares") in accordance with Rule 12b-1 under the 1940 Act
("Rule 12b-1"), and desires to adopt this Distribution Plan (the "Plan") as a
plan of distribution pursuant to such Rule; and
WHEREAS, the Trust desires to engage The Landmark Funds Broker-Dealer
Services, Inc., a Massachusetts corporation ("LFBDS"), to provide certain
distribution services for the Trust (the "Distributor"); and
WHEREAS, the Trust desires to enter into a distribution agreement (in such
form as may from time to time be approved by the Board of Trustees of the Trust
in the manner specified in Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Trust in connection with the offering and distribution of the Shares of each
Fund (the "Distribution Agreement"); and
WHEREAS, the Trust recognizes and agrees that the Distributor may retain
the services of any one or more broker-dealers registered as such under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), banks and
other financial intermediaries to act as dealer or agent in connection with the
offering of the Shares of a Fund, and the Distributor may make periodic
payments, out of the fee paid to the Distributor, its profits or any other
source available to it, to such broker-dealer, bank or other financial
intermediary for such services; and
WHEREAS, the Trust recognizes and agrees that the Distributor may impose
certain deferred sales charges in connection with the repurchase of Shares by
each Fund and the Distributor may retain (or receive from such Fund, as the case
may be) all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of each Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and each Fund
ant its shareholders;
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan
for the Trust as a plan for distribution in accordance with Rule 12b-1, on the
following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the
offering and sale of Shares of each Fund to customers of financial
institutions which have entered into shareholder servicing agreements
with the Trust applicable to such Fund. Among other things, the
Distributor shall be responsible for all expenses of printing
(excluding typesetting) and distributing prospectuses, and, upon
request, statements of additional information, to prospective
shareholders of each Fund and providing such other related services as
are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses described
in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel,
office expenses (including rent and overhead), equipment, printing,
delivery and mailing costs.
3. It is understood that, under certain circumstances, the Distributor may
impose certain deferred sales charges in connection with the repurchase
of Shares of each Fund and the Distributor may retain (or receive from
each Fund, as the case may be) all such deferred sales charges. As
additional consideration for services performed and expenses incurred
in the performance of its obligations under the Distribution Agreement,
the Trust shall pay the Distributor from the assets of each Fund a
distribution fee periodically at an annual rate equal to 0.75% of the
average daily net assets of such Fund for its then-current fiscal year
attributable to the Shares of that Fund.
4. As partial consideration for the personal services and/or account
maintenance services performed by the Distributor and/or each
broker-dealer, bank or other financial intermediary in the performance
of its obligations under its dealer or agency agreement with the
Distributor, each Fund may pay the Distributor and/or each
broker-dealer, bank or other financial intermediary a service fee
periodically at a rate not to exceed in the aggregate 0.25% per annum
of the average daily net assets of such Fund (and provided that any
service fee paid to a broker-dealer, bank or other financial
intermediary will not exceed 0.25% per annum of the portion of the
average daily net assets of such Fund that is represented by Shares
that are owned by investors for whom such broker-dealer, bank or other
financial intermediary is the holder or intermediary of record). That
portion of each Fund's average daily net assets on which the fees
payable to a broker-dealer, bank or other financial intermediary under
this paragraph 4 hereof are calculated may be subject to certain
minimum amount requirements as may be determined, and additional or
different dealer qualification standards that may be established from
time to time, by the Distributor. The service fee payable to a
broker-dealer, bank or other financial intermediary pursuant to this
paragraph 4 may from time to time be paid by each Fund to the
Distributor and the Distributor will then pay these fees on behalf of
such Fund.
5. The Trust understands that an agreement between the Distributor and any
broker-dealer registered as such under the Exchange Act, bank or other
financial intermediary may provide for a portion (which may be
substantially all) of the fees payable to the Distributor under the
Distribution Agreement to be paid by the Distributor to such
broker-dealer, bank or other financial intermediary in consideration of
services in connection with the sale of the Shares of any Fund. Nothing
in this Plan shall be construed as requiring the Trust to make any
payment to any such broker-dealer, bank or other financial intermediary
or to have any obligation to such broker-dealer, bank or other
financial intermediary in connection with its services. The Distributor
agrees and hereby undertakes that any agreement entered into between
the Distributor and any such broker-dealer, bank or other financial
intermediary shall provide that such broker-dealer shall look solely to
the Distributor for compensation for its services thereunder and that
in no event shall such broker-dealer, bank or other financial
intermediary seek any payment from the Trust or its shareholders.
6. The Trust shall pay all fees and expenses of any independent auditor,
legal counsel, administrator, transfer agent, custodian, shareholder
servicing agent, registrar or dividend disbursing agent of the Trust;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses and
statements of additional information, shareholder reports, notices,
proxy statements and reports to government officers and commissions and
to shareholders of the Trust except that the Distributor shall be
responsible for the expenses of printing (excluding typesetting) and
distributing prospectuses and statements of additional information to
prospective shareholders as provided in paragraphs 1 and 2 hereof;
expenses connected with the execution, recording and settlement of
portfolio security transactions; insurance premiums; expenses of
calculating the net asset value of Shares; expenses of shareholder
meetings; and expenses relating to the issuance, registration and
qualification of Shares.
7. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject
or by which it is bound, or to relieve or deprive the Board of Trustees
of the responsibility for and control of the conduct of the affairs of
the Trust.
8. This Plan shall become effective as to any Fund upon (a) approval by a
vote of at least a "majority of the outstanding voting securities" of
the Shares of that Fund, and (b) approval by a vote of the Board of
Trustees and vote of a majority of the Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at
a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the
Board of Trustees of the Trust and a majority of the Qualified
Trustees, such votes to be cast in person at a meeting called for the
purpose of voting on continuance of this Plan. If such annual approval
is not obtained, this Plan shall expire on the date which is 15 months
after the date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the
amount to be expended from the assets of any Fund attributable to the
Shares for the services described herein shall be effective only upon
approval by a vote of a "majority of the outstanding voting securities"
of the Shares of such Fund, and (b) any material amendment of this Plan
shall be effective only upon approval by a vote of the Board of
Trustees of the Trust and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of
voting on such amendment. This Plan may be terminated at any time with
respect to any Fund by vote of a majority of the Qualified Trustees or
by a vote of a "majority of the outstanding voting securities" of the
Shares of such Fund.
11. The Trust and the Distributor each shall provide the Board of Trustees
of the Trust, and the Board of Trustees of the Trust shall review, at
least quarterly, a written report of the amounts expended under the
Plan and the purposes for which such expenditures were made.
12. While this Plan is in effect, the selection and nomination of Qualified
Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons" and
"majority of the outstanding voting securities" are used as defined in
the 1940 Act. In addition, for purposes of determining the fees payable
to the Distributor, the value of the net assets of any Fund shall be
computed in the manner specified in the Trust's then-current prospectus
and statement of additional information applicable to that Fund for
computation of the net asset value applicable to Shares of that Fund.
14. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 11 hereof
(collectively, the "Records") for a period of six years from the end of
the fiscal year in which such Record was made and each such Record
shall be kept in an easily accessible place for the first two years of
said record-keeping.
15. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
16. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall
not be affected thereby.
<PAGE>
Exhibit 25(a)
LANDMARK FIXED INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, Susan
Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by Landmark Fixed Income
Funds (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and under the Investment Company Act of 1940, as
amended, and any and all other instruments which such attorneys and agents, or
any of them, deem necessary or advisable to enable the Registrant to comply with
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
John R. Elder
- -----------------------------
John R. Elder
<PAGE>
LANDMARK FIXED INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Fixed Income Funds (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Riley C. Gilley
- -----------------------------
Riley C. Gilley
<PAGE>
LANDMARK FIXED INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as her true and lawful attorneys and agents to
execute in her name and on her behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Fixed Income Funds (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
her own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 6th day of
February, 1998.
Diana R. Harrington
- -----------------------------
Diana R. Harrington
<PAGE>
LANDMARK FIXED INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as her true and lawful attorneys and agents to
execute in her name and on her behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Fixed Income Funds (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
her own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 6th day of
February, 1998.
Susan B. Kerley
- -----------------------------
Susan B. Kerley
<PAGE>
LANDMARK FIXED INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Fixed Income Funds (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
C. Oscar Morong, Jr.
- -----------------------------
C. Oscar Morong, Jr.
<PAGE>
LANDMARK FIXED INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Fixed Income Funds (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
E. Kirby Warren
- -----------------------------
E. Kirby Warren
<PAGE>
LANDMARK FIXED INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Fixed Income Funds (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
William S. Woods, Jr.
- -----------------------------
William S. Woods, Jr.
<PAGE>
LANDMARK FIXED INCOME FUNDS
The undersigned hereby constitutes and appoints John R. Elder, Susan Jakuboski,
Molly S. Mugler and Linda T. Gibson, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statements on Form
N-1A, and any and all amendments thereto, filed by Landmark Fixed Income Funds
(on behalf of each of its series now or hereinafter created) (the "Registrant")
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, and under the Investment Company Act of 1940, as amended, and any and
all other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Registrant to comply with the Securities
Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the
rules, regulations and requirements of the Securities and Exchange Commission,
and the securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Philip W. Coolidge
- -----------------------------
Philip W. Coolidge
<PAGE>
Exhibit 25(b)
The Premium Portfolios
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by The
Premium Portfolios (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, the Registration Statements on Form
N-1A, and any and all amendments thereto, to be executed by the Registrant and
filed by another registrant with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, or under the Securities Act of
1933, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
C. Oscar Morong, Jr.
- -----------------------------
C. Oscar Morong, Jr.
At Southampton, Bermuda
<PAGE>
The Premium Portfolios
The undersigned hereby constitutes and appoints Philip W. Coolidge, Susan
Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by The Premium
Portfolios (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, the Registration Statements on Form N-1A, and
any and all amendments thereto, to be executed by the Registrant and filed by
another registrant with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, or under the Securities Act of 1933,
as amended, and any and all other instruments which such attorneys and agents,
or any of them, deem necessary or advisable to enable the Registrant to comply
with the Investment Company Act of 1940, as amended, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other jurisdiction; and the undersigned hereby
ratifies and confirms as his own act and deed any and all that such attorneys
and agents, or any of them, shall do or cause to be done by virtue hereof. Any
one of such attorneys and agents shall have, and may exercise, all of the powers
hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
John R. Elder
- -----------------------------
John R. Elder
At Southampton, Bermuda
<PAGE>
The Premium Portfolios
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by The
Premium Portfolios (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, the Registration Statements on Form
N-1A, and any and all amendments thereto, to be executed by the Registrant and
filed by another registrant with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, or under the Securities Act of
1933, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Elliott J. Berv
- -----------------------------
Elliott J. Berv
At Southampton, Bermuda
<PAGE>
The Premium Portfolios
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by The
Premium Portfolios (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, the Registration Statements on Form
N-1A, and any and all amendments thereto, to be executed by the Registrant and
filed by another registrant with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, or under the Securities Act of
1933, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Mark T. Finn
- -----------------------------
Mark T. Finn
At Southampton, Bermuda
<PAGE>
The Premium Portfolios
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by The
Premium Portfolios (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, the Registration Statements on Form
N-1A, and any and all amendments thereto, to be executed by the Registrant and
filed by another registrant with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, or under the Securities Act of
1933, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Walter E. Robb, III
- -----------------------------
Walter E. Robb, III
At Southampton, Bermuda
<PAGE>
The Premium Portfolios
The undersigned hereby constitutes and appoints John R. Elder, Susan Jakuboski,
Molly S. Mugler and Linda T. Gibson, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statements on Form
N-1A, and any and all amendments thereto, filed by The Premium Portfolios (on
behalf of each of its series now or hereinafter created) (the "Registrant") with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended, the Registration Statements on Form N-1A, and any and all amendments
thereto, to be executed by the Registrant and filed by another registrant with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended, or under the Securities Act of 1933, as amended, and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Registrant to comply with the Investment
Company Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Philip W. Coolidge
- -----------------------------
Philip W. Coolidge
At Southampton, Bermuda
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000795808
<NAME> LANDMARK U.S. GOVERNMENT INCOME FUND
<SERIES>
<NUMBER>001
<NAME>LANDMARK FIXED INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 20,235,808
<RECEIVABLES> 82,456
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,318,264
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,990,563
<SHARES-COMMON-STOCK> 2,105,044
<SHARES-COMMON-PRIOR> 2,799,549
<ACCUMULATED-NII-CURRENT> 7,723
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,623,296)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (137,729)
<NET-ASSETS> 20,237,261
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,397,507
<OTHER-INCOME> 0
<EXPENSES-NET> 186,417
<NET-INVESTMENT-INCOME> 1,211,090
<REALIZED-GAINS-CURRENT> (48,060)
<APPREC-INCREASE-CURRENT> 194,316
<NET-CHANGE-FROM-OPS> 1,357,346
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,224,908)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 919,430
<NUMBER-OF-SHARES-REDEEMED> (8,775,300)
<SHARES-REINVESTED> 1,216,313
<NET-CHANGE-IN-ASSETS> (6,507,119)
<ACCUMULATED-NII-PRIOR> 21,541
<ACCUMULATED-GAINS-PRIOR> (2,575,236)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 58,254
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 320,718
<AVERAGE-NET-ASSETS> 23,301,693
<PER-SHARE-NAV-BEGIN> 9.55
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.61
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000795808
<NAME> LANDMARK INTERMEDIATE INCOME FUND
<SERIES>
<NUMBER>002
<NAME>LANDMARK FIXED INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 35,414,237
<INVESTMENTS-AT-VALUE> 36,438,347
<RECEIVABLES> 380,119
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 30,699
<TOTAL-ASSETS> 36,849,165
<PAYABLE-FOR-SECURITIES> 58,053
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 58,053
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,640,804
<SHARES-COMMON-STOCK> 3,775,843
<SHARES-COMMON-PRIOR> 4,630,939
<ACCUMULATED-NII-CURRENT> 26,955
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,987,494)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,021,298
<NET-ASSETS> 36,701,563
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,683,236
<OTHER-INCOME> 0
<EXPENSES-NET> 353,642
<NET-INVESTMENT-INCOME> 2,329,594
<REALIZED-GAINS-CURRENT> 272,468
<APPREC-INCREASE-CURRENT> 649,983
<NET-CHANGE-FROM-OPS> 3,252,045
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,338,323)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 595,327
<NUMBER-OF-SHARES-REDEEMED> (11,061,426)
<SHARES-REINVESTED> 2,335,328
<NET-CHANGE-IN-ASSETS> (7,217,049)
<ACCUMULATED-NII-PRIOR> 35,684
<ACCUMULATED-GAINS-PRIOR> (3,259,962)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 137,525
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 577,345
<AVERAGE-NET-ASSETS> 39,292,930
<PER-SHARE-NAV-BEGIN> 9.48
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.57)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.72
<EXPENSE-RATIO> 0.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
