-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pzf0igmw71bGO4nVTovAcEWiYRRvbBTh9U6h/1GfthmBb4oeqOMNPROnSaw2wim3 8sFIbcZLRG2DgbwH4G3QdA== 0000950156-98-000160.txt : 19980223 0000950156-98-000160.hdr.sgml : 19980223 ACCESSION NUMBER: 0000950156-98-000160 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 23 FILED AS OF DATE: 19980220 EFFECTIVENESS DATE: 19980220 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANDMARK FIXED INCOME FUNDS /MA/ CENTRAL INDEX KEY: 0000795808 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-06540 FILM NUMBER: 98546719 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-05033 FILM NUMBER: 98546720 BUSINESS ADDRESS: STREET 1: 6ST JAMES AVE 9TH FL CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6174231679 FORMER COMPANY: FORMER CONFORMED NAME: LANDMARK FIXED INCOME FUNDS/ DATE OF NAME CHANGE: 19931117 FORMER COMPANY: FORMER CONFORMED NAME: LANDMARK FIXED INCOME FUNCS/DE DATE OF NAME CHANGE: 19931115 FORMER COMPANY: FORMER CONFORMED NAME: LANDMARK U S GOVERNMENT INCOME FUND DATE OF NAME CHANGE: 19920703 485BPOS 1 FIXED INCOME FUNDS N-1A 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. 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. 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. 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. 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. 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).
------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------------------------------ 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."
----------------------------------------------------------------- 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 - -------------------------------------------------------------------------------------------------------------------- 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.
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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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." 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 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 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. 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
AGGREGATE AGGREGATE COMPENSATION COMPENSATION TOTAL FROM THE FROM THE COMPENSATION GOVERNMENT INTERMEDIATE FROM TRUST AND TRUSTEE INCOME FUND (1) INCOME FUND (1) COMPLEX (2) 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
- ---------- (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. 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. 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 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. 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. 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. 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 EX-99.1(A) 2 DECLARATION OF TRUST Exhibit 1(a) LANDMARK U.S. GOVERNMENT INCOME FUND ----------------------- DECLARATION OF TRUST Dated June 23, 1986 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 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 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 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 EX-99.1(B) 3 AMEND. TO DECLARATION OF TRUST 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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 EX-99.2(A) 4 AMENDED & RESTATED BY-LAWS 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. 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. EX-99.2(B) 5 AMEND. TO AMENDED & RESTATED BY-LAWS 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." 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. EX-99.5 6 INVESTMENT ADVISORY AGREEMENT 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 ------------------------ ----------------------- EX-99.6(A) 7 AMEND. & RES. DISTRIBUTION AGREEMENT 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 -------------------------------- -------------------------------- EX-99.6(B) 8 DISTRIBUTION AGREEMENT 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. 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 ---------------------- ---------------------------- 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 -------------------------- EX-99.8 9 CUSTODIAN AGREEMENT Exhibit 8 CUSTODIAN CONTRACT Between LANDMARK FIXED INCOME FUNDS and STATE STREET BANK AND TRUST COMPANY 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 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. 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 EX-99.9(A) 10 AMEND. & RES. ADM. SERV. PLAN 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. EX-99.9(B) 11 ADM. SERVICES AGREEMENT 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 -------------------------------- ---------------------------- EX-99.9(C) 12 SUB-ADM. SERV. AGREEMENT 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 -------------------------------- EX-99.9(E) 13 TRANS. AGENCY & SERV. AGREEMENT Exhibit 9(e) TRANSFER AGENCY AND SERVICE AGREEMENT between LANDMARK U.S. GOVERNMENT INCOME FUND and STATE STREET BANK AND TRUST COMPANY 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 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 EX-99.9(G) 14 ACCT. SERVICING AGREEMENT 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. 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 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 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 ------------------------------ EX-99.11(A) 15 ACCOUNTANTS CONSENT 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 EX-99.11(B) 16 ACCOUNTANTS CONSENT 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 EX-99.11(C) 17 AUDITORS' CONSENT 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 EX-99.15(A) 18 AMEND. & RES. DIST. PLAN 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. EX-99.15(B) 19 DISTRIBUTION PLAN 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. EX-99.25(A) 20 POWERS OF ATTORNEY 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 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 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 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 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. 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 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. 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 EX-99.25(B) 21 POWERS OF ATTORNEY 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 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 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 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 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 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 EX-27 22 FDS - LANDMARK U.S. GOVERNMENT INCOME FUND
6 0000795808 LANDMARK U.S. GOVERNMENT INCOME FUND 001 LANDMARK FIXED INCOME FUND 12-MOS DEC-31-1997 DEC-31-1997 0 20,235,808 82,456 0 0 20,318,264 0 0 0 0 0 22,990,563 2,105,044 2,799,549 7,723 0 (2,623,296) 0 (137,729) 20,237,261 0 1,397,507 0 186,417 1,211,090 (48,060) 194,316 1,357,346 0 (1,224,908) 0 0 919,430 (8,775,300) 1,216,313 (6,507,119) 21,541 (2,575,236) 0 0 58,254 0 320,718 23,301,693 9.55 0.50 0.00 (0.51) 0.00 0.00 9.61 0.80 0 0
EX-27 23 FDS - LANDMARK INTERMEDIATE INCOME FUND
6 0000795808 LANDMARK INTERMEDIATE INCOME FUND 002 LANDMARK FIXED INCOME FUND 12-MOS DEC-31-1997 DEC-31-1997 35,414,237 36,438,347 380,119 0 30,699 36,849,165 58,053 0 0 58,053 0 38,640,804 3,775,843 4,630,939 26,955 0 (2,987,494) 0 1,021,298 36,701,563 0 2,683,236 0 353,642 2,329,594 272,468 649,983 3,252,045 0 (2,338,323) 0 0 595,327 (11,061,426) 2,335,328 (7,217,049) 35,684 (3,259,962) 0 0 137,525 0 577,345 39,292,930 9.48 0.58 0.00 (0.57) 0.00 0.00 9.72 0.90 0 0
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