As filed with the Securities and Exchange Commission on April 21, 1998
1940 Act File No. 811-07941
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 1
MERRIMAC MASTER PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
P.O. Box 501, Cardinal Avenue, George Town, Grand Cayman, Cayman Islands, BWI
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (809) 949-2001
Susan C. Mosher, Secretary
Merrimac Master Portfolio
200 Clarendon Street
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Copy to:
Philip H. Newman
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
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MERRIMAC MASTER PORTFOLIO
EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant to Section
8(b) of the Investment Company Act of 1940, as amended (the "1940 Act").
However, beneficial interests in the Registrant are not being registered under
the Securities Act of 1933, as amended (the "1933 Act") since such interests
will be issued solely in private placement transactions which do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Investments in the Registrant's series may only be made by investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities which are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any beneficial
interests in any series of the Registrant.
Pursuant to General Instruction F3 of Form N-1A, a registration statement filed
under only the 1940 Act shall consist of the facing sheet of the Form, responses
to all items of Parts A and B except Items 1, 2, 3 and 5A of Part A thereof,
responses to all items of Part C except Items 24(b)(6), 24(b)(10), 24(b)(11),
24(b)(12) and 24(b)(16) required signatures, and all other documents that are
required or which the Registrant may file as part of the registration statement.
(i)
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PART A
April 21, 1998
Responses to Items 1 through 3 and 5A have been omitted pursuant to paragraph 3
of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant
The Merrimac Master Portfolio (the "Trust") is an open-end management investment
company registered with the Securities and Exchange Commission (the "SEC") under
the 1940 Act. The Trust was organized as a common law trust under the laws of
the State of New York on October 30, 1996. The Trust has established two series:
Merrimac Cash Portfolio (the "Cash Portfolio") and Merrimac Treasury Portfolio
(the "Treasury Portfolio") (collectively, the "Portfolios" and singly, a
"Portfolio"). The shares of beneficial interest in each series shall hereinafter
be referred to as "shares" and holders of such interests shall hereinafter be
referred to as "shareholders." Each Portfolio is diversified within the meaning
of the 1940 Act. Beneficial interests in each Portfolio are issued solely in
private placement transactions which do not involve any "public offering" within
the meaning of Section 4(2) of the 1933 Act. Investments in a Portfolio may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the 1933
Act.
Investment Objective
The investment objective of each Portfolio is to obtain as high a level of
current income as is consistent with the preservation of capital and liquidity.
There is no assurance that either Portfolio will achieve its investment
objective. Each Portfolio's investment objective and investment policies (other
than the policies identified in Item 13, Part B of this Registration Statement)
are not fundamental and may be changed at any time by the Board of Trustees of
the Trust (the "Board of Trustees" or the "Trustees") upon at least 30 days
prior written notice to shareholders of the particular Portfolio.
Investment Policies
Each Portfolio seeks to achieve its objective by investing in high quality U.S.
dollar denominated money market instruments. The Cash Portfolio may invest in
U.S. Treasury bills, notes and bonds, and instruments issued by U.S. Government
agencies or instrumentalities ("U.S. Government Securities"); securities of U.S.
and Non-U.S. banks or thrift organizations (such as bankers' acceptances, time
deposits and certificates of deposit); corporate debt obligations, including
commercial paper, notes and bonds and other money market instruments;
asset-backed securities; and variable rate obligations (defined as a security
whose coupon rate resets at least every six months). The Cash Portfolio also may
invest in repurchase agreements that are collateralized by the securities listed
above with no restrictions on the maturity of obligations collateralizing such
repurchase agreements.
The Treasury Portfolio will invest substantially all, but not less than 65% of
its assets in U.S. Government Securities which are backed by the "full faith and
credit" of the U.S. Government. To maximize the tax-effective yield for
shareholders, under normal circumstances, the Treasury Portfolio will invest
only in obligations that qualify for the exemption from state taxation.
The Cash Portfolio and the Treasury Portfolio will each operate as a "money
market mutual fund" and all investments will qualify as "eligible securities"
within the meaning of Rule 2a-7 under the 1940 Act. Consistent with Rule 2a-7,
the Cash Portfolio and the Treasury Portfolio will not purchase securities of
any issuer (except securities issued or guaranteed by the United States
Government, its agencies or instrumentalities and with respect to the Cash
Portfolio, repurchase agreements involving such securities) if as a result more
than 5% of the total assets of the Portfolio would be invested in the securities
of such issuer or the Portfolio would own more than 10% of the outstanding
voting securities of such issuer.
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Additional Investment Policies
Maturity and Quality. Each Portfolio will manage interest rate risk by
maintaining a dollar-weighted average maturity of 90 days or less and will not
invest in securities with remaining maturities of more than 397 days (as
determined in accordance with Rule 2a-7 under the 1940 Act.) Each Portfolio may
invest in variable or floating rate securities which bear interest at rates
subject to periodic adjustment or which provide for periodic recovery of
principal on demand. Each Portfolio intends to incur only minimal credit risk.
The Portfolios may only purchase securities, in addition to U.S. Government
Securities, that are rated in the highest or second highest rating categories
for short-term obligations by at least two nationally recognized statistical
rating organizations ("NRSROs"). As a matter of operating policy, however, the
Portfolios will only invest in securities, exclusive of U.S. Government
Securities, that are rated in the highest rating category for short-term
obligations by at least two NRSROs. Investments in high quality, short term
instruments may, in many circumstances, result in a lower yield than would be
available from investments in instruments with a lower quality or a longer term.
Investment Restrictions. Part B of this Registration Statement contains a list
of specific investment restrictions which govern the investment policies of the
Portfolios. These specific restrictions may not be changed without shareholder
approval. Except as otherwise indicated, each Portfolio's investment policies
may be changed at any time by the Board of Trustees upon at least 30 days prior
written notice to shareholders of the particular Portfolio. If a percentage or
rating restriction is adhered to at the time an investment is made, a later
change in percentage caused by a change in the Portfolio's asset size or rating
resulting from changes made subsequently by NRSROs will not be a violation of
policy.
Investment Practices
Money Market Instruments. An investment in a Portfolio is subject to interest
rate risk and credit risk of the issuers of the money market instruments. All
money market instruments can change in value when interest rates or an issuer's
creditworthiness changes, or if an issuer or guarantor of a security fails to
pay interest or principal when due.
U.S. Government Securities. Each Portfolio may invest in U.S. Government
Securities. Not all U.S. Government Securities are backed by the full faith and
credit of the United States. For example, securities issued by the Federal Farm
Credit Bank or by the Federal National Mortgage Association are supported by the
agency's right to borrow money from the U.S. Treasury under certain
circumstances. Securities issued by the Federal Home Loan Bank are supported
only by the credit of the agency. There is no guarantee that the U.S. Government
will support these types of securities, and therefore they involve more risk
than "full faith and credit" Government Securities. The Treasury Portfolio will
generally invest in "full faith and credit" U.S. Government Securities.
Bankers' Acceptances. The Cash Portfolio may invest in bankers' acceptances
which are bills of exchange or time drafts drawn on and accepted by a commercial
bank. They are used by corporations to finance the shipment and storage of goods
and to furnish dollar exchange. Maturities are generally six months or less.
Time Deposits. The Cash Portfolio may invest in time deposits ("TDs"), which are
non-negotiable receipts issued by a bank in exchange for the deposit of funds.
Like a certificate of deposit, a TD earns a specified rate of interest over a
definite period of time; however, it cannot be traded in the secondary market.
Certificates of Deposit. The Cash Portfolio also may invest in certificates of
deposit ("CDs"), which are negotiable interest bearing instruments with a
specific maturity. CDs are issued by banks and thrift institutions in exchange
for the deposit of funds and normally can be traded in the secondary market
prior to maturity.
Commercial Paper. The Cash Portfolio may invest in commercial paper, which is
the term used to designate unsecured short-term promissory notes issued by
corporations and other entities. Maturities on these issues vary from a few days
to nine months.
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Corporate Debt Obligations. Subject to their credit quality and maturity
limitations, the Cash Portfolio may invest in corporate bonds, including
obligations of industrial, utility, banking and other financial issuers.
Corporate bonds are subject to the risk of an issuer's inability to meet
principal and interest payments and may also be subject to price volatility due
to such factors as market interest rates, market perception of the credit
worthiness of the issuer and general market liquidity.
Asset-Backed Securities. The Cash Portfolio also may invest in asset-backed
securities, which consist of securities secured by company receivables, home
equity loans, truck and auto loans, leases, credit card receivables and other
securities backed by other types of receivables or other assets. Credit support
for asset-backed securities may be based on the underlying assets and/or
provided through credit enhancements such as letters of credit, insurance bonds,
limited issuer guarantees, senior-subordinated structures and over
collateralization. Asset-backed securities are normally traded over-the-counter
and typically have a short-intermediate maturity structure depending on the
paydown characteristics of the underlying financial assets which are passed
through to the security holder. Asset-backed securities may be subject to
prepayment risk, particularly in a period of declining interest rates.
Prepayments, which occur when unscheduled payments are made on the underlying
debt instruments, may shorten the effective maturities of these securities and
may lower their total returns. Asset-backed securities generally do not have the
benefit of a security interest in collateral that is comparable to mortgage
assets and there is the possibility that recoveries on repossessed collateral
may not be available to support payments on these securities. There is no limit
on the extent to which the Cash Portfolio may invest in asset-backed securities;
however, the Cash Portfolio will only invest in asset-backed securities that
carry a rating in the highest category from at least two NRSROs.
Eurodollar and Yankee Dollar Investments. The Cash Portfolio may invest in
Eurodollar and Yankee Dollar instruments. Eurodollar instruments are bonds of
foreign corporate and government issuers that pay interest and principal in U.S.
dollars held in banks outside the United States, primarily in Europe. Yankee
Dollar instruments are U.S. dollar denominated bonds typically issued in the
U.S. by foreign governments and their agencies and foreign banks and
corporations. The Cash Portfolio may invest in Eurodollar Certificates of
Deposit ("ECDs"), Eurodollar Time Deposits ("ETDs") and Yankee Certificates of
Deposit ("Yankee CDs"). ECDs are U.S. dollar-denominated certificates of deposit
issued by foreign branches of domestic banks; ETDs are U.S. dollar-denominated
deposits in a foreign branch of a U.S. bank or in a foreign bank; and Yankee CDs
are U.S. dollar-denominated certificates of deposit issued by a U.S. branch of a
foreign bank and held in the U.S. These investments involve risks that are
different from investments in securities issued by U.S. issuers, including
potential unfavorable political and economic developments, foreign withholding
or other taxes, seizure of foreign deposits, currency controls, interest
limitations or other governmental restrictions which might affect payment of
principal or interest.
When-Issued and Delayed Delivery Transactions. Each Portfolio may invest in
when-issued and delayed delivery securities, which are securities purchased for
delivery beyond the normal settlement date at a stated price and yield, thereby
involving the risk that the yield obtained will be less than that available in
the market at delivery. Although the purchase of securities on a when-issued
basis is not considered leveraging, it has the effect of leveraging. When such a
security is purchased, the Custodian will set aside cash or liquid securities to
satisfy the purchase commitment unless the relevant Portfolio has entered into
an offsetting agreement to sell the securities. These segregated securities will
be valued at market, and additional cash or securities will be segregated if
necessary so that the market value of the account will continue to satisfy the
purchase commitment. A Portfolio generally will not pay for such securities or
earn interest on them until received. Commitments to purchase when-issued
securities will not, under normal market conditions, exceed 25% of the
Portfolio's total assets, and a commitment will not exceed 90 days. A Portfolio
will only purchase when-issued securities for the purpose of acquiring portfolio
securities and not for speculative purposes. However, a Portfolio may sell these
securities or dispose of the commitment before the settlement date if it is
deemed advisable as a matter of investment strategy. The market value of
when-issued or delayed delivery securities when they are delivered may be less
than the amount the Portfolios paid for them.
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Variable and Floating Rate Instruments. Certain of the obligations purchased by
the Portfolios may carry variable or floating rates of interest and may include
variable amount master demand notes. A floating rate security provides for the
automatic adjustment of its interest rate whenever a specified interest rate
changes. A variable rate security provides for the automatic establishment of a
new interest rate on set dates. Variable and floating rate instruments may
include variable amount master demand notes that permit the indebtedness
thereunder to vary in addition to providing for periodic adjustments in the
interest rate. There may be no active secondary market with respect to a
particular variable or floating rate instrument. Nevertheless, the periodic
readjustments of their interest rates tend to assure that their value to a
Portfolio will approximate their par value. Further, some of the demand
instruments purchased by a Portfolio derive their liquidity from the ability of
the holder to demand repayment from the issuer or from a third party providing
credit support. The creditworthiness of issuers of variable and floating rate
instruments and their ability to repay principal and interest will be
continuously monitored by each portfolio's investment adviser or sub-adviser.
Repurchase Agreements. The Cash Portfolio may enter into repurchase agreements,
which are agreements by which a person obtains a security and simultaneously
commits to return the security to the seller at an agreed upon price (including
principal and interest) on an agreed upon date within a number of days from the
date of purchase. In substance, a repurchase agreement is a loan by a Portfolio
collateralized with securities. The lending Portfolio's Custodian or its agent
will hold the security as collateral for the repurchase agreement. All
repurchase transactions must be collateralized initially at a value at least
equal to 102% of the repurchase price and counterparties are required to deliver
additional collateral in the event the market value of the collateral falls
below 100%. The Cash Portfolio bears the risk of loss in the event the other
party defaults on its obligations and the Cash Portfolio is delayed or prevented
from its right to dispose of the collateral securities or if the Cash Portfolio
realizes a loss on the sale of the collateral securities. The Cash Portfolio
will enter into repurchase agreements with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
guidelines established and periodically reviewed by the Trustees. The Cash
Portfolio will not invest more than 10% of its net assets in repurchase
agreements maturing in more than seven days.
Reverse Repurchase Agreements. The Cash Portfolio may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Cash Portfolio would sell the securities to financial
institutions such as banks and broker-dealers and agree to repurchase them at a
mutually agreed-upon date and price. The Cash Portfolio will enter into reverse
repurchase agreements to avoid otherwise selling securities during unfavorable
market conditions to provide cash to satisfy redemption requests. At the time
the Cash Portfolio enters into a reverse repurchase agreement, it would place in
a segregated custodial account, assets such as cash or liquid securities,
consistent with the Cash Portfolio's investment restrictions and having a value
equal to the repurchase price (including accrued interest), and would
subsequently monitor the account to ensure that such equivalent value was
maintained. Reverse repurchase agreements involve the risk that the counterparty
may default at a time when the market value of securities sold by the Cash
Portfolio have increased in value.. Reverse repurchase agreements are considered
by the SEC to be borrowings by the Portfolio under the 1940 Act.
Restricted and Illiquid Securities. Each Portfolio may invest up to 10% of its
total assets in illiquid securities. Illiquid securities are those that are not
readily marketable, repurchase agreements maturing in more than seven days, time
deposits with a notice or demand period of more than seven days and certain
restricted securities. Based upon continuing review of the trading markets for a
specific restricted security, the security may be determined to be eligible for
resale to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933 and, therefore, to be liquid. Also, certain illiquid
securities may be determined to be liquid if they are found to satisfy certain
relevant liquidity requirements. The Board of Trustees of the Portfolio Trust
have adopted guidelines and delegated to each Portfolio's investment adviser or
sub-adviser, as applicable, the daily function of determining and monitoring the
liquidity of portfolio securities, including restricted and illiquid securities.
Each Portfolio's Board of Trustees, however, retains oversight and is ultimately
responsible for such determinations. The purchase price and subsequent valuation
of illiquid securities normally reflect a discount, which may be significant,
from the market price of comparable securities for which a liquid market exists.
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Short-Term Trading. Although the Portfolios usually intend to hold securities
purchased until maturity, at which time they will be redeemable at their full
principal value plus accrued interest, they may, at times, engage in short-term
trading to attempt to take advantage of yield variations in the short-term
market. Each Portfolio also may sell portfolio securities prior to maturity
based on a revised evaluation of the creditworthiness of the issuer or to meet
redemptions. In the event there are unusually heavy redemption requests due to
changes in interest rates or otherwise, a Portfolio may have to sell a portion
of its investment portfolio at a time when it may be disadvantageous to do so.
However, each Portfolio believes that its ability to borrow funds to accommodate
redemption requests may mitigate in part the necessity for such portfolio sales
during these periods.
Risk Factors
The shares of the Portfolios have not been registered under the 1933 Act and,
because they will be offered only to accredited investors, it is anticipated
that they will be exempt from the registration provisions thereof. Shares of the
Portfolios may not be transferred or resold without registration under the 1933
Act or pursuant to an exemption from such registration. However, shares of the
Portfolios may be redeemed in accordance with the terms of the Declaration of
Trust.
Investments in shares of either Portfolio are neither insured nor guaranteed by
the government. Although the policies of the Cash Portfolio and the Treasury
Portfolio are designed to maintain a stable net asset value of $1.00 per share,
all money market instruments can change in value when interest rates or an
issuer's creditworthiness changes, or if an issuer or guarantor of a security
fails to pay interest or principal when due. If these changes in value were
substantial, the Cash portfolio or the Treasury Portfolio`s net asset value
could deviate from $1.00. Shares of either Portfolio are not deposits or
obligations of, or guaranteed or endorsed by, Investors Bank & Trust Company
("Investors Bank") or The Bank of New York ("BNY"), and shares are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other agency, and involve investment risks including the possible loss of
principal.
Item 5. Management of the Portfolios
The Board of Trustees
The Board of Trustees of the Trust has overall responsibility for managing the
Trust in good faith and in a manner that represents the best interests of the
Trust. This management responsibility may be delegated. Accordingly, the Board
of Trustees supervises the management, activities and affairs of the Trust and
has approved contracts with Investors Bank, BNY and Aeltus Investment
Management, Inc. ("Aeltus") to provide day-to-day management of the Trust's
operations. More information regarding the Trustees and officers of the Trust
appears in Part B of this Registration Statement.
The Adviser
The Trustees, including a majority of the Trustees that are not "interested
persons" of the Trust, as such term is defined in Section 2(a)(19) of the 1940
Act ("Independent Trustees"), have authorized Investors Bank to serve as the
investment adviser to each Portfolio of the Trust pursuant to an Investment
Adviser Agreement (the "Adviser Agreement"). Under the Adviser Agreement,
Investors Bank continuously reviews and supervises each Portfolio's investment
program. Investors Bank discharges its responsibilities subject to the
supervision of, and policies established by, the Trustees of the Portfolio
Trust. Investors Bank was organized in 1969 as a Massachusetts-chartered trust
company and provides domestic and global custody, multi currency accounting,
institutional transfer agency, performance measurement, foreign exchange,
securities lending and mutual fund administration services to a variety of
financial asset managers, including mutual fund complexes, investment advisers,
banks and insurance companies. Investors Bank is a wholly-owned subsidiary of
Investors Financial Services Corp., a publicly-held corporation and holding
company registered under the Bank Holding Company Act of 1956. The business
address of Investors Bank is 200 Clarendon Street, Boston, Massachusetts 02116.
Investors Bank began acting as investment adviser at the commencement of
operations of the Cash Portfolio (November 21, 1996) but otherwise has no
previous experience in providing investment advisory services.
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The Sub-Advisers
BNY serves as the Cash Portfolio's sub-adviser pursuant to its Investment
Sub-Adviser Agreement (the "BNY Sub-Adviser Agreement") with Investors Bank.
Under the BNY Sub-Adviser Agreement, BNY manages the Portfolio, selects
investments and places all orders for the purchase and sale of the Portfolio's
securities, subject to the general supervision of the Trust's Board of Trustees
and Investors Bank and in accordance with the Portfolio's investment objective,
policies and restrictions. BNY is a wholly owned subsidiary of The Bank of New
York Company, Inc. BNY has discretionary investment authority for the short-term
money management of accounts exceeding $50 billion. The business address of BNY
is 48 Wall Street, New York, New York 10286. For its services to the Portfolio,
BNY is paid by Investors Bank a monthly fee computed at an annual rate of 0.08%
of the average daily net assets of the Cash Portfolio.
Aeltus Investment Management, Inc. ("Aeltus") serves as the Treasury Portfolio's
sub-adviser pursuant to its Investment Sub-Adviser Agreement (the "Aeltus
Sub-Adviser Agreement") with Investors Bank. Under the Aeltus Sub-Adviser
Agreement, Aeltus manages the Portfolio, selects investments and places all
orders for the purchase and sale of the Portfolio's securities, subject to the
general supervision of the Trust's Board of Trustees and Investors Bank and in
accordance with the Portfolio's investment objective, policies and restrictions.
Aeltus is an indirect wholly owned subsidiary of Aetna Inc. As of December 31,
1997, Aeltus managed approximately $ 44.6 billion in assets for various
individual and institutional accounts, including registered investment
companies. The business address of Aeltus is 242 Trumbull Street, Hartford,
Connecticut 06103-1205. For its services to the Treasury Portfolio, Aeltus is
paid by Investors Bank a monthly fee computed at an annual rate of 0.08% of the
average daily net assets of the Treasury Portfolio.
The Administrator, Transfer Agent, Custodian and Fund Accountant
Each Portfolio employs IBT Trust & Custodial Services (Ireland) LMTD ("IBT
Ireland"), a subsidiary of Investors Bank, serves as Administrator. The services
provided by IBT Ireland under the Administration Agreement include certain
accounting, clerical and bookkeeping services, corporate secretarial services
and assistance in the preparation and filing of tax returns and reports to
shareholders and the SEC.
IBT Fund Services (Canada) Inc. ("IBT Canada"), a subsidiary of Investors Bank,
acts as transfer agent for the Portfolios. As transfer agent, IBT Canada is
responsible for maintaining records of shareholder interests for the Portfolios.
IBT Canada also serves as fund accountant to the Portfolios pursuant to a Fund
Accounting Agreement. In such capacity, IBT Canada performs certain accounting,
clerical and bookkeeping services, and the daily calculation of net asset value
for each Portfolio. Investors Bank acts as custodian for each Portfolio. As
custodian, Investors Bank holds cash, securities and other assets of the
Portfolios as required by the 1940 Act.
For its services under the Adviser Agreement, Administration Agreement, Transfer
Agency Agreement, Custodian Agreement and the Fund Accounting Agreement, the
Portfolios each pay Investors Bank an aggregate fee which is calculated daily
and paid monthly, at an annual rate of 0.17% of the average daily net assets of
such Portfolio. Investors Bank is solely responsible for the payment of all fees
to BNY, Aeltus and to its subsidiaries. For the fiscal year ended December 31,
1997, the compensation paid to Investors Bank by the Cash Portfolio and the
Treasury Portfolio was 0.14% and 0.17%, respectively of each Portfolio's average
net assets.
Trust Expenses
The Trust will pay all of its expenses other than those expressly assumed by
Investors Bank. The principal expenses of the Trust are the fees for advisory
services, administration, custody, fund accounting and transfer agency services,
all of which are payable to Investors Bank. Other expenses include: (i)
amortization of deferred organizational costs; (ii) taxes, if any; (iii)
expenses for legal, auditing and financial accounting services; (iv) expense of
preparing (including typesetting, printing and mailing) reports and notices to
existing shareholders; (v) expense of issuing and redeeming Trust shares; (vi)
the fees, travel expenses and other out-of-pocket expenses of the Independent
Trustees; (vii) extraordinary expenses as may arise, including expenses incurred
in connection with litigation proceedings and claims and the legal obligations
of the Trust to indemnify its Trustees, shareholders and agents; and (viii)
other expenses
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properly payable by the Trust.
Item 6. Capital Stock and Other Securities
Attributes of Portfolio Shares
Investments in the Portfolios have no preferences, pre-emptive or conversion or
similar rights and are fully paid and nonassessable, by the Trust. Neither
Portfolio is required and neither has a current intention to hold annual
meetings of shareholders. Special meetings of shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the shareholders as provided in the Trust's
Declaration of Trust or as deemed necessary or desirable by the Trustees.
Changes in fundamental policies will be submitted to shareholders. Shareholders
have under certain circumstances (e.g., upon the application and submission of
certain specified documents to the Trustees by a specified percentage of the
aggregate value of the Trust's outstanding shares (or of a Portfolio's
outstanding shares on matters relating solely to one Portfolio)) 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 the right to remove one or more Trustees without a meeting by a declaration
in writing by a specified number of shareholders. Upon liquidation or
dissolution of a Portfolio, shareholders would be entitled to share pro rata in
the net assets of the Portfolio available for distribution to shareholders.
The Trust is organized as a trust under the laws of the State of New York. Under
the Declaration of Trust, dated October 30, 1996 and amended February 6, 1997,
the Trustees are authorized to issue shares (i.e., beneficial interests) in the
Portfolios. Each shareholder is entitled to a vote in proportion to the value of
its investment in the particular Portfolio. Investments in a Portfolio may not
be transferred, but a shareholder may withdraw all or any portion of its
investment at any time at net asset value.
Shares of a Portfolio are not registered under the 1933 Act and are sold in
reliance upon an exemption from registration. Shares may not be transferred or
resold without registration under the 1933 Act, except pursuant to an exemption
from registration. However, shares may be redeemed on any day that the New York
Stock Exchange is open for business (a "Business Day").
Control Persons
As of April 1, 1998, the Merrimac Cash Fund, a series of the Merrimac Funds,
beneficially owned more than 95% of the voting securities of the Cash Portfolio
and therefore controls, as such term is defined under the 1940 Act, the Cash
Portfolio.
As of April 1, 1998, the Merrimac Treasury Fund, a series of the Merrimac Funds,
beneficially owned 100% of the voting securities of the Treasury Portfolio and
therefore controls, as such term is defined under the 1940 Act, the Treasury
Portfolio.
Shareholder Inquiries
All shareholder inquiries should be directed to Merrimac Master Portfolio c/o
Investors Bank.
Dividends and Distributions
The net income of the Portfolios is determined each Business Day (and on such
other days as are deemed necessary in order to comply with Rule 22c-1 under the
1940 Act). This determination is made once during each such day as of 2:00 p.m.,
Eastern time. All net income of a Portfolio, as defined below, so determined is
allocated pro rata among the shareholders in such Portfolio at the time of
determination.
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For this purpose, the net income of a Portfolio (from the time of the
immediately preceding determination thereof) consists of (i) all income accrued,
less the amortization of any premium, on the assets of the Portfolio, less (ii)
all actual and accrued expenses of the Portfolio determined in accordance with
generally accepted accounting principles. Interest income includes discount
earned (including both original issue and market discount) accrued ratably to
the date of maturity and any net realized gains or losses on the assets of the
Portfolio.
It is intended that each Portfolio's assets and income sources will be managed
in such a way that a shareholder of either Portfolio will be able to satisfy the
requirements of Subchapter M of the Code, assuming that the shareholder invested
all of its investable assets in the Portfolio and met its specific qualification
requirements although no assurance cam be given in this regard.
Item 7. Purchase of Securities Being Offered
Shares of each Fund are sold at the net asset value next computed after the
purchase order is received in good order by the Trust for shares received by
Investors Bank, the Fund's Custodian. The net asset value of each Fund's Shares
will be determined at 2:00 p.m. (ET) on each Business Day.
Beneficial interests in each Portfolio are issued solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in either Portfolio may only be made
by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the 1933
Act.
An investment in either Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received by the Portfolio. The net asset value of a Portfolio is determined on
each Business Day. Securities are valued at amortized cost, which the Trustees
of the Portfolios have determined in good faith constitutes fair value for the
purposes of complying with the 1940 Act. This valuation method will continue to
be used until such time as the Trustees of the Portfolios determine that it does
not constitute fair value for such purposes.
There is no minimum initial or subsequent investment in the Portfolios. However,
since the Portfolios intend to be as fully invested at all times as is
reasonably practicable in order to enhance the yield on their assets,
investments must be made in federal funds (i.e., monies credited to the account
of a Portfolio's custodian bank by a Federal Reserve Bank).
Each Portfolio reserves the right to cease accepting investments at any time or
to reject any investment order.
Item 8. Redemption or Repurchase
Shareholders may redeem all or a portion of their interests on any Business Day.
Redemptions will be made at the net asset value next determined after Investors
Bank has received a proper notice of redemption. If notice of redemption is
received prior to 2:00 p.m., Eastern time, on any Business Day, the redemption
will be effective on the date of receipt and the shareholder will not receive
the dividend for that day. Proceeds of the redemption will ordinarily be made by
wire on the same Business Day, but in any event within seven Business Days from
the date of receipt. Shareholders liquidating their account after 2:00 p.m.,
Eastern time, on any Business Day will receive upon redemption all dividends
reinvested through the date of redemption and payment will ordinarily be made by
wire on the next Business Day, but, in any case, within seven Business Days from
the date of receipt of a proper notice of redemption.
A shareholder may elect to receive payment in the form of a wire or check. There
is no charge imposed by either Portfolio to redeem; however, in the case of
redemption by wire, a shareholder's bank may impose its own wire transfer fee
for receipt of the wire.
Item 9. Pending Legal Proceedings
None.
8
<PAGE>
Item 10. Cover Page
MERRIMAC MASTER PORTFOLIO
PART B
APRIL 21, 1998
Merrimac Master Portfolio (the "Trust") is a registered open-end investment
company organized as a New York common law trust offering beneficial interests
in two series: Merrimac Cash Portfolio (the "Cash Portfolio") and Merrimac
Treasury Portfolio (the "Treasury Portfolio"). Each Portfolio is diversified as
defined in the Investment Company Act of 1940 (the "1940 Act").
This Part B supplements information concerning the Trust and the Portfolios
contained in Part A of the Trust's Registration Statement dated April 21, 1998.
This Part B should be read in conjunction with Part A, which may be obtained by
telephoning or writing the Trust at 200 Clarendon Street, Boston, Massachusetts
02116, telephone 1-888-MERRMAC.
B-1
<PAGE>
Item 11. Table of Contents
Page
----
General Information and History B-3
Investment Objectives and Policies B-3
Management of the Portfolios B-4
Control Persons and Principal Holders of Securities B-5
Investment Advisory and Other Services B-5
Brokerage Allocation and Other Practices B-8
Capital Stock and Other Securities B-9
Purchase, Redemption and Pricing of Securities Being Offered B-10
Tax Status B-11
Underwriters B-12
Calculation of Performance Data B-12
Financial Statements B-12
B-2
<PAGE>
Item 12. General Information and History
The Trust has no prior business history.
Item 13. Investment Objectives and Policies
Part A contains additional information about the investment objectives and
policies of the Portfolios. This Part B should be read only in conjunction with
Part A.
Investment Limitations
All of the Portfolios' fundamental investment restrictions are set forth below.
These fundamental investment restrictions may not be changed except by the
affirmative vote of a majority of the Portfolios' outstanding voting securities
as defined in the 1940 Act. Under the 1940 Act, a "vote of the majority of the
outstanding voting securities" means the vote, at the annual or a special
meeting of security holders duly called, (i) of 67% or more of the voting
securities present at the meeting if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy or (ii) of
more than 50% of the outstanding voting securities, whichever is less. Under
these restrictions, a Portfolio may not:
(1) purchase any securities that would cause more than 25% of the
total assets of the Portfolio at the time of such purchase to be
invested in securities of one or more issuers conducting their
principal business activities in the same industry, provided that
there is no limitation with respect to U.S. Government Obligations or
to bank obligations or with respect to repurchase agreements
collateralized by any of such obligations;
(2) borrow money, except as a temporary measure for extraordinary or
emergency purposes or to facilitate redemptions, provided that
borrowing does not exceed an amount equal to 33 1/3% of the current
value of the Portfolio's assets taken at market value, less
liabilities, other than borrowings;
(3) purchase securities on margin (except for delayed delivery or
when-issued transactions or such short-term credits as are necessary
for the clearance of transactions);
(4) make loans to any person or firm; provided, however, that the
making of a loan shall not include entering into repurchase
agreements, and provided further that the Portfolio may lend its
portfolio securities to broker-dealers or other institutional
investors if the aggregate value of all securities loaned does not
exceed 33-1/3% of the value of the Portfolio's total assets;
(5) engage in the business of underwriting the securities issued by
others, except that the Portfolio will not be deemed to be engaging in
the business of underwriting with respect to the purchase or sale of
securities subject to legal or contractual restrictions on
disposition;
(6) issue senior securities, except as permitted by its investment
objective, policies and restrictions, and except as permitted by the
1940 Act; and
(7) purchase or sell real estate, commodities, or commodity contracts
unless acquired as a result of ownership of securities, and provided
further that the Portfolio may invest in securities backed by real
estate and in financial futures contracts and options thereon.
The foregoing percentages will apply at the time of the purchase of a
security.
Investment Policies
See Item 4 in Part A for a description of the Portfolio's investment policies.
B-3
<PAGE>
Description of Ratings
Description of Commercial Paper Ratings
The following descriptions of short-term debt ratings have been published by
Standard & Poor's Rating Service, a division of McGraw-Hill Companies ("S&P"),
Moody's Investors Service Inc.("Moody's"), Fitch's Investors Service ("Fitch"),
Duff and Phelps ("Duff"), and IBCA Limited ("IBCA"), respectively. These
obligations have an original maturity not exceeding thirteen months, unless
explicitly noted.
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market. Commercial
paper issues rated A-1 by S&P reflect a very strong degree of safety of timely
payment. Commercial paper issues rated A-2 reflect a strong degree of safety of
timely payment but not as strong as for issues designated A-1.
Commercial paper issues rated Prime-1 by Moody's are judged by Moody's to be of
the "highest" quality on the basis of relative repayment capacity with a
superior ability for repayment of senior short-term debt obligations. Commercial
paper issues rated Prime-2 are judged by Moody's to be of the "second highest"
quality with a strong ability for repayment of senior short-term debt
obligations.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. Commercial paper issues rated Fitch-2 are regarded
as having only a slightly less assurance of timely payment than those issues
rated Fitch-1.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors that are supported by ample asset protection. Risk
factors are minor. The rating Duff-2 is regarded as having good certainty of
timely payment with sound liquidity factors supported by good asset protection.
Risk factors are small.
The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. The designation A2 by IBCA indicates that
the obligation is supported by a strong capacity for timely repayment.
Description of Long-Term Debt Ratings
The following is a description of Moody's debt instrument ratings:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than the Aaa securities.
Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification. The modifier 1 indicates that the obligation ranks in the higher
end of its generic rating category; the modifier 2 indicates a midrange ranking;
and the modifier 3 indicates a ranking in the lower end of that generic rating
category.
B-4
<PAGE>
The following is a description of S&P's debt instrument ratings:
S&P's ratings are based, in varying degrees, on the following considerations:
(i) the likelihood of default -- capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligations; (ii) the nature of and provisions of the obligation;
and (iii) the protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA -- Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
Plus (+) or minus (-): The ratings may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
Item 14. Management of the Portfolios
The business and affairs of the Portfolios are managed under the direction of
the Board of Trustees of the Trust. The Board of Trustees approves all
significant agreements between the Portfolios and the persons and companies that
furnish services to the particular Portfolio, including (when applicable)
agreements with its investment adviser, administrator, fund accountant,
custodian and transfer agent. The day-to-day operations of each Portfolio are
delegated to the Portfolio's investment manager and administrator.
The following are the names, addresses and dates of birth of the Trust's
Trustees and officers, their positions with the Trust and their present and
principal occupations during the past five years. An asterisk (*) indicates that
a Trustee is an "interested person" of the Trust, as defined in the 1940 Act.
Kevin J. Sheehan, Trustee* (06/22/51), Director since 1990, President since
1992, Chairman and Chief Executive Officer since June 1995, Investors Bank &
Trust Company. Chairman and Chief Executive Officer since June 1995, Investors
Financial Services Corp.
Francis J. Gaul, Jr., Trustee (09/25/43), Adviser , Triad Mutual Fund Investors
Corp. (Registered Investment Adviser) July 1996 - present; Vice President &
Resident Manager, Goldman Sachs & Co. (Investment Banking & Institutional Sales)
November 1987 - January 1996.
Edward F. Hines, Jr., Trustee (09/05/45), Partner 1977 - present, Managing
Partner 1983-87, Choate, Hall & Stewart.
Thomas E. Sinton, Trustee (08/26/32), Retired; Managing Director, Corporate
Accounting Policy, April 1993 - October 1996 and Consultant, November 1992 -
March 1993, Bankers Trust Company; General Partner, 1967 - 1992, Ernst & Young
LLP.
Sean P. Brennan, President (06/27/61), Director, Marketing, Investors Bank &
Trust Company, 1996 to present; Executive Vice President, Aspen Capital
Management, 1995-96; Director of International Mutual Funds, CS First Boston,
1993-94; Vice President of Sales, Concord Financial Corp. 1989-93.
Timothy J. Coyne, Vice President, (05/09/67); Director, Corporate Marketing,
Investors Bank & Trust Company, 1997-present; Vice President, Corporate Sales,
Dreyfus Corporation, 1995-97; Assistant Vice President, Concord Financial Corp.
1992-95.
Paul J. Jasinski, Treasurer and Chief Financial Officer (02/17/47), Managing
Director, Investors Bank & Trust Company, 1990 - present.
B-5
<PAGE>
Christopher J. Quinn, Assistant Vice President, (05/06/66), Manager, Advisory
Client Services, Investors Bank & Trust Company, 1996-present; Service
Specialist - Mutual Funds, Fleet Bank, 1994-96; Executive Sales Assistant,
Concord Financial Corp., 1993-94.
Susan C. Mosher, Secretary (01/29/55), Director, Mutual Fund Administration -
Legal Administration, Investors Bank & Trust Company, 1995 - present; Associate
Counsel, 440 Financial Group of Worcester, Inc., 1993 - 95; Associate and
Partner, Gallagher, Callahan & Gartrell, P.A., 1986 - 1992.
Andrew S. Josef, Assistant Secretary, (02/25/64), Director, Mutual Fund
Administration - Legal Administration, Investors Bank & Trust Company,
1997-present; Senior Associate, Sullivan & Worcester LLP, 1995-97; Associate,
Goodwin, Proctor & Hoar, 1993-95; Associate, Simpson Thacher & Bartlett,
1989-93.
Raymond O'Neill, Assistant Treasurer and Assistant Secretary (04/12/62),
Managing Director, Dublin, IBT Trust & Custodial Services (Ireland) LMTD 1994 -
present; Vice President, Atlantic Corporate Management Limited, 1991-1994.
Compensation
The following table describes the compensation received by the Trustees for the
fiscal year ended December 31, 1997 (with the exception of Mr. Sheehan, who
receives no remuneration from the Portfolios) for the fiscal year ended December
31, 1997.
<TABLE>
<CAPTION>
Total
Pension or Compensation
Aggregate Retirement From Registrant
Name of Compensa- Benefits Accrued Estimated Annual and Fund
Person, tion From As Part of Portfolio Benefits Upon Complex* Paid
Position Registrant Expenses Retirement to Trustees
- -------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Francis J. Gaul, Jr., $20,000 None None $25,000
Trustee
Edward F. Hines, Jr., $20,000 None None $25,000
Trustee
Thomas E. Sinton, $20,000 None None $25,000
Trustee
</TABLE>
* The term "Fund Complex" refers to the series of the Trust, the series of the
Merrimac Funds, and Merrimac Global Cash Fund (a Cayman company established in
1997).
Item 15. Control Persons and Principal Holders of Securities
As of April 1, 1998, the Merrimac Cash Fund (the "Cash Fund"), a series of the
Merrimac Funds, owned more than 95% of the beneficial interests in the Cash
Portfolio. The Cash Fund is a Delaware business trust registered under the 1940
Act as an open-end management investment company. Because the Cash Fund controls
the Cash Portfolio, the Cash Fund may take action without the prior approval of
any other investors in the Cash Portfolio. Whenever the Cash Fund is requested
to vote on matters pertaining to the Portfolio, it will hold a meeting of its
shareholders and will cast its vote as instructed by its shareholders.
As of April 1, 1998, the Merrimac Treasury Fund (the "Treasury Fund"), a series
of the Merrimac Funds, owns 100% of the beneficial interests in the Treasury
Portfolio. The Treasury Fund is a Delaware business trust registered under the
1940 Act as an open-end management investment company. Because the Treasury Fund
controls the Treasury Portfolio, the Treasury Fund may take action without the
prior approval of any other investors in the Treasury Portfolio. Whenever the
Treasury Fund is requested to vote on matters pertaining to the Portfolio, it
will hold a meeting of its
B-6
<PAGE>
shareholders and will cast its vote as instructed by its shareholders.
The Trustees and officers of the Trust, as a group, own less than 1% of the
Portfolios' beneficial interests.
Item 16. Investment Advisory and Other Services
Most of the Portfolios' day-to-day operations are performed by separate business
organizations under contractual agreement with the Portfolios or the Trust. The
principal service providers for the Portfolios are:
<TABLE>
<S> <C>
Investment Adviser Investors Bank & Trust Company
Investment Sub-Adviser (Cash Portfolio) The Bank of New York
Investment Sub-Adviser (Treasury Portfolio) Aeltus Investment Management, Inc.
Administrator IBT Trust & Custodial Services (Ireland)
LMTD
Transfer Agent IBT Fund Services (Canada) Inc.
Custodian Investors Bank & Trust Company
Independent Auditors Ernst & Young LLP
</TABLE>
Adviser
Each Portfolio and Investors Bank & Trust Company ("Investors Bank") have
entered into an investment adviser agreement (the "Adviser Agreement"). Under
the Adviser Agreement, Investors Bank continuously reviews and supervises the
Portfolio's investment program. Investors Bank discharges its responsibilities
subject to the supervision of, and policies established by, the Trustees of the
Trust. Investors Bank was organized in 1969 as a Massachusetts-chartered trust
company and provides domestic and global custody, multi currency accounting,
institutional transfer agency, performance measurement, foreign exchange,
securities lending and mutual fund administration services to a variety of
financial asset managers, including mutual fund complexes, investment advisers,
banks and insurance companies. Investors Bank is a wholly-owned subsidiary of
Investors Financial Services Corp., a publicly-held corporation and holding
company registered under the Bank Holding Company Act of 1956. The business
address of Investors Bank is 200 Clarendon Street, Boston, Massachusetts 02116.
Investors Bank began acting as an investment adviser at the commencement of
operations of the Cash Portfolio (November 21, 1996) but otherwise has no
previous experience in providing investment advisory services.
Sub-Advisers
The Bank of New York ("BNY") serves as the Cash Portfolio's sub-adviser pursuant
to its Investment Sub-Adviser Agreement (the "BNY Sub-Adviser Agreement") with
Investors Bank. Under the BNY Sub-Adviser Agreement, BNY manages the Portfolio,
selects investments and places all orders for the purchase and sale of the
Portfolio's securities, subject to the general supervision of the Trust's Board
of Trustees and Investors Bank and in accordance with the Portfolio's investment
objective, policies and restrictions. BNY is a wholly owned subsidiary of The
Bank of New York Company, Inc. BNY has discretionary investment authority for
the short-term money management of accounts exceeding $50 billion. The business
address of BNY is 48 Wall Street, New York, New York 10286. For its services to
the Portfolio, BNY is paid by Investors Bank a monthly fee computed at an annual
rate of 0.08% of the average daily net assets of the Cash Portfolio.
Aeltus Investment Management, Inc. ("Aeltus") serves as the Treasury Portfolio's
sub-adviser pursuant to its Investment Sub-Adviser Agreement (the "Aeltus
Sub-Adviser Agreement") with Investors Bank. Under the Aeltus Sub-Adviser
Agreement, Aeltus manages the Portfolio, selects investments and places all
orders for the purchase and sale of the Portfolio's securities, subject to the
general supervision of the Trust's Board of Trustees and Investors Bank and in
accordance with the Portfolio's investment objective, policies and restrictions.
Aeltus is an indirect wholly owned subsidiary of Aetna Inc. As of December 31,
1997, Aeltus managed approximately $ 44.6 billion in assets for various
individual and institutional accounts, including registered investment
companies. The business address of Aeltus is 242 Trumbull Street, Hartford,
Connecticut 06103-1205. For its services to the Treasury Portfolio, Aeltus is
paid by Investors Bank a monthly fee computed at an annual rate of 0.08% of the
average daily net assets of the Treasury Portfolio.
B-7
<PAGE>
Administrator
Each Portfolio employs IBT Trust & Custodial Services (Ireland) LMTD ("IBT
Ireland"), a subsidiary of Investors Bank, as Administrator under an
Administration Agreement (the "Administration Agreement") to provide certain
administrative services. The services provided by IBT Ireland include certain
accounting, clerical and bookkeeping services, corporate secretarial services
and assistance in the preparation and filing of tax returns and reports to
shareholders and the Securities and Exchange Commission.
Transfer Agent
IBT Fund Services (Canada) Inc. ("IBT Canada"), a subsidiary of Investors Bank,
acts as transfer agent for each Portfolio pursuant to a Transfer Agency
Agreement. As transfer agent, IBT Canada is responsible for maintaining records
of shareholder interests for each Portfolio.
Custodian and Fund Accountant
Investors Bank acts as custodian and IBT Canada as fund accountant for the
Portfolios. As custodian, Investors Bank holds cash, securities and other assets
of each Portfolio as required by the 1940 Act. As fund accountant, IBT Canada
performs certain accounting, clerical and bookkeeping services, and the daily
calculation of net asset value for the Portfolios.
For its services under the Adviser Agreement, Administration Agreement, Transfer
Agency Agreement, Custodian Agreement and the Fund Accounting Agreement, each
Portfolio pays Investors Bank an aggregate fee which is calculated daily and
paid monthly, at an annual rate of 0.17% of the average daily net assets of the
particular Portfolio. Investors Bank is solely responsible for the payment of
all fees to BNY, Aeltus and to its subsidiaries.
For the last two fiscal periods ended December 31, 1997, the fees paid to
Investors Bank by the Trust (on behalf of the Cash Portfolio) for all services
rendered by Investors Bank to the Cash Portfolio was $51,253 and $1,932,596,
respectively.
For the fiscal period ended December 31, 1997, the fees paid to Investors Bank
by the Trust (on behalf of the Treasury Portfolio) for all services rendered by
Investors Bank to the Treasury Portfolio was $79,035.
Independent Auditors
For the period ended December 31, 1996, the Boston, Massachusetts office of
Ernst & Young LLP ("Ernst & Young LLP") served as independent auditors to the
Trust. For the fiscal year ended December 31, 1997, the Grand Cayman office of
Ernst & Young ("Ernst & Young") served as independent auditors to the Trust.
Ernst & Young LLP and Ernst & Young are responsible for performing, for the
respective periods noted above, annual audits of the financial statements and
financial highlights in accordance with generally accepted accounting standards,
a review of the Federal tax returns. Additionally, pursuant to Rule 17f-2 of the
1940 Act, three security counts are performed for the Portfolio Trust.
The mailing address of Ernst & Young LLP is 200 Clarendon Street, Boston,
Massachusetts 02116. The mailing address of Ernst & Young is One Capital Place,
Shedden Road, Georgetown, Grand Cayman, Cayman Islands, British West Indies.
Item 17. Brokerage Allocation and Other Practices
Each Portfolio's purchases and sales of portfolio securities usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. The Portfolios do
not anticipate paying brokerage commissions. Any transaction for which a
Portfolio pays a brokerage commission will be effected at the best price and
execution available. Subject to this requirement, securities may be bought from
or sold to brokers or dealers who have furnished
B-8
<PAGE>
statistical, research and other information or services to Investors Bank, BNY
or Aeltus. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market makers include the spread between the bid and
asked price.
Allocation of transactions, including their frequency, to various dealers is
determined by BNY and Aeltus in their best judgment and in a manner deemed to be
in the best interest of shareholders of the particular Portfolio rather than by
any formula. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price.
Investment decisions for each Portfolio will be made independently from those
for any other account that is or may in the future become managed by BNY or
Aeltus. If, however, a Portfolio and other accounts managed by BNY or Aeltus are
contemporaneously engaged in the purchase or sale of the same security, the
transactions my be averaged as to price and allocated equitably to each account.
In some cases, this policy might adversely affect the price paid or received by
a Portfolio or the size of the position obtainable for the Portfolio. In
addition, when purchases or sales of the same security for the Portfolio and for
other accounts managed by BNY or Aeltus occur contemporaneously, the purchase or
sale orders may be aggregated in order to obtain any price advantages available
to large denomination purchases or sales. For the fiscal year ended December 31,
1997, the Cash Portfolio and the Treasury Portfolio paid no brokerage
commissions in 1997.
No transactions are executed with BNY, Aeltus or Investors Bank, or with any
affiliate of either entity, acting either as principal or as broker.
Item 18. Capital Stock and Other Securities
The Trust was organized as a New York common law trust on October 30, 1996 and
operates under a Declaration of Trust, dated October 30, 1996 and amended
February 6, 1997. The Trust is authorized to issue beneficial interests only to
Institutional Investors or other accredited investors, as such term is defined
under Rule 501 of the Securities Act of 1933. The beneficial interests of each
series shall hereinafter be referred to as "shares" and the holders of such
interests shall hereinafter be referred to as "shareholders." The Trustees shall
have the authority to establish series, each of which shall be a separate
subtrust and the shares of which shall be separate and distinct from the shares
of any other series and shall evidence ownership interest in a different
investment portfolio (hereinafter referred to as a "Portfolio Series"). The
shares in each Portfolio Series may have such rights as the Trustees may
establish from time to time, including with respect to price, terms and manner
of purchase and redemption, dividends and other distributions, rights on
liquidation, sinking or purchase fund provisions, conversion rights and
conditions under which the shareholders of the several Portfolio Series shall
have separate voting rights or no voting rights.
As of the date of this Part B, the Trust is comprised of the following Portfolio
Series, each of which commenced operations on the date set forth opposite the
Portfolio's name:
Merrimac Cash Portfolio November 12, 1996
Merrimac Treasury Portfolio April 2, 1997
The Trust is authorized, without shareholder approval, to divide Interests of
any Portfolio Series into two or more classes, each class having such different
dividend, liquidation, voting and other rights as the Trustees may determine.
The Trustees may, without any vote of the shareholders, amend or otherwise
supplement the Declaration of Trust by an instrument in writing executed by a
majority of the Trustees, provided that shareholders shall have the right to
vote with respect to the election or removal of Trustees, any investment
advisory contract, any dissolution of a Portfolio Series, certain amendments to
this Declaration of Trust, any merger, consolidation or sale of assets, such
additional matters relating to the Trust as may be required by the 1940 Act or
otherwise required or authorized by law or by any registration statement of the
Trust filed with the SEC, or as the Trustees may consider desirable.
B-9
<PAGE>
Under Delaware law and the Master Trust Agreement, shareholders of a Portfolio
Series may not be held liable for the obligations of a Portfolio Series,
although there can be no assurance that such provisions of law will be respected
in all jurisdictions. If any present or past shareholder of any Portfolio Series
of the Trust is charged or held personally liable for any obligation or
liability of the Trust solely by reason of being or having been a shareholder
and not because of such shareholder's acts or omissions or for some other
reason, the Portfolio Series, upon request, shall assume the defense against
such charge and satisfy any judgment thereon, and the shareholder or former
shareholder shall be entitled out of the assets of such Portfolio Series, to be
held harmless from and indemnified against all loss and expense arising from
such liability. Thus, the risk to shareholders of incurring financial loss
beyond their investment is limited to circumstances in which a jurisdiction does
not respect the limitation of liability provisions of Delaware law and the
Master Trust Agreement and the Portfolio Series itself is unable to meet its
obligations.
The Trust will not have an Annual Meeting of Shareholders. Special Meetings may
be convened: (i) by the Board of Trustees; (ii) upon written request to the
Board of Trustees by the holders of at least 10% of the outstanding shares of
the Trust (if such matter relates to the Trust as a whole) or a Portfolio (if
such matter relates only to such Portfolio); or (iii) upon the Board of
Trustee's failure to honor the shareholder's request described above, by
shareholders of at least 10% of the outstanding shares giving notice of the
Special Meeting to the shareholders.
Item 19. Purchase, Redemption and Pricing of Securities Being Offered
Manner In Which Shares Are Offered
Shares of each Portfolio are issued solely in private placement transactions
which do not involve any "public offering" within the meaning of Section 4(2) of
the 1933 Act. Investments in a Portfolio may only be made by investment
companies, insurance company separate accounts, common or commingled trust funds
or similar organizations or entities which are "accredited investors" within the
meaning of Regulation D under the 1933 Act. Shares are sold directly by the
Trust without a distributor and are not subject to a sales load or redemption
fee; assets of the Trust are not subject to a Rule 12b-1 fee.
Valuation of Shares
The net asset value per share of each Portfolio is determined each day that the
New York Stock Exchange ("NYSE") is open (a "Business Day"). This determination
is made once each Business Day as of 2:00 p.m., Eastern time.
It is the policy of each Portfolio to use its best efforts to maintain a
constant price per share of $1.00, although there can be no assurance that the
$1.00 net asset value per share will be maintained. In accordance with this
effort and pursuant to Rule 2a-7 under the 1940 Act, each Portfolio uses the
amortized cost valuation method to value its portfolio instruments. This method
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium even though the portfolio
security may increase or decrease in market value generally in response to
changes in interest rates. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price a Portfolio would receive if it sold the
instrument.
The Trustees have established procedures reasonably designed to stabilize each
Portfolio's price per share at $1.00. These procedures include: (i) the
determination of the deviation from $1.00, if any, of the Portfolio's net asset
value using market values; (ii) periodic review by the Trustees of the amount of
and the methods used to calculate the deviation; and (iii) maintenance of
records of such determination. The Trustees will promptly consider what action,
if any, should be taken if such deviation exceeds 1/2 of one percent.
Item 20. Tax Status
The Trust is organized as a common law trust under New York law. Each Portfolio
of the Trust has determined, on the basis of an opinion of counsel, that it is
properly treated as a partnership for federal and New York income tax purposes.
Accordingly, a Portfolio is not subject to any income tax, but each investor in
a Portfolio must take into account its share of the Portfolio's ordinary income
and capital gains in determining its income tax liability. The
B-10
<PAGE>
determination of such share is made in accordance with the governing instruments
of the Portfolio and the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations promulgated thereunder.
Each Portfolio's tax year-end is December 31. Although, as described above, a
Portfolio is not subject to federal income tax, it files appropriate federal
income tax returns.
Each Portfolio believes that, in the case of an investor in the Portfolio that
seeks to annually qualify as a regulated investment company ("RIC") under the
Code, the investors should be treated for federal income tax purposes as an
owner of an undivided interest in the assets and operations of the Portfolio,
and accordingly should be deemed to own a proportionate share of each of the
assets of the Portfolio and should be entitled to treat as earned by it the
portion of the Portfolio's gross income attributable to that share. Each
Portfolio also believes that each such investor should be deemed to hold its
proportionate share of the Portfolio's assets for the period the Portfolio has
held the assets or for the period the investor has been a partner in the
Portfolio, whichever is shorter. Each such investor should consult its tax
advisers regarding whether, in light of its particular tax status and any
special tax rules applicable to it, this approach applies to its investment in
the Portfolio, or whether the Portfolio should be treated, as to it, as a
separate entity as to which the investor has no direct interest in Portfolio
assets or operations.
In order to enable an investor in the Portfolios that is otherwise eligible to
qualify as a RIC under the Code to so qualify, each Portfolio intends to satisfy
the requirements of Subchapter M of the Code relating to the nature or the
Portfolio's gross income and the composition (diversification) of the
Portfolio's assets as if those requirements were directly applicable to the
Portfolio, and to allocate and permit withdrawals of its net investment income
and any net realized capital gains in a manner that will enable an investor that
is a RIC to comply with the qualification requirements imposed by Subchapter M
of the Code.
Each Portfolio will allocate at least annually among its investors each
investor's distributive share of the Portfolio's net investment income, net
realized capital gains, and any other items of income, gain, loss, deduction, or
credit in a manner intended to comply with the Code and applicable Treasury
regulations.
The above discussion does not address the special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance companies,
and financial institutions, or the state, local, or foreign tax laws that may be
applicable to certain investors. Investors should consult their own tax advisers
with respect to the special tax rules that may apply in their particular
situations, as well as the state, local, or foreign tax consequences to them of
investing in a Portfolio.
Item 21. Underwriters
Not Applicable.
Item 22. Calculation of Performance Data
Not Applicable.
B-11
<PAGE>
Item 23. Financial Statements
The financial statements contained in the Annual Report of the Cash Portfolio
and the Treasury Portfolio (Accession Number 0001029869-98-000354) for the
fiscal year ended December 31, 1997 (and filed via the SEC's EDGAR electronic
filing system on March 6, 1998) are incorporated by reference into this Part B
The Annual Report of the Cash Portfolio and the Treasury Portfolio may be
obtained from the Trust by calling 1-888-MERRMAC.
B-12
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial Statements included in PART A of this Registration
Statement:
None
(2) Financial Statements included in PART B of this Registration
Statement:
Portfolio of Investments at December 31, 1997*
Statements of Assets and Liabilities at December 31, 1997*
Statements of Changes in Net Assets of the Cash Portfolio for the
period November 12, 1996 (Commencement of Operations) to December
31, 1996 and for the year ended December 31, 1997 and of the
Treasury Portfolio for the period April 2, 1997 (Commencement of
Operations) to December 31, 1997*
Statements of Operations of the Cash Portfolio for the year ended
December 31, 1997 and of the Treasury Portfolio for the period
April 2, 1997 (Commencement of Operations) to December 31, 1997*
Financial Highlights of the Cash Portfolio for the period from
November 12, 1996 (commencement of operations) to December 31,
1996 and for the year ended December 31, 1997*
Financial Highlights of the Treasury Portfolio for the period
from April 2, 1997 (commencement of operations) to December 31,
1997*
Supplementary Data*
Notes to Financial Statements - December 31, 1997*
Independent Auditors' Report - February 13, 1998*
*Incorporated herein by reference to the Annual Report of the Registrant for the
fiscal year ended December 31, 1997, filed with the Securities and Exchange
Commission on the EDGAR system on March 6, 1998 (Accession Number
0001029869-98-000354)
(b) Exhibits:
Exhibit No. Description
----------- -----------
1(a) Declaration of Trust, effective as of
October 30, 1996(1)
1(b) Amendment No. 1 to the Declaration of Trust
2 By-Laws(1)
3 None
C-1
<PAGE>
4 None
5(a) Investment Adviser Agreement between Registrant
and Investors Bank & Trust Company
("Investors Bank")(1)
5(b) Investment Sub-Adviser Agreement between
Investors Bank and The Bank of New York(1)
5(c) Investment Sub-Adviser Agreement between
Investors Bank and Aeltus Investment Management,
Inc.(1)
6 *
7 Not Applicable
8 Custodian Agreement between Registrant and
Investors Bank(1)
9(a) Fund Accounting Agreement between Registrant and
IBT Fund Services (Canada) Inc.(1)
9(b) Administration Agreement between Registrant and
Investors Services (Ireland) Limited (formerly
IBT Fund Services (Ireland) Limited)(1)
9(c) Transfer Agency Agreement between Registrant and
IBT Fund Services (Ireland) Limited(1)
10 *
11 *
12 *
13 None
14 Not Applicable
15 Not Applicable
16 Not Applicable
17 Financial Data Schedules
18 Not Applicable
(1) Incorporated by reference to the Registrant's Registration Statement on Form
N-1A filed March 28, 1997 (Accession No. 0001029869-97-000386).
* Pursuant to General Instructions F3 of Form N-1A, a registration statement
filed under only the Investment Company Act of 1940 shall consist of the
facing sheet of the Form, responses to all items of Part A and B except Items
1, 2, 3, and 5A of Part A thereof, responses to all items of Part C except
Items 24(b)(6), 24(b)(10), 24(b)(11) and 24(b)(12), required signatures and
all other documents that are required or which the Registrant may file as part
of the registration statement.
C-2
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
As of the close of business on April 1, 1998, the Merrimac Cash Fund, a series
of the Merrimac Funds, owned approximately 95% of the value of the outstanding
shares of the Merrimac Cash Portfolio. Because the Merrimac Cash Fund controls
the Merrimac Cash Portfolio, it may take action without the prior approval of
any other investor in the Merrimac Cash Portfolio.
As of the close of business on April 1, 1998, the Merrimac Treasury Fund, a
series of the Merrimac Funds, owned 100% of the value of the outstanding shares
of the Merrimac Treasury Portfolio. Because the Merrimac Treasury Fund controls
the Merrimac Treasury Portfolio, it may take action without the prior approval
of any other investor in the Merrimac Treasury Portfolio.
Item 26. Number of Holders of Securities
As of April 1, 1998, the record holders of each class of Registrant's securities
were as follows:
Title of Class Number of Record Holders
-------------- ------------------------
Merrimac Cash Portfolio 2
Merrimac Treasury Portfolio 1
Item 27. Indemnification
Under Article V of the Registrant's Declaration of Trust, the Trust shall
indemnify, to the fullest extent permitted by law (including the 1940 Act), each
Trustee, officer or employee of the Trust (including any Person who serves at
the Trust's request as a director, officer or trustee of another organization in
which the Trust has any interest as a shareholder, creditor or otherwise)
against all liabilities and expenses (including amounts paid in satisfaction of
judgments, in compromise, as fines and penalties, and as counsel fees)
reasonably incurred by such Person in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, in which
such Person may be involved or with which such Person may be threatened, while
in office or thereafter, by reason of such Person being or having been such a
Trustee, officer, employee, except with respect to any matter as to which such
Person shall have been adjudicated to have acted with bad faith, willful
misfeasance, gross negligence or reckless disregard of such Person's duties,
such liabilities and expenses being liabilities only of the Portfolio Series out
of which such claim for indemnification arises; provided, however, that as to
any matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for such payment of for
any other expenses shall be provided unless there has been a determination that
such Person did not engage in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such Person's
office (i) by the court or other body approving the settlement or other
disposition; or (ii) based upon a review of readily available facts (as opposed
to a full trial-type inquiry), by written opinion from independent legal counsel
approved by the Trustees; or (iii) by a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, based upon a review
of readily available facts (as opposed to a full trial-type inquiry).
Item 28. Business and Other Connections of Investment Adviser
Investors Bank serves as investment adviser to the Registrant. Investors Bank
was organized in 1969 as a Massachusetts-chartered trust company and provides
domestic and global custody, multi-currency accounting, institutional transfer
agency, performance measurement, foreign exchange, securities lending and mutual
fund administration services to a variety of financial asset managers, including
mutual fund complexes, investment advisers, banks and insurance companies. The
business, profession, vocation or employment of a substantial nature that each
director or officer of Investors Bank is or has been, at any time during the
past two fiscal years, engaged in for his own account or in the capacity of
director, officer, employee, partner or trustee, is as follows:
C-3
<PAGE>
<TABLE>
<CAPTION>
Business and Other
Positions Within
Name Position With Adviser Last Two Years
<S> <C> <C>
Kevin J. Sheehan President & Chief Executive Officer Chief Executive Officer since
June 1995;
President since June 1992
Michael F. Rogers Executive Vice President since September 1993
Karen C. Keenan Senior Vice President, Chief Treasurer since September
Financial Officer and Treasurer 1997; Senior Vice President
and Chief Financial Officer
since June 1995
Edmund J. Maroney Senior Vice President, Technology since July 1991
Robert D. Mancuso Senior Vice President, Marketing since September 1993
Client Services
David F. Flynn Senior Vice President-Lending since April 1992
John E. Henry General Counsel & Secretary since January 1997; General
Counsel & Assistant Secretary
since February 1996
James M. Oates Director Chairman of IBEX Capital
Markets, LLC since 1996;
Managing Director of The
Wydown Group 1994-1996
Thomas P. McDermott Director Managing Director of TPM
Associates since 1994
Frank B. Condon Director Chief Executive Officer &
Chairman of The Woodstock
Corporation from 1993 to
April 1997
Phyllis S. Swersky Director President of The Meltech
Group since 1995; President &
Chief Executive Officer of
The NET Collaborative from
1996 to 1997.
Donald G. Friedl Director President of All Seasons
from 1986 until January 1997
Robert B. Fraser Director Retired, Formerly, Chairman
of Goodwin, Procter & Hoar,
L.L.P.
</TABLE>
C-4
<PAGE>
Item 29. Principal Underwriters
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:
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
(Investment Adviser and Custodian)
The Bank of New York
48 Wall Street
New York, NY 10286
(Investment Sub-Adviser)
Aeltus Investment Management, Inc.
242 Trumbull Street
Hartford, CT 06103
(Investment Sub-Adviser)
IBT Trust & Custodial Services (Ireland) LMTD
Deloitte & Touche House
29 Earlsfort Terrace
Dublin 2, Ireland
(Administrator)
IBT Fund Services (Canada) Inc.
1 First Canadian, King Street West
Suite 2800 P.O. Box 231
Toronto, CA M5X1C8
(Transfer Agent and Fund Accountant)
Item 31. Management Services
Not Applicable
Item 32. Undertakings
Not Applicable.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, as amended,
the Registrant has duly caused this Amendment No. 1 to the Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereto
duly authorized in the City of Boston and the State of Massachusetts as of the
21st day of April, 1998.
MERRIMAC MASTER PORTFOLIO
/s/ Paul Jasinski
-----------------
Paul Jasinski
Treasurer
<PAGE>
Exhibit Index
Exhibit No. Description
----------- -----------
1(b) Amendment No. 1 to the Declaration of Trust
17 Financial Data Schedules
MERRIMAC MASTER PORTFOLIO
Amendment No. 1 to
DECLARATION OF TRUST
Pursuant to Article VI, Section 6.2 of the Declaration of Trust of Merrimac
Master Portfolio (the "Trust"), dated as of October 30, 1996 (the "Declaration
of Trust"), and pursuant to authorization by the Trustees of the Trust at a
meeting duly called and held for such purpose on February 6, 1997, the following
Series of the Trust is established and designated:
Merrimac Treasury Portfolio
The Interests in the above Series shall have the relative rights and
preferences as set forth in subsections (a) - (c) of Article VI, Section 6.2 of
the Declaration of Trust and shall be effective as of the date set forth below.
Dated as of November 20, 1997
/s/Susan C. Mosher
------------------
Susan C. Mosher
Secretary
Merrimac Master Portfolio
Duly Authorized
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from The Merrimac Treasury Portfolio
form N-SAR for the period ended December 31, 1997
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> Merrimac Treasury Portfolio
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 73,298,656
<INVESTMENTS-AT-VALUE> 73,298,656
<RECEIVABLES> 645,543
<ASSETS-OTHER> 11,154
<OTHER-ITEMS-ASSETS> 2,625
<TOTAL-ASSETS> 73,957,978
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41,632
<TOTAL-LIABILITIES> 41,632
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 73,916,346
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 73,916,346
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,496,056
<OTHER-INCOME> 0
<EXPENSES-NET> 134,300
<NET-INVESTMENT-INCOME> 2,361,756
<REALIZED-GAINS-CURRENT> (2,590)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,359,166
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,359,166
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 79,035
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 134,300
<AVERAGE-NET-ASSETS> 62,158,039
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from The Merrimac Cash Portfolio
form N-SAR for the period ended December 31, 1997
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> Merrimac Cash Portfolio
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,378,256,894
<INVESTMENTS-AT-VALUE> 1,378,256,894
<RECEIVABLES> 6,694,481
<ASSETS-OTHER> 981
<OTHER-ITEMS-ASSETS> 44,678
<TOTAL-ASSETS> 1,384,997,034
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 149,441
<TOTAL-LIABILITIES> 149,441
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,384,847,593
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,384,847,593
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 77,144,989
<OTHER-INCOME> 0
<EXPENSES-NET> 2,161,045
<NET-INVESTMENT-INCOME> 74,983,944
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 74,983,944
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 74,983,944
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,314,064
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,542,513
<AVERAGE-NET-ASSETS> 1,361,359,387
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
