<PAGE>
Rule 497(c)
File Nos. 33-39538 and 811-4052
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PROSPECTUS
JANUARY 2, 1996
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LANDMARK CASH RESERVES
LANDMARK U.S. TREASURY RESERVES
(Members of the Landmark(SM) Family of Funds)
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This Prospectus describes two diversified money market mutual funds in the
Landmark Family of Funds: Landmark Cash Reserves and Landmark U.S. Treasury
Reserves. Each Fund has its own investment objectives and policies. Landmark
Cash Reserves offers both Class A and Class B shares. Citibank, N.A. is the
investment adviser.
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UNLIKE OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIOS OF SECURITIES, LANDMARK CASH RESERVES AND LANDMARK U.S. TREASURY
RESERVES SEEK THEIR INVESTMENT OBJECTIVES BY INVESTING ALL OF THEIR INVESTABLE
ASSETS IN CASH RESERVES PORTFOLIO AND U.S. TREASURY RESERVES PORTFOLIO,
RESPECTIVELY (EACH CALLED A "PORTFOLIO"). EACH PORTFOLIO HAS THE SAME
INVESTMENT OBJECTIVES AND POLICIES AS ITS CORRESPONDING FUND. SEE "SPECIAL
INFORMATION CONCERNING INVESTMENT STRUCTURE" ON PAGE 9.
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INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. EACH FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE; HOWEVER, THERE CAN BE NO ASSURANCE THAT EITHER FUND WILL BE ABLE TO
DO SO. PROSPECTIVE INVESTORS SHOULD ALSO BE AWARE THAT SHARES OF THE FUNDS ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED 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.
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This Prospectus concisely sets forth information about the Funds that a
prospective investor should know before investing. A Statement of Additional
Information dated January 2, 1996 (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 contacting the investor's
shareholder servicing agent (see inside back cover for address and phone
number).
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Table of Contents
Prospectus Summary ..................................................... 2
Expense Summary ........................................................ 4
Condensed Financial Information ........................................ 6
Investment Information ................................................. 8
Risk Considerations .................................................... 9
Valuation of Shares ....................................................10
Classes of Shares ......................................................11
Purchases ..............................................................12
Exchanges ..............................................................13
Redemptions ............................................................14
Net Income and Distributions ...........................................14
Management .............................................................15
Tax Matters ............................................................18
Performance Information ................................................18
General Information ....................................................19
Appendix -- Permitted Investments and
Investment Practices .......................................20
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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.
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INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
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PROSPECTUS SUMMARY
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See the body of the Prospectus for more information on the topics
discussed in this summary.
THE FUNDS: This Prospectus describes two money market mutual funds: Landmark
Cash Reserves and Landmark U.S. Treasury Reserves. Each Fund has its own
investment objectives and policies. Each Fund seeks its objectives by
investing its investable assets in a Portfolio having the same investment
objectives and policies as that Fund. There can be no assurance that either
Fund will achieve its objectives.
INVESTMENT OBJECTIVES AND POLICIES: LANDMARK CASH RESERVES. To provide its
shareholders with liquidity and as high a level of current income as is
consistent with the preservation of capital. Through Cash Reserves Portfolio,
the Fund invests in U.S. dollar-denominated money market obligations with
maturities of 397 days or less issued by U.S. and non-U.S. issuers.
LANDMARK U.S. TREASURY RESERVES. To provide its shareholders with liquidity
and as high a level of current income from U.S. Government obligations as is
consistent with the preservation of capital. Through U.S. Treasury Reserves
Portfolio, the Fund invests in obligations issued by the U.S. Government with
maturities of 397 days or less.
INVESTMENT ADVISER AND DISTRIBUTOR: Citibank, N.A., ("Citibank" or the
"Adviser"), a wholly-owned subsidiary of Citicorp, is the investment adviser
of each Portfolio. Citibank and its affiliates manage more than $73 billion in
assets worldwide. The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS" 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: LANDMARK CASH RESERVES. Investors may select Class A or Class B
shares, with different expense levels and sales charges (if made available by
the investors' Shareholder Servicing Agents). Class A shares are offered at
net asset value (normally $1.00 per share), without a sales load, and are
subject to a distribution fee at the annual rate of 0.10% (0.06% after
anticipated waivers) of the average daily net assets represented by the Class
A shares. Class B shares are offered at net asset value (normally $1.00 per
share), and investors pay a contingent deferred sales charge not to exceed 5%
of the lesser of the shares' net asset value at redemption or their original
purchase price if the shares are redeemed within six years of the date of
purchase. Class B shares are subject to a distribution fee at the annual rate
of 0.75% of the average daily net assets represented by the Class B shares.
Class B shares automatically convert into Class A shares approximately eight
years after purchase. Class B shares may only be purchased by exchange of
Class B shares of another Landmark Fund. See "Classes of Shares," "Purchases,"
"Redemptions" and "Management -- Distribution Arrangements."
LANDMARK U.S. TREASURY RESERVES. Shares of the Fund are purchased and redeemed
at net asset value (normally $1.00 per share), without a sales load or
redemption fees. While there are no sales loads, shares of the Fund are
subject to a distribution fee at the annual rate of 0.10% (0.00% after
anticipated waivers) of the average daily net assets of the Fund. See
"Purchases" and "Management -- Distribution Arrangements."
EXCHANGES: Shares may be exchanged for shares of most other Landmark Funds.
See "Exchanges."
DIVIDENDS: Declared daily and distributed monthly. Shares begin accruing
dividends on the day they are purchased. See "Net Income and Distributions."
REINVESTMENT: Dividends 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 "Net Income and Distributions."
WHO SHOULD INVEST: Each Fund is designed for investors seeking liquidity,
preservation of capital and current income, and for whom growth of capital is
not a consideration. Landmark Cash Reserves is also designed for investors
seeking a convenient means of accumulating an interest in a professionally
managed, diversified portfolio consisting of short-term U.S. dollar-
denominated money market obligations issued by U.S. and non-U.S. issuers.
Landmark U.S. Treasury Reserves is designed for investors seeking a convenient
means of accumulating an interest in a professionally managed, diversified
portfolio consisting of short-term U.S. Government obligations. See
"Investment Information."
RISK FACTORS: There can be no assurance that either Fund or its corresponding
Portfolio will achieve its investment objectives. In addition, while each Fund
intends to maintain a stable net asset value of $1.00 per share, there can be
no assurance that either Fund will be able to do so. Investments in high
quality, short-term instruments may, in many circumstances, result in a lower
yield than would be available from investments with a lower quality or a
longer term.
Investors in Cash Reserves should be able to assume the special risks of
investing in non-U.S. securities, which include possible adverse political,
social and economic developments abroad, differing regulations to which non-
U.S. issuers are subject and different characteristics of non-U.S. economies
and markets. In addition, the prices of securities of non-U.S. issuers may be
more volatile than those of comparable U.S. issuers.
Certain investment practices also may entail special risks. Prospective
investors should read "Risk Considerations" for more information about risk
factors.
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EXPENSE SUMMARY
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The following table summarizes estimated shareholder transaction and annual
operating expenses for each Fund and for its corresponding Portfolio.* Each
Fund invests all of its investable assets in its corresponding Portfolio. The
Trustees of each Fund believe that the aggregate per share expenses of that
Fund and its corresponding 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 its Portfolio. For more
information on costs and expenses, see "Management" -- page 15 and "General
Information-Expenses" -- page 20.
<TABLE>
<CAPTION>
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CASH RESERVES U.S. TREASURY
CLASS A CLASS B RESERVES
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<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price) ......................................... None None None
Maximum Contingent Deferred Sales Charge (as a percentage
of original purchase price or redemption proceeds,
whichever is less) ........................................ None 5.00%+ None
ANNUAL FUND OPERATING EXPENSES, AFTER FEE WAIVERS AND
REIMBURSEMENTS
(AS A PERCENTAGE OF AVERAGE NET ASSETS):
Investment Management Fee(1) .............................. .06% .06% .05%
12b-1 Fees(1)(2) .......................................... .06% .75% .00%
Other Expenses
Administrative Services Fees(1) ......................... .25% .25% .25%
Shareholder Servicing Agent Fees ........................ .25% .25% .25%
Other Operating Expenses ................................ .08% .14% .15%
--- --- ---
Total Fund Operating Expenses(1) .......................... .70% 1.45% .70%
=== === ===
<FN>
* 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. Because Class B shares were not
offered during Cash Reserves' most recent fiscal year, certain figures in the table are based on
estimated amounts for the current fiscal year. The table shows the fees paid to various service
providers after giving effect to expected voluntary partial fee waivers.
(1) Absent fee waivers and reimbursements, investment management fees, 12b-1 fees, administrative
services fees and total fund operating expenses would be .15%, .20%, .40% and 1.08% for Landmark Cash
Reserves -- Class A, .15%, .85%, .40% and 1.73% for Landmark Cash Reserves -- Class B, and .15%,
.20%, .40% and 1.15% for Landmark U.S. Treasury Reserves. There can be no assurance that the fee
waivers and reimbursements reflected in the table will continue at their present levels. Under each
Fund's administrative services plan, the aggregate of the fee paid to the Administrator, the fees
paid to the Shareholder Servicing Agents and the fee paid to the Distributor under the rule 12b-1
distribution plan (not including the rule 12b-1 fee for Class B shares and not including the .10%
portion of the fee that may be charged in anticipation of or reimbursement for print or electronic
media advertising, see "Distribution Arrangements" below) may not exceed .70% of each of their
average daily net assets on an annualized basis for the then-current fiscal year. Individual
components of the aggregate may vary from time to time.
(2) Fees under the 12b-1 distribution plans 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.
+ Maximum of 5.0% in the first year, declining to a maximum of 1.0% in the sixth year and eliminated
thereafter. Class B shares are available only by exchange from Class B shares of other Landmark
Funds. The applicable contingent deferred sales charge for Class B shares will depend on the fund or
funds from which the investor exchanged. See "Purchases."
</FN>
More complete descriptions of the following expenses of the Funds and the Portfolios are set forth on the
following pages: (i) investment management fees -- page 15, (ii) distribution fees -- page 17, (iii)
administrative services fees -- page 16, and (iv) shareholder servicing agent fees -- page 16.
<CAPTION>
EXAMPLE: A shareholder would pay the following expenses on a $1,000 investment, assuming redemption at the end of
each period indicated below:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
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<S> <C> <C> <C> <C>
CASH RESERVES
Class A shares ............................. $ 7 $22 $39 $ 87
Class B shares:
Assuming complete redemption at end of $65 $76 $99 $153
period(1)(2) ...........................
Assuming no redemption(2) ................ $15 $46 $79 $153
U.S. TREASURY RESERVES ...................... $ 7 $22 $39 $ 87
<FN>
(1) Assumes deduction at the time of redemption of the maximum applicable contingent deferred sales charge.
(2) Ten-year figures assume conversion of Class B shares to Class A shares approximately eight years after purchase.
</TABLE>
The Example assumes that all dividends are reinvested, and expenses are based
on each Fund's fiscal year ended August 31, 1995, after waivers and
reimbursements. If waivers and reimbursements were not in place, the amounts
in the example would be $11, $34, $60 and $133 for Landmark Cash Reserves --
Class A, $68, $85, $116 and $213 for Landmark Cash Reserves -- Class B
(assuming complete redemption at the end of each period) and $11, $33, $58 and
$129 for Landmark U.S. Treasury Reserves. 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 either Fund's future performance. THE EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OF EITHER
FUND. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
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CONDENSED FINANCIAL INFORMATION
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The following tables provide condensed financial information about the Funds
for the periods indicated. This information should be read in conjunction with
the financial statements appearing in each Fund's Annual Report to
Shareholders, which are incorporated by reference in the Statement of
Additional Information. The financial statements and notes, as well as the
table below, covering periods through August 31, 1995 have been audited by
Price Waterhouse LLP (for the fiscal years ended August 31, 1995 and August
31, 1994) and Deloitte & Touche LLP (for periods prior to the fiscal year
ended August 31, 1994), independent accountants, on behalf of Cash Reserves,
and by Deloitte & Touche LLP on behalf of U.S. Treasury Reserves. The
accountants' reports are included in the applicable Fund's Annual Report.
Copies of the Annual Reports may be obtained without charge from an investor's
Shareholder Servicing Agent (see inside of back cover for address and phone
number).
<TABLE>
<CAPTION>
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CASH RESERVES
FINANCIAL HIGHLIGHTS
YEAR ENDED AUGUST 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of
period ................ $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income ... 0.05174 0.03137 0.02671 0.04010 0.06606 0.07785 0.08354 0.06483 0.05520 0.06732
Less dividends from net
investment income ..... (0.05174) (0.03137) (0.02671) (0.04010) (0.06606) (0.07785) (0.08354) (0.06483) (0.05520) (0.06732)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, end of
period ................ $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) ....... $931,886 $445,600 $470,758 $498,447 $580,052 $413,756 $322,469 $264,728 $159,823 $154,245
Ratio of expenses to
average net assets* ... 0.69% 0.69% 0.69% 0.67% 0.61% 0.73% 0.80% 0.81% 0.81% 0.81%
Ratio of net investment
income to average net
assets ................ 5.17% 3.12% 2.67% 4.05% 6.48% 7.80% 8.39% 6.48% 5.54% 6.76%
Total return ............ 5.30% 3.18% 2.70% 4.13% 6.81% 8.04% 8.66% 6.62% 5.68% 6.93%
Note: If certain agents of the Fund and agents of Cash Reserves Portfolio had not waived all or a portion of their fees during the
periods indicated, the net investment income per share and the ratios would have been as follows:
Net investment income
per share ............. $0.04895 $0.02840 $0.02381 $0.03753 $0.06025 $0.07466 $0.08195 $0.06323 $0.05341 $0.06533
RATIOS:
Expenses to average net
assets* ............... 0.97% 0.99% 0.98% 0.93% 0.94% 0.97% 0.96% 0.97% 0.99% 1.01%
Net investment income to
average net assets .... 4.89% 2.82% 2.38% 3.79% 5.91% 7.48% 8.23% 6.32% 5.36% 6.56%
<FN>
*Includes the Fund's share of Cash Reserve Portfolio's allocated expenses after May 4, 1990 (date of the Fund's investment of all of
its assets in the Portfolio).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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U.S. TREASURY RESERVES
FINANCIAL HIGHLIGHTS
YEAR ENDED EIGHT MONTHS YEAR ENDED
AUGUST 31, ENDED DECEMBER 31,
1995 1994 AUGUST 31, 1993*** 1992 1991+
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<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ......... $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income ........................ 0.04751 0.02837 0.01662 0.03117 0.03411
Less dividends from net investment income .... (0.04751) (0.02837) (0.01662) (0.03117) (0.03411)
-------- -------- -------- -------- --------
Net Asset Value, end of period ........... $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000 omitted) ...... $256,452 $203,400 $249,466 $338,719 $548,722
Ratio of expenses to average net assets* ..... 0.70% 0.70% 0.66%** 0.70% 0.53%**
Ratio of net investment income to average
net assets ................................... 4.77% 2.81% 2.49%** 3.19% 4.89%**
Total return ................................. 4.86% 2.87% 2.53%** 3.16% 3.46%**
Note: If certain agents of the Fund and agents of U.S. Treasury Reserves Portfolio had not waived all or a portion of their fees
during the periods indicated, the net investment income per share and the ratios would have been as follows:
Net investment income per share .............. $0.04452 $0.02514 $0.01455 $0.02853 $0.03076
RATIOS:
Expenses to average net assets* .......... 1.00% 1.02% 0.97%** 0.96% 1.02%**
Net investment income to average
net assets ............................... 4.47% 2.49% 2.18%** 2.92% 4.41%**
<FN>
* Includes the Fund's share of U.S. Treasury Reserves Portfolio's allocated expenses.
** Annualized.
*** On April 15, 1993, the Fund changed its fiscal year end from December 31 to August 31.
+ For the period from the start of business, May 3, 1991, to December 31, 1991.
</TABLE>
<PAGE>
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INVESTMENT INFORMATION
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INVESTMENT OBJECTIVES: The investment objective of CASH RESERVES is to
provide its shareholders with liquidity and as high a level of current income
as is consistent with the preservation of capital.
The investment objective of U.S. TREASURY RESERVES is to provide its
shareholders with liquidity and as high a level of current income from U.S.
Government obligations as is consistent with the preservation of capital.
The investment objective 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
objective.
INVESTMENT POLICIES: CASH RESERVES seeks its objective by investing all of
its investable assets in Cash Reserves Portfolio. Cash Reserves Portfolio
seeks the same objective as the Fund by investing in high quality U.S. dollar-
denominated money market instruments. These instruments include short-term
obligations of the U.S. Government and repurchase agreements covering these
obligations, bank obligations (such as certificates of deposit, bankers'
acceptances and fixed time deposits) of U.S. and non-U.S. banks and
obligations issued or guaranteed by the governments of Western Europe,
Scandinavia, Australia, Japan and Canada. The U.S. Government obligations in
which the Portfolio invests include U.S. Treasury bills, notes and bonds, and
instruments issued by U.S. Government agencies or instrumentalities. Some
obligations of U.S. Government agencies and instrumentalities are supported by
the "full faith and credit" of the United States, others by the right of the
issuer to borrow from the U.S. Treasury and others only by the credit of the
agency or instrumentality. For more information regarding the Portfolio's
permitted investments and investment practices, see the Appendix -- Permitted
Investments and Investment Practices on page 20.
U.S. TREASURY RESERVES seeks its objective by investing all of its
investable assets in U.S. Treasury Reserves Portfolio. U.S. Treasury Reserves
Portfolio seeks the same objective as the Fund by investing in U.S. Treasury
bills, notes and bonds, and instruments issued by U.S. Government agencies or
instrumentalities which are supported by the "full faith and credit" of the
United States. U.S. Treasury Reserves Portfolio will not enter into repurchase
agreements. For more information regarding the Portfolio's permitted
investments and investment practices, see the Appendix -- Permitted
Investments and Investment Practices on page 20. ALTHOUGH THE PORTFOLIO
INVESTS IN U.S. GOVERNMENT OBLIGATIONS, NEITHER AN INVESTMENT IN THE FUND NOR
AN INVESTMENT IN THE PORTFOLIO IS INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT.
CERTAIN ADDITIONAL INVESTMENT POLICIES:
$1.00 NET ASSET VALUE. Each Fund employs specific investment policies and
procedures designed to maintain a constant net asset value of $1.00 per share.
There can be no assurance, however, that a constant net asset value will be
maintained on a continuing basis. See "Net Income and Distributions."
MATURITY AND QUALITY. All of the Portfolios' investments mature or are
deemed to mature within 397 days from the date of acquisition, and the average
maturity of the investments held by each Portfolio (on a dollar-weighted
basis) is 90 days or less. All of the Portfolios' investments are in high
quality securities which have been determined by the Adviser to present
minimal credit risks. To meet a Portfolio's high quality standards a security
must be rated in the highest rating category for short-term obligations by at
least two nationally recognized statistical rating organizations (each, an
"NRSRO") assigning a rating to the security or issuer or, if only one NRSRO
assigns a rating, that NRSRO or, in the case of an investment which is not
rated, of comparable quality as determined by the Adviser. 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.
PERMITTED INVESTMENTS. For more information regarding permitted
investments and investment practices, see the Appendix -- Permitted
Investments and Investment Practices on page 20. 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 and the Portfolios. Certain of these specific
restrictions may not be changed without shareholder approval. Except as
otherwise indicated, the Funds' and Portfolios' 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 the Portfolios' securities will not be a violation
of policy.
BROKERAGE TRANSACTIONS. The primary consideration in placing the
Portfolios' 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.
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RISK CONSIDERATIONS
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The risks of investing in each Fund vary depending upon the nature of the
securities held, and the investment practices employed, on its behalf. Certain
of these risks are described below.
"CONCENTRATION" IN BANK OBLIGATIONS. Cash Reserves Portfolio invests at
least 25% of its assets, and may invest up to 100% of its assets, in bank
obligations. This concentration policy is fundamental, and may not be changed
without the consent of the Portfolio's investors. Banks are subject to
extensive governmental regulation which may limit both the amounts and types
of loans and other financial commitments which may be made and interest rates
and fees which may be charged. The profitability of this industry is largely
dependent upon the availability and cost of capital funds for the purpose of
financing lending operations under prevailing money market conditions. Also,
general economic conditions play an important part in the operation of this
industry and exposure to credit losses arising from possible financial
difficulties of borrowers might affect a bank's ability to meet its
obligations.
NON-U.S. SECURITIES. Investors in Cash Reserves should be aware that
investments in non-U.S. securities involve risks relating to political, social
and economic developments abroad, as well as risks resulting from the
differences between the regulations to which U.S. and non-U.S. issuers and
markets are subject. 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. 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 Portfolio.
INVESTMENT PRACTICES. Certain of the investment practices employed for the
Portfolios may entail certain risks. See the Appendix -- Permitted Investments
and Investment Practices on page 20.
SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE: Unlike other mutual funds
which directly acquire and manage their own portfolio securities, each Fund
seeks its investment objective by investing all of its investable assets in
its corresponding Portfolio, a registered investment company. Each Portfolio
has the same investment objective and policies as its corresponding Fund. In
addition to selling beneficial interests to a Fund, a Portfolio may sell
beneficial interests to other mutual funds, collective investment vehicles, or
institutional investors. Such investors will invest in the Portfolio on the
same terms and conditions and will pay a proportionate share of the
Portfolio's expenses. However, the other investors investing in the Portfolio
are not required to sell their shares at the same public offering price as the
Fund due to variations in sales commissions and other operating expenses.
Therefore, investors in a Fund should be aware that these differences may
result in differences in returns experienced by investors in the different
funds that invest in that Portfolio. Such differences in returns are also
present in other mutual fund structures. Information concerning other holders
of interests in the Portfolios is available from the Funds' distributor,
LFBDS, at the address and telephone number indicated on the back cover of this
Prospectus.
The investment objective of each Fund may be changed by its Trustees
without the approval of the Fund's shareholders, but not without written
notice thereof to shareholders at least 30 days prior to implementing the
change. If there is a change in a Fund's investment objective, shareholders
should consider whether the Fund remains an appropriate investment in light of
their then current financial positions and needs. The investment objective of
each Portfolio may also be changed without the approval of the investors in
the Portfolio, but not without written notice thereof to the investors in the
Portfolio (and, if a Fund is then invested in the Portfolio, notice to Fund
shareholders) at least 30 days prior to implementing the change. There can, of
course, be no assurance that the investment objective of either a Fund or its
Portfolio will be achieved. See "Investment Objective, Policies and
Restrictions -- Investment Restrictions" in the Statement of Additional
Information for a description of the fundamental policies of each Fund and its
Portfolio that cannot be changed without approval by the holders of a
"majority of the outstanding voting securities" (as defined in the Investment
Company Act of 1940 (the "1940 Act")) of the Fund or Portfolio. Except as
stated otherwise, all investment guidelines, policies and restrictions
described herein and in the Statement of Additional Information are non-
fundamental.
Certain changes in a Portfolio's investment objective, policies or
restrictions or a failure by a Fund's shareholders to approve a change in the
Portfolio's investment objective or restrictions, may preclude the Fund from
investing its investable assets in the Portfolio or require the Fund to
withdraw its interest in the Portfolio. Any such withdrawal could result in an
"in-kind" distribution of securities (as opposed to a cash distribution) from
the Portfolio which may or may not be readily marketable. If securities are
distributed, the Fund could incur brokerage, tax or other charges in
converting the securities to cash. The in kind distribution may result in the
Fund having a less diversified portfolio of investments or adversely affect
the liquidity of the Fund. Notwithstanding the above, there are other means
for meeting shareholder redemption requests, such as borrowing. The absence of
substantial experience with this investment structure could have an adverse
effect on an investment in the Funds.
Smaller funds investing in a Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large
fund withdraws from the Portfolio, the remaining funds may subsequently
experience higher pro rata operating expenses, thereby producing lower
returns. Additionally, because the Portfolio would become smaller, it may
become less diversified, resulting in increased portfolio risk; however, these
possibilities exist for traditionally structured funds which have large or
institutional investors who may withdraw from a fund. Also, funds with a
greater pro rata ownership in the Portfolio could have effective voting
control of the operations of the Portfolio. If a Fund is requested to vote on
matters pertaining to its Portfolio (other than a vote by the Fund to continue
the operation of the Portfolio upon the withdrawal of another investor in the
Portfolio), the Fund will hold a meeting of its shareholders and will cast all
of its votes proportionately as instructed by such shareholders. The Fund will
vote the shares held by Fund shareholders who do not give voting instructions
in the same proportion as the shares of Fund shareholders who do give voting
instructions. Shareholders of the Fund who do not vote will have no effect on
the outcome of such matters.
Each Fund may withdraw its investment from its Portfolio at any time, if
the Fund's Board of Trustees determines that it is in the best interest of the
Fund to do so. Upon any such withdrawal, the Board of Trustees would consider
what action might be taken, including the investment of all of the investable
assets of the Fund in another pooled investment entity having the same
investment objective as the Fund or the retaining of an investment adviser to
manage the Fund's assets in accordance with the investment policies described
above. In the event the Fund's Trustees were unable to find a substitute
investment company in which to invest the Fund's assets or were unable to
secure directly the services of an investment adviser, the Trustees would
determine the best course of action.
For a description of the management of the Portfolios, see "Management" --
page 15. For descriptions of the expenses of the Portfolios, see "Management"
and "General Information -- Expenses" -- page 20. For a description of the
investment objectives, policies and restrictions of the Portfolios, see
"Investment Information" -- page 8.
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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 3:00 p.m., Eastern time, for Cash Reserves, and 12:00
noon, Eastern time, for U.S. Treasury Reserves, by adding the market value of
all securities and other assets of a Fund (including its interest in its
Portfolio), then subtracting the liabilities charged to the Fund, and then
dividing the result by the number of outstanding shares of the Fund. Net asset
value is calculated separately for Class A and Class B shares of Cash
Reserves. The amortized cost method of valuing Portfolio securities is used in
order to stabilize the net asset value of shares of each Fund at $1.00;
however, there can be no assurance that a Fund's net asset value will always
remain at $1.00 per share. The net asset value per share is effective for
orders received and accepted by the Distributor prior to its calculation.
The amortized cost method involves valuing a security at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. Although the amortized cost method provides certainty in valuation,
it may result in periods during which the stated value of a security is higher
or lower than the price the Portfolio would receive if the security were sold.
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CLASSES OF SHARES
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DIFFERENCES BETWEEN THE CLASSES: Cash Reserves offers two classes of
shares to investors, Class A and Class B shares, which represent interests in
the same mutual fund. The primary distinctions between these classes lie in
the contingent deferred sales charge applicable to Class B shares and in the
classes' ongoing expenses, including asset-based sales charges in the form of
distribution fees. Each class has distinct advantages and disadvantages for
different investors, and investors may choose the class that best suits their
circumstances and objectives. CLASS B SHARES MAY ONLY BE PURCHASED BY EXCHANGE
OF CLASS B SHARES OF ANOTHER LANDMARK FUND.
U.S. Treasury Reserves offers a single class of shares to investors.
SALES CHARGES. Class A shares are sold at net asset value, without a sales
load. Class B shares are sold with no initial sales charge, but a contingent
deferred sales charge (up to 5% of the lesser of the shares' net asset value
at redemption or the original purchase price) applies to redemptions made
within six years of purchase.
The contingent deferred sales charge may be waived upon redemption of
certain Class B shares. See "Purchases" below.
ONGOING ANNUAL EXPENSES. Class A shares pay an annual 12b-1 distribution
fee of 0.10% (0.06% after anticipated waivers) of average daily net assets.
Class B shares pay an annual 12b-1 distribution fee of 0.75% of average daily
net assets. Annual 12b-1 distribution fees are a form of asset-based sales
charge. An investor should consider both ongoing annual expenses and any
contingent deferred sales charges in estimating the costs of investing in the
different classes of Fund shares over various time periods.
CONVERSION OF CLASS B SHARES: A shareholder's Class B shares in Cash Reserves
will automatically convert to Class A shares in Cash Reserves approximately
eight years after the date of issuance, together with a pro rata portion of
all Class B shares representing dividends and other distributions paid in
additional Class B shares. The conversion will be effected at the relative net
asset values per share of the two classes on the first Business Day of the
month in which the eighth anniversary of the issuance of the Class B shares
occurs. If a shareholder effects one or more exchanges among Class B shares of
the Landmark Funds during the eight-year period, the holding periods for the
shares so exchanged will be counted toward the eight-year period. The
conversion of Class B shares to Class A shares is subject to the continuing
availability of a ruling from the Internal Revenue Service or an opinion of
counsel that such conversion will not constitute a taxable event for federal
tax purposes. There can be no assurance that such ruling or opinion will be
available, and the conversion of Class B shares to Class A shares will not
occur if such ruling or opinion is not available. In that event, Class B
shares would continue to be subject to higher expenses than Class A shares for
an indefinite period.
OTHER INFORMATION: See "Purchases," "Redemptions" and "Management --
Distribution Arrangements" for a more complete description of the contingent
deferred sales charges applicable to Class B shares of Cash Reserves, and
distribution fees for both classes of shares of Cash Reserves.
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PURCHASES
- --------------------------------------------------------------------------------
Cash Reserves offers two classes of shares, Class A and B shares, with
different expense levels and sales charges. See "Classes of Shares" above for
more information. U.S. Treasury Reserves offers one class of shares. WHEN
PLACING PURCHASE ORDERS FOR CASH RESERVES, INVESTORS SHOULD SPECIFY WHETHER
THE ORDER IS FOR CLASS A OR CLASS B SHARES. ALL SHARE PURCHASE ORDERS THAT
FAIL TO SPECIFY A CLASS AUTOMATICALLY WILL BE INVESTED IN CLASS A SHARES.
CLASS B SHARES MAY ONLY BE PURCHASED BY EXCHANGE OF CLASS B SHARES OF ANOTHER
LANDMARK FUND.
Shares of the Funds are offered continuously and may be purchased on any
Business Day without a sales load at the shares' net asset value (normally
$1.00 per share) next determined after an order is transmitted to and accepted
by the Distributor. Shares may be purchased 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.
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). An investor's Shareholder Servicing
Agent may not make available both classes of shares of Cash Reserves. 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.
While there is no sales load imposed on shares of the Funds, the
Distributor receives fees from each Fund pursuant to a Distribution Plan. See
"Management -- Distribution Arrangements." In addition, Class B shares may be
subject to a contingent deferred sales charge upon redemption.
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 until they have received the purchase price in federal or other
immediately available funds. If Fund shares are purchased by check, there will
be a delay (usually not longer than two business days) in transmitting the
purchase order until the check is converted into federal funds.
PURCHASING CLASS A SHARES: Class A shares of Cash Reserves may be purchased at
their next determined net asset value (normally $1.00 per share), without a
sales load.
PURCHASING CLASS B SHARES: CONTINGENT DEFERRED SALES CHARGE -- CLASS B SHARES.
Class B shares of Cash Reserves may be purchased at their next determined net
asset value (normally $1.00 per share), without a sales load, but only by
exchange of Class B shares of another Landmark Fund. A contingent deferred
sales charge, however, is imposed upon certain redemptions of Class B shares.
Class B shares that are redeemed will not be subject to a contingent
deferred sales charge to the extent that the value of such shares represents
(i) capital appreciation of Fund assets, (ii) reinvestment of dividends or
capital gain distributions or (iii) shares redeemed more than six years after
their purchase. Otherwise, redemptions of Class B shares purchased through an
exchange of another Landmark Fund will be subject to a contingent deferred
sales charge. Upon redemption, the applicable contingent deferred sales charge
will be calculated as if no exchange had taken place and the investor were
redeeming shares of that fund. The amount of the contingent deferred sales
charge will depend on the number of years since the investor has invested and
the dollar amount being redeemed. When determining the amount of the
contingent deferred sales charge, the Fund will use the contingent deferred
sales charge schedule of any fund from which the investor has exchanged shares
that would result in the investor paying the highest contingent deferred sales
charge. An investor should consult the prospectus of the fund from which
shares were exchanged to determine the applicable contingent deferred sales
charge.
In determining the applicability and rate of any contingent deferred sales
charge, it will be assumed that a redemption is made first of Class B shares
representing the reinvestment of dividends and capital gains distributions
followed by Class B shares held by the shareholder for the longest period of
time. The holding period of Class B shares will be calculated from the date
that the Class B shares were initially acquired in one of the other Landmark
Funds, and Class B shares being redeemed will be considered to represent, as
applicable, capital appreciation or dividend and capital gains distribution
reinvestments in such other funds. This will result in any contingent deferred
sales charge being imposed at the lowest possible rate. For federal income tax
purposes, the amount of the contingent deferred sales charge will reduce the
gain or increase the loss, as the case may be, on the amount realized on
redemption. Any contingent deferred sales charges will be paid to the
Distributor.
SALES CHARGE WAIVERS -- CLASS B SHARES. The contingent deferred sales
charge will be waived for exchanges. In addition, the contingent deferred
sales charge will be waived for a total or partial redemption made within one
year of the death of the shareholder. This waiver is available where the
deceased shareholder is either the sole shareholder or owns the shares with
his or her spouse as a joint tenant with right of survivorship, and applies
only to redemption of shares held at the time of death. The contingent
deferred sales charge also will be waived in connection with:
(i) a lump sum or other distribution in the case of an Individual Retirement
Account ("IRA"), a self-employed individual retirement plan (so-called
"Keogh Plan") or a custodian account under Section 403(b) of the Code,
in each case following attainment of age 59 1/2,
(ii) a total or partial redemption resulting from any distribution following
retirement in the case of a tax-qualified retirement plan, and
(iii) a redemption resulting from a tax-free return of an excess contribution
to an IRA.
Contingent deferred sales charge waivers will be granted subject to
confirmation by a shareholder's Shareholder Servicing Agent of the
shareholder's status or holdings, as the case may be.
Securities dealers and other financial institutions may receive different
compensation with respect to sales of Class A and Class B shares.
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EXCHANGES
- --------------------------------------------------------------------------------
Shares of each Fund may be exchanged for shares of other Landmark Funds
that are made available by a shareholder's Shareholder Servicing Agent, or may
be acquired through an exchange of shares of those funds. No initial sales
charge is imposed on shares being acquired through an exchange unless the
shares being acquired are subject to a sales charge that is greater than the
current sales charge of the Fund (in which case an initial sales charge will
be imposed at a rate equal to the difference). No contingent deferred sales
charge is imposed on Class B shares of Cash Reserves being disposed of though
an exchange; however, contingent deferred sales charges may apply to
redemptions of Class B shares of other Landmark Funds disposed of or acquired
through an exchange.
In general, shares of a particular class may be exchanged only for shares
of another fund of the same class. Investors should note that Class A shares
of Cash Reserves may not be exchanged for Class A shares of another fund
without a sales charge, but may be exchanged for shares of certain other
Landmark money market funds without a sales charge.
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 by the Distributor. See
"Valuation of Shares." Shares of the Funds may be exchanged only after payment
in federal funds for the shares has been made.
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. Before
making any exchange, shareholders should contact their Shareholder Servicing
Agents to obtain more information and prospectuses of the Landmark Funds to be
acquired through the exchange.
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REDEMPTIONS
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value (normally $1.00 per
share) next determined after a redemption request in proper form is received
by a shareholder's Shareholder Servicing Agent (subject to any applicable
contingent deferred sales charge for Class B shares of Cash Reserves). Shares
of U.S. Treasury Reserves and Class A shares of Cash Reserves may be redeemed
without a sales charge. Shareholders may redeem shares of a Fund only by
authorizing their Shareholder Servicing Agents to redeem such shares on their
behalf through the Distributor. If a redeeming shareholder owns shares of more
than one class, Class A shares will be redeemed first unless the shareholder
specifically requests otherwise.
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 the shareholder's 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 Business Day the redemption is effected, 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" 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.
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NET INCOME AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
The net income of each Fund is determined each Business Day (and on such
other days as is necessary in order to comply with the 1940 Act). This
determination is made once during each such day as of 3:00 p.m., Eastern time,
for Cash Reserves and 12:00 noon, Eastern time, for U.S. Treasury Reserves.
All the net income of each Fund is declared as a dividend to shareholders of
record at the time of such determination. Shares begin accruing dividends on
the day they are purchased, and accrue dividends up to and including the day
prior to redemption. Dividends are distributed monthly on or prior to the last
Business Day of each month. Unless a shareholder elects to receive dividends
in cash (subject to the policies of the shareholder's Shareholder Servicing
Agent), dividends are distributed in the form of full and fractional
additional shares of the applicable Fund at the rate of one share of the Fund
for each one dollar of dividend income.
Since the net income of each Fund is declared as a dividend each time the
net income of the Fund is determined, the net asset value per share of each
Fund is expected to remain at $1.00 per share immediately after each such
determination and dividend declaration. Any increase in the value of a
shareholder's investment in a Fund, representing the reinvestment of dividend
income, is reflected by an increase in the number of shares of the Fund in the
shareholder's account.
It is expected that each Fund will have a positive net income at the time
of each determination thereof. If for any reason a Fund's net income is a
negative amount, which could occur, for instance, upon default by an issuer of
a portfolio security, the Fund would first offset the negative amount with
respect to each shareholder account from the dividends declared during the
month with respect to those accounts. If and to the extent that negative net
income exceeds declared dividends at the end of the month, the Fund would
reduce the number of outstanding Fund shares by treating each shareholder as
having contributed to the capital of the Fund that number of full and
fractional shares in the shareholder's account which represents the
shareholder's share of the amount of such excess. Each shareholder would be
deemed to have agreed to such contribution in these circumstances by
investment in a Fund.
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MANAGEMENT
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS: Each Fund is supervised by the Board of Trustees of
Landmark Funds III. Each Portfolio is supervised by its own 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 Funds are
different from a majority of the disinterested Trustees of their corresponding
Portfolios. More information on the Trustees and officers of the Funds and the
Portfolios 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 $73 billion in assets worldwide, including the
Landmark Funds and Portfolios. Citibank is a wholly-owned subsidiary of
Citicorp.
Citibank manages the assets of each Portfolio pursuant to separate
investment advisory agreements ("Advisory Agreements"). Subject to policies
set by the Portfolios' Trustees, Citibank makes investment decisions for the
Portfolios.
ADVISORY FEES. For its services under the Advisory Agreements, the Adviser
receives investment advisory fees, which are accrued daily and paid monthly,
of 0.15% of each Portfolio's average daily net assets on an annualized basis
for the Portfolio's then-current fiscal year. The Adviser has voluntarily
agreed to waive a portion of its investment advisory fee.
For the fiscal year ended August 31, 1995, the investment advisory fees
payable to Citibank were as follows: for Cash Reserves Portfolio, $4,097,854,
of which $2,306,161 was voluntarily waived (after waiver, 0.06% of the
Portfolio's average daily net assets for that fiscal year); and for U.S.
Treasury Reserves Portfolio, $1,148,418, of which $753,105 was voluntarily
waived (after waiver, 0.05% of the Portfolio'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 Portfolios, 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 and the Portfolios 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 or the Portfolios. Citibank
believes that its services under the 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 affected Funds or Portfolios 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 Portfolios have administrative
services plans ("Administrative Services Plans") which provide that the
applicable Fund or Portfolio may obtain the services of an administrator, a
transfer agent, a custodian, a fund accountant, 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 Funds'
Administrative Services Plan, the total of the fees paid to each Fund's
Administrator and Shareholder Servicing Agents and the distribution fee paid
to the Distributor (other than fees paid with respect to Class B shares of
Cash Reserves and other than any fee concerning electronic or other media
advertising) may not exceed 0.70% of a Fund's average daily net assets on an
annualized basis for the Fund's then-current fiscal year. Within this overall
limitation, individual fees may vary. Under each 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: LFBDS provides certain administrative services to the Funds
and U.S. Treasury Reserves Portfolio, and Signature Financial Group (Cayman),
Ltd., either directly or through a wholly-owned subsidiary ("SFG"), provides
certain administrative services to Cash Reserves Portfolio, in each case under
administrative services agreements. These administrative services include
providing general office facilities, supervising the overall administration of
the Funds and Portfolios, and providing persons satisfactory to the Boards of
Trustees to serve as Trustees and officers of the Funds and Portfolios. These
Trustees and officers may be directors, officers or employees of LFBDS, SFG or
their affiliates.
For these services, the Administrators receive fees accrued daily and paid
monthly of 0.35% of the average daily net assets of each Fund and 0.05% of the
assets of each 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 may voluntarily agree to waive a portion of the fees payable to
it.
LFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group,
Inc. "Landmark" is a service mark of LFBDS.
SUB-ADMINISTRATOR: Pursuant to sub-administrative services agreements,
Citibank performs such sub-administrative duties for the Funds and Portfolios
as from time to time are agreed upon by Citibank and LFBDS or SFG. Citibank's
compensation as sub-administrator is paid by LFBDS 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 (or its affiliate State Street Canada, Inc.) acts as transfer agent
and dividend disbursing agent for each Fund. State Street (or its affiliate
State Street Canada, Inc.) acts as the custodian of each Fund's and each
Portfolio's assets. Securities held for a Portfolio may be held by a sub-
custodian bank approved by the Portfolio's Trustees. State Street also
provides fund accounting services to the Funds and the Portfolios and
calculates the daily net asset value for the Funds and the Portfolios.
DISTRIBUTION ARRANGEMENTS: LFBDS is the distributor of each Fund's shares and
also serves as distributor for each of the other Landmark Funds and as a
Shareholder Servicing Agent for certain investors. LFBDS receives distribution
fees from the Funds pursuant to Distribution Plans adopted in accordance with
Rule 12b-1 under the 1940 Act, and also collects any contingent deferred sales
charges imposed on redemptions of Class B shares of Cash Reserves. In those
states where LFBDS is not a registered broker-dealer, shares of the Funds are
sold through Signature Broker-Dealer Services, Inc., as dealer.
Under a single plan of distribution for U.S. Treasury Reserves and the
Class A shares of Cash Reserves and a separate plan of distribution for the
Class B shares of Cash Reserves (collectively "Plans"), the Funds pay the
Distributor a fee at an annual rate not to exceed 0.10% of the average daily
net assets of U.S. Treasury Reserves, 0.10% of the average daily net assets of
Cash Reserves represented by Class A shares and 0.75% of the average daily net
assets of Cash Reserves represented by Class B shares. However, the
Distributor has agreed to waive a portion of these fees on a month-to-month
basis for U.S. Treasury Reserves and for the Class A shares of Cash Reserves.
The Plan for U.S. Treasury Reserves and the Class A shares of Cash Reserves
also permits the Funds to pay the Distributor an additional fee (not to exceed
0.10% of the average daily net assets of the applicable shares) in
anticipation of or as reimbursement for print or electronic media advertising
expenses incurred in connection with the sale of the shares. The Funds did not
pay anything under this provision during their fiscal years ended August 31,
1995 and do not anticipate doing so during the current fiscal year. The Plan
for Class B shares of Cash Reserves also provides that Cash Reserves may pay
the Distributor a monthly service fee at an annual rate not to exceed 0.25% of
the average daily net assets represented by the Class B shares. However, Cash
Reserves has not entered into any agreement to pay any such service fee to the
Distributor. If such an agreement is entered into in the current fiscal year,
it will not provide for the payment of a service fee in excess of 0.10% of the
average daily net assets represented by the Class B shares.
The Distributor uses the distribution fees under the Plans to offset each
Fund's marketing costs attributable to such classes, 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.
From time to time LFBDS may make payments for distribution and/or
shareholder servicing activities out of its past profits or any other services
available to it.
During the period they are in effect, the Plans and related distribution
agreements ("Distribution Agreements") obligate the Funds to pay distribution
fees to LFBDS as compensation for its distribution activities, not as
reimbursement for specific expenses incurred. Thus, even if LFBDS's expenses
exceed its distribution fees for any Fund, the Fund will not be obligated to
pay more than those fees and, if LFBDS'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 LFBDS until either the applicable Plan or Distribution
Agreement is terminated or not renewed. In that event, LFBDS's expenses in
excess of distribution fees received or accrued through the termination date
will be LFBDS's sole responsibility and not obligations of the Fund. In their
annual consideration of the continuation of the Plans, the Trustees of Cash
Reserves will review each Plan and LFBDS's expenses for each class separately.
Each class of shares of Cash Reserves has exclusive voting rights with
respect to the Plan for that class.
- --------------------------------------------------------------------------------
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 requirements of the Internal Revenue Code
applicable to regulated investment companies so that it will not be liable for
any federal income or excise taxes.
Shareholders are required to pay federal income tax on any dividends and
other distributions received. Generally, distributions from a Fund's net
investment income and short-term capital gains will be taxed as ordinary
income. Distributions from long-term net capital gains will be taxed as such
regardless of how long the shares of a Fund have been held. Dividends and
distributions are treated in the same manner for federal tax purposes whether
they are paid in cash or as additional shares.
Distributions derived from interest on U.S. Government obligations may be
exempt from state and local taxes in certain states. Early each year, each
Fund will notify its shareholders of the amount and tax status of
distributions paid to shareholders for the preceding year.
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. A Fund may be required to withhold (and pay over to
the IRS for the shareholder's credit) 31% of certain distributions paid to
shareholders who fail to provide this information or otherwise violate IRS
regulations.
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, tax equivalent yield,
total rate of return or tax equivalent 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.
Each Fund may provide its period and average annualized "total rates of
return" and U.S. Treasury Reserves may also provide "tax equivalent 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 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. The "tax equivalent total rate of return"
refers to the total rate of return that a fully taxable money market fund
would have to generate in order to produce an after-tax total rate of return
equivalent to that of U.S. Treasury Reserves. The use of a tax equivalent
total rate of return allows investors to compare the total rates of return of
U.S. Treasury Reserves, the dividends from which may be exempt from state
personal income taxes, with the total rates of return of funds the dividends
from which are not so tax exempt.
Each Fund may provide annualized "yield" and "effective yield" quotations,
and U.S. Treasury Reserves may also provide "tax equivalent yield" quotations.
The "yield" of a Fund refers to the income generated by an investment in the
Fund over a seven-day 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 week over a 365-day period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly, but when annualized
the income earned by the investment during that seven-day period is assumed to
be reinvested. The effective yield is slightly higher than the yield because
of the compounding effect of this assumed reinvestment. The "tax equivalent
yield" refers to the yield that a fully taxable money market fund would have
to generate in order to produce an after-tax yield equivalent to that of U.S.
Treasury Reserves. The use of a tax equivalent yield allows investors to
compare the yield of U.S. Treasury Reserves, the dividends from which may be
exempt from state personal income tax, with yields of funds the dividends from
which are not so tax exempt. A Fund may also provide yield, effective yield
and tax equivalent yield quotations for longer periods.
Cash Reserves will include performance data for both classes of 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 diversified series of Landmark Funds III.
Landmark Funds III, which was known as "Landmark Cash Reserves" until its name
changed effective January 17, 1991, is a Massachusetts business trust which
was organized on June 28, 1985; it also is an open-end management investment
company registered under the 1940 Act.
Under the 1940 Act, a diversified series or diversified investment company
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 investment
company 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.
Each Portfolio is a separate trust organized under the laws of the State
of New York. The Declaration of Trust of each Portfolio provides that a Fund
and other entities investing in a Portfolio are each liable for all
obligations of that Portfolio. However, it is not expected that the
liabilities of a Portfolio would ever exceed its assets.
VOTING AND OTHER RIGHTS: Landmark Funds III (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 a 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
instructions it receives for all other shares of which that Shareholder
Servicing Agent is the holder of record.
The Trust's activities are supervised by the Trust's Board of Trustees. As
a Massachusetts business trust, the Trust is 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: For the fiscal year ended August 31, 1995, total operating expenses
of the Funds, after allocating to each Fund its share of its Portfolio's
expenses and after giving effect to fee waivers or reimbursements, were as
follows: for Cash Reserves -- Class A, 0.69% of the Fund's average daily net
assets for that fiscal year; and for U.S. Treasury Reserves, 0.70% of the
Fund's average daily net assets for that fiscal year. All fee waivers and
reimbursements are voluntary and may be reduced or terminated at any time.
------------------------------
The Statement of Additional Information dated the date hereof contains
more detailed information about the Funds and the Portfolios, 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, (vi) programs for the
purchase of shares, and (vii) the determination of net asset value.
No person has been authorized to give any information or make any
representations not contained in this Prospectus 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
- --------------------------------------------------------------------------------
TREASURY RECEIPTS. Each Portfolio may invest in Treasury Receipts, which
are unmatured interest coupons of U.S. Treasury bonds and notes which have
been separated and resold in a custodial receipt program administered by the
U.S. Treasury.
COMMERCIAL PAPER. Cash Reserves Portfolio may invest in commercial paper,
which is unsecured debt of corporations usually maturing in 270 days or less
from its date of issuance.
ASSET-BACKED SECURITIES. Cash Reserves Portfolio may invest in asset-
backed securities, which represent fractional interests in underlying pools of
assets, such as car installment loans or credit card receivables. The rate of
return on asset-backed securities may be affected by prepayment of the
underlying loans or receivables. Reinvestment of principal may occur at higher
or lower rates than the original yield.
REPURCHASE AGREEMENTS. Cash Reserves Portfolio may enter into repurchase
agreements. Repurchase agreements are transactions in which an institution
sells the Portfolio a security at one price, subject to the Portfolio'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.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements and in order to generate additional income, each Portfolio 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 Portfolio would not exceed 33 1/3% of the
Portfolio's net assets.
In the event of the bankruptcy of the other party to a securities loan or
a repurchase agreement, the Portfolio could experience delays in recovering
either the securities lent or cash. To the extent that, in the meantime, the
value of the securities lent have increased or the value of the securities
purchased have decreased, the Portfolio could experience a loss.
PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS. Each Portfolio may invest up
to 10% of its net assets 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 the
Portfolio to sell them promptly at an acceptable price.
<PAGE>
- -------------------------------------------------------------------------------
SHAREHOLDER
SERVICING AGENTS
- -------------------------------------------------------------------------------
FOR CITIBANK NEW YORK RETAIL BANKING AND BUSINESS AND PROFESSIONAL CUSTOMERS:
Citibank, N.A.
450 West 33rd Street, New York, NY 10001
(212) 564-3456 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,
Registered Representative 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.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100
FOR CITICORP INVESTMENT SERVICES CUSTOMERS:
Citicorp Investment Services
One Court Square, Long Island City, NY11120
Call Your Investment Consultant or (800) 846-5200
(212) 736-8170 in New York City
- -------------------------------------------------------------------------------
[LOGO] LANDMARK
FUNDS
MONEY MARKET FUNDS:
Cash Reserves
Premium Liquid Reserves
Institutional Liquid Reserves
U.S. Treasury Reserves
Premium U.S. Treasury Reserves
Institutional U.S. Treasury Reserves
Tax Free Reserves
California Tax Free Reserves
Connecticut Tax Free Reserves
New York Tax Free Reserves
STOCK & BOND FUNDS:
U.S. Government Income Fund
Intermediate Income Fund
National Tax Free Income Fund
New York Tax Free Income Fund
Balanced Fund
Equity Fund
International Equity Fund
Small Cap Equity Fund
Emerging Asian Markets Equity Fund
- -------------------------------------------------------------------------------
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge*, President
H. B. Alvord
E. Kirby Warren
SECRETARY
Thomas M. Lenz*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
- ----------------------| |--------------------------
INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue, Boston, MA 02116
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
(FOR LANDMARK CASH RESERVES)
Price Waterhouse LLP
160 Federal Street, Boston, MA02110
(FOR LANDMARK U.S. TREASURY RESERVES)
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham, Dana & Gould
150 Federal Street, Boston, MA 02110
- ----------------------| |--------------------------
SHAREHOLDER SERVICING AGENTS
(See Inside of Cover)
MM/P/96/RB Printed on Recycled Paper [Recycle Symbol]
- --------------------------------------
[LOGO] LANDMARK FUNDS
Advised by Citibank, N.A.
- --------------------------------------
LANDMARK
CASH RESERVES
- --------------------------------------
LANDMARK
U.S. TREASURY
RESERVES
- --------------------------------------
- --------------------------------------
PROSPECTUS
January 2, 1996
- --------------------------------------
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
January 2, 1996
LANDMARK CASH RESERVES
LANDMARK U.S. TREASURY RESERVES
(Members of the LandmarkSM Family of Funds)
Landmark Cash Reserves ("Cash Reserves") and Landmark U.S. Treasury
Reserves ("U.S. Treasury Reserves" and together with Cash Reserves, the "Funds")
are each separate series of Landmark Funds III (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 Cash
Reserves and U.S. Treasury Reserves in, respectively, Cash Reserves Portfolio
and U.S. Treasury Reserves Portfolio (the "Portfolios"). The address of Cash
Reserves Portfolio is Elizabethan Square, George Town, Grand Cayman, British
West Indies. The address and telephone number of U.S. Treasury Reserves
Portfolio are 6 St. James Avenue, Boston, Massachusetts 02116, (617) 423-1679.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED 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
The Funds 2
Investment Objectives, Policies and
Restrictions 3
Performance Information 15
Determination of Net Asset Value 16
Management 18
Portfolio Transactions 28
Description of Shares, Voting Rights
and Liabilities 29
Certain Additional Tax Matters 31
Independent Accountants and Financial
Statements 32
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 January 2, 1996. 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 (see back cover for address and phone number).
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
1. THE FUNDS
The Trust is a no-load, diversified, open-end management investment
company which was organized as a business trust under the laws of the
Commonwealth of Massachusetts on June 28, 1985 and is the successor to the
business of The Landmark Funds Cash Reserves, Inc., which was incorporated under
the laws of the State of Maryland in 1984. The Trust was known as "Landmark Cash
Reserves" until its name was changed effective February 1, 1991. All references
in this Statement of Additional Information to the Trust's activities are
intended to include those of the Trust and its predecessor, unless the context
indicates otherwise. Shares of the Trust are divided into two separate series,
Cash Reserves and U.S. Treasury Reserves, which are described in this Statement
of Additional Information. References in this Statement of Additional
Information to the Prospectus are to the Prospectus, dated January 2, 1996, of
the Funds by which shares of the Funds are offered.
Each of the Funds is a type of mutual fund commonly referred to as a
"money market fund." The net asset value of each of the Funds' shares is
expected to remain constant at $1.00, although there can be no assurance that
this will be so on a continuing basis. (See "Determination of Net Asset Value.")
The Trust seeks the investment objectives of the Funds by investing all
the investable assets of Cash Reserves and U.S. Treasury Reserves in,
respectively, Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio. Each
of the Portfolios is a diversified open-end management investment company. Each
Portfolio has the same investment objectives and policies as its corresponding
Fund.
Citibank, N.A. ("Citibank" or the "Adviser") is the investment adviser
to each of the Portfolios. The Adviser manages the investments of each Portfolio
from day to day in accordance with the investment objectives and policies of
that Portfolio. The selection of investments for each Portfolio, and the way
they are managed, depend on the conditions and trends in the economy and the
financial marketplaces.
The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS") supervises
the overall administration of the Trust and U.S. Treasury Reserves Portfolio.
Signature Financial Group (Cayman), Ltd., either directly or through its
wholly-owned subsidiary ("SFG"), supervises the overall administration of Cash
Reserves Portfolio. The Boards of Trustees of the Trust and the Portfolios
provide broad supervision over the affairs of the Trust and of the Portfolios,
respectively. Shares of each Fund are continuously sold by LFBDS, 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 with respect to
that Fund (collectively, "Shareholder Servicing Agents"). Although shares of the
Funds are sold without a sales load, LFBDS may receive fees from the Funds
pursuant to a Distribution Plan adopted 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 CASH RESERVES are to provide shareholders
of the Fund with liquidity and as high a level of current income as is
consistent with the preservation of capital.
The investment objectives of U.S. TREASURY RESERVES are to provide
shareholders of the Fund with liquidity and as high a level of current income
from U.S. Government obligations as is consistent with the preservation of
capital.
The investment objectives of each of the Funds may be changed without
approval by the Fund's shareholders. Of course, there can be no assurance that
either Fund will achieve its investment objectives.
INVESTMENT POLICIES
The Trust seeks the investment objectives of the Funds by investing all
of the investable assets of Cash Reserves and U.S. Treasury Reserves in,
respectively, Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio, each
of which has the same investment objectives and policies as its corresponding
Fund. The Prospectus contains a discussion of the various types of securities in
which each 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 and each Portfolio.
Since the investment characteristics of each Fund will correspond directly to
those of the Portfolio in which it invests, the following is a supplementary
discussion with respect to each Portfolio.
The Trust may withdraw the investment of either Fund from its
corresponding Portfolio at any time, if the Board of Trustees of the Trust
determines that it is in the best interests of the Fund to do so. Upon any such
withdrawal, a Fund's assets would be invested in accordance with the investment
policies described below with respect to its corresponding Portfolio. Except for
the concentration policy of Cash Reserves with respect to bank obligations
described in paragraph (1) below, which is fundamental and may not be changed
without the approval of Cash Reserves' shareholders, the approval of a Fund's
shareholders would not be required to change any of that Fund's investment
policies. Likewise, except for the concentration policy of Cash Reserves
Portfolio with respect to bank obligations described in paragraph (1) below,
which is fundamental and may not be changed without the approval of Cash
Reserves Portfolio's investors, the approval of the investors in a Portfolio
would not be required to change that Portfolio's investment objectives or any of
that Portfolio's investment policies discussed below, including those concerning
securities transactions.
CASH RESERVES PORTFOLIO
Cash Reserves Portfolio seeks its investment objective through
investments limited to the following types of high quality U.S.
dollar-denominated money market instruments. All investments by Cash Reserves
Portfolio mature or are deemed to mature within 397 days from the date of
acquisition and the average maturity of the investments held by the Portfolio
(on a dollar-weighted basis) is 90 days or less. All investments by the
Portfolio are in "high quality" securities (i.e., securities rated in the
highest rating category for short-term obligations by at least two nationally
recognized statistical rating organizations (each, an "NRSRO") assigning a
rating to the security or issuer or, if only one NRSRO assigns a rating, that
NRSRO or, in the case of an investment which is not rated, of comparable quality
as determined by the Adviser) and are determined by the Adviser to present
minimal credit risks. 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. Under the 1940
Act, Cash Reserves and Cash Reserves Portfolio are each classified as
"diversified", although in the case of Cash Reserves, all of its investable
assets are invested in the Portfolio. A "diversified investment company" must
invest at least 75% of its assets in cash and cash items, U.S. Government
securities, investment company securities (e.g., interests in the Portfolio) and
other securities limited as to any one issuer to not more than 5% of the total
assets of the investment company and not more than 10% of the voting securities
of the issuer.
(1) Bank obligations -- Cash Reserves Portfolio invests at least 25% of
its investable assets, and may invest up to 100% of its assets, in bank
obligations. These obligations include, but are not limited to,
negotiable certificates of deposit, bankers' acceptances and fixed time
deposits. Cash Reserves Portfolio limits its investments in U.S. bank
obligations (including their non-U.S. branches) to banks having total
assets in excess of $1 billion and which are subject to regulation by
an agency of the U.S. Government. The Portfolio may also invest in
certificates of deposit issued by banks the deposits in which are
insured by the Federal Deposit Insurance Corporation ("FDIC"), through
either the Bank Insurance Fund or the Savings Association Insurance
Fund, having total assets of less than $1 billion, provided that the
Portfolio at no time owns more than $100,000 principal amount of
certificates of deposit (or any higher principal amount which in the
future may be fully insured by FDIC insurance) of any one of those
issuers. Fixed time deposits are obligations which are payable at a
stated maturity date and bear a fixed rate of interest. Generally,
fixed time deposits may be withdrawn on demand by the Portfolio, but
they may be subject to early withdrawal penalties which vary depending
upon market conditions and the remaining maturity of the obligation.
Although fixed time deposits do not have a market, there are no
contractual restrictions on the Portfolio's right to transfer a
beneficial interest in the deposit to a third party. This concentration
policy is fundamental and may not be changed without the approval of
the investors in Cash Reserves Portfolio.
U.S. banks organized under federal law are supervised and examined by
the Comptroller of the Currency and are required to be members of the
Federal Reserve System and to be insured by the FDIC. U.S. banks
organized under state law are supervised and examined by state banking
authorities and are members of the Federal Reserve System only if they
elect to join. However, state banks which are insured by the FDIC are
subject to federal examination and to a substantial body of federal law
and regulation. As a result of federal and state laws and regulations,
U.S. branches of U.S. banks, among other things, are generally required
to maintain specified levels of reserves, and are subject to other
supervision and regulation designed to promote financial soundness.
Cash Reserves Portfolio limits its investments in non-U.S. bank
obligations (i.e., obligations of non-U.S. branches and subsidiaries of
U.S. banks, and U.S. and non-U.S. branches of non-U.S. banks) to U.S.
dollar-denominated obligations of banks which at the time of investment
are branches or subsidiaries of U.S. banks which meet the criteria in
the preceding paragraphs or are branches of non-U.S. banks which (i)
have more than $10 billion, or the equivalent in other currencies, in
total assets; (ii) in terms of assets are among the 75 largest non-U.S.
banks in the world; (iii) have branches or agencies in the United
States; and (iv) in the opinion of the Adviser, are of an investment
quality comparable with obligations of U.S. banks which may be
purchased by the Portfolio. These obligations may be general
obligations of the parent bank, in addition to the issuing branch or
subsidiary, but the parent bank's obligations may be limited by the
terms of the specific obligation or by governmental regulation. The
Portfolio also limits its investments in non-U.S. bank obligations to
banks, branches and subsidiaries located in Western Europe (United
Kingdom, France, Germany, Belgium, the Netherlands, Italy,
Switzerland), Scandinavia (Denmark, Norway, Sweden), Australia, Japan,
the Cayman Islands, the Bahamas and Canada. Cash Reserves Portfolio
does not purchase any bank obligation of the Adviser or an affiliate of
the Adviser.
Since Cash Reserves Portfolio may hold obligations of non-U.S. branches
and subsidiaries of U.S. banks, and U.S. and non-U.S. branches of
non-U.S. banks, an investment in Cash Reserves involves certain
additional risks. Such investment risks include future political and
economic developments, the possible imposition of non-U.S. withholding
taxes on interest income payable on such obligations held by the
Portfolio, the possible seizure or nationalization of non-U.S. deposits
and the possible establishment of exchange controls or other non-U.S.
governmental laws or restrictions applicable to the payment of the
principal of and interest on certificates of deposit or time deposits
that might affect adversely such payment on such obligations held by
the Portfolio. In addition, there may be less publicly-available
information about a non-U.S. branch or subsidiary of a U.S. bank or a
U.S. or non-U.S. branch of a non-U.S. bank than about a U.S. bank and
such branches and subsidiaries may not be subject to the same or
similar regulatory requirements that apply to U.S. banks, such as
mandatory reserve requirements, loan limitations and accounting,
auditing and financial record-keeping standards and requirements.
The provisions of federal law governing the establishment and operation
of U.S. branches do not apply to non-U.S. branches of U.S. banks.
However, Cash Reserves Portfolio may purchase obligations only of those
non-U.S. branches of U.S. banks which were established with the
approval of the Board of Governors of the Federal Reserve System (the
"Board of Governors"). As a result of such approval, these branches are
subject to examination by the Board of Governors and the Comptroller of
the Currency. In addition, such non-U.S. branches of U.S. banks are
subject to the supervision of the U.S. bank and creditors of the
non-U.S. branch are considered general creditors of the U.S. bank
subject to whatever defenses may be available under the governing
non-U.S. law and to the terms of the specific obligation. Nonetheless,
Cash Reserves Portfolio generally will be subject to whatever risk may
exist that the non-U.S. country may impose restrictions on payment of
certificates of deposit or time deposits.
U.S. branches of non-U.S. banks are subject to the laws of the state in
which the branch is located or to the laws of the United States. Such
branches are therefore subject to many of the regulations, including
reserve requirements, to which U.S. banks are subject. In addition,
Cash Reserves Portfolio may purchase obligations only of those U.S.
branches of non-U.S. banks which are located in states which impose the
additional requirement that the branch pledge to a designated bank
within the state an amount of its assets equal to 5% of its total
liabilities.
Non-U.S. banks in whose obligations Cash Reserves Portfolio may invest
may not be subject to the laws and regulations referred to in the
preceding two paragraphs.
(2) Obligations of, or guaranteed by, non-U.S. governments. Cash Reserves
Portfolio limits its investments in non-U.S. government obligations to
obligations issued or guaranteed by the governments of Western Europe
(United Kingdom, France, Germany, Belgium, the Netherlands, Italy,
Switzerland), Scandinavia (Denmark, Norway, Sweden), Australia, Japan
and Canada. Generally, such obligations may be subject to the
additional risks described in paragraph 1 above in connection with the
purchase of non-U.S. bank obligations.
(3) Commercial paper rated Prime-1 by Moody's Investors Service, Inc.
("Moody's") or A-1 by Standard & Poor's Ratings Group ("Standard &
Poor's") or, if not rated, determined to be of comparable quality by
the Adviser, such as unrated commercial paper issued by corporations
having an outstanding unsecured debt issue currently rated Aaa by
Moody's or AAA by Standard & Poor's.
(4) Obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities. These include issues of the U.S. Treasury, such as
bills, certificates of indebtedness, notes and bonds, and issues of
agencies and instrumentalities established under the authority of an
Act of Congress. Some of the latter category of obligations are
supported by the full faith and credit of the United States, others are
supported by the right of the issuer to borrow from the U.S. Treasury,
and still others are supported only by the credit of the agency or
instrumentality. Examples of each of the three types of obligations
described in the preceding sentence are (i) obligations guaranteed by
the Export-Import Bank of the United States, (ii) obligations of the
Federal Home Loan Mortgage Corporation, and (iii) obligations of the
Student Loan Marketing Association, respectively.
(5) Repurchase agreements, providing for resale within 397 days or less,
covering obligations of, or guaranteed by, the U.S. Government, its
agencies or instrumentalities which may have maturities in excess of
397 days. A repurchase agreement arises when a buyer purchases an
obligation and simultaneously agrees with the vendor to resell the
obligation to the vendor at an agreed-upon price and time, which is
usually not more than seven days from the date of purchase. The resale
price of a repurchase agreement is greater than the purchase price,
reflecting an agreed-upon market rate which is effective for the period
of time the buyer's funds are invested in the obligation and which is
not related to the coupon rate on the purchased obligation. Obligations
serving as collateral for each repurchase agreement are delivered to
the Portfolio's custodian either physically or in book entry form and
the collateral is marked to the market daily to ensure that each
repurchase agreement is fully collateralized at all times. A buyer of a
repurchase agreement runs a risk of loss if, at the time of default by
the issuer, the value of the collateral securing the agreement is less
than the price paid for the repurchase agreement. If the vendor of a
repurchase agreement becomes bankrupt, Cash Reserves Portfolio might be
delayed, or may incur costs or possible losses of principal and income,
in selling the collateral. The Portfolio may enter into repurchase
agreements only with a vendor which is a member bank of the Federal
Reserve System or which is a "primary dealer" (as designated by the
Federal Reserve Bank of New York) in U.S. Government obligations. The
Portfolio will not enter into any repurchase agreements with the
Adviser or an affiliate of the Adviser. The restrictions and procedures
described above which govern the Portfolio's investment in repurchase
agreements are designed to minimize the Portfolio's risk of losses in
making those investments.
(6) Asset-backed securities, which may include securities such as
Certificates for Automobile Receivables ("CARS") and Credit Card
Receivable Securities ("CARDS"), as well as other asset-backed
securities that may be developed in the future. CARS represent
fractional interests in pools of car installment loans, and CARDS
represent fractional interests in pools of revolving credit card
receivables. The rate of return on asset-backed securities may be
affected by early prepayment of principal on the underlying loans or
receivables. Prepayment rates vary widely and may be affected by
changes in market interest rates. It is not possible to accurately
predict the average life of a particular pool of loans or receivables.
Reinvestment of principal may occur at higher or lower rates than the
original yield. Therefore, the actual maturity and realized yield on
asset-backed securities will vary based upon the prepayment experience
of the underlying pool of loans or receivables. (See "Asset-Backed
Securities.")
Cash Reserves Portfolio does not purchase securities which the
Portfolio believes, at the time of purchase, will be subject to exchange
controls or non-U.S. withholding taxes; however, there can be no assurance that
such laws may not become applicable to certain of the Portfolio's investments.
In the event exchange controls or non-U.S. withholding taxes are imposed with
respect to any of the Portfolio's investments, the effect may be to reduce the
income received by the Portfolio on such investments.
ASSET-BACKED SECURITIES
As set forth above, Cash Reserves Portfolio may purchase asset-backed
securities that represent fractional interests in pools of retail installment
loans, both secured (such as Certificates for Automobile Receivables) and
unsecured, or leases or revolving credit receivables, both secured and unsecured
(such as Credit Card Receivable Securities). These assets are generally held by
a trust and payments of principal and interest or interest only are passed
through monthly or quarterly to certificate holders and may be guaranteed up to
certain amounts by letters of credit issued by a financial institution
affiliated or unaffiliated with the trustee or originator of the trust.
Underlying automobile sales contracts, leases or credit card
receivables are subject to prepayment, which may reduce the overall return to
certificate holders. Nevertheless, principal repayment rates tend not to vary
much with interest rates and the short-term nature of the underlying loans,
leases or receivables tends to dampen the impact of any change in the prepayment
level. Certificate holders may also experience delays in payment on the
certificates if the full amounts due on underlying loans, leases or receivables
are not realized by the Portfolio because of unanticipated legal or
administrative costs of enforcing the contracts or because of depreciation or
damage to the collateral (usually automobiles) securing certain contracts, or
other factors. If consistent with its investment objectives and policies, Cash
Reserves Portfolio may invest in other asset-backed securities that may be
developed in the future.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to
generate income, each of the Portfolios 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 ("NYSE") (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. A Portfolio
would have the right to call a loan and obtain the securities loaned at any time
on customary industry settlement notice (which will not usually exceed five
days). During the existence of a loan, a Portfolio would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and would also receive compensation based on investment of the
collateral. The Portfolio 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. If the Adviser determines to make loans, it is not
intended that the value of the securities loaned by a Portfolio would exceed 33
1/3% of the value of its net assets.
U.S. TREASURY RESERVES PORTFOLIO
U.S. Treasury Reserves Portfolio seeks its investment objective by
investing in obligations of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities including issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an Act of Congress which
are supported by the full faith and credit of the United States.
U.S. Treasury Reserves Portfolio will not enter into repurchase agreements.
INVESTMENT RESTRICTIONS
The Trust, on behalf of the Funds, and the Portfolios have each adopted
the following policies which may not be changed without approval by holders of a
"majority of the outstanding shares" of the applicable 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 Fund or Portfolio
present at a meeting, if 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 Fund or the
Portfolio. The term "voting securities" as used in this paragraph has the same
meaning as in the 1940 Act. Whenever the Trust is requested to vote on a change
in the investment restrictions of a Portfolio (or, in the case of Cash Reserves
Portfolio, its concentration policy described in paragraph (1) under "Investment
Policies"), the Trust will hold a meeting of the corresponding Fund's
shareholders and will cast its vote as instructed by the shareholders. Each Fund
will vote the shares held by its shareholders who do not give voting
instructions in the same proportion as the shares of that Fund's shareholders
who do give voting instructions. Shareholders of the Funds who do not vote will
have no effect on the outcome of these matters.
CASH RESERVES
The Trust, on behalf of Cash Reserves, may not:
(1) Invest in equity securities (e.g., common stock, preferred stock,
options, warrants, puts, calls), voting securities, restricted securities,
corporate debt securities (e.g., bonds, debentures) other than those bank
securities and commercial paper referred to under "Investment Policies", local
or state government securities (e.g., municipal bonds, state bonds), commodities
or commodity contracts, real estate, or securities of other investment
companies, except that the Trust may invest all or a portion of the Fund's
assets in a diversified, open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund. The Trust, on behalf of the Fund, will not sell securities short, write
put or call options, engage in underwriting, or invest in companies for the
purpose of exercising control. The Trust, on behalf of the Fund, will not make
loans to other persons except that it may acquire debt securities as discussed
under "Investment Policies".
(2) Purchase securities or obligations of any one issuer (other than
securities issued by the U.S. Government, its agencies and instrumentalities and
repurchase agreements covering such securities) if immediately after such
purchase more than 5% of the value of its assets would be invested in that
issuer except that the Trust may invest all or a portion of the Fund's assets in
a diversified, open-end management investment company with substantially the
same investment objective, policies and restrictions as the Fund.
(3) Borrow money except from banks as a temporary measure for
extraordinary or emergency purposes (not for leveraging) or in order to meet
unexpectedly heavy redemption requests in an amount not exceeding 15% of the
value of the Fund's assets and will not purchase any securities at any time when
the Fund's total outstanding borrowings from banks exceed 5% of the Fund's gross
assets. The Trust, on behalf of the Fund, will not pledge its assets except to
secure borrowings. While the Trust, on behalf of the Fund, may borrow from its
Custodian for the foregoing purposes, any borrowing from the Custodian will be
on terms no less favorable to the Fund than those offered by the Custodian to
comparable borrowers and on terms which the Trust believes are not less
favorable than those readily obtainable elsewhere.
(4) Concentrate the Fund's investments in any particular industry, but
if it is deemed appropriate to the achievement of the Fund's investment
objective, up to 25% of the assets of the Fund (taken at market value at the
time of each investment) may be invested in any one industry, provided that, if
the Trust withdraws the Fund's investment from an open-end management investment
company with substantially the same investment objective, policies and
restrictions as the Fund, it will invest at least 25%, and may invest up to
100%, of the assets of the Fund in bank obligations; and provided, further, that
nothing in this Investment Restriction is intended to affect the Trust's ability
to invest 100% of the Fund's assets in a diversified, open-end management
investment company with substantially the same investment objective, policies
and restrictions as the Fund.
(5) There is no limitation on investing in securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, or
repurchase agreements covering those securities, except that the Trust, on
behalf of the Fund, will not acquire securities that are not readily marketable
or repurchase agreements calling for resale within more than 7 days if, as a
result thereof, more than 10% of the value of its net assets would be invested
in such securities. The Trust, on behalf of the Fund, may not invest in fixed
time deposits maturing in more than seven calendar days, and fixed time deposits
maturing from two business days through seven calendar days may not exceed 10%
of the Fund's net assets.
Cash Reserves Portfolio may not:
(1) borrow money, except that as a temporary measure for extraordinary
or emergency purposes the Portfolio may borrow from banks in an amount not to
exceed 1/3 of the value of the net assets of the Portfolio, including the amount
borrowed (moreover, the Portfolio may not purchase any securities at any time at
which borrowings exceed 5% of its total assets (taken at market value))(it is
intended that the Portfolio would borrow money only from banks and only to
accommodate requests for the withdrawal of all or a portion of a beneficial
interest in the Portfolio while effecting an orderly liquidation of securities);
for additional related restrictions, see clause (i) under the caption "State and
Federal Restrictions" below;
(2) purchase any security or evidence of interest therein on margin,
except that the Portfolio may obtain such short term credit as may be necessary
for the clearance of purchases and sales of securities;
(3) underwrite securities issued by other persons, except insofar as
the Portfolio may technically be deemed an underwriter under the Securities Act
of 1933 in selling a security;
(4) make loans to other persons except (a) through the lending of
securities held by the Portfolio, but not in excess of 33 1/3% of the
Portfolio's net assets, (b) through the use of fixed time deposits or repurchase
agreements or the purchase of short term obligations, or (c) by purchasing all
or a portion of an issue of debt securities of types commonly distributed
privately to financial institutions; for purposes of this paragraph 4 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; for additional related restrictions, see clause (x) under the
caption "State and Federal Restrictions" below;
(5) 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 in
the ordinary course of business (the Portfolio reserves the freedom of action to
hold and to sell real estate acquired as a result of the ownership of securities
by the Portfolio);
(6) concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of its investment objective, up to 25%
of the assets of the Portfolio (taken at market value at the time of each
investment) may be invested in any one industry, except that the Portfolio will
invest at least 25% of its assets and may invest up to 100% of its assets in
bank obligations; or
(7) 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, except as appropriate to evidence a debt
incurred without violating Investment Restriction (1) above.
U.S. TREASURY RESERVES
Neither the Trust, on behalf of U.S. Treasury Reserves, nor U.S.
Treasury Portfolio may:
(1) borrow money, except that as a temporary measure for extraordinary
or emergency purposes either the Trust or the Portfolio may borrow from banks in
an amount not to exceed 1/3 of the value of the net assets of the Fund or the
Portfolio, respectively, including the amount borrowed (moreover, neither the
Trust (on behalf of the Fund) nor the Portfolio may purchase any securities at
any time at which borrowings exceed 5% of the total assets of the Fund or the
Portfolio, respectively (taken in each case at market value)) (it is intended
that the Fund and the Portfolio would borrow money only from banks and only to
accommodate requests for the repurchase of shares of the Fund or the withdrawal
of all or a portion of a beneficial interest in the Portfolio while effecting an
orderly liquidation of securities); for additional related restrictions, see
clause (i) under the caption "State and Federal Restrictions" below;
(2) purchase any security or evidence of interest therein on margin,
except that either the Trust, on behalf of the Fund, or the Portfolio may obtain
such short term credit as may be necessary for the clearance of purchases and
sales of securities;
(3) underwrite securities issued by other persons, except that all the
assets of the Fund may be invested in the Portfolio and except insofar as either
the Trust or the Portfolio may technically be deemed an underwriter under the
Securities Act of 1933 in selling a security;
(4) make loans to other persons except (a) through the lending of
securities held by either the Fund or the Portfolio, but not in excess of 33
1/3% of the Fund's or the Portfolio's net assets, as the case may be, (b)
through the use of repurchase agreements or the purchase of short term
obligations, or (c) by purchasing all or a portion of an issue of debt
securities of types commonly distributed privately to financial institutions;
for purposes of this paragraph 4 the purchase of a portion of an issue of debt
securities which is part of an issue to the public shall not be considered the
making of a loan; for additional related restrictions, see clause (x) under the
caption "State and Federal Restrictions" below;
(5) 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 in
the ordinary course of business (the Fund and the Portfolio 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 the Portfolio);
(6) concentrate its investments in any particular industry; provided,
that nothing in this Investment Restriction is intended to affect the ability to
invest 100% of the Fund's assets in the Portfolio; or
(7) 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, except as appropriate to evidence a debt
incurred without violating Investment Restriction (1) above.
STATE AND FEDERAL RESTRICTIONS
In order to comply with certain state and federal statutes and
regulatory policies, neither the Trust, on behalf of either of the Funds, nor
the corresponding Portfolio will 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 in each case at cost),
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10%
of the net assets of the Fund or Portfolio (taken in each case at market value),
(iii) sell any security which it does not own unless by virtue of its
ownership of other securities it has 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 the corresponding
Portfolio,
(v) purchase securities issued by any registered investment company,
except that all of the assets of the Fund may be invested in the corresponding
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, and 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 will not
purchase the securities of any registered investment company if such purchase at
the time thereof would cause more than 10% of the total assets of the Fund or
the 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 by the Portfolio;
and provided, further, that the Portfolios shall not purchase securities issued
by any open-end investment company,
(vi) taken together with any investments described in clause (x) below,
invest more than 10% of the net assets of the Fund or the Portfolio in
securities that are not readily marketable, including debt securities for which
there is no established market (and, in the case of Cash Reserves and Cash
Reserves Portfolio, repurchase agreements maturing in more than seven days),
except that all the assets of the Fund may be invested in the corresponding
Portfolio,
(vii) purchase securities of any issuer if such purchase at the time
thereof would cause it 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, except that all the assets of the Fund may be invested in the
corresponding Portfolio,
(viii) 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 the Portfolio, or is an officer or director of the Adviser, if
after the purchase of the securities of such issuer by the Trust, on behalf of
the Fund, or a Portfolio, 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,
(ix) write, purchase or sell any put or call option or any combination
thereof,
(x) taken together with any investments described in clause (vi) above,
invest in securities which are subject to legal or contractual restrictions on
resale (other than, in the case of Cash Reserves and Cash Reserves Portfolio,
repurchase agreements and fixed time deposits maturing in not more than seven
days) if, as a result thereof, more than 10% of the net assets of the Fund or
Portfolio (in each case taken at market value), would be so invested (including,
in the case of Cash Reserves and Cash Reserves Portfolio, repurchase agreements
maturing in more than seven days), except that all the assets of the Fund may be
invested in the Portfolio,
(xi) 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 by the Fund or Portfolio, except that all the assets of the Fund may be
invested in a corresponding Portfolio, or
(xii) make short sales of securities or maintain a short position,
unless at all times when a short position is open it 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, respectively (in each case taken at market
value), is held as collateral for such sales at any one time. (The Portfolios do
not presently intend to make such sales.)
These policies are not fundamental and may be changed by the Trust with
respect to either of the Funds without approval by the Fund's shareholders or by
either of the Portfolios without the approval by the corresponding Fund or its
other investors, in each case in response to changes in the various state and
federal requirements.
PERCENTAGE AND RATING RESTRICTIONS
If a percentage restriction or a rating restriction (other than a
restriction as to borrowing) 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 by a Fund or a Portfolio or a later
change in the rating of a security held by a Fund or a Portfolio is not
considered a violation of policy.
3. PERFORMANCE INFORMATION
Any current yield quotation of a Fund which is used in such a manner as
to be subject to the provisions of Rule 482(d) under the Securities Act of 1933,
as amended, consists of an annualized historical yield, carried at least to the
nearest hundredth of one percent, based on a specific seven calendar day period
and is calculated by dividing the net change in the value of an account having a
balance of one share at the beginning of the period by the value of the account
at the beginning of the period and multiplying the quotient by 365/7. For this
purpose the net change in account value would reflect the value of additional
shares purchased with dividends declared on the original share and dividends
declared on both the original share and any such additional shares, but would
not reflect any realized gains or losses as a result of the Fund's investment in
the Portfolio or any unrealized appreciation or depreciation on portfolio
securities. In addition, any effective yield quotation of a Fund so used shall
be calculated by compounding the current yield quotation for such period by
multiplying such quotation by 7/365, adding 1 to the product, raising the sum to
a power equal to 365/7, and subtracting 1 from the result.
Any tax equivalent yield quotation of a Fund is calculated as follows:
If the entire current yield quotation for such period is tax-exempt, the tax
equivalent yield will 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
tax-exempt, the tax equivalent yield will be the sum of (a) that portion of the
yield which is tax-exempt divided by 1 minus a stated income tax rate or rates
and (b) the portion of the yield which is not tax-exempt.
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 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 tax equivalent total rate of return quotation of a Fund is
calculated as follows: If the entire current total rate of return quotation for
such period is tax-exempt, the tax equivalent total rate of return will be the
current total rate of return quotation divided by 1 minus a stated income tax
rate or rates. If a portion of the current total rate of return quotation is not
tax-exempt, the tax equivalent total rate of return will be the sum of (a) that
portion of the total rate of return which is tax-exempt divided by 1 minus a
stated income tax rate or rates and (b) the portion of the total rate of return
which is not tax-exempt.
Set forth below is total rate of return information, assuming that
dividends and capital gains distributions, if any, were reinvested, for the
Funds for the periods indicated, at the beginning of which periods no sales
charges were applicable to purchases of shares of the Funds.
<PAGE>
<TABLE>
<CAPTION>
REDEEMABLE VALUE OF A
HYPOTHETICAL $1,000
ANNUALIZED TOTAL RATE OF INVESTMENT AT THE END
PERIOD RETURN OF THE PERIOD
<S> <C> <C>
CASH RESERVES
September 1, 1984 (commencement of operations) to
August 31, 1995 6.06% $1,909.60
Five years ended August 31, 1995 4.40% $1,240.50
One year ended August 31, 1995 5.30% $1,053.00
U.S. TREASURY RESERVES
May 3, 1991 (commencement of operations) to August
31, 1995 3.70% $1,170.60
One year ended August 31, 1995 4.86% $1,048.60
</TABLE>
The annualized yield of Cash Reserves for the seven-day period ended
August 31, 1995 was 5.37%. The effective compound annualized yield of Cash
Reserves for such period was 5.52%. The annualized yield of U.S. Treasury
Reserves for the seven-day period ended August 31, 1995 was 4.86%, the effective
compound annualized yield of U.S. Treasury Reserves for such period was 4.98%
and the annualized tax equivalent yield of U.S. Treasury Reserves for such
period was 5.53% (assuming a combined state and local tax rate of 12.051% for
New York City residents).
4. DETERMINATION OF NET ASSET VALUE
The net asset value of each share of each class of Cash Reserves is
determined on each day on which the NYSE is open for trading. This determination
is made once during each such day as of 3:00 p.m., Eastern time, by dividing the
value of Cash Reserves' net assets attributable to a class (i.e., the value of
the Fund's investment in Cash Reserves Portfolio and other assets attributable
to the class less the Fund's liabilities attributable to the class, including
expenses payable or accrued) by the number of shares of that class outstanding
at the time the determination is made. The net asset value of each share of U.S.
Treasury Reserves is determined on each day on which the NYSE is open for
trading. This determination is made once during each such day as of 12:00 noon,
Eastern time, by dividing the value of the Fund's net assets (i.e., the value of
its investment in U.S. Treasury Reserves Portfolio and other assets less its
liabilities, including expenses payable or accrued) by the number of shares of
the Fund outstanding at the time the determination is made. As of the date of
this Statement of Additional Information, the NYSE is open for trading every
weekday except for the following holidays (or the days on which they are
observed): New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It is
anticipated that the net asset value of each share of each Fund will remain
constant at $1.00 and, although no assurance can be given that they will be able
to do so on a continuing basis, as described below, the Funds and Portfolios
employ specific investment policies and procedures to accomplish this result.
The value of a 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 corresponding Fund is determined. The net asset value of
a Fund's investment in the corresponding Portfolio is equal to the Fund's pro
rata share of the total investment of the Fund and of other investors in the
Portfolio less the Fund's pro rata share of the Portfolio's liabilities.
The securities held by a Fund or Portfolio are valued at their
amortized cost. Amortized cost valuation involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium. If fluctuating interest rates cause the market value of the
securities held by the Fund or Portfolio to deviate more than 1/2 of 1% from
their value determined on the basis of amortized cost, the Fund or Portfolio's
Board of Trustees will consider whether any action should be initiated, as
described in the following paragraph. Although the amortized cost method
provides certainty in valuation, it may result in periods during which the
stated value of an instrument is higher or lower than the price the Fund or
Portfolio would receive if the instrument were sold.
Pursuant to the rules of the Securities and Exchange Commission
("SEC"), the Trust's and the Portfolios' Boards of Trustees have established
procedures to stabilize the value of the Funds' and Portfolios' net assets
within 1/2 of 1% of the value determined on the basis of amortized cost. These
procedures include a review of the extent of any such deviation of net asset
value, based on available market rates. Should that deviation exceed 1/2 of 1%
for a Fund or a Portfolio, the Trust's or Portfolio's Board of Trustees will
consider whether any action should be initiated to eliminate or reduce material
dilution or other unfair results to investors in the Fund or Portfolio. Such
action may include withdrawal in kind, selling securities prior to maturity and
utilizing a net asset value as determined by using available market quotations.
The Funds and Portfolios maintain a dollar-weighted average maturity of 90 days
or less, do not purchase any instrument with a remaining maturity greater than
397 days or (in the case of Cash Reserves and Cash Reserves Portfolio) subject
to a repurchase agreement having a duration of greater than 397 days, limit
their investments, including repurchase agreements, to those U.S.
dollar-denominated instruments that are determined by the Adviser to present
minimal credit risks and comply with certain reporting and recordkeeping
procedures. The Trust and Portfolios also have established procedures to ensure
that securities purchased by the Funds and Portfolios meet high quality
criteria. (See "Investment Objectives, Policies and Restrictions -- Investment
Policies.")
Subject to compliance with applicable regulations, the Trust and the
Portfolios have each reserved the right to pay the redemption price of shares of
the Funds or beneficial interests in the Portfolios, 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 Portfolios may suspend the right of redemption or
postpone the date of payment for shares of a Fund or beneficial interests in a
Portfolio more than seven days during any period when (a) trading in the markets
the Fund or Portfolio normally utilizes is restricted, or an emergency, as
defined by the rules and regulations of the SEC, exists making disposal of the
Fund's or Portfolio's investments or determination of its net asset value not
reasonably practicable; (b) the NYSE 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 Trust and the Portfolios, 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 a Portfolio. Unless otherwise indicated below, the address of each
Trustee and officer is 6 St. James Avenue, Boston, Massachusetts. The address of
Cash Reserves Portfolio is Elizabethan Square, George Town, Grand Cayman,
British West Indies. The address of U.S. Treasury Reserves Portfolio is 6 St.
James Avenue, Boston, Massachusetts.
TRUSTEES OF THE TRUST
H. B. ALVORD; 73 -- Treasurer - Tax Collector, County of Los Angeles (retired,
March, 1984); Trustee, The 59 Wall Street Trust and The 59 Wall Street Fund,
Inc. (Registered Investment Companies). His address is P.O. Box 1812, Pebble
Beach, California.
PHILIP W. COOLIDGE; 44* -- President of the Trust and the Portfolios; Chairman,
Chief Executive Officer and President, Signature Financial Group, Inc. and The
Landmark Funds Broker-Dealer Services, Inc. (since December, 1988).
C. OSCAR MORONG, JR.; 60 -- 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). His address is 1385 Outlook Drive West,
Mountainside, New Jersey.
E. KIRBY WARREN; 61 -- Professor of Management, Graduate School of Business,
Columbia University (since 1987). His address is Columbia University, Graduate
School of Business, 725 Uris Hall, New York, New York.
TRUSTEES OF THE PORTFOLIOS
ELLIOTT J. BERV; 52 -- Chairman and Director, Catalyst, Inc. (Management
Consultants) (since August, 1992); President, Chief Operating Officer and
Director, Deven International, Inc. (International Consultants) (June, 1991 to
July, 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; 44* -- President of the Trust and the Portfolios; Chairman,
Chief Executive Officer and President, Signature Financial Group, Inc. and The
Landmark Funds Broker-Dealer Services, Inc. (since December, 1988).
MARK T. FINN; 52 -- 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.
WALTER E. ROBB, III; 69 -- 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 PORTFOLIOS
PHILIP W. COOLIDGE; 44* -- President of the Trust and the Portfolios; Chairman,
Chief Executive Officer and President, Signature Financial Group, Inc., and The
Landmark Funds Broker-Dealer Services, Inc. (since December, 1988).
DAVID G. DANIELSON; 30* -- Assistant Treasurer of the Trust and the Portfolios;
Assistant Manager, Signature Financial Group, Inc. since May 1991; Graduate
Student, Northeastern University from April 1990 to March 1991.
JOHN R. ELDER; 47* -- Treasurer of the Trust and the Portfolios; Vice President,
Signature Financial Group, Inc. (since April 1995); Treasurer, Phoenix Family of
Mutual Funds (Phoenix Home Life Mutual Insurance Company) (from 1983 to March
1995).
LINDA T. GIBSON; 30* -- Assistant Secretary of the Trust and the Portfolios;
Legal Counsel, Signature Financial Group, Inc. (since June 1991); law student,
Boston University School of Law (from September 1989 to May 1992); Product
Manager, Signature Financial Group, Inc. (January 1989 to September 1989).
SUSAN JAKUBOSKI; 31* -- Vice President, Assistant Treasurer and Assistant
Secretary of Cash Reserves Portfolio and Assistant Secretary of the Trust (since
August, 1994); Manager, Signature Financial Group (Cayman) Ltd. (since August,
1994); Senior Fund Administrator, Signature Financial Group, Inc. (since August,
1994); Assistant Treasurer, Signature Broker-Dealer Services, Inc. (since
September, 1994); Fund Compliance Administrator, Concord Financial Group
(November, 1990 to August, 1994); Senior Fund Accountant, Neuberger & Berman
Management, Inc. (from February, 1988 to November, 1990); Customer Service
Representative, I.B.J. Schroder (prior to 1988). Her address is Elizabethan
Square, George Town, Grand Cayman, Cayman Islands, BWI.
JAMES S. LELKO; 30* -- Assistant Treasurer of the Trust and the Portfolios;
Assistant Manager, Signature Financial Group, Inc. since January 1993; Senior
Tax Compliance Accountant, Putnam Companies since prior to December 1992.
THOMAS M. LENZ; 37* -- Secretary of the Trust and the Portfolios; Vice President
and Associate General Counsel, Signature Financial Group, Inc. (since November
1989); Attorney, Ropes & Gray (September 1984 to November 1989).
MOLLY S. MUGLER; 44* -- Assistant Secretary of the Trust and the Portfolios;
Legal Counsel and Assistant Secretary, Signature Financial Group, Inc. (since
December, 1988); Assistant Secretary, The Landmark Funds Broker-Dealer Services,
Inc. (since December, 1988).
BARBARA M. O'DETTE; 36* -- Assistant Treasurer of the Trust and the Portfolios;
Assistant Treasurer, Signature Financial Group, Inc. and The Landmark Funds
Broker-Dealer Services, Inc. (since December, 1988).
ANDRES E. SALDANA; 33* -- Assistant Secretary of the Trust and the Portfolios;
Legal Counsel and Assistant Secretary, Signature Financial Group, Inc. since
November 1992; Attorney, Ropes & Gray from September 1990 to November 1992.
DANIEL E. SHEA; 33* -- Assistant Treasurer of the Trust and the Portfolios;
Assistant Manager of Fund Administration, Signature Financial Group, Inc. since
November 1993; Supervisor and Senior Technical Advisor, Putnam Investments since
prior to 1990.
The Trustees and officers of the Trust and the Portfolios also hold
comparable positions with certain other funds for which LFBDS or an affiliate
serves as the distributor or administrator.
<TABLE>
<CAPTION>
TRUSTEES COMPENSATION TABLE
AGGREGATE AGGREGATE
COMPENSATION FROM COMPENSATION FROM TOTAL COMPENSATION
LANDMARK CASH LANDMARK U.S. FROM THE TRUSTS AND
TRUSTEE RESERVES(1) TREASURY RESERVES(1) COMPLEX(2)
<S> <C> <C> <C>
H.B. Alvord $7,026.83 $3,274.48 $40,000.00
Philip W. Coolidge 0 0 0
C. Oscar Morong, Jr. $7,997.02 $3,672.28 $44,500.00
E. Kirby Warren $7,997.02 $3,672.28 $44,500.00
- -----------------------
(1) For the fiscal year ended August 31, 1995.
(2) Information relates to the fiscal year ended August 31, 1995. Messrs. Alvord, Coolidge, Finn, Morong and
Warren are trustees of 12, 28, 12 and 12 Funds, respectively, of the Landmark Family of Funds.
</TABLE>
As of December 15, 1995, all Trustees and officers as a group owned
less than 1% of each Fund's outstanding shares. As of the same date, more than
95% of the outstanding shares of each Fund were held of record by Citibank, N.A.
or an affiliate, as a Shareholder Servicing Agent of the Funds, for the accounts
of their respective clients.
The Declaration of Trust of each of the Trust and the Portfolios
provides that the Trust or such Portfolio, as the case may be, 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 such Portfolio, as the case may be, unless, as to
liability to the Trust or such Portfolio or its 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 such Portfolio, 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
such Portfolio, 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 each Portfolio pursuant to separate
investment advisory agreements (the "Advisory Agreements"). Subject to such
policies as the Board of Trustees of the Portfolio may determine, the Adviser
manages the securities of each Portfolio and makes investment decisions for each
Portfolio. The Adviser furnishes at its own expense all services, facilities and
personnel necessary in connection with managing each Portfolio's investments and
effecting securities transactions for each Portfolio. Each of the Advisory
Agreements will continue in effect as long as such continuance is specifically
approved at least annually by the Board of Trustees of the applicable Portfolio
or by a vote of a majority of the outstanding voting securities of the
applicable Portfolio, and, in either case, by a majority of the Trustees of the
applicable Portfolio who are not parties to such Advisory Agreement or
interested persons of any such party, at a meeting called for the purpose of
voting on the Advisory Agreements.
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 applicable
Portfolio when authorized either by a vote of a majority of the outstanding
voting securities of the applicable Portfolio or by a vote of a majority of the
Board of Trustees of the applicable Portfolio, 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 of security transactions for the applicable
Portfolio, 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.
Cash Reserves Portfolio: For the fiscal years ended August 31, 1993, 1994 and
1995, the fees paid to Citibank under the Advisory Agreement were $2,108,642,
$1,806,314 and $4,097,854, respectively (of which $943,419 and $2,306,161 were
voluntarily waived for the years ended August 31, 1994 and 1995, respectively).
U.S. Treasury Reserves Portfolio: For the fiscal year ended December 31, 1992
and the eight-month period ended August 31, 1993, the fees paid to Citibank
under the Advisory Agreement were $933,117 and $570,108, respectively. For the
fiscal years ended August 31, 1994 and 1995, the fees payable to Citibank under
the Advisory Agreement were $850,924 and $1,148,418 (of which $506,109 and
$753,105 were voluntarily waived).
ADMINISTRATORS
Pursuant to Administrative Services Agreements (the "Administrative
Services Agreements"), LFBDS provides the Trust and U.S. Treasury Reserves
Portfolio, and SFG provides Cash Reserves Portfolio, with general office
facilities, and LFBDS supervises the overall administration of the Trust and
U.S. Treasury Reserves Portfolio and SFG supervises the overall administration
of Cash Reserves Portfolio, including, among other responsibilities, the
negotiation of contracts and fees with, and the monitoring of performance and
billings of, the independent contractors and agents of the Trust and the
Portfolios; the preparation and filing of all documents required for compliance
by the Trust and the Portfolios with applicable laws and regulations; and
arranging for the maintenance of books and records of the Trust and the
Portfolios. LFBDS and SFG provide persons satisfactory to the Board of Trustees
of the Trust and the Portfolios to serve as Trustees and officers of the Trust
and the Portfolios. Such Trustees and officers may be directors, officers or
employees of LFBDS, SFG or their affiliates.
The Prospectus contains a description of the fees payable to LFBDS and
SFG under the Administrative Services Agreements.
Cash Reserves: For the fiscal years ended August 31, 1993, 1994 and 1995, the
fees paid or payable to LFBDS from the Fund under the Administrative Services
Agreement and a prior administrative services agreement with the Trust were
$701,335, $1,146,206 and $1,566,336 (of which $14,759 and $52,077 were
voluntarily waived in 1993 and 1994). For the fiscal years ended August 31,
1993, the fee paid or payable to LFBDS under a prior administrative services
agreement with Cash Reserves Portfolio was $702,881 (of which $596,227 was
voluntarily waived). For the fiscal years ended August 31, 1994 and 1995, the
fees paid or payable to SFG under the Administrative Services Agreement with
Cash Reserves Portfolio were $602,105 and $1,365,951 (all of which were
voluntarily waived).
U.S. Treasury Reserves: For the fiscal year ended December 31, 1992, the fee
paid to LFBDS from the Fund under a prior administrative services agreement with
the Trust was $246,286. For the eight-month period ended August 31, 1993 and for
the fiscal years ended August 31, 1994 and 1995, the fees paid to LFBDS from the
Fund under the Administrative Services Agreement with the Trust were $302,379
(of which $34,314 was voluntarily waived), $577,750 (of which $49,087 was
voluntarily waived), and $561,420 (none of which was waived). For the fiscal
year ended December 31, 1992, the fee payable to LFBDS under the Administrative
Services Agreement with the Portfolio was $311,039 (of which $72,119 was
voluntarily waived). For the fiscal year ended December 31, 1992, the
eight-month period ended August 31, 1993 and for the fiscal years ended August
31, 1994 and 1995, the fees payable to LFBDS under the Administrative Services
Agreement with the Portfolio were $311,039 (of which $72,119 was voluntarily
waived), $190,036 (all of which was voluntarily waived), $283,642 (all of which
was voluntarily waived) and $382,806 (all of which was voluntarily waived).
The Administrative Services Agreement with the Trust acknowledges that
the names "Landmark" and "Landmark Funds" are the property of LFBDS and provides
that if LFBDS ceases to serve as the administrator of the Trust, the Trust and
the Funds will change their respective names so as to delete the word "Landmark"
or the words "Landmark Funds". The Administrative Services Agreement with the
Trust also provides that LFBDS may render administrative services to others and
may permit other investment companies in addition to the Trust to use the word
"Landmark" or the words "Landmark Funds" in their names.
The Administrative Services Agreement with the Trust continues in
effect as to a Fund if such continuance is specifically approved at least
annually by the Trust's Board of Trustees or by a vote of a majority of the
outstanding voting securities of such Fund and, in either case, by a majority of
the Trustees of the Trust who are not interested parties of the Trust or LFBDS.
The Administrative Services Agreement with the Trust terminates automatically if
it is assigned and may be terminated as to a Fund by the Trust without penalty
by vote of a majority of the outstanding voting securities of the Fund 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
LFBDS 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.
LFBDS has agreed to reimburse the Funds for their operating expenses
(exclusive of interest, taxes, brokerage, and extraordinary expenses) which in
any year exceed the limits prescribed by any state in which the Funds' shares
are qualified for sale. The expenses incurred by the Funds for distribution
purposes pursuant to the Trust's Distribution Plans are included within such
operating expenses only to the extent required by any state in which the Funds'
shares are qualified for sale. The Trust may elect not to qualify the Funds'
shares for sale in every state. The Trust believes that currently the most
restrictive expense ratio limitation imposed by any state is 2 1/2% of the first
$30 million of a Fund's average net assets for its then-current fiscal year, 2%
of the next $70 million of such assets, and 1 1/2% of such assets in excess of
$100 million. For the purpose of this obligation to reimburse expenses, the
Funds' annual expenses are estimated and accrued daily, and any appropriate
estimated payments will be made by LFBDS. Subject to the obligation of LFBDS to
reimburse the Funds for their excess expenses as described above, the Trust has,
under its Administrative Services Agreement, confirmed its obligation for
payment of all other expenses of the Funds.
The Administrative Services Agreements with the Portfolios provide that
LFBDS or SFG, as the case may be, may render administrative services to others.
The Administrative Services Agreement with each of the Portfolios 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 or by either
party on not more than 60 days' nor less than 30 days' written notice. The
Administrative Services Agreement with each of the Portfolios also provides that
neither LFBDS or SFG, as the case may be, 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, 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.
LFBDS and SFG are wholly-owned subsidiaries of Signature Financial
Group, Inc.
Pursuant to Sub-Administrative Services Agreements (the
"Sub-Administrative Agreements"), Citibank performs such sub-administrative
duties for the Trust and the Portfolios as are from time to time agreed upon by
Citibank and, as the case may be, LFBDS or SFG. Citibank's sub-administrative
duties may include providing equipment and clerical personnel necessary for
maintaining the organization of the Trust and the Portfolios, participation in
preparation of documents required for compliance by the Trust and the Portfolios
with applicable laws and regulations, preparation of certain documents in
connection with meetings of Trustees and shareholders of the Trust and
Portfolios, and other functions which would otherwise be performed by LFBDS as
set forth above. For performing such sub-administrative services, Citibank
receives such compensation as is from time to time agreed upon by Citibank and,
as the case may be, LFBDS or SFG not in excess of the amount paid to LFBDS or
SFG for its services under the applicable Administrative Services Agreement. All
such compensation is paid by LFBDS or SFG, as the case may be.
DISTRIBUTOR
The Trust has adopted Distribution Plans (the "Distribution Plans") on
behalf of itself and the Funds in accordance with Rule 12b-1 under the 1940 Act
after having concluded that there is a reasonable likelihood that the
Distribution Plans will benefit the Funds and their shareholders. Cash Reserves
has both Class A Shares and Class B Shares. U.S. Treasury Reserves has a single
class of shares. The Distribution Plan with respect to the Class A shares of
Cash Reserves and the shares of U.S. Treasury Reserves provides that the Trust
shall pay a distribution fee to the Distributor at an annual rate not to exceed
0.10% the average daily net assets of U.S. Treasury Reserves and of the average
daily net assets represented by the Class A shares of Cash Reserves (exclusive
of any advertising expenses incurred by the Distributor in connection with the
sale of shares of each Fund). The Distribution Plan with respect to Class B
shares of Cash Reserves provides that the Fund will pay the Distributor a
distribution fee at annual rate not to exceed 0.75% of the average daily net
assets represented by the Class B shares. The Distributor may use all or any
portion of such fee to pay for Fund expenses of printing prospectuses and
reports used for sales purposes, expenses of the preparation and printing of
sales literature and other distribution-related expenses.
The Distribution Plan with respect to the Class A shares of Cash
Reserves and the shares of U.S. Treasury Reserves also permits each Fund to pay
the Distributor an additional fee (not to exceed 0.10% per annum of the average
daily net assets of U.S. Treasury Reserves and of the average daily net assets
represented by the Class A shares of Cash Reserves) in anticipation of, or as
reimbursement for, print or electronic media advertising expenses incurred in
connection with the sale of Class A shares of Cash Reserves and shares of U.S.
Treasury Reserves. The Distribution Plan for Class B shares of Cash Reserves
also provides that Cash Reserves may pay the Distributor a monthly service fee
at an annual rate not to exceed 0.25% of the average daily net assets
represented by the Class B shares. However, Cash Reserves has not entered into
any agreement to pay any such service fee to the Distributor. No payments under
the Distribution Plans are made to Shareholder Servicing Agents although
Shareholder Servicing Agents receive payments under the Administrative Services
Plan referred to below.
Each Distribution Plan continues 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 Trust's 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
("Qualified Trustees"). Each Distribution Plan requires that the Trust and the
Distributor shall provide to the Board of Trustees, and the Board of Trustees
shall 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 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 the
Fund. The Distribution Plans 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 voting securities of that Fund and may not be
materially amended in any case without a vote of the majority of both the
Trustees and the 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, LFBDS acts as the agent of
the Funds in connection with the offering of shares of the Funds pursuant to
Distribution Agreements (the "Distribution Agreements"). After the prospectus
and periodic reports have been prepared, set in type and mailed to existing
shareholders, the Distributor pays for the printing and distribution of copies
of the prospectuses and periodic reports which are used in connection with the
offering of shares of the each of the Funds to prospective investors. The
Prospectus contains a description of fees payable to the Distributor under the
Distribution Agreements.
Cash Reserves: For the fiscal years ended August 31, 1993, 1994 and 1995, the
fees paid from the Fund to the Distributor under the Distribution Agreement were
$233,778, $229,241 and $313,267, respectively, of which no portion was
applicable to print or electronic media advertising.
U.S. Treasury Reserves: For the eight-month period ended August 31, 1993 and for
the fiscal years ended August 31, 1994 and 1995, the fees paid from the Fund to
the Distributor under the Distribution Agreement were $100,793, $115,550 and
$112,284 (of which $3,435, $10,186 and $7,800 were voluntarily waived,
respectively, and none of which was applicable to print or electronic media
advertising).
SHAREHOLDER SERVICING AGENTS, TRANSFER AGENT AND CUSTODIAN
The Trust has adopted an Administrative Services Plan (the
"Administrative Plan") which 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 Administrative Plan, the total of the fees
paid to the Administrator and Shareholder Servicing Agents from each Fund and
the distribution fee paid to the Distributor from each Fund (other than fees
paid with respect to Class B shares and other than any fee concerning electronic
or other media advertising) may not exceed 0.70% of that Fund's average daily
net assets on an annualized basis for the Fund's then-current fiscal year.
Within this overall limitation, individual fees may vary. The Administrative
Plan continues 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 Trust's Trustees who are not "interested persons" of the Trust and who have
no direct or indirect financial interest in the operation of the Administrative
Plan or in any agreement related to such Plan ("Qualified Trustees"). The
Administrative Plan requires that at least quarterly the Trust provide to the
Trust's Board of Trustees and the Trust's Board of Trustees review a written
report of the amounts expended (and the purposes therefor) under the
Administrative Plan. The Administrative Plan may be terminated with respect to a
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 the Fund. The
Administrative Plan 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 voting securities of the Fund and may not be materially amended in
any case without a vote of the majority of both the Trust's Trustees and the
Trust's 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 and a Custodian Agreement with State Street Bank
and Trust Company ("State Street") pursuant to which State Street (or its
affiliate State Street Canada, Inc.) acts as transfer agent and custodian for
the Trust. For additional information, including a description of fees paid to
the Shareholder Servicing Agents under the Servicing Agreements, see
"Shareholder Servicing Agents" and "Transfer Agent, Custodian and Fund
Accountant" in the Prospectus. For the fiscal years ended August 31, 1994 and
1995, aggregate fees payable from Cash Reserves to Shareholder Servicing Agents
under the Servicing Agreement were $1,833,930 and $2,506,138, respectively (of
which $687,723 and $939,802, respectively, were voluntarily waived). For the
fiscal years ended August 31, 1994 and 1995, aggregate fees payable from U.S.
Treasury Reserves to Shareholder Servicing Agents under the Servicing Agreement
were $924,400 and $898,272, respectively (of which $346,650 and $336,852,
respectively, were voluntarily waived).
The Portfolios have also adopted Administrative Services Plans (the
"Portfolio Administrative Plans") which provide that the Portfolios 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 Plans, the administrative services fee payable to
either LFBDS or SFG, as the case may be, may not exceed 0.05% of a Portfolio's
average daily net assets on an annualized basis for its then-current fiscal
year. Each Portfolio Administrative Plan continues in effect if such continuance
is specifically approved at least annually by a vote of both a majority of the
applicable Portfolio's Trustees and a majority of the Portfolio'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 ("Qualified Trustees"). Each Portfolio
Administrative Plan requires that the applicable Portfolio 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 Portfolio
Administrative Plan. Each Portfolio Administrative Plan may be terminated at any
time by a vote of a majority of the Portfolio's Qualified Trustees or by a vote
of a majority of the outstanding voting securities of the applicable Portfolio.
Neither Portfolio Administrative Plan may be amended to increase materially the
amount of permitted expenses thereunder without the approval of a majority of
the outstanding voting securities of the applicable Portfolio and may not be
materially amended in any case without a vote of the majority of both the
Portfolio's Trustees and the Portfolio's Qualified Trustees.
Each Portfolio has entered into a Transfer Agency and Service Agreement
and a Custodian Agreement with State Street pursuant to which State Street (or
its affiliate State Street Canada, Inc.) acts as transfer agent and custodian
and performs fund accounting services for the Portfolios.
6. PORTFOLIO TRANSACTIONS
The Portfolios' 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. 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 the Adviser in its best judgment and in a manner deemed
to be in the best interest of investors in the applicable 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, series or investment company that is or may in the
future become managed by the Adviser or its affiliates. If, however, a Portfolio
and other investment companies, series or accounts managed by the Adviser are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may 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 the Portfolio or the size of the position obtainable for the
Portfolio. In addition, when purchases or sales of the same security for a
Portfolio and for other investment companies or series managed by the Adviser
occur contemporaneously, the purchase or sale orders may be aggregated in order
to obtain any price advantages available to large denomination purchases or
sales.
No portfolio transactions are executed with the Adviser, or with any
affiliate of the Adviser, acting either as principal or as broker.
7. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trust's Board of 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.
Currently, the Funds are the only two series of shares of the Trust, one of
which, Cash Reserves, is divided into two classes. Each share of each class of
Cash Reserves represents an equal proportionate interest in the Fund with each
other share of that class. Each share of U.S. Treasury Reserves represents an
equal proportionate interest in the Fund with each other share of U.S. Treasury
Reserves. Upon liquidation or dissolution of a Fund, the Fund's shareholders are
entitled to share pro rata in the Fund's net assets available for distribution
to its shareholders. The Trust reserves the right to create and issue additional
series and classes of shares. Shares of each series participate equally in the
earnings, dividends and distribution of net assets of the particular series upon
the 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 and has no current
intention to hold annual meetings of shareholders but the Trust will hold
special meetings of a Fund's shareholders when in the judgment of the Trust's
Trustees it is necessary or desirable to submit matters for a shareholder vote.
Shareholders have under certain circumstances (e.g., upon 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 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 its
outstanding shares.
The Trust's Declaration of Trust provides that, at any meeting of
shareholders of the Trust or of any series of the Trust, 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 it 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 the 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 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 also provides that the Trust shall 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 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.
Each Portfolio is organized as a trust under the laws of the State of
New York. Each Portfolio's Declaration of Trust provides that investors in the
Portfolio (e.g., other investment companies (including the corresponding Fund),
insurance company separate accounts and common and commingled trust funds) are
each liable for all obligations of the Portfolio. However, the risk of a Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the applicable
Portfolio itself was unable to meet its obligations. It is not expected that the
liabilities of either Portfolio would ever exceed its assets.
Each investor in a Portfolio, including the corresponding Fund, may add
to or reduce its investment in the Portfolio on each business day. At 3:00 p.m.,
Eastern time, for Cash Reserves Portfolio, and 12:00 noon, Eastern time, for
U.S. Treasury Reserves Portfolio, on each such business day, the value of each
investor's interest in the Portfolio is determined by multiplying the net asset
value of the Portfolio by the percentage representing that investor's share of
the aggregate beneficial interests in the Portfolio effective for that day. Any
additions or withdrawals, which 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 3:00 p.m. Eastern time, for Cash Reserves Portfolio, and 12:00 noon,
Eastern time, for U. S. Treasury Reserves Portfolio, 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
3:00 p.m., Eastern time, for Cash Reserves Portfolio, and 12:00 noon, Eastern
time, for U.S. Treasury Reserves Portfolio, 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 3:00 p.m., Eastern time, for Cash
Reserves Portfolio, and 12:00 noon, Eastern time, for U.S. Treasury Reserves
Portfolio, on the following business day of the Portfolio.
8. CERTAIN ADDITIONAL TAX MATTERS
Each of the Funds 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 and
holding period of the Fund's portfolio assets. Provided all such requirements
are met and all of a Fund's net investment income and realized capital gains are
distributed to shareholders in accordance with the timing requirements imposed
by the Code, no federal income or excise taxes will be required to be paid by
the Fund. If a 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. Each of the Portfolios believes that it will
not be required to pay any federal income or excise taxes.
Investment income received by Cash Reserves from non-U.S. investments
may be subject to foreign income taxes withheld at the source; Cash Reserves
does not expect to be able to pass through to shareholders any foreign tax
credits with respect to those foreign taxes. The United States has entered into
tax treaties with many foreign countries that may entitle Cash Reserves to a
reduced rate of tax or an exemption from tax on these investments. It is not
possible to determine Cash Reserves' effective rate of foreign tax in advance
since that rate depends upon the proportion of the Cash Reserves Portfolio's
assets ultimately invested within various countries.
Because each Fund expects to earn primarily interest income, it is
expected that no Fund distributions will qualify for the dividends-received
deduction for corporations.
9. INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Price Waterhouse LLP and Price Waterhouse are the independent and
chartered accountants for Cash Reserves and Cash Reserves Portfolio,
respectively, providing audit services and assistance and consultation with
respect to the preparation of filings with the SEC. Deloitte & Touche LLP were
the independent certified public accountants for Cash Reserves and Cash Reserves
Portfolio through December 31, 1993. The selection of Price Waterhouse LLP and
Price Waterhouse was based on management's decision with respect to certain
areas of expertise and service capabilities. There was no disagreement between
the Fund, the Portfolio and Deloitte & Touche LLP with respect to the accounting
and audit services provided by such firm. Deloitte & Touche LLP are the
independent certified public accountants for U.S. Treasury Reserves and U.S.
Treasury Reserves Portfolio, providing audit services and assistance and
consultation with respect to the preparation of filings with the SEC.
The audited financial statements of Cash Reserves (Statement of Assets
and Liabilities at August 31, 1995, Statement of Operations for the year ended
August 31, 1995, Statement of Changes in Net Assets for the years ended August
31, 1995 and August 31, 1994, Financial Highlights for each of the years in the
five-year period ended August 31, 1995, Notes to Financial Statements and
Independent Auditors' Report) and of Cash Reserves Portfolio (Portfolio of
Investments at August 31, 1995, Statement of Assets and Liabilities at August
31, 1995, Statement of Operations for the year ended August 31, 1995, Statement
of Changes in Net Assets for the years ended August 31, 1995 and August 31,
1994, Financial Highlights for each of the years in the five-year period ended
August 31, 1995, Notes to Financial Statements and Independent Auditors'
Report), each of which is included in the Annual Report to Shareholders of Cash
Reserves, are incorporated by reference into this Statement of Additional
Information and have been so incorporated in reliance upon the reports of Price
Waterhouse LLP and Price Waterhouse (for the fiscal years ended August 31, 1995
and 1994) and Deloitte & Touche LLP (for periods prior to the fiscal year ended
August 31, 1994).
The audited financial statements of U.S. Treasury Reserves (Statement
of Assets and Liabilities at August 31, 1995, Statement of Operations for the
year ended August 31, 1995, Statement of Changes in Net Assets for the years
ended August 31, 1995 and 1994, Financial Highlights for each of the years in
the two-year period ended August 31, 1995, the eight months ended August 31,
1993, the year ended December 31, 1992 and the period from May 3, 1991
(commencement of operations) to December 31, 1991, and the Notes to Financial
Statements and Independent Auditors' Report) and of U.S. Treasury Reserves
Portfolio (Portfolio of Investments at August 31, 1995, Statement of Assets and
Liabilities at August 31, 1995, Statement of Operations for the year ended
August 31, 1995, Statement of Changes in Net Assets for the years ended August
31, 1995 and 1994, and the Financial Highlights for the years ended August 31,
1995 and 1994, the eight months ended August 31, 1993, the year ended December
31, 1992 and the period from March 1, 1991 (commencement of operations) to
December 31, 1991, the Notes to Financial Statements and Independent Auditors'
Report), each of which is included in the Annual Report to Shareholders of U.S.
Treasury Reserves, 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 certified public accountants, as experts
in accounting and auditing.
A copy of each of the Annual Reports accompanies this Statement of
Additional Information.
<PAGE>
SHAREHOLDER SERVICING AGENTS
FOR CITIBANK NEW YORK RETAIL BANKING AND
BUSINESS AND PROFESSIONAL CUSTOMERS:
Citibank, N.A.
450 West 33rd Street, New York, NY 10001
(212) 564-3456 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 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,
Registered Representative or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY l0043
(212) 559-7117
FOR NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100
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) 736-8170 in New York City
<PAGE>
LANDMARK CASH RESERVES
LANDMARK U.S. TREASURY RESERVES
TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge, President*
H.B. Alvord
E. Kirby Warren
SECRETARY
Thomas M. Lenz*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
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INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue, Boston, MA 02116
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
(LANDMARK CASH RESERVES)
Price Waterhouse LLP
160 Federal Street, Boston, MA 02110
(LANDMARK U.S. TREASURY RESERVES)
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham, Dana & Gould
150 Federal Street, Boston, MA 02110
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SHAREHOLDER SERVICING AGENTS
(See Inside of Cover)
