<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION APRIL 11, 1996
File Nos. 2-54750
and 811-2597
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 33 X
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 27 X
MASTER RESERVES TRUST
(Exact name of Registrant as specified in Charter)
200 Berkeley Street, Boston, Massachusetts 02116-5034
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code:
(617) 338-3200
Rosemary D. Van Antwerp, Esq., 200 Berkeley Street,
Boston, MA 02116-5034
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b).
X on April 19, 1996 pursuant to paragraph (b).
60 days after filing pursuant to paragraph (a)(i).
on (date) pursuant to paragraph (a)(i).
75 days after filing pursuant to paragraph (a)(ii).
on (date) pursuant to paragraph (a)(ii).
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has registered an indefinite amount of its shares under the Securities Act of
1933. A Rule 24f-2 Notice for Registrant's last fiscal year was filed on
February 28, 1996.
<PAGE>
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Proposed Proposed
Title of Share Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being Being Price Per Offering Registration
Registered Registered Unit* Price** Fee
- ---------------------------------------------------------------------------
Shares of
Beneficial
Interest 119,541,960 $1.00 $290,000 $100
No Par Value
- ---------------------------------------------------------------------------
* Computed under Rule 457(d) on the basis of the offering price per share at the
close of business on March 27, 1996.
** The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940. 119,251,960 shares of the
Fund were redeemed during its fiscal year ended December 31, 1995. All of such
shares are being used for a reduction in this filing.
<PAGE>
MASTER RESERVES TRUST
CONTENTS OF
POST-EFFECTIVE AMENDMENT NO. 33
to
REGISTRATION STATEMENT
This Post-Effective Amendment No. 33 to Registration Statement No.
2-54750/811-2597 consists of the following pages, items of information, and
documents.
The Facing Sheet
The Contents Page
The Cross-Reference Sheet
PART A
Prospectus
PART B
Statement of Additional Information
PART C
PART C - OTHER INFORMATION - ITEM 24(a) and (b)
Financial Statements
Independent Auditors' Report
Listing of Exhibits
PART C - OTHER INFORMATION - ITEMS 25-32-SIGNATURE PAGES
Number of Security Holders
Indemnification
Business and Other Connections
Principal Underwriter
Location of Accounts and Records
Signatures
Exhibits (including Powers of Attorney)
<PAGE>
MASTER RESERVES TRUST
Cross-Reference Sheet pursuant to Rules 404 and 495 under the Securities Act of
1933.
Items in
Part A of
Form N-1A Prospectus Caption
1 Cover Page
2 Fee Table
3 Financial Highlights
Performance Data
4 Cover Page
The Fund
Investment Objective and Policies
Investment Restrictions
Additional Investment Information
5 Portfolio Management and Expenses
Additional Information
5A Not applicable
6 The Fund
Dividends and Taxes
Fund Shares
Shareholder Services
Pricing Shares
7 How to Buy Shares
Shareholder Services
8 How to Redeem Shares
9 Not applicable
Items in
Part B of
Form N-1A Statement of Additional Information Caption
10 Cover Page
11 Table of Contents
12 Not applicable
<PAGE>
MASTER RESERVES TRUST
Cross-Reference Sheet continued.
Items in
Part B of
Form N-1A Statement of Additional Information Caption
13 Fund Investment Objective and Policies
Investment Restrictions
Appendix
14 Trustees and Officers
15 Additional Information
16 Investment Adviser
Distributor
Additional Information
17 Brokerage
18 Declaration of Trust
19 Valuation and Redemption of Securities
20 Dividends and Taxes
21 Distributor
22 Yield Quotations
23 Financial Statements
<PAGE>
MASTER RESERVES TRUST
PART A
PROSPECTUS
<PAGE>
- ------------------------------------------------------------------------------
PROSPECTUS APRIL 19, 1996
- ------------------------------------------------------------------------------
MASTER RESERVES TRUST
200 Berkeley Street, Boston, Massachusetts 02116-5034
Call toll free 1-800-343-2138
- ------------------------------------------------------------------------------
Master Reserves Trust (the "Fund") is a mutual fund that seeks maximum current
income while preserving capital. Currently, the Fund offers institutional and
other substantial investors a money market portfolio ("Money Market Portfolio I"
or the "Portfolio"). Money Market Portfolio I is a "multiple user" portfolio,
i.e., a portfolio available to more than one investor.
SHARES OF THE FUND ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
WHILE THE FUND INTENDS TO MAINTAIN A NET ASSET VALUE PER SHARE OF $1.00, THERE
IS NO ASSURANCE THAT IT WILL BE ABLE TO DO SO.
This prospectus relates only to the Fund and the Portfolio and summarizes
information about the Fund and the Portfolio that a prospective investor should
know before investing. Investors should read and retain this prospectus for
future reference.
Additional information about the Fund and the Portfolio is contained in a
statement of additional information dated April 19, 1996, which has been filed
with the Securities and Exchange Commission and is incorporated by reference
into this prospectus. For a free copy, or for other information about the Fund
and the Portfolio, write to the address or call the telephone number listed
above.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
TABLE OF CONTENTS
- ---------------------------------------------------------------------------------------------------------------
Page Page
<S> <C> <C> <C>
Fee Table .......................................... 2 How to Buy Shares .............................. 8
Financial Highlights ............................... 3 How to Redeem Shares ........................... 9
The Fund ........................................... 3 Shareholder Services ........................... 10
Investment Objective and Policies .................. 3 Performance Data ............................... 11
Investment Restrictions ............................ 5 Fund Shares .................................... 11
Pricing Shares ..................................... 5 Additional Information ......................... 11
Dividends and Taxes ................................ 6 Additional Investment Information .............. A-1
Portfolio Management and Expenses .................. 7
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
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.
- ------------------------------------------------------------------------------
<PAGE>
MASTER RESERVES TRUST
FEE TABLE
FOR
MONEY MARKET PORTFOLIO I
Set forth below is the fee table for the Portfolio currently offered by the
Fund. The purpose of the fee table is to assist investors in understanding the
costs and expenses that an investor in the Portfolio will bear directly or
indirectly. For more complete descriptions of the various costs and expenses,
see "Portfolio Management and Expenses" in this prospectus.
SHAREHOLDER TRANSACTION EXPENSES
There are no shareholder transaction expenses associated with this
investment.
<TABLE>
<CAPTION>
ANNUAL PORTFOLIO OPERATING EXPENSES<F1>
<S> <C>
(as a percentage of average net assets)
Management Fee .......................................... 0.09%
Other Expenses .......................................... 0.00%
-----
Total Portfolio Operating Expenses ...................... 0.09%
=====
<CAPTION>
EXAMPLE<F2>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each period: ................... $1 $3 $5 $12
AMOUNTS SHOWN IN THE FEE TABLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<FN>
- --------
<F1> Expense ratios are for the Portfolio's fiscal year ended December 31, 1995.
Keystone Investment Management Company ("Keystone") has voluntarily limited
its advisory fee with respect to the Portfolio to an annual rate of 0.09%
of the Portfolio's average net assets. Keystone expects to maintain this
expense limitation on a calendar month by month basis. See "Portfolio
Expenses."
<F2> The Securities and Exchange Commission requires use of a 5% annual return
figure for purposes of this example. Actual return for the Portfolio may be
greater or less than 5%.
</FN>
</TABLE>
The Portfolio may be offered to customers of financial institutions that
offer a variety of services to their customers at varying fees. The fees
associated with such services, such as sweep, trustee, agency or custodian fees,
may have to be paid by customers in order to purchase Portfolio shares. Such
fees are not expected to be directly related to the Portfolio. Some fees,
however, such as those based on a bank customer's assets or income, may be
indirectly related to the Portfolio.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the year)
MONEY MARKET PORTFOLIO I
The following table contains important financial information relating to the
Portfolio and has been audited by KPMG Peat Marwick LLP, the Fund's independent
auditors. The table appears in the Fund's Annual Report and should be read in
conjunction with the Fund's financial statements and related notes, which also
appear, together with the independent auditors' report, in the Fund's Annual
Report. The Fund's financial statements, related notes, and independent
auditors' report are included in the statement of additional information.
Additional information about the Fund's performance is contained in its Annual
Report, which will be made available upon request and without charge.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ..... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
Net Investment Income .................. 0.057 0.042 0.032 0.037 0.059 0.079 0.089 0.073 0.064 0.066
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Less Distributions
Dividends from Net Investment Income ... (0.057) (0.042) (0.032) (0.037) (0.059) (0.079) (0.089) (0.073) (0.064) (0.066)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN ........................... 5.83% 4.23% 3.24% 3.76% 6.01% 8.27% 9.25% 7.57% 6.60% 6.76%
RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Net Investment Income ................ 5.83% 4.49% 3.23% 3.70% 5.90% 7.92% 9.24% 7.41% 6.51% 6.42%
Total Expenses ....................... 0.09% 0.10% 0.10% 0.19% 0.20% 0.26% 0.30% 0.25% 0.23% 0.24%
Net Assets, End of Year (thousands)..... $35,910 $30,314 $61,354 $205,818 $56,603 $67,682 $162,336 $280,142 $222,314 $187,845
</TABLE>
<PAGE>
- ------------------------------------------------------------------------------
THE FUND
- ------------------------------------------------------------------------------
The Fund is an open-end, diversified management investment company, commonly
known as a mutual fund. The Fund has been operating continuously since September
22, 1975, when it was created under Massachusetts law as a Massachusetts
business trust. The Fund is one of more than 30 funds managed or advised by
Keystone Investment Management Company (formerly Keystone Custodian Funds, Inc.)
("Keystone"), the Fund's investment adviser.
- ------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- ------------------------------------------------------------------------------
The Fund's investment objective is to provide shareholders with maximum
current income while preserving capital. To meet this objective, the Fund
currently offers only the Portfolio. Of course, there can be no assurance that
the Fund will achieve its investment objective since there is uncertainty in
every investment.
The Fund is designed for institutional and other substantial investors who
wish to keep temporary cash balances invested in money market instruments. Since
the Portfolio is fully diversified among many securities, investors may incur
less risk by investing in the Portfolio than by investing directly in a small
number of instruments. Investors also achieve liquidity since the Portfolio's
shares may be redeemed at any time. Furthermore, investors are relieved of the
administrative tasks of collecting income and reinvesting the proceeds of
matured securities and receive detailed records of their accounts.
The Portfolio invests in money market instruments maturing in 397 calendar
days or less and/or U.S. government securities maturing in 762 calendar days or
less and maintains an average dollar-weighted maturity of 90 days or less.
The Portfolio limits its investments, including repurchase agreements, to
those U.S. dollar-denominated instruments that Keystone determines present
minimal credit risks and are at the time of acquisition eligible securities
("Eligible Securities") as defined under Rule 2a-7 of the Investment Company Act
of 1940 (the "1940 Act"). Eligible Securities include (1) securities rated by
the requisite rating agencies at the date of investment in one of the two
highest short-term rating categories; (2) securities of issuers receiving such
rating with respect to other short-term debt securities; (3) and comparable
unrated securities. Requisite rating agencies means any two agencies that have
issued a rating with respect to a security or class of debt obligations of an
issuer or one rating agency if only one agency has issued a rating with respect
to such security or issuer. If the Portfolio purchases securities that are
unrated or that have been rated by a single rating agency, the purchase must be
approved or ratified by the Fund's Board of Trustees.
The short-term ratings are as follows: A-1 and A-2, the two highest ratings
given by Standard & Poor's Corporation ("S&P"); Prime-1 and Prime-2, the two
highest ratings given by Moody's Investors Service ("Moody's"); and F-1
and F-2, the two highest ratings given by Fitch Investors Service, Inc.
("Fitch").
While the Portfolio may purchase single rated or unrated securities, the Fund
anticipates that at least 95% of the Portfolio's assets will be invested in
instruments that at the date of investment are rated or deemed to be of
comparable quality to securities rated in the highest short-term rating
categories by any two rating agencies. The Portfolio will not invest more than
1% of its assets in securities rated in the second highest short-term rating
category issued by any one issuer. The Portfolio will not invest more than 5% of
its assets in securities rated in the second highest short-term rating category.
The Fund is presently authorized by the Board of Trustees to invest in
short-term municipal obligations. The Portfolio will only invest in short-term
municipal obligations when such investment is consistent with the Fund's
investment objective and the Portfolio's investment policies. The Board has also
authorized the purchase by the Fund of U.S. dollar-denominated obligations of
foreign branches of foreign banks when such investments otherwise satisfy the
investment criteria of the Fund.
The Portfolio invests in the following types of instruments: (1) commercial
paper, including master demand notes and loan participation agreements; (2)
obligations issued or guaranteed by the U.S. government or by any agency or
instrumentality of the U.S. government; (3) obligations (including U.S., Yankee
and Eurodollar certificates of deposit, time deposits and bankers' acceptances)
of domestic and foreign banks or savings and loan associations provided that (a)
at the time of investment, the depository institution or guarantor bank has at
least $1 billion in assets (as of the date of its most recently published
financial statements), or (b) the principal amount of the instrument is insured
in full by the Federal Deposit Insurance Corporation; (4) obligations that, at
the date of investment, are rated AA or better by S&P or Aa or better by
Moody's; and (5) repurchase agreements for any security listed above.
To the extent permitted by its investment policies, the Portfolio may invest
in restricted securities, including securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 (the "1933 Act"). Generally, Rule
144A establishes a safe harbor from the registration requirements of the 1933
Act for resales by large institutional investors of securities not publicly
traded in the U.S. The Portfolio may purchase Rule 144A securities when such
securities present an attractive investment opportunity and otherwise meet the
Portfolio's selection criteria. Keystone determines the liquidity of the
Portfolio's Rule 144A securities in accordance with guidelines adopted by the
Fund's Board of Trustees.
At the present time, the Fund cannot accurately predict exactly how the market
for Rule 144A securities will develop. A Rule 144A security that was readily
marketable upon purchase may subsequently become illiquid. In such an event, the
Board of Trustees will consider what action, if any, is appropriate.
Because interest rates on money market instruments fluctuate in response to
economic factors, the rates on short-term investments made by the Portfolio and
the daily dividend paid to investors will vary, rising or falling with
short-term rates generally. Also, yields from short-term securities may
frequently be lower than yields from longer term securities. In addition, the
value of the Portfolio's securities will fluctuate inversely with interest
rates, the amount of outstanding debt and other factors.
For a further explanation about the types of investments and investment
techniques available to the Portfolio, including the associated risks, please
refer to the description of such investments and investment techniques at the
back of this prospectus as well as the statement of additional information.
- ------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- ------------------------------------------------------------------------------
The Fund has adopted the fundamental restrictions summarized below, which may
not be changed without the vote of a majority (as defined in the 1940 Act) of
the Fund's outstanding shares. These restrictions and certain other fundamental
restrictions are set forth in detail in the statement of additional information.
Unless otherwise stated, all references to the Fund's assets are in terms of
current market value.
Generally, the Fund will not do the following: (1) invest more than 5% of its
assets in the securities of any single issuer except for securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities; (2) borrow
money, except that the Fund may borrow money from banks for extraordinary or
emergency purposes in amounts up to one-third (normally less than 5%) of its
total assets, including the amount borrowed, and such borrowings will be repaid
before additional investments are made; (3) pledge more than 15% of its total
assets to secure borrowings; and (4) purchase any security, other than U.S.
government securities, if as a result more than 25% of the Fund's total assets
would be invested in a single industry, except that the Fund may invest up to
100% of its assets in finance companies as a group, banks and bank holding
companies as a group and utility companies as a group.
Notwithstanding the more flexible limits set forth above, the Fund deems each
of its fundamental investment restrictions to apply to the investments of the
Portfolio. Moreover, notwithstanding the freedom reserved by the Fund to
concentrate all of its assets in finance companies, banks, bank holding
companies and utilities, the Portfolio (if permitted by its investment policies)
may invest up to 100% of its assets only in (1) securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities; and (2) instruments
issued by a domestic bank (including a foreign branch of a domestic bank for
which the investment risk associated with the securities issued by such branch
is the same as the investment risk associated with the securities issued by its
domestic parent as well as a U.S. branch of a foreign bank that is subject to
the same regulation as U.S. banks).
In addition, the Fund has a policy that the Portfolio will not invest more
than 10% of its total assets in illiquid securities, including repurchase
agreements maturing in more than seven days.
- ------------------------------------------------------------------------------
PRICING SHARES
- ------------------------------------------------------------------------------
Transactions in the money market instruments in which the Fund invests
normally require immediate settlement in federal funds. The Portfolio intends to
be as fully invested as is reasonably practicable in order to maximize the yield
on its portfolio assets. Accordingly, all payments must be in federal funds or
other funds available to the Fund that day. If notification of the purchase
order is received by 12:00 noon (eastern time) and federal funds or other funds
available to the Fund that day are received by wire on a day on which banks in
both Boston and New York City are open for business, the purchase order will be
accepted that day. The shares purchased will be entitled to that day's dividend.
Other orders will be accepted and will become entitled to dividends declared on
the next bank business day after receipt of payment.
The net asset value per share of the Portfolio is computed as of the close of
trading on the New York Stock Exchange (the "Exchange") (currently 4:00 p.m.
eastern time for purposes of pricing Portfolio shares) on each day on which the
Exchange is open, except on days when changes in the value of the Portfolio's
securities do not affect the net asset value of its shares. The Exchange is
currently closed on weekends, New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value per share of the Portfolio is determined by adding the value
of all securities and other assets held by the Portfolio, deducting the
liabilities chargeable to the Portfolio, including its share of the general
liabilities of the Fund, and dividing the result by the number of shares of the
Portfolio outstanding.
Since the net income of the Portfolio is declared as a dividend each time net
income is determined, the net asset value per share of the Portfolio is rounded
to the nearest penny daily and is expected to remain at $1.00 per share
immediately after each dividend declaration. The Fund expects to have net income
at the time of each dividend determination for the Portfolio. If, for any
reason, there is a net loss in the Portfolio, the Fund will first offset such
amount pro rata against dividends accrued during the month in each shareholder
account. To the extent that such a net loss would exceed such accrued dividends
for the Portfolio, the Fund will reduce the number of outstanding shares by
having each shareholder of the Portfolio contribute to the Fund's capital his
pro rata portion of the total number of shares required to be cancelled in order
to maintain a net asset value of $1.00 for the Portfolio. Each shareholder will
be deemed to have agreed to such a contribution in these circumstances by his
investment in the Portfolio.
Securities purchased with maturities of sixty days or less are valued at
amortized cost (original purchase cost as adjusted for amortization of premium
or accretion of discount), which, when combined with accrued interest,
approximates market; securities maturing in more than sixty days for which
market quotations are readily available are valued at current market value; and
securities maturing in more than sixty days when purchased that are held on the
sixtieth day prior to maturity, are valued at amortized cost (market value on
the sixtieth day adjusted for amortization of premium or accretion of discount),
which, when combined with accrued interest, approximates market; in any case
reflecting fair value as determined by the Board of Trustees. All other
investments are valued at market value or, where market quotations are not
readily available, at fair value as determined in good faith by the Board of
Trustees.
- ------------------------------------------------------------------------------
DIVIDENDS AND TAXES
- ------------------------------------------------------------------------------
The Portfolio has qualified and intends to continue to qualify as a regulated
investment company under the Internal Revenue Code. The Portfolio qualifies if,
among other things, it distributes to its shareholders at least 90% of its net
investment income for its fiscal year. The Portfolio also intends to make timely
distributions, if necessary, sufficient in amount to avoid the nondeductible 4%
excise tax imposed on a regulated investment company to the extent that it fails
to distribute, with respect to each calendar year, at least 98% of its ordinary
income for such calendar year and 98% of its net capital gains for the one-year
period ending on October 31 of such calendar year. Any taxable distribution
declared in October, November or December to shareholders of record in such a
month and paid by the following January 31 will be taxable to shareholders as if
paid on December 31 of the year in which such dividends were declared. If the
Portfolio qualifies and if it distributes all of its net investment income and
net capital gains, if any, to Shareholders, it will be relieved of any federal
income tax liability.
The Portfolio will make distributions from its net investment income to its
shareholders by the 15th day of each month and net capital gains, if any, at
least annually. Dividends distributed by the Portfolio will be automatically
invested in additional shares of the Portfolio unless the shareholder elects to
receive them in cash. Dividends are taxable as ordinary income to shareholders
who are subject to federal income taxes and may also be subject to state and
local taxes. The Fund does not expect to realize any capital gains or losses.
The Fund advises its shareholders annually as to the federal tax status of all
distributions made during the year.
- ------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT AND EXPENSES
- ------------------------------------------------------------------------------
BOARD OF TRUSTEES
Under Massachusetts law, the Fund's Board of Trustees has absolute and
exclusive control over the management and disposition of all assets of the Fund.
Subject to the authority of the Board of Trustees, Keystone serves as the Fund's
investment adviser and, in general, supervises the management and investment
program of the Portfolio.
INVESTMENT ADVISER
Keystone, located at 200 Berkeley Street, Boston, Massachusetts 02116-5034,
has provided investment advisory and management services to investment companies
and private accounts since it was organized in 1932. Keystone is a wholly-owned
subsidiary of Keystone Investments, Inc. (formerly Keystone Group, Inc.)
("Keystone Investments"), 200 Berkeley Street, Boston, Massachusetts 02116-5034.
Keystone Investments is a private corporation predominantly owned by former
and current members of management of Keystone and its affiliates. The shares of
Keystone Investments common stock beneficially owned by management are held in a
number of voting trusts, the trustees of which are George S. Bissell, Albert H.
Elfner, III, Edward F. Godfrey and Ralph J. Spuehler, Jr. Keystone Investments
provides accounting, bookkeeping, legal, personnel and general corporate
services to Keystone, its affilitates and the Keystone Investments Family of
Funds.
Pursuant to its Investment Advisory Agreement with the Fund (the "Advisory
Agreement") , Keystone provides investment management and administrative
services to the Portfolio. Such services include managing the investment and
reinvestment of the Portfolio's assets as well as providing the Portfolio with
office space, facilities, equipment and personnel.
Under the terms of the Advisory Agreement, Keystone is generally entitled to a
management fee, payable quarterly, equal to (1) 5% of the gross income of the
Portfolio, less (2) the amount of the net expenses of the Fund (excluding
Keystone's compensation, interest, taxes, brokerage commissions, fees of the
Fund's independent Trustees and extraordinary expenses).
PORTFOLIO EXPENSES
Commencing December 28, 1992, Keystone voluntarily limited its advisory fee
with respect to the Portfolio to an annual rate of 0.09% of the Portfolio's
average net assets. Keystone expects to maintain this voluntary limitation on a
calendar month-by-month basis. Keystone will periodically evaluate the foregoing
expense limitation and may modify or terminate it in the future. Keystone
continues to pay the Portfolio's normal operating expenses, excluding Keystone's
compensation, interest, taxes, brokerage commissions and extraordinary expenses.
During the year ended December 31, 1995, the Portfolio paid or accrued to
Keystone investment management and advisory services fees of $23,337, which
represented 0.09% of the Portfolio's average daily net assets.
PORTFOLIO MANAGER
Christopher P. Conkey is the Fund's portfolio manager. He is a Keystone Vice
President and has more than 12 years of investment experience.
SECURITIES TRANSACTIONS
Under policies established by the Board of Trustees, Keystone selects
broker-dealers to execute portfolio transactions for the Portfolio subject to
receipt of best execution. When selecting broker-dealer to execute portfolio
transactions, Keystone may consider as a factor the number of shares of the
Portfolio sold by such broker-dealers. In addition, broker-dealers executing
Portfolio transactions may, from time to time, be affiliated with the Fund,
Keystone, Fiduciary Investment Company, Inc. ("FICO"), the Fund's principal
underwriter ("Principal Underwriter"), or their affiliates. FICO, a wholly-owned
subsidiary of Keystone, is located at 200 Berkeley Street, Boston, Massachusetts
02116-5034.
Subject to the requirement of receipt of best execution, the Fund may pay
higher commissions to broker-dealers that provide research services. Keystone
may use these services in advising the Fund as well as in advising its other
clients.
The Glass-Steagall Act presently limits the ability of a depository
institution (such as a commercial bank or a savings and loan association) to
become an underwriter or distributor of securities. In the event the
Glass-Steagall Act is deemed to prohibit depository institutions from accepting
payments in connection with the sale of securities, or should Congress relax
current restrictions on depository institutions, the Board of Trustees will
consider what action, if any, is appropriate.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein; banks and financial
institutions may be required to register as dealers pursuant to state law.
PORTFOLIO TURNOVER
The Fund will not trade in securities for short-term profits, but, when
circumstances warrant, securities may be sold without regard to the length of
time held.
- ------------------------------------------------------------------------------
HOW TO BUY SHARES
- ------------------------------------------------------------------------------
Money Market Portfolio I is available to any investor making a minimum initial
purchase aggregating $250,000. There is no minimum amount required for
subsequent purchases.
Shares of the Portfolio are sold without a sales charge at net asset value,
normally $1.00 per share, on each day on which banks in both Boston and New
York City are open for business. The Fund and its Principal Underwriter reserve
the right to reject any order for the purchase of Fund shares.
OPENING AN ACCOUNT
First, telephone Keystone Investor Resource Center, Inc. ("KIRC"), the Fund's
transfer and dividend disbursing agent, toll free at 1-800-343-2898 to open an
account and to obtain an account or wire identification number.
Second, arrange with your bank to wire federal funds to KIRC's agent at the
following address (please include your account number):
State Street Bank and Trust Company
For credit to MRT
Account or wire identification
number -------------------------------------------------------------------
Third, complete and sign the Account Application and mail it to:
Keystone Investor Resource Center, Inc.
P.O. Box 2121
Boston, Massachusetts 02106-2121
If KIRC deems it appropriate, additional documentation or verification of
authority may be required.
Information on how to wire federal funds is available at any national bank or
any state bank that is a member of the Federal Reserve System. The bank may
charge for these services. Presently, there is no fee for receipt by KIRC of
federal funds wired, but the right to charge for this service is reserved.
Additional purchases for an existing account may be made by wiring federal
funds, or other funds available to the Fund that day, to State Street Bank and
Trust Company as described above.
- ------------------------------------------------------------------------------
HOW TO REDEEM SHARES
- ------------------------------------------------------------------------------
Shareholders may redeem shares of the Fund at net asset value, normally $1.00
per share, by mail or by using the telephone.
MAIL REDEMPTIONS
A shareholder may redeem shares on each day on which the Exchange is open by
mailing a written request to KIRC at the following address:
Keystone Investor Resource Center, Inc.
P.O. Box 2121
Boston, Massachusetts 02106-2121
The signatures on the written request must be PROPERLY GUARANTEED by a bank or
other persons eligible to guarantee signatures under the Securities Exchange Act
of 1934 and KIRC policies when the circumstances of such redemptions indicate
that guaranteed signatures are appropriate, in the judgment of the Fund or KIRC,
for the protection of the Fund, its shareholders and KIRC.
TELEPHONE REDEMPTIONS
Shares may be redeemed on each day on which banks in both Boston and New York
City are open for business by calling (toll free 1-800-343-2138). To engage in
telephone transactions generally, you must complete the appropriate sections of
the Fund's application.
In order to insure that instructions received by KIRC are genuine when you
initiate a telephone transaction, you will be asked to verify certain criteria
specific to your account. At the conclusion of the transaction, you will be
given a transaction number confirming your request, and written confirmation of
your transaction will be mailed the next business day. Your telephone
instructions will be recorded. Redemptions by telephone are allowed only if the
address and bank account of record have been the same for a minimum period of 30
days. If you cannot reach the Fund by telephone, you should follow the
procedures for redeeming by mail as set forth above.
Redemption proceeds will be wired in federal funds only to the commercial bank
(and account number) designated by the shareholder on the Account Application.
CONSEQUENTLY, SHAREHOLDERS MUST COMPLETE AN ACCOUNT APPLICATION, INCLUDING THE
REDEMPTION AUTHORIZATION. If KIRC deems it appropriate, additional documentation
may be required. Although at present the Fund pays the wire costs involved, it
reserves the right at any time to require the shareholder to pay such costs.
Under normal circumstances, if the request for redemption is received by 12:00
noon (eastern time) on a day on which banks in both Boston and New York City are
open for business, the proceeds of such redemption will be wired on the same
day, but the shareholder will not receive that day's dividend. If the request is
received after 12:00 noon or on a day when such banks are not open, that day's
dividend will be received by the shareholder, and the redemption proceeds will
be wired the next bank business day. In order to permit the most effective
management of its investments, however, the Fund strongly urges shareholders
intending to redeem amounts over $1,000,000 to notify the Fund at least one day
in advance of the redemption. The Fund reserves the right to take up to seven
days to wire redemption proceeds if, in the judgment of management, the number
and amount of redemption requests received on any day prior to 12:00 noon is
unusual or if the Fund could otherwise be adversely affected by making any
payment.
Payment will be made promptly and, in any event, within seven days after a
properly completed redemption request is received, subject to suspension of the
right of redemption or extension of the date for payment when (1) the Exchange
is closed, other than customary weekend and holiday closings; (2) trading on the
Exchange is restricted; (3) an emergency exists and the Fund cannot dispose of
its investments or fairly determine their value; or (4) the Securities and
Exchange Commission so orders.
Any change in the Shareholder's bank account designated to receive redemption
proceeds must be made in another Account Application signed by the shareholder
(WITH SIGNATURES PROPERLY GUARANTEED IN THE MANNER DESCRIBED ABOVE) and
delivered to KIRC at the above address.
The Fund reserves the right, at any time, to terminate, suspend or change the
terms of any redemption method described in this prospectus, except redemption
by mail, and to impose fees.
Except as otherwise noted, neither the Fund, KIRC nor FICO assumes
responsibility for the authenticity of any instructions received by any of them
from a shareholder in writing or by telephone. KIRC will employ reasonable
procedures to confirm that instructions received over the telephone are genuine
including recording verbal instructions. Neither the Fund, KIRC nor FICO will be
liable when following instructions received by telephone that KIRC reasonably
believes to be genuine.
If a shareholder redeems all the shares in an account, the shareholder will
receive, in addition to the value thereof, all declared but unpaid distributions
thereon.
The Fund has made no arrangements with brokers for the repurchase of shares.
Redemptions placed through brokers, who may charge for their services, must
comply with the redemption procedures and requirements described above.
SMALL ACCOUNTS
The Fund reserves the right to redeem shares in any account in which the value
of shares of the Portfolio is less than such minimum amount as the Trustees
prescribe. Such redemption proceeds will be promptly paid to the shareholder.
Shareholders will be notified if their accounts are less than the minimum amount
and given 30 days to bring the account up to the minimum amount before
redemption.
- ------------------------------------------------------------------------------
SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
Details on all shareholder services may be obtained from KIRC by calling toll
free 1-800-343-2138 or from FICO by writing FICO at 200 Berkeley Street, Boston,
Massachusetts 02116-5034.
KEYSTONE AUTOMATED RESPONSE LINE
The Keystone Automated Response Line ("KARL") offers shareholders specific
fund account information and price, total return and yield quotations; as well
as the ability to do account transactions, including investments, exchanges and
redemptions. Shareholders may access KARL by dialing toll free 1-800-346-3858 on
any touch-tone telephone, 24 hours a day, seven days a week.
SHAREHOLDER ACCOUNTS
Each investor will automatically have established an account under which he
will receive a statement showing details of all transactions, including the
current balance of full and fractional shares owned by such investor.
Certificates will not be issued.
SUBACCOUNTS
Special processing has been arranged with KIRC for banks and other
institutions that wish to open multiple accounts (a master account and
subaccounts). An investor wishing to avail himself of KIRC's subaccounting
facilities will be required to enter into a separate agreement, with the charges
to be determined on the basis of the level of services to be rendered. An
investor may open a subaccount with his initial investment or at a later date
and may register the subaccount either by name or by number.
- ------------------------------------------------------------------------------
PERFORMANCE DATA
- ------------------------------------------------------------------------------
From time to time, the Fund may advertise "yield" and "effective yield." BOTH
YIELD FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE
FUTURE PERFORMANCE. The "yield" of the Portfolio refers to the income generated
by an investment in the Portfolio over a seven-day period (which period will be
stated in the advertisement). This income is then "annualized," i.e., the amount
of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly, but, when annualized,
the income earned by an investment in the Portfolio is assumed to be reinvested.
The "effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.
The Fund may also include comparative performance information in advertising
or marketing the Fund's shares, such as data from Lipper Analytical Services,
Inc., Morningstar, Inc., Ibbotson Associates and Value Line or other industry
publications.
Any given yield quotation should not be considered representative of the
Portfolio's yield for any future period.
- ------------------------------------------------------------------------------
FUND SHARES
- ------------------------------------------------------------------------------
The Fund may issue an unlimited number of shares of the Portfolio. Shares of
the Portfolio participate in dividends and distributions and have equal
voting, liquidation and other rights. When issued and paid for, the shares will
be fully paid and nonassessable by the Fund. Shares have no preference,
conversion, exchange or preemptive rights. Shares are redeemable, transferable
and freely assignable as collateral. There are no sinking fund provisions.
Shareholders are entitled to one vote for each full share owned and fractional
votes for fractional shares. Shares of the Fund vote together except when
required by law to vote separately by portfolio. The Fund does not have annual
meetings. The Fund will have special meetings, from time to time, as required
under its Declaration of Trust and under the 1940 Act. As provided in the Fund's
Declaration of Trust, shareholders have the right to remove Trustees by an
affirmative vote of two-thirds of the outstanding shares. A special meeting of
the shareholders will be held when holders of 10% of the outstanding shares
request a meeting for the purpose of removing a Trustee. The Fund is prepared to
assist shareholders in communications with one another for the purpose of
convening such meeting as prescribed by Section 16(c) of the 1940 Act.
Under Massachusetts law, it is possible that a Fund shareholder may be held
personally liable for the Fund's obligations. The Fund's Declaration of Trust
provides, however, that shareholders shall not be subject to any personal
liability for the Fund's obligations and provides indemnification from Fund
assets for any shareholder held personally liable for the Fund's obligations.
Disclaimers of such liability are included in each Fund agreement.
- ------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------
KIRC, located at 101 Main Street, Cambridge, Massachusetts 02142-1519, is a
wholly-owned subsidiary of Keystone. KIRC serves as the Portfolio's transfer
agent and dividend disbursing agent.
When the Fund determines from its records that more than one account in the
Fund is registered in the name of a shareholder or shareholders having the same
address, upon notice to those shareholders, the Fund intends, when an annual
report or a semi-annual report of the Fund is required to be furnished, to mail
one copy of such report to that address.
Except as otherwise stated in this prospectus or required by law, the Fund
reserves the right to change the terms of the offer stated in this prospectus
without shareholder approval, including the right to impose or change fees for
services provided.
<PAGE>
- ------------------------------------------------------------------------------
ADDITIONAL INVESTMENT INFORMATION
- ------------------------------------------------------------------------------
OBLIGATIONS OF FOREIGN BRANCHES OF UNITED STATES BANKS ("EURODOLLAR CERTIFICATES
OF DEPOSIT")
The obligations of foreign branches of U.S. banks may be general obligations
of the parent bank in addition to the issuing branch, or may be limited by the
terms of a specific obligation and by government regulation. Payment of interest
and principal upon these obligations may also be affected by governmental action
in the country of domicile of the branch (generally referred to as sovereign
risk). In addition, evidences of ownership of such obligations may be held
outside of the U.S. and the Fund may, consequently, be subject to the risks
associated with the holding of such property overseas. Examples of governmental
actions would be the imposition of currency controls, interest limitations,
withholding taxes, seizure of assets or the declaration of a moratorium. Various
provisions of federal law governing domestic branches do not apply to foreign
branches of domestic banks.
OBLIGATIONS OF FOREIGN BRANCHES OF FOREIGN BANKS ("EURODOLLAR CERTIFICATES OF
DEPOSIT")
The obligations of foreign branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by government regulation.
Payment of interest and principal upon these obligations may also be affected by
governmental action in the country of domicile of the branch (generally referred
to as sovereign risk). In addition, evidences of ownership of such obligations
are expected to be held outside of the U.S., and, consequently, the Fund may be
subject to the risks associated with the holding of such property overseas.
Examples of governmental actions would be the imposition of currency controls,
interest limitations, withholding taxes, seizure of assets or the declaration of
a moratorium. Various provisions of federal law governing domestic branches do
not apply to foreign branches of foreign banks.
OBLIGATIONS OF U.S. BRANCHES OF FOREIGN BANKS ("YANKEE CERTIFICATES OF DEPOSIT")
Obligations of U.S. branches of foreign banks may be general obligations of
the parent bank in addition to the issuing branch, or may be limited by the
terms of a specific obligation and by federal and state regulation as well as by
governmental action in the country in which the foreign bank has its head
office. In addition, there may be less publicly available information about a
U.S. branch of a foreign bank than about a domestic bank.
MASTER DEMAND NOTES
Master demand notes are unsecured obligations that permit the investment of
fluctuating amounts by the Portfolio at varying rates of interest pursuant to
direct arrangements between the Portfolio as lender, and the issuer as borrower.
The Portfolio has the right to increase the amount under a note at any time up
to the full amount provided by the note agreement, or to decrease the amount,
and the borrower may repay up to the full amount of the note without penalty.
Notes purchased by the Portfolio permit it to demand payment of principal and
accrued interest at any time (on not more than seven days' notice). Notes
acquired by the Portfolio may have maturities of more than one year, provided
(1) the Portfolio is entitled to payment of principal and accrued interest upon
not more than seven days' notice, and (2) the rate of interest on such notes is
adjusted automatically at periodic intervals, which normally will not exceed 31
days, but may extend up to one year. The notes will be deemed to have a maturity
equal to the longer of the period remaining to the next interest rate adjustment
or the demand notice period. Because these types of notes are direct lending
arrangements between the lender and the borrower, such instruments are not
normally traded, and there is no secondary market for these notes, although they
are redeemable and thus repayable by the borrower at face value plus accrued
interest at any time. Accordingly, the right of the Portfolio to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. In connection with master demand notes, Keystone considers, under
standards established by the Board of Trustees, earning power, cash flow and
other liquidity ratios of the borrower and will monitor the ability of the
borrower to pay principal and interest on demand. These notes are not typically
rated by credit rating agencies. Unless rated, the Portfolio will invest in them
only if the issuer meets the criteria established for commercial paper.
CERTIFICATES OF DEPOSIT
Certificates of deposit are receipts issued by a domestic or foreign bank or a
savings and loan association in exchange for the deposit of funds. The issuer
agrees to pay the amount deposited plus interest to the bearer of the receipt on
the date specified on the certificate. The certificate usually can be traded in
the secondary market prior to maturity.
Certificates of deposit will be limited to U.S. dollar-denominated
certificates of domestic or foreign banks and/or a savings and loan association
provided that (1) at the time of investment the depository institution or
guarantor bank has at least $1 billion in deposits (as of the date of its most
recently published financial statements) or (2) the principal amount of the
instrument is insured in full by the Federal Deposit Insurance Corporation
("FDIC").
The Fund will not acquire time deposits or obligations issued by the
International Bank for Reconstruction and Development; the Asian Development
Bank or the Inter-American Development Bank. See also "Obligations of Foreign
Branches of United States Banks," "Obligations of Foreign Branches of Foreign
Banks," and "Obligations of U.S. Branches of Foreign Banks."
BANKERS' ACCEPTANCES
Bankers' acceptances typically arise from short-term credit arrangements
designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by the bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most acceptances have maturities of six months or less.
Bankers' acceptances acquired by the Portfolio must have been accepted by
domestic or foreign commercial banks or savings and loan associations and (1) at
the time of investment the depository institution or guarantor bank has at least
$1 billion in deposits (as of the date of their most recently published
financial statements) or (2) the principal amount of the instrument is insured
in full by the FDIC.
LOAN PARTICIPATION NOTES
A loan participation note represents participation in a corporate loan of a
commercial bank with a remaining maturity of one year or less. Such loans must
be to corporations in whose obligations the Portfolio may invest. Any
participation purchased by the Portfolio must be issued by a bank in the U.S.
with assets exceeding $1 billion. Since the issuing bank does not guarantee the
participations in any way, they are subject to the credit risks generally
associated with the underlying corporate borrower. In addition, because it may
be necessary under the terms of the loan participation for the Portfolio to
assert through the issuing bank such rights as may exist against the corporate
borrower, in the event the underlying corporate borrower fails to pay principal
and interest when due, the Portfolio may be subject to delays, expenses and
risks that are greater than those that would have been involved if the Portfolio
had purchased a direct obligation (such as commercial paper) of such borrower.
Moreover, under the terms of the loan participation the Portfolio may be
regarded as a creditor of the issuing bank (rather than the underlying corporate
borrower), so that the Portfolio may also be subject to the risk that the
issuing bank may become insolvent. The secondary market, if any, for loan
participations is extremely limited and any such participations purchased by the
Portfolio may be regarded as illiquid.
REPURCHASE AGREEMENTS
To earn additional income, the Portfolio may enter into repurchase agreements
with member banks of the Federal Reserve System that have at least $1 billion in
assets, primary dealers in U.S. government securities or other financial
institutions believed by Keystone to be creditworthy. Such persons are required
to be registered as U.S. government securities dealers with the Securities and
Exchange Commission and/or the regulatory organization routinely responsible for
their regulation. Under such agreements, the bank, primary dealer or other
financial institution agrees to repurchase the security at a mutually agreed
upon time and price, thereby determining the yield during the term of the
agreement. This results in a fixed rate of return insulated from market
fluctuations during such period. Under a repurchase agreement, the seller must
maintain the value of the securities subject to the agreement at not less than
the repurchase price, and such value is determined on a daily basis by marking
the underlying securities to their market values. Although the securities
subject to the repurchase agreement might bear maturities exceeding a year, the
Portfolio only intends to enter into repurchase agreements that provide for
settlement within a year and usually within seven days. Securities subject to
repurchase agreements will be held by the Fund's custodian or in the Federal
Reserve book entry system. The Portfolio does not bear the risk of a decline in
the value of the underlying security unless the seller defaults under its
repurchase obligation. In the event of a bankruptcy or other default of a seller
of a repurchase agreement, the Portfolio could experience both delays in
liquidating the underlying securities and losses including (1) possible declines
in the value of the underlying securities during the period while the Portfolio
seeks to enforce its rights thereto; (2) possible subnormal levels of income and
lack of access to income during this period; and (3) expenses of enforcing its
rights. The Board of Trustees of the Fund has established procedures to evaluate
the creditworthiness of each party with whom the Portfolio enters into
repurchase agreements by setting guidelines and standards of review for Keystone
and monitoring Keystone's actions with regard to repurchase agreements.
LOANS OF SECURITIES TO BROKER-DEALERS
To earn additional income, the Portfolio may lend securities to brokers and
dealers pursuant to agreements requiring that the loans be continuously secured
by cash or securities of the U.S. government, its agencies or instrumentalities,
or any combination of cash and such securities, as collateral equal at all times
in value to at least the market value of the securities loaned. Such securities
loans will not be made with respect to the Portfolio if, as a result, the
aggregate of all outstanding securities loans exceeds 15% of the value of the
Portfolio's total assets taken at their current value. The Portfolio continues
to receive interest or dividends on the securities loaned and simultaneously
earns interest on the investment of the cash loan collateral in U.S. Treasury
notes, certificates of deposit, other high grade, short term obligations or
interest bearing cash equivalents. Although voting rights attendant to
securities loaned pass to the borrower, such loans may be called at any time and
will be called so that the securities may be voted by the Portfolio if, in the
opinion of the Fund, a material event affecting the investment is to occur.
There may be risks of delay in receiving additional collateral or in recovering
the securities loaned or even loss of rights in the collateral should the
borrower of the securities fail financially. Loans may only be made, however, to
borrowers deemed to be of good standing, under standards approved by the Board
of Trustees, when the income to be earned from the loan justifies the attendant
risks.
<PAGE>
MASTER
RESERVES
TRUST
BOSTON, MASSACHUSETTS
Investment Adviser
KEYSTONE INVESTMENT MANAGEMENT
COMPANY
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116-5034
Shareholder Services
KEYSTONE INVESTOR RESOURCE
CENTER, INC.
P.O. BOX 2121
BOSTON, MASSACHUSETTS 02106
TEL. NO.: TOLL FREE 800-343-2898
Independent Auditors
KPMG PEAT MARWICK LLP
99 HIGH STREET
BOSTON, MASSACHUSETTS 02108
Distributor
FIDUCIARY INVESTMENT COMPANY,
INC.
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02110
TEL. NO.: 800-225-2618
Custodian
STATE STREET BANK AND TRUST
COMPANY
225 FRANKLIN STREET
BOSTON, MASSACHUSETTS 02110
MASTER
RESERVES
TRUST
PROSPECTUS
APRIL 19, 1996
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MASTER RESERVES TRUST
APRIL 19, 1996
This statement of additional information is not a prospectus, but
relates to, and should be read in conjunction with, the prospectus of Master
Reserves Trust (the "Fund") dated April 19, 1996. A copy of the prospectus may
be obtained from Fiduciary Investment Company, Inc. ("FICO"), the Fund's
principal underwriter, 200 Berkeley Street, Boston, Massachusetts 02116- 5034.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
Investment Objective and Policies 2
Investment Restrictions 3
Valuation and Redemption of Securities 5
Dividends and Taxes 6
Yield Quotations 6
Trustees and Officers 7
Declaration of Trust 11
Investment Adviser 13
Distributor 15
Brokerage 17
Additional Information 18
Appendix A-1
Financial Statements F-1
Independent Auditors' Report F-17
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to provide shareholders with maximum
current income while preserving capital. To meet this objective, the Fund
currently offers only one portfolio, Money Market Portfolio I (the "Portfolio").
This statement of additional information provides information about and relates
solely to the Fund and the Portfolio. Keystone Investment Management Company
(formerly Keystone Custodian Funds, Inc.) ("Keystone") serves as the Fund's
investment adviser.
Subject to the availability of master notes and to the conditions
described in the next sentence, it is the Fund's present intention that any
investments the Portfolio may make in instruments maturing in one day or less
shall be made in master notes payable on demand. The Portfolio will invest in
master demand notes only at such times as the yields available on such notes, to
Keystone's knowledge, are comparable to or exceed the yields then available on
securities (otherwise appropriate for investment by the Portfolio) of like
maturity issued or guaranteed by the United States ("U.S.") government or any
agency or instrumentality thereof.
The Portfolio will be diversified among issuers. The Fund's investment
restrictions permit the Fund to concentrate up to 100% of its assets in one or
more of the following industries: finance companies, banks and bank holding
companies and utility companies. Notwithstanding the freedom reserved by the
Fund to so concentrate assets, the Portfolio (if permitted by its investment
policies) may concentrate its assets only in (1) securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities; and (2) instruments
issued by a domestic bank (including (a) a foreign branch of a domestic bank for
which the investment risk associated with the securities issued by such branch
is the same as the investment risk associated with the securities issued by its
domestic parent and (b) a U.S. branch of a foreign bank that is subject to the
same regulation as U.S. banks). If permitted by its investment policies, the
Portfolio will invest in excess of 25% of its assets in domestic banks only at
such times as (1) the yields then available on such securities, to Keystone's
knowledge, exceed the yields then available on securities (otherwise appropriate
for investment by the Portfolio) issued or guaranteed by the U.S. government or
any agency or instrumentality thereof; and (2) in the opinion of management, the
relative return from such investments, compared with the relative risk,
marketability and quality of such securities, appears to warrant such
concentration.
The Fund intends to manage the maturities of instruments in the
Portfolio so that reasonably anticipated liquidity needs can be met from then
available cash rather than from the sale of portfolio instruments prior to
maturity.
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The investment restrictions set forth below are fundamental and may not
be changed without the vote of a majority, of the Fund's outstanding shares as
defined in the Investment Company Act of 1940 (the "1940 Act"). The Fund may not
do the following:
(1) purchase securities on margin, but the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities;
(2) make short sales of securities or maintain a short position, unless
at all times when a short position is open, the Fund owns an equal amount of
such securities or of securities which, without payment of any further
consideration, are convertible into or exchangeable for securities of the same
issue as the securities sold short;
(3) borrow money, except from banks as a temporary measure in an amount
not to exceed one-third of its total assets to facilitate redemptions or for
extraordinary or emergency purposes; a loan limitation in excess of 5% is
generally associated with a leveraged fund, but since the Fund anticipates
ordinarily having to pay interest on borrowed money at rates comparable to its
yield, the Fund has no intention of attempting to increase its net income by
borrowing, and any such borrowings will be repaid before any additional
investments are made;
(4) pledge assets except to secure indebtedness permitted by the third
investment restriction enumerated above, with pledged assets to be no more than
15% of its total assets;
(5) purchase any security, other than U.S. government securities, if as
a result more than 25% of the Fund's total assets would be invested in a single
industry, except that the Fund may invest up to 100% of its assets in finance
companies as a group, banks and bankholding companies as a group and utility
companies as a group when, in the opinion of management, yield differentials and
money market conditions make such investments desirable and suitable investments
are available;
(6) purchase any security, other than U.S. government securities, if,
as a result, (a) more than 5% of the Fund's total assets would be invested in
securities of the issuer, or (b) the Fund would hold more than 10% of the voting
securities of the issuer;
(7) invest for the purpose of exercising control over or management of
any company;
(8) invest in securities of other investment companies, except as part
of a merger, consolidation, purchase of assets or similar transaction approved
by the Fund's shareholders;
(9) make investments in commodities, commodity contracts or real
estate; although the Fund has no present intention of doing so, it may invest in
securities secured by real estate or interests therein or issued by companies,
including real estate investment trusts, which deal in real estate or interests
therein;
(10) act as an underwriter or purchase securities that are not readily
marketable, except for repurchase agreements;
(11) purchase or retain securities of an issuer if, to the knowledge of
the Fund, an officer, Trustee or Director of the Fund or Keystone owns
beneficially more than 1/2 of 1% of the shares or securities of such issuer and
all such officers, Trustees and Directors owning more than 1/2 of 1% of such
shares or securities together own more than 5% of such shares or securities;
(12) purchase securities of any company that has, with predecessors, a
record of less than three years' continuing operations, if as a result more than
5% of the total assets of the Fund would be invested in such securities;
(13) purchase puts, calls, straddles, spreads or combinations thereof,
except that in connection with the purchase of fixed-income securities it may
acquire warrants or other rights to subscribe for securities of companies
issuing such fixed-income securities or securities of parents or subsidiaries of
such companies, although the fixed-income securities would be purchased on the
basis of their investment characteristics exclusive of such warrants or other
rights; and
(14) invest in interests in oil, gas or other mineral exploration or
development programs.
Notwithstanding the more flexible limits above, the Fund deems each of
its fundamental investment restrictions to apply to the investments of the
Portfolio. For a clarification of how the concentration policies set forth in
the fifth investment restriction above specifically apply to the Portfolio, see
"Fund Objective and Policies."
With respect to the Portfolio, the Fund has no present intention of
investing more than 5% of the Portfolio's assets in short sales of securities,
securities secured by real estate or interests therein, securities issued by
companies that deal in real estate or interests therein, or warrants.
The Fund may make loans, but only through the purchase of debt
instruments or repurchase agreements and through the lending of its portfolio
securities. The Fund has a policy that no portfolio will invest more than 10% of
its assets in illiquid securities, including repurchase agreements maturing in
more than seven days.
The foregoing percentages will apply at the time of the purchase of a
security and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of a purchase of such
security. In the event that any common stock should be acquired through the
exercise of warrants, it is expected that such stock would be sold as market
conditions permit in the exercise of prudent investment judgment.
The Fund understands that the securities laws of one state would not
permit the Fund to sell the Portfolio's shares in that state if it should pledge
in excess of 10% of the Portfolio's net assets. The Fund has no present
intention of exceeding this limit, although this limit is more restrictive than
the fourth investment restriction enumerated above.
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VALUATION AND REDEMPTION OF SECURITIES
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Current value for the Fund's portfolio securities is determined as
follows: securities purchased with maturities of sixty days or less are valued
at amortized cost (original purchase cost as adjusted for amortization of
premium or accretion of discount), which, when combined with accrued interest,
approximates market; securities maturing in more than sixty days for which
market quotations are readily available are valued at current market value; and
securities maturing in more than sixty days when purchased that are held on the
sixtieth day prior to maturity are valued at amortized cost (market value on the
sixtieth day adjusted for amortization of premium or accretion of discount),
which, when combined with accrued interest, approximates market, and which, in
either case reflects fair value as determined by the Board of Trustees. Any
securities for which market quotations are not readily available or other assets
are valued on a consistent basis at fair value as determined in good faith using
methods prescribed by the Board of Trustees.
The Fund computes the net asset value per share of the Portfolio
rounded to the nearest one cent on a net asset value of $1.00. Accordingly, the
net asset value will not reflect net realized or unrealized gains or losses on
portfolio securities that amount to less than one-half cent per share. By
adhering to restrictions on the quality and maturity of its investments, by
valuing certain securities at amortized cost, and by declaring all net income of
the Portfolio as a dividend each time it is determined, the Fund anticipates
that, under usual and ordinary circumstances, it will be able to maintain a
constant net asset value, so rounded, of $1.00 per share for the Portfolio and
will use its best efforts to do so.
The Fund has obligated itself under the 1940 Act to redeem for cash all
shares presented for redemption by any one shareholder in any 90 day period up
to the lesser of $250,000 or 1% of the Fund's assets at the beginning of such
period.
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DIVIDENDS AND TAXES
- --------------------------------------------------------------------------------
The net income of the Portfolio is determined as of the normal close of
trading on the New York Stock Exchange (the "Exchange") (currently 4:00 p.m.
eastern time) for purposes of pricing Fund shares on each business day on which
the Exchange is open. All net income of the Portfolio so determined is declared
as a dividend to shareholders of record of the Portfolio as of that time.
For this purpose, the net income of the Portfolio, from the time of the
immediately preceding determination thereof, shall consist of all interest
income accrued on the assets of the Portfolio, less all expenses and liabilities
of the Portfolio chargeable against income. Interest income shall include
discount earned, including both original issue and market discount, on discount
paper accrued ratably to the date of maturity. Expenses, including the
compensation payable to Keystone, are accrued each day.
Any net realized short-term capital gains of the Fund in excess of any
capital loss carryover will be distributed to shareholders of the Portfolio
realizing the gain from time to time as management deems appropriate in
maintaining the Portfolio's net asset value at $1.00 per share.
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YIELD QUOTATIONS
- --------------------------------------------------------------------------------
The current yield of the Portfolio as it may appear from time to time
in advertisements, is calculated by determining the net change exclusive of
capital changes (all realized and unrealized gains and losses) in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
multiply the base period return by 365/7 with the resulting yield figure carried
to the nearest hundredth of one percent. The determination of net change in
account value reflects the value of additional shares purchased with the
dividends from the original share and dividends declared on both the original
share and any such additional shares and all fees charged to shareholder
accounts in proportion to the length of the base period and the Portfolio's
average account size.
In addition to the current yield, the Portfolio's effective yield may
appear from time to time in advertisements. The Portfolio's effective yield will
be calculated by compounding the unannualized base period return, adding 1,
raising the sum to a power equal to 365/7, and subtracting 1 from the result.
The current and effective yields as quoted in any such advertisements
will not be based on information as of a date more than fourteen days prior to
the date of its publication. Each yield will vary depending on market
conditions, and principal is not insured. Each yield also depends on the
quality, maturity and type of instruments held in the Portfolio and operating
expenses. The advertisements will include, among other things, the length and
the date of the last day in the base period used in computing the quotation.
The Fund does not currently advertise or intend to advertise any yield
figures.
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TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
Trustees and officers of the Fund, their principal occupations and some
of their affiliations over the last five years are as follows:
*ALBERT H. ELFNER, III: President, Chief Executive Officer and Trustee of the
Fund; Chairman of the Board, President, Director and Chief Executive
Officer of Keystone Investments, Inc. (formerly known as Keystone Group,
Inc.) ("Keystone Investments"); President, Chief Executive Officer and
Trustee or Director of all other funds in the Keystone Investments
Family of Funds; Director and Chairman of the Board, Chief Executive
Officer and Vice Chairman of Keystone; Chairman of the Board and
Director of Keystone Institutional Company, Inc. (formerly Keystone
Investment Management Corporation) ("Keystone Institutional") and
Keystone Fixed Income Advisors, Inc. ("KFIA"); Director, Chairman of the
Board, Chief Executive Officer and President of Keystone Management,
Inc. ("Keystone Management") and Keystone Software Inc. ("Keystone
Software"); Director and President of Keystone Asset Corporation,
Keystone Capital Corporation, and Keystone Trust Company; Director of
Keystone Investment Distributors Company (formerly Keystone
Distributors, Inc.), Keystone Investor Resource Center, Inc. ("KIRC"),
and FICO; Director of Boston Children's Services Association; Trustee of
Anatolia College, Middlesex School, and Middlebury College; Member,
Board of Governors and New England Medical Center; former Director and
President of Hartwell Keystone Advisers, Inc. ("Hartwell Keystone");
former Director and Vice President of Robert Van Partners, Inc.; and
former Trustee of Neworld Bank.
FREDERICK AMLING: Trustee of the Fund; Trustee or Director of all other funds in
the Keystone Investments Family of Funds; Professor, Finance Department,
George Washington University; President, Amling & Company (investment
advice); Member, Board of Advisers, Credito Emilano (banking); and
former Economics and Financial Consultant, Riggs National Bank.
CHARLES A. AUSTIN III: Trustee of the Fund; Trustee or Director of all other
funds in the Keystone Investments Family of Funds; Investment Counselor
to Appleton Partners, Inc.; former Managing Director, Seaward Management
Corporation (investment advice); and former Director, Executive Vice
President and Treasurer, State Street Research & Management Company
(investment advice).
*GEORGE S. BISSELL: Chairman of the Board and Trustee of the Fund; Director of
Keystone Investments; Chairman of the Board and Trustee or Director of
all other funds in the Keystone Investments Family of Funds; Director
and Chairman of the Board of Hartwell Keystone; Chairman of the Board
and Trustee of Anatolia College; Trustee of University Hospital (and
Chairman of its Investment Committee); former Chairman of the Board and
Chief Executive Officer of Keystone Investments; and former Chief
Executive Officer of the Fund.
EDWIN D. CAMPBELL: Trustee of the Fund; Trustee or Director of all other funds
in the Keystone Investments Family of Funds; Director and former
Executive Vice President, National Alliance of Business; former Vice
President, Educational Testing Services; former Executive Director,
Coalition of Essential Schools, Brown University; and former Dean,
School of Business, Adelphi University.
CHARLES F. CHAPIN: Trustee of the Fund; Trustee or Director of all other funds
in the Keystone Investments Family of Funds; former Group Vice
President, Textron Corp.; and former Director, Peoples Bank (Charlotte,
N.C).
LEROY KEITH, JR.: Trustee of the Fund; Trustee or Director of all other funds
in the Keystone Investments Family of Funds; Director of Phoenix Total
Return Fund and Equifax, Inc.; Trustee of Phoenix Series Fund, Phoenix
Multi-Portfolio Fund and The Phoenix Big Edge Series Fund; and former
President, Morehouse College.
K. DUN GIFFORD: Trustee of the Fund; Trustee or Director of all other funds
in the Keystone Investments Family of Funds; Chairman of the Board,
Director and Executive Vice President, The London Harness Company;
Managing Partner, Roscommon Capital Corp.; Trustee, Cambridge College;
Chairman Emeritus and Director, American Institute of Food and Wine;
Chief Executive Officer, Gifford Gifts of Fine Foods; Chairman, Gifford,
Drescher & Associates (environmental consulting); President, Oldways
Preservation and Exchange Trust (education); and former Director,
Keystone Investments and Keystone.
F. RAY KEYSER, JR.: Trustee of the Fund; Trustee or Director of all other
funds in the Keystone Investments Family of Funds; Of Counsel, Keyser,
Crowley & Meub, P.C.; Member, Governor's (VT) Council of Economic
Advisers; Chairman of the Board and Director, Central Vermont Public
Service Corporation and Hitchcock Clinic; Director, Vermont Yankee
Nuclear Power Corporation, Vermont Electric Power Company, Inc., Grand
Trunk Corporation, Central Vermont Railway, Inc., S.K.I. Ltd., Sherburne
Corporation, Union Mutual Fire Insurance Company, New England Guaranty
Insurance Company, Inc. and the Investment Company Institute; former
Governor of Vermont; former Director and President, Associated
Industries of Vermont; former Chairman and President, Vermont Marble
Company; former Director of Keystone; and former Director and Chairman
of the Board, Green Mountain Bank.
DAVID M. RICHARDSON: Trustee of the Fund; Trustee or Director of all other
funds in the Keystone Investments Family of Funds; Executive Vice
President, DHR International, Inc. (executive recruitment); former
Senior Vice President, Boyden International Inc. (executive
recruitment); and Director, Commerce and Industry Association of New
Jersey, 411 International, Inc. and J & M Cumming Paper Co.
RICHARD J. SHIMA: Trustee of the Fund; Trustee or Director of all other funds in
the Keystone Investments Family of Funds; Chairman, Environmental
Warranty, Inc., and Consultant, Drake Beam Morin, Inc. (executive
outplacement); Director of Connecticut Natural Gas Corporation, Trust
Company of Connecticut, Hartford Hospital, Old State House Association
and Enhance Financial Services, Inc.; Chairman, Board of Trustees,
Hartford Graduate Center; Trustee, Kingswood-Oxford School and Greater
Hartford YMCA; former Director, Executive Vice President and Vice
Chairman of The Travelers Corporation; former Managing Director of
Russell Miller, Inc. and former Member, Georgetown College Board of
Advisors.
ANDREW J. SIMONS: Trustee of the Fund; Trustee or Director of all other funds
in the Keystone Investments Family of Funds; Partner, Farrell, Fritz,
Caemmerer, Cleary, Barnosky & Armentano, P.C.; President, Nassau County
Bar Association; former Associate Dean and Professor of Law, St. John's
University School of Law.
EDWARD F. GODFREY: Senior Vice President of the Fund; Senior Vice President of
all other funds in the Keystone Investments Family of Funds; Director,
Senior Vice President, Chief Financial Officer and Treasurer of Keystone
Investments, Keystone Investment Distributors Company, Keystone Asset
Corporation, Keystone Capital Corporation, Keystone Trust Company;
Treasurer of Keystone Institutional and FICO; Treasurer and Director of
Keystone Management and Keystone Software, Inc.; Vice President and
Treasurer of KFIA; former Treasurer and Director of Hartwell Keystone;
former Treasurer of Robert Van Partners, Inc. and Director of KIRC.
JAMES R. McCALL: Senior Vice President of the Fund; Senior Vice President of
all other funds in the Keystone Investments Family of Funds; and
President of Keystone.
CHRISTOPHER P. CONKEY: Vice President of the Fund and Senior Vice President of
Keystone.
J. KEVIN KENELY: Treasurer of the Fund; Treasurer of all other funds in the
Keystone Investments Family of Funds; Vice President and former
Controller of Keystone Investments, Keystone, Keystone Institutional,
Keystone Management, Keystone Investment Distributors, Inc., FICO and
Keystone Software; and former Controller of Keystone Asset Corporation
and Keystone Capital Corporation.
ROSEMARY D. VAN ANTWERP: Senior Vice President and Secretary of the Fund; Senior
Vice President and Secretary of all other funds in the Keystone
Investments Family of Funds; Senior Vice President, General Counsel and
Secretary of Keystone; Senior Vice President, General Counsel, Secretary
and Director of Keystone Investment Distributors Company, Keystone
Management and Keystone Software; Senior Vice President and General
Counsel of Keystone Institutional; Senior Vice President, General
Counsel and Director of FICO and KIRC; Vice President and Secretary of
KFIA; and Senior Vice President, General Counsel and Secretary of
Keystone Investments, Keystone Asset Corporation, Keystone Capital
Corporation and Keystone Trust Company; former Senior Vice President and
Secretary of Hartwell Keystone and Robert Van Partners, Inc.
* This Trustee may be considered an "interested person" within the meaning of
the 1940 Act.
Mr. Elfner and Mr. Bissell are "interested persons" by virtue of their
positions as officers and/or Directors of Keystone Investments and several of
its affiliates including Hartwell Keystone, Keystone Investment Distributors and
KIRC. Mr. Elfner and Mr. Bissell own shares of Keystone Investments. Mr. Elfner
is Chairman of the Board, Chief Executive Officer and Director of Keystone
Investments. Mr. Bissell is a Director of Keystone Investments.
During the fiscal year ended December 31, 1995, no Trustee or officer
of the Fund received any direct remuneration from the Fund. For the year ending
December 31, 1995, fees paid to Independent Trustees on a fund complex wide
basis were approximately $450,716. As of March 29, 1996, the Fund's Trustees and
officers, as a group, beneficially owned less than one percent of the Fund's
outstanding shares.
The address of all the Fund's Trustees and officers is 200 Berkeley
Street, Boston, Massachusetts 02116-5034.
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DECLARATION OF TRUST
- --------------------------------------------------------------------------------
The Fund is a Massachusetts business trust established under a
Declaration of Trust dated September 22, 1975, as amended and restated July 27,
1993 (the "Declaration of Trust"). The Fund is similar in most respects to a
business corporation. The principal distinction between the Fund and a
corporation relates to the shareholder liability described below. A copy of the
Declaration of Trust was filed as an exhibit to the Fund's Registration
Statement. This summary is qualified in its entirety by reference to the Fund's
Declaration of Trust.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number
of shares of beneficial interest of one or more series and classes. Each share
of a series or class represents an equal proportionate interest with each other
share of the series or class. Upon liquidation shares are entitled to a pro rata
share in the net assets of the portfolio of securities underlying the series.
Shareholders have no preemptive or conversion rights.
SHAREHOLDER LIABILITY
Pursuant to court decisions or other theories of law, shareholders of a
Massachusetts business trust may be held personally liable on the obligations of
the Fund. The possibility of shareholders incurring financial loss under such
circumstances appears remote because the Fund's Declaration of Trust (1)
contains an express disclaimer of shareholder liability for obligations of the
Fund; (2) requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the Trustees;
and (3) provides for indemnification out of the Fund property for any
shareholder held personally liable for the obligations of the Fund.
VOTING RIGHTS
Under the Declaration of Trust, the Fund does not hold annual meetings.
Shares are entitled, however, to vote at meetings called for the election of
Trustees or to consider other matters. No amendment may be made to the
Declaration of Trust without the approval of the shareholders of the Fund.
Shares have non-cumulative voting rights, which means that the holders of more
than 50% of the shares voting for the election of Trustees can elect 100% of the
Trustees to be elected at a meeting, and, in such event, the holders of the
remaining percentage of shares voting will not be able to elect any Trustees.
Shares of all of the Fund's portfolios vote together irrespective of class on
all matters except (1) when the 1940 Act requires that shares shall be voted by
an individual portfolio, and (2) when the Trustees of the Fund have determined
that a matter does not affect any interest of one or more portfolios, only
holders of shares of the other portfolio(s) shall be entitled to vote thereon.
The Trustees shall continue to hold office indefinitely, unless
otherwise required by law, and may appoint successor Trustees. Trustees may be
removed from office (1) at any time by two-thirds vote of the Trustees; (2) when
any Trustee becomes mentally or physically incapacitated; or (3) at a special
meeting of shareholders by a two-thirds vote of the outstanding shares. Any
Trustee may also voluntarily resign from office.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only
for his own willful defaults. If reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, a Trustee shall
not be liable for any neglect or wrongdoing of any such person; provided,
however, that nothing in the Declaration of Trust shall protect a Trustee
against any liability for his willful misfeasance, bad faith, gross negligence
or reckless disregard of his duties.
The Trustees have absolute and exclusive control over the management
and disposition of all assets of the Fund and may perform such acts as in their
sole judgment and discretion are necessary and proper for conducting the
business and affairs of the Fund or promoting the interests of the Fund and the
shareholders.
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INVESTMENT ADVISER
- --------------------------------------------------------------------------------
Subject to the general supervision of the Fund's Board of Trustees,
Keystone serves as investment adviser to the Fund and is responsible for the
overall management of the Fund's business and affairs.
Keystone, located at 200 Berkeley Street, Boston, Massachusetts
02116-5034, has provided investment advisory and management services to
investment companies and private accounts since it was organized in 1932.
Keystone is a wholly-owned subsidiary of Keystone Investments, 200 Berkeley
Street, Boston, Massachusetts 02116-5034.
Keystone Investments is a private corporation predominantly owned by
current and former members of management of Keystone and its affiliates. The
shares of Keystone Investments common stock beneficially owned by management are
held in a number of voting trusts, the trustees of which are George S. Bissell,
Albert H. Elfner, III, Edward F. Godfrey, Ralph J. Spuehler, Jr. and Rosemary D.
Van Antwerp. Keystone Investments provides accounting, bookkeeping, legal,
personnel and general corporate services to Keystone Management, Keystone, their
affiliates and the Keystone Investments Family of Funds.
Pursuant to its Investment Advisory and Management Agreement with the
Fund (the "Advisory Agreement"), Keystone is required to provide all necessary
administrative services, office space, equipment and clerical personnel for
handling the affairs of the Portfolio. The Advisory Agreement also requires
Keystone to furnish the Portfolio investment management services, subject to the
control of the Trustees of the Fund; provided, however, that Keystone, at its
own expense may contract with one or more firms to provide such investment
management services. At the request and subject to the direction of the Trustees
of the Fund, Keystone is also required to provide or cause to be provided to the
Portfolio custodial, auditing, valuation, bookkeeping, legal, stock transfer and
dividend disbursing services; services related to and preparation of
shareholders' reports, trustees' and shareholders' meetings; and maintenance of
registration with the Securities and Exchange Commission and various states as
well as insurance and membership in trade associations and related items.
Keystone pays all charges and expenses relating to these items as further
described below. Keystone provides certain of these items itself and obtains
others from other organizations, in each case subject to the direction of the
Trustees.
In addition to Keystone's compensation, the Fund pays its brokerage
commissions, interest charges, taxes, fees (other than the registration fees
referred to above) payable to government agencies, any fees of its unaffiliated
Trustees for services to the Fund, and extraordinary expenses. Keystone pays the
compensation of any officers and affiliated Trustees of the Fund.
As compensation for the services and facilities provided to the
Portfolio pursuant to the Advisory Agreement, Keystone is generally entitled to
receive at the end of each fiscal quarter an amount equal to (1) 5% of the gross
income of the Portfolio, less (2) the amount of the net expenses borne by the
Fund (excluding Keystone's compensation, interest, taxes, brokerage commissions,
and extraordinary expenses) for such quarter; but in no event shall the amount
of such compensation be less than zero. "Gross income" means the total of all
interest income calculated on an accrual basis and includes accrued discounts on
debt securities.
Commencing December 28, 1992, Keystone, voluntarily limited its fee for
the Portfolio to an annual rate of 0.09% of the Portfolio's average net assets.
Keystone expects to maintain this voluntary limitation on a calendar month by
month basis. Keystone continues to pay the Fund's normal operating expenses,
excluding Keystone's compensation, interest, taxes, brokerage commissions, fees
of the Fund's Independent Trustees, and extraordinary expenses.
The Advisory Agreement also provides that if the annual expenses of the
Fund exceed the limits on investment company expenses imposed by any statute or
any regulatory authority of any jurisdiction in which shares of the Fund are
qualified for offer and sale, Keystone will bear the amount of such excess to
the extent required thereunder. Keystone will not be required to bear such
excess, however, (1) to an extent greater than the compensation due Keystone for
the period for which such expense limitation is required to be calculated,
unless such statute or regulatory authority shall so require; and (2) to an
extent that would result in the Fund's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code. The term
"expenses" is defined in such laws or regulations and, generally speaking,
excludes brokerage commissions, taxes, interest and extraordinary expenses. It
is believed that the lowest such annual limitation, as of the date of this
statement of additional information, was 2.5% of the first $30,000,000 of
average month-end net assets, 2.0% of the next $70,000,000 and 1.5% of any
excess over $100,000,000.
For the fiscal years ended December 31, 1993 and 1994, the Fund paid
Keystone $510,844 and $148,293, respectively, for investment management
services. For the year ended December 31, 1995, the Fund paid Keystone $23,337
for such services.
Under the Advisory Agreement, any liability of Keystone in connection
with rendering services thereunder is limited to situations involving its
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties.
The Advisory Agreement continues in effect from year to year only so
long as such continuance is specifically approved at least annually by the vote
of a majority of the Trustees who are not "interested persons" (as defined in
the 1940 Act) of the Fund or Keystone cast in person at a meeting called for the
purpose of voting on such approval. The Advisory Agreement may be terminated,
without penalty, on 60 days' written notice by the vote of the Board of Trustees
or by the vote of a majority of the outstanding voting securities of the Fund.
Keystone may terminate the Advisory Agreement on 90 days' written notice to the
Fund. The Advisory Agreement will terminate automatically upon its assignment.
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DISTRIBUTOR
- --------------------------------------------------------------------------------
The Fund has entered into a Distribution Agreement (the "Distribution
Agreement") with FICO, a wholly-owned subsidiary of Keystone.
The Fund has appointed FICO to act as principal underwriter of the
Fund's shares in such states as the Fund may, from time to time, designate. FICO
will act as agent for the Fund and not as principal. FICO will have the right to
obtain subscriptions for and to sell shares as agent of the Fund and, in so
doing, may retain and employ representatives to promote distribution of the
shares and may obtain orders from brokers or dealers or others for sales of
shares to them. No such representative, dealer or broker shall have any
authority to act as agent for the Fund. The Distribution Agreement provides that
FICO will bear the expenses of preparing, printing and distributing advertising
and sales literature and prospectuses used by it.
All subscriptions and sales of shares by FICO are at the offering price
of the shares in accordance with the provisions of the Fund's Declaration of
Trust, By-Laws, current prospectus and statement of additional information. All
orders are subject to acceptance by the Fund, and the Fund reserves the right in
its sole discretion to reject any order received. Under the Distribution
Agreement, the Fund is not liable to anyone for failure to accept any order.
FICO has agreed that it will, in all respects, duly conform with all
state and federal laws applicable to the sale of the shares and will indemnify
and hold harmless the Fund, and each person who has been, is or may be a Trustee
or officer of the Fund, against expenses reasonably incurred by any of them in
connection with any claim, action, suit or proceeding to which any of them may
be a party, that arises out of or is alleged to arise out of any
misrepresentation or omission to state a material fact on the part of FICO or
any other person for whose acts FICO is responsible or is alleged to be
responsible, unless such misrepresentation or omission was made in reliance upon
written information furnished by the Fund.
The Distribution Agreement continues in effect only if its terms and
its continuance are approved at least annually at a meeting called for that
purpose by a majority of the Trustees who are not parties to such agreement or
"interested persons" of any such party and if its continuance is approved by
vote of a majority of the Trustees or a majority of the outstanding voting
shares of the Fund. Under the Distribution Agreement, the Fund is responsible
for all expenses in connection with the registration of its shares with the
Securities and Exchange Commission, auditing and filing fees in connection with
the registration of its shares under the various state "blue-sky" laws and the
cost of preparation of prospectuses and other expenses. Keystone pays such
expenses on the Fund's behalf.
The Distribution Agreement may be terminated, without penalty, on 60
days' written notice by the Fund or on 90 days' written notice by FICO. The
Distribution Agreement will terminate automatically upon its "assignment" as
that term is defined in the 1940 Act.
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BROKERAGE
- --------------------------------------------------------------------------------
It is the policy of the Fund, in effecting transactions in portfolio
securities, to seek best execution of orders at the most favorable prices. The
determination of what may constitute best execution and price in the execution
of a securities transaction by a broker involves a number of considerations,
including, without limitation, the overall direct net economic result to the
Fund, involving both price paid or received and any commissions and other costs
paid, the efficiency with which the transaction is effected, the ability to
effect the transaction at all where a large block is involved, the availability
of the broker to stand ready to execute potentially difficult transactions in
the future and the financial strength and stability of the broker. Such
considerations are weighed by management in determining the overall
reasonableness of brokerage commissions paid.
Subject to the foregoing, a factor in the selection of brokers is the
receipt of research services, such as analyses and reports concerning issuers,
industries, securities, economic factors and trends and other statistical and
factual information. Any such research and other statistical and factual
information provided by brokers to the Fund or Keystone is considered to be in
addition to and not in lieu of services required to be performed by Keystone
under the Advisory Agreement. The cost, value and specific application of such
information are indeterminable and cannot be practicably allocated among the
Fund and other clients of Keystone who may indirectly benefit from the
availability of such information. Similarly, the Fund may indirectly benefit
from information made available as a result of transactions for such other
clients.
The Fund's securities transactions are generally principal transactions
with the issuer of the security or with major underwriters and dealers for money
market instruments. Accordingly, the Fund does not pay significant brokerage
commissions. The cost of securities purchased from underwriters includes an
underwriting commission or concession, and the prices at which securities are
purchased from and sold to dealers include a dealer's mark-up or mark-down.
Purchases from underwriters will include the underwriting commission or
concession and purchases from dealers serving as market makers will include the
spread between the bid and asked prices. Where transactions are made in the
over-the-counter market, the Fund will deal with primary market makers unless
more favorable prices are otherwise obtainable.
The Fund may participate, if and when practicable, in group bidding for
the purchase directly from an issuer of certain securities for the Fund's
portfolio in order to take advantage of the lower purchase price available to
members of such a group.
The Board of Trustees of the Fund has determined that the Fund may
follow a policy of considering sales of shares as a factor in the selection of
broker-dealers to execute portfolio transactions, subject to the requirements of
best execution, including best price, described above.
Investment decisions for the Fund are made independently from those of
the other funds and investment accounts managed by Keystone. It may frequently
develop that the same investment decision is made for more than one fund.
Simultaneous transactions are inevitable when the same security is suitable for
the investment objective of more than one account. When two or more funds or
accounts are engaged in the purchase or sale of the same security, the
transactions are allocated as to amount in accordance with a formula that is
equitable to each fund or account. It is recognized that in some cases this
system could have a detrimental effect on the price or volume of the security as
far as the Fund is concerned. In other cases, however, it is believed that the
ability of the Fund to participate in volume transactions will produce better
executions for the Fund. It is the opinion of the Board of Trustees of the Fund
that the desirability of retaining Keystone as investment adviser to the Fund
outweighs any disadvantages that may result from exposure to simultaneous
transactions.
The policy of the Fund with respect to brokerage is and will be
reviewed by the Board of Trustees from time to time. Because of the possibility
of further regulatory developments affecting the securities exchanges and
brokerage practices generally, the foregoing practices may be changed, modified
or eliminated.
In no instance are portfolio securities purchased from or sold to
Keystone, FICO or any of their affiliated persons, as defined in the 1940 Act
and rules and regulations issued thereunder.
During the fiscal years ended December 31, 1992, 1993 and 1994, the
Fund did not pay any brokerage commissions.
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
As of March 29, 1996, the following entities owned of record 5% or
more of the outstanding shares of the Fund: Keystone Investment Distributors
Company, Attn: Mgr. Financial Accounting, 200 Berkeley Street, Boston, MA
02116-5022, 12.3%; Keystone Asset Corp., Attn: Kim Lynch, 200 Berkeley Street,
Boston, MA 02116-5022, 24.6%; Keystone Investment Management Company and
subsidiaries, Attn: Kim Lynch, 200 Berkeley Street, Boston, MA 02116-5022,
15.4%; and Keystone Management, Inc., Attn Kim Lynch, 200 Berkeley Street,
Boston, MA 02116-5022, 43.2%.
State Street Bank and Trust Company (the "Custodian"), located at 225
Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and
cash of the Fund. The Custodian, in addition to its custodial services, performs
accounting and related recordkeeping functions for the Fund.
KIRC, located at 101 Main Street, Cambridge, Massachusetts 02142-1519,
is a wholly-owned subsidiary of Keystone and acts as transfer agent and dividend
disbursing agent for the Fund.
KPMG Peat Marwick LLP, located at 99 High Street, Boston, Massachusetts
02110, Certified Public Accountants, are the independent auditors for the Fund.
Except as otherwise stated in its prospectuses or required by law, the
Fund reserves the right to change the terms of the offer stated in its
prospectuses without shareholder approval, including the right to impose or
change fees for services provided.
No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in the Fund's
prospectuses, statements of additional information or in supplemental sales
literature issued by the Fund or its Principal Underwriter. No person is
entitled to rely on any information or representation not contained therein.
The Fund's prospectus and this statement of additional information omit
certain information contained in the Fund's Registration Statement filed with
the Securities and Exchange Commission, which may be obtained from the
Securities and Exchange Commission's principal office in Washington, D.C. upon
payment of the fee prescribed by the rules and regulations promulgated by the
Securities and Exchange Commission.
<PAGE>
APPENDIX
MONEY MARKET INSTRUMENTS
The Fund's investments in commercial paper are limited to those rated
A-1 by Standard & Poor's Corporation ("S&P"), Prime-1 by Moody's Investors
Service, Inc. ("Moody's") or F-1 by Fitch's Investors Services, Inc.
("Fitch's"). These ratings and other money market instruments are described
below.
COMMERCIAL PAPER RATINGS
Commercial paper rated A-1 by S&P has the following characteristics:
(1) liquidity ratios are adequate to meet cash requirements; (2) the issuer's
long-term senior debt is rated "A" or better, although in some cases "BBB"
credits may be allowed; (3) the issuer has access to at least two additional
channels of borrowing; (4) basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances; and (5) typically, the issuer's
industry is well established, and the issuer has a strong position within the
industry.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks that may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships that exist with the issuer; and (8) recognition by the management
of obligations that may be present or may arise as a result of public
preparations to meet such obligations. Relative strength or weakness of the
above factors determines how the issuer's commercial paper is rated within
various categories.
The rating F-1 is the highest rating assigned by Fitch's. Among the
factors considered by Fitch's in assigning this rating are the following: (1)
the issuer's liquidity; (2) its standing in the industry; (3) the size of its
debt; (4) its ability to service its debt; (5) its profitability; (6) its return
on equity; (7) its alternative sources of financing; and (8) its ability to
access the capital markets. Analysis of the relative strength or weakness of
these factors and others determines whether an issuer's commercial paper is
rated F-1.
MASTER DEMAND NOTES
Master demand notes are unsecured obligations that permit the
investment of fluctuating amounts by the Fund at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and the issuer, as
borrower. Master demand notes may permit daily fluctuations in the interest rate
and daily changes in the amounts borrowed. The Fund has the right to increase
the amount under the note at any time up to the full amount provided by the note
agreement or to decrease the amount under the note, and the borrower may repay
up to the full amount of the note without penalty. Notes purchased by the Fund
must permit the Fund to demand payment of principal and accrued interest at any
time (on not more than seven days' notice) or to resell the note at any time to
a third party. Master demand notes purchased by the Fund may have maturities of
more than one year, provided they specify that (1) the Fund be entitled to
payment of principal and accrued interest upon not more than seven days' notice,
and (2) the rate of interest on such notes be adjusted automatically at periodic
intervals which normally will not exceed 31 days but may extend up to one year.
Because these types of notes are direct lending arrangements between the lender
and borrower, such instruments are not normally traded, and there is no
secondary market for these notes, although they are redeemable and thus
repayable by the borrower at face value plus accrued interest at any time.
Accordingly, the Fund's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. In connection with master
demand note arrangements, Keystone Investment Management Company ("Keystone")
considers, under standards established by the Board of Trustees, earning power,
cash flow, and other liquidity ratios of the borrower and continually monitors
the ability of the borrower to pay principal and interest on demand. These
notes, as such, are not typically rated by credit rating agencies. Unless they
are so rated, the Fund may invest in them only if at the time of an investment
the issuer meets the criteria set forth above for commercial paper. The notes
will be deemed to have a maturity equal to the longer of the period remaining to
the next interest rate adjustment or the demand notice period.
U.S. GOVERNMENT SECURITIES
Securities issued or guaranteed by the U.S. government include a
variety of Treasury securities that differ only in their interest rates,
maturities and dates of issuance. Treasury bills have maturities of one year or
less. Treasury notes have maturities of one to ten years and Treasury bonds
generally have maturities of greater than ten years at the date of issuance.
Securities issued or guaranteed by the U.S. government or its agencies
or instrumentalities include direct obligations of the U.S. Treasury and
securities issued or guaranteed by the Federal Housing Administration, Farmers
Home Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Home Loan Banks, Federal
Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land
Banks, Maritime Administration, The Tennessee Valley Authority, District of
Columbia Armory Board and Federal National Mortgage Association.
Some obligations of U.S. government agencies and instrumentalities,
such as Treasury bills and Government National Mortgage Association pass-through
certificates, are supported by the full faith and credit of the U.S. government.
Others, such as securities of Federal Home Loan Banks, are supported by the
right of the issuer to borrow from the Treasury. Still others, such as bonds
issued by the Federal National Mortgage Association, a private corporation, are
supported only by the credit of the instrumentality. Because the U.S. government
is not obligated by law to provide support to an instrumentality it sponsors,
the Fund will invest in the securities issued by such an instrumentality only
when Keystone determines that the credit risk with respect to the
instrumentality does not make its securities unsuitable investments. U.S.
government securities will not include international agencies or
instrumentalities in which the U.S. government, its agencies or
instrumentalities participate, such as the International Bank for Reconstruction
and Development (the "World Bank"), the Asian Development Bank or the
Inter-American Development Bank, or issues insured by the Federal Deposit
Insurance Corporation.
CERTIFICATES OF DEPOSITS
Certificates of deposit are receipts issued by a bank in exchange for
the deposit of funds. The issuer agrees to pay the amount deposited plus
interest to the bearer of the receipt on the date specified on the certificate.
The certificate usually can be traded in the secondary market prior to maturity.
Certificates of deposit will be limited to U.S. dollar denominated
certificates of U.S. banks (including their branches abroad) and of U.S.
branches of foreign banks that are members of the Federal Reserve System or the
Federal Deposit Insurance Corporation, and have at least $1 billion in deposits
as of the date of their most recently published financial statements.
The Fund will not acquire time deposits or obligations issued by the
World Bank, the Asian Development Bank or the Inter-American Development Bank.
Additionally, the Fund does not currently intend to purchase such foreign
securities (except to the extent that certificates of deposit of foreign
branches of U.S. banks may be deemed foreign securities) or purchase
certificates of deposit, bankers' acceptances or other similar obligations
issued by foreign banks.
BANKERS' ACCEPTANCES
Bankers' acceptances typically arise from short-term credit
arrangements designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by the bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most acceptances have maturities of six months or less.
Bankers' acceptances acquired by the Fund must have been accepted by U.S.
commercial banks, including foreign branches of U.S. commercial banks, having
total deposits at the time of purchase in excess of $1 billion and must be
payable in U.S. dollars.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. Repurchase agreements
may be entered into only with a member bank of the Federal Reserve System which
has at least $1 billion in assets, a primary dealer in U.S. government
securities or other financial institution believed by Keystone to be
creditworthy. At this time such persons are not required to be registered as
U.S. government securities dealers with any regulatory organization. Under such
agreements, the bank, primary dealer or other financial institution agrees, upon
entering into the contract, to repurchase the security at a mutually agreed upon
date and price, thereby determining the yield during the term of the agreement.
This results in a fixed rate of return insulated from market fluctuations during
such period. The seller under a repurchase agreement will be required to
maintain the value of the securities subject to the agreement at not less than
the repurchase price, and such value will be determined on a daily basis by
marking the underlying securities to their market value. Although the securities
subject to the repurchase agreement might bear maturities exceeding a year, the
Fund only intends to enter into repurchase agreements that provide for
settlement within a year and usually within seven days. Securities subject to
repurchase agreements will be held by the Fund's custodian or in the Federal
Reserve Book Entry System. The Fund does not bear the risk of a decline in value
of the underlying security unless the seller defaults under its repurchase
obligation. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying securities and losses, including (1) possible declines in the value
of the underlying securities during the period while the Fund seeks to enforce
its rights thereto; (2) possible subnormal levels of income and lack of access
to income during this period; and (3) expenses of enforcing its rights. The
Board of Trustees of the Fund has established procedures to evaluate the
creditworthiness of each party with whom the Fund enters into repurchase
agreements by setting guidelines and standards of review for Keystone and
monitoring Keystone's actions with regard to repurchase agreements.
<PAGE>
MASTER RESERVES TRUST
ANNUAL REPORT
December 31, 1995
<PAGE>
MASTER RESERVES TRUST
MONEY MARKET PORTFOLIO I
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each year
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
Net Investment Income 0.057 0.042 0.032 0.037 0.059 0.079 0.089 0.073 0.064 0.066
Less Distributions
Dividends from Net Investment Income (0.057) (0.042) (0.032) (0.037) (0.059) (0.079) (0.089) (0.073) (0.064) (0.066)
-------------------------------------------------------------------------------------------
Net Asset Value, End of Year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===========================================================================================
Total Return 5.83% 4.23% 3.24% 3.76% 6.01% 8.27% 9.25% 7.57% 6.60% 6.76%
Ratios/Supplemental Data
Ratios to Average Net Assets
Net Investment Income 5.83% 4.49% 3.23% 3.70% 5.90% 7.92% 9.24% 7.41% 6.51% 6.42%
Total Expenses 0.09% 0.10% 0.10% 0.19% 0.20% 0.26% 0.30% 0.25% 0.23% 0.24%
Net Assets, End of Year (thousands) $35,910 $30,314 $61,354 $205,818 $56,603 $67,682 $162,336 $280,142 $222,314 $187,845
</TABLE>
See Notes to Financial Statements.
1
<PAGE>
MASTER RESERVES TRUST
MONEY MARKET PORTFOLIO I
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
Principal Maturity Market
Amount Date Value
--------- -------- -----------
<S> <C> <C>
Bank Notes (2.8%) (c)
$1,000,000 National Bank Detroit, 5.75% (Cost $1,000,008) 01/18/96 $ 1,000,008
-----------
Bankers' Acceptances (5.6%)
1,000,000 Morgan Guaranty Co. of New York, 5.70% 01/16/96 997,783
1,000,000 Union Bank Switzerland, 5.61% 02/01/96 995,325
-----------
Total Bankers Acceptances (Cost $1,993,108) 1,993,108
-----------
Certificate of Deposit (2.8%)
1,000,000 Wachovia Bank, Georgia, 5.81% (Cost $1,000,019) 01/25/96 1,000,019
-----------
Commercial Paper (38.4%) (c)
1,000,000 ABN Amro North America, 5.69% 01/30/96 995,575
1,000,000 Ameritech Capital Funding Corp., 5.60% 02/12/96 993,622
1,000,000 Bell Atlantic Network, 5.50% 02/23/96 992,056
1,000,000 Coca Cola Co., 5.52% 03/15/96 988,928
1,000,000 Dupont EI De Nemours & Co., 5.67% 01/22/96 996,850
500,000 General Electric Capital Corp., 5.62% 01/17/96 498,829
500,000 General Electric Capital Corp., 5.64% 01/24/96 498,277
1,160,000 Heinz (H.J.) Co., 5.57% 02/06/96 1,153,718
1,000,000 Hewlett Packard Co., 5.69% 01/04/96 999,684
500,000 Hewlett Packard Co., 5.63% 01/12/96 499,218
1,000,000 Motorola Credit Corp., 5.73% 01/05/96 999,523
600,000 Nestle Capital Corp., 5.54% 02/16/96 595,845
600,000 Nestle Capital Corp., 5.53% 02/23/96 595,207
1,000,000 Pfizer Inc., 5.70% 01/12/96 998,417
1,000,000 Pitney Bowes Credit Corp., 5.60% 02/09/96 994,089
1,000,000 Procter & Gamble Co., 5.65% 01/10/96 998,744
-----------
Total Commercial Paper (Cost $13,798,461) 13,798,582
-----------
Master Note (1.4%)
499,000 Associates Corporation of North America, 5.71% 01/02/96 499,000
(Cost $499,000) -----------
</TABLE>
2
<PAGE>
MASTER RESERVES TRUST
MONEY MARKET PORTFOLIO I
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
Principal Maturity Market
Amount Date Value
- ---------- -------- ------------
<S> <C> <C>
U.S. Government Agency Issues (38.5%) (c)
1,000,000 Federal Farm Credit Bank Discount Note, 5.54% 02/14/96 $ 993,383
3,194,000 Federal Home Loan Mortgage Discount Note, 5.40% 01/02/96 3,194,000
824,000 Federal Home Loan Mortgage Discount Note, 5.57% 01/03/96 823,873
1,000,000 Federal Home Loan Bank Discount Note, 5.59% 01/10/96 998,758
1,000,000 Federal Home Loan Bank Discount Note, 5.52% 02/28/96 991,260
1,000,000 Federal Home Loan Bank Discount Note, 5.38% 04/23/96 983,511
1,000,000 Federal Home Loan Bank Discount Note, 5.33% 05/13/96 980,933
1,000,000 Federal National Mortgage Association Discount Note, 5.60% 01/05/96 999,533
1,000,000 Federal National Mortgage Association Discount Note, 5.52% 02/21/96 992,333
1,910,000 Federal National Mortgage Association Discount Note, 5.47% 03/08/96 1,891,231
1,000,000 Federal National Mortgage Association Discount Note, 5.41% 03/18/96 988,685
------------
Total U.S. Government Agency Issues (Cost $13,836,283) 13,837,500
------------
Maturity
Repurchase Agreements (10.9%) Value
----------
Smith Barney Harris Upham & Co., 5.90%, purchased 12/29/95
(Collateralized by $1,950,020, FNMA #332607, 7.00%,
12/01/15) maturing 01/02/96 $1,915,255 1,914,000
Investments in repurchase agreements, in a joint trading account
purchased 12/29/95, 5.90% to 5.92% maturing 01/02/96 (b) 2,001,313 2,000,000
-----------
Total Repurchase Agreements (Cost $3,914,000) 3,914,000
-----------
Total Investments (Cost $36,040,879)(a) 36,042,217
Other Assets and Liabilities - Net (-0.4%) (132,182)
-----------
Net Assets (100%) $35,910,035
===========
</TABLE>
(a) The cost of investments for federal income tax purposes is identical to
the cost for financial reporting purposes. Gross unrealized
appreciation and depreciation of investments, based on identified tax
cost, at December 31, 1995 are as follows:
Gross unrealized appreciation......................... $1,338
Gross unrealized depreciation ........................ 0
------
Net unrealized appreciation........................... $1,338
======
(b) The repurchase agreements are fully collaterized by U.S. Government and/or
agency obligations based on market prices at December 31, 1995
(c) Rates shown are the effective yields at the date of purchase.
See Notes to Financial Statements
3
<PAGE>
Master Reserves Trust
Money Market Portfolio I
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Assets (Note 1)
Investments at market value
Portfolio Securities (Cost $32,126,879) $32,128,217
Repurchase Agreements (Cost $3,914,000) 3,914,000
-----------
Total Investments 36,042,217
Cash 2,608
Interest receivable 22,405
-----------
Total assets 36,067,230
-----------
Liabilities (Notes 1 and 2)
Distribution payable 156,841
Accrued management fees 354
-----------
Total liabilities 157,195
-----------
Net assets $35,910,035
===========
Net assets represented by:
Paid-in capital $35,899,786
Accumulated net realized gain
on investments 8,911
Net unrealized appreciation on investments 1,338
-----------
Total net assets $35,910,035
===========
Net Asset Value, offering and redemption price per share:
Net asset value of $35,910,035 / 35,903,688
outstanding shares of beneficial interest $1.00
===========
See Notes to Financial Statements.
4
<PAGE>
Master Reserves Trust
Money Market Portfolio I
STATEMENT OF OPERATIONS
Year Ended December 31, 1995
Investment income (Note 1)
Interest $1,518,678
----------
Expenses (Note 2)
Management fee 23,337
----------
Total expenses 23,337
----------
Net investment income 1,495,341
----------
Net realized and unrealized gain on investments (Note 1)
Net realized gain on investments 31
Net change in unrealized appreciation on investments 1,350
----------
Net realized and unrealized gain on investments 1,381
----------
Net increase in net assets resulting from operations $1,496,722
==========
See Notes to Financial Statements.
5
<PAGE>
Master Reserves Trust
Money Market Portfolio I
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994
<S> <C> <C>
Operations
Net investment income $ 1,495,341 $ 2,177,261
Net realized and unrealized gain (loss) on investments 31 (5,765)
Net change in unrealized appreciation
on investments 1,350 2,171
------------ ------------
Net increase in net assets
resulting from operations 1,496,722 2,173,667
------------ ------------
Distributions to shareholders
from net investment income (1,495,341) (2,177,261)
------------ ------------
Capital share transactions (Note 3)
Proceeds from shares sold 124,846,435 225,765,967
Payments for shares redeemed (120,750,938) (257,357,648)
Net asset value of shares issued
in reinvestment of distributions 1,498,978 555,364
------------ ------------
Net increase (decrease) in net
assets resulting from capital
share transactions 5,594,475 (31,036,317)
------------ ------------
Total increase (decrease) in net assets 5,595,856 (31,039,911)
Net assets
Beginning of year 30,314,179 61,354,090
------------ ------------
End of year $ 35,910,035 $ 30,314,179
============ ============
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
(1) SIGNIFICANT ACCOUNTING POLICIES
Master Reserves Trust (the "Fund"), a Massachusetts business trust, is
an open-end management investment company registered under the Investment
Company Act of 1940. Keystone Management, Inc. ("KMI") is the Investment Manager
and Keystone Investment Management Company (formerly Keystone Custodian Funds,
Inc.)("Keystone") is the Investment Adviser. Keystone is a wholly-owned
subsidiary of Keystone Investments, Inc. (formerly Keystone Group, Inc.)("KII"),
a Delaware corporation. KII is privately owned by an investor group consisting
predominantly of current and former members of management of Keystone. Keystone
Investor Resource Center, Inc. ("KIRC"), a wholly-owned subsidiary of Keystone,
is the Fund's transfer and dividend disbursing agent. The Fund is a mutual fund
that seeks maximum current income while perserving capital by investing in money
market instruments.
The Fund currently offers institutional and other substantial investors a
money market portfolio (Money Market Portfolio I) (the "Portfolio"). The Fund
began offering shares of the Portfolio on May 4, 1976.
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles which
requires management to make estimates and assumptions that affect amounts
reported herein. Although actual results could differ from these estimates, any
such differences are expected to be immaterial to the net assets of the
Portfolio.
A. Portfolio securities which are purchased with maturities of sixty
days or less are valued at amortized cost (original purchase cost as adjusted
for amortization of premium or accretion of discount), which, when combined with
accrued interest, approximates market. Portfolio securities maturing in more
than sixty days for which market quotations are readily available are valued at
current market value. Portfolio securities maturing in more than sixty days when
purchased, which are held on the sixtieth day prior to maturity, are valued at
amortized cost (market value on the sixtieth day adjusted for amortization of
premium or accretion of discount), which, when combined with accrued interest,
approximates market. All other securities and other assets are valued at fair
value as determined in good faith using methods prescribed by the Board of
Trustees.
7
<PAGE>
B. Securities transactions are accounted for on the trade date.
Interest income is recorded on the accrual basis. Realized gains and losses from
securities transactions are determined using the identified cost basis for both
financial reporting and federal income tax purposes.
C. The Portfolio has qualified, and intends to qualify in the future,
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (Internal Revenue Code). Thus, the Portfolio is relieved of any federal
income tax liability by distributing all of its net investment income and net
capital gains, if any, to its shareholders. The Portfolio intends to avoid
excise tax liability by making the required distributions under the Internal
Revenue Code.
D. When the Portfolio enters into a repurchase agreement (a purchase of
securities whereby the seller agrees to repurchase the securities at a mutually
agreed upon date and price) the repurchase price of the securities will
generally equal the amount paid by the Portfolio plus a negotiated interest
amount. The seller under the repurchase agreement will be required to provide
securities ("collateral") to the Portfolio whose value will be maintained at an
amount not less than the repurchase price, and which generally will be
maintained at 101% of the repurchase price. The Portfolio monitors the value of
collateral on a daily basis, and if the value of the collateral falls below
required levels, the Portfolio intends to seek additional collateral from the
seller or terminate the repurchase agreement. If the seller defaults, the
Portfolio would suffer a loss to the extent that the proceeds from the sale of
the underlying securities were less than the repurchase price. Any such loss
would be increased by any cost incurred on disposing of such securities. If
bankruptcy proceedings are commenced against the seller under the repurchase
agreement, the realization on the collateral may be delayed or limited.
Repurchase agreements entered into by the Portfolio will be limited to
transactions with dealers or domestic banks believed to present minimal credit
risks, and the Portfolio will take constructive receipt of all securities
underlying repurchase agreements until such agreements expire.
E. The Portfolio declares dividends from net investment income daily,
pays dividends monthly and automatically reinvests such dividends in additional
shares at net asset value, unless shareholders request payment in cash. Net
realized short-term capital gains of the portfolio, if any, will be distributed
annually.
(2) MANAGEMENT FEE AND OTHER PARTY TRANSACTIONS
Under the terms of the current management contract, Keystone provides
investment management and administrative services as well as office space,
equipment and clerical personnel for handling the
8
<PAGE>
affairs of the Fund. At the request and subject to the discretion of the
Trustees of the Fund, Keystone is required at its own expense to provide or
cause to be provided to the Fund the following additional operating services,
facilities and supplies: custodial, auditing, valuation, bookkeeping, legal,
stock transfer and dividend disbursing services, shareholders' reports, and
shareholders' meetings and maintenance of registration with the Securities and
Exchange Commission and various states, as well as insurance and membership in
trade associations and related items. In return, Keystone is entitled to a fee,
payable quarterly, computed at the annual rate of 0.09% of average daily net
assets of the Portfolio.
(3) SHARES OF BENEFICIAL INTEREST
The Fund is authorized to issue an unlimited number of shares, no par
value, for each portfolio. All capital share transactions included in the
Portfolio's Statement of Changes in Net Assets were made at net asset value of
$1.00 per share.
9
<PAGE>
[KPMG LOGO] Peat Marwick LLP
INDEPENDENT AUDITORS' REPORT
The Trustees and Shareholders
Master Reserves Trust
We have audited the accompanying statement of assets and liabilities of Money
Market Portfolio I of Master Reserves Trust, including the schedule of
investments, as of December 31, 1995, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the ten-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Money
Market Portfolio I of Master Reserves Trust as of December 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the ten-year period then ended in conformity
with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
January 26, 1996
<PAGE>
MASTER RESERVES TRUST
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
Item 24(a). Financial Statements
All financial statements listed below are included in the Registrant's Statement
of Additional Information.
Financial Highlights For the fiscal years ended December 31,
1986 through 1995
Schedule of Investments December 31, 1995
Statement of Assets
and Liabilities December 31, 1995
Statement of Operations For the fiscal year ended December 31, 1995
Statement of Changes in Net Assets For the fiscal years ended December 31, 1994
and 1995
Notes to Financial Statements
Independent Auditors' Report January 26, 1996
All other statements and schedules are omitted as the required information is
inapplicable.
<PAGE>
24(b). Exhibits.
(1) A copy of the Registrant's amended and restated Declaration of Trust
was filed with Post-Effective Amendment No. 29 to Registrant's
Registration Statement as Exhibit 24(b)(1) and is incorporated herein
by reference.
(2) A copy of Registrant's By-Laws, as amended, was filed with
Post-Effective Amendment No. 26 to Registrant's Registration Statement
as Exhibit 24(b)(2) and is incorporated by reference herein.
(3) Not applicable.
(4) A. Registrant's amended and restated Declaration of Trust, Articles
III, V, and VI, was filed with Post-Effective Amendment No. 29 to
Registrant's Registration Statement as Exhibit 24(b)(1) and is
incorporated by reference herein.
B. Registrant's By-Laws, as amended, Article 2, Section 2.5, was filed
with Post-Effective Amendment No. 26 to Registrant's Registration
Statement as Exhibit 24(b)(2) and incorporated by reference herein.
(5) A copy of the form of Investment Advisory Agreement between Registrant
and Keystone Investment Management Company (formerly Keystone Custodian
Funds, Inc.) dated August 19, 1993 was filed with Post-Effective
Amendment No. 29 to Registrant's Registration Statement as Exhibit
24(b)(5)(A) and is incorporated herein by reference.
(6) A copy of the Distribution Agreement between Registrant and Fiduciary
Investment Company, Inc. dated August 19, 1993 was filed with
Post-Effective Amendment No. 29 to Registrant's Registration Statement
as Exhibit 24(b)(6) and is incorporated herein by reference.
(7) Not applicable.
(8) A copy of Registrant's Custodian, Fund Accounting and Recordkeeping
Agreement between Registrant and State Street Bank and Trust Company
dated July 18, 1988, as amended, was filed with Post-Effective
Amendment No. 26 to Registrant's Registration Statement as Exhibit
24(b)(8) and is incorporated by reference herein.
(9) Not applicable.
(10) An opinion and a consent of counsel as to the legality of shares
registered by the Fund is filed herewith.
(11) A consent as to the use of the opinion of Registrant's Independent
Auditors is filed herewith.
(12) Not applicable.
(13) A copy of the Registrant's Subscription Agreement was filed with
Registrant's Registration Statement as Exhibit 24(b)(13) and is
incorporated by reference herein.
(14) Not applicable.
(15) Not applicable.
(16) Not applicable.
(17) Financial data schedule is filed herewith.
(18) Not applicable.
(19) Powers of Attorney are filed herewith.
Item 25. Persons Controlled by or Under Common Control With Registrant
Not applicable.
Item 26. Number of Holders of Securities
Number of Record
Title of Class Holders as of March 29, 1996
-------------- ----------------------------
Shares of beneficial interest, 7
no par value
Item 27. Indemnification
Provisions for the indemnification of the Registrant's Trustees and
officers are contained in Article VIII of Registrant's Declaration of
Trust, as amended and restated, a copy of which was filed with
Post-Effective Amendment No. 29 to Registrant's Registration Statement
as Exhibit 24(b)(1) and is incorporated by reference herein.
Item 28. Businesses and Other Connections of Investment Adviser
The following tables list the names of the various officers and
directors of Keystone Investment Management Company (formerly known as
Keystone Custodian Funds, Inc.), Registrant's investment manager and
adviser. For each named individual, the table lists, for at least the
past two fiscal years, (a) any other organizations (excluding
investment advisory clients) with which the officer and/or director has
had or has substantial involvement; and (b) positions held with such
organizations.
<PAGE>
LIST OF OFFICERS AND DIRECTORS OF
KEYSTONE INVESTMENT MANAGEMENT COMPANY
Position with
Keystone
Investment
Name Management Company Other Business Affiliations
- ---- ------------------ ---------------------------
Albert H. Elfner, III Chairman of Chairman of the Board,
the Board, Chief Executive Officer,
Chief Executive President and Director:
Officer,and Keystone Investments, Inc.
Director Keystone Management, Inc.
Keystone Software, Inc.
Keystone Asset Corporation
Keystone Capital Corporation
Chairman of the Board and
Director:
Keystone Fixed Income
Advisers, Inc.
Keystone Institutional
Company, Inc.
President and Director:
Keystone Trust Company
Director or Trustee:
Fiduciary Investment
Company, Inc.
Keystone Investment
Distributors Company
Keystone Investor
Resource Center, Inc.
Boston Children's
Services Associates
Middlesex School
Middlebury College
Former Trustee or Director:
Neworld Bank
Robert Van Partners, Inc.
Philip M. Byrne Director President and Director:
Keystone Institutional
Company, Inc.
Senior Vice President:
Keystone Investments, Inc.
<PAGE>
Position with
Keystone
Investment
Name Management Company Other Business Affiliations
- ---- ------------------ ---------------------------
Herbert L. Bishop, Jr. Senior Vice None
President
Donald C. Dates Senior Vice None
President
Gilman Gunn Senior Vice None
President
Edward F. Godfrey Director, Director, Senior Vice
Senior Vice President
President, Chief Financial Officer and
Treasurer and Treasurer:
Chief Financial Keystone Investments, Inc.
Officer Keystone Investment
Distributors Company
Treasurer:
Keystone Institutional
Company, Inc.
Keystone Management,
Inc.
Keystone Software, Inc.
Fiduciary Investment
Company, Inc.
Former Treasurer and
Director:
Hartwell Keystone Advisers,
Inc.
Former Treasurer:
Robert Van Partners, Inc.
James R. McCall Director and None
President
Ralph J. Spuehler, Jr. Director President and Director:
Keystone Investment
Distributors Company
Senior Vice President and
Director:
Keystone Investments, Inc.
Chairman and Director:
Keystone Investor
Resource Center, Inc.
Keystone Management, Inc.
Formerly President:
Keystone Management, Inc.
Formerly Treasurer:
The Kent Funds
Keystone Investments, Inc.
Keystone Investment
Management Company
<PAGE>
Position with
Keystone
Investment
Name Management Company Other Business Affiliations
- ---- ------------------ ---------------------------
Rosemary D. Van Antwerp Senior Vice General Counsel, Senior
President, Vice President and
General Counsel Secretary:
and Secretary Keystone Investments, Inc.
Senior Vice President and
General Counsel:
Keystone Institutional
Company, Inc.
Senior Vice President,
General Counsel and
Director:
Keystone Investor
Resource Center, Inc.
Fiduciary Investment
Company, Inc.
Keystone Investment
Distributors Company
Senior Vice President,
General Counsel, Director
and Secretary:
Keystone Management, Inc.
Keystone Software, Inc.
Former Senior Vice
President and Secretary:
Hartwell Keystone
Advisers, Inc.
Robert Van Partners, Inc.
Vice President and
Secretary:
Keystone Fixed Income
Advisers, Inc.
Robert K. Baumback Vice President None
Betsy A. Blacher Senior Vice None
President
Francis X. Claro Vice President None
Kristine R. Cloyes Vice President None
<PAGE>
Position with
Keystone
Investment
Name Management Company Other Business Affiliations
- ---- ------------------ ---------------------------
Christopher P. Conkey Senior Vice None
President
Richard Cryan Senior Vice None
President
Maureen E. Cullinane Senior Vice None
President
George E. Dlugos Vice President None
Antonio T. Docal Vice President None
Christopher R. Ely Senior Vice None
President
Robert L. Hockett Vice President None
Sami J. Karam Vice President None
Donald M. Keller Senior Vice None
President
J. Kevin Kenely Vice President Vice President:
Keystone Investments, Inc.
Keystone Investment
Distributors Company
Keystone Institutional
Company, Inc.
Keystone Management, Inc.
Keystone Software, Inc.
Fiduciary Investment
Company, Inc.
Formerly Controller:
Keystone Investments, Inc.
Keystone Management, Inc.
Keystone Investment
Distributors Company
Keystone Software, Inc.
Fiduciary Investment
Company, Inc.
Keystone Institutional
Company, Inc.
George J. Kimball Vice President None
JoAnn L. Lyndon Vice President None
John C. Madden, Jr. Vice President None
Stephen A. Marks Vice President None
Eleanor H. Marsh Vice President None
Walter T. McCormick Senior Vice None
President
Barbara McCue Vice President None
Stanley M. Niksa Vice President None
Robert E. O'Brien Vice President None
Margery C. Parker Vice President None
<PAGE>
Position with
Keystone
Investment
Name Management Company Other Business Affiliations
- ---- ------------------ ---------------------------
William H. Parsons Vice President None
Daniel A. Rabasco Vice President None
David L. Smith Vice President None
Kathy K. Wang Vice President None
Judith A. Warners Vice President None
John D. Rogol Vice President Vice President and
and Controller Controller:
Keystone Investments,
Inc.
Keystone Investment
Distributors Company
Keystone Institutional
Company, Inc.
Fiduciary Investment
Company, Inc.
Keystone Software, Inc.
Keystone Management, Inc.
Controller:
Keystone Asset Corporation
Keystone Capital
Corporation
Joseph J. Decristofaro Asst. Vice President None
<PAGE>
Item 29. Principal Underwriter
(a) Fiduciary Investment Company, Inc., Registrant's principal
underwriter ("FICO"), also acts as principal underwriter or
distributor for the following investment companies:
Keystone Institutional Adjustable Rate Fund
Keystone Institutional Trust
Keystone Institutional Small Capitalization Fund
(b) For information with respect to each director and officer of
FICO, see the following table:
Position and Offices Position and
Name and Principal with Fiduciary Offices with
Business Address* Investment Company, Inc. the Fund
- --------------------------------------------------------------------------------
Ralph J. Spuehler, Jr. President and Director None
Edward F. Godfrey Treasurer Senior Vice President
Rosemary D. Van Antwerp Senior Vice President, Senior Vice
General Counsel and President
Director and Secretary
J. Kevin Kenely Vice President Treasurer
John D. Rogol Controller None
Jean S. Loewenberg Clerk Assistant Secretary
Albert H. Elfner, III Director President, CEO
and Trustee
* The business address of the above-listed persons is 200 Berkeley Street,
Boston, Massaschusetts 02116.
(c) Not applicable.
Item 30. Location of Accounts and Records
200 Berkeley Street
Boston, Massachusetts 02116-5034
Keystone Investor Resource Center, Inc.
101 Main Street
Cambridge, MA 02142-1519
State Street Bank and Trust Company
1776 Heritage Drive
Quincy, MA 02171
Iron Mountain
3431 Sharps Lot Road
Swansea, Massachusetts 02777
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Upon request and without charge, Registrant hereby undertakes to
furnish a copy of its latest annual report to shareholders to each
person to whom a copy of Registrant's prospectus is delivered.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for the effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Boston, in The
Commonwealth of Massachusetts, on the 11th day of April, 1996.
MASTER RESERVES TRUST
By:/s/ Rosemary D. VanAntwerp
-----------------------------
Rosemary D. VanAntwerp
Senior Vice President
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
Registrant's Registration Statement has been signed below by the following
persons in the capacities indicated on the 11th day of April, 1996.
SIGNATURES TITLE
- ---------- -----
/s/ George S. Bissell Chairman of the Board and Trustee
- -------------------------
George S. Bissell*
/s/ Albert H. Elfner, III President, Chief Executive Officer
- ------------------------- and Trustee
Albert H. Elfner, III*
/s/ J. Kevin Kenely Treasurer (Principal Accounting
- ------------------------- and Financial Officer)
J. Kevin Kenely*
*By: /s/ James M. Wall
----------------------------
James M. Wall**
Attorney-in-Fact
<PAGE>
SIGNATURES TITLE
- ---------- -----
/s/ Frederick Amling Trustee
- --------------------------
Frederick Amling*
/s/ Charles A. Austin, III Trustee
- --------------------------
Charles A. Austin, III*
/s/ Edwin D. Campbell Trustee
- --------------------------
Edwin D. Campbell*
/s/ Charles F. Chapin Trustee
- --------------------------
Charles F. Chapin*
/s/ K. Dun Gifford Trustee
- --------------------------
K. Dun Gifford*
/s/ Leroy Keith, Jr. Trustee
- --------------------------
Leroy Keith, Jr.*
/s/ F. Ray Keyser, Jr. Trustee
- --------------------------
F. Ray Keyser, Jr.*
/s/ David M. Richardson Trustee
- --------------------------
David M. Richardson*
/s/ Richard J. Shima Trustee
- --------------------------
Richard J. Shima*
/s/ Andrew J. Simons Trustee
- --------------------------
Andrew J. Simons*
*By /s/ James M. Wall
----------------------------------
James M. Wall**
Attorney-in-Fact
**James M. Wall, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named individuals pursuant to powers of attorney
duly executed by such persons and attached hereto as Exhibit 24(b)(17).
<PAGE>
INDEX TO EXHIBITS
Page Number in
Sequential
Exhibit Number Exhibit Numbering System
- -------------- ------- ----------------
1 Amended and Restated Declaration
of Trust(3)
2 By-Laws(2)
5 Investment Advisory Agreement(3)
6 Distribution Agreement(3)
8 Custodian, Fund Accounting
and Recordkeeping Agreement, as amended(2)
10 Opinion and Consent of Counsel
11 Independent Auditors' Consent
13 Subscription Agreement(1)
17 Financial Data Schedule (filed as Exhibit 27)
19 Powers of Attorney
- ------------------
(1) Incorporated by reference herein to Registrant's Registration Statement
No. 2-54750/811-2597.
(2) Incorporated by reference herein to Post-Effective Amendment No. 26 to
Registrant's Registration Statement.
(3) Incorporated by reference herein to Post-Effective Amendment No. 29 to
Registrant's Registration Statment.
<PAGE>
EXHIBIT 99.10
April 11, 1996
Master Reserves Trust
200 Berkeley Street
Boston, Massachusetts 02116-5034
Gentlemen:
I am Senior Vice President of and General Counsel to Keystone
Investment Management Company, Inc., investment adviser to Master Reserves Trust
(the "Fund"). You have asked for my opinion with respect to the proposed
issuance of 119,541,960 additional shares of the Fund.
To my knowlede, a Prospectus is being filed with the Securities and
Exchange Commission (the "Commission") as part of this Post-Effective Amendment
No. 33 to the Fund's Registration Statement, which covers the public offering
and sale of the Fund shares currently registered with the Commission.
In my opinion, such additional shares, if issued and sold in accordance
with the Fund's Declaration of Trust Agreement ("Trust Agreement") and offering
Prospectus, will be legally issued, fully paid, and nonassessble by the Fund,
entitling the holders thereof to the rights set forth in the Trust Agreement and
subject to the limitations set forth therein.
My opinion is based upon my examination of the Fund's Trust Agreement
and By-Laws; a review of the minutes of the Fund's Board of Trustees authorizing
the issuance of such additional shares; and the Fund's Prospectus. In my
examination of such documents, I have assumed the genuineness of all signatures
and the conformity of copies to originals.
I hereby consent to the use of this opinion in connection with
Post-Effective Amendment No. 33 to the Fund's Registration Statement, which
covers the registration of such additional shares.
Sincerely yours,
/s/ Rosemary D. Van Antwerp
Rosemary D. Van Antwerp
Senior Vice President and
General Counsel
<PAGE>
EXHIBIT 99.11
CONSENT OF INDEPENDENT AUDITORS
The Trustees and Shareholders
Master Reserves Trust
We consent to the use of our report dated January 26, 1996, included herein and
to the references to our firm under the captions "FINANCIAL HIGHLIGHTS" in the
prospectus and "ADDITIONAL INFORMATION" in the statement of additional
information.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
April 11, 1996
<PAGE>
EXHIBIT 99.19
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and/or Chairman of the Board and Chief
Executive Officer and for which Keystone Custodian Funds, Inc. serves as Adviser
or Manager and registering from time to time the shares of such companies, and
generally to do all such things in my name and in my behalf to enable such
investment companies to comply with the provisions of the Securities Act of
1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
/s/ George S. Bissell
George S. Bissell
Director/Trustee,
Chairman of the Board
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and/or Chief Executive Officer and for
which Keystone Custodian Funds, Inc. serves as Adviser or Manager and
registering from time to time the shares of such companies, and generally to do
all such things in my name and in my behalf to enable such investment companies
to comply with the provisions of the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and all requirements and regulations
of the Securities and Exchange Commission thereunder, hereby ratifying and
confirming my signature as it may be signed by my said attorneys to any and all
registration statements and amendments thereto.
/s/ Albert H. Elfner, III
Albert H. Elfner, III
Director/Trustee,
President and Chief Executive Officer
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Rosemary D. Van Antwerp, Jean S.
Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T. Murphy, each of
them singly, my true and lawful attorneys, with full power to them and each of
them to sign for me and in my name in the capacity indicated below any and all
registration statements, including, but not limited to, Forms N-8A, N-8B-1, S-5,
N-1 and N-1A, as amended from time to time, and any and all amendments thereto
to be filed with the Securities and Exchange Commission for the purpose of
registering from time to time all investment companies of which I am now or
hereafter a Director, Trustee or officer and for which Keystone Investment
Management Company serves as Adviser or Manager and registering from time to
Investment Management Company time the shares of such companies, and generally
to do all such things in my name and in my behalf to enable such investment
companies to comply with the provisions of the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, and all requirements
and regulations of the Securities and Exchange Commission thereunder, hereby
ratifying and confirming my signature as it may be signed by my said attorneys
to any and all registration statements and amendments thereto.
/s/ J. Kevin Kenely
J. Kevin Kenely
Treasurer
Dated: December 15, 1995
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/s/ Frederick Amling
Frederick Amling
Director/Trustee
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/s/ Charles A. Austin III
Charles A. Austin III
Director/Trustee
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/s/ Edwin D. Campbell
Edwin D. Campbell
Director/Trustee
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/s/ Charles F. Chapin
Charles F. Chapin
Director/Trustee
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/s/ K. Dun Gifford
K. Dun Gifford
Director/Trustee
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/s/ Leroy Keith, Jr.
Leroy Keith, Jr.
Director/Trustee
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/s/ F. Ray Keyser, Jr.
F. Ray Keyser, Jr.
Director/Trustee
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/s/ David M. Richardson
David M. Richardson
Director/Trustee
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/s/ Richard J. Shima
Richard J. Shima
Director/Trustee
Dated: December 14, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/s/ Andrew J. Simons
Andrew J. Simons
Director/Trustee
Dated: December 14, 1994
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM ACCOUNTING RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
ACCOUNTING RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> MASTER RESERVES TRUST CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 36,040,879
<INVESTMENTS-AT-VALUE> 36,042,217
<RECEIVABLES> 22,405
<ASSETS-OTHER> 2,608
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 36,067,230
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 157,195
<TOTAL-LIABILITIES> 157,195
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35,899,786
<SHARES-COMMON-STOCK> 35,903,688
<SHARES-COMMON-PRIOR> 30,309,213
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,911
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,338
<NET-ASSETS> 35,910,035
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,518,678
<OTHER-INCOME> 0
<EXPENSES-NET> (23,337)
<NET-INVESTMENT-INCOME> 1,495,341
<REALIZED-GAINS-CURRENT> 31
<APPREC-INCREASE-CURRENT> 1,350
<NET-CHANGE-FROM-OPS> 1,496,722
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<DISTRIBUTIONS-OF-INCOME> (1,495,341)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 124,837,358
<NUMBER-OF-SHARES-REDEEMED> (120,750,938)
<SHARES-REINVESTED> 1,498,978
<NET-CHANGE-IN-ASSETS> 5,595,856
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> (3,902)
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<PER-SHARE-DIVIDEND> (0.06)
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</TABLE>
