AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 4, 1999
FILE NO. 811-05813
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 13
CASH RESERVES PORTFOLIO
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
C/O SIGNATURE FINANCIAL GROUP (CAYMAN) LTD.
ELIZABETHAN SQUARE, GEORGE TOWN, GRAND CAYMAN, CAYMAN ISLANDS, BWI
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 345-945-1824
SUSAN JAKUBOSKI
C/O SIGNATURE FINANCIAL GROUP (CAYMAN) LTD.
ELIZABETHAN SQUARE, GEORGE TOWN, GRAND CAYMAN, CAYMAN ISLANDS, BWI
(NAME AND ADDRESS OF AGENT FOR SERVICE)
WITH A COPY TO
ROGER P. JOSEPH, ESQ.
BINGHAM DANA LLP
150 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110 U.S.A.
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EXPLANATORY NOTE
Cash Reserves Portfolio has filed this Registration Statement pursuant to
Section 8(b) of the Investment Company Act of 1940. However, beneficial
interests in the Portfolio are not being registered under the Securities Act of
1933, since such interests will be issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Only investment companies, insurance company
separate accounts, common or commingled trust funds or similar organizations or
entities that are "accredited investors" within the meaning of Regulation D
under the 1933 Act may make investments in the Portfolio. This Registration
Statement is not an offer to sell, or the solicitation of an offer to buy, any
beneficial interests in the Portfolio.
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PART A
Responses to Items 1,2,3,5 and 9 have been omitted pursuant to General
Instruction B.2(b) of Form N-1A.
Item 4. Investment Objectives, Principal Investment Strategies, and Related
Risks.
PORTFOLIO GOAL
The goal of Cash Reserves Portfolio is to provide its investors with liquidity
and as high a level of current income as is consistent with preservation of
capital. The Portfolio's goal may be changed without the approval of its
investors, but not without written notice thereof to the Portfolio's investors
at least 30 days prior to implementing the change. Of course, there is no
assurance that the Portfolio will achieve its goal.
MAIN INVESTMENT STRATEGIES
The Portfolio invests only in high quality, short-term money market instruments
denominated in U.S. dollars. These include:
o short-term obligations of the U.S. government and its agencies and
instrumentalities, and repurchase agreements for these obligations;
o obligations of U.S. and non- U.S. banks;
o obligations issued or guaranteed by the governments of Western Europe,
Australia, Japan and Canada; and
o commercial paper and asset backed securities.
The Portfolio invests at least 25%, and may invest up to 100%, of its assets in
bank obligations, such as certificates of deposit, fixed time deposits and
bankers' acceptances.
The Portfolio's principal investment strategies are the strategies that, in the
opinion of Citibank, N.A., the Portfolio's investment adviser, are most likely
to be important in trying to achieve the Portfolio's investment goal. Of
course, there can be no assurance that the Portfolio will achieve its goal.
Please note that the Portfolio may also use strategies and invest in securities
that are not described below but that are described in Part B to this
Registration Statement.
The Portfolio complies with industry regulations that apply to money market
funds. These regulations require that the Portfolio's investments mature or be
deemed to mature within 397 days from the date purchased and that the average
maturity of the Portfolio's investments (on a dollar-weighted basis) be 90 days
or less. In addition, all of the Portfolio's investments must be in U.S.
dollar-denominated high quality securities which have been determined by
Citibank to present minimal credit risks. To be high quality, a security (or
its issuer) must be rated in one of the two highest short-term rating
categories by nationally recognized rating agencies, such as Moody's or
Standard & Poor's, or, in Citibank's opinion, be of comparable quality.
Investors should note that within these two rating categories there may be
sub-categories or gradations indicating relative quality. If the credit quality
of a security deteriorates after the Portfolio buys it, Citibank will decide
whether the security should be held or sold.
Management Style. Managers of mutual funds use different styles when selecting
securities to purchase. Citibank's portfolio managers use a "top-down" approach
when selecting securities for the Portfolio. When using a "top-down" approach,
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the portfolio manager looks first at broad economic factors and market
conditions, such as prevailing and anticipated interest rates. On the basis of
those factors and conditions, the manager selects optimal interest rates and
maturities and chooses certain sectors or industries within the overall market.
The manager then looks at individual companies within those sectors or
industries to select securities for the investment portfolio.
Since the Portfolio maintains a weighted average maturity of no more than 90
days, many of its investments are held until maturity. The manager may sell a
security before maturity when it is necessary to do so to meet redemption
requests. The manager may also sell a security if the manager believes the
issuer is no longer as creditworthy, or in order to adjust the average weighted
maturity of the Portfolio's investment portfolio (for example, to reflect
changes in the manager's expectations concerning interest rates), or when the
manager believes there is superior value in other market sectors or industries.
WHAT ARE MONEY MARKET INSTRUMENTS?
A money market instrument is a short-term IOU issued by banks or other
corporations, or the U.S. or a foreign government and state or local
governments. Money market instruments have maturity dates of 13 months or less.
Money market instruments may include certificates of deposit, bankers'
acceptances, variable rate demand notes (where the interest rate is reset
periodically and the holder may demand payment from the issuer at any time),
fixed-term obligations, commercial paper (short term unsecured debt of
corporations), asset-backed securities (which are backed by pools of accounts
receivable such as car installment loans or credit card receivables) and
repurchase agreements. In a repurchase agreement, the seller sells a security
and agrees to buy it back at a later date (usually within seven days) and at a
higher price, which reflects an agreed upon interest rate.
The Portfolio invests in high quality U.S. dollar-denominated money market
instruments of U.S. and non-U.S. issuers. These obligations include U.S.
government obligations, obligations of U.S. and non-U.S. banks, obligations
issued or guaranteed by the governments of Western Europe, Australia, Japan and
Canada, commercial paper, asset backed securities and repurchase agreements.
The Portfolio's U.S. government obligations may include U.S. Treasury bills,
bonds and notes and obligations of U.S. government agencies and
instrumentalities that may, but need not, be backed by the full faith and
credit of the United States. While the Portfolio can invest in all of these
types of obligations, the Portfolio concentrates in bank obligations, including
certificates of deposit, fixed time deposits and bankers' acceptances. This
means that the Portfolio invests at least 25% of its assets in bank
obligations, and the Portfolio may invest up to all of its assets in bank
obligations. Except for this concentration policy, the Portfolio's investment
goal and policies may be changed without a vote of investors.
The Portfolio invests only in "first tier" securities. These securities are
rated in the highest short-term rating category by nationally recognized rating
agencies or, in Citibank's opinion, are of comparable quality.
MAIN RISKS
Investing in a mutual fund involves risk, including the risk that you may
receive little or no return on your investment or even that you may lose part
or all of your investment. Before investing, you should consider the risks you
will assume. Certain of these risks are described below.
o Non-U.S. Securities. Investors in the Portfolio should be aware that
investments in non-U.S. securities involve risks relating to political,
social and economic developments abroad, as well as risks resulting from
the differences between the regulations to which U.S. and non-U.S. issuers
and markets are subject. These risks may include expropriation of assets,
confiscatory taxation, withholding taxes on dividends and interest paid on
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fund investments, fluctuations in currency exchange rates, currency
exchange controls and other limitations on the use or transfer of assets
by the Portfolio or issuers of securities, and political or social
instability. In addition, non-U.S. companies may not be subject to
accounting standards or governmental supervision comparable to U.S.
companies, and there may be less public information about their
operations. Non-U.S. markets may be less liquid and more volatile than
U.S. markets. As a result, there may be rapid changes in the value of
non-U.S. securities. Non-U.S. markets also may offer less protection to
investors such as the Portfolio.
o Concentration. The Portfolio concentrates in bank obligations. This means
that the value of the Portfolio's investments could decline as a result
of adverse events affecting the banking industry and that an investment in
the Portfolio may be particularly susceptible to events affecting the
banking industry. Banks are highly regulated. Decisions by regulators may
limit the loans banks make and the interest rates and fees they charge,
and may reduce bank profitability. Banks also depend on being able to
obtain funds at reasonable costs to finance their lending operations. This
makes them sensitive to changes in money market and general economic
conditions. When a bank's borrowers get in financial trouble, their
failure to repay the bank will also affect the bank's financial situation.
o Interest Rate Risk. The Portfolio invests in short term money market
instruments. As a result, the amount of income paid to you by the
Portfolio will go up or down depending on day-to-day variations in short
term interest rates. A major increase in interest rates could cause the
value of your investment in the Portfolio to decline. Investing in high
quality, short-term instruments may result in a lower yield (the income on
your investment) than investing in lower quality or longer-term
instruments.
o Credit Risk. The Portfolio invests in "first tier" securities, meaning
securities that are rated in the highest short-term rating category by
nationally recognized rating agencies or, in Citibank's opinion, are of
comparable quality. However, it is possible that some issuers will be
unable to make the required payments on debt securities held by the
Portfolio. Debt securities also fluctuate in value based on perceived
creditworthiness of issuers. A default on an investment held by the
Portfolio, or a significant decline in the value of a Portfolio
investment, could cause the value of your investment in the Portfolio to
decline.
o Year 2000. The Portfolio could be adversely affected if the computer
systems used by the Portfolio or its service providers are not programmed
to process information accurately on or after January 1, 2000. The
Portfolio, and its service providers, are making efforts to resolve any
potential Year 2000 problems. While it is likely these efforts will be
successful, the failure to implement any necessary modifications could
have an adverse impact on the Portfolio. The Portfolio also could be
adversely affected if the issuers of securities held by the Portfolio do
not solve their Year 2000 problems, or if it costs them large amounts of
money to solve these problems.
o An investment in the Portfolio is not a deposit of Citibank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
o It is possible to lose money by investing in the Portfolio.
Item 6. Management, Organization and Capital Structure.
INVESTMENT ADVISER
The Portfolio draws on the strength and experience of Citibank. Citibank is the
investment adviser of the Portfolio, and subject to policies set by the
Portfolio's Trustees, Citibank makes investment decisions. Citibank has been
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managing money since 1822. With its affiliates, it currently manages more than
$290 billion in assets worldwide. Citibank is a wholly-owned subsidiary of
Citicorp, which is, in turn, a wholly-owned subsidiary of Citigroup Inc.
Citigroup Inc. was formed as a result of the merger of Citicorp and Travelers
Group, Inc., which was completed on October 8, 1998. Citibank's address is 153
East 53rd Street, New York, New York.
Although Citibank and its affiliates may have banking and investment banking
relationships with the issuers of securities that are held in the Portfolio, in
making investment decisions for the Portfolio Citibank does not obtain or use
material inside information acquired by any division, department or affiliate
of Citibank in the course of those relationships. Citibank and its affiliates
may have loans outstanding that are repaid with proceeds of securities
purchased by the Portfolio.
ADVISORY FEES
For the services it provided under the investment advisory agreement for the
Portfolio, for the Portfolio's fiscal year ended August 31, 1998, the
investment advisory fees paid to Citibank, after waivers, were 0.08% of the
Portfolio's average daily net assets for that fiscal year.
CAPITAL STOCK
Investments in the Portfolio have no preference, pre-emptive or conversion
rights and are fully paid and non-assessable, except as set forth below. The
Portfolio is not required and has no current intention to hold annual meetings
of investors, but the Portfolio holds special meetings of investors when in the
judgment of the Trustees it is necessary or desirable to submit matters for an
investor vote. Investors have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees by a
specified number of investors) the right to communicate with other investors in
connection with requesting a meeting of investors for the purpose of removing
one or more Trustees. Investors also have the right to remove one or more
Trustees without a meeting by a declaration in writing by a specified number of
investors. Upon liquidation or dissolution of the Portfolio, investors would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.
The Portfolio is organized as a trust under the laws of the State of New York.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Each investor is entitled to a vote in
proportion to the value of its investment in the Portfolio. Investments in the
Portfolio may not be transferred, but an investor may withdraw all or any
portion of its investment at any time at net asset value. Investors in the
Portfolio (e.g., investment companies, insurance company separate accounts and
common and commingled trust funds) are each liable for all obligations of the
Portfolio. However, it is not expected that the liabilities of the Portfolio
would ever exceed its assets.
Item 7. Investor Information.
HOW NET INCOME IS CALCULATED
The Portfolio calculates its net income at 3:00 p.m. Eastern time, every day
the New York Stock Exchange is open for trading. All the Portfolio's net income
so determined is allocated pro rata among the investors in the Portfolio at the
time of such determination. On days when the financial markets in which the
Portfolio invests close early, net income will be calculated as of the close of
those markets. The Portfolio's securities are valued at amortized cost, which
is approximately equal to market value.
It is intended that the Portfolio's assets, income and distributions will be
managed in such a way that an investor in the Portfolio will be able to satisfy
the requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended, assuming that the investor invested all of its investable assets in
the Portfolio.
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THE PURCHASE AND REDEMPTION OF BENEFICIAL INTERESTS IN THE PORTFOLIO
Beneficial interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the Securities Act of 1933. Only investment companies,
insurance company separate accounts, common or commingled trust funds or
similar organizations or entities that are "accredited investors" within the
meaning of Regulation D under the 1933 Act may invest in the Portfolio. This
Registration Statement is not an offer to sell, or the solicitation of an offer
to buy, any "security" within the meaning of the 1933 Act.
An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received by the Portfolio. The net asset value of the Portfolio is determined
once during each Business Day as of 3:00 p.m., Eastern time. Securities are
valued at amortized cost, which the Trustees of the Portfolio have determined
in good faith constitutes fair value for the purposes of complying with the
Investment Company Act of 1940. This valuation method will continue to be used
until such time as the Trustees of the Portfolio determine that it does not
constitute fair value for such purposes.
There is no minimum initial or subsequent investment in the Portfolio. However,
since the Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the yield on its assets, investments
must be made in federal funds (i.e., monies credited to the account of the
Portfolio's custodian bank by a Federal Reserve Bank).
The Portfolio reserves the right to cease accepting investments at any time or
to reject any investment order.
An investor in the Portfolio may withdraw all or any portion of its investment
at any time at the net asset value next determined after a withdrawal request
in proper form is furnished by the investor to the Portfolio. The proceeds of a
withdrawal will be paid by the Portfolio in federal funds normally on the
business day (a day the New York Stock Exchange is open for trading) the
withdrawal is effected, but in any event within seven days. Investments in the
Portfolio may not be transferred.
Subject to compliance with applicable regulations, the Portfolio may pay the
redemption price of beneficial interests in the Portfolio, either totally or
partially, by a distribution in kind of readily marketable securities (instead
of cash). The securities so distributed would be valued at the same amount as
that assigned to them in calculating the net asset value for the beneficial
interests being redeemed. If a holder of beneficial interests received a
distribution in kind, such holder could incur brokerage or other charges in
converting the securities to cash.
The right of any investor to receive payment with respect to any withdrawal may
be suspended or the payment of the withdrawal proceeds postponed during any
period in which the New York Stock Exchange is closed (other than weekends or
holidays) or trading on the Exchange is restricted, or, to the extent otherwise
permitted by the 1940 Act, if an emergency exists.
TAX MATTERS
The Portfolio expects to be treated as a partnership for federal income tax
purposes. As a result, the Portfolio does not expect to pay any federal income
or excise taxes, and, generally, investors in the Portfolio should not have to
pay federal taxes when they invest in or receive distributions or make
withdrawals from the Portfolio. However, each investor, in determining its own
federal income and excise tax liabilities, if any, will have to include the
investor's share from time to time of the Portfolio's ordinary income,
expenses, capital gains or losses, credits, and other items, whether or not
distributed.
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The Portfolio also expects that investors which seek to qualify as regulated
investment companies under the Internal Revenue Code will be able to look to
their proportionate share of the assets and gross income of the Portfolio for
purposes of determining their compliance with the requirements applicable to
such companies.
The foregoing tax discussion is only for an investor's general information, and
does not take account of the special rules applicable to certain investors
(such as tax-exempt investors) or a number of special circumstances. Each
investor should consult its own tax advisers regarding the tax consequences in
its circumstances of an investment in the Portfolio, as well as any state,
ocal or foreign tax consequences to them of investing in the Portfolio
Item 8. Distribution Arrangements.
The exclusive placement agent for the Portfolio is CFBDS, Inc. CFBDS receives
no compensation for serving as the Portfolio's exclusive placement agent.
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PART B
Item 10. Cover Page and Table of Contents.
This Part B sets forth information with respect to Cash Reserves Portfolio
(the "Portfolio"), an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The date of this Part B and
Part A to the Registration Statement for the Portfolio is January 4, 1999.
TABLE OF CONTENTS Page
Portfolio History.......................................................B-2
Description of the Portfolio and Its Investments and Risks..............B-2
Management of the Portfolio.............................................B-8
Control Persons and Principal Holders
of Securities.........................................................B-10
Investment Advisory and Other Services..................................B-10
Brokerage Allocation and Other Practices................................B-13
Capital Stock and Other Securities......................................B-13
Purchase, Redemption and Pricing of
Securities............................................................B-14
Taxation of the Portfolio...............................................B-15
Underwriters............................................................B-17
Calculations of Performance Data........................................B-17
Financial Statements....................................................B-17
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Item 11. Portfolio History.
The Portfolio was organized as a trust under the laws of the State of New
York on May 23, 1989.
Item 12. Description of the Portfolio and Its Investments and Risks.
The investment objective of the Portfolio is to provide its investors with
liquidity and as high a level of current income as is consistent with the
preservation of capital. There can, of course, be no assurance that the
Portfolio will achieve its investment objective. The investment objective of
the Portfolio may be changed without the approval of the investors in the
Portfolio.
Except for the concentration policy with respect to bank obligations
described in paragraph (1) below, which is fundamental and may not be changed
without the approval of the investors in the Portfolio, the approval of the
investors in the Portfolio would not be required to change any of the
Portfolio's investment policies discussed below, including those concerning
securities transactions. The Portfolio would, however, give written notice to
its investors at least 30 days prior to implementing any change in its
investment objective.
The Portfolio seeks its investment objective through investments limited
to the following types of high quality U.S. dollar-denominated money market
instruments. All investments by the Portfolio mature or are deemed to mature
within 397 days from the date of acquisition, and the average maturity of the
investments held by the Portfolio (on a dollar-weighted basis) is 90 days or
less. All investments by the Portfolio are in "first tier" securities (i.e.,
securities rated in the highest rating category for short-term obligations by
at least two nationally recognized statistical rating organizations (each, an
"NRSRO") assigning a rating to the security or issuer or, if only one NRSRO
assigns a rating, that NRSRO or, in the case of an investment which is not
rated, of comparable quality as determined by the Citibank, N.A., the
Portfolio's investment adviser ("Citibank" or the "Adviser")) and are
determined by the Adviser to present minimal credit risks. Investments in high
quality, short term instruments may, in many circumstances, result in a lower
yield than would be available from investments in instruments with a lower
quality or a longer term. The Portfolio may hold uninvested cash reserves
pending investment. Under the 1940 Act, the Portfolio is classified as
"diversified." A "diversified investment company" must invest at least 75% of
its assets in cash and cash items, U.S. government securities, investment
company securities and other securities limited as to any one issuer to not
more than 5% of the total assets of the investment company and not more than
10% of the voting securities of the issuer.
(1) Bank obligations -- The Portfolio invests at least 25% of its
investable assets, and may invest up to 100% of its assets, in bank
obligations. This concentration policy is fundamental and may not be
changed without the approval of the investors in the Portfolio. Bank
obligations include, but are not limited to, negotiable certificates of
deposit, bankers' acceptances and fixed time deposits. The Portfolio
limits its investments in U.S. bank obligations (including their non-U.S.
branches) to banks having total assets in excess of $1 billion and which
are subject to regulation by an agency of the U.S. government. The
Portfolio may also invest in certificates of deposit issued by banks the
deposits in which are insured by the Federal Deposit Insurance Corporation
("FDIC"), through either the Bank Insurance Fund or the Savings
Association Insurance Fund, having total assets of less than $1 billion,
provided that the Portfolio at no time owns more than $100,000 principal
amount of certificates of deposit (or any higher principal amount which in
the future may be fully insured by FDIC insurance) of any one of those
issuers. Fixed time deposits are obligations which are payable at a stated
maturity date and bear a fixed rate of interest. Generally, fixed time
deposits may be withdrawn on demand by the Portfolio, but they may be
subject to early withdrawal penalties which vary depending upon market
conditions and the remaining maturity of the obligation. Although fixed
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time deposits do not have a market, there are no contractual restrictions
on the Portfolio's right to transfer a beneficial interest in the deposit
to a third party.
U.S. banks organized under federal law are supervised and examined by the
Comptroller of the Currency and are required to be members of the Federal
Reserve System and to be insured by the FDIC. U.S. banks organized under
state law are supervised and examined by state banking authorities and are
members of the Federal Reserve System only if they elect to join. However,
state banks which are insured by the FDIC are subject to federal
examination and to a substantial body of federal law and regulation. As a
result of federal and state laws and regulations, U.S. branches of U.S.
banks, among other things, are generally required to maintain specified
levels of reserves, and are subject to other supervision and regulation
designed to promote financial soundness.
The Portfolio limits its investments in non-U.S. bank obligations (i.e.,
obligations of non-U.S. branches and subsidiaries of U.S. banks, and U.S.
and non-U.S. branches of non-U.S. banks) to U.S. dollar-denominated
obligations of banks which at the time of investment are branches or
subsidiaries of U.S. banks which meet the criteria in the preceding
paragraphs or are branches of non-U.S. banks which (i) have more than $10
billion, or the equivalent in other currencies, in total assets; (ii) in
terms of assets are among the 75 largest non-U.S. banks in the world;
(iii) have branches or agencies in the United States; and (iv) in the
opinion of the Adviser, are of an investment quality comparable with
obligations of U.S. banks which may be purchased by the Portfolio. These
obligations may be general obligations of the parent bank, in addition to
the issuing branch or subsidiary, but the parent bank's obligations may be
limited by the terms of the specific obligation or by governmental
regulation. The Portfolio also limits its investments in non-U.S. bank
obligations to banks, branches and subsidiaries located in Western Europe
(United Kingdom, France, Germany, Belgium, the Netherlands, Italy,
Switzerland, Denmark, Norway, Sweden), Australia, Japan, the Cayman
Islands, the Bahamas and Canada. The Portfolio does not purchase any bank
obligation of the Adviser or an affiliate of the Adviser.
Since the Portfolio may hold obligations of non-U.S. branches and
subsidiaries of U.S. banks, and U.S. and non-U.S. branches of non-U.S.
banks, an investment in the Portfolio involves certain additional risks.
Such investment risks include future political and economic developments,
the possible imposition of non-U.S. withholding taxes on interest income
payable on such obligations held by the Portfolio, the possible seizure or
nationalization of non-U.S. deposits and the possible establishment of
exchange controls or other non-U.S. governmental laws or restrictions
applicable to the payment of the principal of and interest on certificates
of deposit or time deposits that might affect adversely such payment on
such obligations held by the Portfolio. In addition, there may be less
publicly-available information about a non-U.S. branch or subsidiary of a
U.S. bank or a U.S. or non-U.S. branch of a non-U.S. bank than about a
U.S. bank and such branches and subsidiaries may not be subject to the
same or similar regulatory requirements that apply to U.S. banks, such as
mandatory reserve requirements, loan limitations and accounting, auditing
and financial record-keeping standards and requirements.
The provisions of federal law governing the establishment and operation of
U.S. branches do not apply to non-U.S. branches of U.S. banks. However,
the Portfolio may purchase obligations only of those non-U.S. branches of
U.S. banks which were established with the approval of the Board of
Governors of the Federal Reserve System (the "Board of Governors"). As a
result of such approval, these branches are subject to examination by the
Board of Governors and the Comptroller of the Currency. In addition, such
non-U.S. branches of U.S. banks are subject to the supervision of the U.S.
bank and creditors of the non-U.S. branch are considered general creditors
of the U.S. bank subject to whatever defenses may be available under the
governing non-U.S. law and to the terms of the specific obligation.
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Nonetheless, the Portfolio generally will be subject to whatever risk may
exist that the non-U.S. country may impose restrictions on payment of
certificates of deposit or time deposits.
U.S. branches of non-U.S. banks are subject to the laws of the state in
which the branch is located or to the laws of the United States. Such
branches are therefore subject to many of the regulations, including
reserve requirements, to which U.S. banks are subject. In addition, the
Portfolio may purchase obligations only of those U.S. branches of non-U.S.
banks which are located in states which impose the additional requirement
that the branch pledge to a designated bank within the state an amount of
its assets equal to 5% of its total liabilities.
Non-U.S. banks in whose obligations the Portfolio may invest may not be
subject to the laws and regulations referred to in the preceding two
paragraphs.
(2) Obligations of, or guaranteed by, non-U.S. governments. The Portfolio
limits its investments in non-U.S. government obligations to obligations
issued or guaranteed by the governments of Western Europe (United Kingdom,
France, Germany, Belgium, the Netherlands, Italy, Switzerland, Denmark,
Norway, Sweden), Australia, Japan and Canada. Generally, such obligations
may be subject to the additional risks described in paragraph (1) above in
connection with the purchase of non-U.S. bank obligations.
(3) Commercial paper rated Prime-1 by Moody's Investors Service, Inc.
("Moody's") or A-1 by Standard & Poor's Ratings Group ("Standard &
Poor's") or, if not rated, determined to be of comparable quality by the
Adviser, such as unrated commercial paper issued by corporations having an
outstanding unsecured debt issue currently rated Aaa by Moody's or AAA by
Standard & Poor's. Commercial paper is unsecured debt of corporations
usually maturing in 270 days or less from its date of issuance.
(4) Obligations of, or guaranteed by, the U.S. government, its agencies or
instrumentalities. These include issues of the U.S. Treasury, such as
bills, certificates of indebtedness, notes, bonds and Treasury Receipts,
which are unmatured interest coupons of U.S. Treasury bonds and notes
which have been separated and resold in a custodial receipt program
administered by the U.S. Treasury, and issues of agencies and
instrumentalities established under the authority of an Act of Congress.
Some of the latter category of obligations are supported by the full faith
and credit of the United States, others are supported by the right of the
issuer to borrow from the U.S. Treasury, and still others are supported
only by the credit of the agency or instrumentality. Examples of each of
the three types of obligations described in the preceding sentence are (i)
obligations guaranteed by the Export-Import Bank of the United States,
(ii) obligations of the Federal Home Loan Mortgage Corporation, and (iii)
obligations of the Student Loan Marketing Association, respectively.
(5) Repurchase agreements, providing for resale within 397 days or less,
covering obligations of, or guaranteed by, the U.S. government, its
agencies or instrumentalities which may have maturities in excess of 397
days. A repurchase agreement arises when a buyer purchases an obligation
and simultaneously agrees with the vendor to resell the obligation to the
vendor at an agreed-upon price and time, which is usually not more than
seven days from the date of purchase. The resale price of a repurchase
agreement is greater than the purchase price, reflecting an agreed-upon
market rate which is effective for the period of time the buyer's funds
are invested in the obligation and which is not related to the coupon rate
on the purchased obligation. Obligations serving as collateral for each
repurchase agreement are delivered to the Portfolio's custodian either
physically or in book entry form and the collateral is marked to the
market daily to ensure that each repurchase agreement is fully
collateralized at all times. A buyer of a repurchase agreement runs a risk
<PAGE>
of loss if, at the time of default by the issuer, the value of the
collateral securing the agreement is less than the price paid for the
repurchase agreement. If the vendor of a repurchase agreement becomes
bankrupt, the Portfolio might be delayed, or may incur costs or possible
losses of principal and income, in selling the collateral. The Portfolio
may enter into repurchase agreements only with a vendor which is a member
bank of the Federal Reserve System or which is a "primary dealer" (as
designated by the Federal Reserve Bank of New York) in U.S. government
obligations. The Portfolio will not enter into any repurchase agreements
with the Adviser or an affiliate of the Adviser. The restrictions and
procedures described above which govern the Portfolio's investment in
repurchase agreements are designed to minimize the Portfolio's risk of
losses in making those investments. (See "Repurchase Agreements.")
(6) Asset-backed securities, which may include securities such as
Certificates for Automobile Receivables ("CARS") and Credit Card
Receivable Securities ("CARDS"), as well as other asset-backed securities
that may be developed in the future. CARS represent fractional interests
in pools of car installment loans, and CARDS represent fractional
interests in pools of revolving credit card receivables. The rate of
return on asset-backed securities may be affected by early prepayment of
principal on the underlying loans or receivables. Prepayment rates vary
widely and may be affected by changes in market interest rates. It is not
possible to accurately predict the average life of a particular pool of
loans or receivables. Reinvestment of principal may occur at higher or
lower rates than the original yield. Therefore, the actual maturity and
realized yield on asset-backed securities will vary based upon the
prepayment experience of the underlying pool of loans or receivables.
(See "Asset-Backed Securities.")
The Portfolio does not purchase securities which it believes, at the time
of purchase, will be subject to exchange controls or non-U.S. withholding
taxes; however, there can be no assurance that such laws may not become
applicable to certain of the Portfolio's investments. In the event exchange
controls or non-U.S. withholding taxes are imposed with respect to any of the
Portfolio's investments, the effect may be to reduce the income received by the
Portfolio on such investments or to prevent the Portfolio from receiving any
value in U.S. dollars from its investment in non-U.S. securities.
ASSET-BACKED SECURITIES
As set forth above, the Portfolio may purchase asset-backed securities
that represent fractional interests in pools of retail installment loans, both
secured (such as CARS) and unsecured, or leases or revolving credit
receivables, both secured and unsecured (such as CARDS). These assets are
generally held by a trust and payments of principal and interest or interest
only are passed through monthly or quarterly to certificate holders and may be
guaranteed up to certain amounts by letters of credit issued by a financial
institution affiliated or unaffiliated with the trustee or originator of the
trust.
Underlying automobile sales contracts, leases or credit card receivables
are subject to prepayment, which may reduce the overall return to certificate
holders. Nevertheless, principal repayment rates tend not to vary much with
interest rates and the short-term nature of the underlying loans, leases or
receivables tends to dampen the impact of any change in the prepayment level.
Reinvestment of principal may occur at higher or lower rates than the original
yield. Certificate holders may also experience delays in payment on the
certificates if the full amounts due on underlying loans, leases or receivables
are not realized by the Portfolio because of unanticipated legal or
administrative costs of enforcing the contracts or because of depreciation or
damage to the collateral (usually automobiles) securing certain contracts, or
other factors. If consistent with its investment objectives and policies, the
Portfolio may invest in other asset-backed securities that may be developed in
the future.
<PAGE>
REPURCHASE AGREEMENTS
The Portfolio may invest its assets in instruments subject to repurchase
agreements only with member banks of the Federal Reserve System or "primary
dealers" (as designated by the Federal Reserve Bank of New York) in U.S.
government securities. Under the terms of a typical repurchase agreement, the
Portfolio would acquire an underlying debt instrument for a relatively short
period (usually not more than one week) subject to an obligation of the seller
to repurchase and the Portfolio to resell the instrument at a fixed price and
time, thereby determining the yield during the Portfolio's holding period. This
results in a fixed rate of return insulated from market fluctuations during
such period. A repurchase agreement is subject to the risk that the seller may
fail to repurchase the security. Repurchase agreements may be deemed to be
loans under the 1940 Act. All repurchase agreements entered into by the
Portfolio shall be fully collateralized at all times during the period of the
agreement in that the value of the underlying security shall be at least equal
to the amount of the loan, including the accrued interest thereon, and the
Portfolio or its custodian or sub-custodian shall have possession of the
collateral, which the Portfolio's Board of Trustees believes will give it a
valid, perfected security interest in the collateral. Whether a repurchase
agreement is the purchase and sale of a security or a collateralized loan has
not been definitively established. This might become an issue in the event of
the bankruptcy of the other party to the transaction. In the event of default
by the seller under a repurchase agreement construed to be a collateralized
loan, the underlying securities are not owned by the Portfolio but only
constitute collateral for the seller's obligation to pay the repurchase price.
Therefore, the Portfolio may suffer time delays and incur costs in connection
with the disposition of the collateral. The Portfolio's Board of Trustees
believes that the collateral underlying repurchase agreements may be more
susceptible to claims of the seller's creditors than would be the case with
securities owned by the Portfolio. Repurchase agreements will give rise to
income which will not qualify as tax-exempt income when distributed by the
Portfolio. The Portfolio will not invest in a repurchase agreement maturing in
more than seven days if any such investment together with illiquid securities
held by the Portfolio exceed 10% of the Portfolio's total net assets.
Repurchase agreements are also subject to the same risks described herein with
respect to stand-by commitments.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to
generate income, the Portfolio may lend its securities to broker-dealers and
other institutional borrowers. Such loans will usually be made only to member
banks of the U.S. Federal Reserve System and to member firms of the New York
Stock Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents, or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested in
high quality short-term instruments. Either party has the right to terminate a
loan at any time on customary industry settlement notice (which will not
usually exceed three business days). During the existence of a loan, the
Portfolio would continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned and with respect to cash collateral
would also receive compensation based on investment of the collateral (subject
to a rebate payable to the borrower). Where the borrower provides the Portfolio
with collateral consisting of U.S. Treasury obligations, the borrower is also
obligated to pay the Portfolio a fee for use of the borrowed securities. The
Portfolio would not, however, have the right to vote any securities having
voting rights during the existence of the loan, but would call the loan in
anticipation of an important vote to be taken among holders of the securities
or of the giving or withholding of their consent on a material matter affecting
the investment. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the collateral should the borrower fail
financially. However, the loans would be made only to entities deemed by the
Adviser to be of good standing, and when, in the judgment of the Adviser, the
consideration which can be earned currently from loans of this type justifies
the attendant risk. In addition, the Portfolio could suffer loss if the
borrower terminates the loan and the Portfolio is forced to liquidate
investments in order to return the cash collateral to the buyer. If the Adviser
determines to make loans, it is not intended that the value of the securities
loaned by the Portfolio would exceed 33 1/3% of the value of its net assets.
<PAGE>
PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS
The Portfolio may invest up to 10% of its net assets in securities for
which there is no readily available market. These illiquid securities may
include privately placed restricted securities for which no institutional
market exists. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of illiquid
investments may involve time-consuming negotiation and legal expenses, and it
may be difficult or impossible for the Portfolio to sell them promptly at an
acceptable price.
INVESTMENT RESTRICTIONS
The Portfolio has adopted the following policies which may not be changed
without approval by holders of a "majority of the outstanding shares" of the
Portfolio, which as used in this Registration Statement means the vote of the
lesser of (i) 67% or more of the outstanding "voting securities" of the
Portfolio present at a meeting, if the holders of more than 50% of the
outstanding "voting securities" of the Portfolio are present or represented by
proxy, or (ii) more than 50% of the outstanding "voting securities" of the
Portfolio. The term "voting securities" as used in this paragraph has the same
meaning as in the 1940 Act.
The Portfolio may not:
(1) borrow money, except that as a temporary measure for extraordinary or
emergency purposes the Portfolio may borrow from banks in an amount not to
exceed 1/3 of the value of its net assets, including the amount borrowed from
banks (moreover, the Portfolio will not purchase any securities at any time at
which borrowings exceed 5% of its total assets (taken at market value)) (it is
intended that the Portfolio would borrow money only from banks and only to
accommodate requests for the withdrawal of all or a portion of a beneficial
interest in the Portfolio while effecting an orderly liquidation of
securities);
(2) purchase any security or evidence of interest therein on margin,
except that the Portfolio may obtain such short term credit as may be necessary
for the clearance of purchases and sales of securities;
(3) underwrite securities issued by other persons and except insofar as
the Portfolio may technically be deemed an underwriter under the Securities Act
of 1933, as amended (the "1933 Act"), in selling a security;
(4) make loans to other persons except (a) through the lending of
securities held by the Portfolio, but not in excess of 33 1/3% of the
Portfolio's net assets, (b) through the use of fixed time deposits or
repurchase agreements or the purchase of short term obligations, or (c) by
purchasing all or a portion of an issue of debt securities of types commonly
distributed privately to financial institutions; for purposes of this paragraph
4 the purchase of short term commercial paper or a portion of an issue of debt
securities which are part of an issue to the public shall not be considered the
making of a loan;
(5) purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the Portfolio reserves the freedom of action
to hold and to sell real estate acquired as a result of the ownership of
securities by the Portfolio);
(6) concentrate its investments in any particular industry, but if it is
deemed appropriate for the achievement of its investment objective, up to 25%
of the assets of the Portfolio (taken at market value at the time of each
investment) may be invested in any one industry, except that the Portfolio will
invest at least 25% of its assets and may invest up to 100% of its assets in
bank obligations; or
<PAGE>
(7) issue any senior security (as that term is defined in the 1940 Act) if
such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, except as appropriate to evidence a debt
incurred without violating Investment Restriction (1) above.
PERCENTAGE AND RATING RESTRICTIONS: If a percentage or a rating
restriction on investment or utilization of assets set forth above or referred
to elsewhere in this Registration Statement is adhered to at the time an
investment is made or assets are so utilized, a later change in percentage
resulting from changes in the value of the securities held by the Portfolio or
a later change in the rating of a security held by the Portfolio is not
considered a violation of policy.
Item 13. Management of the Portfolio.
The Trustees and officers of the Portfolio and their principal occupations
during the past five years are set forth below. Their titles may have varied
during that period. Asterisks indicate that those Trustees and officers are
"interested persons" (as defined in the 1940 Act) of the Portfolio. Unless
otherwise indicated below, the address of each Trustee and officer is 21 Milk
Street, Boston, Massachusetts 02109. The address of the Portfolio is
Elizabethan Square, George Town, Grand Cayman, Cayman Islands, British West
Indies.
TRUSTEES
ELLIOTT J. BERV; 55 -- Chairman and Director, Catalyst, Inc. (Management
Consultants) (since June, 1992); President, Chief Operating Officer and
Director, Deven International, Inc. (International Consultants) (June, 1991 to
June, 1992); President and Director, Elliott J. Berv & Associates (Management
Consultants) (since May, 1984). His address is 24 Atlantic Drive, Scarborough,
Maine.
PHILIP W. COOLIDGE; 47* -- President of the Portfolio; Chief Executive Officer
and President, Signature Financial Group, Inc. and CFBDS, Inc.
RILEY C. GILLEY; 72 -- Vice President and General Counsel, Corporate Property
Investors (November, 1988 to December, 1991); Partner, Breed, Abbott & Morgan
(Attorneys) (Retired, December, 1987). His address is 4041 Gulf Shore Boulevard
North, Naples, Florida.
WALTER E. ROBB, III; 72 -- President, Benchmark Consulting Group, Inc. (since
1991); Principal, Robb Associates (Corporate Financial Advisors ) (since 1978);
President, Benchmark Advisors, Inc. (Corporate Financial Advisors) (since
1989); Trustee of certain registered investment companies in the MFS Family of
Funds. His address is 35 Farm Road, Sherborn, Massachusetts.
OFFICERS
PHILIP W. COOLIDGE; 47* -- President of the Portfolio; Chief Executive Officer
and President, Signature Financial Group, Inc., and CFBDS, Inc.
CHRISTINE A. DRAPEAU; 28* -- Assistant Secretary and Assistant Treasurer of
Portfolio; Vice President, Signature Financial Group, Inc. (since January,
1996); Paralegal and Compliance Officer, various financial companies (July,
1992 to January, 1996).
TAMIE EBANKS-CUNNINGHAM; 26* -- Assistant Secretary of the Portfolio; Office
Manager, Signature Financial Group (Cayman) Ltd. (Since April 1995);
Administrator, Cayman Islands Primary School (prior to April 1995). Her address
is P.O. Box 2494, Elizabethan Square, George Town, Grand Cayman, Cayman
Islands, B.W.I.
<PAGE>
JOHN R. ELDER; 50* -- Treasurer of the Portfolio; Vice President, Signature
Financial Group, Inc. (since April, 1995); Assistant Treasurer, CFBDS, Inc.
(since April 1995); Treasurer, Phoenix Family of Mutual Funds (Phoenix Home
Life Mutual Insurance Company) (1983 to March, 1995).
LINDA T. GIBSON; 33* -- Secretary of the Portfolio; Senior Vice President,
Signature Financial Group, Inc.; Secretary, CFBDS, Inc.
JAMES E. HOOLAHAN; 51* -- Vice President, Assistant Secretary and Assistant
Treasurer of the Portfolio; Senior Vice President, Signature Financial Group,
Inc.
SUSAN JAKUBOSKI; 34* -- Vice President, Assistant Treasurer and Assistant
Secretary of the Portfolio; Vice President, Signature Financial Group (Cayman)
Ltd. (since August, 1994); Fund Compliance Administrator, Concord Financial
Group (November, 1990 to August, 1994). Her address is Suite 193, 12 Church
St., Hamilton HM11, Bermuda.
MOLLY S. MUGLER; 47* -- Assistant Secretary and Assistant Treasurer of the
Portfolio; Vice President, Signature Financial Group, Inc.; Assistant
Secretary, CFBDS, Inc.
CLAIR TOMALIN; 30* -- Assistant Secretary of the Portfolio; Office Manager,
Signature Financial Group (Europe) Limited. Her address is 117 Charterhouse
Street, London ECIM 6AA.
SHARON M. WHITSON; 50* -- Assistant Secretary and Assistant Treasurer of the
Portfolio; Assistant Vice President, Signature Financial Group, Inc.
JULIE J. WYETZNER; 39* -- Vice President, Assistant Secretary and Assistant
Treasurer of the Portfolio; Vice President, Signature Financial Group, Inc.
The Trustees and officers of the Portfolio also hold comparable positions
with certain other funds for which Signature Financial Group (Cayman) Ltd.
("SFG" or the "Administrator"), the Portfolio's administrator and a wholly-
owned subsidiary of Signature Financial Group, Inc., or an affiliate serves as
the distributor or administrator. Mr. Coolidge is also a Trustee of CitiFunds
Trust III, CitiFunds Premium Trust and CitiFunds Institutional Trust, open-end
investment companies, series of each of which are investors in the Portfolio,
and each officer of the Portfolio holds the same position with those investment
companies.
The Trustees of the Portfolio (with the exception of Mr. Coolidge, who
received no remuneration from the Portfolio) received the following
remuneration from the Portfolio during its fiscal year ended August 31, 1998:
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT COMPENSATOIN
BENEFITS FROM
AGGREGATE ACCRUED AS ESTIMATED REGISTRANT AND
COMPENSATION PART OF ANNUAL BENEFITS PORTFOLIO
NAME OF PERSON, FROM PORTFOLIO UPON COMPLEX PAID
POSITION REGISTRANT EXPENSES RETIREMENT TO TRUSTEES(1)
<S> <C> <C> <C> <C>
Elliott J. Berv, $15,011 None None $53,750
Trustee
Mark T. Finn, Trustee(2) $11,566 None None $52,000
Riley C. Gilley, $0 None None $0
Trustee (3)
Walter E. Robb, III, $12,561 None None $50,000
Trustee
</TABLE>
(1) Messrs. Coolidge, Berv, Finn, Gilley and Robb are trustees of 49, 27, 26,
33 and 30, funds, respectively, in the family of open-end registered
investment companies advised or managed by Citibank.
(2) Mr. Finn resigned as a trustee of the Portfolio as of September 1, 1998.
(3) Mr. Gilley became a trustee of the Portfolio as of September 1, 1998.
<PAGE>
The Portfolio's Declaration of Trust provides that it will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Portfolio, unless, as to liability to the Portfolio or its investors, it is
finally adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices, or
unless with respect to any other matter it is finally adjudicated that they did
not act in good faith in the reasonable belief that their actions were in the
best interests of the Portfolio. In the case of settlement, such
indemnification will not be provided unless it has been determined by a court
or other body approving the settlement or other disposition, or by a reasonable
determination, based upon a review of readily available facts, by vote of a
majority of disinterested Trustees or in a written opinion of independent
counsel, that such officers or Trustees have not engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of their duties.
Item 14. Control Persons and Principal Holders of Securities.
CitiFunds Cash Reserves (a series of CitiFunds Trust III), CitiFunds
Premium Liquid Reserves (a series of CitiFunds Premium Trust), CitiFunds
Institutional Liquid Reserves (a series of CitiFunds Institutional Trust) and
Excelsior Institutional Money Portfolio (a series of Excelsior Portfolios)
(collectively, the "Funds") and Citi Liquid Reserves, Ltd., Citi Premium Liquid
Reserves, Ltd., and Citi Institutional Liquid Reserves, Ltd. own all of the
beneficial interests in the Portfolio. The following is a list of the record
holders of beneficial interests in the Portfolio:
BENEFICIAL INTEREST
NAME OF RECORD HOLDER (as of 12/29/98)
_______________________________________________________________________________
CitiFunds Cash Reserves 21.6%
CitiFunds Premium Liquid Reserves 6.0%
CitiFunds Institutional Liquid Reserves 35.8%
Excelsior Institutional Money Market Portfolio 1.6%
Citi Liquid Reserves, Ltd. 0.4%
Citi Premium Liquid Reserves, Ltd. 1.1%
Citi Institutional Liquid Reserves, Ltd. 33.5%
The Funds are registered investment companies which have informed the
Portfolio that whenever requested to vote on matters pertaining to the
Portfolio (other than a vote to continue the Portfolio following the withdrawal
of an investor) each will hold a meeting of shareholders and will cast its vote
as instructed by its shareholders, or otherwise act in accordance with
applicable law. Notwithstanding the foregoing, at any meeting of shareholders
of a Fund, a shareholder servicing agent may vote any shares of which it is the
holder of record and for which it does not receive voting instructions
proportionately in accordance with instructions it received for all other
shares of which that shareholder servicing agent is the holder of record.
Item 15. Investment Advisory and Other Services.
Citibank manages the assets of the Portfolio pursuant to an investment
advisory agreement (the "Advisory Agreement"). Subject to such policies as the
Board of Trustees of the Portfolio may determine, the Adviser manages the
securities of the Portfolio and makes investment decisions for the Portfolio.
The Adviser furnishes at its own expense all services, facilities and personnel
necessary in connection with managing the Portfolio's investments and effecting
securities transactions for the Portfolio. The Advisory Agreement will continue
in effect as long as such continuance is specifically approved at least
annually by the Board of Trustees of the Portfolio or by a vote of a majority
of the outstanding voting securities of the Portfolio, and, in either case, by
a majority of the Trustees of the Portfolio who are not parties to the Advisory
<PAGE>
Agreement or interested persons of any such party, at a meeting called for the
purpose of voting on the Advisory Agreement.
The Advisory Agreement provides that the Adviser may render services to
others. The Advisory Agreement is terminable by the Portfolio without penalty
on not more than 60 days' nor less than 30 days' written notice when authorized
either by a vote of a majority of the outstanding voting securities of the
Portfolio or by a vote of a majority of its Board of Trustees, or by the
Adviser on not more than 60 days' nor less than 30 days' written notice, and
will automatically terminate in the event of its assignment. The Advisory
Agreement provides that neither the Adviser nor its personnel shall be liable
for any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of security transactions
for the Portfolio, except for willful misfeasance, bad faith or gross
negligence or reckless disregard of its or their obligations and duties under
the Advisory Agreement.
For its services under the Advisory Agreement, the Adviser receives an
investment advisory fee, which is accrued daily and paid monthly, of 0.15% of
the Portfolio's average daily net assets on an annualized basis for the
Portfolio's then-current fiscal year. The Adviser has voluntarily agreed to
waive a portion of its investment advisory fee.
For the fiscal years ended August 31, 1996, 1997 and 1998, the fees paid
to the Adviser under the Advisory Agreement, after waivers, were $2,713,691,
$4,395,286 and $6,739,206, respectively.
The Glass-Steagall Act prohibits certain financial institutions, such as
Citibank, from underwriting securities of open-end investment companies, such
as the Portfolio. Citibank believes that its services under the Advisory
Agreement and the activities performed by it as sub-administrator of the
Portfolio are not underwriting and are consistent with the Glass-Steagall Act
and other relevant federal and state laws. However, there is no controlling
precedent regarding the performance of the combination of investment advisory
and sub-administrative activities by banks. State laws on this issue may differ
from applicable federal law and banks and financial institutions may be
required to register as dealers pursuant to state securities laws. Changes in
either federal or state statutes or regulations, or in their interpretations,
could prevent Citibank or its affiliates from continuing to perform these
services for the Portfolio. If Citibank or its affiliates were to be prevented
from acting as the Adviser or sub-administrator, the Portfolio would seek
alternative means for obtaining these services. The Portfolio does not expect
that investors would suffer any adverse financial consequences as a result of
any such occurrence.
The Portfolio has adopted an Administrative Services Plan (the
"Administrative Plan") which provides that the Portfolio may obtain the
services of an administrator, a transfer agent and a custodian, and may enter
into agreements providing for the payment of fees for such services. Under the
Administrative Plan, the administrative services fee payable to SFG may not
exceed 0.05% of the Portfolio's average daily net assets on an annualized basis
for its then-current fiscal year. The Administrative Plan continues in effect
if such continuance is specifically approved at least annually by a vote of
both a majority of the Portfolio's Trustees and a majority of the Portfolio's
Trustees who are not "interested persons" of the Portfolio and who have no
direct or indirect financial interest in the operation of the Administrative
Plan or in any agreement related to such Plan ("Qualified Trustees"). The
Administrative Plan requires that the Portfolio provide to its Board of
Trustees and the Board of Trustees review, at least quarterly, a written report
of the amounts expended (and the purposes therefor) under the Administrative
Plan. The Administrative Plan may be terminated at any time by a vote of a
majority of the Portfolio's Qualified Trustees or by a vote of a majority of
the outstanding voting securities of the Portfolio. The Administrative Plan may
not be amended to increase materially the amount of permitted expenses
thereunder without the approval of a majority of the outstanding voting
securities of the Portfolio and may not be materially amended in any case
without a vote of the majority of both the Trustees and the Qualified Trustees.
Pursuant to an Administrative Services Agreement (the "Administrative
Services Agreement"), SFG provides the Portfolio with general office facilities
and supervises the overall administration of the Portfolio, including, among
other responsibilities, the negotiation of contracts and fees with, and the
<PAGE>
monitoring of performance and billings of, the independent contractors and
agents of the Portfolio; the preparation and filing of all documents required
for compliance by the Portfolio with applicable laws and regulations; and
arranging for the maintenance of books and records of the Portfolio. The
Administrator provides persons satisfactory to the Board of Trustees of the
Portfolio to serve as Trustees and officers of the Portfolio. Such Trustees and
officers, as well as certain other employees and Trustees of the Portfolio, may
be directors, officers or employees of the Administrator or its affiliates.
The Administrative Services Agreement continues in effect if such
continuance is specifically approved at least annually by the Portfolio's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio and, in either case, by a majority of the Trustees of the
Portfolio who are not parties to the Administrative Services Agreement or
interested persons of any such party. The Administrative Services Agreement
terminates automatically if it is assigned and may be terminated without
penalty by a vote of a majority of the outstanding voting securities in the
Portfolio or by either party on not more than 60 days' nor less than 30 days'
written notice. The Administrative Services Agreement also provides that
neither SFG, as the Administrator, nor its personnel shall be liable for any
error of judgment or mistake of law or for any act or omission in the
administration or management of the Portfolio, except for willful misfeasance,
bad faith or gross negligence in the performance of its or their duties or by
reason of reckless disregard of its or their obligations and duties under the
Administrative Services Agreement.
For these services under the Administrative Services Agreement, SFG
receives a fee accrued daily and paid monthly of 0.05% of the assets of the
Portfolio. For the fiscal years ended August 31, 1996, 1997 and 1998, the fees
payable to SFG under the Administrative Services Agreement were voluntarily
waived.
The Administrative Services Agreement provides that SFG may render
administrative services to others.
SFG is a wholly-owned subsidiary of Signature Financial Group, Inc., a
Delaware corporation.
Pursuant to a sub-administrative services agreement, Citibank performs
such sub-administrative duties for the Portfolio as are from time to time
agreed upon by Citibank and SFG. Citibank's sub-administrative duties may
include providing equipment and clerical personnel necessary for maintaining
the organization of the Portfolio, participation in the preparation of
documents required for compliance by the Portfolio with applicable laws and
regulations, preparation of certain documents in connection with meetings of
Trustees and investors in the Portfolio, and other functions which would
otherwise be performed by SFG as set forth above. For performing such
sub-administrative services, Citibank receives such compensation as is from
time to time agreed upon by SFG and Citibank, not in excess of the amount paid
to SFG for its services under the Administrative Services Agreement discussed
above (i.e., not more than 0.05% per annum of the average daily net assets of
the Portfolio). All such compensation is paid by SFG.
The Portfolio has entered into a Transfer Agency Agreement and a Custodian
Agreement with State Street Bank and Trust Company ("State Street") pursuant to
which State Street acts as custodian and State Street Canada, Inc. ("State
Street Canada") acts as transfer agent and provides fund accounting services
for the Portfolio. The principal business address of State Street is 225
Franklin Street, Boston, Massachusetts 02110 and the principal business address
of State Street Canada is 40 King Street West, Suite 5700, Toronto, Ontario,
Canada.
PricewaterhouseCoopers LLP are the independent certified public
accountants for the Portfolio, providing audit services, and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission. The principal business address of PricewaterhouseCoopers
LLP is Suite 3000, Box 82, Royal Trust Towers, Toronto Dominion Center,
Toronto, Ontario, Canada M5K 1G8.
<PAGE>
Item 16. Brokerage Allocation and Other Practices.
The Portfolio's purchases and sales of portfolio securities usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
There usually are no brokerage commissions paid for such purchases. The
Portfolio does not anticipate paying brokerage commissions. Any transaction for
which the Portfolio pays a brokerage commission will be effected at the best
price and execution available. Purchases from underwriters of portfolio
securities include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price.
Allocation of transactions, including their frequency, to various dealers
is determined by the Adviser in its best judgment and in a manner deemed to be
in the best interest of the investors in the Portfolio rather than by any
formula. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price.
Investment decisions for the Portfolio are made independently from those
for any other account or investment company that is or may in the future become
managed by the Adviser or its affiliates. If, however, the Portfolio and other
investment companies or accounts managed by the Adviser are contemporaneously
engaged in the purchase or sale of the same security, the transactions may be
averaged as to price and allocated equitably to each account. In some cases,
this policy might adversely affect the price paid or received by the Portfolio
or the size of the position obtainable for the Portfolio. In addition, when
purchases or sales of the same security for the Portfolio and for other
investment companies or accounts managed by the Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
No transactions are executed with the Adviser or an affiliate of the
Adviser, in any case acting either as principal or as broker.
Item 17. Capital Stock and Other Securities.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to participate
pro rata in distributions of taxable income, loss, gain and credit of the
Portfolio. Upon liquidation or dissolution of the Portfolio, investors are
entitled to share pro rata in the Portfolio's net assets available for
distribution to its investors. Investments in the Portfolio have no preference,
pre-emptive, conversion or similar rights and are fully paid and
non-assessable, except as set forth below. Investments in the Portfolio may not
be transferred. Certificates representing an investor's beneficial interest in
the Portfolio are issued only upon the written request of an investor.
Each investor is entitled to a vote in proportion to the value of its
investment in the Portfolio. Investors in the Portfolio do not have cumulative
voting rights, and investors holding more than 50% of the aggregate beneficial
interest in the Portfolio may elect all of the Trustees of the Portfolio if
they choose to do so and in such event the other investors in the Portfolio
would not be able to elect any Trustee. The Portfolio is not required and has
no current intention to hold annual meetings of investors, but the Portfolio
holds special meetings of investors when it is required to do so by law, or in
the judgment of the Portfolio's Trustees it is necessary or desirable to submit
matters for an investor vote. No material amendment may be made to the
Portfolio's Declaration of Trust without the affirmative vote of a majority of
the outstanding voting securities of the Portfolio.
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by a vote of two-thirds of the
Portfolio's outstanding voting securities. The Portfolio may also be terminated
(i) by a vote of two-thirds of the Portfolio's outstanding voting securities or
(ii) by the Trustees of the Portfolio by written notice to the holders of the
Portfolio's outstanding voting securities.
<PAGE>
The Portfolio is organized as a trust under the laws of the State of New
York. Investors in the Portfolio are personally liable for its obligations and
liabilities, subject, however, to indemnification by the Portfolio in the event
that there is imposed upon an investor a greater portion of the liabilities and
obligations of the Portfolio than its proportionate beneficial interest in the
Portfolio. The Declaration of Trust also provides that the Portfolio shall
maintain appropriate insurance (e.g., fidelity bonding and errors and omissions
insurance) for the protection of the Portfolio, its investors, Trustees,
officers, employees and agents covering possible tort and other liabilities.
Thus, the risk of an investor incurring financial loss on account of investor
liability is limited to circumstances in which both inadequate insurance
existed and the Portfolio itself was unable to meet its obligations. It is not
expected that the liabilities of the Portfolio would ever exceed its assets.
The Portfolio's Declaration of Trust further provides that obligations of
the Portfolio are not binding upon the Trustees individually, but only upon the
property of the Portfolio and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office.
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each business day. At 3:00 p.m., Eastern time, on each such
business day, the value of each investor's interest in the Portfolio is
determined by multiplying the net asset value of the Portfolio by the
percentage representing that investor's share of the aggregate beneficial
interests in the Portfolio effective for that day. Any additions or
withdrawals, which are to be effected on that day, are then effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio is
then re-computed as the percentage equal to the fraction (i) the numerator of
which is the value of such investor's investment in the Portfolio as of 3:00
p.m., Eastern time, on such day plus or minus, as the case may be, the amount
of any additions to or withdrawals from the investor's investment in the
Portfolio effected on such day, and (ii) the denominator of which is the
aggregate net asset value of the Portfolio 3:00 p.m., Eastern time, on such day
plus or minus, as the case may be, the amount of the net additions to or
withdrawals from the aggregate investments in the Portfolio by all investors in
the Portfolio. The percentage so determined is then applied to determine the
value of the investor's interest in the Portfolio as of 3:00 p.m., Eastern
time, on the following business day of the Portfolio.
Item 18. Purchase, Redemption and Pricing of Securities.
Beneficial interests in the Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the 1933
Act.
The Portfolio normally determines its net asset value as of 3:00 p.m.,
Eastern time, on each day on which the New York Stock Exchange is open for
trading. As of the date of this Registration Statement, the New York Stock
Exchange will be open for trading every weekday except for the following
holidays (or the days on which they are observed): New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. Purchases and withdrawals
will be effected at the time of determination of net asset value next following
the receipt of any purchase or withdrawal order. On days when the financial
markets in which the Portfolio invests close early, the Portfolio's net asset
value is determined as of the close of these markets if such time is earlier
than the time at which the net asset value is normally calculated.
The securities held by the Portfolio are valued at their amortized cost.
Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
<PAGE>
premium. If fluctuating interest rates or other factors cause the market value
of the securities held by the Portfolio to deviate more than 1/2 of 1% from
their value determined on the basis of amortized cost, the Portfolio's Board of
Trustees will consider whether any action should be initiated, as described in
the following paragraph. Although the amortized cost method provides certainty
in valuation, it may result in periods during which the stated value of an
instrument is higher or lower than the price the Portfolio would receive if the
instrument were sold.
Pursuant to the rules of the Securities and Exchange Commission, the
Portfolio's Board of Trustees has established procedures to stabilize the value
of the Portfolio's net assets within 1/2 of 1% of the value determined on the
basis of amortized cost. These procedures include a review of the extent of any
such deviation of net asset value, based on available market quotations. Should
that deviation exceed 1/2 of 1%, the Portfolio's Board of Trustees would
consider whether any action should be initiated to eliminate or reduce material
dilution or other unfair results to the investors in the Portfolio. Such action
may include withdrawal in kind, selling its securities prior to maturity and
utilizing a net asset value as determined by using available market quotations.
The Portfolio maintains a dollar-weighted average maturity of 90 days or less,
does not purchase any instrument with a remaining maturity greater than 397
days or subject to a repurchase agreement having a duration of greater than 397
days, limits its investments, including repurchase agreements, to those U.S.
dollar-denominated instruments that have been determined by or on behalf of the
Portfolio's Board of Trustees to present minimal credit risks and complies with
certain reporting and recordkeeping procedures. The Portfolio has also
established procedures to ensure that securities purchased by it meet its high
quality criteria.
Subject to compliance with applicable regulations, the Portfolio has
reserved the right to pay the redemption price of beneficial interests in the
Portfolio, either totally or partially, by a distribution in kind of readily
marketable securities (instead of cash). The securities so distributed would be
valued at the same amount as that assigned to them in calculating the net asset
value for the beneficial interests being redeemed. If a holder of beneficial
interests received a distribution in kind, such holder could incur brokerage or
other charges in converting the securities to cash.
The Portfolio may suspend the right of redemption or postpone the date of
payment for beneficial interests in the Portfolio more than seven days during
any period when (a) trading in the markets the Portfolio normally utilizes is
restricted, or an emergency, as defined by the rules and regulations of the
Securities and Exchange Commission exists making disposal of the Portfolio's
investments or determination of its net asset value not reasonably practicable;
(b) the New York Stock Exchange is closed (other than customary weekend and
holiday closings); or (c) the Securities and Exchange Commission has by order
permitted such suspension.
Item 19. Taxation of the Portfolio.
The Portfolio is organized as a trust under New York law. The Portfolio
has determined, on the basis of a ruling of the Internal Revenue Service, that
it is properly treated as a partnership for federal income tax purposes.
Accordingly, the Portfolio is not subject to any federal income tax, but each
investor in the Portfolio must take into account its share of the Portfolio's
ordinary income, expenses, capital gains or losses, credits and other items in
determining its income tax liability. The determination of such share is made
in accordance with the governing instruments of the Portfolio and the Internal
Revenue Code of 1986, as amended (the "Code"), and regulations promulgated
thereunder.
The Portfolio's tax year-end is August 31. Although, as described above,
the Portfolio is not subject to federal income tax, it files appropriate
federal income tax returns.
The Portfolio believes that, in the case of an investor in the Portfolio
that seeks to qualify as a regulated investment company ("RIC") under the Code,
the investor should be treated for federal income tax purposes as an owner of
an undivided interest in the assets and operations of the Portfolio, and
<PAGE>
accordingly should be deemed to own a proportionate share of each of the assets
of the Portfolio and should be entitled to treat as earned by it the portion of
the Portfolio's gross income attributable to that share. Each such investor
should consult its tax advisers regarding whether, in light of its particular
tax status and any special tax rules applicable to it, this approach applies to
its investment in the Portfolio, or whether the Portfolio should be treated, as
to it, as a separate entity as to which the investor has no direct interest in
Portfolio assets or operations.
In order to enable an investor in the Portfolio that is otherwise eligible
to qualify as a RIC under the Code to so qualify, the Portfolio intends to
satisfy the requirements of Subchapter M of the Code relating to the nature of
the Portfolio's gross income and the composition (diversification) of the
Portfolio's assets as if those requirements were directly applicable to the
Portfolio, and to allocate and permit withdrawals of its net investment income
and any net realized capital gains in a manner that will enable an investor
that is a RIC to comply with the qualification requirements imposed by
Subchapter M of the Code.
The Portfolio will allocate at least annually among its investors each
investor's distributive share of the Portfolio's net investment income
(including net investment income derived from interest on U.S. Treasury
obligations), net realized capital gains, and any other items of income, gain,
loss, deduction, or credit in a manner intended to comply with the Code and
applicable Treasury regulations.
To the extent the cash proceeds of any withdrawal or distribution exceed
an investor's adjusted tax basis in its partnership interest in the Portfolio,
the investor will generally recognize gain for federal income tax purposes. If,
upon a complete withdrawal (i.e., a redemption of its entire interest in the
Portfolio), the investor's adjusted tax basis in its partnership interest in
the Portfolio exceeds the proceeds of the withdrawal, the investor will
generally recognize a loss for federal income tax purposes. An investor's
adjusted tax basis in its partnership interest in the Portfolio will generally
be the aggregate price paid therefor, increased by the amounts of its
distributive share of items of realized net income (including income, if any,
exempt from Federal income tax) and gain, and reduced, but not below zero, by
the amounts of its distributive share of items of realized net loss and the
amounts of any distributions received by the investor.
Portfolio income allocated to investors that is derived from interest on
obligations of the U.S. Government and certain of its agencies and
instrumentalities (but generally not from capital gains realized upon the
disposition of such obligations) may be exempt from state and local taxes. The
Portfolio intends to advise investors of the extent, if any, to which its
income consists of such interest. Investors are urged to consult their tax
advisers regarding the possible exclusion of such portion of the income
allocated to them by the Portfolio for state and local income tax purposes.
There are certain tax issues which will be relevant to only certain of the
Portfolio's investors, specifically, investors which are segregated asset
accounts and investors who contribute assets other than cash to the Portfolio.
It is intended that such segregated asset accounts will be able to satisfy
diversification requirements applicable to them and that such contributions of
assets will not be taxable provided certain requirements are met.
The above discussion does not address the special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance companies,
and financial institutions, or the state, local, or non-United States tax laws
that may be applicable to certain investors. Investors should consult their own
tax advisers with respect to the special tax rules that may apply in their
particular situations, as well as the state, local, or foreign tax consequences
to them of investing in the Portfolio.
<PAGE>
Item 20. Underwriters.
The exclusive placement agent for the Portfolio is CFBDS, Inc., which
receives no compensation for serving in this capacity. Investment companies,
insurance company separate accounts, common and commingled trust funds and
similar organizations and entities may continuously invest in the Portfolio.
Item 21. Calculation of Performance Data.
Not applicable.
Item 22. Financial Statements.
The financial statements contained in the Annual Report of the Portfolio,
as filed with the Securities and Exchange Commission on October 27, 1998
(Accession Number 0000950156-98-000652), for the fiscal year ended August 31,
1998 are incorporated by reference into this Part B.
A copy of the Annual Report of the Portfolio accompanies this Part B.
<PAGE>
PART C
Item 23. Exhibits.
<TABLE>
<CAPTION>
<S> <C> <C>
** a(1) Amended and Restated Declaration of Trust of the Registrant
* a(2) Amendments to the Declaration of Trust of the Registrant
and **
** b By-laws of the Registrant
** d Investment Advisory Agreement between the Registrant and Citibank, N.A., as
investment adviser
** e Placement Agency Agreement between the Registrant and CFBDS, Inc.
(formerly known as The Landmark Funds Broker-Dealer Services, Inc.)
("CFBDS"), as exclusive placement agent
** g Custodian Contract between the Registrant and State Street Bank and Trust
Company ("State Street"), as custodian
** h(1) Transfer Agency and Service Agreement between the Registrant and State Street,
as transfer agent
** h(2) Amended and Restated Administrative Services Plan of the Registrant
** h(3) Administrative Service Agreement between the Registrant and Signature
Financial Group (Cayman), Ltd. ("SFG"), as administrator
** h(4) Sub-Administrative Services Agreement between SFG, and Citibank, N.A.
n Financial Data Schedule
</TABLE>
- -------------------------------------------------------------
* Incorporated herein by reference to Registrant's Registration Statement on
Form N-1A (File No. 811-05813) as filed with the Securities and Exchange
Commission on December 28, 1995.
** Incorporated herein by reference to Registrant's Registration Statement on
Form N-1A (File No. 811-05813) as filed with the Securities and Exchange
Commission on December 30, 1996.
Item 24. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 25. Indemnification.
Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed as an Exhibit to its Registration Statement on Form N-1A.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
<PAGE>
Item 26. Business and Other Connections of Investment Adviser.
Citibank, N.A. ("Citibank") is a commercial bank offering a wide range
of banking and investment services to customers across the United States and
around the world. Citibank is a wholly-owned subsidiary of Citicorp, which is,
in turn, a wholly-owned subsidiary of Citigroup Inc. Citibank also serves as
investment adviser to the following registered investment companies (or series
thereof): Asset Allocation Portfolios (Large Cap Value Portfolio, Small Cap
Value Portfolio, International Portfolio, Foreign Bond Portfolio, Intermediate
Income Portfolio and Short-Term Portfolio), The Premium Portfolios (U.S. Fixed
Income Portfolio, Growth & Income Portfolio, Balanced Portfolio, Large Cap
Growth Portfolio, International Equity Portfolio, Government Income Portfolio
and Small Cap Growth Portfolio), U.S. Treasury Reserves Portfolio, Tax Free
Reserves Portfolio, CitiFundsSM Tax Free Income Trust (CitiFundsSM National Tax
Free Income Portfolio, CitiFundsSM New York Tax Free Income Portfolio and
CitiFundsSM California Tax Free Income Portfolio), CitiFundsSM Multi-State Tax
Free Trust (CitiFundsSM California Tax Free Reserves, CitiFundsSM New York Tax
Free Reserves and CitiFundsSM Connecticut Tax Free Reserves), CitiFundsSM
Institutional Trust (CitiFundsSM Institutional Cash Reserves) and Variable
Annuity Portfolios (CitiSelect VIP Folio 200, CitiSelect VIP Folio 300,
CitiSelect VIP Folio 400, CitiSelect VIP Folio 500 and CitiFundsSM Small Cap
Growth VIP Portfolio). Citibank and its affiliates manage assets in excess of
$290 billion worldwide. The principal place of business of Citibank is located
at 399 Park Avenue, New York, New York 10043.
John S. Reed is the Chairman and a Director of Citibank. Victor J.
Menezes is the President and a Director of Citibank. William R. Rhodes and H.
Onno Ruding are Vice Chairmen and Directors of Citibank. The other Directors of
Citibank are Paul J. Collins, Vice Chairman of Citigroup Inc. and Robert I.
Lipp, Chairman and Chief Executive Officer of The Travelers Insurance Group
Inc. and of Travelers Property Casualty Corp.
Each of the individuals named above is also a Director of Citigroup
Inc. In addition, the following persons have the affiliations indicated:
Paul J. Collins Director, Kimberly-Clark Corporation
Robert I. Lipp Chairman, Chief Executive Officer and President, Travelers
Property Casualty Corp.
John S. Reed Director, Monsanto Company
Director, Philip Morris Companies
Incorporated
Stockholder, Tampa Tank & Welding, Inc.
William R. Rhodes Director, Private Export Funding
Corporation
H. Onno Ruding Supervisory Director, Amsterdamsch Trustees Cantoor B.V.
Director, Pechiney S.A.
Advisory Director, Unilever NV and Unilever PLC
Director, Corning Incorporated
Item 27. Principal Underwriters.
(a) CFBDS, the Registrant's placement agent, is also the distributor
for CitiFundsSM International Growth & Income Portfolio, CitiFundsSM
International Growth Portfolio, CitiFundsSM U.S. Treasury Reserves, CitiFundsSM
<PAGE>
Cash Reserves, CitiFundsSM Premium U.S. Treasury Reserves, CitiFundsSM Premium
Liquid Reserves, CitiFundsSM Institutional U.S. Treasury Reserves, CitiFundsSM
Institutional Liquid Reserves, CitiFundsSM Institutional Cash Reserves,
CitiFundsSM Tax Free Reserves, CitiFundsSM Institutional Tax Free Reserves,
CitiFundsSM California Tax Free Reserves, CitiFundsSM Connecticut Tax Free
Reserves, CitiFundsSM New York Tax Free Reserves, CitiFundsSM Intermediate
Income Portfolio, CitiFundsSM Short-Term U.S. Government Income Portfolio,
CitiFundsSM Balanced Portfolio, CitiFundsSM Small Cap Value Portfolio,
CitiFundsSM Growth & Income Portfolio, CitiFundsSM Large Cap Growth Portfolio,
CitiFundsSM Small Cap Growth Portfolio, CitiFundsSM National Tax Free Income
Portfolio, CitiFundsSM New York Tax Free Income Portfolio, CitiFundsSM
California Tax Free Income Portfolio, CitiSelect VIP Folio 200, CitiSelect VIP
Folio 300, CitiSelect VIP Folio 400, CitiSelect VIP Folio 500, CitiFundsSM
Small Cap Growth VIP Portfolio, CitiSelect Folio 200, CitiSelect Folio 300,
CitiSelect Folio 400, and CitiSelect Folio 500. CFBDS is also the placement
agent for U.S. Fixed Income Portfolio, Large Cap Value Portfolio, Small Cap
Value Portfolio, International Portfolio, Foreign Bond Portfolio, Intermediate
Income Portfolio, Short-Term Portfolio, Growth & Income Portfolio, Large Cap
Growth Portfolio, Small Cap Growth Portfolio, International Equity Portfolio,
Balanced Portfolio, Government Income Portfolio, U.S. Treasury Reserves
Portfolio and Tax Free Reserves Portfolio. CFBDS also serves as the distributor
for the following funds: The Travelers Fund U for Variable Annuities, The
Travelers Fund VA for Variable Annuities, The Travelers Fund BD for Variable
Annuities, The Travelers Fund BD II for Variable Annuities, The Travelers Fund
BD III for Variable Annuities, The Travelers Fund BD IV for Variable Annuities,
The Travelers Fund ABD for Variable Annuities, The Travelers Fund ABD II for
Variable Annuities, The Travelers Separate Account PF for Variable Annuities,
The Travelers Separate Account PF II for Variable Annuities, The Travelers
Separate Account QP for Variable Annuities, The Travelers Separate Account TM
for Variable Annuities, The Travelers Separate Account TM II for Variable
Annuities, The Travelers Separate Account Five for Variable Annuities, The
Travelers Separate Account Six for Variable Annuities, The Travelers Separate
Account Seven for Variable Annuities, The Travelers Separate Account Eight for
Variable Annuities, The Travelers Fund UL for Variable Annuities, The Travelers
Fund UL II for Variable Annuities, The Travelers Variable Life Insurance
Separate Account One, The Travelers Variable Life Insurance Separate Account
Two, The Travelers Variable Life Insurance Separate Account Three, The
Travelers Variable Life Insurance Separate Account Four, The Travelers Separate
Account MGA, The Travelers Separate Account MGA II, The Travelers Growth and
Income Stock Account for Variable Annuities, The Travelers Quality Bond Account
for Variable Annuities, The Travelers Money Market Account for Variable
Annuities, The Travelers Timed Growth and Income Stock Account for Variable
Annuities, The Travelers Timed Short-Term Bond Account for Variable Annuities,
The Travelers Timed Aggressive Stock Account for Variable Annuities, The
Travelers Timed Bond Account for Variable Annuities, Emerging Growth Fund,
Government Fund, Growth and Income Fund, International Equity Fund, Municipal
Fund, Balanced Investments, Emerging Markets Equity Investments, Government
Money Investments, High Yield Investments, Intermediate Fixed Income
Investments, International Equity Investments, International Fixed Income
Investments, Large Capitalization Growth Investments, Large Capitalization
Value Equity Investments, Long-Term Bond Investments, Mortgage Backed
Investments, Municipal Bond Investments, Small Capitalization Growth
<PAGE>
Investments, Small Capitalization Value Equity Investments, Appreciation
Portfolio, Diversified Strategic Income Portfolio, Emerging Growth Portfolio,
Equity Income Portfolio, Equity Index Portfolio, Growth & Income Portfolio,
Intermediate High Grade Portfolio, International Equity Portfolio, Money Market
Portfolio, Total Return Portfolio, Smith Barney Adjustable Rate Government
Income Fund, Smith Barney Aggressive Growth Fund Inc., Smith Barney
Appreciation Fund, Smith Barney Arizona Municipals Fund Inc., Smith Barney
California Municipals Fund Inc., Balanced Portfolio, Conservative Portfolio,
Growth Portfolio, High Growth Portfolio, Income Portfolio, Global Portfolio,
Select Balanced Portfolio, Select Conservative Portfolio, Select Growth
Portfolio, Select High Growth Portfolio, Select Income Portfolio, Concert
Social Awareness Fund, Smith Barney Large Cap Blend Fund, Smith Barney
Fundamental Value Fund Inc., Large Cap Value Fund, Short-Term High Grade Bond
Fund, U.S. Government Securities Fund, Smith Barney Balanced Fund, Smith Barney
Convertible Fund, Smith Barney Diversified Strategic Income Fund, Smith Barney
Exchange Reserve Fund, Smith Barney High Income Fund, Smith Barney Municipal
High Income Fund, Smith Barney Premium Total Return Fund, Smith Barney Total
Return Bond Fund, Cash Portfolio, Government Portfolio, Municipal Portfolio,
Concert Peachtree Growth Fund, Smith Barney Contrarian Fund, Smith Barney
Government Securities Fund, Smith Barney Hansberger Global Small Cap Value
Fund, Smith Barney Hansberger Global Value Fund, Smith Barney Investment Grade
Bond Fund, Smith Barney Special Equities Fund, Smith Barney Intermediate
Maturity California Municipals Fund, Smith Barney Intermediate Maturity New
York Municipals Fund, Smith Barney Large Capitalization Growth Fund, Smith
Barney S&P 500 Index Fund, Smith Barney Mid Cap Blend Fund, Smith Barney
Managed Governments Fund Inc., Smith Barney Managed Municipals Fund Inc., Smith
Barney Massachusetts Municipals Fund, Cash Portfolio, Government Portfolio,
Retirement Portfolio, California Money Market Portfolio, Florida Portfolio,
Georgia Portfolio, Limited Term Portfolio, New York Money Market Portfolio, New
York Portfolio, Pennsylvania Portfolio, Smith Barney Municipal Money Market
Fund, Inc., Smith Barney Natural Resources Fund Inc., Smith Barney New Jersey
Municipals Fund Inc., Smith Barney Oregon Municipals Fund, Zeros Plus Emerging
Growth Series 2000, Smith Barney Security and Growth Fund, Smith Barney Small
Cap Blend Fund, Inc., Smith Barney Telecommunications Income Fund, Income and
Growth Portfolio, Reserve Account Portfolio, U.S. Government/High Quality
Securities Portfolio, Emerging Markets Portfolio, European Portfolio, Global
Government Bond Portfolio, International Balanced Portfolio, International
Equity Portfolio, Pacific Portfolio, AIM Capital Appreciation Portfolio,
Alliance Growth Portfolio, GT Global Strategic Income Portfolio, MFS Total
Return Portfolio, Putnam Diversified Income Portfolio, Smith Barney High Income
Portfolio, Smith Barney Large Cap Value Portfolio, Smith Barney International
Equity Portfolio, Smith Barney Large Capitalization Growth Portfolio, Smith
Barney Money Market Portfolio, Smith Barney Pacific Basin Portfolio, TBC
Managed Income Portfolio, Van Kampen American Capital Enterprise Portfolio,
Centurion Tax-Managed U.S. Equity Fund, Centurion Tax-Managed International
Equity Fund, Centurion U.S. Protection Fund, Centurion International Protection
Fund, Global High-Yield Bond Fund, International Equity Fund, Emerging
Opportunities Fund, Core Equity Fund, Long-Term Bond Fund, Global Dimensions
Fund L.P., Citicorp Private Equity L.P., AIM V.I. Capital Appreciation Fund,
AIM V.I. Government Series Fund, AIM V.I. Growth Fund, AIM V.I. International
Equity Fund, AIM V.I. Value Fund, Fidelity VIP Growth Portfolio, Fidelity VIP
High Income Portfolio, Fidelity VIP Equity Income Portfolio, Fidelity VIP
Overseas Portfolio, Fidelity VIP II Contrafund Portfolio, Fidelity VIP II Index
500 Portfolio, MFS World Government Series, MFS Money Market Series, MFS Bond
Series, MFS Total Return Series, MFS Research Series, MFS Emerging Growth
Series, Salomon Brothers Institutional Money Market Fund, Salomon Brothers Cash
Management Fund, Salomon Brothers New York Municipal Money Market Fund, Salomon
Brothers National Intermediate Municipal Fund, Salomon Brothers U.S. Government
Income Fund, Salomon Brothers High Yield Bond Fund, Salomon Brothers Strategic
Bond Fund, Salomon Brothers Total Return Fund, Salomon Brothers Asia Growth
Fund, Salomon Brothers Capital Fund Inc, Salomon Brothers Investors Fund Inc,
Salomon Brothers Opportunity Fund Inc, Salomon Brothers Institutional High
Yield Bond Fund, Salomon Brothers Institutional Emerging Markets Debt Fund,
Salomon Brothers Variable Investors Fund, Salomon Brothers Variable Capital
Fund, Salomon Brothers Variable Total Return Fund, Salomon Brothers Variable
High Yield Bond Fund, Salomon Brothers Variable Strategic Bond Fund, Salomon
Brothers Variable U.S. Government Income Fund, and Salomon Brothers Variable
Asia Growth Fund.
(b) The information required by this Item 29 with respect to each
director and officer of CFBDS is incorporated by reference to Schedule A of
Form BD filed by CFBDS pursuant to the Securities and Exchange Act of 1934
(File No. 8-32417).
(c) Not applicable.
<PAGE>
Item 28. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
<TABLE>
<CAPTION>
<S> <C>
NAME ADDRESS
Signature Financial Group (Cayman), Ltd. Elizabethan Square
(administrator) George Town
Grand Cayman, Cayman Island, BWI
CFBDS, Inc. 21 Milk Street
(exclusive placement agent) Boston, MA 02109
State Street Canada, Inc. 40 King Street West
(transfer agent) Ontario, Canada
State Street Bank and Trust Company (custodian) 225 Franklin Street
Boston, MA 02110
Citibank, N.A. 153 East 53rd Street
(investment adviser) New York, NY 10043
</TABLE>
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to its Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereto duly authorized, in
Grand Cayman, Cayman Islands, on the 31st day of December, 1998.
CASH RESERVES PORTFOLIO
By: Tamie Ebanks
-------------------
Tamie Ebanks,
Assistant Secretary
<PAGE>
EXHIBIT INDEX
Exhibit: Description:
n Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000850615
<NAME> CASH RESERVES PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 8,784,208,333
<INVESTMENTS-AT-VALUE> 8,784,208,333
<RECEIVABLES> 97,556,173
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,881,764,506
<PAYABLE-FOR-SECURITIES> 75,000,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 854,890
<TOTAL-LIABILITIES> 75,854,890
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,805,909,616
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8,805,909,616
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 513,556,789
<OTHER-INCOME> 0
<EXPENSES-NET> 8,928,885
<NET-INVESTMENT-INCOME> 504,627,904
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 504,627,904
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30,335,511,897
<NUMBER-OF-SHARES-REDEEMED> (29,691,630,125)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,148,509,676
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,394,307
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20,049,552
<AVERAGE-NET-ASSETS> 8,929,537,769
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0.1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
