497 (e) File Nos. 33-28844 and 811-5812
33-38848 and 811-5812
SUPPLEMENT DATED MAY 24, 1995 TO
STATEMENT OF ADDITIONAL INFORMATION DATED JANUARY 3, 1995
FOR
LANDMARK CASH RESERVES
LANDMARK U.S. TREASURY RESERVES
PREMIUM LIQUID RESERVES
PREMIUM U.S. TREASURY RESERVES
LANDMARK INSTITUTIONAL LIQUID RESERVES
LANDMARK INSTITUTIONAL U.S. TREASURY RESERVES
The determination of net asset value per share and net income per share of each
of Landmark Cash Reserves, Premium Liquid Reserves and Landmark Institutional
Liquid Reserves shall be made once each day as of 3:00 p.m., Eastern time.
<PAGE>
497(c) File Nos.33-28844 and 811-5812
33-38848 and 811-5812
STATEMENT OF
ADDITIONAL INFORMATION
PREMIUM LIQUID RESERVES January 3, 1995
PREMIUM U.S. TREASURY RESERVES
(Members of the LandmarkSM Family of Funds)
Premium Liquid Reserves ("Liquid Reserves") and Premium U.S. Treasury
Reserves ("U.S. Treasury Reserves" and together with Liquid Reserves, the
"Funds") are each separate series of Landmark Premium Funds (the "Trust"). The
address and telephone number of the Trust are 6 St. James Avenue, Boston,
Massachusetts 02116, (617) 423-1679. The Trust invests all of the investable
assets of Liquid Reserves and U.S. Treasury Reserves in, respectively, Cash
Reserves Portfolio and U.S. Treasury Reserves Portfolio (the "Portfolios"). The
address of Cash Reserves Portfolio is Elizabethan Square, George Town, Grand
Cayman, British West Indies. The address and telephone number of U.S. Treasury
Reserves Portfolio are 6 St. James Avenue, Boston, Massachusetts 02116, (617)
423-1679.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, CITIBANK, N.A. OR ANY OF ITS AFFILIATES, ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
Table of Contents Page
The Funds 2
Investment Objectives, Policies and
Restrictions 3
Performance Information 13
Determination of Net Asset Value 14
Management 16
Portfolio Transactions 24
Description of Shares, Voting Rights
and Liabilities 25
Certain Additional Tax Matters 27
Independent Accountants and Financial
Statements 28
This Statement of Additional Information sets forth information which may
be of interest to investors but which is not necessarily included in the Funds'
Prospectus, dated January 3, 1995, by which shares of the Funds are offered.
This Statement of Additional Information should be read in conjunction with the
Prospectus, a copy of which may be obtained by an investor without charge by
contacting the Funds' Distributor (see back cover for address and phone number).
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
1. THE FUNDS
The Trust is a no-load, open-end management investment company which was
organized as a business trust under the laws of the Commonwealth of
Massachusetts on May 23, 1989. Shares of the Trust are divided into two separate
series, Premium Liquid Reserves and Premium U.S. Treasury Reserves, which are
described in this Statement of Additional Information. References in this
Statement of Additional Information to the Prospectus are to the Prospectus,
dated January 3, 1995, of the Funds by which shares of the Funds are offered.
Each of the Funds is a type of mutual fund commonly referred to as a
"money market fund." The net asset value of each of the Funds' shares is
expected to remain constant at $1.00, although there can be no assurance that
this will be so on a continuing basis. (See "Determination of Net Asset Value.")
The Trust seeks the investment objectives of the Funds by investing all
the investable assets of Liquid Reserves and U.S. Treasury Reserves in,
respectively, Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio. Each
of the Portfolios is a diversified open-end management investment company. Each
Portfolio has the same investment objectives and policies as its corresponding
Fund.
Citibank, N.A. ("Citibank" or the "Adviser") is the investment adviser to
each of the Portfolios. The Adviser manages the investments of each Portfolio
from day to day in accordance with the investment objectives and policies of
that Portfolio. The selection of investments for each Portfolio, and the way
they are managed, depend on the conditions and trends in the economy and the
financial marketplaces.
The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS" or the
"Administrator") supervises the overall administration of the Trust and U.S.
Treasury Reserves Portfolio. Signature Financial Group (Cayman), Ltd., either
directly or through a wholly-owned subsidiary ("SFG"), supervises the overall
administration of Cash Reserves Portfolio. The Boards of Trustees of the Trust
and the Portfolios provide broad supervision over the affairs of the Trust and
of the Portfolios, respectively. Shares of each Fund are continuously sold by
LFBDS, the Funds' distributor (the "Distributor"), only to investors who are
customers of a financial institution, such as a federal or state-chartered bank,
trust company, savings and loan association or savings bank, or a securities
broker, that has entered into a shareholder servicing agreement with the Trust
with respect to that Fund (collectively, "Shareholder Servicing Agents").
Although shares of the Funds are sold without a sales load, LFBDS may receive
fees from the Funds pursuant to a Distribution Plan adopted in accordance with
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act").
2. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
The investment objectives of PREMIUM LIQUID RESERVES are to provide
shareholders of the Fund with liquidity and as high a level of current income as
is consistent with the preservation of capital.
The investment objectives of PREMIUM U.S. TREASURY RESERVES are to provide
shareholders of the Fund with liquidity and as high a level of current income
from U.S. Government obligations as is consistent with the preservation of
capital.
The investment objective of each of the Funds may be changed without
approval by the Fund's shareholders. Of course, there can be no assurance that
either Fund will achieve its investment objective.
INVESTMENT POLICIES
The Trust seeks the investment objectives of the Funds by investing all of
the investable assets of Liquid Reserves and U.S. Treasury Reserves in,
respectively, Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio, each
of which has the same investment objectives and policies as its corresponding
Fund. The Prospectus contains a discussion of the various types of securities in
which each Portfolio may invest and the risks involved in such investments. The
following supplements the information contained in the Prospectus concerning the
investment objectives, policies and techniques of each Fund and each Portfolio.
Since the investment characteristics of each Fund will correspond directly to
those of the Portfolio in which it invests, the following is a supplementary
discussion with respect to each Portfolio.
The Trust may withdraw the investment of either Fund from its
corresponding Portfolio at any time, if the Board of Trustees of the Trust
determines that it is in the best interests of the Fund to do so. Upon any such
withdrawal, a Fund's assets would be invested in accordance with the investment
policies described below with respect to its corresponding Portfolio. Except for
the concentration policy of Liquid Reserves with respect to bank obligations
described in paragraph (1) below, which is fundamental and may not be changed
without the approval of Liquid Reserves' shareholders the approval of a Fund's
shareholders would not be required to change any of that Fund's investment
policies. Likewise, except for the concentration policy of Cash Reserves
Portfolio with respect to bank obligations described in paragraph (1) below,
which is fundamental and may not be changed without the approval of Cash
Reserves Portfolio's investors, the approval of the investors in a Portfolio
would not be required to change that Portfolio's investment objectives or any of
that Portfolio's investment policies discussed below, including those concerning
securities transactions.
CASH RESERVES PORTFOLIO
Cash Reserves Portfolio seeks its investment objective through investments
limited to the following types of high quality U.S. dollar-denominated money
market instruments. All investments by Cash Reserves Portfolio mature or are
deemed to mature within 397 days from the date of acquisition and the average
maturity of the investments held by the Portfolio (on a dollar-weighted basis)
is 90 days or less. All investments by the Portfolio are in "high quality"
securities (i.e., securities rated in the highest rating category for short-term
obligations by at least two nationally recognized statistical rating
organizations (each, an "NRSRO") assigning a rating to the security or issuer
or, if only one NRSRO assigns a rating, that NRSRO or, in the case of an
investment which is not rated, of comparable quality as determined by the
Adviser) and are determined by the Adviser to present minimal credit risks.
Investments in high quality, short-term instruments may, in many circumstances,
result in a lower yield than would be available from investments in instruments
with a lower quality or a longer term. Under the 1940 Act, Liquid Reserves and
Cash Reserves Portfolio are each classified as "diversified," although in the
case of Liquid Reserves, all of its investable assets are invested in the
Portfolio. A "diversified investment company" must invest at least 75% of its
assets in cash and cash items, U.S. Government securities, investment company
securities (e.g., interests in the Portfolio) and other securities limited as to
any one issuer to not more than 5% of the total assets of the investment company
and not more than 10% of the voting securities of the issuer.
(1) Bank obligations -- Cash Reserves Portfolio invests at least 25% of its
investable assets, and may invest up to 100% of its assets, in bank
obligations. These obligations include, but are not limited to, negotiable
certificates of deposit, bankers' acceptances and fixed time deposits.
Cash Reserves Portfolio limits its investments in U.S. bank obligations
(including their non-U.S. branches) to banks having total assets in excess
of $1 billion and which are subject to regulation by an agency of the U.S.
Government. The Portfolio may also invest in certificates of deposit
issued by banks the deposits in which are insured by the Federal Deposit
Insurance Corporation ("FDIC"), through either the Bank Insurance Fund or
the Savings Association Insurance Fund, having total assets of less than
$1 billion, provided that the Portfolio at no time owns more than $100,000
principal amount of certificates of deposit (or any higher principal
amount which in the future may be fully insured by FDIC insurance) of any
one of those issuers. Fixed time deposits are obligations which are
payable at a stated maturity date and bear a fixed rate of interest.
Generally, fixed time deposits may be withdrawn on demand by the
Portfolio, but they may be subject to early withdrawal penalties which
vary depending upon market conditions and the remaining maturity of the
obligation. Although fixed time deposits do not have a market, there are
no contractual restrictions on the Portfolio's right to transfer a
beneficial interest in the deposit to a third party. This concentration
policy is fundamental and may not be changed without the approval of the
investors in Cash Reserves Portfolio.
U.S. banks organized under federal law are supervised and examined by the
Comptroller of the Currency and are required to be members of the Federal
Reserve System and to be insured by the FDIC. U.S. banks organized under
state law are supervised and examined by state banking authorities and
are members of the Federal Reserve System only if they elect to join.
However, state banks which are insured by the FDIC are subject to federal
examination and to a substantial body of federal law and regulation. As a
result of federal and state laws and regulations, U.S. branches of U.S.
banks, among other things, are generally required to maintain specified
levels of reserves, and are subject to other supervision and regulation
designed to promote financial soundness.
Cash Reserves Portfolio limits its investments in non-U.S. bank
obligations (i.e., obligations of non-U.S. branches and subsidiaries of
U.S. banks, and U.S.and non-U.S. branches of non-U.S. banks) to U.S.
dollar-denominated obligations of banks which at the time of investment
are branches or subsidiaries of U.S. banks which meet the criteria in the
preceding paragraphs or are branches of non-U.S. banks which (i) have
more than $10 billion, or the equivalent in other currencies, in total
assets; (ii) in terms of assets are among the 75 largest non-U.S. banks
in the world; (iii) have branches or agencies in the United States; and
(iv) in the opinion of the Adviser, are of an investment quality
comparable with obligations of U.S. banks which may be purchased by the
Portfolio. These obligations may be general obligations of the parent
bank, in addition to the issuing branch or subsidiary, but the parent
bank's obligations may be limited by the terms of the specific obligation
or by governmental regulation. The Portfolio also limits its investments
in non-U.S. bank obligations to banks, branches and subsidiaries located
in Western Europe (United Kingdom, France, Germany, Belgium, the
Netherlands, Italy, Switzerland), Scandinavia (Denmark, Norway, Sweden),
Australia, Japan, the Cayman Islands, the Bahamas and Canada. Cash
Reserves Portfolio does not purchase any bank obligation of the Adviser
or an affiliate of the Adviser.
Since Cash Reserves Portfolio may hold obligations of non-U.S. branches
and subsidiaries of U.S. banks, and U.S. and non-U.S. branches of
non-U.S. banks, an investment in Liquid Reserves involves certain
additional risks. Such investment risks include future political and
economic developments, the possible imposition of non-U.S. withholding
taxes on interest income payable on such obligations held by the
Portfolio, the possible seizure or nationalization of non-U.S. deposits
and the possible establishment of exchange controls or other non-U.S.
governmental laws or restrictions applicable to the payment of the
principal of and interest on certificates of deposit or time deposits
that might affect adversely such payment on such obligations held by the
Portfolio. In addition, there may be less publicly-available information
about a non-U.S. branch or subsidiary of a U.S. bank or a U.S. or
non-U.S. branch of a non-U.S. bank than about a U.S. bank and such
branches and subsidiaries may not be subject to the same or similar
regulatory requirements that apply to U.S. banks, such as mandatory
reserve requirements, loan limitations and accounting, auditing and
financial record-keeping standards and requirements.
The provisions of federal law governing the establishment and operation of
U.S. branches do not apply to non-U.S. branches of U.S. banks. However,
Cash Reserves Portfolio may purchase obligations only of those non-U.S.
branches of U.S. banks which were established with the approval of the
Board of Governors of the Federal Reserve System (the "Board of
Governors"). As a result of such approval, these branches are subject to
examination by the Board of Governors and the Comptroller of the Currency.
In addition, such non-U.S. branches of U.S. banks are subject to the
supervision of the U.S. bank and creditors of the non-U.S. branch are
considered general creditors of the U.S. bank subject to whatever
defenses may be available under the governing non-U.S. law and to the
terms of the specific obligation. Nonetheless, Cash Reserves Portfolio
generally will be subject to whatever risk may exist that the non-U.S.
country may impose restrictions on payment of certificates of deposit or
time deposits.
U.S. branches of non-U.S. banks are subject to the laws of the state in
which the branch is located or to the laws of the United States. Such
branches are therefore subject to many of the regulations, including
reserve requirements, to which U.S. banks are subject. In addition, Cash
Reserves Portfolio may purchase obligations only of those U.S. branches
of non-U.S. banks which are located in states which impose the additional
requirement that the branch pledge to a designated bank within the state
an amount of its assets equal to 5% of its total liabilities.
Non-U.S. banks in whose obligations Cash Reserves Portfolio may invest may
not be subject to the laws and regulations referred to in the preceding
two paragraphs.
(2) Obligations of, or guaranteed by, non-U.S. governments. Cash Reserves
Portfolio limits its investments in non-U.S. government obligations to
obligations issued or guaranteed by the governments of Western Europe
(United Kingdom, France, Germany, Belgium, the Netherlands, Italy,
Switzerland), Scandinavia (Denmark, Norway, Sweden), Australia, Japan and
Canada. Generally, such obligations may be subject to the additional
risks described in paragraph 1 above in connection with the purchase of
non-U.S. bank obligations.
(3) Commercial paper rated Prime-1 by Moody's Investors Service, Inc.
("Moody's") or A-1 by Standard & Poor's Ratings Group ("Standard &
Poor's") or, if not rated, determined to be of comparable quality by the
Adviser, such as unrated commercial paper issued by corporations having an
outstanding unsecured debt issue currently rated Aaa by Moody's or AAA by
Standard & Poor's.
(4) Obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities. These include issues of the U.S. Treasury, such as
bills, certificates of indebtedness, notes and bonds, and issues of
agencies and instrumentalities established under the authority of an Act
of Congress. Some of the latter category of obligations are supported by
the full faith and credit of the United States, others are supported by
the right of the issuer to borrow from the U.S. Treasury, and still others
are supported only by the credit of the agency or instrumentality.
Examples of each of the three types of obligations described in the
preceding sentence are (i) obligations guaranteed by the Export-Import
Bank of the United States, (ii) obligations of the Federal Home Loan
Mortgage Corporation, and (iii) obligations of the Student Loan Marketing
Association, respectively.
(5) Repurchase agreements, providing for resale within 397 days or less,
covering obligations of, or guaranteed by, the U.S. Government, its
agencies or instrumentalities which may have maturities in excess of 397
days. A repurchase agreement arises when a buyer purchases an obligation
and simultaneously agrees with the vendor to resell the obligation to the
vendor at an agreed-upon price and time, which is usually not more than
seven days from the date of purchase. The resale price of a repurchase
agreement is greater than the purchase price, reflecting an agreed-upon
market rate which is effective for the period of time the buyer's funds
are invested in the obligation and which is not related to the coupon rate
on the purchased obligation. Obligations serving as collateral for each
repurchase agreement are delivered to the Portfolio's custodian either
physically or in book entry form and the collateral is marked to the
market daily to ensure that each repurchase agreement is fully
collateralized at all times. A buyer of a repurchase agreement runs a risk
of loss if, at the time of default by the issuer, the value of the
collateral securing the agreement is less than the price paid for the
repurchase agreement. If the vendor of a repurchase agreement becomes
bankrupt, Cash Reserves Portfolio might be delayed, or may incur costs or
possible losses of principal and income, in selling the collateral. The
Portfolio may enter into repurchase agreements only with a vendor which is
a member bank of the Federal Reserve System or which is a "primary dealer"
(as designated by the Federal Reserve Bank of New York) in U.S. Government
obligations. The Portfolio will not enter into any repurchase agreements
with the Adviser or an affiliate of the Adviser. The restrictions and
procedures described above which govern the Portfolio's investment in
repurchase agreements are designed to minimize the Portfolio's risk of
losses in making those investments.
(6) Asset-backed securities, which may include securities such as Certificates
for Automobile Receivables ("CARS") and Credit Card Receivable Securities
("CARDS"), as well as other asset-backed securities that may be developed
in the future. CARS represent fractional interests in pools of car
installment loans, and CARDS represent fractional interests in pools of
revolving credit card receivables. The rate of return on asset-backed
securities may be affected by early prepayment of principal on the
underlying loans or receivables. Prepayment rates vary widely and may be
affected by changes in market interest rates. It is not possible to
accurately predict the average life of a particular pool of loans or
receivables. Reinvestment of principal may occur at higher or lower rates
than the original yield. Therefore, the actual maturity and realized yield
on asset-backed securities will vary based upon the prepayment experience
of the underlying pool of loans or receivables. (See "Asset-Backed
Securities.")
Cash Reserves Portfolio does not purchase securities which the Portfolio
believes, at the time of purchase, will be subject to exchange controls or
non-U.S. withholding taxes; however, there can be no assurance that such laws
may not become applicable to certain of the Portfolio's investments. In the
event exchange controls or non-U.S. withholding taxes are imposed with respect
to any of the Portfolio's investments, the effect may be to reduce the income
received by the Portfolio on such investments.
ASSET-BACKED SECURITIES
As set forth above, Cash Reserves Portfolio may purchase asset-backed
securities that represent fractional interests in pools of retail installment
loans, both secured (such as Certificates for Automobile Receivables) and
unsecured, leases or revolving credit receivables, both secured and unsecured
(such as Credit Card Receivable Securities). These assets are generally held by
a trust and payments of principal and interest or interest only are passed
through monthly or quarterly to certificate holders and may be guaranteed up to
certain amounts by letters of credit issued by a financial institution
affiliated or unaffiliated with the trustee or originator of the trust.
Underlying automobile sales contracts, leases or credit card receivables
are subject to prepayment, which may reduce the overall return to certificate
holders. Nevertheless, principal repayment rates tend not to vary much with
interest rates and the short-term nature of the underlying loans, leases or
receivables tends to dampen the impact of any change in the prepayment level.
Certificate holders may also experience delays in payment on the certificates if
the full amounts due on underlying loans, leases or receivables are not realized
by the Portfolio because of unanticipated legal or administrative costs of
enforcing the contracts or because of depreciation or damage to the collateral
(usually automobiles) securing certain contracts, or other factors. If
consistent with its investment objectives and policies, Cash Reserves Portfolio
may invest in other asset-backed securities that may be developed in the future.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to
generate income, each of the Portfolios may lend its securities to
broker-dealers and other institutional borrowers. Such loans will usually be
made only to member banks of the U.S. Federal Reserve System and to member firms
of the New York Stock Exchange (and subsidiaries thereof). Loans of securities
would be secured continuously by collateral in cash, cash equivalents, or U.S.
Treasury obligations maintained on a current basis at an amount at least equal
to the market value of the securities loaned. The cash collateral would be
invested in high quality short-term instruments. A Portfolio would have the
right to call a loan and obtain the securities loaned at any time on customary
industry settlement notice (which will not usually exceed five days). During the
existence of a loan, a Portfolio would continue to receive the equivalent of the
interest or dividends paid by the issuer on the securities loaned and would also
receive compensation based on investment of the collateral. The Portfolio would
not, however, have the right to vote any securities having voting rights during
the existence of the loan, but would call the loan in anticipation of an
important vote to be taken among holders of the securities or of the giving or
withholding of their consent on a material matter affecting the investment. As
with other extensions of credit, there are risks of delay in recovery or even
loss of rights in the collateral should the borrower fail financially. However,
the loans would be made only to entities deemed by the Adviser to be of good
standing, and when, in the judgment of the Adviser, the consideration which can
be earned currently from loans of this type justifies the attendant risk. If the
Adviser determines to make loans, it is not intended that the value of the
securities loaned by a Portfolio would exceed 33 1/3% of the value of its net
assets.
U.S. TREASURY RESERVES PORTFOLIO
U.S. Treasury Reserves Portfolio seeks its investment objective by
investing in obligations of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities including issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an Act of Congress which
are supported by the full faith and credit of the United States. U.S. Treasury
Reserves Portfolio will not enter into repurchase agreements.
INVESTMENT RESTRICTIONS
The Trust, on behalf of the Funds, and the Portfolios have each adopted
the following policies which may not be changed without approval by holders of a
"majority of the outstanding shares" of the applicable Fund or Portfolio, which
as used in this Statement of Additional Information means the vote of the lesser
of (i) 67% or more of the outstanding voting securities of the Fund or Portfolio
present at a meeting, if the holders of more than 50% of the outstanding "voting
securities" of the Fund or Portfolio are present or represented by proxy, or
(ii) more than 50% of the outstanding "voting securities" of the Fund or the
Portfolio. The term "voting securities" as used in this paragraph has the same
meaning as in the 1940 Act. Whenever the Trust is requested to vote on a change
in the investment restrictions of a Portfolio (or, in the case of Cash Reserves
Portfolio, its concentration policy described in paragraph (1) under "Investment
Policies"), the Trust will hold a meeting of the corresponding Fund's
shareholders and will cast its vote as instructed by the shareholders. Each Fund
will vote the shares held by its shareholders who do not give voting
instructions in the same proportion as the shares of that Fund's shareholders
who do give voting instructions. Shareholders of the Funds who do not vote will
have no effect on the outcome of these matters.
Neither the Trust, on behalf of a Fund, nor a Portfolio may:
(1) borrow money, except that as a temporary measure for extraordinary or
emergency purposes either the Trust or the Portfolio may borrow from banks in an
amount not to exceed 1/3 of the value of the net assets of the Fund or the
Portfolio, respectively, including the amount borrowed (moreover, neither the
Trust (on behalf of the Fund) nor the Portfolio may purchase any securities at
any time at which borrowings exceed 5% of the total assets of the Fund or the
Portfolio, respectively (taken in each case at market value)) (it is intended
that the Fund and the Portfolio would borrow money only from banks and only to
accommodate requests for the repurchase of shares of the Fund or the withdrawal
of all or a portion of a beneficial interest in the Portfolio while effecting an
orderly liquidation of securities); for additional related restrictions, see
clause (i) under the caption "State and Federal Restrictions" below;
(2) purchase any security or evidence of interest therein on margin,
except that either the Trust, on behalf of the Fund, or the Portfolio may obtain
such short term credit as may be necessary for the clearance of purchases and
sales of securities;
(3) underwrite securities issued by other persons, except that all the
assets of the Fund may be invested in the Portfolio and except insofar as either
the Trust or the Portfolio may technically be deemed an underwriter under the
Securities Act of 1933 in selling a security;
(4) make loans to other persons except (a) through the lending of
securities held by either the Fund or the Portfolio, but not in excess of 33
1/3% of the Fund's or the Portfolio's net assets, as the case may be, (b)
through the use of repurchase agreements (or, in the case of Liquid Reserves and
Cash Reserves Portfolio, fixed time deposits) or the purchase of short term
obligations, or (c) by purchasing all or a portion of an issue of debt
securities of types commonly distributed privately to financial institutions;
for purposes of this paragraph 4 the purchase of a portion of an issue of debt
securities which is part of an issue to the public (and in the case of Liquid
Reserves and Cash Reserves Portfolio, short term commercial paper) shall not be
considered the making of a loan; for additional related restrictions, see clause
(x) under the caption "State and Federal Restrictions" below;
(5) purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein), interests
in oil, gas or mineral leases, commodities or commodity contracts in the
ordinary course of business (the Trust on behalf of each Fund and the Portfolio
reserve the freedom of action to hold and to sell real estate acquired as a
result of the ownership of securities by the Fund or the Portfolio);
(6) in the case of U.S. Treasury Reserves and U.S. Treasury Reserves
Portfolio, concentrate its investment in any particular industry; provided that
nothing in this Investment Restriction is intended to affect the ability to
invest 100% of U.S. Treasury Reserves' assets in U.S. Treasury Reserves
Portfolio;
(7) in the case of Liquid Reserves and Cash Reserves Portfolio,
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 Liquid Reserves or Cash Reserves Portfolio, respectively (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; provided that, if the
Trust withdraws the investment of Liquid Reserves from Cash Reserves Portfolio,
the Trust will invest the assets of the Fund in bank obligations to the same
extent and with the same reservation as the Portfolio; and provided, further
that nothing in this Investment Restriction is intended to affect Liquid
Reserves' ability to invest 100% of its assets in Cash Reserves Portfolio; or
(8) issue any senior security (as that term is defined in the 1940 Act) if
such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, except as appropriate to evidence a debt
incurred without violating Investment Restriction (1) above.
STATE AND FEDERAL RESTRICTIONS
In order to comply with certain state and federal statutes and regulatory
policies, neither the Trust, on behalf of either of the Funds, nor the
corresponding Portfolio will as a matter of operating policy:
(i) borrow money for any purpose in excess of 10% of the total assets of
the Fund or Portfolio (taken in each case at cost),
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of
the net assets of the Fund or Portfolio (taken in each case at market value),
(iii) sell any security which it does not own unless by virtue of its
ownership of other securities it has at the time of sale a right to obtain
securities, without payment of further consideration, equivalent in kind and
amount to the securities sold; and provided, that if such right is conditional
the sale is made upon the same conditions,
(iv) invest for the purpose of exercising control or management, except
that all of the assets of the Fund may be invested in the corresponding
Portfolio,
(v) purchase securities issued by any registered investment company,
except that all of the assets of the Fund may be invested in the corresponding
Portfolio and except by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchase other than the
customary broker's commission, and except when such purchase, though not made in
the open market, is part of a plan of merger or consolidation; provided,
however, that the Trust (on behalf of the Fund) and the Portfolio will not
purchase the securities of any registered investment company if such purchase at
the time thereof would cause more than 10% of the total assets of the Fund or
the Portfolio, respectively (taken in each case at the greater of cost or market
value) to be invested in the securities of such issuers or would cause more than
3% of the outstanding voting securities of any such issuer to be held by the
Fund or Portfolio; and provided, further, that neither the Fund nor the
Portfolio shall purchase securities issued by any open-end investment company,
(vi) taken together with any investments described in clause (x) below,
invest more than 10% of the net assets of the Fund or the Portfolio in
securities that are not readily marketable, including debt securities for which
there is no established market (and, in the case of Liquid Reserves and Cash
Reserves Portfolio, fixed time deposits) and repurchase agreements maturing in
more than seven days, except that all the assets of the Fund may be invested in
the corresponding Portfolio,
(vii) purchase securities of any issuer if such purchase at the time
thereof would cause it to hold more than 10% of any class of securities of such
issuer, for which purposes all indebtedness of an issuer shall be deemed a
single class, except that all the assets of the Fund may be invested in the
corresponding Portfolio,
(viii) purchase or retain any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or Trustee of
the Trust or the Portfolio, or is an officer or director of the Adviser, if
after the purchase of the securities of such issuer by the Trust, on behalf of
the Fund, or the Portfolio, one or more of such persons owns beneficially more
than 1/2 of 1% of the shares or securities, or both, all taken at market value,
of such issuer, and such persons owning more than 1/2 of 1% of such shares or
securities together own beneficially more than 5% of such shares or securities,
or both, all taken at market value,
(ix) write, purchase or sell any put or call option or any combination
thereof,
(x) taken together with any investments described in clause (vi) above,
invest in securities which are subject to legal or contractual restrictions on
resale (other than, in the case of Liquid Reserves and Cash Reserves Portfolio,
repurchase agreements and fixed time deposits maturing in not more than seven
days) if, as a result thereof, more than 10% of the net assets of the Fund or
the Portfolio, respectively, (in each case taken at market value) would be so
invested (including, in the case of Liquid Reserves and Cash Reserves Portfolio,
repurchase agreements maturing in more than seven days), except that all the
assets of the Fund may be invested in the Portfolio,
(xi) purchase securities of any issuer if such purchase at the time
thereof would cause more than 10% of the voting securities of such issuer to be
held by the Fund or the Portfolio, respectively, except that all the assets of
the Fund may be invested in the Portfolio, or
(xii) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue as, and equal in
amount to, the securities sold short, and unless not more than 10% of the net
assets of the Fund or the Portfolio respectively (in each case taken at market
value) is held as collateral for such sales at any one time (the Funds and the
Portfolios do not presently intend to make such sales).
These policies are not fundamental and may be changed by the Trust with
respect to a Fund without approval by the Fund's shareholders, or by a Portfolio
without approval by the corresponding Fund or its other investors, in each case
in response to changes in the various state and federal requirements.
PERCENTAGE AND RATING RESTRICTIONS
If a percentage restriction or a rating restriction (other than a
restriction as to borrowing) on investment or utilization of assets set forth
above or referred to in the Prospectus is adhered to at the time an investment
is made or assets are so utilized, a later change in percentage resulting from
changes in the value of the securities held by a Fund or a Portfolio or a later
change in the rating of a security held by the Fund or the Portfolio is not
considered a violation of policy.
3. PERFORMANCE INFORMATION
Any current yield quotation of a Fund which is used in such a manner as to
be subject to the provisions of Rule 482(d) under the Securities Act of 1933, as
amended, consists of an annualized historical yield, carried at least to the
nearest hundredth of one percent, based on a specific seven calendar day period
and is calculated by dividing the net change in the value of an account having a
balance of one share at the beginning of the period by the value of the account
at the beginning of the period and multiplying the quotient by 365/7. For this
purpose the net change in account value would reflect the value of additional
shares purchased with dividends declared on the original share and dividends
declared on both the original share and any such additional shares, but would
not reflect any realized gains or losses as a result of the Fund's investment in
the Portfolio or any unrealized appreciation or depreciation on portfolio
securities. In addition, any effective yield quotation of a Fund so used shall
be calculated by compounding the current yield quotation for such period by
multiplying such quotation by 7/365, adding 1 to the product, raising the sum to
a power equal to 365/7, and subtracting 1 from the result.
Any tax equivalent yield quotation of a Fund is calculated as follows: If
the entire current yield quotation for such period is tax-exempt, the tax
equivalent yield will be the current yield quotation divided by 1 minus a stated
income tax rate or rates. If a portion of the current yield quotation is not
tax-exempt, the tax equivalent yield will be the sum of (a) that portion of the
yield which is tax-exempt divided by 1 minus a stated income tax rate or rates
and (b) the portion of the yield which is not tax-exempt.
A total rate of return quotation for a Fund is calculated for any period
by (a) dividing (i) the sum of the net asset value per share on the last day of
the period and the net asset value per share on the last day of the period of
shares purchasable with dividends and capital gains distributions declared
during such period with respect to a share held at the beginning of such period
and with respect to shares purchased with such dividends and capital gains
distributions, by (ii) the public offering price on the first day of such
period, and (b) subtracting 1 from the result. Any annualized total rate of
return quotation is calculated by (x) adding 1 to the period total rate of
return quotation calculated above, (y) raising such sum to a power which is
equal to 365 divided by the number of days in such period, and (z) subtracting 1
from the result.
Any tax equivalent total rate of return quotation of a Fund is calculated
as follows: If the entire current total rate of return quotation for such period
is tax-exempt, the tax equivalent total rate of return will be the current total
rate of return quotation divided by 1 minus a stated income tax rate or rates.
If a portion of the current total rate of return quotation is not tax-exempt,
the tax equivalent total rate of return will be the sum of (a) that portion of
the total rate of return which is tax-exempt divided by 1 minus a stated income
tax rate or rates and (b) the portion of the total rate of return which is not
tax-exempt.
Set forth below is total rate of return information, assuming that
dividends and capital gains distributions, if any, were reinvested, for the
Funds for the periods indicated, at the beginning of which periods no sales
charges were applicable to purchases of shares of the Funds.
REDEEMABLE VALUE OF
A HYPOTHETICAL
$1,000 INVESTMENT
ANNUALIZED TOTAL AT THE END
PERIOD RATE OF RETURN OF THE PERIOD
PREMIUM LIQUID RESERVES
May 3, 1990 (commencement of 4.73% $1,221.62
operations) to August 31, 1994
One year ended August 31, 1994 3.49% $1,034.86
PREMIUM U.S. TREASURY RESERVES
March 1, 1991 (commencement of 3.72% $1,136.40
operations) to August 31, 1994
One year ended August 31, 1994 3.13% $1,031.31
The annualized yield of Premium Liquid Reserves for the seven-day period
ended August 31, 1994 was 4.54%. The effective compound annualized yield of
Premium Liquid Reserves for such period was 4.64%. The annualized yield of
Premium U.S. Treasury Reserves for the seven-day period ended August 31, 1994
was 3.99%, the effective compound annualized yield of Premium U.S. Treasury
Reserves for such period was 4.07% and the annualized tax equivalent yield of
Premium U.S. Treasury Reserves for such period was 4.54% (assuming a combined
state and local tax rate of 12.051% for New York City residents).
4. DETERMINATION OF NET ASSET VALUE
The net asset value of each of the shares of each Fund is determined on
each day on which the New York Stock Exchange is open for trading. This
determination is made once during each such day as of 2:00 p.m., Eastern time,
for Liquid Reserves and 12:00 noon, Eastern time, for U.S. Treasury Reserves, by
dividing the value of the Fund's net assets (i.e., the value of its investment
in its Portfolio and other assets less its liabilities, including expenses
payable or accrued) by the number of shares of the Fund outstanding at the time
the determination is made. As of the date of this Statement of Additional
Information, the New York Stock Exchange is open for trading every weekday
except for the following holidays (or the days on which they are observed): New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. It is anticipated that the net asset
value of each share of each Fund will remain constant at $1.00 and, although no
assurance can be given that they will be able to do so on a continuing basis, as
described below, the Funds and Portfolios employ specific investment policies
and procedures to accomplish this result.
The value of a Portfolio's net assets (i.e., the value of its securities
and other assets less its liabilities, including expenses payable or accrued) is
determined at the same time and on the same days as the net asset value per
share of the corresponding Fund is determined. The net asset value of a Fund's
investment in the corresponding Portfolio is equal to the Fund's pro rata share
of the total investment of the Fund and of other investors in the Portfolio less
the Fund's pro rata share of the Portfolio's liabilities.
The securities held by a Fund or Portfolio are valued at their amortized
cost. Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. If fluctuating interest rates cause the market value of the securities
held by the Fund or Portfolio to deviate more than 1/2 of 1% from their value
determined on the basis of amortized cost, the Fund or Portfolio's Board of
Trustees will consider whether any action should be initiated, as described in
the following paragraph. Although the amortized cost method provides certainty
in valuation, it may result in periods during which the stated value of an
instrument is higher or lower than the price the Fund or Portfolio would receive
if the instrument were sold.
Pursuant to the rules of the Securities and Exchange Commission, the
Trust's and the Portfolios' Boards of Trustees have established procedures to
stabilize the value of the Funds' and Portfolios' net assets within 1/2 of 1% of
the value determined on the basis of amortized cost. These procedures include a
review of the extent of any such deviation of net asset value, based on
available market rates. Should that deviation exceed 1/2 of 1% for a Fund or a
Portfolio, the Trust's or Portfolio's Board of Trustees of the applicable Fund
or Portfolio will consider whether any action should be initiated to eliminate
or reduce material dilution or other unfair results to the investors in the Fund
or Portfolio. Such action may include withdrawal in kind, selling securities
prior to maturity and utilizing a net asset value as determined by using
available market quotations. The Funds and Portfolios maintain a dollar-weighted
average maturity of 90 days or less, do not purchase any instrument with a
remaining maturity greater than 397 days or (in the case of Liquid Reserves and
Cash Reserves Portfolio) subject to a repurchase agreement having a duration of
greater than 397 days, limit their investments, including repurchase agreements,
to those U.S. dollar-denominated instruments that are determined by the Adviser
to present minimal credit risks and comply with certain reporting and
recordkeeping procedures. The Trust and Portfolios also have established
procedures to ensure that securities purchased by the Funds and Portfolios meet
high quality criteria. (See "Investment Objectives, Policies and Restrictions --
Investment Policies.")
Subject to compliance with applicable regulations, the Trust and the
Portfolios have each reserved the right to pay the redemption price of shares of
the Funds or beneficial interests in the Portfolios, either totally or
partially, by a distribution in kind of readily marketable securities (instead
of cash). The securities so distributed would be valued at the same amount as
that assigned to them in calculating the net asset value for the shares or
beneficial interests being sold. If a holder of shares or beneficial interests
received a distribution in kind, such holder could incur brokerage or other
charges in converting the securities to cash.
The Trust or the Portfolios may suspend the right of redemption or
postpone the date of payment for shares of a Fund or beneficial interests in a
Portfolio more than seven days during any period when (a) trading in the markets
the Fund or Portfolio normally utilizes is restricted, or an emergency, as
defined by the rules and regulations of the Securities and Exchange Commission,
exists making disposal of the Fund's or 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.
5. MANAGEMENT
The Trustees and officers of the Trust and the Portfolios and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Asterisks indicate that those
Trustees and officers are "interested persons" (as defined in the 1940 Act) of
the Trust or a Portfolio. Unless otherwise indicated below, the address of each
Trustee and officer is 6 St. James Avenue, Boston, Massachusetts. The address of
Cash Reserves Portfolio is Elizabethan Square, George Town, Grand Cayman,
British West Indies. The address of U.S. Treasury Reserves Portfolio is 6 St.
James Avenue, Boston, Massachusetts.
TRUSTEES OF THE TRUST
PHILIP W. COOLIDGE* -- President of the Trust and the Portfolios; Chief
Executive Officer, Signature Financial Group, Inc. and The Landmark Funds
Broker-Dealer Services, Inc. (since December, 1988).
MARK T. FINN -- President and Director, Delta Financial, Inc. (since June,
1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd. (Commodity
Trading Advisory Firm) (since April, 1990); Director, Vantage Consulting Group
(since October, 1988). His address is 3500 Pacific Avenue, P.O. Box 539,
Virginia Beach, Virginia.
DONALD B. OTIS -- Director of Investor Relations, International Business
Machines Corporation (retired February, 1982). His address is 6300 Midnight Pass
Road, Sarasota, Florida.
WILLIAM S. WOODS, JR. -- Vice President - Investments, Sun Company, Inc.
(retired, April, 1984). His address is 35 Colwick Road, Cherry Hill, New Jersey.
<PAGE>
TRUSTEES OF THE PORTFOLIOS
ELLIOTT J. BERV -- Chairman and Director, Catalyst, Inc. (Management
Consultants) (since August, 1992); President, Chief Operating Officer and
Director, Deven International, Inc. (International Consultants) (June, 1991 to
July, 1992); President and Director, Elliott J. Berv & Associates (Management
Consultants) (since May, 1984). His address is 15 Stornoway Drive, Cumberland
Foreside, Maine.
PHILIP W. COOLIDGE* -- President of the Trust and the Portfolios; Chief
Executive Officer, Signature Financial Group, Inc. and The Landmark Funds
Broker-Dealer Services, Inc. (since December, 1988).
MARK T. FINN -- President and Director, Delta Financial, Inc. (since June,
1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd. (Commodity
Trading Advisory Firm) (since April, 1990); Director, Vantage Consulting Group
(since October, 1988). His address is 3500 Pacific Avenue, P.O. Box 539,
Virginia Beach, Virginia.
WALTER E. ROBB, III -- President, Benchmark Advisors, Inc. (Corporate
Financial Advisors) (since 1989); Trustee of certain registered investment
companies in the MFS Family of Funds. His address is 35 Farm Road, Sherborn,
Massachusetts.
OFFICERS OF THE TRUST AND THE PORTFOLIOS
PHILIP W. COOLIDGE* -- President of the Trust and the Portfolios; Chief
Executive Officer, Signature Financial Group, Inc. and The Landmark Funds
Broker-Dealer Services, Inc. (since December, 1988).
JAMES B. CRAVER* -- Secretary and Treasurer of the Trust and the
Portfolios; Senior Vice President and General Counsel, Signature Financial
Group, Inc. and The Landmark Funds Broker-Dealer Services, Inc. (since January,
1991); Partner, Baker & Hostetler (Attorneys) (prior to January, 1991).
SUSAN JAKUBOSKI* -- Vice President, Assistant Treasurer and Assistant
Secretary of Cash Reserves Portfolio (since August, 1994); Manager, Signature
Financial Group (Cayman) Ltd. (since August, 1994); Senior Fund Administrator,
Signature Financial Group, Inc. (since August, 1994); Assistant Treasurer,
Signature Broker-Dealer Services, Inc. (since September, 1994); Fund Compliance
Administrator, Concord Financial Group (November, 1990 to August, 1994); Senior
Fund Accountant, Neuberger & Berman Management, Inc. (from February, 1988 to
November, 1990); Customer Service Representative, I.B.J. Schroder (prior to
1988). Her address is Elizabethan Square, George Town, Grand Cayman, Cayman
Islands, BWI.
MOLLY S. MUGLER* -- Assistant Secretary of the Trust and the Portfolios;
Legal Counsel and Assistant Secretary, Signature Financial Group, Inc. (since
December, 1988); Assistant Secretary, The Landmark Funds Broker-Dealer Services,
Inc. (since December, 1988).
BARBARA M. O'DETTE*-- Assistant Treasurer of the Trust and the Portfolios;
Assistant Treasurer, Signature Financial Group, Inc. and The Landmark Funds
Broker-Dealer Services, Inc. (since December, 1988).
DONALD S. RUMERY* -- Assistant Treasurer of the Trust and the Portfolios;
Vice President and Assistant Treasurer, Signature Financial Group, Inc. and The
Landmark Funds Broker-Dealer Services, Inc. (since March, 1990); Vice President,
Putnam Investor Services (Financial Services Company) (prior to March, 1990).
The Trustees and officers of the Trust and the Portfolios also hold
comparable positions with certain other funds for which LFBDS or an affiliate
serves as the distributor or administrator.
As of October 31, 1994, all Trustees and officers as a group owned less
than 1% of each Fund's outstanding shares. As of the same date, more than 95% of
the outstanding shares of Liquid Reserves and more than 95% of the outstanding
shares of U.S. Treasury Reserves were held of record by Citibank, N.A. or an
affiliate, as a Shareholder Servicing Agent of the Funds, for the accounts of
their respective clients.
The Declaration of Trust of each of the Trust and the Portfolios provides
that the Trust or such Portfolio, as the case may be, will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust or such Portfolio, as the case may be, unless, as to liability to the
Trust or such Portfolio or its respective investors, it is finally adjudicated
that they engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in their offices, or unless with
respect to any other matter it is finally adjudicated that they did not act in
good faith in the reasonable belief that their actions were in the best
interests of the Trust or such Portfolio, as the case may be. In the case of
settlement, such indemnification will not be provided unless it has been
determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees of the Trust or
such Portfolio, or in a written opinion of independent counsel, that such
officers or Trustees have not engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties.
ADVISER
Citibank manages the assets of each Portfolio pursuant to separate
investment advisory agreements (the "Advisory Agreements"). Subject to such
policies as the Board of Trustees of a 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 Portfolios' investments and
effecting securities transactions for each Portfolio. Each of the Advisory
Agreements will continue in effect as long as such continuance is specifically
approved at least annually by the Board of Trustees of the applicable Portfolio
or by a vote of a majority of the outstanding voting securities of the
applicable Portfolio, and, in either case, by a majority of the Trustees of the
applicable Portfolio who are not parties to such Advisory Agreement or
interested persons of any such party, at a meeting called for the purpose of
voting on the Advisory Agreement.
Each of the Advisory Agreements provides that the Adviser may render
services to others. Each Advisory Agreement is terminable without penalty on not
more than 60 days' nor less than 30 days' written notice by the applicable
Portfolio when authorized either by a vote of a majority of the outstanding
voting securities of the applicable Portfolio or by a vote of a majority of the
Board of Trustees of the applicable Portfolio, or by the Adviser on not more
than 60 days' nor less than 30 days' written notice, and will automatically
terminate in the event of its assignment. Each Advisory Agreement provides that
neither the Adviser nor its personnel shall be liable for any error of judgment
or mistake of law or for any loss arising out of any investment or for any act
or omission in the execution of security transactions for the applicable
Portfolio, except for willful misfeasance, bad faith or gross negligence or
reckless disregard of its or their obligations and duties under the Advisory
Agreement.
The Prospectus contains a description of the fees payable to the Adviser
for services under the Advisory Agreements.
Cash Reserves Portfolio: For the fiscal years ended August 31, 1992, 1993 and
1994 the fees paid to Citibank under the Advisory Agreement were $1,554,940,
$2,108,642 and $1,806,314 (of which $943,419 was voluntarily waived)
respectively.
U.S. Treasury Reserves Portfolio: For the fiscal year ended December 31, 1992,
the eight-month period ended August 31, 1993 and the fiscal year ended August
31, 1994, the fees paid to Citibank under the Advisory Agreement were $933,117,
$570,108 and $850,924 (of which $506,109 was voluntarily waived for the year
ended August 31, 1994), respectively.
ADMINISTRATORS
Pursuant to Administrative Services Agreements (the "Administrative
Services Agreements"), LFBDS provides the Trust and U.S. Treasury Reserves
Portfolio, and SFG provides Cash Reserves Portfolio, with general office
facilities, and LFBDS supervises the overall administration of the Trust and
U.S. Treasury Reserves Portfolio and SFG supervises the overall administration
of Cash Reserves Portfolio, including, among other responsibilities, the
negotiation of contracts and fees with, and the monitoring of performance and
billings of, the independent contractors and agents of the Trust and the
Portfolios; the preparation and filing of all documents required for compliance
by the Trust and the Portfolios with applicable laws and regulations; and
arranging for the maintenance of books and records of the Trust and the
Portfolios. LFBDS and SFG provide persons satisfactory to the Board of Trustees
of the Trust and the Portfolios to serve as Trustees and officers of the Trust
and the Portfolios. Such Trustees and officers may be directors, officers or
employees of LFBDS, SFG or their affiliates.
The Prospectus contains a description of the fees payable to LFBDS and SFG
under the Administrative Services Agreements.
Liquid Reserves: For the fiscal years ended August 31, 1992, 1993 and 1994, the
fees payable to LFBDS from the Fund under the Administrative Services Agreement
and a prior administrative services agreement with the Trust were $201,572,
$126,597 and $288,055 (of which $157,271, $53,106 and $89,434 were voluntarily
waived). For the same periods, the fees paid or payable to SFG under the
Administrative Services Agreement with Cash Reserves Portfolio and a prior
administrative services agreement with Cash Reserves Portfolio were $518,313,
$702,881 and $602,105 (of which $596,227 was voluntarily waived in 1993 and
$602,105 was waived in 1994).
U.S. Treasury Reserves: For the fiscal year ended December 31, 1992, the
eight-month period ended August 31, 1993 and the fiscal year ended August 31,
1994, the fees payable to LFBDS from U.S. Treasury Reserves under the
Administrative Services Agreement and the prior administrative services
agreement with the Trust were $91,593 (of which $34,542 was voluntarily waived),
$83,005 (of which $18,018 was voluntarily waived) and $348,031 (of which $69,228
was voluntarily waived). For the fiscal year ended December 31, 1992, the
eight-month period ended August 31, 1993 and the fiscal year ended August 31,
1994, the fees payable to LFBDS under the Administrative Services Agreement with
U.S. Treasury Reserves Portfolio were $311,039 (of which $72,119 was voluntarily
waived), $190,036 (all of which was voluntarily waived) and $283,642 (all of
which was voluntarily waived).
The Administrative Services Agreement with the Trust acknowledges that the
names "Landmark" and "Landmark Funds" are the property of LFBDS and provides
that if LFBDS ceases to serve as the administrator of the Trust, the Trust will
change its name so as to delete the word "Landmark" or the words "Landmark
Funds." The Administrative Services Agreement with the Trust also provides that
LFBDS may render administrative services to others and may permit other
investment companies in addition to the Trust to use the word "Landmark" or the
words "Landmark Funds" in their names.
The Administrative Services Agreement with the Trust continues in effect
as to a Fund if such continuance is specifically approved at least annually by
the Trust's Board of Trustees or by a vote of a majority of the outstanding
voting securities of such Fund and, in either case, by a majority of the
Trustees of the Trust who are not interested parties of the Trust or LFBDS. The
Administrative Services Agreement with the Trust terminates automatically if it
is assigned and may be terminated as to a Fund by the Trust without penalty by
vote of a majority of the outstanding voting securities of the Fund or by either
party on not more than 60 days' nor less than 30 days' written notice. The
Administrative Services Agreement with the Trust also provides that neither
LFBDS nor its personnel shall be liable for any error of judgment or mistake of
law or for any act or omission in the administration or management of the Trust,
except for willful misfeasance, bad faith or gross negligence in the performance
of its or their duties or by reason of reckless disregard of its or their
obligations and duties under the Administrative Services Agreement.
LFBDS has agreed to reimburse the Funds for their operating expenses
(exclusive of interest, taxes, brokerage, and extraordinary expenses) which in
any year exceed the limits prescribed by any state in which the Funds' shares
are qualified for sale. The expenses incurred by the Funds for distribution
purposes pursuant to the Trust's Distribution Plans are included within such
operating expenses only to the extent required by any state in which the Funds'
shares are qualified for sale. The Trust may elect not to qualify the Funds'
shares for sale in every state. The Trust believes that currently the most
restrictive expense ratio limitation imposed by any state is 2 1/2% of the first
$30 million of a Fund's average net assets for its then-current fiscal year, 2%
of the next $70 million of such assets, and 1 1/2% of such assets in excess of
$100 million. For the purpose of this obligation to reimburse expenses, the
Funds' annual expenses are estimated and accrued daily, and any appropriate
estimated payments will be made by LFBDS. Subject to the obligation of LFBDS to
reimburse the Funds for their excess expenses as described above, the Trust has,
under its Administrative Services Agreement, confirmed its obligation for
payment of all other expenses of the Funds.
The Administrative Services Agreements with the Portfolios provide that
LFBDS or SFG, as the case may be, may render administrative services to others.
The Administrative Services Agreement with each of the Portfolios terminates
automatically if it is assigned and may be terminated without penalty by a vote
of a majority of the outstanding voting securities of the Portfolio or by either
party on not more than 60 days' nor less than 30 days' written notice. The
Administrative Services Agreement with each of the Portfolios also provides that
neither LFBDS or SFG, as the case may be, nor its personnel shall be liable for
any error of judgment or mistake of law or for any act or omission in the
administration or management of the Portfolio, except for willful misfeasance,
bad faith or gross negligence in the performance of its or their duties or by
reason of reckless disregard of its or their obligations and duties under the
Administrative Services Agreement.
LFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group,
Inc.
Pursuant to Sub-Administrative Services Agreements (the
"Sub-Administrative Agreements"), Citibank performs such sub-administrative
duties for the Trust and the Portfolios as are from time to time agreed upon by
Citibank and, as the case may be, LFBDS or SFG. Citibank's sub-administrative
duties may include providing equipment and clerical personnel necessary for
maintaining the organization of the Trust and the Portfolios, participation in
preparation of documents required for compliance by the Trust and the Portfolios
with applicable laws and regulations, preparation of certain documents in
connection with meetings of Trustees and shareholders of the Trust and
Portfolios, and other functions which would otherwise be performed by LFBDS as
set forth above. For performing such sub-administrative services, Citibank
receives such compensation as is from time to time agreed upon by Citibank and,
as the case may be, LFBDS or SFG not in excess of the amount paid to LFBDS or
SFG for its services under the applicable Administrative Services Agreement. All
such compensation is paid by LFBDS or SFG, as the case may be.
DISTRIBUTOR
The Trust has adopted a Distribution Plan (the "Distribution Plan") in
accordance with Rule 12b-1 under the 1940 Act after having concluded that there
is a reasonable likelihood that the Distribution Plan will benefit the Funds and
their shareholders. The Distribution Plan provides that the Distributor receives
a fee from each Fund at an annual rate not to exceed 0.10% of the Fund's average
daily net assets in anticipation of, or as reimbursement for, expenses incurred
in connection with the sale of shares of the Fund, such as advertising expenses
and the expenses of printing (excluding typesetting) and distributing
prospectuses and reports used for sales purposes, expenses of preparing and
printing sales literature and other distribution related expenses.
The Distribution Plan continues in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Trust's Trustees and a majority of the Trust's Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial interest in
the operation of the Distribution Plan or in any agreement related to such Plan
("Qualified Trustees"). The Distribution Plan requires that at least quarterly
the Trust and the Distributor provide to the Board of Trustees and the Board of
Trustees review a written report of the amounts expended (and the purposes
therefor) under the Distribution Plan. The Distribution Plan further provides
that the selection and nomination of the Trust's Qualified Trustees is committed
to the discretion of the Trust's disinterested Trustees then in office. The
Distribution Plan may be terminated with respect to the applicable Fund at any
time by a vote of a majority of the Trust's Qualified Trustees or by a vote of a
majority of the outstanding voting securities of that Fund. The Distribution
Plan may not be amended to increase materially the amount of the Funds'
permitted expenses thereunder without the approval of a majority of the
outstanding voting securities of the applicable Fund and may not be materially
amended in any case without a vote of the majority of both the Trust's Trustees
and the Trust's Qualified Trustees. The Distributor will preserve copies of any
plan, agreement or report made pursuant to the Distribution Plan for a period of
not less than six years from the date of the Distribution Plan, and for the
first two years the Distributor will preserve such copies in an easily
accessible place.
As contemplated by the Distribution Plan, LFBDS acts as the agent of the
Funds in connection with the offering of shares of the Funds pursuant to a
Distribution Agreement (the "Distribution Agreement"). After the prospectus and
periodic reports have been prepared, set in type and mailed to existing
shareholders, the Distributor pays for the printing and distribution of copies
of the prospectuses and periodic reports which are used in connection with the
offering of shares of the Funds to prospective investors. The Prospectus
contains a description of fees payable to the Distributor under the Distribution
Agreement.
Liquid Reserves: For the fiscal years ended August 1992, 1993 and 1994, the fees
payable to the Distributor from Liquid Reserves under the Distribution Agreement
were $403,145 (of which $360,528 was voluntarily waived), $253,194 (of which
$207,096 was voluntarily waived) and $192,037 (of which $190,409 was voluntarily
waived), respectively.
U.S. Treasury Reserves: For the fiscal year ended December 31, 1992, the fee
payable from U.S. Treasury Reserves to the Distributor under the Distribution
Agreement was $183,187, of which $173,640 was voluntarily waived. For the
eight-month period ended August 31, 1993 and the fiscal year ended August 31,
1994, the fees payable from U.S. Treasury Reserves to the Distributor under the
Distribution Agreement were $166,010 and $232,020, of which $74,637 and $105,017
were voluntarily waived.
SHAREHOLDER SERVICING AGENTS, TRANSFER AGENT AND CUSTODIAN
The Trust has adopted an Administrative Services Plan (the "Administrative
Plan") which provides that the Trust may obtain the services of an
administrator, a transfer agent, a custodian and one or more Shareholder
Servicing Agents, and may enter into agreements providing for the payment of
fees for such services. Under the Administrative Plan, the aggregate of the fee
paid to the Administrator from each Fund and the fees paid to the Shareholder
Servicing Agents from each Fund may not exceed 0.45% of the applicable Fund's
average daily net assets on an annualized basis for the Fund's 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
Trust's Trustees and a majority of the Trust's Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial interest in
the operation of the Administrative Plan or in any agreement related to such
Plan ("Qualified Trustees"). The Administrative Plan requires that the Trust
provide to the Trust's Board of Trustees and the Trust's 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 with respect to a Fund by a vote of a majority of the
Trust's Qualified Trustees or by a vote of a majority of the outstanding voting
securities of the Fund. The Administrative Plan may not be amended to increase
materially the amount of permitted expenses thereunder without the approval of a
majority of the outstanding voting securities of a Fund and may not be
materially amended in any case without a vote of the majority of both the
Trust's Trustees and the Trust's Qualified Trustees.
The Trust has entered into a shareholder servicing agreement (a "Servicing
Agreement") with each Shareholder Servicing Agent and a Transfer Agency and
Service Agreement and a Custodian Agreement with State Street Bank and Trust
Company ("State Street") pursuant to which State Street (or its affiliate State
Street Canada, Inc.) acts as transfer agent and custodian for the Trust. For
additional information, including a description of fees paid to the Shareholder
Servicing Agents under the Servicing Agreements, see "Management-Shareholder
Servicing Agents" in the Prospectus. For the fiscal years ended August 31, 1993
and August 31, 1994, aggregate fees payable from Liquid Reserves to Shareholder
Servicing Agents were $1,012,776, of which $759,582 was voluntarily waived, and
$576,110, of which $384,073 was voluntarily waived. For the fiscal year ended
December 31, 1992, the eight-month period ended August 31, 1993 and the fiscal
year ended August 31, 1994, the aggregate fees payable from U.S. Treasury
Reserves to Shareholder Servicing Agents under the Servicing Agreements were
$732,747, of which $549,560 was voluntarily waived, $664,039, of which $498,030
was voluntarily waived, and $696,061 of which $464,041 was voluntarily waived,
respectively.
The Portfolios have also adopted Administrative Services Plans (the
"Portfolio Administrative Plans") which provide that the Portfolios may obtain
the services of an administrator, a transfer agent and a custodian, and may
enter into agreements providing for the payment of fees for such services. Under
the Portfolio Administrative Plans, the administrative services fee payable to
either LFBDS or SFG, as the case may be, may not exceed 0.05% of a Portfolio's
average daily net assets on an annualized basis for its then-current fiscal
year. Each Portfolio Administrative Plan continues in effect if such continuance
is specifically approved at least annually by a vote of both a majority of the
applicable Portfolio's Trustees and a majority of the Portfolio's Trustees who
are not "interested persons" of the Portfolio and who have no direct or indirect
financial interest in the operation of the Portfolio Administrative Plan or in
any agreement related to such Plan ("Qualified Trustees"). Each Portfolio
Administrative Plan requires that the applicable Portfolio provide to its Board
of Trustees and the Board of Trustees review, at least quarterly, a written
report of the amounts expended (and the purposes therefor) under the Portfolio
Administrative Plan. Each Portfolio Administrative Plan may be terminated at any
time by a vote of a majority of the Portfolio's Qualified Trustees or by a vote
of a majority of the outstanding voting securities of the applicable Portfolio.
Neither Portfolio Administrative Plan may be amended to increase materially the
amount of permitted expenses thereunder without the approval of a majority of
the outstanding voting securities of the applicable Portfolio and may not be
materially amended in any case without a vote of the majority of both the
Portfolio's Trustees and the Portfolio's Qualified Trustees.
Each Portfolio has entered into a Transfer Agency and Service Agreement
and a Custodian Agreement with State Street pursuant to which State Street (or
its affiliate State Street Canada, Inc.) acts as transfer agent and custodian
and performs fund accounting services for the Portfolios.
6. PORTFOLIO TRANSACTIONS
The Portfolios' purchases and sales of portfolio securities usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. The Portfolios do
not anticipate paying brokerage commissions. Any transaction for which a
Portfolio pays a brokerage commission will be effected at the best price and
execution available. Purchases from underwriters of portfolio securities include
a commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market makers include the spread between the bid and
asked price.
Allocation of transactions, including their frequency, to various dealers
is determined by the Adviser in its best judgment and in a manner deemed to be
in the best interest of investors in the applicable Portfolio rather than by any
formula. The primary consideration is prompt execution of orders in an effective
manner at the most favorable price.
Investment decisions for each Portfolio will be made independently from
those for any other account, series or investment company that is or may in the
future become managed by the Adviser or its affiliates. If, however, a Portfolio
and other investment companies, series or accounts managed by the Adviser are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by the Portfolio or the size of the position obtainable for the
Portfolio. In addition, when purchases or sales of the same security for a
Portfolio and for other investment companies or series managed by the Adviser
occur contemporaneously, the purchase or sale orders may be aggregated in order
to obtain any price advantages available to large denomination purchases or
sales.
No portfolio transactions are executed with the Adviser, or with any
affiliate of the Adviser, acting either as principal or as broker.
7. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trust's Board of Trustees to
issue an unlimited number of full and fractional Shares of Beneficial Interest
($0.00001 par value) of each series and to divide or combine the shares of any
series into a greater or lesser number of shares of that series without thereby
changing the proportionate beneficial interests in that series. Currently, the
Funds are the only two series of shares of the Trust. Each share represents an
equal proportionate interest in a Fund with each other share. Upon liquidation
or dissolution of a Fund, the Fund's shareholders are entitled to share pro rata
in the Fund's net assets available for distribution to its shareholders. The
Trust reserves the right to create and issue additional series of shares. Shares
of each series participate equally in the earnings, dividends and distribution
of net assets of the particular series upon the liquidation or dissolution of
the series. Shares of each series are entitled to vote separately to approve
advisory agreements or changes in investment policy, but shares of all series
may vote together in the election or selection of Trustees and accountants for
the Trust. In matters affecting only a particular Fund, only shares of that Fund
are entitled to vote.
Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the Trust do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the Trust may elect all of the Trustees of the Trust if
they choose to do so and in such event the other shareholders in the Trust would
not be able to elect any Trustee. The Trust is not required and has no present
intention of holding annual meetings of shareholders but the Trust will hold
special meetings of a Fund's shareholders when in the judgment of the Trust's
Trustees it is necessary or desirable to submit matters for a shareholder vote.
Shareholders have under certain circumstances (e.g., upon application and
submission of certain specified documents to the Trustees by a specified number
of shareholders) the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Trustees. Shareholders also have the right to remove one or more Trustees
without a meeting by a declaration in writing by a specified number of
shareholders. No material amendment may be made to the Trust's Declaration of
Trust without the affirmative vote of the holders of a majority of its
outstanding shares.
The Trust's Declaration of Trust provides that, at any meeting of
shareholders of the Trust or of any series of the Trust, a Shareholder Servicing
Agent may vote any shares of which it is the holder of record and for which it
does not receive voting instructions proportionately in accordance with the
instructions it receives for all other shares of which it is the holder of
record. Shares have no preference, pre-emptive, conversion or similar rights.
Shares, when issued, are fully paid and non-assessable, except as set forth
below.
The Trust may enter into a merger or consolidation, or sell all or
substantially all of its assets (or all or substantially all of the assets
belonging to any series of the Trust), if approved by the vote of the holders of
two-thirds of the Trust's outstanding shares voting as a single class, or of the
affected series of the Trust, as the case may be, except that if the Trustees of
the Trust recommend such sale of assets, merger or consolidation, the approval
by vote of the holders of a majority of the Trust's or the affected series'
outstanding shares would be sufficient. The Trust or any series of the Trust, as
the case may be, may be terminated (i) by a vote of a majority of the
outstanding voting securities of the Trust or the affected series or (ii) by the
Trustees by written notice to the shareholders of the Trust or the affected
series. If not so terminated, the Trust will continue indefinitely.
Share certificates will not be issued.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Trust
and provides for indemnification and reimbursement of expenses out of Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Declaration of Trust also provides that the Trust may maintain
appropriate insurance (e.g., fidelity bonding and errors and omissions
insurance) for the protection of the Trust, its shareholders, Trustees,
officers, employees and agents covering possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, but nothing in the Declaration of Trust protects a Trustee against any
liability to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his or her office.
Each Portfolio is organized as a trust under the laws of the State of New
York. Each Portfolio's Declaration of Trust provides that investors in the
Portfolio (e.g., other investment companies (including the corresponding Fund),
insurance company separate accounts and common and commingled trust funds) are
each liable for all obligations of the Portfolio. However, the risk of a Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the applicable
Portfolio itself was unable to meet its obligations. It is not expected that the
liabilities of either Portfolio would ever exceed its assets.
Each investor in a Portfolio, including the corresponding Fund, may add to
or reduce its investment in the Portfolio on each business day. At 2:00 p.m.,
Eastern time, in the case of Cash Reserves Portfolio, and 12:00 noon, Eastern
time, in the case of U.S. Treasury Reserves Portfolio, on each such business
day, the value of each investor's interest in the Portfolio is determined by
multiplying the net asset value of the Portfolio by the percentage representing
that investor's share of the aggregate beneficial interests in the Portfolio
effective for that day. Any additions or withdrawals, which are to be effected
on that day, are then effected. The investor's percentage of the aggregate
beneficial interests in the Portfolio is then re-computed as the percentage
equal to the fraction (i) the numerator of which is the value of such investor's
investment in the Portfolio as of 2:00 p.m., Eastern time, for Cash Reserves
Portfolio or 12:00 noon, Eastern time, for U.S. Treasury Reserves Portfolio, on
such day plus or minus, as the case may be, the amount of any additions to or
withdrawals from the investor's investment in the Portfolio effected on such
day, and (ii) the denominator of which is the aggregate net asset value of the
Portfolio as of 2:00 p.m., Eastern time, for Cash Reserves Portfolio or 12:00
noon, Eastern time, for U.S. Treasury Reserves Portfolio, on such day plus or
minus, as the case may be, the amount of the net additions to or withdrawals
from the aggregate investments in the Portfolio by all investors in the
Portfolio. The percentage so determined is then applied to determine the value
of the investor's interest in the Portfolio as of 2:00 p.m., Eastern time, for
Cash Reserves Portfolio or 12:00 noon, Eastern time, for U.S. Treasury Reserves
Portfolio, on the following business day of the Portfolio.
8. CERTAIN ADDITIONAL TAX MATTERS
Each of the Funds has elected to be treated and intends to qualify each
year as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), by meeting all applicable
requirements of Subchapter M, including requirements as to the nature of the
Fund's gross income, the amount of Fund distributions and the composition and
holding period of the Fund's portfolio assets. Provided all such requirements
are met and all of a Fund's net investment income and realized capital gains are
distributed to shareholders in accordance with the timing requirements imposed
by the Code, no federal income or excise taxes will be required to be paid by
the Fund. If a Fund should fail to qualify as a regulated investment company for
any year, the Fund would incur a regular corporate federal income tax upon its
taxable income and Fund distributions would generally be taxable as ordinary
dividend income to shareholders.
Because each Fund expects to earn primarily interest income, it is
expected that no Fund distributions will qualify for the dividends-received
deduction for corporations.
9. INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Price Waterhouse LLP and Price Waterhouse are the independent certified
public accountants for Liquid Reserves and Cash Reserves Portfolio,
respectively, providing audit services and assistance and consultation with
respect to the preparation of filings with the Securities and Exchange
Commission. Deloitte & Touche LLP were the independent certified public
accountants for Liquid Reserves and Cash Reserves Portfolio through December 31,
1993. The selection of Price Waterhouse LLP and Price Waterhouse was based on
management's decision with respect to certain areas of expertise and service
capabilities. There was no disagreement between the Fund, the Portfolio and
Deloitte & Touche LLP with respect to the accounting and audit services provided
by such firm. Deloitte & Touche LLP are the independent certified public
accountants for U.S. Treasury Reserves and U.S. Treasury Reserves Portfolio,
providing audit services and assistance and consultation with respect to the
preparation of filings with the Securities and Exchange Commission.
The audited financial statements of Liquid Reserves (Statement of Assets
and Liabilities at August 31, 1994, Statement of Operations for the year ended
August 31, 1994, Statement of Changes in Net Assets for the years ended August
31, 1994 and 1993, Financial Highlights for each of the years in the four-year
period ended August 31, 1994 and for the period from May 3, 1990 (commencement
of operations) to August 31, 1990, Notes to Financial Statements and Independent
Auditor's Report) and of Cash Reserves Portfolio (Portfolio of Investments at
August 31, 1994, Statement of Assets and Liabilities at August 31, 1994,
Statement of Operations for the year ended August 31, 1994, Statement of Changes
in Net Assets for the years ended August 31, 1994 and 1993, Financial Highlights
for each of the years in the four-year period ended August 31, 1994, and the
period from May 3, 1990 (commencement of operations) to August 31, 1990, the
Notes to Financial Statements and the Independent Auditor's Report), each of
which is included in the Annual Report to Shareholders of Liquid Reserves, are
incorporated by reference into this Statement of Additional Information and have
been so incorporated in reliance upon the report of Price Waterhouse LLP and
Price Waterhouse (for the fiscal year ended August 31, 1994) and Deloitte &
Touche LLP (for periods prior to the fiscal year ended August 31, 1994), as
experts in accounting and auditing.
The audited financial statements of U.S. Treasury Reserves (Statement of
Assets and Liabilities at August 31, 1994, Statement of Operations for the year
ended August 31, 1994, Statement of Changes in Net Assets for the year ended
August 31, 1994, for the eight-month period ended August 31, 1993 and for the
year ended December 31, 1992, Financial Highlights for the year ended August 31,
1994, the eight months ended August 31, 1993, the year ended December 31, 1992
and the period from March 1, 1991 (commencement of operations) to December 31,
1991, the Notes to Financial Statements and Independent Auditors' Report) and of
U.S. Treasury Reserves Portfolio (Portfolio of Investments at August 31, 1994,
Statement of Assets and Liabilities at August 31, 1994, Statement of Operations
for the year ended August 31, 1994, Statement of Changes in Net Assets for the
year ended August 31, 1994, for the eight-month period ended August 31, 1993 and
for the year ended December 31, 1992, Financial Highlights for the year ended
August 31, 1994, for the eight-month period ended August 31, 1993, for the year
ended December 31, 1992 and for the period March 1, 1991 (commencement of
operations) to December 31, 1991, Notes to Financial Statements and the
Independent Auditors' Report), each of which is included in the Annual Report to
Shareholders of U.S. Treasury Reserves, are incorporated by reference into this
Statement of Additional Information and have been so incorporated in reliance
upon the report of Deloitte & Touche LLP, independent certified public
accountants, as experts in accounting and auditing.
A copy of each of the Annual Reports accompanies this Statement of
Additional Information.
<PAGE>
SHAREHOLDER SERVICING AGENTS
FOR PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
Investment Specialist or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY l0043
(212) 559-7117
FOR NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100
<PAGE>
PREMIUM LIQUID RESERVES
PREMIUM U.S. TREASURY RESERVES
TRUSTEES AND OFFICERS
Philip W. Coolidge
President*
Mark T. Finn
Donald B. Otis
William S. Woods, Jr.
SECRETARY AND TREASURER
James B. Craver*
ASSISTANT TREASURERS
Barbara M. O'Dette*
Donald S. Rumery*
ASSISTANT SECRETARY
Molly S. Mugler*
*Affiliated Person of Administrator and Distributor
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INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue, Boston, MA 02116
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN State Street Bank and Trust Company 225 Franklin
Street, Boston, MA 02110
AUDITORS
(LANDMARK PREMIUM LIQUID RESERVES)
Price Waterhouse LLP
160 Federal Street, Boston, MA 02110
(LANDMARK PREMIUM U.S. TREASURY RESERVES)
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham, Dana & Gould
150 Federal Street, Boston, MA 02110
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SHAREHOLDER SERVICING AGENTS
(See Inside of Cover)
