<PAGE>
Rule 497(c)
File Nos. 33-28844 and 811-5812
PROSPECTUS
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JANUARY 2, 1997
PREMIUM LIQUID RESERVES
PREMIUM U.S. TREASURY RESERVES
(Members of the Landmark(SM) Family of Funds)
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This Prospectus describes two diversified money market mutual funds in the
Landmark Family of Funds: Premium Liquid Reserves and Premium U.S. Treasury
Reserves. Each Fund has its own investment objective and policies. Citibank,
N.A. is the investment adviser.
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UNLIKE OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIOS OF SECURITIES, EACH FUND SEEKS ITS INVESTMENT TTTTT LAUTUOBJECTIVE
BY INVESTING ALL OF ITS INVESTABLE ASSETS IN A PORTFOLIO WITH THE SAME
INVESTMENT OBJECTIVE AND POLICIES. SEE "SPECIAL INFORMATION CONCERNING
INVESTMENT STRUCTURE" ON PAGE 7.
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REMEMBER THAT SHARES OF THE FUNDS:
[] ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY
[] ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, CITIBANK
OR ANY OF ITS AFFILIATES
[] ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED
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INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. EACH FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE; HOWEVER, THERE CAN BE NO ASSURANCE THAT EITHER FUND WILL BE ABLE TO DO
SO.
This Prospectus concisely sets forth information about the Funds that a
prospective investor should know before investing. A Statement of Additional
Information dated January 2, 1997 (and incorporated by reference in this
Prospectus) has been filed with the Securities and Exchange Commission. Copies
of the Statement of Additional Information may be obtained without charge, and
further inquiries about the Funds may be made, by contacting the investor's
Shareholder Servicing Agent (see inside back cover for address and phone
number).
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TABLE OF CONTENTS
Prospectus Summary ......................................................2
Expense Summary .........................................................3
Condensed Financial Information .........................................4
Investment Information ..................................................6
Risk Considerations .....................................................7
Valuation of Shares .....................................................8
Purchases ...............................................................8
Exchanges ...............................................................9
Redemptions .............................................................9
Net Income and Distributions ...........................................10
Management .............................................................10
Tax Matters ............................................................13
Performance Information ................................................13
General Information ....................................................14
Appendix -- Permitted Investments and
Investment Practices .......................................15
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
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PROSPECTUS SUMMARY
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See the body of the Prospectus for more information on the topics discussed
in this summary.
THE FUNDS: This Prospectus describes two money market mutual funds: Premium
Liquid Reserves and Premium U.S. Treasury Reserves. Each Fund has its own
investment objective and policies. Each Fund seeks its objective by investing
its investable assets in a Portfolio having the same investment objective and
policies as that Fund. There can be no assurance that either Fund will achieve
its objective.
INVESTMENT OBJECTIVES AND POLICIES: PREMIUM LIQUID RESERVES. To provide its
shareholders with liquidity and as high a level of current income as is
consistent with the preservation of capital. Through Cash Reserves Portfolio,
the Fund invests in U.S. dollar-denominated money market obligations with
maturities of 397 days or less issued by U.S. and non-U.S. issuers.
PREMIUM U.S. TREASURY RESERVES. To provide its shareholders with liquidity and
as high a level of current income from U.S. Government obligations as is
consistent with the preservation of capital. Through U.S. Treasury Reserves
Portfolio, the Fund invests in obligations issued by the U.S. Government with
maturities of 397 days or less.
INVESTMENT ADVISER AND DISTRIBUTOR: Citibank, N.A., ("Citibank" or the
"Adviser"), a wholly-owned subsidiary of Citicorp, is the investment adviser
of each Portfolio. Citibank and its affiliates manage more than $83 billion in
assets worldwide. The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS" or
the "Distributor") is the distributor of shares of each Fund. See
"Management."
PURCHASES AND REDEMPTIONS: Customers of Shareholder Servicing Agents may
purchase and redeem shares of the Funds on any Business Day. See "Purchases"
and "Redemptions."
PRICING: Shares of the Funds are purchased and redeemed at net asset value
(normally $1.00 per share), without a sales load or redemption fees. While there
are no sales loads, shares of each Fund are subject to a distribution fee. See
"Purchases" and "Management -- Distribution Arrangements."
EXCHANGES: Shares may be exchanged for shares of most other Landmark Funds.
See "Exchanges."
DIVIDENDS: Declared daily and distributed monthly. Shares begin accruing
dividends on the day they are purchased. See "Net Income and Distributions."
REINVESTMENT: Dividends may be received either in cash or in Fund shares at
net asset value, subject to the policies of a shareholder's Shareholder
Servicing Agent. See "Net Income and Distributions."
WHO SHOULD INVEST: Each Fund is designed for investors seeking liquidity,
preservation of capital and current income, and for whom growth of capital is
not a consideration. Premium Liquid Reserves is also designed for investors
seeking a convenient means of accumulating an interest in a professionally
managed, diversified portfolio consisting of short-term U.S. dollar-
denominated money market obligations issued by U.S. and non-U.S. issuers.
Premium U.S. Treasury Reserves is designed for investors seeking a convenient
means of accumulating an interest in a professionally managed, diversified
portfolio consisting of short-term U.S. Government obligations. See
"Investment Information."
RISK FACTORS: There can be no assurance that either Fund or its corresponding
Portfolio will achieve its investment objective. In addition, while each Fund
intends to maintain a stable net asset value of $1.00 per share, there can be no
assurance that either Fund will be able to do so. Investments in high quality,
short-term instruments may, in many circumstances, result in a lower yield than
would be available from investments with a lower quality or a longer term.
Investors in Premium Liquid Reserves should be able to assume the special
risks of investing in non-U.S. securities, which include possible adverse
political, social and economic developments abroad, differing regulations to
which non-U.S. issuers are subject and different characteristics of non-U.S.
economies and markets. In addition, the prices of securities of non-U.S.
issuers may be more volatile than those of comparable U.S. issuers.
Certain investment practices also may entail special risks. Prospective
investors should read "Risk Considerations" for more information about risk
factors.
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EXPENSE SUMMARY
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The following table summarizes estimated shareholder transaction and annual
operating expenses for each Fund and for its corresponding Portfolio.* For more
information on costs and expenses, see "Management" -- page 10 and "General
Information -- Expenses" -- page 15.
---------------------------
PREMIUM PREMIUM
LIQUID U.S. TREASURY
RESERVES RESERVES
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SHAREHOLDER TRANSACTION EXPENSES ................. None None
ANNUAL FUND OPERATING EXPENSES, AFTER FEE WAIVERS
AND REIMBURSEMENTS (AS A PERCENTAGE OF AVERAGE
NET ASSETS):
Investment Management Fee(1) ..................... .06% .05%
12b-1 Fees(1)(2) ................................. .00% .00%
Other Expenses
Administrative Services Fees(1) ................ .17% .20%
Shareholder Servicing Agent Fees ............... .10% .10%
Other Operating Expenses ....................... .07% .10%
--- ---
Total Fund Operating Expenses(1) ................. .40% .45%
=== ===
* This table is intended to assist investors in understanding the various
costs and expenses that a shareholder of a Fund will bear, either directly
or indirectly. The table shows the fees paid to various service providers
after giving effect to expected voluntary partial fee waivers. There can be
no assurance that the fee waivers and reimbursements reflected in the table
will continue at their present levels.
(1) Absent fee waivers and reimbursements, investment management fees, 12b-1
fees, administrative services fees and total fund operating expenses would
be .15%, .10%, .40% and .82% for Premium Liquid Reserves and .15%, .10%,
.40% and .85% for Premium U.S. Treasury Reserves.
(2) Fees under the 12b-1 distribution plan are asset-based sales charges.
Long-term shareholders in a Fund could pay more in sales charges than the
economic equivalent of the maximum front-end sales charges permitted by the
National Association of Securities Dealers, Inc.
EXAMPLE: A shareholder would pay the following expenses on a $1,000
investment, assuming redemption at the end of each period indicated below:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
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PREMIUM LIQUID RESERVES ....... $4 $13 $22 $51
PREMIUM U.S. TREASURY
RESERVES ..................... $5 $14 $25 $57
The Example assumes a 5% annual return and that all dividends are reinvested,
and expenses are based on each Fund's fiscal year ended August 31, 1996, after
waivers and reimbursements. If waivers and reimbursements were not in place,
the amounts in the Example would be $8, $26, $45 and $101 for Premium Liquid
Reserves and $9 $27, $47 and $105 for Premium U.S. Treasury Reserves. The
assumption of a 5% annual return is required by the Securities and Exchange
Commission for all mutual funds, and is not a prediction of either Fund's
future performance. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OF EITHER FUND. ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN.
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CONDENSED FINANCIAL INFORMATION
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The following tables provide condensed financial information about the Funds for
the periods indicated. This information should be read in conjunction with the
financial statements appearing in each Fund's Annual Report to Shareholders,
which are incorporated by reference in the Statement of Additional Information.
The financial statements and notes, as well as the tables below, covering
periods through August 31, 1996 have been audited by Price Waterhouse LLP,
independent accountants, on behalf of Premium Liquid Reserves, and by Deloitte &
Touche LLP, independent accountants, on behalf of Premium U.S. Treasury
Reserves. The accountants' reports are included in the applicable Fund's Annual
Report. Copies of the Annual Reports may be obtained without charge from an
investor's Shareholder Servicing Agent (see inside of back cover for address and
phone number).
<TABLE>
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PREMIUM LIQUID RESERVES
FINANCIAL HIGHLIGHTS
YEAR ENDED AUGUST 31,
1996 1995 1994 1993 1992 1991 1990*
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<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ............ $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income ........................... 0.05322 0.05465 0.03432 0.02957 0.04281 0.06794 0.02598
Less dividends from net investment income ....... (0.05322) (0.05465) (0.03432) (0.02957) (0.04281) (0.06794) (0.02598)
-------- -------- -------- -------- -------- -------- --------
Net Asset Value, end of period .................. $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
======== ======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted).......... $380,303 $423,992 $238,732 $193,996 $258,077 $262,143 $ 1,507
Ratio of expenses to average net assets**........ 0.40% 0.40% 0.40% 0.40% 0.40% 0.43% 0.45%+
Ratio of net investment income to
average net assets ............................ 5.35% 5.47% 3.47% 2.94% 4.24% 6.27% 7.81%+
Total return ....... ............................ 5.45% 5.60% 3.49% 3.00% 4.40% 7.01% 7.86%+
Note: If agents of the Fund and agents of Cash Reserves Portfolio had not waived all or a portion of their fees during the
periods indicated, the net investment income per share and the ratios would have been as follows:
Net investment income per share ................. $0.04911 $0.05047 $0.02962 $0.02514 $0.03847 $0.06274 $0.01916
RATIOS:
Expenses to average net assets** ................ 0.82% 0.83% 0.88% 0.85% 0.83% 0.91% 2.50%+
Net investment income to average net assets ..... 4.93% 5.04% 2.99% 2.50% 3.81% 5.79% 5.76%+
*For the period from the start of business, May 3, 1990, to August 31, 1990.
**Includes the Fund's share of Cash Reserves Portfolio's allocated expenses.
+Annualized
</TABLE>
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<TABLE>
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PREMIUM U.S. TREASURY RESERVES
FINANCIAL HIGHLIGHTS
EIGHT
MONTHS
YEAR ENDED ENDED
AUGUST 31, AUGUST 31, YEAR ENDED DECEMBER 31,
1996 1995 1994 1993** 1992 1991***
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<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ................ $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income ............................... 0.04851 0.04999 0.03087 0.01810 0.03363 0.04584
Less dividends from net investment .................. (0.04851) (0.04999) (0.03087) (0.01810) (0.03363) (0.04584)
-------- -------- -------- -------- -------- --------
Net Asset Value, end of period ...................... $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) ............. $235,271 $317,312 $252,458 $223,544 $238,188 $118,862
Ratio of expenses to average net assets* ............ 0.45%+ 0.45% 0.45% 0.45% 0.45% 0.28%+
Ratio of net investment income to
average net assets ................................ 4.88% 5.02% 3.09% 2.72%+ 3.28% 5.27%+
Total return ........................................ 4.96% 5.12% 3.13% 2.75%+ 3.42% 4.64%+
Note: If agents of the Fund and agents of U.S. Treasury Reserves Portfolio had not waived all or a portion of their fees
during the periods indicated, the net investment income per share and the ratios would have been as follows:
Net investment income per share ..................... $0.04463 $0.04601 $0.02667 $0.01537 $0.02922 $0.04055
RATIOS:
Expenses to average net assets* ..................... 0.85% 0.84% 0.87% 0.85%+ 0.88% 0.90%+
Net investment income to average net assets ......... 4.49% 4.62% 2.67% 2.31%+ 2.85% 4.68%+
*Includes the Fund's share of U.S. Treasury Reserves Portfolio's allocated expenses.
**On April 15, 1993, the Fund changed its fiscal year end from December 31 to August 31.
***For the period from the start of business, March 1, 1991, to December 31, 1991.
+Annualized.
</TABLE>
<PAGE>
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVES: The investment objective of PREMIUM LIQUID RESERVES
is to provide its shareholders with liquidity and as high a level of current
income as is consistent with the preservation of capital.
The investment objective of PREMIUM U.S. TREASURY RESERVES is to provide its
shareholders with liquidity and as high a level of current income from U.S.
Government obligations as is consistent with the preservation of capital.
The investment objective of each Fund may be changed by its Trustees without
approval by that Fund's shareholders, but shareholders will be given written
notice at least 30 days before any change is implemented. Of course, there can
be no assurance that either Fund will achieve its investment objective.
INVESTMENT POLICIES: PREMIUM LIQUID RESERVES seeks its objective by investing
all of its investable assets in Cash Reserves Portfolio. Cash Reserves Portfolio
seeks the same objective as the Fund by investing in high quality U.S.
dollar-denominated money market instruments. These instruments include
short-term obligations of the U.S. Government and repurchase agreements covering
these obligations, bank obligations (such as certificates of deposit, bankers'
acceptances and fixed time deposits) of U.S. and non-U.S banks and obligations
issued or guaranteed by the governments of Western Europe, Scandinavia,
Australia, Japan and Canada. The U.S. Government obligations in which the
Portfolio invests include U.S. Treasury bills, notes and bonds, and instruments
issued by U.S. Government agencies or instrumentalities. Some obligations of
U.S. Government agencies and instrumentalities are supported by the "full faith
and credit" of the United States, others by the right of the issuer to borrow
from the U.S. Treasury and others only by the credit of the agency or
instrumentality. For more information regarding the Portfolio's permitted
investments and investment practices, see the Appendix -- Permitted Investments
and Investment Practices on page 15.
PREMIUM U.S. TREASURY RESERVES seeks its objective by investing all of its
investable assets in U.S. Treasury Reserves Portfolio. U.S. Treasury Reserves
Portfolio seeks the same objective as the Fund by investing in U.S. Treasury
bills, notes and bonds, and instruments issued by U.S. Government agencies or
instrumentalities which are supported by the "full faith and credit" of the
United States. U.S. Treasury Reserves Portfolio will not enter into repurchase
agreements. For more information regarding the Portfolio's permitted
investments and investment practices, see the Appendix -- Permitted
Investments and Investment Practices on page 15. ALTHOUGH THE PORTFOLIO
INVESTS IN U.S. GOVERNMENT OBLIGATIONS, NEITHER AN INVESTMENT IN THE FUND NOR
AN INVESTMENT IN THE PORTFOLIO IS INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT.
CERTAIN ADDITIONAL INVESTMENT POLICIES:
$1.00 NET ASSET VALUE. Each Fund employs specific investment policies and
procedures designed to maintain a constant net asset value of $1.00 per share.
There can be no assurance, however, that a constant net asset value will be
maintained on a continuing basis. See "Net Income and Distributions."
MATURITY AND QUALITY. All of the Portfolios' investments mature or are
deemed to mature within 397 days from the date of acquisition, and the average
maturity of the investments held by each Portfolio (on a dollar-weighted basis)
is 90 days or less. All of the Portfolios' investments are in high quality
securities which have been determined by the Adviser to present minimal credit
risks. To meet a Portfolio's high quality standards a security must be rated in
the highest rating category for short-term obligations by at least two
nationally recognized statistical rating organizations (each, an "NRSRO")
assigning a rating to the security or issuer or, if only one NRSRO assigns a
rating, that NRSRO or, in the case of an investment which is not rated, of
comparable quality as determined by the Adviser. Investments in high quality,
short-term instruments may, in many circumstances, result in a lower yield than
would be available from investments in instruments with a lower quality or a
longer term.
PERMITTED INVESTMENTS. For more information regarding permitted investments
and investment practices, see the Appendix -- Permitted Investments and
Investment Practices on page 15. The Funds will not necessarily invest or engage
in each of the investments and investment practices in the Appendix but reserve
the right to do so.
INVESTMENT RESTRICTIONS. The Statement of Additional Information contains a
list of specific investment restrictions which govern the investment policies of
the Funds and the Portfolios. Except as otherwise indicated, the Funds' and
Portfolios' investment objectives and policies may be changed without
shareholder approval. If a percentage or rating restriction (other than a
restriction as to borrowing) is adhered to at the time an investment is made, a
later change in percentage or rating resulting from changes in the Portfolios'
securities will not be a violation of policy.
BROKERAGE TRANSACTIONS. The primary consideration in placing the Portfolios'
security transactions with broker-dealers for execution is to obtain and
maintain the availability of execution at the most favorable prices and in the
most effective manner possible.
RISK CONSIDERATIONS
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The risks of investing in each Fund vary depending upon the nature of the
securities held, and the investment practices employed, on its behalf. Certain
of these risks are described below.
"CONCENTRATION" IN BANK OBLIGATIONS. Cash Reserves Portfolio invests at
least 25% of its assets, and may invest up to 100% of its assets, in bank
obligations. This concentration policy is fundamental, and may not be changed
without the consent of the Portfolio's investors. Banks are subject to extensive
governmental regulation which may limit both the amounts and types of loans and
other financial commitments which may be made and interest rates and fees which
may be charged. The profitability of this industry is largely dependent upon the
availability and cost of capital funds for the purpose of financing lending
operations under prevailing money market conditions. Also, general economic
conditions play an important part in the operation of this industry and exposure
to credit losses arising from possible financial difficulties of borrowers might
affect a bank's ability to meet its obligations.
NON-U.S. SECURITIES. Investors in Premium Liquid Reserves should be aware
that investments in non-U.S. securities involve risks relating to political,
social and economic developments abroad, as well as risks resulting from the
differences between the regulations to which U.S. and non-U.S. issuers and
markets are subject. These risks may include expropriation, confiscatory
taxation, withholding taxes on dividends and interest, limitations on the use
or transfer of Portfolio assets and political or social instability. In
addition, non-U.S. companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may be less
public information about their operations. Non-U.S. markets may be less liquid
and more volatile than U.S. markets, and may offer less protection to
investors such as the Portfolio.
INVESTMENT PRACTICES. Certain of the investment practices employed for the
Portfolios may entail certain risks. See the Appendix -- Permitted Investments
and Investment Practices on page 15.
SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE: The Funds do not invest
directly in securities. Instead, the Funds invest all of their investable assets
in their corresponding Portfolios, which are mutual funds having the same
investment objectives and policies as the Funds. The Portfolios, in turn, buy,
hold and sell securities in accordance with these objectives and policies. Of
course, there can be no assurance that the Funds or the Portfolios will achieve
their objectives. The Trustees of each Fund believe that the aggregate per share
expenses of that Fund and its corresponding Portfolio will be less than or
approximately equal to the expenses that the Fund would incur if the assets of
the Fund were invested directly in the types of securities held by its
Portfolio. Each Fund may withdraw its investment in its Portfolio at any time,
and will do so if the Fund's Trustees believe it to be in the best interest of
the Fund's shareholders. If a Fund were to withdraw its investment in its
Portfolio, the Fund could either invest directly in securities in accordance
with the investment policies described above or invest in another mutual fund or
pooled investment vehicle having the same investment objectives and policies. If
a Fund were to withdraw, the Fund could receive securities from the Portfolio
instead of cash, causing the Fund to incur brokerage, tax and other charges or
leaving it with securities which may or may not be readily marketable or widely
diversified.
Each Portfolio may change its investment objective and certain of its
investment policies and restrictions without approval by its investors, but the
Portfolio will notify its corresponding Fund (which in turn will notify its
shareholders) and its other investors at least 30 days before implementing any
change in its investment objective. A change in investment objective, policies
or restrictions may cause a Fund to withdraw its investment in its Portfolio.
Certain investment restrictions of each Portfolio cannot be changed without
approval by the investors in that Portfolio. These policies are described in the
Statement of Additional Information. When a Fund is asked to vote on matters
concerning its Portfolio (other than a vote to continue the Portfolio following
the withdrawal of an investor), the Fund will hold a shareholder meeting and
vote in accordance with shareholder instructions. Of course, the Fund could be
outvoted, or otherwise adversely affected, by other investors in its Portfolio.
The Portfolios may sell interests to investors in addition to the Funds.
These investors may be mutual funds which offer shares to their shareholders
with different costs and expenses than the Funds. Therefore, the investment
returns for all investors in funds investing in a Portfolio may not be the same.
These differences in returns are also present in other mutual fund structures.
Information about other holders of interests in the Portfolios is available
from the Funds' distributor, LFBDS (see back cover for address and phone
number).
VALUATION OF SHARES
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Net asset value per share of each Fund is determined each day the New York
Stock Exchange is open for trading (a "Business Day"). This determination is
made once each day as of 3:00 p.m., Eastern time, for Premium Liquid Reserves,
and 12:00 noon, Eastern time, for Premium U.S. Treasury Reserves, by adding the
market value of all securities and other assets of a Fund (including its
interest in its Portfolio), then subtracting the liabilities charged to the
Fund, and then dividing the result by the number of outstanding shares of the
Fund. The amortized cost method of valuing Portfolio securities is used in order
to stabilize the net asset value of shares of each Fund at $1.00; however, there
can be no assurance that a Fund's net asset value will always remain at $1.00
per share. The net asset value per share is effective for orders received and
accepted by the Distributor prior to its calculation.
The amortized cost method involves valuing a security at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. Although the amortized cost method provides certainty in valuation, it
may result in periods during which the stated value of a security is higher or
lower than the price the Portfolio would receive if the security were sold.
PURCHASES
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Shares of the Funds are offered continuously and may be purchased on any
Business Day without a sales load at the shares' net asset value (normally $1.00
per share) next determined after an order is transmitted to and accepted by the
Distributor. Shares may be purchased either through a securities broker which
has a sales agreement with the Distributor or through a bank or other financial
institution which has an agency agreement with the Distributor. Shares of the
Funds are being offered exclusively to customers of a Shareholder Servicing
Agent (i.e., a financial institution, such as a federal or state-chartered bank,
trust company, savings and loan association or savings bank, or a securities
broker, that has entered into a shareholder servicing agreement concerning a
Fund). Each Fund and the Distributor reserve the right to reject any purchase
order and to suspend the offering of Fund shares for a period of time.
While there is no sales load imposed on shares of the Funds, the
Distributor receives fees from each Fund pursuant to a Distribution Plan. See
"Management -- Distribution Arrangements."
Each shareholder's account is established and maintained by his or her
Shareholder Servicing Agent, which will be the shareholder of record of the
Fund. Each Shareholder Servicing Agent may establish its own terms, conditions
and charges with respect to services it offers to its customers. Charges for
these services may include fixed annual fees and account maintenance fees. The
effect of any such fees will be to reduce the net return on the investment of
customers of that Shareholder Servicing Agent.
Shareholder Servicing Agents will not transmit purchase orders to the
Distributor until they have received the purchase price in federal or other
immediately available funds. If Fund shares are purchased by check, there will
be a delay (usually not longer than two business days) in transmitting the
purchase order until the check is converted into federal funds.
From time to time the Distributor may make payments for distribution and/ or
shareholder servicing activities out of its past profits and other sources
available to it. The Distributor also may make payments for marketing,
promotional or related expenses to dealers who engage in marketing efforts on
behalf of the Funds. The amounts of these payments will be determined by the
Distributor in its sole discretion and may vary among different dealers.
EXCHANGES
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Shares of each Fund may be exchanged for shares of other Landmark Funds that
are made available by a shareholder's Shareholder Servicing Agent, or may be
acquired through an exchange of shares of those funds. No initial sales charge
is imposed on shares being acquired through an exchange unless the shares being
acquired are subject to a sales charge that is greater than the current sales
charge of the Fund (in which case an initial sales charge will be imposed at a
rate equal to the difference). Contingent deferred sales charges may apply to
redemptions of some shares of other Landmark Funds disposed of or acquired
through an exchange.
Shareholders must place exchange orders through their Shareholder Servicing
Agents, and may do so by telephone if their account applications so permit. For
more information on telephone transactions see "Redemptions." All exchanges will
be effected based on the relative net asset values per share next determined
after the exchange order is received by the Distributor. See "Valuation of
Shares." Shares of the Funds may be exchanged only after payment in federal
funds for the shares has been made.
This exchange privilege may be modified or terminated at any time, upon at
least 60 days' notice when such notice is required by SEC rules, and is
available only in those jurisdictions where such exchanges legally may be made.
See the Statement of Additional Information for further details. Before making
any exchange, shareholders should contact their Shareholder Servicing Agents to
obtain more information and prospectuses of the Landmark Funds to be acquired
through the exchange.
REDEMPTIONS
- ------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value (normally $1.00 per
share) next determined after a redemption request in proper form is received by
a shareholder's Shareholder Servicing Agent. Shareholders may redeem shares of a
Fund only by authorizing their Shareholder Servicing Agents to redeem such
shares on their behalf through the Distributor.
REDEMPTIONS BY MAIL. Shareholders may redeem Fund shares by sending written
instructions in proper form (as determined by a shareholder's Shareholder
Servicing Agent) to their Shareholder Servicing Agents. Shareholders are
responsible for ensuring that a request for redemption is in proper form.
REDEMPTIONS BY TELEPHONE. Shareholders may redeem or exchange Fund shares by
telephone, if their account applications so permit, by calling their Shareholder
Servicing Agents. During periods of drastic economic or market changes or severe
weather or other emergencies, shareholders may experience difficulties
implementing a telephone exchange or redemption. In such an event, another
method of instruction, such as a written request sent via an overnight delivery
service, should be considered. The Funds and each Shareholder Servicing Agent
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. These procedures may include recording of the telephone
instructions and verification of a caller's identity by asking for the
shareholder's name, address, telephone number, Social Security number, and
account number. If these or other reasonable procedures are not followed, the
Fund or the Shareholder Servicing Agent may be liable for any losses to a
shareholder due to unauthorized or fraudulent instructions. Otherwise, the
shareholder will bear all risk of loss relating to a redemption or exchange by
telephone.
PAYMENT OF REDEMPTIONS. The proceeds of a redemption are paid in federal
funds normally on the Business Day the redemption is effected, but in any event
within seven days. If a shareholder requests redemption of shares which were
purchased recently, a Fund may delay payment until it is assured that good
payment has been received. In the case of purchases by check, this can take up
to ten days. See "Determination of Net Asset Value" in the Statement of
Additional Information regarding the Funds' right to pay the redemption price in
kind with securities (instead of cash).
Questions about redemption requirements should be referred to the
shareholder's Shareholder Servicing Agent. The right of any shareholder to
receive payment with respect to any redemption may be suspended or the payment
of the redemption price postponed during any period in which the New York Stock
Exchange is closed (other than weekends or holidays) or trading on the Exchange
is restricted or if an emergency exists.
NET INCOME AND DISTRIBUTIONS
- ------------------------------------------------------------------------------
The net income of each Fund is determined each Business Day (and on such
other days as is necessary in order to comply with the Investment Company Act of
1940). This determination is made once during each such day as of 3:00 p.m.,
Eastern time, for Premium Liquid Reserves, and 12:00 noon, Eastern time, for
Premium U.S. Treasury Reserves. All the net income of each Fund is declared as a
dividend to shareholders of record at the time of such determination. Shares
begin accruing dividends on the day they are purchased, and accrue dividends up
to and including the day prior to redemption. Dividends are distributed monthly
on or prior to the last Business Day of each month. Unless a shareholder elects
to receive dividends in cash (subject to the policies of the shareholder's
Shareholder Servicing Agent), dividends are distributed in the form of full and
fractional additional shares of the applicable Fund at the rate of one share of
the Fund for each one dollar of dividend income.
Since the net income of each Fund is declared as a dividend each time the
net income of the Fund is determined, the net asset value per share of each Fund
is expected to remain at $1.00 per share immediately after each such
determination and dividend declaration. Any increase in the value of a
shareholder's investment in a Fund, representing the reinvestment of dividend
income, is reflected by an increase in the number of shares of the Fund in the
shareholder's account.
It is expected that each Fund will have a positive net income at the time of
each determination thereof. If for any reason a Fund's net income is a negative
amount, which could occur, for instance, upon default by an issuer of a
portfolio security, the Fund would first offset the negative amount with respect
to each shareholder account from the dividends declared during the month with
respect to those accounts. If and to the extent that negative net income exceeds
declared dividends at the end of the month, the Fund would reduce the number of
outstanding Fund shares by treating each shareholder as having contributed to
the capital of the Fund that number of full and fractional shares in the
shareholder's account which represents the shareholder's share of the amount of
such excess. Each shareholder would be deemed to have agreed to such
contribution in these circumstances by investment in a Fund.
MANAGEMENT
- ------------------------------------------------------------------------------
TRUSTEES AND OFFICERS: Each Fund is supervised by the Board of Trustees of
Landmark Premium Funds. Each Portfolio is supervised by its own Board of
Trustees. In each case, a majority of the Trustees are not affiliated with the
Adviser. In addition, a majority of the disinterested Trustees of the Funds are
different from a majority of the disinterested Trustees of their corresponding
Portfolios. More information on the Trustees and officers of the Funds and the
Portfolios appears under "Management" in the Statement of Additional
Information.
INVESTMENT ADVISER: CITIBANK. Each Fund draws on the strength and experience of
Citibank. Citibank offers a wide range of banking and investment services to
customers across the United States and throughout the world, and has been
managing money since 1822. Its portfolio managers are responsible for investing
in money market, equity and fixed income securities. Citibank and its affiliates
manage more than $83 billion in assets worldwide. Citibank is a wholly-owned
subsidiary of Citicorp.
Citibank manages the assets of each Portfolio pursuant to separate
Investment Advisory Agreements. Subject to policies set by the Portfolios'
Trustees, Citibank makes investment decisions for the Portfolios.
ADVISORY FEES. For its services under the Investment Advisory Agreements,
the Adviser receives investment advisory fees, which are accrued daily and paid
monthly, of 0.15% of each Portfolio's average daily net assets on an annualized
basis for the Portfolio's then-current fiscal year. The Adviser has voluntarily
agreed to waive a portion of its investment advisory fee.
For the fiscal year ended August 31, 1996, the investment advisory fees paid
to Citibank, after waivers, were 0.06% of Cash Reserves Portfolio's average
daily net assets for that fiscal year and 0.05% of U.S. Treasury Reserves
Portfolio's average daily net assets for that fiscal year.
BANKING RELATIONSHIPS. Citibank and its affiliates may have deposit, loan
and other relationships with the issuers of securities purchased on behalf of
the Portfolios, including outstanding loans to such issuers which may be repaid
in whole or in part with the proceeds of securities so purchased. Citibank has
informed the Funds and the Portfolios that, in making its investment decisions,
it does not obtain or use material inside information in the possession of any
division or department of Citibank or in the possession of any affiliate of
Citibank.
BANK REGULATORY MATTERS. The Glass-Steagall Act prohibits certain financial
institutions, such as Citibank, from underwriting securities of open-end
investment companies, such as the Funds or the Portfolios. Citibank believes
that its services under the Investment Advisory Agreements and the activities
performed by it or its affiliates as Shareholder Servicing Agents and
sub-administrator are not underwriting and are consistent with the Glass-
Steagall Act and other relevant federal and state laws. However, there is no
controlling precedent regarding the performance of the combination of investment
advisory, shareholder servicing and sub-administrative activities by banks.
State laws on this issue may differ from applicable federal law and banks and
financial institutions may be required to register as dealers pursuant to state
securities laws. Changes in either federal or state statutes or regulations, or
in their interpretations, could prevent Citibank or its affiliates from
continuing to perform these services. If Citibank or its affiliates were to be
prevented from acting as the Adviser, sub-administrator or a Shareholder
Servicing Agent, the Funds or Portfolios would seek alternative means for
obtaining these services. The Funds do not expect that shareholders would suffer
any adverse financial consequences as a result of any such occurrence.
ADMINISTRATIVE SERVICES PLANS: The Funds and Portfolios have Administrative
Services Plans which provide that the applicable Fund or Portfolio may obtain
the services of an administrator, a transfer agent, a custodian, a fund
accountant, and, in the case of the Funds, one or more Shareholder Servicing
Agents, and may enter into agreements providing for the payment of fees for such
services. Under the Funds' Administrative Services Plan, the total of the fees
paid to each Fund's Administrator and Shareholder Servicing Agents may not
exceed 0.45% of the Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year. Within this overall limitation, individual
fees may vary. Under each Portfolio's Administrative Services Plan, fees paid to
the Portfolio's Administrator may not exceed 0.05% of the Portfolio's average
daily net assets on an annualized basis for the Portfolio's then-current fiscal
year. See "Administrators," "Shareholder Servicing Agents" and "Transfer Agent,
Custodian and Fund Accountant."
ADMINISTRATORS: LFBDS provides certain administrative services to the Funds and
U.S. Treasury Reserves Portfolio, and Signature Financial Group (Cayman), Ltd.
("SFG") provides certain administrative services to Cash Reserves Portfolio, in
each case under administrative services agreements. These administrative
services include providing general office facilities, supervising the overall
administration of the Funds and the Portfolios, and providing persons
satisfactory to the Boards of Trustees to serve as Trustees and officers of the
Funds and Portfolios. These Trustees and officers may be directors, officers or
employees of LFBDS, SFG or their affiliates.
For these services, the Administrators receive fees accrued daily and paid
monthly of 0.35% of the average daily net assets of each Fund and 0.05% of the
assets of each Portfolio, in each case on an annualized basis for the Fund's or
the Portfolio's then-current fiscal year. However, each of the Administrators
has voluntarily agreed to waive a portion of the fees payable to it.
LFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group,
Inc. "Landmark" is a service mark of LFBDS.
SUB-ADMINISTRATOR: Pursuant to sub-administrative services agreements, Citibank
performs such sub-administrative duties for the Funds and Portfolios as from
time to time are agreed upon by Citibank and LFBDS or SFG. Citibank's
compensation as sub-administrator is paid by LFBDS or SFG.
SHAREHOLDER SERVICING AGENTS: The Funds have entered into separate shareholder
servicing agreements with each Shareholder Servicing Agent pursuant to which
that Shareholder Servicing Agent provides shareholder services, including
answering customer inquiries, assisting in processing purchase, exchange and
redemption transactions and furnishing Fund communications to shareholders. For
these services, each Shareholder Servicing Agent receives a fee from each Fund
at an annual rate of 0.10% of the average daily net assets of the Fund
represented by shares owned by investors for whom such Shareholder Servicing
Agent maintains a servicing relationship.
Some Shareholder Servicing Agents may impose certain conditions on their
customers in addition to or different from those imposed by the Funds, such as
requiring a minimum initial investment or charging their customers a direct fee
for their services. Each Shareholder Servicing Agent has agreed to transmit to
its customers who are shareholders of a Fund appropriate prior written
disclosure of any fees that it may charge them directly and to provide written
notice at least 30 days prior to imposition of any transaction fees.
TRANSFER AGENT, CUSTODIAN AND FUND ACCOUNTANT: State Street Bank and Trust
Company (or its affiliate State Street Canada, Inc.) acts as transfer agent and
dividend disbursing agent for each Fund. State Street acts as the custodian of
each Fund's and each Portfolio's assets. Securities held for a Portfolio may be
held by a sub-custodian bank approved by the Portfolio's Trustees. State Street
also provides fund accounting services to the Funds and the Portfolios and
calculates the daily net asset value for the Funds and the Portfolios.
DISTRIBUTION ARRANGEMENTS: LFBDS is the Distributor of each Fund's shares and
also serves as distributor for each of the other Landmark Funds and as a
Shareholder Servicing Agent for certain investors. As Distributor, LFBDS bears
the cost of compensating personnel involved in the sale of shares of the Funds
and bears all costs of travel, office expenses (including rent and overhead) and
equipment. In those states where LFBDS is not a registered broker-dealer, shares
of the Funds are sold through Signature Broker-Dealer Services, Inc., as dealer.
Under a plan of distribution for Premium Liquid Reserves and Premium U.S.
Treasury Reserves (the "Plan"), each Fund pays the Distributor a fee at an
annual rate not to exceed 0.10% of the average daily net assets of the Fund in
anticipation of, or as reimbursement for, expenses incurred by the Distributor
in connection with the sale of shares, 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. However, the Distributor has
agreed to waive a portion of these fees for each Fund. The Plan was adopted in
accordance with Rule 12b-1 under the 1940 Act.
The Funds and the Distributor provide to the Trustees quarterly a written
report of amounts expended pursuant to the Plan and the purposes for which the
expenditures were made.
TAX MATTERS
- ------------------------------------------------------------------------------
This discussion of taxes is for general information only. Investors should
consult their own tax advisers about their particular situations.
Each Fund intends to meet requirements of the Internal Revenue Code
applicable to regulated investment companies so that it will not be liable for
any federal income or excise taxes.
Shareholders are required to pay federal income tax on any dividends and
other distributions received. Generally, distributions from a Fund's net
investment income and short-term capital gains will be taxed as ordinary income.
Distributions from long-term net capital gains will be taxed as such regardless
of how long the shares of a Fund have been held. Dividends and distributions are
treated in the same manner for federal tax purposes whether they are paid in
cash or as additional shares.
Distributions derived from interest on U.S. Government obligations may be
exempt from certain state and local taxes. Early each year, each Fund will
notify its shareholders of the amount and tax status of distributions paid to
shareholders for the preceding year.
The account application asks each new shareholder to certify that the
shareholder's Social Security or taxpayer identification number is correct and
that the shareholder is not subject to 31% backup withholding for failing to
report income to the IRS. A Fund may be required to withhold (and pay over to
the IRS for the shareholder's credit) 31% of certain distributions paid to
shareholders who fail to provide this information or otherwise violate IRS
regulations.
Each Fund will withhold U.S. federal income tax payments at a rate of 30%
(or any lower applicable treaty rate) on taxable dividends and other payments
subject to withholding taxes that are made to persons who are not citizens or
residents of the United States. Distributions received from a Fund by non-U.S.
persons also may be subject to tax under the laws of their own jurisdiction.
Investors should consult their own tax advisers regarding the status of
their accounts under state and local laws.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
Fund performance may be quoted in advertising, shareholder reports and other
communications in terms of yield, effective yield, tax equivalent yield, total
rate of return or tax equivalent total rate of return. All performance
information is historical and is not intended to indicate future performance.
Yields and total rates of return fluctuate in response to market conditions and
other factors.
Each Fund may provide its period and average annualized "total rates of
return" and Premium U.S. Treasury Reserves may also provide "tax equivalent
total rates of return." The "total rate of return" refers to the change in the
value of an investment in the Fund over a stated period and is compounded to
include the value of any shares purchased with any dividends or capital gains
declared during such period. Period total rates of return may be "annualized."
An "annualized" total rate of return assumes that the period total rate of
return is generated over a one-year period. The "tax equivalent total rate of
return" refers to the total rate of return that a fully taxable money market
fund would have to generate in order to produce an after-tax total rate of
return equivalent to that of Premium U.S. Treasury Reserves. The use of a tax
equivalent total rate of return allows investors to compare the total rates of
return of Premium U.S. Treasury Reserves, the dividends from which may be exempt
from state personal income taxes, with the total rates of return of funds the
dividends from which are not so tax exempt.
Each Fund may provide annualized "yield" and "effective yield" quotations,
and Premium U.S. Treasury Reserves may also provide "tax equivalent yield"
quotations. The "yield" of a Fund refers to the income generated by an
investment in the Fund over a seven-day period (which period is stated in any
such advertisement or communication). This income is then annualized; that is,
the amount of income generated by the investment over that period is assumed to
be generated each week over a 365-day period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly, but when annualized
the income earned by the investment during that seven-day period is assumed to
be reinvested. The effective yield is slightly higher than the yield because of
the compounding effect of this assumed reinvestment. The "tax equivalent yield"
refers to the yield that a fully taxable money market fund would have to
generate in order to produce an after-tax yield equivalent to that of Premium
U.S. Treasury Reserves. The use of a tax equivalent yield allows investors to
compare the yield of Premium U.S. Treasury Reserves, the dividends from which
may be exempt from state personal income tax, with yields of funds the dividends
from which are not so tax exempt. A Fund may also provide yield, effective yield
and tax equivalent yield quotations for longer periods.
Of course, any fees charged by a shareholder's Shareholder Servicing Agent
will reduce that shareholder's net return on his or her investment. See the
Statement of Additional Information for more information concerning the
calculation of yield and total rate of return quotations for the Funds.
GENERAL INFORMATION
- ------------------------------------------------------------------------------
ORGANIZATION: Each Fund is a diversified series of Landmark Premium Funds,
which is a Massachusetts business trust which was organized on May 23, 1989.
Each Fund also is an open-end management investment company registered under the
1940 Act.
Under the 1940 Act, a diversified series or diversified investment company
must invest at least 75% of its assets in cash and cash items, U.S. Government
securities, investment company securities and other securities limited as to any
one issuer to not more than 5% of the total assets of the investment company and
not more than 10% of the voting securities of the issuer.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the trust's
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the trust itself was unable to meet its
obligations.
Each Portfolio is a separate trust organized under the laws of the State of
New York. The Declaration of Trust of each Portfolio provides that a Fund and
other entities investing in a Portfolio are each liable for all obligations of
that Portfolio. However, it is not expected that the liabilities of a Portfolio
would ever exceed its assets.
VOTING AND OTHER RIGHTS: Landmark Premium Funds (the "Trust") may issue an
unlimited number of shares, may create new series of shares and may divide
shares in each series into classes. Each share of each Fund gives the
shareholder one vote in Trustee elections and other matters submitted to
shareholders for vote. All shares of each series of the Trust have equal voting
rights except that, in matters affecting only a particular Fund or class, only
shares of that particular Fund or class are entitled to vote.
At any meeting of shareholders of a Fund, a Shareholder Servicing Agent may
vote any shares of which it is the holder of record and for which it does not
receive voting instructions proportionately in accordance with instructions it
receives for all other shares of which that Shareholder Servicing Agent is the
holder of record.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will usually be sought only for
changes in a Fund's or Portfolio's fundamental investment restrictions and for
the election of Trustees under certain circumstances. Trustees may be removed by
shareholders under certain circumstances. Each share of each Fund is entitled to
participate equally in dividends and other distributions and the proceeds of any
liquidation of that Fund.
CERTIFICATES: The Funds' Transfer Agent maintains a share register for
shareholders of record, i.e., Shareholder Servicing Agents. Share certificates
are not issued.
RETIREMENT PLANS: Investors may be able to establish new accounts in a Fund
under one of several tax-sheltered plans. Such plans include IRAs, Keogh or
Corporate Profit-Sharing and Money-Purchase Plans, 403(b) Custodian Accounts,
and certain other qualified pension and profit-sharing plans. Investors should
consult with their Shareholder Servicing Agents and tax and retirement advisers.
EXPENSES: For the fiscal year ended August 31, 1996, total operating expenses of
the Funds, after allocating to each Fund its share of its Portfolio's expenses
and after giving effect to fee waivers or reimbursements, were as follows: for
Premium Liquid Reserves, 0.40% of the Fund's average daily net assets for that
fiscal year; and for Premium U.S. Treasury Reserves, 0.45% of the Fund's average
daily net assets for that fiscal year. All fee waivers and reimbursements are
voluntary and may be reduced or terminated at any time.
- ------------------------------------------------------------------------------
The Statement of Additional Information dated the date hereof contains more
detailed information about the Funds and the Portfolios, including information
related to (i) investment policies and restrictions, (ii) the Trustees,
officers, Adviser and Administrators, (iii) securities transactions, (iv) the
Funds' shares, including rights and liabilities of shareholders, (v) the method
used to calculate performance information, (vi) programs for the purchase of
shares, and (vii) the determination of net asset value.
No person has been authorized to give any information or make any
representations not contained in this Prospectus in connection with the offering
made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Funds
or their distributor. This Prospectus does not constitute an offering by the
Funds or their distributor in any jurisdiction in which such offering may not
lawfully be made.
APPENDIX
- --------------------------------------------------------------------------------
PERMITTED INVESTMENTS AND
INVESTMENT PRACTICES
TREASURY RECEIPTS. Each Portfolio may invest in Treasury Receipts, which
are unmatured interest coupons of U.S. Treasury bonds and notes which have
been separated and resold in a custodial receipt program administered by the
U.S. Treasury.
COMMERCIAL PAPER. Cash Reserves Portfolio may invest in commercial paper,
which is unsecured debt of corporations usually maturing in 270 days or less
from its date of issuance.
ASSET-BACKED SECURITIES. Cash Reserves Portfolio may invest in asset- backed
securities, which represent fractional interests in underlying pools of assets,
such as car installment loans or credit card receivables. The rate of return on
asset-backed securities may be affected by prepayment of the underlying loans or
receivables. Reinvestment of principal may occur at higher or lower rates than
the original yield.
REPURCHASE AGREEMENTS. Cash Reserves Portfolio may enter into repurchase
agreements. Repurchase agreements are transactions in which an institution sells
the Portfolio a security at one price, subject to the Portfolio's obligation to
resell and the selling institution's obligation to repurchase that security at a
higher price normally within a seven day period. There may be delays and risks
of loss if the seller is unable to meet its obligation to repurchase.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements and in order to generate additional income, each Portfolio may lend
its portfolio securities to broker-dealers and other institutional borrowers.
Such loans must be callable at any time and continuously secured by collateral
(cash or U.S. Government securities) in an amount not less than the market
value, determined daily, of the securities loaned. It is intended that the value
of securities loaned by a Portfolio would not exceed 33 1/3% of the Portfolio's
net assets.
In the event of the bankruptcy of the other party to a securities loan or a
repurchase agreement, the Portfolio could experience delays in recovering either
the securities lent or cash. To the extent that, in the meantime, the value of
the securities lent have increased or the value of the securities purchased have
decreased, the Portfolio could experience a loss.
PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS. Each Portfolio may invest up to
10% of its net assets in securities for which there is no readily available
market. These illiquid securities may include privately placed restricted
securities for which no institutional market exists. The absence of a trading
market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for the
Portfolio to sell them promptly at an acceptable price.
<PAGE>
SHAREHOLDER SERVICING AGENTS
- --------------------------------------------------------------------------------
FOR CITIBANK PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
Registered Representative or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117
FOR CITIBANK NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100
[logo] LANDMARK
FUNDS
MONEY MARKET FUNDS:
Cash Reserves
Premium Liquid Reserves
Institutional Liquid Reserves
U.S. Treasury Reserves
Premium U.S. Treasury Reserves
Institutional U.S. Treasury Reserves
Tax Free Reserves
Institutional Tax Free Reserves
California Tax Free Reserves
Connecticut Tax Free Reserves
New York Tax Free Reserves
STOCK & BOND FUNDS:
U.S. Government Income Fund
Intermediate Income Fund
National Tax Free Income Fund
New York Tax Free Income Fund
Balanced Fund
Equity Fund
Small Cap Equity Fund
International Equity Fund
Emerging Asian Markets Equity Fund
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Mark T. Finn
Riley C. Gilley
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
- --------------------------------------| |--------------------------------------
INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue, Boston, MA 02116
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
(FOR PREMIUM LIQUID RESERVES)
Price Waterhouse LLP
160 Federal Street, Boston, MA 02110
(FOR PREMIUM U.S. TREASURY RESERVES)
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham, Dana & Gould LLP
150 Federal Street, Boston, MA 02110
- --------------------------------------| |--------------------------------------
SHAREHOLDER SERVICING AGENTS
(See Inside of Cover)
PM/P/97/RB Printed on Recycled Paper [recycled symbol]
[logo] LANDMARK(SM) FUNDS
Advised by Citibank, N.A.
- --------------------------------
PREMIUM
LIQUID RESERVES
- --------------------------------
PREMIUM
U.S. TREASURY
RESERVES
- --------------------------------
PROSPECTUS
January 2, 1997
<PAGE>
Rule 497(c)
File Nos. 33-28844 and 811-5812
STATEMENT OF
ADDITIONAL INFORMATION
PREMIUM LIQUID RESERVES January 2, 1997
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 12
Determination of Net Asset Value 13
Management 15
Portfolio Transactions 23
Description of Shares, Voting Right and Liabilities 23
Certain Additional Tax Matters 25
Independent Accountants and Financial Statements 26
This Statement of Additional Information sets forth information which
may be of interest to investors but which is not necessarily included in the
Funds' Prospectus, dated January 2, 1997, 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 2, 1997, 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. ("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").
<PAGE>
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 objectives of each of the Funds may be changed without
approval by the Fund's shareholders. Of course, there can be no assurance that
either Fund will achieve its investment objectives.
INVESTMENT POLICIES
The Trust seeks the investment objectives of the Funds by investing all
of the investable assets of 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 ("NYSE") (and subsidiaries thereof). Loans of
securities would be secured continuously by collateral in cash, cash
equivalents, or U.S. Treasury obligations maintained on a current basis at an
amount at least equal to the market value of the securities loaned. The cash
collateral would be invested in high quality short-term instruments. A Portfolio
would have the right to call a loan and obtain the securities loaned at any time
on customary industry settlement notice (which will not usually exceed five
days). During the existence of a loan, a Portfolio would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and would also receive compensation based on investment of the
collateral. The Portfolio would not, however, have the right to vote any
securities having voting rights during the existence of the loan, but would call
the loan in anticipation of an important vote to be taken among holders of the
securities or of the giving or withholding of their consent on a material matter
affecting the investment. As with other extensions of credit, there are risks of
delay in recovery or even loss of rights in the collateral should the borrower
fail financially. However, the loans would be made only to entities deemed by
the Adviser to be of good standing, and when, in the judgment of the Adviser,
the consideration which can be earned currently from loans of this type
justifies the attendant risk. If the Adviser determines to make loans, it is not
intended that the value of the securities loaned by a Portfolio would exceed
33-1/3% of the value of its net assets.
U.S. TREASURY RESERVES PORTFOLIO
U.S. Treasury Reserves Portfolio seeks its investment objective by
investing in obligations of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities including issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an Act of Congress which
are supported by the full faith and credit of the United States. U.S. Treasury
Reserves Portfolio will not enter into repurchase agreements.
INVESTMENT RESTRICTIONS
The Trust, on behalf of the Funds, and the Portfolios have each adopted
the following policies which may not be changed without approval by holders of a
"majority of the outstanding shares" of the applicable Fund or Portfolio, which
as used in this Statement of Additional Information means the vote of the lesser
of (i) 67% or more of the outstanding voting securities of the Fund or Portfolio
present at a meeting, if the holders of more than 50% of the outstanding "voting
securities" of the Fund or Portfolio are present or represented by proxy, or
(ii) more than 50% of the outstanding "voting securities" of the Fund or the
Portfolio. The term "voting securities" as used in this paragraph has the same
meaning as in the 1940 Act. Whenever the Trust is requested to vote on a change
in the investment restrictions of a Portfolio (or, in the case of Cash Reserves
Portfolio, its concentration policy described in paragraph (1) under "Investment
Policies"), the Trust will hold a meeting of the corresponding Fund's
shareholders and will cast its vote as instructed by the shareholders. Each Fund
will vote the shares held by its shareholders who do not give voting
instructions in the same proportion as the shares of that Fund's shareholders
who do give voting instructions. Shareholders of the Funds who do not vote will
have no effect on the outcome of these matters.
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 "Non-Fundamental 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 "Non-Fundamental 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.
NON-FUNDAMENTAL RESTRICTIONS
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.
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.
<TABLE>
<CAPTION>
REDEEMABLE VALUE OF A
HYPOTHETICAL $1,000
INVESTMENT AT THE END
ANNUALIZED TOTAL RATE OF OF THE PERIOD
PERIOD RETURN
<S> <C> <C>
PREMIUM LIQUID RESERVES
May 3, 1990 (commencement of operations) to August 31, 1996 4.98% $1,360.44
Five years ended August 31, 1996 4.38% $1,238.83
One year ended August 31, 1996 5.45% $1,054.53
PREMIUM U.S. TREASURY RESERVES
March 1, 1991 (commencement of operations) to August 31, 1996 4.19% $1,253.79
Five years ended August 31, 1996 4.02% $1,217.78
One year ended August 31, 1996 4.96% $1,049.60
</TABLE>
The annualized yield of Premium Liquid Reserves for the seven-day
period ended August 31, 1996 was 5.10%. The effective compound annualized yield
of Premium Liquid Reserves for such period was 5.23%. The annualized yield of
Premium U.S. Treasury Reserves for the seven-day period ended August 31, 1996
was 4.73%, the effective compound annualized yield of Premium U.S. Treasury
Reserves for such period was 4.84% and the annualized tax equivalent yield of
Premium U.S. Treasury Reserves for such period was 5.38% (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 NYSE is open for trading. This determination is made once
during each such day as of 3:00 p.m., Eastern standard time, for Liquid Reserves
and 12:00 noon, Eastern standard 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 NYSE is open for trading every weekday except for the following
holidays (or the days on which they are observed): New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. It is anticipated that the net asset value of each share of
each Fund will remain constant at $1.00 and, although no assurance can be given
that they will be able to do so on a continuing basis, as described below, the
Funds and Portfolios employ specific investment policies and procedures to
accomplish this result.
The value of a Portfolio's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued) is determined at the same time and on the same days as the net asset
value per share of the corresponding Fund is determined. The net asset value of
a Fund's investment in the corresponding Portfolio is equal to the Fund's pro
rata share of the total investment of the Fund and of other investors in the
Portfolio less the Fund's pro rata share of the Portfolio's liabilities.
The securities held by a Fund or Portfolio are valued at their
amortized cost. Amortized cost valuation involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium. If fluctuating interest rates cause the market value of the
securities held by the Fund or Portfolio to deviate more than 1/2 of 1% from
their value determined on the basis of amortized cost, the Fund or Portfolio's
Board of Trustees will consider whether any action should be initiated, as
described in the following paragraph. Although the amortized cost method
provides certainty in valuation, it may result in periods during which the
stated value of an instrument is higher or lower than the price the Fund or
Portfolio would receive if the instrument were sold.
Pursuant to the rules of the Securities and Exchange Commission
("SEC"), the Trust's and the Portfolios' Boards of Trustees have established
procedures to stabilize the value of the Funds' and Portfolios' net assets
within 1/2 of 1% of the value determined on the basis of amortized cost. These
procedures include a review of the extent of any such deviation of net asset
value, based on available market rates. Should that deviation exceed 1/2 of 1%
for a Fund or a Portfolio, the Trust's or Portfolio's Board of Trustees 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 SEC, exists making disposal of the
Fund's or Portfolio's investments or determination of its net asset value not
reasonably practicable; (b) the NYSE is closed (other than customary weekend and
holiday closings); or (c) the SEC has by order permitted such suspension.
5. MANAGEMENT
The Trustees and officers of the Trust and the Portfolios, their ages
and their principal occupations during the past five years are set forth below.
Their titles may have varied during that period. Asterisks indicate that those
Trustees and officers are "interested persons" (as defined in the 1940 Act) of
the Trust or a Portfolio. Unless otherwise indicated below, the address of each
Trustee and officer is 6 St. James Avenue, Boston, Massachusetts. The address of
Cash Reserves Portfolio is Elizabethan Square, George Town, Grand Cayman,
British West Indies. The address of U.S. Treasury Reserves Portfolio is 6 St.
James Avenue, Boston, Massachusetts.
TRUSTEES OF THE TRUST
PHILIP W. COOLIDGE; 45* -- President of the Trust and the Portfolios; Chairman,
Chief Executive Officer and President, Signature Financial Group, Inc. and The
Landmark Funds Broker-Dealer Services, Inc. (since December, 1988).
MARK T. FINN; 53 -- 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.
RILEY C. GILLEY; 70 -- Vice President and General Counsel, Corporate Property
Investors (November, 1988 to December 1991); Partner, Breed, Abbott & Morgan
(Attorneys) (retired, December 1987). His address is 4041 Gulf Shore Boulevard
North, Naples, Florida.
WILLIAM S. WOODS, JR.; 76 -- Vice President - Investments, Sun Company, Inc.
(retired, April, 1984). His address is 35 Colwick Road, Cherry Hill, New Jersey.
TRUSTEES OF THE PORTFOLIOS
ELLIOTT J. BERV; 53 -- 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; 45* -- President of the Trust and the Portfolios; Chairman,
Chief Executive Officer and President, Signature Financial Group, Inc. and The
Landmark Funds Broker-Dealer Services, Inc. (since December, 1988).
MARK T. FINN; 53 -- 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; 70 -- 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
SAMANTHA M. BURGESS; 27* -- Assistant Secretary and Assistant Treasurer;
Assistant Vice President, Signature Financial Group, Inc. (since November 1995);
Graduate Student, Loyola University (prior to August 1995).
PHILIP W. COOLIDGE; 45* -- President of the Trust and the Portfolios; Chairman,
Chief Executive Officer and President, Signature Financial Group, Inc. and The
Landmark Funds Broker-Dealer Services, Inc. (since December, 1988).
CHRISTINE A. DRAPEAU; 26* -- Assistant Secretary and Assistant Treasurer;
Assistant Vice President, Signature Financial Group, Inc. (since January 1996);
Paralegal and Compliance Officer, various financial companies (July 1992 to
January 1996); Graduate Student, Bentley College (prior to December 1994).
JOHN R. ELDER; 48* -- Treasurer of the Trust and the Portfolios; Vice President,
Signature Financial Group, Inc. (since April 1995); Treasurer, Phoenix Family of
Mutual Funds (Phoenix Home Life Mutual Insurance Company) (from 1983 to March
1995).
LINDA T. GIBSON; 31* -- Secretary of the Trust and the Portfolios; Vice
President, Signature Financial Group, Inc. (since May 1992); law student, Boston
University School of Law (from September 1989 to May 1992).
JOAN A. GULINELLO; 41* -- Assistant Secretary and Assistant Treasurer; Vice
President, Signature Financial Group, Inc. (since October 1993); Secretary, The
Landmark Funds Broker-Dealer Services, Inc. (since October 1995); Vice President
and Assistant General Counsel, Massachusetts Financial Services Company (prior
to October 1993).
JAMES E. HOOLAHAN; 49* -- Vice President, Assistant Secretary and Assistant
Treasurer; Senior Vice President, Signature Financial Group, Inc.
SUSAN JAKUBOSKI; 32* -- Vice President, Assistant Treasurer and Assistant
Secretary of Cash Reserves Portfolio and Assistant Secretary of the Trust (since
August, 1994); Manager, Signature Financial Group (Cayman) Ltd. (since August,
1994); Senior Fund Administrator, Signature Financial Group, Inc. (since August,
1994); Assistant Treasurer, Signature Broker-Dealer Services, Inc. (since
September, 1994); Fund Compliance Administrator, Concord Financial Group
(November, 1990 to August, 1994); Senior Fund Accountant, Neuberger & Berman
Management, Inc. (from February, 1988 to November, 1990); Customer Service
Representative, I.B.J. Schroder (prior to 1988). Her address is Elizabethan
Square, George Town, Grand Cayman, Cayman Islands, BWI.
MOLLY S. MUGLER; 45* -- Assistant Secretary and Assistant Treasurer of the Trust
and the Portfolios; Vice President, Signature Financial Group, Inc.; Assistant
Secretary, The Landmark Funds Broker-Dealer Services, Inc.
(since December, 1988).
KARYN A. NOKE; 26* -- Vice President, Assistant Secretary and Assistant
Treasurer; Vice President, Signature Financial Group (Cayman) Limited (since
September 1996); Assistant Vice President, Signature Financial Group, Inc. (May
1993 to August 1996); Student, University of Massachusetts (prior to May 1993).
SHARON M. WHITSON; 48* -- Assistant Secretary and Assistant Treasurer; Assistant
Vice President, Signature Financial Group, Inc. (since November 1992); Associate
Trader, Massachusetts Financial Services Company (prior to November 1992).
JULIE J. WYETZNER; 37* -- Vice President, Assistant Secretary and Assistant
Treasurer; Vice President, Signature Financial Group, Inc.
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.
TRUSTEES COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE
COMPENSATION FROM COMPENSATION FROM TOTAL COMPENSATION
PREMIUM LIQUID PREMIUM U.S. FROM THE TRUST AND
TRUSTEE RESERVES(1) TREASURY RESERVES(1) COMPLEX(2)
<S> <C> <C> <C>
Philip W. Coolidge 0 0 0
Mark T. Finn $ 1,454.03 $1,425.14 $42,000.00
Riley C. Gilley** N/A N/A $46,000.00
Donald B. Otis* $10,476.96 $8,336.02 $42,000.00
William S. Woods, Jr. $ 5,373.71 $4,598.33 $46,000.00
- ---------------------
(1)For the fiscal year ended August 31, 1996.
(2)Information relates to the fiscal year ended August 31, 1996. Messrs. Coolidge, Finn, Gilley, Otis* and Woods
are trustees of 28, 12, 11, 7 and 11 Funds, respectively, of the Landmark Family of Funds.
*Retired as of August 31, 1996.
**Trustee of Landmark Premium Funds as of August 31, 1996.
</TABLE>
As of December 16, 1996, 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, 1994, 1995 and
1996 the fees payable to Citibank under the Advisory Agreement were $1,806,314
(of which $943,419 was voluntarily waived), $4,097,854 (of which $2,306,161 was
voluntarily waived) and $6,140,512 (of which $3,426,821 was voluntarily waived),
respectively.
U.S. Treasury Reserves Portfolio: For the fiscal years ended August 31, 1994,
1995 and 1996, the fees payable to Citibank under the Advisory Agreement were
$850,924 (of which $506,109 was voluntarily waived), $1,148,418 (of which
$753,105 was voluntarily waived) and $1,101,345 (of which $727,401 was
voluntarily waived), 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, 1994, 1995 and 1996, the
fees payable to LFBDS from the Fund under the Administrative Services Agreement
were $288,055, $458,618 and $1,229,688 (of which $89,434, $11,881 and $793,182
were voluntarily waived). For the same periods, the fees paid or payable to SFG
under the Administrative Services Agreement with Cash Reserves Portfolio were
$602,105 (all of which was voluntarily waived), $1,365,951 (none of which was
waived) and $2,046,838 (all of which were voluntarily waived).
U.S. Treasury Reserves: For the fiscal years ended August 31, 1994, 1995 and
1996, the fees payable to LFBDS from U.S. Treasury Reserves under the
Administrative Services Agreement were $348,031 (of which $69,228 was
voluntarily waived), $395,992 (of which $9,857 was voluntarily waived) and
$942,341 (of which $465,906 was voluntarily waived). For the fiscal years ended
August 31, 1994, 1995 and 1996, the fees payable to LFBDS under the
Administrative Services Agreement with U.S. Treasury Reserves Portfolio were
$283,642, $382,806 and $367,115 (all of which were 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 31, 1994, 1995 and 1996, the
fees payable to the Distributor from Liquid Reserves under the Distribution
Agreement were $192,037 (of which $190,409 was voluntarily waived), $305,745 (of
which $267,152 was voluntarily waived) and $351,340 (of which $190,585 was
voluntarily waived), respectively.
U.S. Treasury Reserves: For the fiscal years ended August 31, 1994, 1995 and
1996, the fees payable from U.S. Treasury Reserves to the Distributor under the
Distribution Agreement were $232,020, $263,994 and $269,240 (of which $105,017,
$104,884 and $193,638 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, 1994, 1995 and 1996, aggregate fees payable from Liquid
Reserves to Shareholder Servicing Agents were $576,110 (of which $384,073 was
voluntarily waived), $917,235 (of which $611,490 was voluntarily waived) and
$351,340 (none of which was waived), respectively. For the fiscal years ended
August 31, 1994, 1995 and 1996, the aggregate fees payable from U.S. Treasury
Reserves to Shareholder Servicing Agents under the Servicing Agreements were
$696,061 (of which $464,041 was voluntarily waived), $791,983 (of which $527,989
was voluntarily waived) and $269,240 (none of which was 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 3:00 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 3:00 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 3:00 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 3:00 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 generally will be required to be
paid by the Fund. If a Fund should fail to qualify as a regulated investment
company for any year, the Fund would incur a regular corporate federal income
tax upon its taxable income and Fund distributions would generally be taxable as
ordinary dividend income to shareholders. Each of the Portfolios believes that
it will not be required to pay any federal income or excise taxes.
Investment income received by Liquid Reserves from non-U.S. investments
may be subject to foreign income taxes withheld at the source; Liquid Reserves
does not expect to be able to pass through to shareholders any foreign tax
credits with respect to those foreign taxes. The United States has entered into
tax treaties with many foreign countries that may entitle Liquid Reserves to a
reduced rate of tax or an exemption from tax on these investments. It is not
possible to determine Liquid Reserves' effective rate of foreign tax in advance
since that rate depends upon the proportion of the Cash Reserves Portfolio's
assets ultimately invested within various countries.
Because each Fund expects to earn primarily interest income, it is
expected that no Fund distributions will qualify for the dividends-received
deduction for corporations.
9. INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Price Waterhouse LLP and Price Waterhouse are the independent and
chartered accountants for Liquid Reserves and Cash Reserves Portfolio, providing
audit services and assistance and consultation with respect to the preparation
of filings with the SEC. Deloitte & Touche LLP are the independent certified
public accountants for U.S. Treasury Reserves and U.S. Treasury Reserves
Portfolio, providing audit services and assistance and consultation with respect
to the preparation of filings with the SEC.
The audited financial statements of Liquid Reserves (Statement of
Assets and Liabilities at August 31, 1996, Statement of Operations for the year
ended August 31, 1996, Statement of Changes in Net Assets for the years ended
August 31, 1996 and 1995, Financial Highlights for each of the years in the
five-year period ended August 31, 1996 , Notes to Financial Statements and the
Independent Auditor's Report) and of Cash Reserves Portfolio (Portfolio of
Investments at August 31, 1996, Statement of Assets and Liabilities at August
31, 1996, Statement of Operations for the year ended August 31, 1996, Statement
of Changes in Net Assets for the years ended August 31, 1996 and 1995, Financial
Highlights for each of the years in the five-year period ended August 31, 1996,
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, as experts in accounting and auditing.
The audited financial statements of U.S. Treasury Reserves (Statement
of Assets and Liabilities at August 31, 1996, Statement of Operations for the
year ended August 31, 1996, Statement of Changes in Net Assets for the years
ended August 31, 1996 and 1995, Financial Highlights for each of the years in
the three-year period ended August 31, 1996, 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, Notes to Financial Statements
and the Independent Auditors' Report) and of U.S. Treasury Reserves Portfolio
(Portfolio of Investments at August 31, 1996, Statement of Assets and
Liabilities at August 31, 1996, Statement of Operations for the year ended
August 31, 1996, Statement of Changes in Net Assets for the years ended August
31, 1996 and 1995, Financial Highlights for each of the years in the three-year
period ended August 31, 1996, 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,
Registered Representative or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY l0043
(212) 559-7117
FOR NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100
<PAGE>
PREMIUM LIQUID RESERVES
PREMIUM U.S. TREASURY RESERVES
TRUSTEES AND OFFICERS
Philip W. Coolidge, President*
Mark T. Finn
Riley C. Gilley
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
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INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue, Boston, MA 02116
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
(LANDMARK 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 LLP
150 Federal Street, Boston, MA 02110
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SHAREHOLDER SERVICING AGENTS
(See Inside of Cover)
