<PAGE>
As filed with the Securities and Exchange Commission on December 23, 1997
File Nos. 33-38848*
811-5812
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 10*
AND
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 17
LANDMARK PREMIUM FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 617-423-1679
PHILIP W. COOLIDGE, 6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM DANA LLP, 150 FEDERAL STREET,
BOSTON, MASSACHUSETTS 02110
It is proposed that this filing will become effective on January 2,
1998, pursuant to paragraph (b) of Rule 485.
U.S. Treasury Reserves Portfolio and Cash Reserves Portfolio have
executed this Registration Statement.
*Pursuant to Rule 429 under the Securities Act of 1933, this
Post-Effective Amendment also serves as Post-Effective Amendment No. 9 to
Registrant's registration statement under the Securities Act of 1933 at
File No. 33-28844.
<PAGE>
<TABLE>
<CAPTION>
LANDMARK PREMIUM FUNDS
(PREMIUM LIQUID RESERVES AND
PREMIUM U.S. TREASURY RESERVES)
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
N-1A
ITEM NO. N-1A ITEM LOCATION
- ------- --------- --------
PART A PROSPECTUS
- ------ ----------
<C> <S> <C>
Item 1. Cover Page............................................. Cover Page
Item 2. Synopsis............................................... Expense Summary
Item 3. Condensed Financial Information........................ Condensed Financial Information
Item 4. General Description of Registrant...................... Investment Information; General
Information; Appendix
Item 5. Management of the Fund................................. Management; Expenses
Item 5A. Management's Discussion of Fund Performance............ Not Applicable
Item 6. Capital Stock and Other Securities..................... General Information; Voting and Other
Rights; Purchases; Exchanges;
Redemptions; Net Income and
Distributions; Tax Matters
Item 7. Purchase of Securities Being Offered................... Purchases; Exchanges; Redemptions
Item 8. Redemption or Repurchase............................... Purchases; Exchanges; Redemptions
Item 9. Pending Legal Proceedings.............................. Not Applicable
<CAPTION>
STATEMENT OF
ADDITIONAL
PART B INFORMATION
- ------- -----------
<C> <S> <C>
Item 10. Cover Page............................................. Cover Page
Item 11. Table of Contents...................................... Cover Page
Item 12. General Information and History........................ The Funds
Item 13. Investment Objectives and Policies..................... Investment Objectives, Policies and
Restrictions
Item 14. Management of the Fund................................. Management
Item 15. Control Persons and Principal Holders of Securities.... Management
Item 16. Investment Advisory and Other Services................. Management
Item 17. Brokerage Allocation and Other Practices............... Portfolio Transactions
Item 18. Capital Stock and Other Securities..................... Description of Shares, Voting Rights and
Liabilities
Item 19. Purchase, Redemption and Pricing of Securities
Being Offered.......................................... Description of Shares, Voting Rights and
Liabilities; Determination of Net Asset
Value
Item 20. Tax Status............................................. Certain Additional Tax Matters
Item 21. Underwriters........................................... Management
Item 22. Calculation of Performance Data........................ Performance Information
Item 23. Financial Statements................................... Independent Accountants and Financial
Statements
PART C Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C to this
Registration Statement.
</TABLE>
<PAGE>
Prospectus January 2, 1998
CitiFunds SM Premium Liquid Reserves
CitiFunds SM Premium U.S. Treasury Reserves
This Prospectus describes two diversified money market mutual funds in the
CitiFundsSM family of funds: CitiFundsSM Premium Liquid Reserves and
CitiFundsSM Premium U.S. Treasury Reserves. Each Fund has its own investment
objective and policies. Citibank, N.A. is the investment adviser.
Unlike other mutual funds which directly acquire and manage their own portfolios
of securities, each Fund seeks its investment objective 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 10.
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, 1998 (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 or by calling 1-800-625-4554.
- ------------------------------------------------------------------------------
REMEMBER THAT SHARES OF THE FUNDS:
o ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY;
o ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
CITIBANK OR ANY OF ITS AFFILIATES;
o ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
- --------------------------------------------------------------------------------
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.
INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
TABLE OF CONTENTS
Prospectus Summary 3
..............................................................................
Expense Summary 5
..............................................................................
Condensed Financial Information 6
..............................................................................
Investment Information 8
..............................................................................
Risk Considerations 9
..............................................................................
Valuation of Shares 11
..............................................................................
Purchases 11
..............................................................................
Exchanges 12
..............................................................................
Redemptions 13
..............................................................................
Net Income and Distributions 14
..............................................................................
Management 15
..............................................................................
Tax Matters 18
..............................................................................
Performance Information 18
..............................................................................
General Information 19
..............................................................................
Appendix -- Permitted Investments and Investment Practices 21
..............................................................................
<PAGE>
PROSPECTUS SUMMARY
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: CitiFunds
Premium Liquid Reserves and CitiFunds 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 $88 billion in
assets worldwide. CFBDS, Inc. ("CFBDS" 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 day the New York Stock Exchange
is open for trading. 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 certain other mutual funds
managed or advised by Citibank, if shares of those funds are offered for sale
in the investor's place of residence. 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.
<PAGE>
EXPENSE SUMMARY
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 15 and "General
Information -- Expenses" -- page 20.
<TABLE>
<CAPTION>
PREMIUM PREMIUM
LIQUID U.S. TREASURY
RESERVES RESERVES
- ----------------------------------------------------------------------------------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES None None
ANNUAL FUND OPERATING EXPENSES, AFTER FEE WAIVERS
AND REIMBURSEMENTS (AS A PERCENTAGE OF AVERAGE
NET ASSETS):
Management Fee (1) 0.07% 0.06%
12b-1 Fees (1)(2) 0.00% 0.00%
Other Expenses
Administrative Services Fees (1) 0.17% 0.21%
Shareholder Servicing Agent Fees 0.10% 0.10%
Other Operating Expenses 0.06% 0.08%
- ----------------------------------------------------------------------------------------
Total Fund Operating Expenses (1) 0.40% 0.45%
- ----------------------------------------------------------------------------------------
</TABLE>
* 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, management fees, 12b-1 fees,
administrative services fees and total fund operating expenses would be
0.15%, 0.10%, 0.40% and 0.81% for Premium Liquid Reserves and 0.15%, 0.10%,
0.40% and 0.83% 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:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PREMIUM LIQUID RESERVES $4 $13 $22 $51
PREMIUM U.S. TREASURY RESERVES $5 $14 $25 $57
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
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, 1997, after
waivers and reimbursements. If waivers and reimbursements were not in place, the
amounts in the Example would be $8, $26, $45 and $102 for Premium Liquid
Reserves and $8, $27, $46 and $103 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.
CONDENSED FINANCIAL INFORMATION
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 the
fiscal periods through August 31, 1997 have been audited by Price Waterhouse
LLP, independent accountants, on behalf of CitiFunds Premium Liquid Reserves
(formerly Premium Liquid Reserves), and by Deloitte & Touche LLP, independent
accountants, on behalf of CitiFunds Premium U.S. Treasury Reserves (formerly
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 or by calling
1-800-625-4554.
CITIFUNDS PREMIUM LIQUID RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
1997 1996 1995 1994 1993 1992 1991 1990*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income 0.05240 0.05322 0.05465 0.03432 0.02957 0.04281 0.06794 0.02598
Less dividends from
net investment income (0.05240) (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 $1.00000
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000's omitted) $387,910 $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% 0.40% 0.43% 0.45%+
Ratio of net
investment income to
average net asset 5.25% 5.35% 5.47% 3.47% 2.94% 4.24% 6.27% 7.81%+
Total return 5.37% 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 $0.04833 $0.04911 $0.05047 $0.02962 $0.02514 $0.03847 $0.06274 $0.01916
RATIOS:
Expenses to average
net assets** 0.81% 0.82% 0.83% 0.88% 0.85% 0.83% 0.91% 2.50%+
Net investment income
to average net assets 4.84% 4.93% 5.04% 2.99% 2.50% 3.81% 5.79% 5.76%+
</TABLE>
*For the period from the commencement of operations, May 3, 1990, to August 31,
1990.
**Includes the Fund's share of Cash Reserves Portfolio's allocated expenses.
+Annualized.
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EIGHT
MONTHS ENDED YEAR ENDED
YEAR ENDED AUGUST 31, AUGUST 31, DECEMBER 31,
1997 1996 1995 1994 1993** 1992 1991***
- --------------------------------------------------------------------------------------------------------------------------------
<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 0.04794 0.04851 0.04999 0.03087 0.01810 0.03363 0.04584
Less dividends
from net
investment
income (0.04794) (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 $1.00000
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end
of period
(000's omitted) $239,441 $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%+ 0.45% 0.28%+
Ratio of net
investment
income to
average net
assets 4.80% 4.88% 5.02% 3.09% 2.72%+ 3.28% 5.29%+
Total return 4.90% 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 $0.04414 $0.04463 $0.04601 $0.02667 $0.01537 $0.02922 $0.04055
RATIOS:
Expenses to
average net
assets* 0.83% 0.85% 0.84% 0.87% 0.85%+ 0.88% 0.90%+
Net investment
income to
average net
assets 4.42% 4.49% 4.62% 2.67% 2.31%+ 2.85% 4.68%+
</TABLE>
*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 commencement of operations, March 1, 1991, to
December 31, 1991.
+Annualized.
<PAGE>
INVESTMENT INFORMATION
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 21.
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 21. 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 21. 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
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 21.
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, CFBDS (6 St. James Avenue, Boston, MA 02116, (617)
423-1679).
VALUATION OF SHARES
Net asset value per share of each Fund is determined each day the New York Stock
Exchange is open for trading (a "Business Day"). This determination is normally
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 Fund's liabilities, and then
dividing the result by the number of the Fund's outstanding shares. 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. On days when the financial
markets in which the Funds invest close early, each Fund's net asset value is
determined as of the close of these markets if such time is earlier than the
time at which the net asset value is normally calculated.
The 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
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 the shareholder's
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
Shares of each Fund may be exchanged for shares of certain other mutual funds
managed or advised by Citibank that are made available by a shareholder's
Shareholder Servicing Agent or service agent, as the case may be, 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.
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 mutual 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 normally 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. On days when
the financial markets in which the Funds invest close early, each Fund's net
income is determined as of the close of these markets if such time is earlier
than the time at which the net income is normally calculated.
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
CitiFunds Premium Trust. 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 $88 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, 1997, the investment advisory fees paid to
Citibank, after waivers, were 0.07% of Cash Reserves Portfolio's average daily
net assets for that fiscal year and 0.06% 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: CFBDS 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 CFBDS, 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.
CFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group, Inc.
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 CFBDS or SFG. Citibank's
compensation as sub-administrator is paid by CFBDS 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 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 (or its affiliate State Street Canada,
Inc.) 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: CFBDS is the Distributor of each Fund's shares and
also serves as distributor for certain other mutual funds advised or managed by
Citibank and as a Shareholder Servicing Agent for certain investors. As
Distributor, CFBDS 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 CFBDS 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 adopted in accordance with Rule 12b-1 under the
1940 Act, 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 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 the 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 jurisdictions.
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 the shareholder's 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 CitiFunds Premium Trust, a
Massachusetts business trust which was organized on May 23, 1989. Prior to
January 2, 1998, CitiFunds Premium Trust was called Landmark Premium Funds. On
January 2, 1998, the Funds added "CitiFunds" to their names. Each Fund 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.
"CitiFunds" is a service mark of Citicorp.
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: CitiFunds Premium 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 series or class, only shares of that particular
series 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, CitiFunds Premium 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, 1997, 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 and (vi) 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.
CFCP/PRE 198 [RECYCLE LOGO] PRINTED ON RECYCLED PAPER
<PAGE>
Statement of
Additional Information
January 2, 1998
CITIFUNDS(SM) PREMIUM LIQUID RESERVES
CITIFUNDS(SM) PREMIUM U.S. TREASURY RESERVES
(Members of the CitiFunds(SM) Family of Funds)
CitiFunds(SM) Premium Liquid Reserves ("Liquid Reserves") and CitiFunds
(SM) Premium U.S. Treasury Reserves ("U.S. Treasury Reserves" and together
with Liquid Reserves, the "Funds") are each separate series of CitiFunds(SM)
Premium Trust (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
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1. The Funds ............................................................. 2
2. Investment Objectives, Policies and Restrictions ...................... 2
3. Performance Information ............................................... 7
4. Determination of Net Asset Value ...................................... 9
5. Management ............................................................ 10
6. Portfolio Transactions ................................................ 15
7. Description of Shares, Voting Rights and Liabilities .................. 16
8. Certain Additional Tax Matters ........................................ 17
9. Independent Accountants and Financial Statements ...................... 18
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, 1998, 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. Prior to January 2, 1998, the Trust was called
Landmark Premium Funds. Shares of the Trust are divided into two separate
series, CitiFunds Premium Liquid Reserves and CitiFunds Premium U.S. Treasury
Reserves, which are described in this Statement of Additional Information. Prior
to January 2, 1998, Liquid Reserves and U.S. Treasury Reserves were called
Landmark Premium Liquid Reserves and Landmark Premium U.S. Treasury Reserves,
respectively. References in this Statement of Additional Information to the
Prospectus are to the Prospectus, dated January 2, 1998, 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.
CFBDS, Inc. ("CFBDS" 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 CFBDS, 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, CFBDS may receive fees from the Funds
pursuant to a Distribution Plan adopted in accordance with Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act").
2. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
The investment objectives of PREMIUM LIQUID RESERVES are to provide
shareholders of the Fund with liquidity and as high a level of current income as
is consistent with the preservation of capital.
The investment objectives of PREMIUM U.S. TREASURY RESERVES are to provide
shareholders of the Fund with liquidity and as high a level of current income
from U.S. Government obligations as is consistent with the preservation of
capital.
The investment objectives of each Fund may be changed without approval by
that 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 objectives 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 acquisitions 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 CARS) and unsecured, leases or revolving credit
receivables, both secured and unsecured (such as CARDS). These assets are
generally held by a trust and payments of principal and interest or interest
only are passed through monthly or quarterly to certificate holders and may be
guaranteed up to certain amounts by letters of credit issued by a financial
institution affiliated or unaffiliated with the trustee or originator of the
trust.
Underlying automobile sales contracts, leases or credit card receivables are
subject to prepayment, which may reduce the overall return to certificate
holders. Nevertheless, principal repayment rates tend not to vary much with
interest rates and the short-term nature of the underlying loans, leases or
receivables tends to dampen the impact of any change in the prepayment level.
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.
U.S. TREASURY RESERVES PORTFOLIO
U.S. Treasury Reserves Portfolio seeks its investment objectives 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.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to generate
income, each of the Portfolios may lend its securities to broker-dealers and
other institutional borrowers. Such loans will usually be made only to member
banks of the U.S. Federal Reserve System and to member firms of the New York
Stock Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents, or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested in
high quality short-term instruments. Either party has the right to terminate a
loan at any time on customary industry settlement notice (which will not usually
exceed three business days). During the existence of a loan, a Portfolio would
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities loaned and with respect to cash collateral would also
receive compensation based on investment of the collateral (subject to a rebate
payable to the borrower). Where the borrower provides the Portfolio with
collateral consisting of U.S. Treasury obligations, the borrower is also
obligated to pay the Portfolio a fee for use of the borrowed securities. The
Portfolio would not, however, have the right to vote any securities having
voting rights during the existence of the loan, but would call the loan in
anticipation of an important vote to be taken among holders of the securities or
of the giving or withholding of their consent on a material matter affecting the
investment. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the collateral should the borrower fail
financially. However, the loans would be made only to entities deemed by the
Adviser to be of good standing, and when, in the judgment of the Adviser, the
consideration which can be earned currently from loans of this type justifies
the attendant risk. In addition, a Portfolio could suffer loss if the borrower
terminates the loan and the Portfolio is forced to liquidate investments in
order to return the cash collateral to the buyer. If the Adviser determines to
make loans, it is not intended that the value of the securities loaned by a
Portfolio would exceed 33 1/3% of the value of its net assets.
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);
(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;
(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.
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 each Fund 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
ANNUALIZED TOTAL AT THE END
PERIOD RATE OF RETURN OF THE PERIOD
- ------ ---------------- ------------------
LIQUID RESERVES
May 3, 1990 (commencement of operations) to
<S> <C> <C>
August 31, 1997 5.03% $1,433.46
Five years ended August 31, 1997 4.58% 1,250.72
One year ended August 31, 1997 5.37% 1,053.68
U.S. TREASURY RESERVES
March 1, 1991 (commencement of operations) to
August 31, 1997 4.30% 1,315.24
Five years ended August 31, 1997 4.17% 1,226.75
One year ended August 31, 1997 4.90% 1,049.01
</TABLE>
The annualized yield of Liquid Reserves for the seven-day period ended
August 31, 1997 was 5.40%. The effective compound annualized yield of Liquid
Reserves for such period was 5.54%. The annualized yield of U.S. Treasury
Reserves for the seven-day period ended August 31, 1997 was 4.82%. The effective
compound annualized yield of U.S. Treasury Reserves for such period was 4.94%,
and the annualized tax equivalent yield of 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 New York Stock Exchange is open for trading. This determination
is normally made once during each such day as of 3:00 p.m., Eastern time, for
Liquid Reserves and 12:00 noon, Eastern time, for U.S. Treasury Reserves, by
dividing the value of the Fund's net assets (i.e., the value of its investment
in its Portfolio and other assets less its liabilities, including expenses
payable or accrued) by the number of the Fund's shares outstanding at the time
the determination is made. On days when the financial markets in which the Funds
invest close early, each Fund's net asset value is determined as of the close of
these markets if such time is earlier than the time at which the net asset value
is normally calculated. As of the date of this Statement of Additional
Information, the Exchange is open for trading every weekday except for the
following holidays (or the days on which they are observed): New Year's Day,
Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. 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 New York Stock Exchange 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; 46* -- President of the Trust and the Portfolios; Chief
Executive Officer and President, Signature Financial Group, Inc. and CFBDS.
MARK T. FINN; 54 -- President and Director, Delta Financial, Inc. (since June,
1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd.
(Commodity Trading Advisory Firm) (since April, 1990); Director, Vantage
Consulting Group, Inc. (since October, 1988). His address is 3500 Pacific
Avenue, P.O. Box 539, Virginia Beach, Virginia.
RILEY C. GILLEY; 71 -- 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.; 77 -- 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; 54 -- Chairman and Director, Catalyst, Inc. (Management
Consultants) (since June, 1992); President, Chief Operating Officer and
Director, Deven International, Inc. (International Consultants) (June, 1991 to
June, 1992); President and Director, Elliott J. Berv & Associates (Management
Consultants) (since May, 1984). His address is 15 Stornoway Drive, Cumberland
Foreside, Maine.
PHILIP W. COOLIDGE; 46* -- President of the Trust and the Portfolios; Chief
Executive Officer and President, Signature Financial Group, Inc. and CFBDS.
MARK T. FINN; 54 -- President and Director, Delta Financial, Inc. (since June,
1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd.
(Commodity Trading Advisory Firm) (since April, 1990); Director, Vantage
Consulting Group, Inc. (since October, 1988). His address is 3500 Pacific
Avenue, P.O. Box 539, Virginia Beach, Virginia.
WALTER E. ROBB, III; 71 -- President, Benchmark Consulting Group, Inc. (since
1991); Principal, Robb Associates (Corporate Financial Advisors) (since 1978);
President, Benchmark Advisors, Inc. (Corporate Financial Advisors) (since
1989); Trustee of certain registered investment companies in the MFS Family of
Funds. His address is 35 Farm Road, Sherborn, Massachusetts.
OFFICERS OF THE TRUST AND THE PORTFOLIOS
PHILIP W. COOLIDGE; 46* -- President of the Trust and the Portfolios; Chief
Executive Officer and President, Signature Financial Group, Inc. and CFBDS.
CHRISTINE A. DRAPEAU; 27* -- Assistant Secretary and Assistant Treasurer of the
Trust and the Portfolios; 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; 49* -- Treasurer of the Trust and the Portfolios; Vice
President, Signature Financial Group, Inc. (since April, 1995); Treasurer,
CFBDS (since April, 1995); Treasurer, Phoenix Family of Mutual Funds (Phoenix
Home Life Mutual Insurance Company) (1983 to March, 1995).
LINDA T. GIBSON; 32* -- Secretary of the Trust and the Portfolios; Vice
President, Signature Financial Group, Inc. (since May, 1992); Assistant
Secretary, CFBDS (since October, 1992).
JOAN R. GULINELLO; 42* -- Assistant Secretary and Assistant Treasurer of the
Trust and the Portfolios; Vice President, Signature Financial Group, Inc.
(since October, 1993); Secretary, CFBDS (since October, 1995); Vice President
and Assistant General Counsel, Massachusetts Financial Services Company (prior
to October, 1993).
JAMES E. HOOLAHAN; 50* -- Vice President, Assistant Secretary and Assistant
Treasurer of the Trust and the Portfolios; Senior Vice President, Signature
Financial Group, Inc.
SUSAN JAKUBOSKI; 33* -- Vice President, Assistant Treasurer and Assistant
Secretary of the Trust and the Portfolios; Vice President, Signature Financial
Group (Cayman) Ltd. (since August, 1994); Fund Compliance Administrator, Concord
Financial Group (November, 1990 to August, 1994). Her address is Suite 193, 12
Church St., Hamilton HM11, Bermuda.
MOLLY S. MUGLER; 46* -- Assistant Secretary and Assistant Treasurer of the
Trust and the Portfolios; Vice President, Signature Financial Group, Inc.;
Assistant Secretary, CFBDS.
SHARON M. WHITSON; 49* -- Assistant Secretary and Assistant Treasurer of the
Trust and the Portfolios; Assistant Vice President, Signature Financial Group,
Inc.
JULIE J. WYETZNER; 38* -- Vice President, Assistant Secretary and Assistant
Treasurer of the Trust and the Portfolios; 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 CFBDS or an affiliate
serves as the distributor or administrator.
TRUSTEES COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE
AGGREGATE COMPENSATION FROM
COMPENSATION FROM PREMIUM TOTAL COMPENSATION
PREMIUM LIQUID U.S. TREASURY FROM THE TRUST
TRUSTEE RESERVES(1) RESERVES(1) AND COMPLEX(2)
------- ----------- ----------- --------------
<S> <C> <C> <C>
Philip W. Coolidge ...................... 0 0 0
Mark T. Finn ............................ $1,944.48 $1,733.90 $52,000.00
Riley C. Gilley ......................... 2,914.12 2,410.24 50,000.00
William S. Woods, Jr. ................... 3,298.32 2,667.87 50,000.00
</TABLE>
- ------------
(1) For the fiscal year ended August 31, 1997.
(2) Information relates to the fiscal year ended August 31, 1997.
Messrs. Coolidge, Finn, Gilley and Woods are trustees of 51, 26, 28
and 27 Funds, respectively, of the family of open-end registered
investment companies advised or managed by Citibank.
As of December 16, 1997, 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 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, 1995, 1996
and 1997 the fees paid to Citibank under the Advisory Agreement, after waivers,
were $1,791,693, $2,713,691 and $4,395,286, respectively.
U.S. TREASURY RESERVES PORTFOLIO: For the fiscal years ended August 31,
1995, 1996 and 1997, the fees paid to Citibank under the Advisory Agreement,
after waivers, were $395,313, $373,944 and $494,339, respectively.
ADMINISTRATORS
Pursuant to Administrative Services Agreements (the "Administrative Services
Agreements"), CFBDS provides the Trust and U.S. Treasury Reserves Portfolio, and
SFG provides Cash Reserves Portfolio, with general office facilities, and CFBDS
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. CFBDS 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 CFBDS, SFG
or their affiliates.
The Prospectus contains a description of the fees payable to CFBDS and SFG
under the Administrative Services Agreements.
LIQUID RESERVES: For the fiscal years ended August 31, 1995, 1996 and 1997,
the fees paid to CFBDS from the Fund under the Administrative Services
Agreement, after waivers, were $446,737, $436,506 and $571,767, respectively.
For the fiscal year ended August 31, 1995, the fees paid to SFG under the
Administrative Services Agreement with Cash Reserves Portfolio, after waivers,
were $1,365,951. For the fiscal years ended August 31, 1996 and 1997, all fees
payable to SFG under the Administrative Services Agreement with Cash Reserves
Portfolio were voluntarily waived.
U.S. TREASURY RESERVES: For the fiscal years ended August 31, 1995, 1996 and
1997, the fees paid to CFBDS from U.S. Treasury Reserves under the
Administrative Services Agreement, after waivers, were $386,135, $476,435 and
$468,960, respectively. For the fiscal years ended August 31, 1995, 1996 and
1997, the fees payable to CFBDS under the Administrative Services Agreement with
U.S. Treasury Reserves Portfolio were voluntarily waived.
By Agreement, the Trust acknowledges that the name "CitiFunds" is the
property of Citicorp and provides that if Citibank ceases to serve as the
Adviser of the Trust, the Trust will change its name so as to delete the word
CitiFunds. The Agreement with the Trust also provides that Citibank may permit
other investment companies in addition to the Trust to use the word "CitiFunds"
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 CFBDS. 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
CFBDS 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.
CFBDS 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 CFBDS. Subject to the obligation of CFBDS 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
CFBDS 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 CFBDS 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.
CFBDS 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, CFBDS 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 CFBDS 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, CFBDS or SFG not in
excess of the amount paid to CFBDS or SFG for its services under the applicable
Administrative Services Agreement. All such compensation is paid by CFBDS 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, CFBDS 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, 1995, 1996 and 1997,
the fees paid to the Distributor from Liquid Reserves under the Distribution
Agreement, after waivers, were $38,593, $160,755 and $50,263, respectively.
U.S. TREASURY RESERVES: For the fiscal years ended August 31, 1995, 1996
and 1997, the fees paid from U.S. Treasury Reserves to the Distributor under
the Distribution Agreement, after waivers, were $159,110, $75,602 and $33,523,
respectively.
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, 1995,
1996 and 1997, aggregate fees paid from Liquid Reserves to Shareholder Servicing
Agents, after waivers, were $305,745, $351,340 and $365,697, respectively. For
the fiscal years ended August 31, 1995, 1996 and 1997, the aggregate fees paid
from U.S. Treasury Reserves to Shareholder Servicing Agents under the Servicing
Agreements, after waivers, were $263,994, $269,240 and $232,345, 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 CFBDS 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.
Portfolio transactions may be executed with the Adviser, or with any
affiliate of the Adviser, acting either as principal or as broker, subject to
applicable law. No commissions on portfolio transactions were paid by any
Portfolio during the fiscal year ended August 31, 1997 to the Adviser or any
affiliate of the Adviser.
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 series, only shares of that
series 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 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 or
deductions 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 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, 1997, Statement of Operations for the year ended
August 31, 1997, Statement of Changes in Net Assets for the years ended August
31, 1997 and 1996, Financial Highlights for each of the years in the five-year
period ended August 31, 1997, Notes to Financial Statements and the Independent
Auditor's Report) and of Cash Reserves Portfolio (Portfolio of Investments at
August 31, 1997, Statement of Assets and Liabilities at August 31, 1997,
Statement of Operations for the year ended August 31, 1997, Statement of Changes
in Net Assets for the years ended August 31, 1997 and 1996, Financial Highlights
for each of the years in the five-year period ended August 31, 1997, 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, 1997, Statement of Operations for the year
ended August 31, 1997, Statement of Changes in Net Assets for the years ended
August 31, 1997 and 1996, Financial Highlights for each of the years in the
four-year period ended August 31, 1997, the eight months ended August 31, 1993
and the year ended December 31, 1992. Notes to Financial Statements and the
Independent Auditors' Report) and of U.S. Treasury Reserves Portfolio (Portfolio
of Investments at August 31, 1997, Statement of Assets and Liabilities at August
31, 1997, Statement of Operations for the year ended August 31, 1997, Statement
of Changes in Net Assets for the years ended August 31, 1997 and 1996, Financial
Highlights for each of the years in the four-year period ended August 31, 1997,
the eight months ended August 31, 1993, and the year ended December 31, 1992,
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 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 10043
(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>
CITIFUNDS(SM) PREMIUM LIQUID RESERVES
CITIFUNDS(SM) 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
- ---------------------------------------------------
INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS, 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
(CITIFUNDS PREMIUM LIQUID RESERVES)
Price Waterhouse LLP
160 Federal Street,
Boston, MA 02110
(CITIFUNDS PREMIUM U.S. TREASURY RESERVES)
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
- ----------------------------------------------
SHAREHOLDER SERVICING AGENTS
(See Inside of Cover)
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) FINANCIAL STATEMENTS INCLUDED IN PART A:
(i)Premium Liquid Reserves
Condensed Financial Information - Financial Highlights
for the period May 3, 1990 (commencement of
operations) to August 31, 1990 and for each of the
years in the seven-year period ended August 31, 1997.
(ii) Premium U.S. Treasury Reserves
Condensed Financial Information - Financial Highlights
for the period March 1, 1991 (commencement of
operations) to December 31, 1991, for the year ended
December 31, 1992, for the eight-month period ended
August 31, 1993 and for the years ended August 31,
1994, August 31, 1995, August 31, 1996 and August 31,
1997.
FINANCIAL STATEMENTS INCLUDED IN PART B:
(i) Premium Liquid Reserves
Statement of Assets and Liabilities at August 31, 1997*
Statement of Operations for the year ended August 31,
1997*
Statement of Changes in Net Assets for the years ended
August 31, 1997 and August 31, 1996*
Financial Highlights for each of the years in the
five-year period ended August 31, 1997*
(ii) Cash Reserves Portfolio
Portfolio of Investments at August 31, 1997*
Statement of Assets and Liabilities at August 31, 1997*
Statement of Operations for the year ended August
31, 1997*
Statement of Changes in Net Assets for the years ended
August 31, 1997 and August 31, 1996*
Financial Highlights for each of the years in the
five-year period ended August 31, 1997*
(iii) Premium U.S. Treasury Reserves
Statement of Assets and Liabilities at August 31,
1997**
Statement of Operations for the year ended August
31, 1997**
Statement of Changes in Net Assets for the years ended
August 31, 1997 and August 31, 1996**
Financial Highlights for the year ended December 31,
1992, the eight months ended August 31, 1993 and the
years ended August 31, 1994, August 31, 1995,
August 31, 1996 and August 31, 1977**
(iv) U.S. Treasury Reserves Portfolio
Portfolio of Investments at August 31, 1997**
Statement of Assets and Liabilities at August
31, 1997**
Statement of Operations for the year ended August
31, 1997**
Statement of Changes in Net Assets for the years ended
August 31, 1997 and August 31, 1996**
Financial Highlights for the year ended December 31,
1992, for the eight months ended August 31, 1993 and
for the years ended August 31, 1994, August 31, 1995,
August 31, 1996 and August 31, 1997**
- ------------------
*Incorporated by reference to the Registrant's Annual Report to Shareholders of
Premium Liquid Reserves for the fiscal year ended August 31, 1997, filed
with the Securities and Exchange Commission on the EDGAR system on October
28, 1997 (Accession Number 0000850628-97-000003).
**Incorporated by reference to the Registrant's Annual Report to Shareholders of
Premium U.S. Treasury Reserves for the fiscal year ended August 31, 1997,
filed with the Securities and Exchange Commission on the EDGAR system on
October 28, 1997 (Accession Number 0000850628-97-000003).
(b) Exhibits
*1(a) Declaration of Trust of the Registrant
*1(b) Amendments to Declaration of Trust of the Registrant
*2(a) Amended and Restated By-Laws of the Registrant
*and filed 2(b) Amendments to Amended and Restated By-Laws of the
herein Registrant
**4 Form of Certificate representing ownership of a share
of beneficial interest of the Registrant
*6 Distribution Agreement between the Registrant and
CFBDS, Inc. (formerly known as The Landmark Funds
Broker-Dealer Services, Inc.) ("CFBDS"), as distributor
*7 Custodian Contract between the Registrant and State
Street Bank and Trust Company ("State Street"), as
custodian
*9(a) Amended and Restated Administrative Services Plan of
the Registrant
*9(b) Administrative Services Agreement between the
Registrant and CFBDS, as administrator
*9(c) Sub-Administrative Services Agreement between Citibank,
N.A. and CFBDS
*9(d)(i) Form of Shareholder Servicing Agreement between the
Registrant and Citibank, N.A., as shareholder
servicing agent
*9(d)(ii) Form of Shareholder Servicing Agreement between the
Registrant and a federal savings bank, as shareholder
servicing agent
*9(d)(iii) Form of Shareholder Servicing Agreement between the
Registrant and CFBDS, as shareholder servicing agent
*9(e) Transfer Agency and Servicing Agreement between the
Registrant and State Street, as transfer agent
*9(f) Amended and Restated Exchange Privilege Agreement
between the Registrant, certain other investment
companies and CFBDS, as distributor
*10 Opinion and Consent of Counsel
11 Consents of Deloitte & Touche LLP, Price Waterhouse LLP
and Price Waterhouse, independent auditors of the
Registrant, U.S. Treasury Reserves Portfolio and Cash
Reserves Portfolio
*15 Amended and Restated Distribution Plan of the
Registrant
****25(a) Powers of Attorney for the Registrant
****25(b) Powers of Attorney for U.S. Treasury Reserves Portfolio
*** or ****25(c) Powers of Attorney for Cash Reserves Portfolio
27 Financial data schedule
- ---------------------
* Incorporated herein by reference to Post-Effective Amendment No. 8 to the
Registrant's Registration Statement on Form N-1A (File No. 33-38848) as
filed with the Securities and Exchange Commission on August 29, 1996 and
Post-Effective Amendment No. 7 to the Registrant's Registration Statement
on Form N-1A (File No. 33-28844) as filed with the Securities and Exchange
Commission on August 29, 1996.
** Information defining the rights of shareholders is contained in the
Registrant's Declaration of Trust, as amended, incorporated herein by
reference as Exhibits No. 1(a) and 1(b).
*** Incorporated herein by reference to Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form N-1A (File No. 33-38848) as
filed with the Securities and Exchange Commission on December 28, 1995 and
Post-Effective Amendment No. 6 to the Registrant's Registration Statement
on Form N-1A (File No. 33-28844) as filed with the Securities and Exchange
Commission on December 28, 1995.
****Incorporated herein by reference to Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on Form N-1A (File No. 33-38848) as
filed with the Securities and Exchange Commission on December 17, 1996.
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
Title of Class Number of Record Holders
-------------- ------------------------
Shares of Beneficial Interest As of December 19, 1997
($0.00001 par value per share)
Premium Liquid Reserves 3
Premium U.S. Treasury Reserves 3
Item 27. Indemnification.
Reference is hereby made to (a) Article V of the Registrant's
Declaration of Trust, incorporated by reference herein as an Exhibit to the
Registrant's Registration Statement on Form N-1A; (b) Section 4 of the
Distribution Agreement between the Registrant and CFBDS, incorporated by
reference herein as an Exhibit to the Registrant's Registration Statement on
Form N-1A; and (c) the undertaking of the Registrant regarding indemnification
set forth in its Registration Statement on Form N-1A.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
Citibank, N.A. ("Citibank") is a commercial bank offering a wide range of
banking and investment services to customers across the United States and around
the world. Citibank is a wholly-owned subsidiary of Citicorp, a registered bank
holding company. Citibank also serves as investment adviser to the following
registered investment companies (or series thereof): Asset Allocation Portfolios
(Large Cap Value Portfolio, Small Cap Value Portfolio, International Portfolio,
Foreign Bond Portfolio, Short-Term Portfolio and Intermediate Income Portfolio),
The Premium Portfolios (Balanced Portfolio, Large Cap Growth Portfolio,
Government Income Portfolio, International Equity Portfolio, Emerging Asian
Markets Equity Portfolio and Small Cap Growth Portfolio), Tax Free Reserves
Portfolio, Landmark Multi-State Tax Free Funds (Landmark New York Tax Free
Reserves, Landmark Connecticut Tax Free Reserves and Landmark California Tax
Free Reserves), Landmark Fixed Income Funds (Landmark Intermediate Income Fund),
Landmark Tax Free Income Funds (Landmark National Tax Free Income Fund and
Landmark New York Tax Free Income Fund), CitiFunds Institutional Trust
(CitiFunds Institutional Cash Reserves) and Variable Annuity Portfolios
(CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP
Folio 400, CitiSelect(R) VIP Folio 500 and Landmark Small Cap Equity VIP Fund).
Citibank and its affiliates manage assets in excess of $88 billion worldwide.
The principal place of business of Citibank is located at 399 Park Avenue, New
York, New York 10043.
John S. Reed is the Chairman of the Board and a Director of Citibank. The
following are Vice Chairmen of the Board and Directors of Citibank: Paul J.
Collins and William R. Rhodes. Other Directors of Citibank are D. Wayne
Calloway, former Chairman and Chief Executive Officer, PepsiCo, Inc.; John M.
Deutch, Institute Professor, Massachusetts Institute of Technology; Reuben Mark,
Chairman and Chief Executive Officer, Colgate-Palmolive Company; Richard D.
Parsons, President, Time Warner, Inc.; Rozanne L. Ridgway, Former Assistant
Secretary of State for Europe and Canada; Robert B. Shapiro, Chairman, President
and Chief Executive Officer, Monsanto Company; Frank A. Shrontz, Chairman
Emeritus, The Boeing Company; and Franklin A. Thomas, former President, The Ford
Foundation.
Each of the individuals named above is also a Director of Citicorp. In
addition, the following persons have the affiliations indicated:
D. Wayne Calloway Director, Exxon Corporation
Director, General Electric Company
Director, Retired Chairman and Chief Executive
Officer, PepsiCo, Inc.
Paul J. Collins Director, Kimberly-Clark Corporation
John M. Deutch Director, Ariad Pharmaceuticals, Inc.
Director, CMS Energy
Director, Cummins Engine Company, Inc.
Director, Schlumberger, Ltd.
Reuben Mark Director, Chairman and Chief Executive Officer
Colgate-Palmolive Company
Director, New York Stock Exchange
Director, Time Warner, Inc.
Non-Executive Director, Pearson, PLC
Richard D. Parsons Director, Federal National Mortgage Association
Director, Philip Morris Companies Incorporated
Member, Board of Representatives, Time Warner
Entertainment Company, L.P.
Director and President, Time Warner, Inc.
John S. Reed Director, Monsanto Company
Director, Philip Morris Companies
Incorporated
William R. Rhodes Director, Private Export Funding
Corporation
Rozanne L. Ridgway Director, 3M
Director, Bell Atlantic Corporation
Director, Boeing Company
Director, Emerson Electric Company
Member-International Advisory Board,
New Perspective Fund, Inc.
Director, RJR Nabisco, Inc.
Director, Sara Lee Corporation
Director, Union Carbide Corporation
Robert B. Shapiro Director, Chairman and Chief Executive
Officer, Monsanto Company
Director, Silicon Graphics
Frank A. Shrontz Director, 3M
Director, Baseball of Seattle, Inc.
Director and Chairman Emeritus, Boeing Company
Director, Boise Cascade Corp.
Director, Chevron Corporation
Franklin A. Thomas Director, Aluminum Company of America
Director, Cummins Engine Company, Inc.
Director, Lucent Technologies
Director, PepsiCo, Inc.
Item 29. Principal Underwriters.
(a) CFBDS, the Registrant's Distributor, is also the distributor for
Landmark International Equity Fund, Landmark Emerging Asian Markets Equity Fund,
Landmark Tax Free Reserves, Landmark Institutional Liquid Reserves, Landmark
Institutional U.S. Treasury Reserves, Landmark Institutional Tax Free Reserves,
CitiFunds SM Institutional Cash Reserves, Landmark Cash Reserves, Landmark U.S.
Treasury Reserves, Landmark New York Tax Free Reserves, Landmark California Tax
Free Reserves, Landmark Connecticut Tax Free Reserves, Landmark U.S. Government
Income Fund, Landmark Intermediate Income Fund, Landmark Balanced Fund, Landmark
Equity Fund, Landmark Small Cap Equity Fund, Landmark National Tax Free Income
Fund, Landmark New York Tax Free Income Fund, CitiSelect(R) VIP Folio 200,
CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP Folio 400, CitiSelect(R) VIP
Folio 500, Landmark Small Cap Equity VIP Fund, CitiSelect(R) Folio 200,
CitiSelect(R) Folio 300, CitiSelect(R) Folio 400 and CitiSelect(R) Folio 500.
CFBDS is also the placement agent for International Equity Portfolio, Balanced
Portfolio, Large Cap Growth Portfolio, Small Cap Growth Portfolio, Government
Income Portfolio, Emerging Asian Markets Equity Portfolio, Tax Free Reserves
Portfolio, Large Cap Value Portfolio, Small Cap Value Portfolio, International
Portfolio, Foreign Bond Portfolio, Short-Term Portfolio and Intermediate Income
Portfolio.
(b) The information required by this Item 29 with respect to each
director and officer of CFBDS is incorporated by reference to Schedule A of Form
BD filed by CFBDS pursuant to the Securities and Exchange Act of 1934 (File No.
8-32417).
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
NAME ADDRESS
CFBDS, Inc. 6 St. James Avenue
(administrator and distributor) Boston, MA 02116
State Street Bank and Trust Company 1776 Heritage Drive
(custodian and transfer agent) North Quincy, MA 02171
Citibank, N.A. 153 East 53rd Street
(investment adviser) New York, NY 10043
SHAREHOLDER SERVICING AGENTS
Citibank, N.A. -- The Citibank 153 East 53rd Street
Private Bank New York, NY 10043
Citibank, N.A. -- Citibank Global 153 East 53rd Street
Asset Management New York, NY 10043
Citibank, N.A. -- North American 111 Wall Street
Investor Services New York, NY 10094
CFBDS, Inc. 6 St. James Avenue
Boston, MA 02116
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus of Premium U.S. Treasury Reserves and Premium Liquid
Reserves is delivered with a copy of the Funds' latest Annual
Reports to Shareholders, upon request without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that this
Post-Effective Amendment to its Registration Statement on Form N-1A meets all of
the requirements for effectiveness pursuant to Rule 485(b) under the Securities
Act of 1933 and that the Registrant has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston and Commonwealth
of Massachusetts on the 19th day of December, 1997.
LANDMARK PREMIUM FUNDS
By: Philip W. Coolidge
----------------------
Philip W. Coolidge
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated below on December 19, 1997.
Signature Title
--------- -----
Philip W. Coolidge President, Principal Executive Officer and Trustee
- -------------------------
Philip W. Coolidge
John R. Elder Principal Accounting and Financial Officer
- -------------------------
John R. Elder
Mark T. Finn* Trustee
- -------------------------
Mark T. Finn
Riley C. Gilley* Trustee
- -------------------------
Riley C. Gilley
William S. Woods, Jr.* Trustee
- -------------------------
William S. Woods, Jr.
*By: Philip W. Coolidge
- -------------------------
Philip W. Coolidge
Executed by Philip W. Coolidge on behalf of those indicated pursuant to Powers
of Attorney.
<PAGE>
SIGNATURES
U.S. Treasury Reserves Portfolio has duly caused this Post-Effective
Amendment to the Registration Statement on Form N-1A of Landmark Premium Funds
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston and Commonwealth of Massachusetts on the 19th day of
December, 1997.
U.S. TREASURY RESERVES PORTFOLIO
By: Philip W. Coolidge
----------------------------------
Philip W. Coolidge
President
This Post-Effective Amendment to the Registration Statement on Form
N-1A of Landmark Premium Funds has been signed by the following persons in the
capacities indicated on December 19, 1997.
Signature Title
--------- -----
Philip W. Coolidge President, Principal Executive Officer and Trustee
- -------------------------
Philip W. Coolidge
John R. Elder Principal Accounting and Financial Officer
- -------------------------
John R. Elder
Elliott J. Berv* Trustee
- -------------------------
Elliott J. Berv
Mark T. Finn* Trustee
- -------------------------
Mark T. Finn
Walter E. Robb, III* Trustee
- -------------------------
Walter E. Robb, III
*By: Philip W. Coolidge
- -------------------------
Philip W. Coolidge
Executed by Philip W. Coolidge on behalf of those indicated pursuant to Powers
of Attorney.
<PAGE>
SIGNATURES
Cash Reserves Portfolio has duly caused this Post-Effective Amendment
to the Registration Statement on Form N-1A of Landmark Premium Funds to be
signed on its behalf by the undersigned, thereunto duly authorized, in Hamilton,
Bermuda on the 19th day of December, 1997.
CASH RESERVES PORTFOLIO
By: Susan Jakuboski
-----------------------------------
Susan Jakuboski, Assistant Treasurer of
Cash Reserves Portfolio
This Post-Effective Amendment to the Registration Statement on Form
N-1A of Landmark Premium Funds has been signed by the following persons in the
capacities indicated on December 19, 1997.
Signature Title
--------- -----
Philip W. Coolidge* President, Principal Executive Officer and Trustee
- -------------------------
Philip W. Coolidge
John R. Elder* Principal Accounting and Financial Officer
- -------------------------
John R. Elder
Elliott J. Berv* Trustee
- -------------------------
Elliott J. Berv
Mark T. Finn* Trustee
- -------------------------
Mark T. Finn
Walter E. Robb, III* Trustee
- -------------------------
Walter E. Robb, III
*By: Susan Jakuboski
- -------------------------
Susan Jakuboski
Executed by Susan Jakuboski on behalf of those indicated pursuant to Powers of
Attorney.
<PAGE>
EXHIBIT INDEX
Exhibit
No.: Description
- ------- -----------
2(b) Amendment to the Amended and Restated By-Laws of the Registrant
11 Consents of Deloitte & Touche LLP, Price Waterhouse LLP and
Price Waterhouse, independent auditors of the Registrant, U.S.
Treasury Reserves Portfolio and Cash Reserves Portfolio
27 Financial data schedule
<PAGE>
Exhibit 2(b)
AMENDMENT TO THE BY-LAWS OF LANDMARK FUNDS I, LANDMARK FUNDS II, LANDMARK
INTERNATIONAL FUNDS, LANDMARK FIXED INCOME FUNDS, LANDMARK TAX FREE INCOME
FUNDS, LANDMARK FUNDS III, LANDMARK PREMIUM FUNDS, LANDMARK MULTI-STATE TAX FREE
FUNDS, LANDMARK INSTITUTIONAL TRUST, LANDMARK TAX FREE RESERVES AND VARIABLE
ANNUITY PORTFOLIOS - AS ADOPTED BY THE BOARDS OF TRUSTEES ON AUGUST 8, 1997:
VOTED: That Article III, Section 4 of the By-Laws of the Trust be and
hereby is amended in its entirety to read as follows*:
Section 4. Proxies. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no
proxy shall be voted at any meeting unless it shall have been placed on
file with the Secretary, or with such other officer or agent of the
Trust as the Secretary may direct, for verification prior to the time at
which such vote shall be taken. [Any Shareholder may give authorization
through telephonic or telegraphic methods of communication for another
person to execute his or her proxy.] Pursuant to a vote of a majority of
the Trustees, proxies may be solicited in the name of one or more
Trustees or one or more of the officers of the Trust. Only Shareholders
of record shall be entitled to vote. Each full Share shall be entitled
to one vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held jointly by several persons, any one of
them may vote at any meeting in person or by proxy in respect of such
Share, but if more than one of them shall be present at such meeting in
person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be executed by or on behalf
of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise, and the burden of proving invalidity shall rest on the
challenger. If the holder of any such Share is a minor or a person of
unsound mind, and subject to guardianship or to the legal control of any
other person as regards the charge or management of such Share, such
Share may be voted by such guardian or such other person appointed or
having such control, and such vote may be given in person or by proxy.
[Unless otherwise specifically limited by their terms, proxies shall
entitle the holder thereof to vote at any adjournment of a meeting.]
*New language is in [brackets].
<PAGE>
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post Effective Amendment
No. 10 to Registration Statement No. 33-38848 of CitiFunds Premium Trust
(formerly known as Landmark Premium Funds) of our reports each dated October 6,
1997 appearing in the annual report to shareholders for the year ended August
31, 1997 of CitiFunds Premium U.S. Treasury Reserves (a series of CitiFunds
Premium Trust) and U.S. Treasury Reserves Portfolio, and to the references to us
under the headings "Condensed Financial Information" in the Prospectus and
"Independent Accountants and Financial Statements" in the Statement of
Additional Information, both of which are part of such Registration Statement.
Deloitte & Touche LLP
Boston, Massachusetts
December 23, 1997
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 9 to the registration statement on Form N-1A (the "Registration
Statement") of CitiFunds Premium Trust (formerly Landmark Premium Funds) of our
report dated October 6, 1997, relating to the financial statements and financial
highlights of CitiFunds Premium Liquid Reserves (formerly Premium Liquid
Reserves) appearing in the August 31, 1997 Annual Report of CitiFunds Premium
Liquid Reserves (formerly Premium Liquid Reserves), which are also incorporated
by reference into the Registration Statement. We also consent to the references
to us under the heading "Condensed Financial Information" in the Prospectus and
under the heading "Independent Accountants and Financial Statements" in the
Statement of Additional Information.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
December 23, 1997
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 9 to the registration statement on Form N-1A (the "Registration
Statement") of CitiFunds Premium Trust (formerly Landmark Premium Funds) of our
report dated October 6, 1997, relating to the financial statements and financial
highlights of CitiFunds Premium Liquid Reserves (formerly Premium Liquid
Reserves) appearing in the August 31, 1997 Annual Report of CitiFunds Premium
Liquid Reserves (formerly Premium Liquid Reserves), which are also incorporated
by reference into the Registration Statement. We also consent to the references
to us under the heading "Condensed Financial Information" in the Prospectus and
under the heading "Independent Accountants and Financial Statements" in the
Statement of Additional Information.
/s/ Price Waterhouse
Price Waterhouse
Toronto, Ontario
December 23, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000850628
<NAME> PREMIUM LIQUID RESERVES
<SERIES>
<NUMBER> 001
<NAME> LANDMARK PREMIUM FUNDS
<S> <C>
<PERIOD-TYPE> 1-YEAR
<FISCAL-YEAR-END> Aug-31-1997
<PERIOD-END> Aug-31-1997
<INVESTMENTS-AT-COST> 388,793,962
<INVESTMENTS-AT-VALUE> 388,793,962
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 388,793,962
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<OTHER-ITEMS-LIABILITIES> 883,938
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<SHARES-COMMON-PRIOR> 380,302,545
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<NET-ASSETS> 387,910,024
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 20,669,471
<OTHER-INCOME> 0
<EXPENSES-NET> 1,465,741
<NET-INVESTMENT-INCOME> 19,203,730
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 19,203,730
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (19,203,730)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,343,549,929
<NUMBER-OF-SHARES-REDEEMED> (2,346,738,058)
<SHARES-REINVESTED> 10,795,608
<NET-CHANGE-IN-ASSETS> 7,607,479
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,489,349
<AVERAGE-NET-ASSETS> 232,345,496
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
