<PAGE>
Tax Free Reserves Portfolio
- - --------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS August 31, 1995
Principal
Amount
Issuer (000's omitted) Value
- - --------------------------------------------------------------------------
TAX-EXEMPT COMMERCIAL
PAPER--7.7%
Denver, Colorado City and County
Airport Revenue, AMT,
4.30%, due 9/8/95............... $ 2,000 $ 2,000,000
Halifax County, Virginia Industrial
Development Authority, AMT,
3.95%, due 11/7/95.............. 4,900 4,900,000
Houston, TX Airport, AMT,
3.80%, due 9/7/95............... 4,000 4,000,000
Illinois Developmental Finance
Authority Pollution Control,
3.70%, due 11/16/95............. 2,700 2,700,000
Lower Colorado River Authority
Service,
3.90%, due 9/12/95.............. 5,000 5,000,000
North Carolina Eastern
Municipal Power,
3.25%, due 9/6/95............... 1,000 1,000,000
Saint Lucie County, Florida
Pollution Control Authority,
4.15%, due 11/28/95............. 3,000 3,000,000
Texas Municipal Power
Agency Revenue,
9.50%, due 9/1/95............... 650 663,000
Wake County, North Carolina
Industrial Facilities Authority,
3.75%, due 10/18/95............. 6,825 6,825,000
------------
30,088,000
------------
GENERAL OBLIGATION
NOTES--1.5%
Cobb County, GA School District,
5.50%, due 2/1/96............... $ 1,470 $ 1,480,200
Iowa School Corps.,
4.75%, due 6/28/96.............. 4,500 4,532,049
------------
6,012,249
------------
ANNUAL AND SEMI-ANNUAL
TENDER REVENUE BONDS AND
NOTES (PUTS)--33.6%
Anchorage, Alaska Hospital Revenue,
9.625%, due 10/1/95............. $ 2,000 $ 2,048,063
Arkansas State Financial Authority
Single Family,
3.80%, due 3/1/96............... 3,000 3,000,000
Arkansas State Financial Authority
Single Family, AMT,
3.90%, due 3/1/96............... 2,240 2,240,000
Atlanta, Georgia Urban Residential,
3.70%, due 11/1/95.............. 6,300 6,300,000
Aurora IL Single Family Mortgage
Revenue, AMT,
4.26%, due 12/15/95............. 4,725 4,725,000
Clackmas County, Oregon Hospital
Facilities Authority,
4.20%, due 10/2/95.............. 2,445 2,445,000
Council Bluffs, Iowa Revenue,
4.30%, due 10/1/95.............. 4,415 4,415,000
Dallas, TX,
6.70%, due 5/1/97............... 3,000 3,055,590
Dallas Texas WaterWorks &
Sewer System Revenue,
8.30%, due 10/1/95.............. 2,225 2,231,727
East Baton Rouge,
Louisiana Single Family, AMT,
3.85%, due 10/5/95 ............. 4,100 4,100,000
East Baton Rouge,
Louisiana Single Family,
3.75%, due 10/5/95 ............. 4,500 4,500,000
Fairfax County, Virginia,
8.00%, due 11/1/95 ............. 1,000 1,017,976
Florida State, Sunshine
Skyway Revenue,
7.25%, due 6/1/96............... 500 522,464
Fort Worth, TX Water & Sewer
Revenue,
5.20%, due 2/15/96.............. 1,000 1,006,661
Fulton, Illinois Solid Waste
Disposal Facility, AMT,
4.35%, due 9/7/95............... 2,000 2,000,000
Fulton County, Georgia Building
Authority Revenue,
7.50%, due 1/1/96............... 2,070 2,132,990
Harris County, Texas Flood Control,
9.60%, due 10/1/95.............. 2,000 2,007,996
Hawaii State,
6.00%, due 11/1/95.............. 1,000 1,002,337
Hawaii State Department of
Budget and Finance,
3.75%, due 3/1/96............... 3,710 3,710,000
Indiana State Single Family
Housing, AMT,
4.00%, due 7/1/96............... 2,500 2,500,000
Intermountain Utah Power Revenue,
4.15%, due 9/15/95.............. 5,500 5,500,000
Iowa, Finance Authority Single
Family Revenue,
4.80%, due 2/22/96.............. 4,510 4,529,852
Iowa Municipalities Workers,
4.10%, due 7/1/96............... 3,000 3,000,000
Jacksonville, Florida Electric
Authority,
6.80%, due 10/1/95.............. 1,000 1,016,955
Jacksonville, Florida Electric
Authority,
7.375%, due 10/1/95 ............ 1,275 1,297,102
Jacksonville, Florida Electric
Authority,
9.50%, due 10/1/95 ............. 1,750 1,791,896
Lower Colorado River Authority,
Texas Revenue,
9.50%, due 1/1/96............... 3,000 3,111,556
Lower Colorado River Authority,
Texas Revenue,
8.375%, due 1/1/96.............. 1,910 1,975,814
Lower Neches Valley Authority,
TX,
3.75%, due 2/15/96.............. 3,000 3,000,000
Manatee County, Florida Housing
Finance, AMT,
4.06%, due 10/16/95............. 3,670 3,670,000
Marion County, Tennessee Industrial
Environmental Development
Authority, AMT, 3.95%, due 2/1/96 6,000 6,000,000
Massachusetts Bay Transportation
Authority,
4.40%, due 9/1/95............... 1,000 1,000,000
Massachusetts State College Building,
7.25%, due 5/1/96 .............. 1,850 1,922,919
Michigan State, 5.00%, due 9/29/95. 6,500 6,505,886
Milwaukee, Wisconsin Metropolitan
Sewer District, 9.00%, due 5/1/96 6,000 6,202,434
Milwaukee, Wisconsin,
4.75%, due 6/15/96.............. 1,835 1,849,008
New Jersey State,
7.00%, due 4/1/96............... 1,500 1,524,904
Northborough, Texas Municipal
Utility District,
11.375%, due 9/1/95............. 500 500,000
Oklahoma State Water Reserve Board,
4.50%, due 9/1/95............... 5,000 5,000,000
Pennsylvania Intergovernmental Corp,
5.20%, due 6/15/96.............. 1,750 1,768,726
Pennsylvania State Higher
Educational Revenue,
3.90%, due 2/26/96.............. 3,000 3,000,000
Seattle, Washington Metropolitan
Municipality, 7.875%, due 1/1/96 1,000 1,032,884
South Columbia Basin
Irrigation District,
9.00%, due 12/1/95.............. 1,000 1,004,973
Southern Minnesota Municipal Power
Agency, 7.125%, due 1/1/96...... 1,000 1,029,805
Tacoma, Washington Department
of Public Utilities,
9.375%, due 1/1/96.............. 1,000 1,036,880
Travis County, Texas,
10.35%, due 3/1/96.............. 1,000 1,029,659
Washington State,
8.75%, due 9/1/95............... 1,700 1,700,000
Washington State,
7.00%, due 10/1/95.............. 1,000 1,001,906
Washington State Housing
Finance Commission,
4.10%, due 6/1/96............... 1,000 1,000,211
Washington Suburban Sanitation
District, MD,
4.25%, due 6/1/96............... 1,750 1,757,996
Western Minnesota, Municipal Power
Agency Supply,
9.50%, due 1/1/96............... 1,500 1,556,233
Wil County, Illinois Community
Unit School District,
9.80%, due 12/1/95.............. 1,000 1,012,526
------------
132,290,929
------------
REVENUE, TAX, BOND AND
TAX REVENUE ANTICIPATION
NOTES--7.6%
California State,
5.75%, due 4/25/96.............. $10,310 $ 10,448,332
Colorado State General Fund Revenue,
4.50%, due 6/27/96.............. 5,250 5,283,175
Cranston, Rhode Island,
4.70%, due 11/15/95............. 7,000 7,008,591
Milwaukee, Wisconsin,
5.50%, due 2/22/96.............. 1,000 1,003,320
Texas State,
4.75%, due 8/30/96.............. 4,500 4,531,960
Weber County, UT,
4.50%, due 12/28/95............. 1,750 1,753,328
------------
30,028,706
------------
VARIABLE RATE DEMAND
NOTES*--52.0%
Angelina & Neches River
Authority Texas, due 5/1/14..... $ 1,000 $ 1,000,000
Baltimore County, Maryland,
due 7/1/16...................... 2,000 2,000,000
Baltimore, Maryland, Port
Facilities Authority,
due 10/14/11.................... 1,000 1,000,000
Beaufort County, North Carolina,
Pollution Control Revenue,
Texas Gulf Inc., due 12/1/00.... 1,000 1,000,000
Beltrami County, Minnesota
Environmental Control,
due 12/1/21..................... 500 500,000
Bexar County Texas Health Facilities
Development, due 7/11/11........ 1,000 1,000,000
Brazos River Harbor, Texas,
due 12/1/19..................... 1,100 1,100,000
Brazos, Texas, Harbor Industrial
Development Authority,
due 12/1/13..................... 2,900 2,900,000
Buffalo County, Nebraska
Hospital Authority,
due 1/1/16...................... 1,000 1,000,000
California Statewide Community
Development, due 11/1/15........ 1,560 1,560,000
California Statewide Community
Development, due 7/1/15......... 600 600,000
Carlton, Wisconsin Environmental
Improvement, due 10/1/00........ 1,475 1,475,000
Cherokee County, South Carolina
Industrial Revenue, AMT,
due 8/1/19...................... 200 200,000
Chicago, IL, due 1/1/10............ 4,000 4,000,000
Clark County, Nevada, Airport
Improvement Revenue,
due 7/1/12...................... 400 400,000
Clinton Township, Michigan Economic
Development Corp., due 5/1/13... 500 500,000
Colorado Health Facilities
Authority Revenue, due 5/15/20 200 200,000
Colorado Housing Finance Authority,
due 12/1/05..................... 3,400 3,400,000
Columbia, Missouri, Water & Electric
Revenue, due 8/15/99............ 500 500,000
Connecticut State Pollution
Development Authority, due 9/1/28 1,700 1,700,000
Connecticut State, Special Assessment
Revenue, due 11/1/01............ 4,100 4,100,000
Connecticut State, Special Tax
Obligation, due 12/1/10......... 3,700 3,700,000
Coweta County, Georgia Industrial
Development Authority, due 3/1/09 900 900,000
Dade County FL Spa Revenue,
due 8/1/15...................... 7,000 7,000,000
District of Columbia,
due 10/1/07..................... 900 900,000
District of Columbia,
due 10/1/15 .................... 500 500,000
Fayetteville, Arkansas Industrial
Development, AMT, due 12/1/04... 1,100 1,100,000
Florida Housing Finance Authority,
due 12/1/08..................... 600 600,000
Floyd County, Georgia Development
Authority, due 12/1/15.......... 4,875 4,875,000
Forsyth County GA Development
Authority Industrial, due 1/1/07 2,000 2,000,000
Fort Wayne, Indiana Economic
Development Revenue,
due 12/1/03 .................... 1,000 1,000,000
Frankfort Industrial Economic
Development Revenue, due 1/1/98 1,200 1,200,000
Grand Rapids MI Water
Supply System, due 1/1/20....... 5,100 5,100,000
Grapevine, Texas Industrial
Development Corp., due 3/1/10 600 600,000
Gwinett County, Georgia Industrial
Development Revenue, AMT,
due 6/1/05...................... 1,500 1,500,000
Hammond, Indiana Pollution
Control Revenue, due 2/1/22..... 1,500 1,500,000
Hopkinsville, Kentucky Industrial
Building Revenue, AMT,
due 4/1/04...................... 1,800 1,800,000
Illinois Development Financial
Authority Pollution Control,
due 11/1/12 .................... 1,000 1,000,000
Illinois Educational Facilities
Authority, due 3/1/27........... 2,000 2,000,000
Illinois Educational Facilities
Authority, due 9/1/25........... 1,000 1,000,000
Illinois Finance Development
Authority, AMT, due 3/1/17...... 800 800,000
Illinois Finance Development
Authority, AMT, due 3/1/17...... 2,500 2,500,000
Illinois Health Facilities
Authority, due 6/1/06........... 1,700 1,700,000
Iowa Finance Authority,
due 11/1/15 .................... 3,000 3,000,000
Jackson County, Mississippi
Pollution Control, due 12/1/16.. 2,400 2,400,000
Jackson County, Mississippi Port
Facility Revenue, due 6/1/23.... 7,150 7,150,000
Jefferson Parish, Louisiana Hospital,
District 2, due 12/1/15 ........ 2,700 2,700,000
Kansas City MO Industrial Development
Hospital, due 10/15/14.......... 700 700,000
Lincoln County WY Pollution
Control, due 8/1/15............. 600 600,000
Lincoln County WY Pollution
Control, due 7/1/17............. 900 900,000
Los Angeles, California Community
Redevelopment Agency,
due 12/1/05 .................... 2,300 2,300,000
Louisa County, Virginia Industrial
Development Authority,
due 1/1/20...................... 5,000 5,000,000
Louisiana State Offshore Term,
due 9/1/06...................... 3,300 3,300,000
Louisiana State Recovery District
Tax, due 7/1/98................. 1,000 1,000,000
Lynchburg, Virginia Industrial
Development Authority,
due 12/1/25..................... 3,400 3,400,000
Maine Health & Higher Educational
Facilities, due 7/1/25.......... 7,000 7,000,000
Maricopa County, Arizona Pollution
Control Revenue, due 5/1/29..... 1,300 1,300,000
Mecklenburg, North Carolina
Pollution Control Authority,
due 12/1/04..................... 1,000 1,000,000
Memphis, Tennessee, due 7/1/04..... 2,900 2,900,000
Missouri State Health and Educational
Facilities Authority, due 12/1/19 1,300 1,300,000
Monroe County, Mississippi Economic
Development Corp., due 10/1/24 2,200 2,200,000
Moon, Pennsylvania Industrial
Development Authority,
due 11/1/15..................... 1,000 1,000,000
Nash County, North Carolina
Industrial Facilities and
Pollution Control Revenue,
due 12/1/14..................... 1,000 1,000,000
North Alabama Environmental Impact
Authority, due 12/1/00.......... 400 400,000
North Carolina Medical Care
Community, due 9/1/02........... 2,300 2,300,000
North Carolina Medical Care
Hospital, due 10/1/20........... 3,100 3,100,000
North Carolina Medical Care
Hospital, due 6/1/22............ 4,700 4,700,000
North Texas Higher Education
Student Loan, due 3/1/05........ 2,800 2,800,000
Oklahoma City, Oklahoma Industrial
& Cultural Revenue, due 6/1/06 1,100 1,100,000
Orange County, FL Industrial
Development Authority,
due 1/1/11...................... 1,650 1,650,000
Peninsula Ports Authority, VA
Revenue, due 12/1/05............ 500 500,000
Pennsylvania State Higher Education
Student Loan, AMT, due 12/1/24 3,100 3,100,000
Pennsylvania State Higher Education
Student Loan, due 7/1/18........ 2,000 2,000,000
Person County, North Carolina
Pollution Control Authority,
due 11/1/19 .................... 3,000 3,000,000
Port St. Helens, OR Pollution
Control, due 4/10/10.............. 1,600 1,600,000
Purdue University, Indiana,
due 7/1/17...................... 1,400 1,400,000
Purdue University, Indiana,
due 7/1/20...................... 2,000 2,000,000
Putnam County, West Virginia
Industrial Development
Revenue, due 10/1/11............ 600 600,000
Quakertown, PA Hospital Authority,
due 7/1/05...................... 1,500 1,500,000
Rhode Island State Industrial
Facilities Corp., AMT,
due 6/1/05...................... 5,500 5,500,000
Sacramento County, California,
due 9/15/07..................... 1,500 1,500,000
Savanna, Illinois Industrial
Development Revenue,
due 6/1/04...................... 600 600,000
St. Charles County, Missouri
Industrial Development Authority,
due 12/1/07..................... 1,000 1,000,000
Tipton Industrial Economic
Development Revenue,
due 7/1/22...................... 1,105 1,105,000
Tracy, California,
due 5/1/15...................... 300 300,000
Uinta County, Wyoming Pollution
Control Authority, due 8/15/20 2,000 2,000,000
Uinta County, Wyoming Pollution
Control Authority,
due 12/1/22 700 700,000
University Athletic Association, Inc.,
due 2/1/20...................... 2,800 2,800,000
University of Arkansas,
due 12/1/19..................... 9,100 9,100,000
Utah State Board of Regents
Student Loan, due 11/1/00....... 2,800 2,800,000
Utah State Board of Regents Student
Loan, AMT, due 11/1/25.......... 8,300 8,300,000
Valdez, Alaska Marine Term
Revenue, due 10/1/25............ 700 700,000
Washington Public Power Supply,
due 7/1/18...................... 2,295 2,295,000
Washington State Health Care
Facilities, due 10/1/05......... 5,100 5,100,000
West Feliciana Parish, LA,
due 12/1/15....................... 1,300 1,300,000
West Virginia State Hospital
Finance Authority,
due 12/1/25..................... 2,800 2,800,000
Wisconsin State, AMT,
due 5/1/04...................... 1,000 1,000,000
Wisconsin State,
due 6/1/06...................... 900 900,000
------------
205,110,000
------------
Total Investments at Amortized Cost. 102.4% $403,529,884
Other Assets, Less Liabilities..... (2.4) (9,307,633)
----- ------------
Net Assets......................... 100.0% $394,222,251
===== ============
AMT-Subject to Alternative Minimum Tax
* Variable rate demand notes have a demand feature under which the fund could
tender them back to the issuer on no more than 7 days' notice
See notes to financial statements
<PAGE>
Tax Free Reserves Portfolio
- - --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES August 31, 1995
ASSETS:
Investments at amortized cost (Note 1A)........................... $403,529,884
Cash.............................................................. 36,927
Interest receivable............................................... 3,176,569
Prepaid expenses and other assets................................. 692
------------
Total assets.................................................. 406,744,072
------------
LIABILITIES:
Payable for investments purchased................................. 12,412,858
Payable to affiliate-- investment advisory fees (Note 2A)......... 66,006
Accrued expenses and other liabilities............................ 42,957
------------
Total liabilities............................................. 12,521,821
------------
NET ASSETS........................................................ $394,222,251
============
REPRESENTED BY:
Capital paid-in for beneficial interests.......................... $394,222,251
============
Tax Free Reserves Portfolio
- - --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1995
INVESTMENT INCOME (Note 1B)........................ $11,858,169
EXPENSES:
Investment Advisory fees (Note 2A)................. $613,607
Administrative fees (Note 2B)...................... 153,402
Custodian fees..................................... 150,009
Auditing fees...................................... 23,400
Legal fees......................................... 11,531
Trustee fees....................................... 9,940
Miscellaneous...................................... 11,798
--------
Total.......................................... 973,687
-----------
Net investment income.......................... 10,884,482
NET REALIZED GAIN ON INVESTMENTS................... 75,464
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................................... $10,959,946
===========
See notes to financial statements
<PAGE>
Tax Free Reserves Portfolio
- - --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
-----------------------
1995 1994
-------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income........................... $ 10,884,482 $ 5,749,881
Net realized gain (loss) on investments......... 75,464 (1,494)
------------- -----------
Increase in net assets from operations...... 10,959,946 5,748,387
------------- -----------
CAPITAL TRANSACTIONS:
Proceeds from contributions..................... 487,327,869 354,949,138
Value of withdrawals............................ (337,173,146) (355,183,409)
------------- ------------
Net increase (decrease) in net assets
from capital transactions................... 150,154,723 (234,271)
------------- ------------
NET INCREASE IN NET ASSETS ..................... 161,114,669 5,514,116
NET ASSETS:
Beginning of period............................. 233,107,582 227,593,466
------------ ------------
End of period................................... $394,222,251 $233,107,582
============ ============
<TABLE>
<CAPTION>
Tax Free Reserves Portfolio
- - -------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FEBRUARY 5, 1991
YEAR ENDED AUGUST 31, (COMMENCEMENT
________________________________________ OF OPERATIONS) TO
1995 1994 1993 1992 AUGUST 31, 1991
-------- -------- -------- -------- ---------------
RATIOS/SUPPLEMENTAL DATA:
<S> <C> <C> <C> <C> <C>
Net Assets, end of period (000 omitted).... $394,222 $233,108 $277,593 $212,502 $200,361
Ratio of expenses to average net assets.... 0.32% 0.31% 0.31% 0.31% 0.35%*
Ratio of net investment income to average
net assets................................ 3.55% 2.33% 2.35% 3.43% 4.41%*
Note: If Agents of the Portfolio had not voluntarily waived a portion of their fees during the periods indicated,
the ratios would have been as follows:
RATIOS:
Expenses to average net assets............. 0.32% 0.32% 0.33% 0.35% 0.36%*
Net investment income to average net assets 3.55% 2.32% 2.32% 3.39% 4.41%*
*Annualized
See notes to financial statements
</TABLE>
<PAGE>
Tax Free Reserves Portfolio
- - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
Tax Free Reserves Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940, as amended, as a no-load, non-diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Declaration of Trust permits the Trustees to issue
beneficial interests in the Portfolio. The Landmark Funds Broker-Dealer
Services, Inc. ("LFBDS") acts as the Portfolio's Administrator. Citibank, N.A.
("Citibank") acts as the Investment Adviser. The significant accounting policies
consistently followed by the Portfolio are in conformity with generally accepted
accounting principles and are as follows:
A. VALUATION OF INVESTMENTS -- Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
The Portfolio's use of amortized cost is subject to the Portfolio's compliance
with certain conditions as specified under Rule 2a-7 of the Investment Company
Act of 1940.
B. INTEREST INCOME -- Interest income consists of interest accrued, less the
amortization of any premium and accretion of market discount on the investments
of the Portfolio.
C. FEDERAL INCOME TAXES -- The Portfolio's policy is to comply with the
applicable provisions of the Internal Revenue Code. Accordingly, no provision
for federal income taxes is necessary.
D. OTHER -- Purchases, maturities and sales, of money market instruments are
accounted for on the date of the transaction.
(2) INVESTMENT ADVISORY FEE AND ADMINISTRATIVE FEE
A. INVESTMENT ADVISORY FEE -- The investment advisory fee paid to Citibank, as
compensation for overall investment management services, amounted to $613,607,
for the year ended August 31, 1995. The investment advisory fee is computed at
the annual rate of 0.20% of the Portfolio's average daily net assets.
B. ADMINISTRATIVE FEE -- Under the terms of an Administrative Services
Agreement, the administrative fee payable to the Administrator, as compensation
for overall administrative services and general office facilities, is computed
at the annual rate of 0.05% of the Portfolio's average daily net assets and
amounted to $153,402, for the year ended August 31, 1995. The Portfolio pays no
compensation directly to any Trustee or any officer who is affiliated with the
Administrator, all of whom receive remuneration for their services to the
Portfolio from the Administrator or its affiliates. Certain of the officers and
a Trustee of the Portfolio are officers and a director of the Administrator or
its affiliates.
(3) INVESTMENT TRANSACTIONS
Purchases, and maturities and sales of money market instruments, exclusive of
securities purchased subject to repurchase agreements, aggregated $1,273,554,752
and $1,104,331,376, respectively, for the year ended August 31, 1995.
(4) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost of investment securities owned at August 31, 1995, for federal income
tax purposes, amounted to $403,529,884.
(5) LINE OF CREDIT
The Portfolio, along with other Landmark Funds, entered into an agreement with a
bank which allows the Funds collectively to borrow up to $40 million for
temporary or emergency purposes. Interest on borrowings, if any, is charged to
the specific fund executing the borrowing at the base rate of the bank. In
addition, the $15 million committed portion of the line of credit requires a
quarterly payment of a commitment fee based on the average daily unused portion
of the line of credit. For the year ended August 31, 1995, the commitment fee
allocated to the Portfolio was $2,026. Since the line of credit was established,
there have been no borrowings.
<PAGE>
Tax Free Reserves Portfolio
- - --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of
Tax Free Reserves Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Tax Free Reserves Portfolio (a New
York Trust) as of August 31, 1995, the related statement of operations for the
year then ended, the statement of changes in net assets for the years ended
August 31, 1995 and 1994 and the financial highlights for each of the years in
the four year period ended August 31, 1995 and the period from February 5, 1991
(Commencement of Operations) to August 31, 1991. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion of these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
August 31, 1995, by correspondence with the Custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Tax Free Reserves
Portfolio at August 31, 1995, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 9, 1995
