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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 30, 1996
FILE NO. 811-6118
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 8
TAX FREE RESERVES PORTFOLIO
(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)
WITH A COPY TO
ROGER P. JOSEPH, ESQ.
BINGHAM, DANA & GOULD LLP
150 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
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EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant to
Section 8(b) of the Investment Company Act of 1940. However, beneficial
interests in the Registrant are not being registered under the Securities Act of
1933 (the "1933 Act") since such interests will be issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Registrant may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any beneficial interests in the Registrant.
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PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to paragraph 4
of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant.
Tax Free Reserves Portfolio (the "Portfolio") is 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 on March 1, 1990. Beneficial
interests in the Portfolio are issued solely in private placement transactions
which do not involve any "public offering" within the meaning of Section 4(2) of
the Securities Act of 1933, as amended (the "1933 Act"). Investments in the
Portfolio may only be made by investment companies, insurance company separate
accounts, common or commingled trust funds or similar organizations or entities
which are "accredited investors" within the meaning of Regulation D under the
1933 Act. This registration statement does not constitute an offer to sell, or
the solicitation of an offer to buy, any "security" within the meaning of the
1933 Act.
INVESTMENT OBJECTIVES
The investment objectives of the Portfolio are to provide investors in the
Portfolio with high levels of current income exempt from federal income taxes,
preservation of capital and liquidity. The investment objectives of the
Portfolio may be changed without the approval of the investors in the Portfolio,
but not without written notice thereof to the investors in the Portfolio at
least 30 days prior to implementing the change. Of course, there can be no
assurance that the Portfolio will achieve its investment objectives.
INVESTMENT POLICIES
The Portfolio seeks its objectives by investing primarily in short-term,
high quality fixed rate and variable rate obligations issued by or on behalf of
states and municipal governments and their authorities, agencies,
instrumentalities and political subdivisions and by other qualifying issuers,
the interest on which is exempt from federal income taxes (these securities are
referred to as "Municipal Obligations"). As a fundamental policy, the Portfolio
invests at least 80% of its assets, under normal circumstances, in the following
types of Municipal Obligations and in participation interests in these
obligations issued by banks, insurance companies or other financial institutions
("Participation Interests"):
(1) Municipal bonds that at the date of purchase are rated Aa or better
by Moody's Investors Service, Inc. ("Moody's") or AA or better by
Standard & Poor's Rating Group ("S&P") or Fitch Investors Service,
Inc. ("Fitch"), or are unrated but are of comparable quality as
determined by Citibank, N.A. ("Citibank"), the Portfolio's
investment adviser (the "Adviser"), on the basis of a credit
evaluation of the obligor, or of the bank issuing the Participation
Interest or guarantee of the bonds, or of any insurance issued in
support of the bonds or the Participation Interest;
(2) Municipal notes that at the date of purchase are rated MIG 2/VMIG 2
or better by Moody's, SP-2 or better by S&P or F-2 or better by
Fitch, or are unrated but are of comparable quality as determined by
the Adviser; and
(3) Municipal commercial paper that at the date of purchase is rated
Prime-2 or better by Moody's, A-2 or better by S&P or F-2 or better
by Fitch, or is unrated but is of comparable quality as determined
by the Adviser.
Although the Portfolio attempts to invest all of its assets in Municipal
Obligations, the Portfolio may invest up to 20% of its assets in taxable
securities (such as U.S. Government obligations or certificates of deposit of
domestic banks). Any taxable securities in which the Portfolio invests are of
comparable quality to the Municipal Obligations in which the Portfolio invests.
In determining the tax status of interest on Municipal Obligations, the
Adviser relies on opinions of bond counsel who may be counsel to the issuer.
CERTAIN ADDITIONAL INVESTMENT POLICIES
90-day Average Maturity. All of the Portfolio's investments mature in 397
days or less from the date of purchase, have a variable rate of interest
adjusted no less frequently than every 397 days, or are purchased pursuant to a
repurchase agreement which provides for repurchase by the seller within 397 days
from the date of purchase. The average maturity of the Portfolio's investments
(on a dollar-weighted basis) is 90 days or less. All of the Portfolio's
investments are "eligible securities" within the meaning of Rule 2a-7 under the
Investment Company Act of 1940, as amended (the "1940 Act"), and are determined
by the Adviser, pursuant to power delegated by the Portfolio's Board of
Trustees, to present minimal credit risks. Investment in high quality,
short-term instruments may, in many circumstances, result in a lower yield than
would be available from investment in instruments with a lower quality or a
longer term.
Permitted Investments. Uninvested cash reserves may be held temporarily
for the Portfolio pending investment. The Portfolio may borrow from banks up to
15% of its total assets for temporary or emergency purposes. For more
information regarding permitted investments and investment practices, see
"Permitted Investments and Investment Practices" below. The Portfolio will not
necessarily invest or engage in each of the investments and investment practices
described in "Permitted Investments and Investment Practices," but reserves the
right to do so.
Investment Restrictions. Part B of this Registration Statement contains a
list of specific investment restrictions which govern the Portfolio's investment
policies. Except as otherwise indicated, the Portfolio's investment restrictions
and policies may be changed without investor 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 Portfolio's securities will not be a violation of policy.
Brokerage Transactions. The primary consideration in placing the
Portfolio's 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.
CERTAIN RISK CONSIDERATIONS
The risks of investing in the Portfolio vary depending upon the nature of
the securities held, and the investment practices employed, on its behalf.
Certain of these risks are described below.
Non-diversified Status. The Portfolio is a non-diversified mutual fund.
This means that it is not subject to any statutory restrictions under the 1940
Act limiting the investment of its assets in one or relatively few issuers
(although certain diversification requirements are imposed by the Internal
Revenue Code). Since the Portfolio may invest a relatively high percentage of
its assets in the obligations of a limited number of issuers, the value of
shares of the Portfolio may be more susceptible to any single economic,
political or regulatory occurrence than the value of shares of a diversified
mutual fund would be. The Portfolio also may invest 25% or more of its assets in
securities the issuers of which are located in the same state or the interest on
which is paid from revenues of similar type projects or that are otherwise
related in such a way that a single economic, business or political development
or change affecting one of the securities would also affect other securities.
Investors should consider the greater risk inherent in these policies when
compared with a more diversified mutual fund.
"Concentration" in Participation Interests. The Portfolio invests more
than 25% of its assets in Participation Interests in Municipal Obligations which
are secured by bank letters of credit or guarantees. Banks are subject to
extensive governmental regulations 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
under a letter of credit or guarantee.
PERMITTED INVESTMENTS AND INVESTMENT PRACTICES
Municipal Bonds. Municipal bonds are debt obligations of states, cities,
municipalities and municipal agencies and authorities which generally have a
maturity at the time of issue of one year or more and which are issued to raise
funds for various public purposes, such as construction of a wide range of
public facilities, refunding outstanding obligations or obtaining funds for
institutions and facilities. The two principal classifications of municipal
bonds are "general obligation" and "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest. The principal of and interest on revenue
bonds are payable from the income of specific projects or authorities and
generally are not supported by the issuer's general power to levy taxes. In some
cases, revenues derived from specific taxes are pledged to support payments on a
revenue bond.
In addition, certain kinds of industrial development bonds ("IDBs") are
issued by or on behalf of public authorities to provide funding for various
privately operated industrial facilities, such as warehouse, office, plant and
store facilities and environmental and pollution control facilities. IDBs are,
in most cases, revenue bonds. The payment of the principal and interest on IDBs
usually depends solely on the ability of the user of the facilities financed by
the bonds or other guarantor to meet its financial obligations and, in certain
instances, the pledge of real and personal property as security for payment.
Many IDBs may not be readily marketable; however, the IDBs or the participation
certificates in IDBs purchased by the Portfolio will have liquidity because they
generally will be supported by demand features to "high quality" banks,
insurance companies or other financial institutions.
Municipal Notes. There are four major varieties of state and municipal
notes: Tax and Revenue Anticipation Notes ("TRANs"); Tax Anticipation Notes
("TANs"); Revenue Anticipation Notes ("RANs"); and Bond Anticipation Notes
("BANs"). TRANs, TANs and RANs are issued by states, municipalities and other
tax-exempt issuers to finance short-term cash needs or, occasionally, to finance
construction. Most TRANs, TANs and RANs are general obligations of the issuing
entity payable from taxes or designated revenues, respectively, expected to be
received within the related fiscal period. BANs are issued with the expectation
that principal and interest of the maturing notes will be paid out of proceeds
from notes or bonds to be issued concurrently or at a later date. BANs are
issued most frequently by both general obligation and revenue bond issuers
usually to finance such items as land acquisition, facility acquisition and/or
construction and capital improvement projects.
Variable Rate Instruments and Participation Interests. Variable rate
instruments provide for a periodic adjustment in the interest rate paid on the
instrument and usually permit the holder to receive payment of principal and
accrued interest upon a specified number of days' notice. The Portfolio may
invest in participation interests in Municipal Obligations owned by a bank,
insurance company or other financial institution or affiliated organization
("Participation Interests"). A variable rate instrument or a Participation
Interest may be backed by an irrevocable letter of credit or guarantee of, or a
right to put to, a bank, or an insurance policy of an insurance company. See
"Stand-by Commitments." Purchase of a Participation Interest may involve the
risk that the Portfolio will not be deemed to be the owner of the underlying
Municipal Obligation for purposes of the ability to claim tax exemption of
interest paid on that Municipal Obligation. If interest rates rise or fall, the
rates payable on variable rate instruments will generally be readjusted. As a
result variable rate instruments do not offer the same opportunity for capital
appreciation or loss as fixed rate instruments.
Stand-by Commitments. When the Portfolio purchases Municipal Obligations
it may also acquire stand-by commitments from banks with respect to such
Municipal Obligations. The Portfolio also may acquire stand-by commitments from
broker-dealers. Under a stand-by commitment, a bank or broker-dealer agrees to
purchase at the Portfolio's option a specified Municipal Obligation at a
specified price. A stand-by commitment is the equivalent of a "put" option with
respect to a particular Municipal Obligation. The Portfolio intends to acquire
stand-by commitments solely to facilitate liquidity. Stand-by commitments are
subject to certain risks, which include the ability of the issuer of the
commitment to pay for the Municipal Obligations at the time the commitment is
exercised, the fact that the commitment is not marketable, and that the maturity
of the underlying security will generally be different from that of the
commitment.
"When-Issued" Securities. In order to ensure the availability of suitable
securities, the Portfolio may purchase securities on a "when-issued" or on a
"forward delivery" basis, which means that the securities would be delivered to
the Portfolio at a future date beyond customary settlement time. Under normal
circumstances, the Portfolio takes delivery of the securities. In general, the
purchaser does not pay for the securities until received and does not start
earning interest until the contractual settlement date. While awaiting delivery
of the securities, the Portfolio establishes a segregated account consisting of
cash, cash equivalents or high quality debt securities equal to the amount of
the Portfolio's commitments to purchase "when-issued" securities. An increase in
the percentage of the Portfolio's assets committed to the purchase of securities
on a "when-issued" basis may increase the volatility of its net asset value.
Repurchase Agreements. The Portfolio may enter into repurchase agreements
in order to earn a return on temporarily available cash. 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. Repurchase agreements may
involve Municipal Obligations or other securities.
Restricted Securities. The Portfolio may purchase restricted securities
that are not registered for sale to the general public. Provided that a dealer
or institutional trading market in such securities exists, these restricted
securities are not treated as illiquid securities for purposes of the
Portfolio's investment limitations. Institutional trading in restricted
securities is relatively new, and the liquidity of the Portfolio's investments
could be impaired if trading does not develop or declines.
Private Placements and Illiquid Investments. The Portfolio may invest up
to 10% of its net assets in securities for which there is no readily available
market. These illiquid securities may include privately placed restricted
securities for which no institutional market exists. The absence of a trading
market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for the
Portfolio to sell them promptly at an acceptable price.
Item 5. Management.
TRUSTEES
The Portfolio's Board of Trustees provides broad supervision over the
affairs of the Portfolio. A majority of the Portfolio's Trustees are not
affiliated with the Adviser. More information on the Trustees and officers of
the Portfolio appears in Part B of this Registration Statement.
INVESTMENT ADVISER
Citibank. Citibank, N.A. ("Citibank") is the Portfolio's investment
adviser (the "Adviser"). The address of Citibank is 153 East 53rd Street, New
York, New York 10043. The Portfolio draws on the strength and experience of
Citibank. Citibank offers a wide range of banking and investment services to
customers across the United States and throughout the world, and has been
managing money since 1822. Its portfolio managers are responsible for investing
in money market, equity and fixed income securities. Citibank and its affiliates
manage more than $83 billion in assets worldwide. Citibank is a wholly-owned
subsidiary of Citicorp.
Citibank manages the assets of the Portfolio pursuant to an Investment
Advisory Agreement. Subject to policies set by the Portfolio's Trustees,
Citibank makes investment decisions for the Portfolio.
Advisory Fees. For its services under the Investment Advisory Agreement,
the Adviser receives investment advisory fees, which are accrued daily and paid
monthly, of 0.20% of the Portfolio's average daily net assets on an annualized
basis for the Portfolio's then-current fiscal year. The Adviser has voluntarily
agreed to waive a portion of its investment advisory fee from the Portfolio.
For the fiscal year ended August 31, 1996, the investment advisory fees
paid to Citibank, after waivers, were 0.19% of the 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 Portfolio, 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 Portfolio 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 Portfolio. Citibank believes that its
services under the Investment Advisory Agreement and the activities performed by
it or its affiliates as 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 and sub-administrative activities by
banks. State laws on this issue may differ from applicable federal law and banks
and financial institutions may be required to register as dealers pursuant to
state securities laws. Changes in either federal or state statutes or
regulations, or in their interpretations, could prevent Citibank or its
affiliates from continuing to perform these services for the Portfolio. If
Citibank or its affiliates were to be prevented from acting as the Adviser or
sub-administrator, the Portfolio would seek alternative means for obtaining
these services. The Portfolio does not expect that investors would suffer any
adverse financial consequences as a result of any such occurrence.
ADMINISTRATIVE SERVICES PLAN
The Portfolio has an Administrative Services Plan which provides that the
Portfolio may obtain the services of an administrator, a transfer agent and a
custodian, and may enter into agreements providing for the payment of fees for
such services. Under the Administrative Services Plan, fees paid to the
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
"Administrator" and "Transfer Agent, Custodian and Fund Accountant" below.
ADMINISTRATOR
The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS"), the Portfolio's
administrator (the "Administrator"), supervises the overall administration of
the Portfolio. The address of LFBDS is 6 St. James Avenue, Boston, Massachusetts
02116. LFBDS provides certain administrative services to the Portfolio under an
administrative services agreement ("Administrative Services Agreement"). These
administrative services include providing general office facilities, supervising
the overall administration of the Portfolio, and providing persons satisfactory
to the Board of Trustees to serve as Trustees and officers of the Portfolio.
These Trustees and officers may be directors, officers or employees of LFBDS or
its affiliates.
For these services, the Administrator receives fees, accrued daily and
paid monthly, of 0.05% of the assets of the Portfolio on an annualized basis for
the Portfolio's then-current fiscal year. The Administrator has voluntarily
agreed to waive a portion of the fees payable to it.
LFBDS is a wholly-owned subsidiary of Signature Financial Group, Inc.
SUB-ADMINISTRATOR
Pursuant to a sub-administrative services agreement, Citibank performs
such sub-administrative duties for the Portfolio as from time to time are agreed
upon by Citibank and LFBDS. Citibank's compensation as sub-administrator is paid
by LFBDS.
TRANSFER AGENT, CUSTODIAN AND FUND ACCOUNTANT
The Portfolio's transfer agent and dividend paying agent is State Street
Bank and Trust Company ("State Street"). State Street acts as the custodian of
the Portfolio's assets. State Street also provides fund accounting services to
the Portfolio and calculates the daily net asset value for the Portfolio. The
address of State Street is 225 Franklin Street, Boston, Massachusetts 02110.
EXPENSES
The Portfolio pays all of its expenses, including the compensation of its
Trustees who are not affiliated with LFBDS; governmental fees; interest charges;
taxes; membership dues in the Investment Company Institute allocable to the
Portfolio; fees and expenses of independent auditors, of legal counsel and of
any transfer agent, custodian, registrar or dividend disbursing agent of the
Portfolio; insurance premiums; expenses of calculating the net asset value of
and the net income on the Portfolio; expenses connected with the execution,
recording and settlement of security transactions; fees and expenses of the
custodian for all services to the Portfolio, including safekeeping of funds and
securities and maintaining required books and accounts; expenses of preparing
and mailing reports to investors and to governmental officers and commissions;
and the advisory fees payable to the Adviser and the administrative fees payable
to the Administrator. For the fiscal year ended August 31, 1996, the Portfolio's
total expenses were .30% of its average net assets.
Item 6. Capital Stock and Other Securities.
Investments in the Portfolio have no preference, pre-emptive or conversion
rights and are fully paid and non-assessable, except as set forth below. The
Portfolio is not required and has no current intention to hold annual meetings
of investors, but the Portfolio will hold special meetings of investors when in
the judgment of the Trustees it is necessary or desirable to submit matters for
an investor vote. Investors have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees by a
specified number of investors) the right to communicate with other investors in
connection with requesting a meeting of investors for the purpose of removing
one or more Trustees. Investors also have the right to remove one or more
Trustees without a meeting by a declaration in writing by a specified number of
investors. Upon liquidation or dissolution of the Portfolio, investors would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.
The Portfolio is organized as a trust under the laws of the State of New
York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Each investor is entitled to a vote in
proportion to the value of its investment in the Portfolio. Investments in the
Portfolio may not be transferred, but an investor may withdraw all or any
portion of its investment at any time at net asset value. Investors in the
Portfolio (e.g., investment companies, insurance company separate accounts and
common and commingled trust funds) are each liable for all obligations of the
Portfolio. However, it is not expected that the liabilities of the Portfolio
would ever exceed its assets.
The net income of the Portfolio is determined each day on which the New
York Stock Exchange is open for trading (a "Business Day") (and on such other
days as are deemed necessary in order to comply with Rule 22c-1 under the 1940
Act). This determination is made once during each such day as of 12:00 noon,
Eastern time. All the net income of the Portfolio, as defined below, so
determined is allocated pro rata among the investors in the Portfolio at the
time of such determination.
For this purpose the net income of the Portfolio (from the time of the
immediately preceding determination thereof) shall consist of (i) all income
accrued, less the amortization of any premium, on the assets of the Portfolio,
less (ii) all actual and accrued expenses of the Portfolio determined in
accordance with generally accepted accounting principles. Interest income
includes discount earned (including both original issue and market discount) on
discount paper accrued ratably to the date of maturity and any net realized
gains or losses on the assets of the Portfolio.
It is intended that the Portfolio's assets, income and distributions will
be managed in such a way that an investor in the Portfolio is able to satisfy
the requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended, assuming that the investor invested all of its investable assets in the
Portfolio.
Item 7. Purchase of Securities.
Beneficial interests in the Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This registration statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the 1933
Act.
An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received by the Portfolio. The net asset value of the Portfolio is determined
once during each Business Day as of 12:00 noon, Eastern time. Securities are
valued at amortized cost, which the Trustees of the Portfolio have determined in
good faith constitutes fair value for the purposes of complying with the 1940
Act. This valuation method will continue to be used until such time as the
Trustees of the Portfolio determine that it does not constitute fair value for
such purposes.
There is no minimum initial or subsequent investment in the Portfolio.
However, since the Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the yield on its assets, investments
must be made in federal funds (i.e., monies credited to the account of the
Portfolio's custodian bank by a Federal Reserve Bank).
The Portfolio reserves the right to cease accepting investments at any
time or to reject any investment order.
The exclusive placement agent for the Portfolio is LFBDS. LFBDS receives
no additional compensation for serving as the exclusive placement agent for the
Portfolio.
Item 8. Redemption or Repurchase.
An investor in the Portfolio may withdraw all or any portion of its
investment at any time at the net asset value next determined after a withdrawal
request in proper form is furnished by the investor to the Portfolio. The
proceeds of a withdrawal will be paid by the Portfolio in federal funds normally
on the Business Day the withdrawal is effected, but in any event within seven
days. Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on such Exchange is restricted, or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
Item 9. Pending Legal Proceedings.
Not applicable.
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PART B
Item 10. Cover Page.
Not applicable.
Item 11. Table of Contents. Page
General Information and History B-1
Investment Objectives and Policies B-1
Management B-13
Control Persons and Principal Holders of Securities B-16
Investment Advisory and Other Services B-16
Brokerage Allocation and Other Practices B-19
Capital Stock and Other Securities B-20
Purchase, Redemption and Pricing of Securities B-21
Tax Status B-23
Underwriters B-24
Calculations of Performance Data B-24
Financial Statements B-25
Item 12. General Information and History.
Not applicable.
Item 13. Investment Objectives and Policies.
The investment objectives of Tax Free Reserves Portfolio (the "Portfolio")
are to provide its investors with high levels of current income which is exempt
from federal income taxes, preservation of capital and liquidity. There can, of
course, be no assurance that the Portfolio will achieve its investment
objectives. The investment objectives of the Portfolio may be changed without
approval of the investors in the Portfolio.
The Portfolio seeks its investment objectives by investing primarily in
short-term, high quality fixed rate and variable rate obligations issued by or
on behalf of states and municipal governments, their authorities, agencies,
instrumentalities and political subdivisions and other qualifying issuers, the
interest on which is exempt from federal personal income taxes, including
participation interests in such obligations issued by banks, insurance companies
or other financial institutions. (Such securities, whether or not the interest
thereon is subject to the federal alternative minimum tax, are referred to
herein as "Municipal Obligations"). In determining the tax status of interest on
Municipal Obligations, the Adviser relies on opinions of bond counsel who may be
counsel to the issuer. The Portfolio may hold uninvested cash reserves pending
investment. The Portfolio's investments may include "when-issued" or "forward
delivery" Municipal Obligations, stand-by commitments and taxable repurchase
agreements. Although the Portfolio will attempt to invest 100% of its assets in
Municipal Obligations, the Portfolio reserves the right to invest up to 20% of
the value of its total assets in securities the interest income on which is
subject to federal, state and local income tax or the federal alternative
minimum tax. The Portfolio invests more than 25% of its assets in participation
certificates issued by banks in industrial development bonds and other Municipal
Obligations. In view of this "concentration" in these bank participation
certificates, an investment in Fund shares should be made with an understanding
of the characteristics of the banking industry and the risks which such an
investment may entail. (See "Variable Rate Instruments and Participation
Interests" below.)
All investments by the Portfolio mature or are deemed to mature within 397
days from the date of acquisition and the average maturity of the Portfolio's
securities (on a dollar-weighted basis) is 90 days or less. The maturities of
variable rate instruments held by the Portfolio are deemed to be the longer of
the notice period, or the period remaining until the next interest rate
adjustment, although the stated maturities may be in excess of 397 days. (See
"Variable Rate Instruments and Participation Interests" below.) All investments
by the Portfolio are "eligible securities" (rated in one of the two highest
rating categories for short-term obligations by at least two nationally
recognized statistical rating organizations (each a "NRSRO") assigning a rating
to the security or issuer or, if only one NRSRO assigned a rating, that NRSRO,
or, in the case of an investment which is not rated, of comparable quality as
determined by or on behalf of the Portfolio's Board of Trustees on the basis of
its credit evaluation of the obligor or of the bank issuing a participation
interest, letter of credit or guarantee, or insurance issued in support of the
Municipal Obligations or participation interests). (See "Variable Rate
Instruments and Participation Interests" below.) Such instruments may produce a
lower yield than would be available from less highly rated instruments. The
Portfolio's Board of Trustees has determined that Municipal Obligations which
are backed by the full faith and credit of the U.S. Government are considered to
have a rating equivalent to Moody's Aaa.
As a fundamental policy, the investments of the Portfolio will be made
primarily (i.e., at least 80% of its assets under normal circumstances) in:
(1) Municipal bonds with remaining maturities of one year or less that are
rated within the Aaa or Aa categories at the date of purchase by Moody's
Investors Service, Inc. ("Moody's") or within the AAA or AA categories by
Standard & Poor's Ratings Group ("Standard & Poor's") or Fitch Investors
Service, Inc.("Fitch") or, if not rated by these rating agencies, are of
comparable quality as determined by or on behalf of the Board of Trustees of the
Portfolio on the basis of the credit evaluation of the obligor on the bonds or
of the bank issuing a participation interest or guarantee or of any insurance
issued in support of the bonds or the participation interests.
(2) Municipal notes with remaining maturities of one year or less that at
the date of purchase are rated MIG-1/VMIG 1 or MIG-2/VMIG 2 by Moody's, SP-1+,
SP-1 or SP-2 by Standard & Poor's or F-1+,F-1 or F-2 by Fitch or, if not rated
by these rating agencies, are of comparable quality as determined by or on
behalf of the Board of Trustees of the Portfolio. The principal kinds of
municipal notes are tax and revenue anticipation notes, tax anticipation notes,
bond anticipation notes and revenue anticipation notes. Notes sold in
anticipation of collection of taxes, a bond sale or receipt of other revenues
are usually general obligations of the issuing municipality or agency.
(3) Municipal commercial paper that is rated Prime-1 or Prime-2 by
Moody's, A-1+, A-1 or A-2 by Standard & Poor's or F-1+, F-1 or F-2 by Fitch or,
if not rated by these rating agencies, is of comparable quality as determined by
or on behalf of the Board of Trustees of the Portfolio. Issues of municipal
commercial paper typically represent very short-term, unsecured, negotiable
promissory notes. These obligations are often issued to meet seasonal working
capital needs of municipalities or to provide interim construction financing and
are paid from general revenues of municipalities or are refinanced with
long-term debt. In most cases municipal commercial paper is backed by letters of
credit, lending agreements, note repurchase agreements or other credit facility
agreements offered by banks or other institutions which may be called upon in
the event of default by the issuer of the commercial paper.
Subsequent to its purchase by the Portfolio, a rated Municipal Obligation
may cease to be rated or its rating may be reduced below the minimum required
for purchase by the Portfolio. Neither event requires sale of such Municipal
Obligation by the Portfolio (other than variable rate instruments which must be
sold if they are not "high quality"), but the Adviser considers such event in
determining whether the Portfolio should continue to hold the Municipal
Obligation. To the extent that the ratings given to the Municipal Obligations or
other securities held by the Portfolio are altered due to changes in any of the
Moody's, Standard & Poor's or Fitch ratings systems, the Adviser adopts such
changed ratings as standards for its future investments in accordance with the
investment policies contained herein. Certain Municipal Obligations issued by
instrumentalities of the U.S. Government are not backed by the full faith and
credit of the U.S. Treasury but only by the creditworthiness of the
instrumentality. The Portfolio's Board of Trustees has determined that any
Municipal Obligation that depends directly, or indirectly through a government
insurance program or other guarantee, on the full faith and credit of the U.S.
Government is considered to have a rating in the highest category. Where
necessary to ensure that the Municipal Obligations are "eligible securities"
(i.e., within the two highest ratings assigned by Moody's, Standard & Poor's or
Fitch), or where the obligations are not freely transferable, the Portfolio will
require that the obligation to pay the principal and accrued interest be backed
by an unconditional irrevocable bank letter of credit, a guarantee, insurance
policy or other comparable undertaking of an approved financial institution.
The Portfolio may invest 25% or more of its assets in securities that are
related in such a way that an economic, business or political development or
change affecting one of the securities would also affect the other securities
including, for example, securities the interest upon which is paid from revenues
of similar type projects, or securities the issuers of which are located in the
same state.
LOANS OF SECURITIES
The Portfolio may lend its securities to brokers, dealers and financial
institutions, provided (1) the loan is secured continuously by collateral
consisting of U.S. Government securities or cash or letters of credit which is
marked to market daily to ensure that each loan is fully collateralized at all
times; (2) the Portfolio may at any time call the loan and obtain the return of
the securities loaned within five business days; (3) the Portfolio will receive
any interest or dividends paid on the securities loaned; and (4) the aggregate
market value of securities loaned will not at any time exceed 33 1/3% of the net
assets of the Portfolio.
The Portfolio will earn income for lending its securities because cash
collateral pursuant to these loans will be invested in short term money market
instruments. In connection with lending securities, the Portfolio may pay
reasonable finders, administrative and custodial fees. Loans of securities
involve a risk that the borrower may fail to return the securities or may fail
to provide additional collateral.
Although the Portfolio reserves the right to lend its securities, it has
no current intention of doing so in the foreseeable future.
VARIABLE RATE INSTRUMENTS AND PARTICIPATION INTERESTS
Variable rate instruments that the Portfolio may purchase are tax-exempt
Municipal Obligations (including municipal notes and municipal commercial paper)
that provide for a periodic adjustment in the interest rate paid on the
instrument and permit the holder to receive payment upon a specified number of
days' notice of the unpaid principal balance plus accrued interest either from
the issuer or by drawing on a bank letter of credit, a guarantee or an insurance
policy issued with respect to such instrument or by tendering or "putting" such
instrument to a third party.
The variable rate instruments in which the Portfolio's assets may be
invested are payable upon a specified period of notice which may range from one
day up to one year. The terms of the instruments provide that interest rates are
adjustable at intervals ranging from daily to up to one year and the adjustments
are based upon the prime rate of a bank or other appropriate interest rate
adjustment index as provided in the respective instruments. The Portfolio will
decide which variable rate instruments it will purchase in accordance with
procedures prescribed by its Board of Trustees to minimize credit risks. An
unrated variable rate instrument may be determined to meet the Portfolio's high
quality criteria if it is backed by a letter of credit or guarantee or a right
to tender or put the instrument to a third party or is insured by an insurer
that meets the high quality criteria for the Portfolio discussed above or on the
basis of a credit evaluation of the underlying obligor. If the credit of the
obligor is of "high quality," no credit support from a bank or other financial
institution will be necessary. Each unrated variable rate instrument will be
evaluated on a quarterly basis to determine that it continues to meet the
Portfolio's high quality criteria. If an instrument is ever deemed to be of less
than high quality, the Portfolio either will sell it in the market or exercise
the liquidity feature described below.
Variable rate instruments in which the Portfolio's assets may be invested
include participation interests in variable rate, tax-exempt Municipal
Obligations owned by a bank, insurance company or other financial institution or
affiliated organizations. Although the rate of the underlying Municipal
Obligations may be fixed, the terms of the participation interest may result in
the Portfolio receiving a variable rate on its investment. A participation
interest gives the Portfolio an undivided interest in the Municipal Obligation
in the proportion that the Portfolio's participation bears to the total
principal amount of the Municipal Obligation and provides the liquidity feature.
Each participation is backed by an irrevocable letter of credit or guarantee of,
or a right to put to, a bank (which may be the bank issuing the participation
interest, a bank issuing a confirming letter of credit to that of the issuing
bank, or a bank serving as agent of the issuing bank with respect to the
possible repurchase of the participation interest) or insurance policy of an
insurance company that has been determined by or on behalf of the Board of
Trustees of the Portfolio to meet the prescribed quality standards of the
Portfolio. The Portfolio has the right to sell the participation interest back
to the institution or draw on the letter of credit or insurance after a
specified period of notice, for all or any part of the full principal amount of
the Portfolio's participation in the security, plus accrued interest. The
Portfolio intends to exercise the liquidity feature only (1) upon a default
under the terms of the bond documents, (2) as needed to provide liquidity to the
Portfolio in order to facilitate withdrawals from the Portfolio, or (3) to
maintain a high quality investment portfolio. In some cases, this liquidity
feature may not be exercisable in the event of a default on the underlying
Municipal Obligations; in these cases, the underlying Municipal Obligations must
meet the Portfolio's high quality credit standards at the time of purchase of
the participation interest. Issuers of participation interests will retain a
service and letter of credit fee and a fee for providing the liquidity feature,
in an amount equal to the excess of the interest paid on the instruments over
the negotiated yield at which the participations were purchased on behalf of the
Portfolio. The total fees generally range from 5% to 15% of the applicable prime
rate or other interest rate index. With respect to insurance, the Portfolio will
attempt to have the issuer of the participation interest bear the cost of the
insurance, although the Portfolio retains the option to purchase insurance if
necessary, in which case the cost of insurance will be an expense of the
Portfolio subject to the expense limitation of 2 1/2% of the first $30 million
of the Portfolio's average net assets, 2% of the next $70 million and 1 1/2% of
the Portfolio's average net assets in excess of $100 million. The Adviser has
been instructed by the Portfolio's Board of Trustees to monitor continually the
pricing, quality and liquidity of the variable rate instruments held by the
Portfolio, including the participation interests, on the basis of published
financial information and reports of the rating agencies and other bank
analytical services to which the Portfolio may subscribe. Although participation
interests may be sold, the Portfolio intends to hold them until maturity, except
under the circumstances stated above.
In view of the "concentration" of the Portfolio in bank participation
interests in Municipal Obligations secured by bank letters of credit or
guarantees, an investment in the Portfolio should be made with an understanding
of the characteristics of the banking industry and the risks which such an
investment may entail. Banks are subject to extensive governmental regulations
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 operations 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 under a letter of credit.
Periods of high inflation and periods of economic slowdown, together with
the fiscal measures adopted to attempt to deal with them, have brought wide
fluctuations in interest rates. When interest rates rise, the value of fixed
income securities generally falls; and vice versa. While this is true for
variable rate instruments generally, the variable rate nature of the underlying
instruments should minimize these changes in value. Accordingly, as interest
rates decrease or increase, the potential for capital appreciation and the risk
of potential capital depreciation is less than would be the case with a
portfolio of fixed income securities. Because the adjustment of interest rates
on the variable rate instruments is made in relation to movements of various
interest rate adjustment indices, the variable rate instruments are not
comparable to long-term fixed rate securities. Accordingly, interest rates on
the variable rate instruments may be higher or lower than current market rates
for fixed rate obligations of comparable quality with similar maturities.
Because of the variable rate nature of the instruments, when prevailing
interest rates decline the Portfolio's yield will decline and its shareholders
will forgo the opportunity for capital appreciation. On the other hand, during
periods when prevailing interest rates increase, the Portfolio's yield will
increase and its shareholders will have reduced risk of capital depreciation.
For purposes of determining whether a variable rate instrument held by the
Portfolio matures within 397 days from the date of its acquisition, the maturity
of the instrument will be deemed to be the longer of (1) the period required
before the Portfolio is entitled to receive payment of the principal amount of
the instrument after notice or (2) the period remaining until the instrument's
next interest rate adjustment. The maturity of a variable rate instrument will
be determined in the same manner for purposes of computing the Portfolio's
dollar-weighted average portfolio maturity.
"WHEN-ISSUED" SECURITIES
New issues of certain Municipal Obligations frequently are offered on a
"when-issued" or "forward delivery" basis. The payment obligation and the
interest rate that will be received on the Municipal Obligations are each fixed
at the time the buyer enters into the commitment although settlement, i.e.,
delivery of and payment for the Municipal Obligations, takes place beyond
customary settlement time (but normally within 45 days after the date of the
Portfolio's commitment to purchase). Although the Portfolio will only make
commitments to purchase "when-issued" or "forward delivery" Municipal
Obligations with the intention of actually acquiring them, the Portfolio may
sell these securities before the settlement date if deemed advisable by the
Adviser.
Municipal Obligations purchased on a "when-issued" or "forward delivery"
basis and the securities held by the Portfolio are subject to changes in value
(both generally changing in the same way, that is, both experiencing
appreciation when interest rates decline and depreciation when interest rates
rise) based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates. Purchasing
Municipal Obligations on a "when-issued" or "forward delivery" basis can involve
a risk that the yields available in the market on the settlement date may
actually be higher or lower than those obtained in the transaction itself. A
separate account of the Portfolio consisting of cash or liquid debt securities
equal to the amount of the "when-issued" or "forward delivery" commitments will
be established at the Portfolio's custodian bank. For the purpose of determining
the adequacy of the securities in the account, the deposited securities will be
valued at market value. If the market value of such securities declines,
additional cash or highly liquid securities will be placed in the account daily
so that the value of the account will equal the amount of the Portfolio's
commitments. On the settlement date of the "when-issued" or "forward delivery"
securities, the Portfolio's obligations will be met from then-available cash
flow, sale of securities held in the separate account, sale of other securities
or, although not normally expected, from sale of the "when-issued" or "forward
delivery" securities themselves (which may have a value greater or lesser than
the Portfolio's payment obligations). Sale of securities to meet such
obligations may result in the realization of capital gains or losses, which are
not exempt from federal income tax.
STAND-BY COMMITMENTS
When the Portfolio purchases Municipal Obligations it may also acquire
stand-by commitments from banks with respect to such Municipal Obligations. The
Portfolio also may acquire stand-by commitments from broker-dealers. Under the
stand-by commitment, a bank or broker-dealer agrees to purchase at the
Portfolio's option a specified Municipal Obligation at a specified price. A
stand-by commitment is the equivalent of a "put" option acquired by the
Portfolio with respect to a particular Municipal Obligation held in the
Portfolio's portfolio.
The amount payable to the Portfolio upon the exercise of a stand-by
commitment normally would be (1) the acquisition cost of the Municipal
Obligation (excluding any accrued interest paid on the acquisition), less any
amortized market premium or plus any amortized market or original issue discount
during the period the Portfolio owned the security, plus (2) all interest
accrued on the security since the last interest payment date during the period
the security was owned by the Portfolio. Absent unusual circumstances relating
to a change in market value, the Portfolio would value the underlying Municipal
Obligation at amortized cost. Accordingly, the amount payable by a bank or
dealer during the time a stand-by commitment is exercisable would be
substantially the same as the market value of the underlying Municipal
Obligation. The Portfolio values stand-by commitments at zero for purposes of
computing the value of its net assets.
The stand-by commitments that the Portfolio may enter into are subject to
certain risks, which include the ability of the issuer of the commitment to pay
for the securities at the time the commitment is exercised and the fact that the
commitment is not marketable by the Portfolio and the maturity of the underlying
security will generally be different from that of the commitment.
TAXABLE SECURITIES
Although the Portfolio attempts to invest 100% of its net assets in
tax-exempt Municipal Obligations, the Portfolio may invest up to 20% of the
value of the Portfolio's net assets in securities of the kind described below,
the interest income on which is subject to federal income tax, under any one or
more of the following circumstances: (a) pending investment in the type of
securities described above; and (b) to maintain liquidity for the purpose of
meeting anticipated withdrawals. In addition, the Portfolio may temporarily
invest more than 20% of its assets in such taxable securities when, in the
opinion of the Adviser, it is advisable to do so because of adverse market
conditions affecting the market for Municipal Obligations. The kinds of taxable
securities in which the Portfolio's assets may be invested are limited to the
following short-term, fixed-income securities (maturing in 397 days or less from
the time of purchase): (1) obligations of the U.S. Government or its agencies,
instrumentalities or authorities; (2) commercial paper rated Prime-1 or Prime-2
by Moody's, A-1+, A-1 or A-2 by Standard & Poor's or F-1+, F-1 or F-2 by Fitch;
(3) certificates of deposit of U.S. banks with assets of $1 billion or more; and
(4) repurchase agreements with respect to any Municipal Obligations or other
securities which the Portfolio is permitted to own. The Portfolio's assets may
also be invested in Municipal Obligations which are subject to an alternative
minimum tax.
REPURCHASE AGREEMENTS
The Portfolio may invest assets in instruments subject to repurchase
agreements only with member banks of the Federal Reserve System or "primary
dealers" (as designated by the Federal Reserve Bank of New York) in U.S.
Government securities. Under the terms of a typical repurchase agreement, the
Portfolio would acquire an underlying debt instrument for a relatively short
period (usually not more than one week) subject to an obligation of the seller
to repurchase and the Portfolio to resell the instrument at a fixed price and
time, thereby determining the yield during the Portfolio's holding period. This
results in a fixed rate of return insulated from market fluctuations during such
period. A repurchase agreement is subject to the risk that the seller may fail
to repurchase the security. Repurchase agreements may be deemed to be loans
under the Investment Company Act of 1940, as amended (the "1940 Act"). All
repurchase agreements entered into by the Portfolio shall be fully
collateralized at all times during the period of the agreement in that the value
of the underlying security shall be at least equal to the amount of the loan,
including the accrued interest thereon, and the Portfolio or its custodian or
sub-custodian shall have possession of the collateral, which the Portfolio's
Board of Trustees believes will give it a valid, perfected security interest in
the collateral. Whether a repurchase agreement is the purchase and sale of a
security or a collateralized loan has not been definitively established. This
might become an issue in the event of the bankruptcy of the other party to the
transaction. In the event of default by the seller under a repurchase agreement
construed to be a collateralized loan, the underlying securities are not owned
by the Portfolio but only constitute collateral for the seller's obligation to
pay the repurchase price. Therefore, the Portfolio may suffer time delays and
incur costs in connection with the disposition of the collateral. The
Portfolio's Board of Trustees believes that the collateral underlying repurchase
agreements may be more susceptible to claims of the seller's creditors than
would be the case with securities owned by the Portfolio. Repurchase agreements
will give rise to income which will not qualify as tax-exempt income when
distributed by the Portfolio. The Portfolio will not invest in a repurchase
agreement maturing in more than seven days if any such investment together with
illiquid securities held by the Portfolio exceed 10% of the Portfolio's total
net assets. Repurchase agreements are also subject to the same risks described
herein with respect to stand-by commitments.
INVESTMENT RESTRICTIONS
The Portfolio has adopted the following policies which may not be changed
without approval by a "majority of the outstanding voting securities" of the
Portfolio, which as used in this Registration Statement means the vote of the
lesser of (i) 67% or more of the outstanding voting securities of the Portfolio
present at a meeting if the holders of more than 50% of the outstanding voting
securities of the Portfolio are present or represented by proxy, or (ii) more
than 50% of the outstanding voting securities of the Portfolio.
The Portfolio may not:
(1) borrow money, except that as a temporary measure for extraordinary or
emergency purposes the Portfolio may borrow from banks in an amount not to
exceed 1/3 of the value of the net assets of the Portfolio, including the amount
borrowed (moreover, the Portfolio may not purchase any securities at any time at
which borrowings exceed 5% of its total assets (taken at market value))(it is
intended that the Portfolio would borrow money only from banks and only to
accommodate requests for withdrawal of all or a portion of a beneficial interest
in the Portfolio while effecting an orderly liquidation of securities); for
additional related restrictions, see clause (i) under the caption
"Non-Fundamental Restrictions" below;
(2) purchase any security or evidence of interest therein on margin,
except that 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 insofar as 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 the Portfolio, but not in excess of 33 1/3% of the
Portfolio's net assets, (b) through the use of fixed time deposits or repurchase
agreements or the purchase of short term obligations, or (c) by purchasing all
or a portion of an issue of debt securities of types commonly distributed
privately to financial institutions; for purposes of this paragraph (4) the
purchase of short term commercial paper or a portion of an issue of debt
securities which are part of an issue to the public shall not be considered the
making of a loan; for additional related restrictions, see clause (x) under the
caption "Non-Fundamental Restrictions" below;
(5) purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein), interests
in oil, gas or mineral leases, commodities or commodity contracts in the
ordinary course of business (the Portfolio reserves the freedom of action to
hold and to sell real estate acquired as the result of ownership of securities
by the Portfolio);
(6) concentrate its investments in any particular industry, but if it is
deemed appropriate for the achievement of its investment objective, up to 25% of
the assets of the Portfolio (taken at market value at the time of each
investment) may be invested in any one industry, except that the Portfolio will
invest at least 25% of its assets and may invest up to 100% of its assets in
bank obligations; or
(7) issue any senior security (as that term is defined in the 1940 Act) if
such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, except as appropriate to evidence a debt
incurred without violating the investment restriction in paragraph (1) above.
Non-Fundamental Restrictions
The Portfolio does not as a matter of operating policy:
(i) borrow money for any purpose in excess of 10% of its total assets
(taken at cost) (moreover, the Portfolio will not purchase any securities at any
time at which borrowings exceed 5% of its total assets (taken at market value)),
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10%
of its net assets (taken at market value),
(iii) sell any security which it does not own unless by virtue of its
ownership of other securities the Portfolio has at the time of sale a right to
obtain securities, without payment of further consideration, equivalent in kind
and amount to the securities sold; provided, that if such right is conditional
the sale is made upon the same conditions,
(iv) invest for the purpose of exercising control or management,
(v) purchase securities issued by any registered investment company except
by purchase in the open market where no commission or profit to a sponsor or
dealer results from such purchase other than the customary broker's commission,
or except when such purchase, though not made in the open market, is part of a
plan of merger or consolidation; provided, however, that the Portfolio will not
purchase the securities of any registered investment company if such purchase at
the time thereof would cause more than 10% of the total assets of the Portfolio
(taken at the greater of cost or market value) to be invested in the securities
of such issuers or would cause more than 3% of the outstanding voting securities
of any such issuer to be held by the Portfolio; and provided, further, that the
Portfolio shall not purchase securities issued by any open-end investment
company,
(vi) taken together with any investments described in clause (x) below,
invest more than 10% of its net assets in securities that are not readily
marketable, including debt securities for which there is no established market
and fixed time deposits and repurchase agreements maturing in more than seven
days,
(vii) purchase securities of any issuer if such purchase at the time
thereof would cause the Portfolio to hold more than 10% of any class of
securities of such issuer, for which purposes all indebtedness of an issuer
shall be deemed a single class,
(viii) purchase or retain any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or Trustee of
the Portfolio, or is an officer or director of the Adviser, if after the
purchase of the securities of such issuer by the Portfolio one or more of such
persons owns beneficially more than 1/2 of 1% of the shares or securities, or
both, all taken at market value, of such issuer, and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities, or both, all taken at market value,
(ix) write, purchase or sell any put or call option or any combination
thereof,
(x) taken together with any investments described in clause (vi) above,
invest in securities which are subject to legal or contractual restrictions on
resale (other than fixed time deposits and repurchase agreements maturing in not
more than seven days) if, as a result thereof, more than 10% of the net assets
of the Portfolio (taken at market value) would be so invested (including fixed
time deposits and repurchase agreements maturing in more than seven days), or
(xi) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue as, and equal in
amount to, the securities sold short, and unless not more than 10% of the net
assets, of the Portfolio (taken at market value) is held as collateral for sales
at any one time (the Portfolio does not presently intend to make such sales).
These policies are not fundamental and may be changed by the Portfolio
without the approval of its investors.
Designation of Issuer of Securities
For purposes of the investment restrictions described above, the issuer of
a tax-exempt security is deemed to be the entity (public or private) ultimately
responsible for the payment of principal of and interest on the security. When
the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
issuing entity and a security is backed only by the assets and revenues of the
entity, the entity would be deemed to be the sole issuer of the security.
Similarly, in the case of an industrial development bond, if that bond is backed
only by the assets and revenues of the non-governmental user, then such
non-governmental user would be deemed to be the sole issuer. If, however, in
either case, the creating government or some other entity, such as an insurance
company or other corporate obligor, guarantees a security or a bank issues a
letter of credit, such a guarantee or letter of credit may, in accordance with
applicable SEC rules, be considered a separate security and could be treated as
an issue of such government, other entity or bank.
Percentage and Rating Restrictions
If a percentage restriction or a rating restriction on investment or
utilization of assets set forth above 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 portfolio securities or a later change in the rating
of a portfolio security will not be considered a violation of such policy.
Item 14. Management
The Trustees and officers of the Portfolio and their principal occupations
during the past five years are set forth below. Their titles may have varied
during that period. Asterisks indicate that those trustees and officers are
"interested persons" (as defined in the 1940 Act) of the Portfolio. Unless
otherwise indicated below, the address of each Trustee and officer is 6 St.
James Avenue, Boston, Massachusetts.
Trustees
ELLIOTT J. BERV (aged 53) - Chairman and Director, Catalyst, Inc. (Management
Consultants) (since August, 1992); President, Chief Operating Officer and
Director, Deven International, Inc. (International Consultants) (June, 1991
to July, 1992); President and Director, Elliott J. Berv & Associates
(Management Consultants) (since May, 1984). His address is 15 Stornoway
Drive, Cumberland Foreside, Maine.
PHILIP W. COOLIDGE* (aged 45) - President of the Portfolio; Chairman, Chief
Executive Officer and President, Signature Financial Group, Inc. and The
Landmark Funds Broker-Dealer Services, Inc. (since December, 1988).
MARK T. FINN (aged 53) - President and Director, Delta Financial, Inc. (since
June, 1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd.
(Commodity Trading Advisory Firm) (since April, 1990); Director, Vantage
Consulting Group, Inc. (since October, 1988). His address is 3500 Pacific
Avenue, P.O. Box 539, Virginia Beach, Virginia.
WALTER E. ROBB, III (aged 70) - President, Benchmark Advisors, Inc.
(Corporate Financial Advisors) (since 1989); Trustee of certain registered
investment companies in the MFS Family of Funds. His address is 35 Farm
Road, Sherborn, Massachusetts.
Officers
PHILIP W. COOLIDGE* (aged 45) - President of the Portfolio; Chairman, Chief
Executive Officer and President, Signature Financial Group, Inc. and The
Landmark Funds Broker-Dealer Services, Inc. (since December, 1988).
SAMANTHA M. BURGESS* (aged 27) - Assistant Secretary and Assistant Treasurer
of the Portfolio; Assistant Vice President, Signature Financial Group, Inc.
(since November, 1995); Graduate Student, Loyola University (prior to August,
1995).
CHRISTINE A. DRAPEAU* (aged 26) - Assistant Secretary and Assistant Treasurer of
the Portfolio; 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* (aged 48) - Treasurer of the Portfolio; Vice President,
Signature Financial Group, Inc. (since April, 1995); Treasurer, The Landmark
Funds Broker-Dealer Services, Inc. (since April, 1995); Treasurer, Phoenix
Family of Mutual Funds (Phoenix Home Life Mutual Insurance Company) (1983 to
March, 1995).
LINDA T. GIBSON* (aged 31) - Secretary of the Portfolio; Vice President,
Signature Financial Group, Inc. (since May, 1992); Assistant Secretary, The
Landmark Funds Broker-Dealer Services, Inc. (since October, 1992); Law
Student, Boston University School of Law (September, 1989 to May, 1992).
JOAN R. GULINELLO* (aged 41) - Assistant Secretary and Assistant Treasurer of
the Portfolio; Vice President, Signature Financial Group, Inc. (since
October, 1993); Secretary, The Landmark Funds Broker-Dealer Services, Inc.
(since October, 1995); Vice President and Assistant General Counsel,
Massachusetts Financial Services Company (prior to October, 1993).
JAMES E. HOOLAHAN* (aged 49) - Vice President, Assistant Secretary and
Assistant Treasurer of the Portfolio; Senior Vice President, Signature
Financial Group, Inc.
MOLLY S. MUGLER* (aged 45) - Assistant Secretary and Assistant Treasurer of
the Portfolio; Vice President, Signature Financial Group, Inc.; Assistant
Secretary, The Landmark Funds Broker-Dealer Services, Inc. (since December,
1988).
KARYN A. NOKE* (aged 25) - Vice President, Assistant Secretary and Assistant
Treasurer of the Portfolio; Vice President, Signature Financial Group
(Cayman), Ltd. (since September, 1996); Assistant Vice President, Signature
Financial Group, Inc. (May, 1993 to August, 1996); Student, University of
Massachusetts (prior to May, 1993).
SHARON M. WHITSON* (aged 48) - Assistant Secretary and Assistant Treasurer of
the Portfolio; Assistant Vice President, Signature Financial Group, Inc.
(since November, 1992); Associate Trader, Massachusetts Financial Services
Company (prior to November, 1992).
JULIE J. WYETZNER* (aged 37) - Vice President, Assistant Secretary and
Assistant Treasurer of the Portfolio; Vice President, Signature Financial
Group, Inc.
The Trustees and officers of the Portfolio hold comparable positions with
certain other funds for which The Landmark Funds Broker-Dealer Services, Inc.
("LFBDS") or an affiliate serves as distributor or administrator.
The Trustees and Officers of the Portfolio also hold comparable positions
with certain other funds for which LFBDS, the Portfolio's administrator and a
wholly-owned subsidiary of Signature Financial Group, Inc., or an affiliate,
serves as the distributor or administrator. Mr. Coolidge is also a Trustee of
Landmark Tax Free Reserves, an open-end investment company which is an investor
in the Portfolio and Landmark Institutional Trust, an open-end investment
company whose series Landmark Institutional Tax Free Reserves is an investor in
the Portfolio. Each officer of the Portfolio holds the same position with such
investment companies.
The Trustees of the Portfolio (with the exception of Mr. Coolidge, who
received no remuneration from the Portfolio) received the following remuneration
from the Portfolio during its fiscal year ended August 31, 1996:
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM
AGGREGATE BENEFITS ESTIMATED REGISTRANT
COMPENSATION ACCRUED AS ANNUAL AND FUND
NAME OF PERSON, FROM PART OF FUND BENEFITS UPON COMPLEX PAID
POSITION REGISTRANT EXPENSES RETIREMENT TO TRUSTEES(1)
-------- ---------- -------- ---------- --------------
Elliott J. Berv,
Trustee $3,545.79 -- -- $42,000.00
Mark T. Finn, -- --
Trustee $3,474.67 $42,000.00
Walter E. Robb,
III, Trustee $3,797.72 -- -- $46,500.00
- --------------------------------
(1) Messrs. Coolidge, Berv, Finn and Robb are trustees of 28, 12, 14 and 12
funds, respectively, of the Landmark Family of Funds.
The Portfolio's Declaration of Trust provides that it will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Portfolio, unless, as to liability to the Portfolio or its investors, it is
finally adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices, or
unless with respect to any other matter it is finally adjudicated that they did
not act in good faith in the reasonable belief that their actions were in the
best interests of the Portfolio. In the case of settlement, such indemnification
will not be provided unless it has been determined by a court or other body
approving the settlement or other disposition, or by a reasonable determination,
based upon a review of readily available facts, by vote of a majority of
disinterested Trustees or in a written opinion of independent counsel, that such
officers or Trustees have not engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties.
Item 15. Control Persons and Principal Holders of Securities.
Landmark Tax Free Reserves owns all of the beneficial interests in the
Portfolio, except for an investment by LFBDS in the amount of $100. Landmark
Institutional Tax Free Reserves is newly organized and has no shareholders as of
the date of this Part B.
Landmark Tax Free Reserves and Landmark Institutional Tax Free Reserves
are registered investment companies which have informed the Portfolio that
whenever requested to vote on matters pertaining to the Portfolio, each will
hold a meeting of shareholders and will cast its vote as instructed by its
shareholders.
Item 16. Investment Advisory and Other Services.
Citibank manages the assets of the Portfolio pursuant to an Investment
Advisory Agreement (the "Advisory Agreement"). Subject to such policies as the
Portfolio's Board of Trustees may determine, the Adviser makes investment
decisions for the Portfolio. The Adviser furnishes at its own expense all
services, facilities and personnel necessary in connection with managing the
Portfolio's investments and effecting securities transactions for the Portfolio.
The Advisory Agreement continues in effect if such continuance is specifically
approved at least annually by the Portfolio's Board of Trustees or by a vote of
a majority of the voting securities of the Portfolio and, in either case, by a
majority of the Portfolio's Trustees who are not parties to the Advisory
Agreement or interested persons of any such party, at a meeting called for the
purpose of voting on the Advisory Agreement.
The Advisory Agreement provides that the Adviser may render services to
others. The Advisory Agreement is terminable by the Portfolio without penalty on
not more than 60 days' nor less than 30 days' written notice when authorized
either by a vote of a majority of the voting securities of the Portfolio or by a
vote of a majority of its Board of Trustees, or by the Adviser on not more than
60 days' nor less than 30 days' written notice, and will automatically terminate
in the event of its assignment. The Advisory Agreement provides that neither the
Adviser nor its personnel shall be liable for any error of judgment or mistake
of law or for any loss arising out of any investment or for any act or omission
in the execution of security transactions for the Portfolio, except for willful
misfeasance, bad faith or gross negligence or reckless disregard of its or their
obligations and duties under the Advisory Agreement.
Part A of this Registration Statement contains a description of the fees
payable to the Adviser for services under the Advisory Agreement. For the fiscal
years ended August 31, 1994, August 31, 1995 and August 31, 1996 the fees
payable to Citibank under the Advisory Agreement with the Portfolio were
$493,866 (of which $25,348 was voluntarily waived), $613,607 (none of which was
waived) and $782,232 (of which $45,211 was voluntarily waived), respectively.
The Portfolio has adopted an Administrative Services Plan (the
"Administrative Plan") which provides that the Portfolio may obtain the services
of an administrator, a transfer agent and a custodian, and may enter into
agreements providing for the payment of fees for such services. Under the
Administrative Plan, the administrative services fee payable to the
Administrator from the Portfolio may not exceed 0.05% of the Portfolio's average
daily net assets on an annualized basis for its then-current fiscal year. The
Administrative Plan continues in effect if such continuance is specifically
approved at least annually by a vote of both a majority of the Portfolio's
Trustees and a majority of the Portfolio's Trustees who are not "interested
persons" of the Portfolio and who have no direct or indirect financial interest
in the operation of the Administrative Plan or in any agreement related to such
Plan ("Qualified Trustees"). The Administrative Plan requires that the Portfolio
provide to the Board of Trustees and the Board of Trustees review, at least
quarterly, a written report of the amounts expended (and the purposes therefor)
under the Administrative Plan. The Administrative Plan may be terminated at any
time by a vote of a majority of the Portfolio's Qualified Trustees or by a vote
of a majority of the outstanding voting securities of the Portfolio. The
Administrative Plan may not be amended to increase materially the amount of
permitted expenses thereunder without the approval of a majority of the
outstanding voting securities of the Portfolio and may not be materially amended
in any case without a vote of the majority of both the Portfolio's Trustees and
the Portfolio's Qualified Trustees.
Pursuant to an Administrative Services Agreement (the "Administrative
Services Agreement"), LFBDS provides the Portfolio with general office
facilities and supervises the overall administration of the Portfolio,
including, among other responsibilities, the negotiation of contracts and fees
with, and the monitoring of performance and billings of, the independent
contractors and agents of the Portfolio; the preparation and filing of all
documents required for compliance by the Portfolio with applicable laws and
regulations; and arranging for the maintenance of books and records of the
Portfolio. LFBDS provides persons satisfactory to the Board of Trustees of the
Portfolio to serve as Trustees and officers of the Portfolio. Such Trustees and
officers may be directors, officers or employees of LFBDS or its affiliates.
The Administrative Services Agreement continues in effect if such
continuance is specifically approved at least annually by the Portfolio's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio and, in either case, by a majority of the Trustees of the
Portfolio who are not parties to the Administrative Services Agreement or
interested persons of any such party. The Administrative Services Agreement
terminates automatically if it is assigned and may be terminated without penalty
by a vote of a majority of the outstanding voting securities in the Portfolio or
by either party on not more than 60 days' nor less than 30 days' written notice.
The Administrative Services Agreement also provides that neither LFBDS, as the
Administrator, nor its personnel shall be liable for any error of judgment or
mistake of law or for any act or omission in the administration or management of
the Portfolio, except for willful misfeasance, bad faith or gross negligence in
the performance of its or their duties or by reason of reckless disregard of its
or their obligations and duties under the Administrative Services Agreement. The
Administrative Services Agreement was most recently approved by the Portfolio's
Board of Trustees on May 3, 1996.
Part A of this Registration Statement contains a description of the fees
payable to the LFBDS under the Administrative Services Agreement. For the fiscal
years ended August 31, 1994, August 31, 1995 and August 31, 1996, the fees
payable to LFBDS under the Administrative Services Agreement with the Portfolio
were $123,466 (of which $6,337 was voluntarily waived), $153,402 (none of which
was waived) and $195,558 (of which $15,533 was voluntarily waived),
respectively.
The Administrative Services Agreement provides that LFBDS may render
administrative services to others.
LFBDS is a wholly-owned subsidiary of Signature Financial Group, Inc.
Pursuant to a sub-administrative services agreement, Citibank performs
such sub-administrative duties for the Portfolio as are from time to time agreed
upon by Citibank and LFBDS. Citibank's sub-administrative duties may include
providing equipment and clerical personnel necessary for maintaining the
organization of the Portfolio, participation in the preparation of documents
required for compliance by the Portfolio with applicable laws and regulations,
preparation of certain documents in connection with meetings of Trustees and
shareholders of the Portfolio, and other functions which would otherwise be
performed by the Administrator as set forth above. For performing such
sub-administrative services, Citibank receives such compensation as is from time
to time agreed upon by LFBDS and Citibank, not to exceed the amount paid to the
Administrator for its services under the Administrative Services Agreement. All
such compensation is paid by LFBDS.
The Portfolio has entered into a Transfer Agency Agreement and a Custodian
Agreement with State Street Bank and Trust Company ("State Street") pursuant to
which State Street acts as transfer agent and custodian for the Portfolio. The
principal business address of State Street is 225 Franklin Street, Boston,
Massachusetts 02110.
Deloitte & Touche LLP are the independent certified public accountants for
the Portfolio, providing audit services, and assistance and consultation with
respect to the preparation of filings with the Securities and Exchange
Commission. The principal business address of Deloitte & Touche LLP is 125
Summer Street, Boston, Massachusetts, 02110.
Item 17. Brokerage Allocation and Other Practices.
The Portfolio's purchases and sales of securities usually are principal
transactions. Securities are normally purchased directly from the issuer or from
an underwriter or market maker for the securities. There usually are no
brokerage commissions paid for such purchases. The Portfolio does not anticipate
paying brokerage commissions. Any transaction for which the Portfolio pays a
brokerage commission will be effected at the best price and execution available.
Purchases from underwriters of securities include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers serving as
market makers include the spread between the bid and asked price.
Allocation of transactions, including their frequency, to various dealers
is determined by the Adviser in its best judgment and in a manner deemed to be
in the best interest of the investors in the Portfolio rather than by any
formula. The primary consideration is prompt execution of orders in an effective
manner at the most favorable price.
Investment decisions for the Portfolio are made independently from those
for any other account or investment company that is or may in the future become
managed by the Adviser or its affiliates. If, however, the Portfolio and other
investment companies or accounts managed by the Adviser are contemporaneously
engaged in the purchase or sale of the same security, the transactions may be
averaged as to price and allocated equitably to each account. In some cases,
this policy may adversely affect the price paid or received by the Portfolio or
the size of the position obtainable for the Portfolio. In addition, when
purchases or sales of the same security for the Portfolio and for other
investment companies or accounts managed by the Adviser occur contemporaneously,
the purchase or sale orders may be aggregated in order to obtain any price
advantages available to large denomination purchases or sales.
No transactions are executed with the Adviser or an affiliate of the
Adviser, in any case acting either as principal or as broker.
Item 18. Capital Stock and Other Securities.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to participate pro
rata in distributions of taxable income, loss, gain and credit of the Portfolio.
Upon liquidation or dissolution of the Portfolio, investors are entitled to
share pro rata in the Portfolio's net assets available for distribution to its
investors. Investments in the Portfolio have no preference, pre-emptive,
conversion or similar rights and are fully paid and non-assessable, except as
set forth below. Investments in the Portfolio may not be transferred.
Certificates representing an investor's beneficial interest in the Portfolio are
issued only upon the written request of an investor.
Each investor is entitled to a vote in proportion to the value of its
investment in the Portfolio. Investors in the Portfolio do not have cumulative
voting rights, and investors holding more than 50% of the aggregate beneficial
interest in the Portfolio may elect all of the Trustees of the Portfolio if they
choose to do so and in such event the other investors in the Portfolio would not
be able to elect any Trustee. The Portfolio is not required and has no current
intention to hold annual meetings of investors but the Portfolio will hold
special meetings of investors when in the judgment of the Portfolio's Trustees
it is necessary or desirable to submit matters for an investor vote. No material
amendment may be made to the Portfolio's Declaration of Trust without the
affirmative vote of a majority of the outstanding voting securities of the
Portfolio.
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two-thirds of the
outstanding voting securities of the Portfolio. The Portfolio may also be
terminated (i) by the affirmative vote of two-thirds of the outstanding voting
securities of the Portfolio or (ii) by the Trustees of the Portfolio by written
notice to its investors.
The Portfolio is organized as a trust under the laws of the State of New
York. Investors in the Portfolio are personally liable for its obligations and
liabilities, subject, however, to indemnification by the Portfolio in the event
that there is imposed upon an investor a greater portion of the liabilities and
obligations of the Portfolio than its proportionate beneficial interest in the
Portfolio. The Declaration of Trust also provides that the Portfolio maintain
appropriate insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Portfolio, its investors, Trustees,
officers, employees and agents covering possible tort and other liabilities.
Thus, the risk of an investor incurring financial loss on account of investor
liability is limited to circumstances in which both inadequate insurance existed
and the Portfolio itself was unable to meet its obligations. It is not expected
that the liabilities of the Portfolio would ever exceed its assets.
The Portfolio's Declaration of Trust further provides that obligations of
the Portfolio are not binding upon the Trustees individually, but only upon the
property of the Portfolio and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each business day. At 12:00 noon, Eastern time, on each such
business day, the value of each investor's interest in the Portfolio is
determined by multiplying the net asset value of the Portfolio by the percentage
representing that investor's share of the aggregate beneficial interests in the
Portfolio effective for that day. Any additions or withdrawals, which are to be
effected on that day, are then effected. The investor's percentage of the
aggregate beneficial interests in the Portfolio is then recomputed 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 12:00 noon, Eastern time, on such
day plus or minus, as the case may be, the amount of any additions to or
withdrawals from the investor's investment in the Portfolio effected on such
day, and (ii) the denominator of which is the aggregate net asset value of the
Portfolio as of 12:00 noon, Eastern time, on such day plus or minus, as the case
may be, the amount of the net additions to or withdrawals from the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
so determined is then applied to determine the value of the investor's interest
in the Portfolio as of 12:00 noon, Eastern time, on the following business day
of the Portfolio.
Item 19. Purchase, Redemption and Pricing of Securities.
Beneficial interests in the Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933, as amended (the "1933
Act"). Investments in the Portfolio may only be made by investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities which are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This registration statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.
The Portfolio determines its net asset value as of 12:00 noon, Eastern
time, on each day on which the New York Stock Exchange is open for trading. As
of the date of this Registration Statement, the New York Stock Exchange will be
open for trading every weekday except for the following holidays (or the days on
which they are observed): New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Purchases
and withdrawals will be effected at the time of determination of net asset value
next following the receipt of any purchase or withdrawal order.
The securities held by the Portfolio are valued at their amortized cost.
Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. If fluctuating interest rates or other factors cause the market value
of the securities held by the Portfolio to deviate more than 1/2 of 1% from
their value determined on the basis of amortized cost, the Portfolio's Board of
Trustees will consider whether any action should be initiated, as described in
the following paragraph. Although the amortized cost method provides certainty
in valuation, it may result in periods during which the stated value of an
instrument is higher or lower than the price an investment company would receive
if the instrument were sold.
Pursuant to the rules of the Securities and Exchange Commission, the
Portfolio's Board of Trustees has established procedures to stabilize the value
of the Portfolio's net assets within 1/2 of 1% of the value determined on the
basis of amortized cost. These procedures include a review of the extent of any
such deviation of net asset value, based on available market quotations. Should
that deviation exceed 1/2 of 1%, the Portfolio's Board of Trustees will consider
whether any action should be initiated to eliminate or reduce material dilution
or other unfair results to the investors in the Portfolio. Such action may
include withdrawal in kind, selling its securities prior to maturity and
utilizing a net asset value as determined by using available market quotations.
The Portfolio maintains a dollar-weighted average maturity of 90 days or less,
does not purchase any instrument with a remaining maturity greater than 397 days
or subject to a repurchase agreement having a duration of greater than 397 days,
limits its investments, including repurchase agreements, to those U.S.
dollar-denominated instruments that have been determined by or on behalf of the
Portfolio's Board of Trustees to present minimal credit risks and complies with
certain reporting and recordkeeping procedures. The Portfolio has also
established procedures to ensure that securities purchased by it meet its high
quality criteria.
Subject to compliance with applicable regulations, the Portfolio has
reserved the right to pay the redemption price of beneficial interests in the
Portfolio, either totally or partially, by a distribution in kind of readily
marketable securities (instead of cash). The securities so distributed would be
valued at the same amount as that assigned to them in calculating the net asset
value for the beneficial interests being redeemed. If a holder of beneficial
interests received a distribution in kind, such holder could incur brokerage or
other charges in converting the securities to cash.
The Portfolio may suspend the right of redemption or postpone the date of
payment for beneficial interests in the Portfolio more than seven days during
any period when (a) trading in the markets the Portfolio normally utilizes is
restricted, or an emergency, as defined by the rules and regulations of the
Securities and Exchange Commission exists making disposal of the Portfolio's
investments or determination of its net asset value not reasonably practicable;
(b) the New York Stock Exchange is closed (other than customary weekend and
holiday closings); or (c) the Securities and Exchange Commission has by order
permitted such suspension.
Item 20. Tax Status.
The Portfolio is organized as a trust under New York law. The Portfolio
has determined, on the basis of an opinion of special tax counsel, that it is
properly treated as a partnership for federal and New York income tax purposes.
Accordingly, the Portfolio is not subject to any income tax, but each investor
in the Portfolio must take into account its share of the Portfolio's ordinary
income, expenses, capital gains or losses, credits and other items in
determining its income tax liability. The determination of such share will be
made in accordance with the governing instruments of the Portfolio and the
Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.
The Portfolio's taxable year-end is August 31. Although the Portfolio is
not subject to federal income tax, it files appropriate federal income tax
returns.
The Portfolio believes that, in the case of an investor in the Portfolio
that seeks to qualify as a regulated investment company ("RIC") under the Code,
the investor should be treated for federal income tax purposes as an owner of an
undivided interest in the assets and operations of the Portfolio, and
accordingly should be deemed to own a proportionate share of each of the assets
of the Portfolio and should be entitled to treat as earned by it the portion of
the Portfolio's gross income attributable to that share. The Portfolio also
believes that each such investor should be deemed to hold its proportionate
share of the Portfolio's assets for the period the Portfolio has held the assets
or for the period the investor has been a partner in the Portfolio, whichever is
shorter. Each such investor should consult its tax advisers regarding whether,
in light of its particular tax status and any special tax rules applicable to
it, this approach applies to its investment in the Portfolio, or whether the
Portfolio should be treated, as to it, as a separate entity as to which the
investor has no direct interest in Portfolio assets or operations.
In order to enable an investor in the Portfolio that is otherwise eligible
to qualify as a RIC under the Code to so qualify, the Portfolio intends to
satisfy the requirements of Subchapter M of the Code relating to the nature of
the Portfolio's gross income and the composition (diversification) and holding
period of the Portfolio's assets as if those requirements were directly
applicable to the Portfolio, and to allocate and permit withdrawals of its net
investment income (including net investment income derived from interest on
Municipal Obligations) and any net realized capital gains in a manner that will
enable an investor that is a RIC to comply with the qualification requirements
imposed by Subchapter M of the Code.
The Portfolio will allocate at least annually among its investors each
investor's distributive share of the Portfolio's net investment income
(including net investment income derived from interest on Municipal
Obligations), net realized capital gains, and any other items of income, gain,
loss, deduction, or credit in a manner intended to comply with the Code and
applicable Treasury regulations.
To the extent the cash proceeds of any withdrawal or distribution exceed
an investor's adjusted tax basis in its partnership interest in the Portfolio,
the investor will generally recognize gain for federal income tax purposes. If,
upon a complete withdrawal (i.e., a redemption of its entire interest in the
Portfolio), the investor's adjusted tax basis in its partnership interest in the
Portfolio exceeds the proceeds of the withdrawal, the investor will generally
recognize a loss for federal income tax purposes. An investor's adjusted tax
basis in its partnership interest in the Portfolio will generally be the
aggregate price paid therefor, increased by the amounts of its distributive
share of items of realized net income (including income, if any, exempt from
Federal income tax) and gain, and reduced, but not below zero, by the amounts of
its distributive share of items of realized net loss and the amounts of any
distributions received by the investor.
There are certain tax issues which will be relevant to only certain of the
Portfolio's investors, specifically, investors which are segregated asset
accounts and investors who contribute assets other than cash to the Portfolio.
It is intended that such segregated asset accounts will be able to satisfy
diversification requirements applicable to them and that such contributions of
assets will not be taxable provided certain requirements are met.
The above discussion does not address the special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance companies,
and financial institutions, or the state, local, or non-United States tax laws
that may be applicable to certain investors. Investors should consult their own
tax advisers with respect to the special tax rules that may apply in their
particular situations, as well as the state, local, or foreign tax consequences
to them of investing in the Portfolio.
Item 21. Underwriters.
The exclusive placement agent for the Portfolio is LFBDS, which receives
no additional compensation for serving in this capacity. Investment companies,
insurance company separate accounts, common and commingled trust funds and
similar organizations and entities may continuously invest in the Portfolio.
Item 22. Calculations of Performance Data.
Not applicable.
Item 23. Financial Statements.
The financial statements contained in the Annual Report of the Portfolio,
as filed with the Securities and Exchange Commission on October 29, 1996
(Accession Number 0000950156-96-000849), for the fiscal year ended August 31,
1996 are incorporated by reference into this Statement of Additional
Information.
A copy of the Annual Report of the Portfolio accompanies this Statement of
Additional Information.
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) FINANCIAL STATEMENTS INCLUDED IN PART A:
Not applicable.
FINANCIAL STATEMENTS INCLUDED IN PART B:
Portfolio of Investments at August 31, 1996*
Statement of Assets and Liabilities at August 31, 1996*
Statement of Operations for the year ended August 31, 1996*
Statement of Changes in Net Assets for the years ended August 31, 1996 and
August 31, 1995*
Financial Highlights for the years ended August 31, 1996, August 31, 1995,
August 31, 1994, August 31, 1993 and August 31, 1992*
Notes to Financial Statements - August 31, 1996*
Independent Auditors' Report - October 4, 1996*
- ---------------
* Incorporated herein by reference to the Annual Report of the Registrant
for the fiscal year ended August 31, 1996, filed with the Securities and
Exchange Commission on the EDGAR system on October 29, 1996 (Accession
Number 0000950156-96-000849).
(b) EXHIBITS
1(a) Declaration of Trust of the Registrant
1(b) Amendment to the Declaration of Trust of the Registrant
2 By-Laws of the Registrant
5 Investment Advisory Agreement between the Registrant and
Citibank, N.A., as investment adviser
6 Placement Agency Agreement between the Registrant and The
Landmark Funds Broker-Dealer Services, Inc. ("LFBDS"), as
exclusive placement agent
7 Custodian Contract between the Registrant and State Street
Bank and Trust Company, as custodian
9(a) Transfer Agency and Service Agreement between the Registrant
and State Street Bank and Trust Company, as transfer agent
9(b) Administrative Services Plan of the Registrant
9(c) Administrative Services Agreement between the Registrant and
LFBDS, as administrator
9(d) Sub-Administrative Services Agreement between LFBDS and
Citibank, N.A.
27 Financial Data Schedule
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
(as of December 27, 1996)
Beneficial Interests 2
Item 27. Indemnification.
Reference is hereby made to Article V of the Registrant's Declaration of
Trust, filed as an Exhibit to its Registration Statement on Form N-1A.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
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): The Premium Portfolios
(Balanced Portfolio, Equity Portfolio, Government Income Portfolio,
International Equity Portfolio, Emerging Asian Markets Equity Portfolio and
Small Cap Equity Portfolio), U.S. Treasury Reserves Portfolio, Cash Reserves
Portfolio, Asset Allocation Portfolios (Asset Allocation Portfolio 200, Asset
Allocation Portfolio 300, Asset Allocation Portfolio 400 and Asset Allocation
Portfolio 500), 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), Landmark VIP Funds (Landmark VIP U.S.
Government Portfolio, Landmark VIP Balanced Portfolio, Landmark VIP Equity
Portfolio and Landmark VIP International Equity Portfolio), and Variable Annuity
Portfolios (CitiSelectSM VIP Folio 200, CitiSelectSM VIP Folio 300, CitiSelectSM
VIP Folio 400, CitiSelectSM VIP Folio 500 and Landmark Small Cap Equity VIP
Fund). As of December 31, 1995, Citibank and its affiliates managed assets in
excess of $83 billion worldwide. The principal place of business of Citibank is
located at 399 Park Avenue, New York, New York 10043.
The Chairman of the Board and a Director of Citibank is John S. Reed.
The following are Vice Chairmen of the Board and Directors of Citibank: Paul
J. Collins, William R. Rhodes and H. Onno Ruding. Other Directors of
Citibank are D. Wayne Calloway, Chairman and Chief Executive Officer,
PepsiCo, Inc., Purchase, New York; Colby H. Chandler, Former Chairman and
Chief Executive Officer, Eastman Kodak Company; Kenneth T. Derr, Chairman and
Chief Executive Officer, Chevron Corporation; H.J. Haynes, Senior Counselor,
Bechtel Group, Inc., San Francisco, California; Rozanne L. Ridgway,
President, The Atlantic Council of the United States; Robert B. Shapiro,
President and Chief Operating Officer, Monsanto Company; Frank A. Shrontz,
Chairman and Chief Executive Officer, The Boeing Company, Seattle,
Washington; Roger B. Smith, Former Chairman and Chief Executive Officer,
General Motors Corporation; Franklin A. Thomas, President, The Ford
Foundation, New York, New York; and Edgar S. Woolard, Jr., Chairman and Chief
Executive Officer, E.I. DuPont De Nemours & Company.
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, Pepsico, Inc.
Colby H. Chandler Director, Digital Equipment Corporation
Director, Ford Motor Company
Director, J.C. Penney Company, Inc.
Paul J. Collins Director, Kimberly-Clark Corporation
Kenneth T. Derr Director, American Telephone and Telegraph, Co.
Director, Chevron Corporation
Director, Potlatch Corporation
H.J. Haynes Director, Bechtel Group, Inc.
Director, Boeing Company
Director, Fremont Group, Inc.
Director, Hewlett-Packard Company
Director, Paccar Inc.
Director, Saudi Arabian Oil Company
John S. Reed Director, Monsanto Company
Director, Philip Morris Companies
Incorporated
Stockholder, Tampa Tank & Welding, Inc.
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
H. Onno Ruding Member, Board of Supervisory Directors,
Amsterdam Trustee's Kantoor
Board Member, Corning, Incorporated
Advisor, Intercena (C&A) (Netherlands)
Member, Board of Supervisory Directors,
Pechiney Nederland N.V.
Member, Board of Advisers, Robeco N.V.
Advisory Director, Unilever N.V.
Advisory Director, Unilever PLC
Robert B. Shapiro Director, G.D. Searle & Co.
Director, Silicon Graphics
Director, Monsanto Company
Director, The Nutrasweet Company
Frank A. Shrontz Director, 3M
Director, Baseball of Seattle, Inc.
Director, Boeing Company
Director, Boise Cascade Corp.
Roger B. Smith Director, International Paper Company
Director, Johnson & Johnson
Director, Pepsico, Inc.
Franklin A. Thomas Director, Aluminum Company of America
Director, American Telephone and Telegraph, Co.
Director, Cummins Engine Company, Inc.
Director, Pepsico, Inc.
Edgar S. Woolard, Jr. Director, E.I. DuPont De Nemours & Company
Item 29. Principal Underwriters.
(a) The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS"), the
Registrant's Distributor, is also the distributor for Landmark International
Equity Fund, Landmark Emerging Asian Markets Equity Fund, Landmark U.S. Treasury
Reserves, Landmark Cash Reserves, Premium U.S. Treasury Reserves, Premium Liquid
Reserves, Landmark Institutional U.S. Treasury Reserves, Landmark Institutional
Liquid Reserves, Landmark Institutional Tax Free Reserves, Landmark Tax Free
Reserves, Landmark California Tax Free Reserves, Landmark Connecticut Tax Free
Reserves, Landmark New York Tax Free Reserves, Landmark U.S. Government Income
Fund, Landmark Intermediate Income Fund, Landmark Balanced Fund, CitiSelectSM
Folio 200, CitiSelectSM Folio 300, CitiSelectSM Folio 400, CitiSelectSM Folio
500, Landmark Equity Fund, Landmark Small Cap Equity Fund, Landmark National Tax
Free Income Fund, Landmark New York Tax Free Income Fund, Landmark VIP Funds
(Landmark VIP U.S. Government Portfolio, Landmark VIP Balanced Portfolio,
Landmark VIP Equity Portfolio and Landmark VIP International Equity Portfolio),
and Variable Annuity Portfolios (CitiSelectSM VIP Folio 200, CitiSelectSM VIP
Folio 300, CitiSelectSM VIP Folio 400, CitiSelectSM VIP Folio 500 and Landmark
Small Cap Equity VIP Fund). LFBDS is also the placement agent for International
Equity Portfolio, Balanced Portfolio, Equity Portfolio, Small Cap Equity
Portfolio, Government Income Portfolio, Emerging Asian Markets Equity Portfolio,
Cash Reserves Portfolio, Asset Allocation Portfolio 200, Asset Allocation
Portfolio 300, Asset Allocation Portfolio 400, Asset Allocation Portfolio 500
and U.S. Treasury Reserves Portfolio.
(b) The information required by this Item 29 with respect to each director
and officer of LFBDS is incorporated by reference to Schedule A of Form BD filed
by LFBDS 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
The Landmark Funds Broker-Dealer 6 St. James Avenue
Services, Inc. Boston, MA 02116
(administrator and exclusive
placement agent)
State Street Bank and Trust Company State Street South
(custodian and transfer agent) 1776 Heritage Drive
North Quincy, MA 02171
Citibank, N.A. 153 East 53rd Street
(investment adviser) New York, NY 10043
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to its Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston and Commonwealth of Massachusetts on the 27th day of
December, 1996.
TAX FREE RESERVES PORTFOLIO
By: Philip W. Coolidge
Philip W. Coolidge,
President
<PAGE>
EXHIBIT INDEX
Exhibit
No.: Description:
1(a) Declaration of Trust of the Registrant
1(b) Amendment to the Declaration of Trust of the Registrant
2 By-Laws of the Registrant
5 Investment Advisory Agreement between the Registrant and
Citibank, N.A., as investment adviser
6 Placement Agency Agreement between the Registrant and The
Landmark Funds Broker-Dealer Services, Inc. ("LFBDS"), as
exclusive placement agent
7 Custodian Contract between the Registrant and State Street Bank
and Trust Company, as custodian
8 Custodian Contract between the Registrant and State Street Bank
and Trust Company, as custodian
9(a) Transfer Agency and Service Agreement between the Registrant
and State Street Bank and Trust Company, as transfer agent
9(b) Administrative Services Plan of the Registrant
9(c) Administrative Services Agreement between the Registrant and
LFBDS, as administrator
9(d) Sub-Administrative Services Agreement between LFBDS and
Citibank, N.A.
27 Financial Data Schedule
<PAGE>
EXHIBIT NO. 1(a)
DECLARATION OF TRUST
OF
TAX FREE RESERVES PORTFOLIO
This is the DECLARATION OF TRUST of Tax Free Reserves Portfolio made on
the 1st day of March, 1990 by the parties signatory hereto, as Trustees, as
defined below .
W I T N E S S E T H:
WHEREAS, the Trustees desire to form a trust fund under the law of New
York for the investment and reinvestment of its assets; and
WHEREAS, it is proposed that the trust assets be composed of funds
contributed thereto by the holders of interests in the trust entitled to
ownership rights in the trust;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust all money and property contributed to the trust fund to manage and dispose
of the same for the benefit of the holders of interests in such trust and
subject to the provisions hereof, to wit:
ARTICLE I
The Trust
1.1 Name. The name of the trust created hereby (the "Trust") shall be
"Tax Free Reserves Portfolio", and so far as may be practicable the Trustees
shall conduct the Trust's activities, execute all documents and sue or be sued
under that name, which name (and the word "Trust" wherever hereinafter used)
shall refer to the Trustees as Trustees, and not individually, and shall not
refer to the officers, agents, employees or holders of interests in the Trust.
However, should the Trustees determine that the use of the name of the Trust is
not advisable, they may select such other name for the Trust as they deem proper
and the Trust may hold its property and conduct its activities under such other
name. Any name change shall become effective upon the execution by a majority of
the then Trustees of an instrument setting forth the new name. Any such
instrument shall have the status of an amendment to this Declaration.
1.2 Definitions. As used in this Declaration, the following terms shall
have the following meanings:
The terms "Affiliated Person", "Assignment" and "Interested Person"
shall have the meanings given them in the 1940 Act.
"Administrator" shall mean any party furnishing services to the Trust
pursuant to any administrative services contract described in Section 4.1
hereof.
"Book Capital Account" shall mean, for any Holder at any time, the Book
Capital Account of the Holder for such day, determined in accordance with
generally accepted accounting principles and the provisions of the 1940 Act.
The "Code" refers to the Internal Revenue Code of 1986, as amended from
time to time.
"Commission" shall mean the Securities and Exchange Commission.
"Declaration" shall mean this Declaration of Trust as amended from time
to time. References in this Declaration to "Declaration", "hereof", "herein" and
"hereunder" shall be deemed to refer to the Declaration rather than the article
or section in which such words appear.
"Fiscal Year" shall mean an annual period as determined by the
Trustees.
"Holders" shall mean as of any particular time all holders of record of
Interests of the Trust at such time.
"Institutional Investor(s)" shall mean the following:
(i) Regulated investment companies for which
(x) Citibank, N.A. and/or one or more of its affiliates acts as
the exclusive shareholder servicing agent(s) and shares of the
regulated investment companies are offered exclusively to customers
of Citibank, N.A. and/or its affiliates, or
(y) Citibank, N.A. and/or one or more of its affiliates acts or,
but for the Trust agreement, would act as the exclusive investment
adviser;
(ii) Section 501(a) group trusts for which Citibank, N.A. and/or
more of its affiliates acts as a fiduciary;
(iii) Section 584 common trust funds maintained by Citibank, N.A. or
an affiliate that is a bank; and,
(iv) Any similar collective investment arrangement for which
Citibank, N.A. and/or one of its affiliates acts in a capacity similar
to any of those described in clause (i) - (iii) above.
"Interest(s)" shall mean the interest of a Holder in the Trust,
including all rights, powers and privileges accorded to Holders in this
Declaration, which interest may be expressed as a percentage, determined by
calculating, at such times and on such basis as the Trustees shall from time to
time determine, the ratio of each Holders' Book Capital Account balance to the
total of all Holders' Book Capital Account balances. Reference herein to a
specified percentage in, or fraction of, Interests of the Holders, means Holders
whose combined Book Capital Accounts represent such specified percentage or
fraction of the Book Capital Accounts of all Holders.
"Investment Adviser" shall mean any party furnishing services to the
Trust pursuant to any investment advisory contract described in Section 4.1
hereof.
"Majority Interests Vote" shall mean the vote, at a meeting of the
Holders of the Trust, of (A) 67% or more of the Interests present or represented
at such meeting, if the Holders of more than 50% of the Interests of the Trust
are present or represented by proxy, or (B) more than 50% of the Interests of
the Trust, whichever is less.
"Person" shall mean and include individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
"Registration Statement" shall mean the currently effective Registration
Statement of the Trust under the 1940 Act.
" Trustees" shall mean the signatories to this Declaration, so long as
they shall continue in office in accordance with the terms hereof, and all other
persons who at the time in question have been duly elected or appointed and have
qualified as trustees in accordance with the provisions hereof and are then in
office, and reference in this Declaration to a Trustee or Trustees shall refer
to such person or persons in their capacity as trustees hereunder.
" Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is owned
or held by or for the account of the Trust or the Trustees.
The "1940 Act" refers to the Investment Company Act of 1940, as amended
from time to time, and the rules and regulations thereunder.
ARTICLE II
Trustees
2.1 Number and Qualification. The number of Trustees shall be fixed from
time to time by written instrument signed by a majority of the Trustees then in
office, provided, however, that the number of Trustees shall in no event be less
than three or more than fifteen. Any vacancy created by an increase in the
number of Trustees may be filled by the appointment of an individual having the
qualifications described in this Article made by a written instrument signed by
a majority of the Trustees then in office. Any such appointment shall not become
effective, however, until the individual named in the written instrument of
appointment shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of this Declaration. No reduction in the number
of Trustees shall have the effect of removing any Trustee from office. Whenever
a vacancy in the number of Trustees shall occur, until such vacancy is filled as
provided in Section 2.4 hereof, the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by this Declaration. A Trustee shall be
an individual at least 21 years of age who is not under legal disability.
2.2 Term and Election. Each Trustee named herein, or elected or
appointed prior to the first meeting of the Holders, shall (except in the event
of resignations, retirements or removals or vacancies pursuant to Section 2.3 or
2.4 hereof) hold office until his successor has been elected at such meeting and
has qualified to serve as Trustee, as required under the 1940 Act. Subject to
the provisions of Section 16(a) of the 1940 Act and except as provided in
Section 2.3 and Section 2.4 hereof, each Trustee shall hold office during the
lifetime of this Trust and until its termination as hereinafter provided.
2.3 Resignation, Removal and Retirement. Any Trustee may resign his or
her trust (without need for prior or subsequent accounting) by an instrument in
writing signed by him or her and delivered or mailed to the Chairman, if any,
the President or the Secretary of the Trust and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any of the Trustees may be removed by the affirmative vote of the
Holders of two-thirds (2/3) of the Interests or (provided the aggregate number
of Trustees, after such removal and after giving effect to any appointment made
to fill the vacancy created by such removal, shall not be less than the number
required by Section 2.1 hereof) with cause, by the action of two-thirds of the
remaining Trustees. Removal with cause includes, but is not limited to, the
removal of the Trustee due to physical or mental incapacity or failure to comply
with such written policies as from time to time may be adopted by at least
two-thirds of the Trustees with respect to the conduct of the Trustees and
attendance at meetings. Any Trustee who has attained a mandatory retirement age
established pursuant to any written policy adopted from time to time by at least
two-thirds of the Trustees shall, automatically and without action of such
Trustee or the remaining Trustees, be deemed to have retired in accordance with
the terms of such policy, effective as of the date determined in accordance with
such policy. Any Trustee who has become incapacitated by illness or injury as
determined by a majority of the other Trustees, may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his or her retirement. Upon the resignation, retirement or removal of a Trustee,
or his or her otherwise ceasing to be a Trustee, he or she shall execute and
deliver such documents as the remaining Trustees shall require for the purpose
of conveying to the Trust or the remaining Trustees any Trust Property held in
the name of the resigning, retiring or removed Trustee. Upon the death of any
Trustee or upon removal or resignation due to any Trustee's incapacity to serve
as trustee, his or her legal representative shall execute and deliver such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
2.4 Vacancies. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the death, resignation, retirement, removal,
adjudicated incompetence or other incapacity to perform the duties of the office
of a Trustee. No such vacancy shall operate to annul this Declaration or to
revoke any existing agency created pursuant to the terms of this Declaration. In
the case of a vacancy, the Holders of at least a majority of the Interests
entitled to vote, acting at any meeting of the Holders held in accordance with
Section 9.1 hereof, or, to the extent permitted by the 1940 Act, a majority vote
of the Trustees continuing in office acting at a meeting or by written
instrument or instruments, may fill such vacancy, and any Trustee so elected by
the Trustees or the Holders shall hold office as provided in this Declaration.
2.5 Meetings. Meetings of the Trustees shall be held from time to time
upon the call of the Chairman, if any, the President, the Secretary, an
Assistant Secretary or any two Trustees. Regular meetings of the Trustees may be
held without call or notice at a time and place fixed by the By-Laws or by
resolution of the Trustees. Notice of any other meeting shall be mailed or
otherwise given not less than 24 hours before the meeting but may be waived in
writing by any Trustee either before or after such meeting. The attendance of a
Trustee at a meeting shall constitute a waiver of notice of such meeting except
where a Trustee attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. The Trustees may act with or without a meeting. A quorum for
all meetings of the Trustees shall be a majority of the Trustees. Unless
provided otherwise in this Declaration, any action of the Trustees may be taken
at a meeting by vote of a majority of the Trustees present (a quorum being
present) or without a meeting by written consent of a majority of the Trustees.
Any committee of the Trustees, including an executive committee, if any,
may act with or without a meeting. A quorum for all meetings of any such
committee shall be a majority of the members thereof. Unless provided otherwise
in this Declaration, any action of any such committee may be taken at a meeting
by vote of a majority of the members present (a quorum being present) or without
a meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust within the meaning of
Section 1.2 hereof or otherwise interested in any action to be taken may be
counted for quorum purposes under this Section 2.5 and shall be entitled to vote
to the extent permitted by the 1940 Act.
All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and participation in a meeting pursuant to such
communications systems shall constitute presence in person at such meeting.
2.6 Officers; Chairman of the Board. The Trustees shall, from time to
time, elect a President, a Secretary and a Treasurer. The Trustees may elect or
appoint, from time to time, a Chairman of the Board who shall preside at all
meetings of the Trustees and carry out such other duties as the Trustees shall
designate. The Trustees may elect or appoint or authorize the President to
appoint such other officers or agents with such powers as the Trustees may deem
to be advisable. The President shall be and the Secretary and Treasurer may, but
need not, be a Trustee.
2.7 By-Laws. The Trustees may adopt and, from time to time, amend or
repeal the By-Laws for the conduct of the business of the Trust.
ARTICLE III
Powers of Trustees
3.1 General. The Trustees shall have exclusive and absolute control over
the Trust Property and over the business of the Trust to the same extent as if
the Trustees were the sole owners of the Trust Property and business in their
own right, but with such powers of delegation as may be permitted by this
Declaration. The Trustees may perform such acts as in their sole discretion are
proper for conducting the business of the Trust. The enumeration of any specific
power herein shall not be construed as limiting the aforesaid power. Such powers
of the Trustees may be exercised without order of or resort to any court.
3.2 Investments. The Trustees shall have power to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute or
otherwise deal in or dispose of United States and foreign currencies
(and related instruments including forward contracts) and securities,
including but not limited to, common and preferred stock, warrants,
bonds, debentures, time notes and all other evidences of indebtedness,
negotiable or non-negotiable instruments, obligations, certificates of
deposit or indebtedness, commercial paper, repurchase agreements,
reverse repurchase agreements, convertible securities, forward
contracts, options, futures contracts, and other securities, including,
without limitation, those issued, guaranteed or sponsored by any state,
territory or possession of the United States and the District of
Columbia and their political subdivisions, agencies and
instrumentalities, or by the United States Government, any foreign
government, or any agency, instrumentality or political subdivision of
the United States Government or any foreign government, or international
instrumentalities, or by any bank, savings institution, corporation or
other business entity organized under the laws of the United States or
under foreign laws; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without
limitation, the right to consent and otherwise act with respect thereto,
with power to designate one or more persons, firms, associations, or
corporations to exercise any of said rights, powers and privileges in
respect of any of said instruments; and the Trustees shall be deemed to
have the foregoing powers with respect to any additional securities in
which the Trustees may determine to invest.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
3.3 Legal Title. Legal title to all the Trust Property shall be vested
in the Trustees as joint tenants except that the Trustees shall have the power
to cause legal title to any Trust Property to be held by or in the name of one
or more of the Trustees, or in the name of the Trust, or in the name of any
other Person on behalf of the Trust, on such terms as the Trustees may
determine.
The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each person who may hereafter become a Trustee. Upon
the resignation, removal or death of a Trustee he or she automatically shall
cease to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property automatically
shall vest in the remaining Trustees. Such vesting and cessation of title shall
be effective whether or not conveyancing documents have been executed and
delivered.
3.4 Sale of Interests. Subject to the more detailed provisions set forth
in Articles VII and VIII, the Trustees shall have the power to permit persons to
purchase Interests and to add to or reduce, in whole or in part, their Interest
in the Trust.
3.5 Borrow Money. The Trustees shall have the power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, including the lending
of portfolio securities, and to endorse, guarantee, or undertake the performance
of any obligation, contract or engagement of any other person, firm, association
or corporation.
3.6 Delegation; Committees. The Trustees shall have power, consistent
with their continuing exclusive authority over the management of the Trust and
the Trust Property, to delegate from time to time to such of their number or to
officers, employees or agents of the Trust the doing of such things and the
execution of such instruments either in the name of the Trust or the names of
the Trustees or otherwise as the Trustees may deem expedient.
3.7 Collection and Payment. The Trustees shall have power to collect all
property due to the Trust; and to pay all claims, including taxes, against the
Trust Property; to prosecute, defend, compromise or abandon any claims relating
to the Trust Property; to foreclose any security interest securing any
obligations, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
3.8 Expenses. The Trustees shall have power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services, including legal and
brokerage services, as they in good faith may deem reasonable, and reimbursement
for expenses reasonably incurred by themselves on behalf of the Trust.
3.9 Miscellaneous Powers. The Trustees shall have the power to: (a)
employ or contract with such Persons as the Trustees may deem desirable for the
transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) purchase,
and pay for out of Trust Property, insurance policies insuring the Investment
Adviser, Administrator, placement agent, Holders, Trustees, officers, employees,
agents, or independent contractors of the Trust against all claims arising by
reason of holding any such position or by reason of any action taken or omitted
by any such Person in such capacity, whether or not the Trust would have the
power to indemnify such Person against such liability; (d) establish pension,
profit-sharing and other retirement, incentive and benefit plans for any
Trustees, officers, employees and agents of the Trust; (e) make donations,
irrespective of benefit to the Trust, for charitable, religious, educational,
scientific, civic or similar purposes; (f) to the extent permitted by law,
indemnify any Person with whom the Trust has dealings, including the Investment
Adviser, Administrator, placement agent, Holders, Trustees, officers, employees,
agents or independent contractors of the Trust, to such extent as the Trustees
shall determine; (g) guarantee indebtedness or contractual obligations of
others; (h) determine and change the Fiscal Year of the Trust and the method in
which its accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
3.10 Further Powers. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices, whether within or without the State of New York, in any
and all states of the United States of America, in the District of Columbia, and
in any and all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States of America and of foreign
governments, and to do all such other things and execute all such instruments as
they deem necessary, proper or desirable in order to promote the interests of
the Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees. The Trustees will not be required to obtain any court order to deal
with Trust Property.
ARTICLE IV
Investment Advisory, Administrative Services
and Placement Agent Arrangements
4.1 Investment Advisory and Other Arrangements. The Trustees may in
their discretion, from time to time, enter into investment advisory and
administrative services contracts or placement agent agreements whereby the
other party to such contract or agreement shall undertake tho furnish the
Trustees such investment advisory, administrative, placement agent and/or other
services as the Trustees shall, from time to time, consider desirable and all
upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of this Declaration, the Trustees may
authorize any Investment Adviser (subject to such general or specific
instructions as the Trustees may, from time to time, adopt) to effect purchases,
sales, loans or exchanges of Trust Property on behalf of the Trustees or may
authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of any such Investment Adviser
(and all without further action by the Trustees). Any such purchases, sales,
loans and exchanges shall be deemed to have been authorized by all of the
Trustees.
4.2 Parties to Contract. Any contract of the character described in
Section 4.1 of this Article IV or in the By-Laws of the Trust may be entered
into with any corporation, firm, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, Trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this Article IV
or the By-Laws. The same person (including a firm, corporation, trust, or
association) may be the other party to contracts entered into pursuant to
Section 4.1 above or the By-Laws of the Trust, and any individual may be
financially interested or otherwise affiliated with persons who are parties to
any or all of the contracts mentioned in this Section 4.2.
<PAGE>
ARTICLE V
Limitations of Liability
5.1 No Personal Liability of Trustees, Officers, Employees, Agents;
Liability of Holders; Indemnification. No Trustee, officer, employee or agent of
the Trust shall be subject to any personal liability whatsoever to any Person,
other than the Trust or its Holders, in connection with Trust Property or the
affairs of the Trust, save only that arising from his bad faith, wilful
misfeasance, gross negligence or reckless disregard of his duty to such Person;
and all such Persons shall look solely to the Trust Property for satisfaction of
claims of any nature against a Trustee, officer, employee or agent of the Trust
arising in connection with the affairs of the Trust. Each Holder shall be
jointly and severally liable (with rights of contribution inter sese in
proportion to their respective Interests in the Trust) for the liabilities and
obligations of the Trust in the event that the Trust fails to satisfy such
liabilities and obligations; provided, however, that, to the extent assets are
available in the Trust, the Trust shall indemnify and hold each Holder harmless
from and against any claim or liability to which such Holder may become subject
by reason of his being or having been a Holder to the extent that such claim or
liability imposes on the Holder an obligation or liability which, when compared
to the obligations and liabilities imposed on other Holders, is greater than its
Interest, and shall reimburse such Holder for all legal and other expenses
reasonably incurred by it in connection with any such claim or liability. The
rights accruing to a Holder under this Section 5.1 shall not exclude any other
right to which such Holder may be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify or reimburse a Holder in
any appropriate situation even though not specifically provided herein.
Notwithstanding the indemnification procedure described above, it is intended
that each Holder shall remain jointly and severally liable to the Trust's
creditors as a legal matter.
5.2 Non-liability of Trustees, etc. No Trustee, officer, employee, or
agent of the Trust shall be liable to the Trust, its Holders, or to any Trustee,
officer, employee, or agent thereof for any action or failure to act (including,
without limitation, the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for his or her own bad faith,
wilful misfeasance, gross negligence or reckless disregard of duty.
5.3 Mandatory Indemnification. The Trust shall indemnify each of its
Trustees, officers, employees, and agents (including persons who serve at its
request as directors, officers or trustees of another organization in which it
has any interest, as a shareholder, creditor or otherwise) against all
liabilities and expenses (including amounts paid in satisfaction of judgments,
in compromise, as fines and penalties, and as counsel fees) reasonably incurred
by him or her in connection with the defense of disposition of any action, suit
or other proceeding, whether civil or criminal, in which he or she may be
involved or threatened, while in office or thereafter, by reason of his or her
being or having been such a Trustee, officer, employee or agent, except with
respect to any matter as to which he shall have been adjudicated to have acted
in bad faith, wilful misfeasance, gross negligence or reckless disregard of his
duties; provided, however, that as to any matter disposed of by a compromise
payment by such Person, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses shall be
provided unless there has been a determination that such Person did not engage
in willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office by the court or other body
approving the settlement or other disposition or by a reasonable determination,
based upon a review of readily available facts (as opposed to a full trial-type
inquiry), that he did not engage in such conduct by written opinion from
independent legal counsel approved by the Trustees. The rights accruing to any
Person under these provisions shall not exclude any other right to which he may
be lawfully entitled; provided that no Person may satisfy any right of indemnity
or reimbursement granted herein or in Section 5.1 or to which he may be
otherwise entitled except out of the Trust Property. The Trustees may make
advance payments in connection with indemnification under this Section 5.3,
provided that the indemnified Person shall have given a written undertaking to
reimburse the Trust in the event it is subsequently determined that he is not
entitled to such indemnification.
5.4 No Bond Required of Trustees. No Trustee shall, as such, be
obligated to give any bond or surety or other security for the performance of
any of his duties hereunder.
5.5 No Duty of Investigation; Notice in Trust Instruments, etc. No
Purchaser, lender, or other Person dealing with the Trustees or any officer,
employee or agent of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of money or property
paid, loaned, or delivered to or on the order of the Trustees or of said
officer, employee or agent. Every obligation, contract, instrument, certificate
or other interest or undertaking of the Trust, and every other act or thing
whatsoever executed in connection with the Trust shall be conclusively taken to
have been executed or done by the executors thereof only in their capacity as
Trustees, officers, employees or agents of the Trust. Every written obligation,
contract, instrument, certificate or other interest or undertaking of the Trust
made or sold by the Trustees or by any officer, employee or agent of the Trust,
in his or her capacity as such, shall contain an appropriate recital to the
effect that the Trustee, officer, employee or agent of the Trust shall not
personally be bound by or liable thereunder, nor shall resort be had to his or
her private property for the satisfaction of any obligation or claim thereunder,
and appropriate references shall be made therein to the Declaration, and may
contain any further recital which they may deem appropriate, but the omission of
such recital shall not operate to impose personal liability on any of the
Trustees, officers, employees or agents of the Trust. The Trustees may maintain
insurance for the protection of the Trust Property, its Holders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
5.6 Reliance on Experts, etc. Each Trustee and officer or employee of
the Trust in the performance of his or her duties, shall be justified and
protected fully and completely with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by any Investment Adviser, Administrator,
accountant, appraiser or other experts or consultants selected with reasonable
care by the Trustees, officers or employees of the Trust, regardless of whether
such counsel or expert may also be a Trustee.
ARTICLE VI
Interests of the Trust
6.1 Interests. The beneficial interests in the property of the Trust
shall consist of non-transferable Interests. The Trustees may permit the
purchase of Interests but only if the purchaser is an Institutional Investor.
Individuals, S corporations, partnerships and grantor trusts that are
beneficially owned by any individual, S corporation or partnership may not
purchase Interests. Subject to applicable law and to such restrictions as may be
adopted by the Trustees, a Holder may increase or decrease its Interest without
limitation.
6.2 Rights of Holders. The ownership of the Trust Property of every
description and the right to conduct any business hereinbefore described are
vested exclusively in the Trustees, and the Holders shall have no right or title
therein other than the beneficial interest conferred by their Interests and they
shall have no right to call for any partition or division of any property,
profits or rights of the Trust. The Interests shall be personal property giving
only the rights in this Declaration specifically set forth.
6.3 Purchase of or Increase in Interests. The Trustees, in their
discretion, may permit, from time to time, without a vote of the Holders, the
purchase of Interests by such party or parties (or an increase in the Interest
of a Holder) and for such type of consideration, including cash or property, at
such time or times (including, without limitation, each business day), and on
such terms as the Trustees may deem best, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with
the assumption of, liabilities) and businesses.
6.4 Register of Interests. A register shall be kept at the Trust under
the direction of the Trustees which shall contain the names and addresses of the
Holders and the Book Capital Account balances of each Holder. Each such register
shall be conclusive as to who are the Holders of the Trust and who shall be
entitled to payments of distributions or otherwise to exercise or enjoy the
rights of Holders. No Holder shall be entitled to receive payment of any
distribution, nor to have notice given to it as herein provided, until it has
given its address to such officer or agent of the Trustees as shall keep the
said register for entry thereon.
6.5 Non-Transferability. Interests shall not be transferable.
6.6 Notices. Any and all notices to which any Holder hereunder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any holder of record at its last known
address as recorded on the register of the Trust.
ARTICLE VII
Decreases and Withdrawals
7.1 Decreases and Withdrawals. A Holder shall have the authority to
decrease or withdraw its Interest in the Trust, at such Holder's option, subject
to the terms and conditions provided in this Article VII. The Trust shall, upon
application of any Holder or pursuant to authorization from any Holder, and
subject to this Article 7.1, decrease or withdraw such Holder's Interest for an
amount determined by the application of a formula adopted for such purpose by
resolution of the Trustees; provided that (a) such amount shall not exceed the
reduction in a Holder's Book Capital Account effected by such decrease or
withdrawal of its Interest and (b) if so authorized by the Trustees, the Trust
at any time and from time to time, may charge fees for effecting such decrease
or withdrawal, at such rates as the Trustees may establish, and at any time and
from time to time, may suspend such right of decrease or withdrawal. The
procedures for effecting decreases or withdrawals shall be as determined by the
Trustees from time to time.
ARTICLE VIII
Determination of Book Capital Account Balances,
Net Income and Distributions
8.1 Book Capital Account Balances. The Book Capital Account balances of
Holders of the Trust shall be determined daily at such time or times as the
Trustees may determine. The Trustees shall adopt resolutions setting forth the
method of determining the Book Capital Account balances for each Holder. The
power and duty to make calculations pursuant to such resolutions may be
delegated by the Trustees to the Investment Adviser, Administrator, custodian or
such other Person as the Trustees may determine.
8.2 Distributions and Allocations to Holders. The Trustees shall, in
compliance with the regulations promulgated under applicable provisions of the
Code, agree to (i) the daily allocation of income or loss to each Holder of the
Trust, (ii) the payment of distributions to Holders and (iii) upon liquidation,
the final distribution of items of taxable income and expense. Such agreement
shall be set forth in written instructions directed to the Trust's accountants
specifying the method by which the Trust will comply with the Code. The Trustees
may amend the instructions adopted pursuant to this Section 8.2 from time to
time to the extent necessary to comply with the Code or any regulations
promulgated thereunder. The Trustees may retain from the net profits such amount
as they may deem necessary to pay the debts or expenses of the Trust or to meet
obligations of the Trust, or as they may deem desirable to use in the conduct of
its affairs or to retain for future requirements or extensions of the business.
8.3 Power to Modify Foregoing Procedures. Notwithstanding any of the
foregoing provisions of this Article VIII, the Trustees may prescribe, in their
absolute discretion, such other bases and times for determining the net income
and net assets of the Trust, the allocation of income or the payment of
distributions to the Holders of the Trust as they may deem necessary or
desirable to enable the Trust to comply with any provision of the 1940 Act, any
rule or regulation thereunder, or any order of exemption issued by said
Commission, all as in effect now or hereafter amended or modified.
ARTICLE IX
Holders
9.1 Meetings of Holders. Meetings of the Holders may be called at any
time by a majority of the Trustees and shall be called by any Trustee upon
written request of Holders holding, in the aggregate, not less than 10% of the
Interests of the Trust, such request specifying the purpose or purposes for
which such meeting is to be called. Any such meeting shall be held within or
without the State of New York on such day and at such time as the Trustees shall
designate. Holders of one-third of the Interests of the Trust, present in person
or by proxy, shall constitute a quorum for the transaction of any business,
except as otherwise may be required by the 1940 Act, other applicable law, this
Declaration or the By-Laws of the Trust. If a quorum is present at a meeting, an
affirmative vote by the Holders present, in person or by proxy, holding more
than 50% of the total Interests of the Holders present, either in person or by
proxy, at such meeting constitutes the action of the Holders, unless the 1940
Act, other applicable law, this Declaration or the By-Laws of the Trust requires
a greater number of affirmative votes.
9.2 Notice of Meetings. Notice of all meetings of the Holders, stating
the time, place and purposes of the meeting, shall be given by the Trustees by
mail to each Holder, at its registered address, mailed at least 10 days and not
more than 60 days before the meeting. At any such meeting, any business properly
before the meeting may be considered whether or not stated in the notice of the
meeting. Any adjourned meeting may be held as adjourned without further notice.
9.3 Record Date for Meetings. For the purpose of determining the Holders
who are entitled to notice of and to vote at any meeting, or to participate in
any distribution, or for the purpose of any other action, the Trustees may from
time to time fix a date, not more than 90 days prior to the date of any meetings
of the Holders or payment of distributions or other action, as the case may be,
as a record date for the determination of the Persons to be treated as Holders
of record for such purposes.
9.4 Proxies, etc. At any meeting of Holders, any Holder 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. Pursuant to a resolution 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 Holders of record
shall be entitled to vote. Each Holder shall be entitled to a vote proportionate
to its Interest in the Trust. When Interests are held jointly by several
Persons, any one of them may vote at any meeting in person or by proxy in
respect of such Interest, 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 with respect
to such Interest. A proxy purporting to be executed by or on behalf of a Holder
shall be deemed valid unless challenged at or prior to its exercise, and the
burden of proving invalidity shall rest on the challenger.
9.5 Reports. The Trustees shall cause to be prepared, at least annually,
a report of operations containing a balance sheet and statement of income and
undistributed income of the Trust prepared in conformity with generally accepted
accounting principles and an opinion of an independent public accountant on such
financial statements. The Trustees shall, in addition, furnish to the Holders at
least semi-annually interim reports containing an unaudited balance sheet as of
the end of such period and an unaudited statement of income and surplus for the
period from the beginning of the current fiscal year to the end of such period.
9.6 Inspection of Records. The records of the Trust shall be open to
inspection by Holders during normal business hours for any purpose not harmful
to the Trust.
9.7 Holder Action by Written Consent. Any action which may be taken by
Holders may be taken without a meeting if Holders holding more than 50% of the
total Interests entitled to vote (or such larger proportion thereof as shall be
required by any express provision of this Declaration) shall consent to the
action in writing and the written consents are filed with the records of the
meetings of Holders. Such consent shall be treated for all purposes as a vote
taken at a meeting of Holders.
<PAGE>
ARTICLE X
Duration; Termination of Trust;
Amendment; Mergers; Etc.
10.1 Duration. Subject to possible termination or dissolution in
accordance with the provisions of Sections 10.2 and 10.3, respectively, the
Trust created hereby shall continue until the expiration of 20 years after the
death of the last survivor of the initial Trustees named herein and the
following persons:
Name Address Date of Birth
David Cornelius Johnson 752 West End Avenue, Apt. 10J May 2,1989
New York, NY 10025
Conner Leahy McCabe 100 Parkway Road, Apt. 3C February 22, 1989
Bronxville, NY 10708
Andrea Hellegers 530 E. 84th Street, Apt. 5H December 22, 1988
New York, NY 10028
Emily Charlotte Bond 192 Garth Rd., Apt. 2M April 22, 1989
Scarsdale, NY 10583
Emilie Blair Ruble 30 Fifth Avenue, Apt. 11F February 24, 1989
New York, NY 10011
Brian Patrick Lyons 152-48 Jewel Avenue January 20, 1989
Flushing, NY 11367
Caroline Bolger Cima 11 Beechwood Lane December 23, 1988
Scarsdale, NY 10583
10.2 Termination of Trust.
(a) The Trust may be terminated (i) by the affirmative vote of the
Holders of not less than two-thirds of the Interests of the Trust at any
meeting of the Holders or by an instrument in writing, without a
meeting, signed by a majority of the Trustees and consented to by the
Holders of not less than two-thirds of such Interests, or (ii) by the
Trustees by written notice to the Holders.
(b) Upon any such termination under the preceding paragraph,
(i) the Trust shall carry on no business except for the purpose
of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the
Trust and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust shall have been wound
up, including the power to fulfill or discharge the contracts of the
Trust, collect its assets, sell, convey, assign, exchange, or
otherwise dispose of all or any part of the remaining Trust Property
to one or more persons at public or private sale for consideration
which may consist in whole or in part of cash, securities or other
property of any kind, discharge or pay its liabilities, and do all
other acts appropriate to liquidate its business; provided that any
sale, conveyance, assignment, exchange, or other disposition of all
or substantially all the Trust Property shall require approval of
the principal terms of the transaction and the nature and amount of
the consideration by the vote of Holders holding more than 50% of
the total Interests entitled to vote; and
(iii) after paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection,
the Trustees may distribute the remaining Trust Property, in cash or
in kind or partly each, among the Holders according to their
respective rights.
(c) Upon termination of the Trust and distribution to the Holders as
herein provided, a majority of the Trustees shall execute and lodge
among the records of the Trust an instrument in writing setting forth
the fact of such termination. Upon termination of the Trust, the
Trustees thereupon shall be discharged from all further liabilities and
duties hereunder, and the rights and Interests of all Holders thereupon
shall cease.
10.3 Dissolution. Upon the withdrawal, resignation, retirement,
bankruptcy or expulsion of any Holder, the Trust shall be dissolved and
terminated effective 120 days after such event. However, the Holders may, by a
unanimous affirmative vote of Holders of the Interests of the Trust at any
meeting of the Holders or by an instrument in writing without a meeting signed
by a majority of the Trustees and consented to by all of the Holders of such
Interests, agree to continue the business of the Trust even if there has been a
prior dissolution and termination.
10.4 Amendment Procedure.
(a) This Declaration may be amended by the vote of Holders holding
more than 50% of the total Interests entitled to vote or by an
instrument in writing, without a meeting, signed by a majority of the
Trustees and consented to by the vote of Holders holding more than 50%
of the total Interests entitled to vote. The Trustees also may amend
this Declaration without the vote or consent of Holders to change the
name of the Trust, to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, or
to conform this Declaration to the requirements of applicable federal
laws or regulations or the requirements of the applicable provisions of
the Code, but the Trustees shall not be liable for failing so to do.
(b) No amendment may be made, under Section 10.4(a) above, which
would change any rights with respect to any Interest in the Trust by
reducing the amount payable thereon upon liquidation of the Trust or by
diminishing or eliminating any voting rights pertaining thereto, except
with the vote or consent of the Holders of two-thirds of the Interests
of the Trust.
(c) A certification in recordable form signed by a majority of the
Trustees setting forth an amendment and reciting that it was duly
adopted by the Holders or by the Trustees as aforesaid or a copy of the
Declaration, as amended, in recordable form, and executed by a majority
of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as Interests
are first sold, this Declaration may be terminated or amended in any respect by
the affirmative vote of a majority of the Trustees or by an instrument signed by
a majority of the Trustees.
10.5 Merger, Consolidation and Sale of Assets. The Trust, or any series
thereof, may merge or consolidate with any other corporation, association, trust
or other organization or may sell, lease or exchange all or substantially all of
its property, including its good will, upon such terms and conditions and for
such consideration when and as authorized at any meeting of Holders called for
the purpose by the affirmative vote of the Holders of not less than two-thirds
of the Interests of the Trust, or by an instrument or instruments in writing
without a meeting, consented to by the Holders of not less than two-thirds of
such Interests, and any such merger, consolidation, sale, lease or exchange
shall be deemed for all purposes to have been accomplished under and pursuant to
the laws of the State of New York.
10.6 Incorporation. Upon a Majority Interests Vote, the Trustees may
cause to be organized or assist in organizing a corporation or corporations
under the laws of any jurisdiction or any other trust, partnership, association
or other organization to take over all of the Trust Property or to carry on any
business in which the Trust shall directly or indirectly have any interest, and
to sell, convey and transfer the Trust Property to any such corporation, trust,
partnership, association or organization in exchange for the equity interests
thereof or otherwise, and to lend money to, subscribe for the equity interests
of, and enter into any contracts with any such corporation, trust, partnership,
association or organization, or any corporation, partnership, trust, association
or organization in which the Trust holds or its about to acquire equity
interests. The Trustees may also cause a merger or consolidation between the
Trust or any successor thereto and any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of the Holders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organizations or entities.
ARTICLE XI
Miscellaneous
11.1 Certificate of Designation; Agent for Service of Process. The Trust
shall file, in the Department of State of New York, a certificate, in the Trust
name and signed by an officer of the Trust, designating the Secretary of the
State of New York as an agent upon whom process in any action or proceeding
against the Trust may be served.
11.2 Governing Law. This Declaration is executed by the Trustees and
delivered in the State of New York and with reference to the laws thereof, and
the rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed according to the laws of the State of
New York and reference shall be specifically made to the trust law of the State
of New York as to the construction of matters not specifically covered herein or
as to which an ambiguity exists.
11.3 Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
11.4 Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust or of any recording office
in which this Declaration may be recorded, appears to be a Trustee hereunder,
certifying to: (a) the number or identity of Trustees or Holders, (b) the due
authorization of the execution of any instrument or writing, (c) the form of any
vote passed at a meeting of Trustees or Holders, (d) the fact that the number of
Trustees or Holders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (e) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or (f) the
existence of any fact or facts which in any manner relate to the affairs of the
Trust, shall be conclusive evidence as to the matters so certified in favor of
any person dealing with the Trustees and their successors.
11.5 Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, or with other applicable
laws and regulations, the conflicting provision shall be deemed never to
have constituted a part of this Declaration; provided, however, that
such determination shall not affect any of the remaining provisions of
this Declaration or render invalid or improper any action taken or
omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall attach only to such provision in such jurisdiction and shall not
in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
/s/Cynthia J. Colitti
-----------------------------------------
Cynthia J. Colitti
as Trustee and not individually
6 St. James Avenue
Boston, Massachusetts
/s/Philip W. Coolidge
-----------------------------------------
Philip W. Coolidge
as Trustee and not individually
6 St. James Avenue
Boston, Massachusetts
/s/Gail E. McHugh
-----------------------------------------
Gail E. McHugh
as Trustee and not individually
6 St. James Avenue
Boston, Massachusetts
<PAGE>
EXHIBIT NO. 1(b)
TAX FREE RESERVES PORTFOLIO
Amendment of Declaration of Trust
The undersigned, being a majority of the Trustees of Tax Free Reserves
Portfolio, a trust established pursuant to a Declaration of Trust dated as of
March 1, 1990 (the "Declaration of Trust"), hereby, pursuant to paragraph (a) of
Section 10.4 of the Declaration of Trust, amend the Declaration of Trust by
adding the following at the end of Section 6.3 thereof:
"The second sentence of Section 6.1 hereof shall not be construed to
limit the authority of the Trustees, pursuant to Section 3.4 hereof or
this Section 6.3, or otherwise, to authorize the purchase of Interests
without a vote of the Holders, provided that the purchaser is a
regulated investment company, segregated asset account, foreign
investment company, common trust fund, group trust or other investment
arrangement, whether organized within or without the United States of
America, and is not an individual, S corporation, partnership or grantor
trust beneficially owned by any individual, S corporation or
partnership."
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of February 3, 1994, at Nassau, The Bahamas.
/s/Elliott J. Berv
------------------------------------------
Trustee
/s/Philip Coolidge
------------------------------------------
Trustee
/s/Walter E. Robb
------------------------------------------
Trustee
<PAGE>
EXHIBIT NO. 2
TAX FREE RESERVES PORTFOLIO
BY-LAWS
These By-Laws are made and adopted pursuant to Section 2.7 of the
Declaration of Trust establishing the TAX FREE RESERVES PORTFOLIO, dated March
1, 1990, as from time to time amended (hereinafter called the "Declaration").
All words and terms capitalized in these By-Laws shall have the meaning or
meanings set forth for such words or terms in the Declaration.
ARTICLE I
Unitholders Meeting
1.1 Chairman. The Chairman, if any, shall act as chairman at all meetings
of the Unitholders; in his absence, the President shall act as chairman; and in
the absence of the Chairman and the President, the Trustee or Trustees present
at each meeting may elect a temporary chairman for the meeting, who may be one
of themselves.
1.2 Proxies; Voting. Unitholders may vote either in person or by duly
executed proxy and each full unit ("Unit") represented at the meeting shall have
one vote, all as provided in Article X of the Declaration. No proxy shall be
valid after eleven (11) months from the date of its execution, unless a longer
period is expressly stated in such proxy.
1.3 Fixing Record Dates. For the purpose of determining the Unitholders who
are entitled to notice of or to vote or act at a meeting, including any
adjournment thereof, or who are entitled to participate in any distributions, or
for any other proper purpose, the Trustees may from time to time fix a record
date in the manner provided in Section 10.3 of the Declaration. If the Trustees
do not, prior to any meeting of Unitholders, so fix a record date, then the date
of mailing notice of the meeting shall be the record date.
1.4 Inspectors of Election. In advance of any meeting of Unitholders, the
Trustees may appoint Inspectors of Election to act at the meeting or any
adjournment thereof. If Inspectors of Election are not so appointed, the
Chairman, if any, of any meeting of Unitholders may, and on the request of any
Unitholder or his proxy shall, appoint Inspectors of Election of the meeting.
The number of Inspectors shall be either one or three. If appointed at the
meeting on the request of one or more Unitholders or proxies, a majority of
Units present shall determine whether one or three Inspectors are to be
appointed, but failure to allow such determination by the Unitholders shall not
affect the validity of the appointment of Inspectors of Election. In case any
person appointed as Inspector fails to appear or fails or refuses to act, the
vacancy may be filled by appointment made by the Trustees in advance of the
convening of the meeting or at the meeting by the person acting as Chairman. The
Inspectors of Election shall determine the number of Units outstanding, the
Units represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, shall receive votes, ballots or consents, shall
hear and determine all challenges and questions in any way arising in connection
with the right to vote, shall count and tabulate all votes or consents,
determine the results, and do such other acts as may be proper to conduct the
election or vote with fairness to all Unitholders. If there are three Inspectors
of Election, the decision, act or certificate of a majority is effective in all
respects as the decision, act or certificate of all. On request of the Chairman,
if any, of the meeting, or of any Unitholder or his proxy, the Inspectors of
Election shall make a report in writing of any challenge or question or matter
determined by them and shall execute a certificate of any facts found by them.
1.5 Records at Unitholder Meetings. At each meeting of the Unitholders
there shall be open for inspection the minutes of the last previous meeting of
Unitholders of the Trust and a list of the Unitholders of the Trust, certified
to be true and correct by the Secretary or other proper agent of the Trust, as
of the record date of the meeting. Such list of Unitholders shall contain the
name of each Unitholder in alphabetical order and the address and number of
Units owned by such Unitholder. Unitholders shall have the right to inspect
books and records of the Trust during normal business hours and for any purpose
not harmful to the Trust.
1.6 Series Holders Meetings. Whenever a matter is required to be voted by
Holders of the Trust in the aggregate under Section 9.1 and 9.2 of the
Declaration, the Trust may either hold a meeting of Unitholders of all series to
vote on such matter, or hold separate meetings of Unitholders of each of the
individual series to vote on such matter, provided that (i) such separate
meetings shall be held within one year of each other, (ii) a quorum of the
individual series entitled to vote in person or by proxy shall be present at
each such separate meeting, and (iii) a quorum shall be present in the aggregate
at such separate meetings, and the votes of Unitholders at all such separate
meetings shall be aggregated in order to determine if sufficient votes have been
cast for such matter to be voted.
When separate meetings are held for Unitholders of each of the individual
series to vote on a matter required to be voted on by Unitholders of the Trust
in the aggregate, the record date of each separate meeting shall be determined
in the manner described above in Section 1.3.
ARTICLE II
Trustees
2.1 Annual and Regular Meetings. The Trustees shall hold an annual meeting
for the election of officers and the transaction of other business which may
come before such meeting. Regular meetings of the Trustees may be held without
call or notice at such place or places and times as the Trustees may by
resolution provide from time to time.
2.2 Special Meetings. Special Meetings of the Trustees shall be held upon
the call of the Chairman, if any, the President, the Secretary or any two
Trustees, at such time, on such day and at such place, as shall be designated in
the notice of the meeting.
2.3 Notice. Notice of a meeting shall be given by mail or by telegram
(which term shall include a tablegram) or delivered personally. If notice is
given by mail, it shall be mailed not later than 48 hours preceding the meeting
and if given by telegram or personally, such telegram shall be sent or delivery
made not later than 48 hours preceding the meeting. Notice by telephone shall
constitute personal delivery for these purposes. Notice of a meeting of Trustees
may be waived before or after any meeting by signed written waiver. Neither the
business to be transacted at, nor the purpose of, any meeting of the Board of
Trustees need be stated in the notice or waiver of notice of such meeting, and
no notice need be given of action proposed to be taken by unanimous written
consent. The attendance of a Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Trustee attends a meeting for the express
purpose of objecting, at the commencement of such meeting, to the transaction of
any business on the ground that the meeting has not been lawfully called or
convened.
2.4 Chairman; Records. The Chairman, if any, shall act as chairman at all
meetings of the Trustees; in his absence the President shall act as chairman;
and, in the absence of the Chairman and the President, the Trustees present
shall elect one of their number to act as temporary chairman. The results of all
actions taken at a meeting of the Trustees, or by unanimous written consent of
the Trustees, shall be recorded by the Secretary.
ARTICLE III
Officers
3.1 Officers of the Trust. The officers of the Trust shall consist of a
Chairman, if any, a President, a Secretary, a Treasurer and such other officers
or assistant officers, including Vice Presidents, as may be elected by the
Trustees. Any two or more of the offices may be held by the same person, except
that the same person may not be both President and Secretary. The Trustees may
designate a Vice President as an Executive Vice President and may designate the
order in which the other Vice Presidents may act. The Chairman and the President
shall be Trustees, but no other officer of the Trust need be a Trustee.
3.2 Election and Tenure. At the initial organization meeting and thereafter
at each annual meeting of the Trustees, the Trustees shall elect the Chairman,
if any, President, Secretary, Treasurer and such other officers as the Trustees
shall deem necessary or appropriate in order to carry out the business of the
Trust. Such officers shall hold office until the next annual meeting of the
Trustees and until their successors have been duly elected and qualified. The
Trustees may fill any vacancy in office or add any additional officers at any
time.
3.3 Removal of Officers. Any officer may be removed at any time, with or
without cause, by action of a majority of the Trustees. This provision shall not
prevent the making of a contract of employment for a definite term with any
officer and shall have no effect upon any cause of action which any officer may
have as a result of removal in breach of a contract of employment. Any officer
may resign at any time by notice in writing signed by such officer and delivered
or mailed to the Chairman, if any, President, or Secretary, and such resignation
shall take effect immediately, or at a later date according to the terms of such
notice in writing.
3.4 Bonds and Surety. Any officer may be required by the Trustees to be
bonded for the faithful performance of his duties in such amount and with such
sureties as the Trustees may determine.
3.5 Chairman, President, and Vice Presidents. The Chairman, if any, shall,
if present, preside at all meetings of the Unitholders and of the Trustees and
shall exercise and perform such other powers and duties as may be from time to
time assigned to him by the Trustees. Subject to such supervisory powers, if
any, as may be given by the Trustees to the Chairman, if any, the President
shall be the chief executive officer of the Trust and, subject to the control of
the Trustees, shall have general supervision, direction and control of the
business of the Trust and of its employees and shall exercise such general
powers of management as are usually vested in the office of President of a
corporation. In the absence of the Chairman, if any, the President shall preside
at all meetings of the Unitholders and the Trustees. The President shall be, ex
officio, a member of all standing committees. Subject to direction of the
Trustees, the Chairman, if any, and the President shall each have power in the
name and on behalf of the Trust to execute any and all loan documents,
contracts, agreements, deeds, mortgages, and other instruments in writing, and
to employ and discharge employees and agents of the Trust. Unless otherwise
directed by the Trustees, the Chairman, if any, and the President shall each
have full authority and power, on behalf of all of the Trustees, to attend and
to act and to vote, on behalf of the Trust at any meetings of business
organizations in which the Trust holds an interest, or to confer such powers
upon any other persons, by executing any proxies duly authorizing such persons.
The Chairman, if any, and the President shall have such further authorities and
duties as the Trustees shall from time to time determine. In the absence or
disability of the President, the Vice Presidents in order of their rank or the
Vice President designated by the Trustees, shall perform all of the duties of
President, and when so acting shall have all the powers of and be subject to all
of the restrictions upon the President. Subject to the direction of the
President, each Vice President shall have the power in the name and on behalf of
the Trust to execute any and all loan documents, contracts, agreements, deeds,
mortgages and other instruments in writing, and, in addition, shall have such
other duties and powers as shall be designated from time to time by the Trustees
or by the President.
3.6 Secretary. The Secretary shall keep the minutes of all meetings of, and
record all votes of, Unitholders, Trustees and the Executive Committee, if any.
He shall be custodian of the seal of the Trust, if any, and he (and any other
person so authorized by the Trustees) shall affix the seal or, if permitted, a
facsimile thereof, to any instrument executed by the Trust which would be sealed
by a New York corporation executing the same or a similar instrument and shall
attest the seal and the signature or signatures of the officer or officers
executing such instrument on behalf of the Trust. The Secretary shall also
perform any other duties commonly incident to such office in a New York business
corporation, and shall have such other authorities and duties as the Trustees
shall from time to time determine.
3.7 Treasurer. Except as otherwise directed by the Trustees, the Treasurer
shall have the general supervision of the monies, funds, securities, notes
receivable and other valuable papers and documents of the Trust, and shall have
and exercise under the supervision of the Trustees and of the President all
powers and duties normally incident to his office. He may endorse for deposit or
collection all notes, checks and other instruments payable to the Trust or to
its order. He shall deposit all funds of the Trust as may be ordered by the
Trustees or the President. He shall keep accurate account of the books of the
Trust's transactions which shall be the property of the Trust, and which
together with all other property of the Trust in his possession, shall be
subject at all times to the inspection and control of the Trustees. Unless the
Trustees shall otherwise determine, the Treasurer shall be the principal
accounting officer of the Trust and shall also be the principal financial
officer of the Trust. He shall have such other duties and authorities as the
Trustees shall from time to time determine. Notwithstanding anything to the
contrary herein contained, the Trustees may authorize any adviser, administrator
or manager to maintain bank accounts and deposit and disburse funds on behalf of
the Trust.
3.8 Other Officers and Duties. The Trustees may elect such other officers
and assistant officers as they shall from time to time determine to be necessary
or desirable in order to conduct the business of the Trust. Assistant officers
shall act generally in the absence of the officer whom they assist and shall
assist that officer in the duties of his office. Each officer, employee and
agent of the Trust shall have such other duties and authority as may be
conferred upon him by the Trustees or delegated to him by the President.
ARTICLE IV
Miscellaneous
4.1 Depositories. In accordance with Section 7.1 of the Declaration, the
funds of the Trust shall be deposited in such depositories as the Trustees shall
designate and shall be drawn out on checks, drafts or other orders signed by
such officer, officers, agent or agents (including any adviser, administrator or
manager), as the Trustees may from time to time authorize.
4.2 Signatures. All contracts and other instruments shall be executed on
behalf of the Trust by such officer, officers, agent or agents, as provided in
these By-Laws or as the Trustees may from time to time by resolution provide.
4.3 Seal. The seal of the Trust, if any, may be affixed to any document,
and the seal and its attestation may be lithographed, engraved or otherwise
printed on any document with the same force and effect as if it had been
imprinted and attested manually in the same manner and with the same effect as
if done by a New York business corporation.
4.4 Indemnification. Insofar as the conditional advancing of
indemnification monies under Section 5.3 of the Declaration of Trust, for
actions based upon the Investment Company Act of 1940 may be concerned, such
payments will be made only on the following conditions: (i) the advances must be
limited to amounts used, or to be used, for the preparation or presentation of a
defense to the action, including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt of a written promise by,
or on behalf of, the recipient to repay that amount of the advance which exceeds
that amount to which it is ultimately determined that he is entitled to receive
from the Trust by reason of indemnification; and (iii) (a) such promise must be
secured by a surety bond, other suitable insurance or an equivalent form of
security which assures that any repayments may be obtained by the Trust without
delay or litigation, which bond, insurance or other form of security must be
provided by the recipient of the advance, or (b) a majority of a quorum of the
Trust's disinterested, non-party Trustees, or an independent legal counsel in a
written opinion, shall determine, based upon a review of readily available
facts, that the recipient of the advance ultimately will be found entitled to
indemnification.
ARTICLE V
Unit Non-Transferability
5.1 Non-Transferability of Units. Units shall not be transferable. Except
as otherwise provided by law, the Trust shall be entitled to recognize the
exclusive right of a person in whose name any Unit or Units stand on the record
of Unitholders as the owner of such Unit or Units for all purposes, including,
without limitation, the rights to receive distributions, and to vote as such
owner, and the Trust shall not be bound to recognize any equitable or legal
claim to or interest in any such Unit or Units on the part of any other person.
5.2 Regulations. The Trustees may make such additional rules and
regulations, not inconsistent with these By-Laws, as they may deem expedient
concerning the issue of Units of the Trust. They may appoint, or authorize any
officer or officers to appoint, one or more registrars.
5.3 Registrars and the Like. As provided in Section 6.5 of the Declaration,
the Trustees shall have authority to employ and compensate such registrars with
respect to the Units of the Trust as the Trustees shall deem necessary or
desirable. In addition, the Trustees shall have power to employ and compensate
such distribution disbursing agents, warrant agents and agents for the
reinvestment of distributions as they shall deem necessary or desirable. Any of
such agents shall have such power and authority as is delegated to any of them
by the Trustee.
ARTICLE VI
Amendment of By-Laws
6.1 Amendment and Repeal of By-Laws. In accordance with Section 2.7 of the
Declaration, the Trustees shall have the power to alter, amend or repeal the
By-Laws or adopt new By-Laws at any time. Action by the Trustees with respect to
the By-Laws shall be taken by an affirmative vote of a majority of the Trustees.
The Trustees shall in no event adopt By-Laws which are in conflict with the
Declaration, and any apparent inconsistency shall be construed in favor of the
related provisions in the Declaration.
The Declaration establishing the Tax Free Reserves Portfolio, a copy of
which together with all amendments thereto is on file in the office of the
Secretary of the State of New York, provides that the name Tax Free Reserves
Portfolio refers to the Trustees under the Declaration collectively as Trustees,
but not as individuals or personally; and no Trustee, officer, employee or agent
of the Tax Free Reserves Portfolio shall be held to any personal liability, nor
shall resort be had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs of said Tax Free
Reserves Portfolio but the Trust Property only shall be liable.
<PAGE>
EXHIBIT NO. 5
INVESTMENT ADVISORY AGREEMENT
TAX FREE RESERVES PORTFOLIO
INVESTMENT ADVISORY AGREEMENT, dated as of March 14, 1990, by and between
Tax Free Reserves Portfolio, a New York trust (the "Portfolio"), and CITIBANK,
N.A., a national banking association ("Citibank" or the "Adviser").
WITNESSETH:
WHEREAS, the Portfolio is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act"); and
WHEREAS, the Portfolio wishes to engage the Adviser to provide certain
investment advisory services, and the Adviser is willing to provide such
investment advisory services to the Portfolio on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. DUTIES OF THE ADVISER. The Adviser shall provide the Portfolio with
such investment advice and supervision as the latter may from time to time
consider necessary for the proper supervision of its investment assets.
Citibank shall act as the Adviser to the Portfolio and as such shall
furnish continuously an investment program and shall determine from time to
time what securities shall be purchased, sold or exchanged and what portion
of the assets of the Portfolio shall be held uninvested, subject always to
the restrictions of the Portfolio's Declaration of Trust, dated March 13,
1990, and By-laws, as each may be amended from time to time (respectively,
the "Declaration" and the "By-Laws"), to the provisions of the 1940 Act,
and to the Portfolio's then-current Registration Statement under the 1940
Act. The Adviser shall also make recommendations as to the manner in which
voting rights, rights to consent to corporate action and any other rights
pertaining to the securities held by the Portfolio shall be exercised.
Should the Board of Trustees of the Portfolio at any time, however, make
any definite determination as to investment policy and notify the Adviser
thereof in writing, the Adviser shall be bound by such determination for
the period, if any, specified in such notice or until similarly notified
that such determination has been revoked. The Adviser shall take, on behalf
of the Portfolio, all actions which it deems necessary to implement the
investment policies determined as provided above, and in particular to
place all orders for the purchase or sale of securities for the Portfolio's
account with the brokers or dealers selected by it, and to that end the
Adviser is authorized as the agent of the Portfolio to give instructions to
the custodian of the Portfolio as to deliveries of securities and payments
of cash for the account of the Portfolio. In connection with the selection
of such brokers or dealers and the placing of such orders, the Adviser is
directed to seek for the Portfolio in its best judgment, prompt execution
in an effective manner at the most favorable price. Subject to this
requirement of seeking the most favorable price, securities may be bought
from or sold to broker-dealers who have furnished statistical, research and
other information or services to the Adviser or the Portfolio, subject to
any applicable laws, rules and regulations. In making purchases or sales of
securities or other property for the account of the Portfolio, the Adviser
may deal with itself or with the Trustees of the Portfolio or the
Portfolio's exclusive placing agent, to the extent such actions are
permitted by the 1940 Act.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall furnish at
its own expense all necessary services, facilities and personnel in
connection with its responsibilities under Section 1 above. It is
understood that the Portfolio will pay all of its own expenses including,
without limitation, compensation of Trustees not "affiliated" with the
Adviser; governmental fees; interest charges; taxes; membership dues in the
Investment Company Institute allocable to the Portfolio; fees and expenses
of independent auditors, of legal counsel and of any transfer agent,
administrator, registrar or dividend disbursing agent of the Portfolio;
expenses of preparing, printing and mailing reports, notices, proxy
statements and reports to governmental officers and commissions and to
investors in the Portfolio; expenses connected with the execution,
recording and settlement of security transactions; insurance premiums; fees
and expenses of the custodian for all services to the Portfolio, including
safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of the Portfolio; and
expenses of meetings of the Portfolio's investors.
3. COMPENSATION OF THE ADVISER. For the services to be rendered, the
Portfolio shall pay to the Adviser an investment advisory fee computed and
paid monthly at an annual rate equal to .20% of the Portfolio's average
daily net assets for its then-current fiscal year. If Citibank serves as
Adviser for less than the whole of any period specified in this Section 3,
the compensation to Citibank, as Adviser, shall be prorated.
4. COVENANTS OF THE ADVISER. The Adviser agrees that it will not deal
with itself, or with the Trustees of the Portfolio or the Portfolio's
exclusive placing agent, as principals in making purchases or sales of
securities or other property for the account of the Portfolio, except as
permitted by the 1940 Act, and will comply with all other provisions of the
Portfolio's Declaration and By-Laws and the then-current Registration
Statement of the Portfolio under the 1940 Act relative to the Adviser and
its Directors and officers.
5. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of
security transactions for the Portfolio, except for willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by
reason of reckless disregard of its obligations and duties hereunder. As
used in this Section 5, the term "Adviser" shall include Directors,
officers and employees of the Adviser as well as the corporation itself.
6. ACTIVITIES OF THE ADVISER. The services of the Adviser to the
Portfolio are not to be deemed to be exclusive, Citibank being free to
render investment advisory and/or other services to others. It is
understood that Trustees and officers of, and investors in the Portfolio
are or may be or may become interested in the Adviser, as Directors,
officers, employees, or otherwise and that Directors, officers and
employees of the Adviser are or may become similarly interested in the
Portfolio and that the Adviser may be or may become interested in the
Portfolio as an investor or otherwise.
7. DURATION, TERMINATION AND AMENDMENTS OF THIS AGREEMENT. This
Agreement shall become effective as of the day and year first above written
and shall govern the relations between the parties hereto thereafter, and
shall remain in force until May 31, 1991 on which date it will terminate
unless its continuance after May 31, 1991 is "specifically approved at
least annually" (a) by the vote of a majority of the Trustees of the
Portfolio who are not "interested persons" of the Portfolio or of the
Adviser at a meeting specifically called for the purpose of voting on such
approval, and (b) by the Board of Trustees of the Portfolio or by "vote of
a majority of the outstanding voting securities" of the Portfolio.
The Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Portfolio, or by the Adviser, in each case on not more than
60 days' nor less than 30 days' written notice to the other party. This
Agreement shall automatically terminate in the event of its "assignment".
This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Portfolio.
The terms "specifically approved at least annually", "vote of a majority of
the outstanding voting securities", "assignment", "affiliated person", and
"interested persons", when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TAX FREE RESERVES PORTFOLIO CITIBANK, N.A.
By: /s/Philip Coolidge By: /s/Peter P. Capaccio
------------------- --------------------
Title: President Title: Vice President
------------------- --------------------
<PAGE>
EXHIBIT NO. 6
PLACEMENT AGENCY AGREEMENT
August 23, 1991
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, Massachusetts 02116
Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Tax Free Reserves Portfolio (the "Portfolio"), an
open-end diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), organized as a
Massachusetts business Trust, has agreed that The Landmark Funds Broker-Dealer
Services, Inc. ("LFBDS") shall be the placement agent (the "Placement Agent") of
beneficial interests of the Portfolio ("Portfolio Interests").
SERVICES AS PLACEMENT AGENT.
1.1 LFBDS will act as Placement Agent of the Portfolio Interests covered by the
registration statement (as defined below) then in effect under the 1940
Act. In acting as Placement Agent under this Placement Agency Agreement,
neither LFBDS nor its employees nor any agents thereof shall make any offer
or sale of Portfolio Interests in a manner which would require the
Interests to be registered under the Securities Act of 1933, as amended
(the "1933 Act").
1.2 All activities by LFBDS and its agents and employees as Placement Agent of
Portfolio Interests shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations
adopted pursuant to the 1940 Act by the Securities and Exchange Commission
(the "Commission").
1.3 Nothing herein shall be construed to require the Portfolio to accept any
offer to purchase any Portfolio Interests, all of which shall be subject to
approval by the Portfolio's Board of Trustees.
1.4 The Portfolio shall furnish from time to time for use in connection with
the sale of Portfolio Interests such information with respect to the
Portfolio and Portfolio Interests as LFBDS may reasonably request. The
Portfolio shall also furnish LFBDS upon request with: (a) unaudited
semiannual statements of the Portfolio's books and accounts prepared by the
Portfolio, and (b) from time to time such additional information regarding
the Portfolio's financial or regulatory condition as LFBDS may reasonably
request.
1.5 The Portfolio represents to LFBDS that all registration statements filed by
the Portfolio with the Commission under the 1940 Act with respect to
Portfolio Interests have been prepared in conformity with the requirements
of such statute and the ru1es and regulations of the Commission thereunder.
As used in this Agreement the term "registration statement" shall mean any
registration statement filed with the Commission as modified by any
amendments thereto that at any time shall have been filed with the
Commission by or on behalf of the Portfolio. The Portfolio represents and
warrants to LFBDS that any registration statement will contain all
statements required to be stated therein in conformity with both such
statute and the rules and regulations of the Commission; that all
statements of fact contained in any registration statement will be true and
correct in all material respects at the time of filing of such registration
statements or amendments thereto; and that no registration statement will
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of Portfolio Interests. The Portfolio
may but shall not be obligated to propose from time to time such amendment
to any registration statement as in the light of future developments may,
in the opinion of the Portfolio's counsel, be necessary or advisable. If
the Portfolio shall not propose such amendment and/or supplement within
fifteen days after receipt by the Portfolio of a written request from LFBDS
to do so, LFBDS may, at its option, terminate this Agreement. The Portfolio
shall not file any amendment to any registration statement without giving
LFBDS reasonable notice thereof in advance; provided, however, that nothing
contained in this Agreement shall in any way limit the Portfolio's right
to file at any time such amendment to any registration statement as the
Portfolio may deem advisable, such right being in all respects absolute and
unconditional.
1.6 The Portfolio agrees to indemnify, defend and hold LFBDS, its several
officers and directors, and any person who controls LFBDS within the
meaning of Section 15 of the 1933 Act or Section 20 of the Securities and
Exchange Act of 1934 (the "1934 Act") (for purposes of this paragraph 1.6,
collectively, "Covered Persons") free and harmless from and against any and
all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which any Covered Person may
incur under the 1933 Act, the 1934 Act, common law or otherwise, arising
out of or based on any untrue statement of a material fact contained in any
registration statement, private placement memorandum or other offering
material ("Offering Material") or arising out of or based on any omission
to state a material fact required to be stated in any Offering Material or
necessary to make the statements in any Offering Material not misleading;
provided, however, that the Portfolio's agreement to indemnify Covered
Persons shall not be deemed to cover any claims, demands, liabilities or
expenses arising out of any financial and other statements as are furnished
in writing to the Portfolio by LFBDS in its capacity as Placement Agent for
use in the answers to any items of any registration statement or in any
statements made in any Offering Material, or arising out of or based on any
omission or alleged omission to state a material fact in connection with
the giving of such information required to be stated in such answers or
necessary to make the answers not misleading; and further provided that the
Portfolio's agreement to indemnify LFBDS and the Portfolio's
representations and warranties herein before set forth in paragraph 1.5
shall not be deemed to cover any liability to the Portfolio or its
investors to which a Covered Person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of a Covered Person's reckless disregard of its
obligations and duties under this Agreement. The Portfolio shall be
notified of any action brought against a Covered Person, such notification
to be given by letter or by telegram addressed to the Portfolio, c/o Roger
P. Joseph, Esq., Bingham, Dana & Gould, 150 Federal Street, 24th floor,
Boston, Massachusetts 02110, with a copy to Philip W. Coolidge, 6 St. James
Avenue, 9th floor, Boston, Massachusetts 02116 promptly after the summons
or other first legal process shall have been duly and completely served
upon such Covered Person. The failure to so notify the Portfolio of any
such action shall not relieve the Portfolio from any liability except to
the extent that the Portfolio shall have been prejudiced by such failure,
or from any liability that the Portfolio may have to the Covered Person
against whom such action is brought by reason of any such untrue statement
or omission, otherwise than on account of the Portfolio's indemnity
agreement contained in this paragraph. The Portfolio will be entitled to
assume the defense of any suit brought to enforce any such claim, demand or
liability, but in such case such defense shall be conducted by counsel of
good standing chosen by the Portfolio and approved by LFBDS, which approval
shall not be unreasonably withheld. In the event the Portfolio elects to
assume the defense of any such suit and retain counsel of good standing
approved by LFBDS, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any of them; but in
case the Portfolio does not elect to assume the defense of any such suit,
or in case LFBDS reasonably does not approve of counsel chosen by the
Portfolio, the Portfolio will reimburse the Covered Person named as
defendant in such suit, for the fees and expenses of any counsel retained
by LFBDS or such Covered Person. The Portfolio's indemnification agreement
contained in this paragraph and the Portfolio's representations and
warranties in this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of Covered
Persons, and shall survive the delivery of any Portfolio Interests. This
agreement of indemnity will inure exclusively to Covered Persons and their
successors. The Portfolio agrees to notify LFBDS promptly of the
commencement of any litigation or proceedings against the Portfolio or any
of its officers or Portfolio ees in connection with the issue and sale of
any Portfolio Interests.
1.7 LFBDS agrees to indemnify, defend and hold the Portfolio, its several
officers and Portfolio ees, and any person who controls the Portfolio
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act (for purposes of this paragraph 1.7, collectively, "Covered Persons")
free and harmless from and against any and all claims, demands, liabilities
and expenses (including the costs of investigating or defending such
claims, demands, liabilities and any counsel fees incurred in connection
therewith) that Covered Persons may incur under the 1933 Act, the 1934 Act,
or common law or otherwise, but only to the extent that such liability or
expense incurred by a Covered Person resulting from such claims or demands
shall arise out of or be based on any untrue statement of a material fact
contained in information furnished in writing by LFBDS in its capacity as
Placement Agent to the Portfolio for use in the answers to any of the items
of any registration statement or in any statements in any Offering Material
or shall arise out of or be based on any omission to state a material fact
in connection with such information furnished in writing by LFBDS to the
Portfolio required to be stated in such answers or necessary to make such
information not misleading. LFBDS shall be notified of any action brought
against a Covered Person, such notification to be given by letter or
telegram addressed to LFBDS at 6 St. James Avenue, Boston, Massachusetts
02116, Attention: Philip W. Coolidge, promptly after the summons or other
first legal process shall have been duly and completely served upon such
Covered Person. LFBDS shall have the right of first control of the defense
the action with counsel of its own choosing satisfactory to the Portfolio
if such action is based solely on such alleged misstatement or omission on
LFBDS's part, and in any other event each Covered Person shall have the
right to participate in the defense or preparation of the defense of any
such action. The failure to so notify LFBDS of any such action shall not
relieve LFBDS from any liability except to the extent that LFBDS shall have
been prejudiced by such failure, or from any liability that LFBDS may have
to Covered Persons by reason of any such untrue or alleged untrue
statement, or omission or alleged omission, otherwise than on account of
LFBDS's indemnity agreement contained in this paragraph.
1.8 No Portfolio Interests shall be offered by either LFBDS or the Portfolio
under any of the provisions of this Agreement and no orders for the
purchase or sale of Portfolio Interests hereunder shall be accepted by the
Portfolio if and so long as the effectiveness of the registration statement
or any necessary amendments thereto shall be suspended under any of the
provisions of the 1940 Act; provided, however, that nothing contained in
this paragraph shall in any way restrict or have an application to or
bearing on the Portfolio's obligation to redeem Portfolio Interests from
any investor in accordance with the provisions of the Portfolio's
registration statement or Declaration of Portfolio, as amended from time to
time.
1.9 The Portfolio agrees to advise LFBDS as soon as reasonably practical by a
notice in writing delivered to LFBDS or its counsel:
(a) of any request by the Commission for amendments to the registration
statement then in effect or for additional information;
(b) in the event of the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement then in effect or the
initiation by service of process on the Portfolio of any proceeding for
that purpose;
(c) of the happening of any event that makes untrue any statement of a material
fact made in the registration statement then in effect or that requires the
making of a change in such registration statement in order to make the
statements therein not misleading; and
(d) of all action of the Commission with respect to any amendment to any
registration statement that may from time to time be filed with the
Commission.
For purposes of this paragraph 1.9, informal requests by or acts of the Staff of
the Commission shall not be deemed actions of or requests by the Commission.
1.10 LFBDS agrees on behalf of itself and its employees to treat confidentially
and as proprietary information of the Portfolio all records and other
information not otherwise publicly available relative to the Portfolio and
its prior, present or potential investors and not to use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder, except after prior notification to and approval in
writing by the Portfolio, which approval shall not be unreasonably withheld
and may not be withheld where LFBDS may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Portfolio.
1.11 In addition to LFBDS's duties as Placement Agent, the Portfolio understands
that LFBDS may, in its discretion, perform additional functions in
connection with transactions in Portfolio Interests.
The processing of Share transactions may include, but is not limited to,
compilation of all transactions from LFBDS's various offices; creation of a
transaction tape and timely delivery of it to the Portfolio's transfer agent
for processing; reconciliation of all transactions delivered to the Portfolio's
transfer agent; and the recording and reporting of these transactions executed
by the Portfolio's transfer agent in customer statements; rendering of periodic
customer statements; and the reporting of IRS Form 1099 information at year end
if required.
LFBDS may also provide other investor services, such as communicating with
Portfolio investors and other functions in administering customer accounts for
Portfolio investors.
LFBDS understands that these services may result in cost savings to the
Portfolio or to the Portfolio's investment manager and neither the Portfolio
nor the Portfolio's investment manager will compensate LFBDS for all or a
portion of the costs incurred in performing functions in connection with
transactions in Portfolio Interests. Nothing herein is intended, nor shall be
construed, as requiring LFBDS to perform any of the foregoing functions.
2. TERM
This Agreement shall become effective on the date first above written and,
unless sooner terminated as provided herein, shall continue until May 24, 1992
and thereafter shall continue automatically for successive annual periods,
provided such continuance is specifically approved at least annually by (i) the
Portfolio's Board of Trustees or (ii) by a vote of a majority (as defined in
the 1940 Act) of the Portfolio's outstanding voting securities, provided that in
either event the continuance is also approved by the majority of the Portfolio's
Trustees who are not interested persons (as defined in the 1940 Act) of the
Portfolio and who have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable without penalty, on not less than
60 days' notice, by the Board, by vote of a majority (as defined in the 1940
Act) of the Portfolio's outstanding voting securities, or by LFBDS. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act and the rules thereunder).
3. REPRESENTATIONS AND WARRANTIES.
LFBDS and the Portfolio each hereby represents and warrants to the other that it
has all requisite authority to enter into, execute, deliver and perform its
obligations under this Agreement and that, with respect to it, this Agreement is
legal, valid and binding, and enforceable in accordance with its terms.
4. CONCERNING APPLICABLE PROVISIONS OF LAW, ETC.
This Agreement shall be subject to all applicable provisions of law, including
the applicable provisions of the 1940 Act and to the extent that any provisions
herein contained conflict with any such applicable provisions of law, the latter
shall control.
This Agreement is executed and delivered in Boston, Massachusetts, and the laws
of the Commonwealth of Massachusetts shall, except to the extent that any
applicable provisions of Federal Law shall be controlling, govern the
construction, validity and effect of this Agreement, without reference to
principles of conflicts of law.
<PAGE>
If the contract set forth herein is acceptable to you, please so indicate by
executing the enclosed copy of this Agreement and returning the same to the
undersigned, whereupon this Agreement shall constitute a binding contract
between the parties hereto effective at the closing of business on the date
hereof.
Yours very truly,
LANDMARK TAX FREE RESERVES PORTFOLIO
By: /s/ Philip Coolidge
-----------------------------------
President
Accepted:
THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC.
By: /s/ Philip Coolidge
-----------------------------------
Chief Executive Officer
<PAGE>
EXHIBIT NO. 7
CUSTODIAN CONTRACT
Between
TAX FREE RESERVES PORTFOLIO
and
STATE STREET BANK AND TRUST COMPANY
Page
1. Employment of Custodian and Property to be Held By
It .................................................... 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian ..................... 2
2.1 Holding Securities ............................. 2
2.2 Delivery of Securities ......................... 2
2.3 Registration of Securities ..................... 7
2.4 Bank Accounts .................................. 8
2.5 Payments for Shares ............................ 9
2.6 Availability of Federal Funds .................. 9
2.7 Collection of Income ........................... 9
2.8 Payment of Fund Monies ......................... 10
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased ................ 13
2.10 Payments for Repurchases or Redemptions
of Shares of the Fund .......................... 13
2.11 Appointment of Agents .......................... 14
2.12 Deposit of Fund Assets in Securities System .... 15
2.12A Fund Assets Held in the Custodian's
Direct Paper System ............................ 18
2.13 Segregated Account ............................. l9
2.14 Ownership Certificates for Tax Purposes ........ 20
2.15 Proxies ........................................ 20
2.16 Communications Relating to Fund
Portfolio Securities ........................... 21
2.17 Proper Instructions ............................ 22
2.18 Actions Permitted Without Express Authority .... 23
2.19 Evidence of Authority .......................... 23
3. Duties of Custodian With Respect to the Books
of Account and Calculation of Net Asset Value
and Net Income ........................................ 24
4. Records ............................................... 24
5. Opinion of Fund's Independent Accountant .............. 25
6. Reports to Fund by Independent Public Accountants ..... 25
7. Compensation of Custodian ............................. 26
8. Responsibility of Custodian ........................... 26
9. Effective Period, Termination and Amendment ........... 27
10. Successor Custodian ................................... 29
11. Interpretive and Additional Provisions ................ 30
12. Massachusetts Law to Apply ............................ 31
13. Prior Contracts ....................................... 31
<PAGE>
CUSTODIAN CONTRACT
This Contract between Tax Free Reserves Portfolio, a business trust
organized and existing under the laws of Massachusetts, having its principal
place of business at 6 St. James Avenue, Boston, Massachusetts, 02116,
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH, that in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets
pursuant to the provisions of the Declaration of Trust. The Fund agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest ("Shares") of the Fund as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of the Fund held or received
by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section 2.17),
the Custodian shall from time to time employ one or more sub-custodians, but
only in accordance with an applicable vote by the Board of Trustees of the Fund,
and provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, including all securities
owned by the Fund, other than (a) securities which are maintained pursuant
to Section 2.12 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as a "Securities System" and (b)
commercial paper of an issuer for which State Street Bank and Trust Company
acts as issuing and paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian pursuant to Section
2.12A.
2.2 Delivery of Securities. The Custodian shall release and deliver securities
owned by the Fund held by the Custodian or in a Securities System account
of the Custodian or in the Custodian's Direct Paper book entry system
account ("Direct Paper Account") only upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and receipt of
payment therefor;
2) Upon the receipt of payment in connection with any repurchase agreement
related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund:
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian:
6) To the issuer thereof, or its agent, for transfer into the name of the
Fund or into the name of any nominee or nominees of the Custodian or
into the name or nominee name of any agent appointed pursuant to
Section 2.11 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund, which may be in the
form of cash or obligations issued by the United States government, its
agencies or instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's account in
the book-entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or responsible for the
delivery of securities owned by the Fund prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"), relating
to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the rules
of the Commodity Futures Trading Commission and/or any Contract Market,
or any similar organization or organizations, regarding account
deposits in connection with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer Agent")
for the Fund, for delivery to such Transfer Agent or to the holders of
shares in connection with distributions in kind, as may be described
from time to time in the Fund's currently effective prospectus and
statement of additional information ("prospectus"), in satisfaction of
requests by holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such purpose
to be a proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment
adviser as the Fund, or in the name or nominee name of any agent appointed
pursuant to Section 2.11 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted by
the Custodian on behalf of the Fund under the terms of this Contract shall
be in "street name" or other good delivery form. If, however, the Fund
directs the Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely collect income due
the Fund on such securities and to notify the Fund on a best efforts basis
only of relevant corporate actions including, without limitation, pendency
of calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or order
by the Custodian acting pursuant to the terms of this Contract, and shall
hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for the Fund may be deposited by it to its credit as Custodian in
the Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be qualified
to act as a custodian under the Investment Company Act of 1940 and that
each such bank or trust company and the funds to be deposited with each
such bank or trust company shall be approved by vote of a majority of the
Board of Trustees of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor for
the Fund's Shares or from the Transfer Agent of the Fund and deposit into
the Fund's account such payments as are received for Shares of the Fund
issued or sold from time to time by the Fund. The Custodian will provide
timely notification to the Fund and the Transfer Agent of any receipt by it
of payments for Shares of the Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the Fund and
the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.7 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered securities held hereunder to which the Fund
shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments
with respect to bearer securities if, on the date of payment by the issuer,
such securities are held by the Custodian or its agent thereof and shall
credit such income, as collected, to the Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when
due on securities held hereunder. Income due the Fund on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the responsibility
of the Fund. The Custodian will have no duty or responsibility in
connection therewith, other than to provide the Fund with such information
or data as may be necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Fund is properly
entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of securities, options, futures contracts or
options on futures contracts for the account of the Fund but only
(a) against the delivery of such securities or evidence of title
to such options, futures contracts or options on futures
contracts, to the Custodian (or any bank, bankinq firm or trust
company doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as amended, to
act as a custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Fund or in
the name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof; (c) in the case
of a purchase involving the Direct Paper System, in accordance
with the conditions set forth in Section 2.12A; (d) in the case of
repurchase agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer which is a member
of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Fund of
securities owned by the Custodian along with written evidence of
the agreement by the Custodian to repurchase such securities from
the Fund or (e) for transfer to a time deposit account of the Fund
in any bank, whether domestic or foreign; such transfer may be
effected prior to receipt of a confirmation from a broker and/or
the applicable bank pursuant to Proper Instructions from the Fund
as defined in Section 2.17;
2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Fund as
set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the
account of the Fund: interest, taxes, management, accounting,
transfer agent and legal fees, and operating expenses of the Fund
whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees or of the Executive Committee of the Fund
signed by an officer of the Fund and certified by its Secretary or
an Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of securities for the account of the Fund is
made by the Custodian in advance of receipt of the securities purchased in
the absence of specific written instructions from the Fund to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by the
Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose but subject to the limitations of
the Declaration of Trust and any applicable votes of the Board of Trustees
of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian is authorized upon
receipt of instructions from the Transfer Agent to wire funds to or through
a commercial bank designated by the redeeming shareholders. In connection
with the redemption or repurchase of Shares of the Fund, the Custodian
shall honor checks drawn on the Custodian by a holder of Shares, which
checks have been furnished by the Fund to the holder of Shares, when
presented to the Custodian in accordance with such procedures and controls
as are mutually agreed upon from time to time between the Fund and the
Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time to time direct;
provided, however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
2.12 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of the Fund in a Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall
not include any assets of the Custodian other than assets held as
a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for the account
of the Fund upon (i) receipt of advice from the Securities System
that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Fund. The
Custodian shall transfer securities sold for the account of the
Fund upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Securities System of transfers of
securities for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to the
Fund at its request. Upon request, the Custodian shall furnish the
Fund confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall furnish
to the Fund copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the account of the
Fund.
4) The Custodian shall provide the Fund with any report obtained by
the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 9 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure
of the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may have
as a consequence of any such loss or damage if and to the extent
that the Fund has not been made whole for any such loss or damage.
2.12A Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by the Fund in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which
shall not include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Fund which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the account
of the Fund upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to
the account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon the making of an entry on
the records of the Custodian to reflect such transfer and receipt
of payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of each transfer
to or from the account of the Fund, in the form of a written
advice or notice, of Direct Paper on the next business day
following such transfer and shall furnish to the Fund copies of
daily transaction sheets reflecting each day's transaction in the
Securities System for the account of the Fund;
6) The Custodian shall provide the Fund with any report on its system
of internal accounting control as the Fund may reasonably request
from time to time;
2.13 Segregated Account. The Custodian shall upon receipt of Proper Instructions
establish and maintain a segregated account or accounts for and on behalf
of the Fund, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.12 hereof, (i) in accordance with the provisions of
any agreement among the Fund, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Eschange Act), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund, (ii) for purposes of segregating
cash or government securities in connection with options purchased, sold or
written by the Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, (iii) for the purpose of compliance by the
Fund with the procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate purposes, but
only, in the case of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board of Trustees or
of the Executive Committee signed by an officer of the Fund and certified
by the Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection with
transfers of securities.
2.15 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.16 Communications Relating to Fund Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund all written information (including, without limitation, pendency of
calls and maturities of securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by the
Fund and the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the securities being held for the
Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Fund all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought
and from the party (or his agents) making the tender or exchange offer. If
the Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Fund shall notify the Custodian
at least three business days prior to the date on which the Custodian is to
take such action.
2.17 Proper Instructions. Proper Instructions as used throughout this Article 2
means a writing signed or initialled by one or more person or persons as
the Board of Trustees shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such
action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given
by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the
Fund accompanied by a detailed description of procedures approved by the
Board of Trustees, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Board of Trustees and the Custodian are satisfied that such procedures
afford adequate safeguards for the Fund's assets. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which requires a segregated
asset account in accordance with Section 2.13.
2.18 Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Fund except
as otherwise directed by the Board of Trustees of the Fund.
2.19 Evidence of Authority. The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed by or
on behalf of the Fund. The Custodian may receive and accept a certified
copy of a vote of the Board of Trustees of the Fund as conclusive evidence
(a) of the authority of any person to act in accordance with such vote or
(b) of any determination or of any action by the Board of Trustees pursuant
to the Declaration of Trust as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.
3. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective prospectus and shall
advise the Fund and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise tbe Transfer Agent periodically of the division of such net income among
its various components. The calculations of the net asset value per share and
the daily income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.
4. Records
The Custodian shall create and maintain all records relating to its
activities and obligation under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.
5. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to
the services provided by the Custodian under this Contract; such reports, shall
be of sufficient scope and in sufficient detail, as may reasonably be required
by the Fund to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
7. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
8. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of Fund
assets to the estent necessary to obtain reimbursement.
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not act under Section 2.12 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Trustees of the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Trustees has reviewed the use by the Fund of such
Securities System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian shall not act under
Section 2.12A hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has approved the
initial use of the Direct Paper System and the receipt of an annual certificate
of the Secretary or an Assistant Secretary that the Board of Trustees has
reviewed the use by the Fund of the Direct Paper System; provided further,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Declaration of Trust, and further provided, that the Fund may at any time
by action of its Board of Trustees (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
10. Successor Custodian
If a successor custodian shall be appointed by the Board of Trustees of the
Fund, the Custodian shall, upon termination, deliver to such successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an account of the
successor custodian all of the Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Declaration of Trust of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
12. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
13. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 31st day of January, 1991.
ATTEST TAX FREE RESERVES PORTFOLIO
/s/ Cynthia J. Colitti By /s/ Philip Coolidge
- -------------------------------- -----------------------------------
Secretary President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Kevin J. Morrissey By /s/ Frank J. Sidoti
- -------------------------------- -----------------------------------
Assistant Secretary Vice President
<PAGE>
EXHIBIT NO. 9(a)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
TAX FREE RESERVES PORTFOLIO
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
Article 1 Terms of Appointment; Duties of the Bank ........................ 1
Article 2 Fees and Expenses ............................................... 5
Article 3 Representations and Warranties of the Bank ...................... 6
Article 4 Representations and Warranties of the Fund ...................... 6
Article 5 Indemnification ................................................. 7
Article 6 Covenants of the Fund and the Bank .............................. 10
Article 7 Termination of Agreement ........................................ ll
Article 8 Assignment ...................................................... 12
Article 9 Amendment ....................................................... 12
Article 10 Massachusetts Law to Apply ...................................... 13
Article 11 Merger of Agreement ............................................. 13
Article 12 Limitations of Liability of the Trustees and the Shareholders ... 13
Article 13 Counterparts .................................................... 13
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 31st day of January, 1991, by and between TAX
FREE RESERVES PORTFOLIO, a Massachusetts business trust, having its principal
office and place of business at 6 St. James Avenue, Boston, Massachusetts 02116
(the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company having its principal office and place of business at 225 Franklin
Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and the Bank desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 Terms of Appointment: Duties of the Bank
1.01 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints the Bank to act as, and the Bank agrees to act
as its transfer agent for the Fund's authorized and issued shares of its
beneficial interest ("Shares"), dividend disbursing agent, custodian of certain
retirement plans and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of the Fund ("Shareholders") and set
out in the currently effective prospectus and statement of additional
information ("prospectus") of the Fund, including without limitation any
periodic investment plan or periodic withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof to
the Custodian of the Fund authorized pursuant to the Declaration of
Trust of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of Shares
and hold such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and redemption directions
and deliver the appropriate documentation thereof to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii) above,
the Bank shall execute transactions directly with broker-dealers
authorized by the Fund who shall thereby be deemed to be acting on
behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to it by
the Custodian with respect to any redemption, pay over or cause to
be paid over in the appropriate manner such monies as instructed by
the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund;
(viii) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and protecting the Bank and
the Fund, and the Bank at its option, may issue replacement
certificates in place of mutilated stock certificates upon
presentation thereof and without such indemnity;
(ix) Report abandoned property to the various states as authorized by the
Fund per policies and principles agreed upon by the Fund and the
Bank;
(x) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(xi) Record the issuance of shares of the Fund and maintain pursuant to
SEC Rule 17Ad-l0(e) a record of the total number of shares of the
Fund which are authorized, based upon data provided to it by the
Fund, and issued and outstanding. The Bank shall also provide the
Fund on a regular basis with the total number of shares which are
authorized and issued and outstanding and shall have no obligation,
when recording the issuance of shares, to monitor the issuance of
such shares or to take cognizance of any laws relating to the issue
or sale of such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the services
set forth in the above paragraph (a), the Bank shall: (i) perform the customary
services of a transfer agent, dividend disbursing agent, custodian of certain
retirement plans and, as relevant, agent in connection with accumulation,
open-account or similar plans (including without limitation any periodic
investment plan or periodic withdrawal program), including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, receiving and tabulating proxies, mailing Shareholder reports
and prospectuses to current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky reporting for each
State and (ii) verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily activity for each
State. The responsibility of the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment of transactions subject to
blue sky compliance by the Fund and the reporting of such transactions to the
Fund as provided above.
(d) Procedures as to who shall provide certain of these services in Article
1 may be established from time to time by agreement between the Fund and the
Bank per the attached service responsibility schedule. The Bank may at times
perform only a portion of these services and the Fund or its agent may perform
these services on the Fund's behalf.
Article 2 Fees and Expenses
2.01 For performance by the Bank pursuant to this Agreement, the Fund
agrees to pay the Bank an annual maintenance fee for each Shareholder account as
set out in the initial fee schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees
to reimburse the Bank for out-of-pocket expenses or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within five
days following the receipt of the respective billing notice. Postage for mailing
of dividends, proxies, Fund reports and other mailings to all shareholder
accounts shall be advanced to the Bank by the Fund at least seven (7) days prior
to the mailing date of such materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
eguipment and personnel to perform its duties and obligations under this
Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Massachusetts.
4.02 It is empowered under applicable laws and by its Declaration of Trust
and By-Laws to enter into and perform this Agreement.
4.03 All proceedings required by said Declaration of Trust and By-Laws have
been taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as amended
is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with respect
to all Shares of the Fund being offered for sale.
Article 5 Indemnification
5.01 The Bank shall not be responsible for, and the Fund shall indemnify
and hold the Bank harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of the Bank or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records and documents or services which (i) are received or relied
upon by the Bank or its agents or subcontractors and/or furnished to it or
performed by or on behalf of the Fund, and (ii) have been prepared, maintained
and/or performed by the Fund or any other person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any reguirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 The Bank shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or failure or
omission to act by the Bank as a result of the Bank's lack of good faith,
negligence or willful misconduct.
5.03 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Fund, reasonably believed
to be genuine and to have been signed by the proper person or persons, or upon
any instruction, information, data, records or documents provided the Bank or
its agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers of
the Fund, and the proper countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article
5 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Fund and the Bank
6.01 The Fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Trustees of the Fund
authorizing the appointment of the Bank and the execution and delivery of this
Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto.
6.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
6.04 The Bank and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
Article 7 Termination of Agreement
7.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, the Bank reserves the right to charge for any other
reasonable expenses associated with such termination and/or a charge equivalent
to the average of three (3) months' fees.
Article 8 Assignment
8.01 Except as provided in Section 8.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
8.03 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(l) of the Securities Exchange Act of
1934, as amended ("Section 17A(c)(l)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(l) or (iii) a BFDS affiliate;
provided, however, that the Bank shall be as fully responsible to the Fund for
the acts and omissions of any subcontractor as it is for its own acts and
omissions.
Article 9 Amendment
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Fund.
Article 10 Massachusetts Law to Apply
10.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 11 Merger of Agreement
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
Article 12 Limitations of Liability of the Trustees and Shareholders
12.01 A copy of this Agreement and Declaration of Trust of the Trust is on
file with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or Shareholders individually
but are binding only upon the assets and property of the Fund.
Article 13 Counterparts
13.01 This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
TAX FREE RESERVES PORTFOLIO
By: /s/ Philip Coolidge
--------------------------------------
President
ATTEST:
By: /s/ Cynthia J. Colitti
------------------------------
Secretary
STATE STREET BANK AND TRUST COMPANY
By: /s/ Frank J. Sidoti
---------------------------------------
Vice President
ATTEST:
By: /s/ Kevin J. Morrissey
------------------------------
Assistant Secretary
<PAGE>
EXHIBIT NO. 9(b)
ADMINISTRATIVE SERVICES PLAN
ADMINISTRATIVE SERVICES PLAN, dated as of March 14, 1990, of Tax Free
Reserves Portfolio, a New York trust (the "Portfolio").
WITNESSETH:
WHEREAS, the Portfolio is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Portfolio desires to adopt this Administrative Services Plan
(the "Plan") in order to provide for certain administrative services to the
Portfolio and holders of its Beneficial Interests (the "Interests"); and
WHEREAS, the Portfolio desires to enter into a transfer agency agreement
(in such form as may from time to time be approved by the Board of Trustees of
the Portfolio (the "Transfer Agency Agreement")) with a financial institution,
as transfer agent for the Portfolio (the "Transfer Agent"), whereby the Transfer
Agent will provide transfer agency services to the Portfolio; and
WHEREAS, the Portfolio desires to enter into a custodian agreement (in such
form as may from time to time be approved by the Board of Trustees of the
Portfolio (the "Custodian Agreement")) with a financial institution, as
custodian for the Portfolio (the "Custodian"), whereby the Custodian will
provide custodial services to the Portfolio; and
WHEREAS, the Portfolio desires to enter into an administrative services
agreement (in such form as may from time to time be approved by the Board of
Trustees of the Portfolio (the "Administrative Services Agreement")) with The
Landmark Funds Broker-Dealer Services, Inc., a Massachusetts corporation, as
administrator of the Portfolio (the "Administrator"), whereby the Administrator
will provide certain administrative and management services to the Portfolio;
and
WHEREAS, the Board of Trustees of the Portfolio, in considering whether the
Portfolio should adopt and implement this Plan, has evaluated such information
as it deemed necessary to an informed determination as to whether this Plan
should be adopted and implemented and has considered such pertinent factors as
it deemed necessary to form the basis for a decision to use assets of the
Portfolio for such purposes, and has determined that there is a reasonable
likelihood that the adoption and implementation of this Plan will benefit the
Portfolio and the holders of its Interests.
NOW, THEREFORE, the Board of Trustees of the Portfolio hereby adopts this
Plan for the Portfolio, on the following terms and conditions:
1. As specified in the Transfer Agency Agreement, the Transfer Agent
shall act as dividend disbursing agent for the Portfolio and perform other
transfer agency functions for the Portfolio. The Portfolio shall pay to the
Transfer Agent such compensation as may from time to time be agreed to by
the Portfolio and the Transfer Agent.
2. As specified in the Custodian Agreement, the Custodian shall
safeguard and control the Portfolio's cash and securities, handle receipt
and delivery of securities for the Portfolio, determine income and collect
interest on the Portfolio's investments, maintain books of original entry
for Portfolio accounting and other required books and accounts, calculate
the daily net asset value of, and net income on, the Interests and, in
general, act as the custodian of the Portfolio's assets, but the Custodian
shall have no power to determine the investment policies of the Portfolio
or to determine which securities the Portfolio will buy or sell. The
Portfolio shall pay to the Custodian such compensation as may from time to
time be agreed to by the Portfolio and the Custodian.
3. As specified in the Administrative Services Agreement, the
Administrator shall perform certain administrative and management services
on behalf of the Portfolio, including: providing office space, equipment
and clerical personnel necessary for maintaining the organization of the
Portfolio and for providing the administrative and management services to
be performed by the Administrator; arranging, if desired by the Portfolio,
for Directors, officers and employees of the Administrator to serve as
Trustees, officers or agents of the Portfolio if duly elected or appointed
to such positions and subject to their individual consent and to any
limitations imposed by law; supervising the overall administration of the
Portfolio, including negotiation of contracts and fees with and the
monitoring of performance and billings of the Portfolio's Transfer Agent,
Custodian and other independent contractors or agents; preparing and, if
applicable, filing all documents required for compliance by the Portfolio
with applicable laws and regulations, including registration statements,
semi-annual and annual reports to the Portfolio's investors, proxy
statements and tax returns; preparation of agendas and supporting documents
for and minutes of meetings of Trustees, committees of Trustees and the
Portfolio's investors; arranging for computation of performance statistics
with respect to the Portfolio; and arranging for maintenance of books and
records of the Portfolio. As consideration for services performed under the
Administrative Services Agreement, the Portfolio shall periodically pay to
the Administrator a fee at an annual rate of 0.05% of the Portfolio's
average daily net assets for its then-current fiscal year.
4. Nothing herein contained shall be deemed to require the Portfolio
to take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
Portfolio of the responsibility for and control of the conduct of the
affairs of the Portfolio.
5. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of the Portfolio,
and (b) approval by a vote of the Board of Trustees of the Portfolio and
vote of a majority of the Trustees who are not "interested persons" of the
Portfolio and who have no direct or indirect financial interest in the
operation of the Plan or in any of the agreements related to the Plan (the
"Qualified Trustees"), such votes to be cast in person at a meeting called
for the purpose of voting on this Plan.
6. This Plan shall continue in effect indefinitely, provided that such
continuance is subject to annual approval by a vote of the Board of
Trustees of the Portfolio and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of voting on
the continuance of this Plan. If such annual approval is not obtained, this
Plan shall expire on the date which is 15 months after the date of the last
approval.
7. This Plan may be amended at any time by the Board of Trustees of
the Portfolio, provided that (a) any amendment to increase materially the
amount to be spent for the services described herein shall be effective
only upon approval by a vote of a "majority of the outstanding voting
securities" of the Portfolio, and (b) any material amendment of this Plan
shall be effective only upon approval by a vote of the Board of Trustees of
the Portfolio and a majority of the Qualified Trustees, such votes to be
cast in person at a meeting called for the purpose of voting on such
amendment. This Plan may be terminated at any time by vote of a majority of
the Qualified Trustees or by a vote of a "majority of the outstanding
voting securities" of the Portfolio.
8. The Treasurer of the Portfolio shall provide the Board of Trustees
of the Portfolio, and the Board of Trustees of the Portfolio shall review,
at least quarterly, a written report of the amounts expended under the Plan
and the purposes for which such expenditures were made.
9. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Portfolio.
10. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are used as defined in the
1940 Act. In addition, for purposes of determining the fees payable to the
Administrator, the value of the Portfolio's net assets shall be computed in
the manner specified in the Portfolio's then-current Registration Statement
under the 1940 Act.
11. The Portfolio shall preserve copies of this Plan, and each
agreement related hereto and each report referred to in paragraph 8 hereof
(collectively the "Records"), for a period of six years from the end of the
fiscal year in which such Record was made and each such Record shall be
kept in an easily accessible place for the first two years of said
record-keeping.
12. This Plan shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the 1940 Act.
13. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall
not be affected thereby.
<PAGE>
EXHIBIT NO. 9(c)
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT, dated as of March 14, 1990, by and
between Tax Free Reserves Portfolio, a New York trust (the "Trust"), and The
Landmark Funds Broker-Dealer Services, Inc., a Massachusetts corporation
("LFBDS" or the "Administrator").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940 (collectively with the rules
and regulations promulgated thereunder, the "1940 Act");
WHEREAS, the Board of Trustees of the Trust has adopted an Administrative
Services Plan, dated as of March 14, 1990, which is incorporated herein by
reference and pursuant to which the Trust desires to enter into this
Administrative Services Agreement; and
WHEREAS, the Trust wishes to engage LFBDS to provide certain administrative
and management services, and LFBDS is willing to provide such administrative and
management services to the Trust, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Administrator. Subject to the direction and control of the
Board of Trustees of the Trust, the Administrator shall perform such
administrative and management services as may time to time be reasonably
requested by the Trust, which shall include without limitation: (a)
providing office space, equipment and clerical personnel necessary for
maintaining the organization of the Trust and for performing the
administrative and management functions herein set forth; (b) arranging,
if desired by the Trust, for Directors, officers and employees of the
Administrator to serve as Trustees, officers or agents of the Trust if
duly elected or appointed to such positions and subject to their
individual consent and to any limitations imposed by law; (c)
supervising the overall administration of the Trust, including
negotiation of contracts and fees with and the monitoring of performance
and billings of the Trust's transfer agent, custodian and other
independent contractors or agents; (d) preparing and, if applicable,
filing all documents required for compliance by the Trust with
applicable laws and regulations, including registration statements,
semi-annual and annual reports to the Trust's investors proxy statements
and tax returns; (e) preparation of agendas and supporting documents for
and minutes of meetings of Trustees, committees of Trustees and the
Trust's investors and (f) arranging for maintenance of books and records
of the Trust. Notwithstanding the foregoing, the Administrator shall not
be deemed to have assumed any duties with respect to, and shall not be
responsible for, the management of the Trust's assets or the rendering
of investment advice and supervision with respect thereto or the
distribution of Shares, nor shall the Administrator be deemed to have
assumed or have any responsibility with respect to functions
specifically assumed by any transfer agent or custodian of the Trust.
2. Allocation of Charges and Expenses. LFBDS shall pay the entire salaries
and wages of all of the Trust's Trustees, officers and agents who devote
part or all of their time to the affairs of LFBDS or its affiliates, and
the wages and salaries of such persons shall not be deemed to be
expenses incurred by the Trust for purposes of this Section 2. Except as
provided in the foregoing sentence, the Trust will pay all of its own
expenses including, without limitation, compensation of Trustees not
affiliated with the Administrator; governmental fees; interest charges;
taxes; membership dues in the Investment Company Institute allocable to
the Trust; fees and expenses of the Trust's independent auditors, of
legal counsel and of any transfer agent, distributor, registrar or
dividend disbursing agent of the Trust; expenses of preparing, printing
and mailing reports, notices, proxy statements and reports to the
Trust's investors and governmental officers and commissions; expenses
connected with the execution, recording and settlement of security
transactions; insurance premiums; fees and expenses of the Trust's
custodian for all services to the Trust, including safekeeping of funds
and securities and maintaining required books and accounts; expenses of
calculating the net asset value of shares of the Trust; expenses of
meetings of investors in the Trust and expenses relating to the
issuance, registration and qualification of shares of the Trust.
3. Compensation of Administrator. For the services to be rendered and the
facilities to be provided by the Administrator hereunder, the Trust
shall pay to the Administrator an administrative fee computed and paid
monthly at an annual rate not in excess of 0.05% of the Trust's average
daily net assets for its then-current fiscal year. If LFBDS serves as
Administrator for less than the whole of any period specified in this
Section 3, the compensation to LFBDS, as Administrator, shall be
prorated. For purposes of computing the fees payable to the
Administrator hereunder, the value of the Trust's net assets shall be
computed in the manner specified in the Trust's then-current
Registration Statement under the 1940 Act.
4. Limitation of Liability of the Administrator. The Administrator shall
not 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 or the
performance of its duties hereunder, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason
of the reckless disregard of its obligations and duties hereunder. As
used in this Section 5, the term "Administrator" shall include LFBDS
and/or any of its affiliates and the Directors, officers and employees
of LFBDS and/or of its affiliates.
5. Activities of the Administrator. The services of the Administrator to
the Trust are not to be deemed to be exclusive, LFBDS being free to
render administrative and/or other services to other parties. It is
understood that Trustees, officers, and shareholders of the Trust are or
may become interested in the Administrator and/or any of its affiliates,
as Directors, officers, employees, or otherwise, and that Directors,
officers and employees of the Administrator and/or any of its affiliates
are or may become similarly interested in the Trust and that the
Administrator and/or any of its affiliates may be or become interested
in the Trust as an investor or otherwise.
6. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written and
shall govern the relations between the parties hereto thereafter, and
shall remain in force until February 28, 1992 on which date it will
terminate unless its continuance after February 28, 1992 is
"specifically approved at least annually" (a) by the vote of a majority
of the Board of Trustees of the Trust who are not "interested persons"
of the Trust or of the Administrator at a meeting specifically called
for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Trust or by the "vote of a majority of the outstanding
voting securities" of the Trust as to which this Agreement is to
continue.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Trustees of the Trust or by the "vote of a
majority of the outstanding voting securities" of the Trust, or by the
Administrator, in each case on not more than 60 days' nor less than 30
days' written notice to the other party. This Agreement shall
automatically terminate in the event of its "assignment".
The terms "specifically approved at least annually", "vote of a majority
of the outstanding voting securities", "assignment", and "interested
persons", when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent
with, the 1940 Act, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under said Act.
7. Subcontracting by LFBDS. LFBDS may subcontract for the performance of
LFBDS' obligations hereunder with any one or more persons; provided,
however, that LFBDS shall not enter into any such subcontract unless the
Trustees of the Trust shall have found the subcontracting party to be
qualified to perform the obligations sought to be subcontracted; and
provided, further, that, unless the Trust otherwise expressly agrees in
writing, LFBDS shall be as fully responsible to the Trust for the acts
and omissions of any subcontractor as it would be for its own acts or
omissions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written. The
undersigned Trustee of the Trust has executed this Agreement not individually,
but as Trustee under the Trust's Declaration of Trust, dated March 1, 1990 as
amended, and the obligations of this Agreement are not binding upon any of the
Trustees or shareholders of the Trust individually, but bind only the Trust
estate.
TAX FREE RESERVES PORTFOLIO
By /s/Philip Coolidge
--------------------------
Title: President
--------------------------
THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC.
By /s/Philip Coolidge
--------------------------
Title: Chief Executive Officer
--------------------------
<PAGE>
2093L
EXHIBIT 9(d)
SUB-ADMINISTRATIVE SERVICES AGREEMENT
SUB-ADMINISTRATIVE SERVICES AGREEMENT, dated as of March 14, 1990 by and
between THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC., a Massachusetts
corporation ("LFBDS" or the "Administrator"), and CITIBANK, N.A., a National
Banking Association ("Citibank" or the "Sub-Administrator").
WITNESSETH:
WHEREAS, LFBDS has entered into an Administrative Services Agreement (the
"Administrative Agreement") with Tax Free Reserves Portfolio (the "Trust"); and
WHEREAS, as permitted by Section 7 of the Administrative Agreement, LFBDS
desires to subcontract some or all of the performance of the Administrator's
obligations thereunder to Citibank, and Citibank desires to accept such
obligations; and
WHEREAS, LFBDS wishes to engage Citibank to provide certain administrative
services on the terms and conditions hereinafter set forth, so long as the
Trustees of the Trust shall have found Citibank to be qualified to perform the
obligations sought to be subcontracted.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herin set forth, the parties covenant and agree as
follows:
1. Duties of the Sub-Administrator. The Sub-Administrator shall perform such
administrative and management services as may from time to time be agreed
to between the Administrator and the Sub-Administrator so long as the
Trustees of the Trust shall have found the Sub-Administrator to be
qualified to perform the obligations sought to be subcontracted, which
may include (a) providing office space, equipment and clerical personnel
necessary for maintaining the organization of the Trust and for
performing the administrative functions herein set forth; (b)
participation in the preparation of documents required for compliance by
the Trust with applicable laws and regulations, including registration
statements, prospectuses, semiannual and annual reports to the Trust's
investors proxy statements and tax returns; (c) preparation of agendas
and supporting documents for and minutes of meetings of the Trustees,
Committees of Trustees and the Trust's investors; (d) arranging for
maintenance of books and records of the Trust; and (e) any other
functions or obligations permitted to or required by the Administrator.
Notwithstanding the foregoing, the Sub-Administrator under this Agreement
shall not be deemed to have assumed any duties with respect to, and shall
not be responsible for, the management of the Trust with respect thereto,
nor shall the Sub-Administrator under this Agreement be deemed to have
assumed or have any responsibility with respect to functions specifically
assumed by any transfer agent or custodian of the Trust.
2. Compensation of Administrator. For the services to be rendered and the
facilities to be provided by the Sub-Administrator hereunder, the
Sub-Administrator shall be paid an administrative fee as may from time to
time be agreed to between the Administrator and the Sub-Administrator.
3. Additional Terms and Conditions. The parties may amend this agreement and
include such other terms and conditions as may from time to time be
agreed to between the Administrator and the Sub-Administrator, so long as
the Trustees of the Trust shall have found the subcontracting party to be
qualified to perform the obligations sought to be subcontracted.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
THE LANDMARK FUNDS
BROKER-DEALER SERVICES, INC.
By: /s/ Philip W. Coolidge
----------------------------
Title: President
CITIBANK, N.A.
By: /s/ Peter P. Capaccio
----------------------------
Title: Vice President
<TABLE> <S> <C>
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<CIK> 0000864953
<NAME> TAX FREE RESERVES PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 384,787,100
<INVESTMENTS-AT-VALUE> 384,787,100
<RECEIVABLES> 3,016,874
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 68,724
<TOTAL-ASSETS> 387,872,698
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 372,171,080
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<ACCUMULATED-NET-GAINS> (25,753)
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 372,171,080
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14,128,044
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<EXPENSES-NET> 1,173,177
<NET-INVESTMENT-INCOME> 12,954,867
<REALIZED-GAINS-CURRENT> (25,753)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 12,929,114
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 426,786,434
<NUMBER-OF-SHARES-REDEEMED> (461,766,719)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (22,051,171)
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 782,232
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,239,296
<AVERAGE-NET-ASSETS> 391,116
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
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</TABLE>
