US TREASURY RESERVES PORTFOLIO, N-30B-2, 1997-10-28

US TREASURY RESERVES PORTFOLIO
N-30B-2, 1997-10-28

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<PAGE>

U.S. Treasury Reserves Portfolio
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS August 31, 1997
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--99.5%
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS--79.7%
due 9/18/1997 ......................... $280,932 $280,246,760
due 10/16/1997 ........................ 50,000 49,685,000
due 10/23/1997 ........................ 190,664 189,261,230
due 10/30/1997 ........................ 18,000 17,851,763
due 11/28/1997 ........................ 50,000 49,375,444
due 1/29/1998 ......................... 50,000 48,933,333
due 2/05/1998 ......................... 90,000 87,949,188
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723,302,718
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U.S. TREASURY NOTES--19.8%
5.75% due 9/30/1997 ................... 155,000 155,046,144
8.75% due 10/15/1997 .................. 25,000 25,096,389
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180,142,533
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TOTAL INVESTMENTS AT AMORTIZED COST .... 99.5% 903,445,251
OTHER ASSETS, LESS LIABILITIES ......... 0.5 4,464,945
---- ------------
NET ASSETS ............................. 100.0% $907,910,196
==== ============

See notes to financial statements

<PAGE>

ASSETS:
Investments, at amortized cost and value (Note 1A) ........... $903,445,251
Cash ......................................................... 631
Interest receivable .......................................... 4,580,840
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Total assets ................................................ 908,026,722
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LIABILITIES:
Payable to affiliate--INVESTMENT advisory fees (Note 2A) ..... 38,016
Accrued expenses and other liabilities ....................... 78,510
------------
Total liabilities ........................................... 116,526
------------
NET ASSETS ................................................... $907,910,196
============
REPRESENTED BY:
Paid-in capital for beneficial interests ..................... $907,910,196
============
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U.S. Treasury Reserves Portfolio
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STATEMENT OF OPERATIONS
For the Year Ended August 31, 1997
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<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME (Note 1B) ............................................... $44,756,356

EXPENSES:
Investment advisory fees (Note 2A) ........................................ $1,279,172
Administrative fees (Note 2B) ............................................. 426,391
Custodian fees ............................................................ 287,904
Auditing fees ............................................................. 20,900
Trustee fees .............................................................. 12,046
Legal fees ................................................................ 8,490
Miscellaneous ............................................................. 29,052
-------
Total expenses ........................................................... 2,063,955
Less aggregate amount waived by Investment Adviser and
Administrator (Notes 2A and 2B) .......................................... (1,211,224)
Less fees paid indirectly (Note 1D) ...................................... (310)
----------
Net expenses ............................................................. 852,421
-----------
Net investment income .................................................... $43,903,935
===========
</TABLE>
See notes to financial statements

<PAGE>

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U.S. Treasury Reserves Portfolio
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STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------
1997 1996
-------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
<S> <C> <C>
Net investment income .................................................... $ 43,903,935 $ 38,179,974
-------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from contributions .............................................. 1,742,310,476 1,474,479,600
Value of withdrawals ..................................................... (1,646,108,001) (1,577,114,165)
-------------- --------------
Net increase (decrease) in net assets from capital transactions .......... 96,202,475 (102,634,565)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS .................................... 140,106,410 (64,454,591)
NET ASSETS:
Beginning of period ...................................................... 767,803,786 832,258,377
-------------- --------------
End of period ............................................................ $ 907,910,196 $ 767,803,786
============== ==============
</TABLE>

Note: If the agents of the Portfolio had not voluntarily waived a portion of
their fees for the periods indicated and the expenses were not reduced for fees
paid indirectly for the years after August 31, 1995, the ratios would have been
as follows:

RATIOS:
Expenses to average net assets ................... 0.24% 0.25% 0.25% 0.26% 0.25% 0.25%
Net investment income to average net assets ...... 5.01% 5.05% 5.21% 3.30% 2.91% 3.58%
</TABLE>

+ Annualized.

See notes to financial statements

<PAGE>

(1) SIGNIFICANT ACCOUNTING POLICIES
U.S. Treasury Reserves Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Declaration of Trust permits the Trustees to issue
beneficial interests in the Portfolio. The Landmark Funds Broker-Dealer
Services, Inc. ("LFBDS") acts as the Portfolio's Administrator and Citibank,
N.A. ("Citibank") acts as the Investment Adviser.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.

The significant accounting policies consistently followed by the Portfolio are
as follows:

A. VALUATION OF INVESTMENTS -- Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
The Portfolio's use of amortized cost is subject to the Portfolio's compliance
with certain conditions as specified under Rule 2a-7 of the Investment Company
Act of 1940.

B. INVESTMENT INCOME AND EXPENSES -- Investment income consists of interest
accrued and discount earned (including both original issue and market discount),
adjusted for amortization of premium, on the investments of the Portfolio,
accrued ratably to the date of maturity, plus or minus net realized gain or
loss, if any, on investments. Expenses of the Portfolio are accrued daily.

C. FEDERAL INCOME TAXES -- The Portfolio's policy is to comply with the
applicable provisions of the Internal Revenue Code. Accordingly, no provision
for federal income taxes is necessary.

D. FEES PAID INDIRECTLY -- The Portfolio's custodian bank calculates its fees
based on the Portfolio's average daily net assets. The fee is reduced according
to a fee arrangement, which provides for custody fees to be reduced based on a
formula developed to measure the value of cash deposited with the custodian by
the Portfolio. This amount is shown as a reduction of expenses on the Statement
of Operations.

E. OTHER -- Purchases, maturities and sales of money market instruments are
accounted for on the date of the transaction.

(2) INVESTMENT ADVISORY FEES AND ADMINISTRATIVE FEES
A. INVESTMENT ADVISORY FEE -- The Investment advisory fees paid to Citibank, as
compensation for overall investment management services, amounted to $1,279,172,
of which $784,833 was voluntarily waived for the year ended August 31, 1997. The
investment advisory fee is computed at an annual rate of 0.15% of the
Portfolio's average daily net assets.

B. ADMINISTRATIVE FEES -- Under the terms of an Administrative Services
Agreement, the administrative fee paid to the Administrator, as compensation for
overall administrative services and general office facilities, is accrued daily
and paid monthly at the annual rate of 0.05% of the Portfolio's average daily
net assets. The Administrative fees amounted to $426,391, all of which was
voluntarily waived for the year ended August 31, 1997. The Portfolio pays no
compensation directly to any Trustee or any officer who is affiliated with the
Administrator, all of whom receive remuneration for their services to the
Portfolio from the Administrator or its affiliates. Certain of the officers and
a Trustee of the Portfolio are officers and a director of the Administrator or
its affiliates.

(3) INVESTMENT TRANSACTIONS
Purchases, maturities and sales of U.S. Treasury obligations, aggregated
$13,100,873,271 and $12,945,786,852, respectively, for the year ended August 31,
1997.

(4) LINE OF CREDIT
The Portfolio, along with other Landmark Funds, entered into an agreement with a
bank which allows the Funds collectively to borrow up to $60 million for
temporary or emergency purposes. Interest on borrowings, if any, is charged to
the specific fund executing the borrowing at the base rate of the bank. In
addition, the $15 million committed portion of the line of credit requires a
quarterly payment of a commitment fee based on the average daily unused portion
of the line of credit. For the year ended August 31, 1997, the commitment fee
allocated to the Portfolio was $3,796. Since the line of credit was established,
there have been no borrowings.

<PAGE>

TO THE TRUSTEES AND INVESTORS OF U.S. TREASURY RESERVES PORTFOLIO:

We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of U.S. Treasury Reserves Portfolio (a
New York Trust) as of August 31, 1997, the related statement of operations for
the year then ended, the statement of changes in net assets for the years ended
August 31, 1997 and 1996, and the financial highlights for each of the years in
the four-year period ended August 31, 1997, the eight months ended August 31,
1993, and the year ended December 31, 1992. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on the financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
August 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of U.S. Treasury
Reserves Portfolio at August 31, 1997, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
October 6, 1997