As filed with the Securities and Exchange Commission on October 1, 1996
File Nos. 33-49554
811-6740
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE
AMENDMENT NO. 7*
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 13
LANDMARK INSTITUTIONAL TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 617-423-1679
PHILIP W. COOLIDGE, 6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM, DANA & GOULD LLP,
150 FEDERAL STREET,
BOSTON, MASSACHUSETTS 02110
It is proposed that this filing will become effective on January 2, 1997,
pursuant to paragraph (a) of Rule 485, or such earlier date on which the
Commission may declare this filing effective pursuant to subparagraph (3) of
Rule 485(a).
U.S. Treasury Reserves Portfolio, Cash Reserves Portfolio and Tax Free
Reserves Portfolio have executed this Registration Statement.
Pursuant to Rule 24f-2, Registrant has registered an indefinite number of
its Shares of Beneficial Interest ($0.00001 par value) under the Securities Act
of 1933 and will file a Rule 24f-2 Notice on or about October 30, 1996 for
Registrant's fiscal year ended August 31, 1996.
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* Pursuant to Rule 429 under the Securities Act of 1933, this Post-Effective
Amendment also serves as Post-Effective Amendment No. 7 to Registrant's
Registration Statement under the Securities Act of 1933 at File No. 33-49552.
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<CAPTION>
LANDMARK INSTITUTIONAL TRUST
(LANDMARK INSTITUTIONAL LIQUID RESERVES,
LANDMARK INSTITUTIONAL U.S. TREASURY RESERVES AND
LANDMARK INSTITUTIONAL TAX FREE RESERVES)
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
N-1A
ITEM NO. N-1A ITEM LOCATION
PART A PROSPECTUS
<S> <C> <C>
Item 1. Cover Page...................................... Cover Page
Item 2. Synopsis........................................ Expense Summary
Item 3. Condensed Financial Information................. Condensed Financial Information
Item 4. General Description of Registrant............... Investment Information; General
Information; Appendix
Item 5. Management of the Fund.......... ............... Management; Expenses
Item 5A. Management's Discussion of Fund Performance..... Not Applicable
Item 6. Capital Stock and Other Securities.............. General Information; Voting and
Other Rights; Purchases; Exchanges;
Redemptions; Net Income and
Distributions; Tax Matters
Item 7. Purchase of Securities Being Offered............ Purchases; Exchanges; Redemptions
Item 8. Redemption or Repurchase........................ Purchases; Exchanges; Redemptions
Item 9. Pending Legal Proceedings....................... Not Applicable
STATEMENT OF
ADDITIONAL
PART B INFORMATION
Item 10. Cover Page...................................... Cover Page
Item 11. Table of Contents............................... Cover Page
Item 12. General Information and History................. The Funds
Item 13. Investment Objectives and Policies.............. Investment Objectives, Policies and
Restrictions
Item 14. Management of the Fund.......................... Management
Item 15. Control Persons and Principal Holders of
Securities...................... Management
Item 16. Investment Advisory and Other Services.......... Management
Item 17. Brokerage Allocation and Other Practices........ Portfolio Transactions
Item 18. Capital Stock and Other Securities.............. Description of Shares, Voting Rights
and Liabilities
Item 19. Purchase, Redemption and Pricing of Securities Description of Shares, Voting Rights
Being Offered................................... and Liabilities; Determination of Net
Asset Value
Item 20. Tax Status...................................... Certain Additional Tax Matters
Item 21. Underwriters.................................... Management
Item 22. Calculation of Performance Data................. Performance Information
Item 23. Financial Statements............................ Independent Accountants and
Financial Statements
</TABLE>
<PAGE>
PART C Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration
Statement.
<PAGE>
PROSPECTUS
JANUARY 2, 1997
LANDMARK INSTITUTIONAL TAX FREE RESERVES
LANDMARK INSTITUTIONAL LIQUID RESERVES
LANDMARK INSTITUTIONAL U.S. TREASURY RESERVES
(Members of the LandmarkSM Family of Funds)
This Prospectus describes three money market mutual funds in the Landmark
Family of Funds: Landmark Institutional Tax Free Reserves, Landmark
Institutional Liquid Reserves and Landmark Institutional U.S. Treasury
Reserves. Each Fund has its own investment objectives and policies. Shares of
the Funds are sold primarily to institutional investors. Citibank, N.A. is the
investment adviser.
UNLIKE OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIOS OF SECURITIES, EACH FUND SEEKS ITS INVESTMENT OBJECTIVES BY
INVESTING ALL OF ITS INVESTABLE ASSETS IN ANOTHER MUTUAL FUND (CALLED A
"PORTFOLIO"). EACH PORTFOLIO HAS THE SAME INVESTMENT OBJECTIVES AND POLICIES AS
ITS CORRESPONDING FUND. SEE "SPECIAL INFORMATION CONCERNING INVESTMENT
STRUCTURE" ON PAGE __.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. EACH FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE; HOWEVER, THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO DO
SO. PROSPECTIVE INVESTORS SHOULD ALSO BE AWARE THAT SHARES OF THE FUNDS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, CITIBANK, N.A. OR ANY
OF ITS AFFILIATES, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL AMOUNT INVESTED.
This Prospectus concisely sets forth information about the Funds that a
prospective investor should know before investing. A Statement of Additional
Information dated January 2, 1997 (and incorporated by reference in this
Prospectus) has been filed with the Securities and Exchange Commission. Copies
of the Statement of Additional Information may be obtained without charge, and
further inquiries about the Funds may be made, by contacting the investor's
shareholder servicing agent (see inside back cover for address and phone
number).
TABLE OF CONTENTS
Prospectus Summary ................................................
Expense Summary ...................................................
Condensed Financial Information ...................................
Investment Information ............................................
Risk Considerations ...............................................
Valuation of Shares ...............................................
Purchases .........................................................
Exchanges .........................................................
Redemptions .......................................................
Net Income and Distributions ......................................
Management ........................................................
Tax Matters .......................................................
Performance Information ...........................................
General Information ...............................................
Appendix A -- Permitted Investments and Investment Practices ......
Appendix B -- Ratings of Municipal Obligations.....................
<PAGE>
Appendix C -- Taxable Equivalent Yield Table.......................
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
PROSPECTUS SUMMARY
See the body of the Prospectus for more information on the topics
discussed in this summary.
THE FUNDS: This Prospectus describes three money market mutual funds:
Landmark Institutional Tax Free Reseves, Landmark Institutional Liquid Reserves
and Landmark Institutional U.S. Treasury Reserves. Each Fund has its own
investment objectives and policies. Each Fund seeks its objectives by investing
its investable assets in a Portfolio having the same investment objectives and
policies as that Fund. There can be no assurance that any Fund will achieve its
objectives.
INVESTMENT OBJECTIVES AND POLICIES:
INSTITUTIONAL TAX FREE RESERVES. To provide its shareholders with high levels
of current income exempt from federal income taxes, preservation of capital and
liquidity. Through Tax Free Reserves Portfolio, the Fund invests primarily in
short-term, high quality obligations issued by state and municipal governments
and by public authorities, the interest on which is exempt from federal income
taxes ("Municipal Obligations"). The Fund is a tax-exempt money market mutual
fund.
INSTITUTIONAL LIQUID RESERVES. To provide its shareholders with liquidity and
as high a level of current income as is consistent with the preservation of
capital. Through Cash Reserves Portfolio, the Fund invests in U.S.
dollar-denominated money market obligations with maturities of 397 days or less
issued by U.S. and non-U.S. issuers.
INSTITUTIONAL U.S. TREASURY RESERVES. To provide its shareholders with
liquidity and as high a level of current income from U.S. Government
obligations as is consistent with the preservation of capital. Through U.S.
Treasury Reserves Portfolio, the Fund invests in obligations issued by the U.S.
Government with maturities of 397 days or less.
INVESTMENT ADVISER AND DISTRIBUTOR: Citibank, N.A. ("Citibank" or the
"Adviser"), a wholly-owned subsidiary of Citicorp, is the investment adviser of
each Portfolio. Citibank and its affiliates manage more than $83 billion in
assets worldwide. The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS" or
the "Distributor") is the distributor of shares of each Fund. See "Management."
PURCHASES AND REDEMPTIONS: Customers of Shareholder Servicing Agents may
purchase and redeem shares of the Funds on any Business Day. See "Purchases"
and "Redemptions."
PRICING: Shares of the Funds are purchased and redeemed at net asset value
(normally $1.00 per share), without a sales load or redemption fees. While
there are no sales loads, shares of each Fund are subject to a distribution
fee.
EXCHANGES : Shares may be exchanged for shares of most other Landmark Funds.
See "Exchanges."
DIVIDENDS: Declared daily and distributed monthly. Shares begin accruing
dividends on the day they are purchased. See "Net Income and Distributions."
REINVESTMENT: Dividends may be received either in cash or in Fund shares at net
asset value, subject to the policies of a shareholder's Shareholder Servicing
Agent. See "Net Income and Distributions."
<PAGE>
WHO SHOULD INVEST: Each Fund is designed for investors seeking liquidity,
preservation of capital and current income, and for whom growth of capital is
not a consideration. Institutional Tax Free Reserves is designed for investors
seeking income which is exempt from federal income taxes. Institutional Liquid
Reserves is designed for investors seeking a convenient means of accumulating
an interest in a professionally managed, diversified portfolio consisting of
short-term, U.S. dollar-denominated money market obligations issued by U.S. and
non-U.S. issuers. Institutional U.S. Treasury Reserves is designed for
investors seeking a convenient means of accumulating an interest in a
professionally managed, diversified portfolio consisting of short-term U.S.
Government obligations. See "Investment Information."
RISK FACTORS: There can be no assurance that any Fund or its corresponding
Portfolio will achieve its investment objectives. In addition, while each Fund
intends to maintain a stable net asset value of $1.00 per share, there can be
no assurance that any Fund will be able to do so. Investments in high quality,
short-term instruments may, in many circumstances, result in a lower yield than
would be available from investments with a lower quality or a longer term.
Institutional Tax Free Reserves is a non-diversified mutual fund, which
means that it is not subject to any statutory restrictions under the Investment
Company Act of 1940 limiting the investment of its assets in one or relatively
few issuers. The Fund may therefore invest a relatively high percentage of its
assets in the obligations of a limited number of issuers. Also, the Fund may
invest 25% or more of its assets in securities of issuers in similar or related
industries or issuers located in the same state. As a result, the Fund is more
susceptible to any single economic, political or regulatory occurrence.
Investors in Institutional Liquid Reserves should be able to assume the
special risks of investing in non-U.S. securities, which include possible
adverse political, social and economic developments abroad, differing
regulations to which non-U.S. issuers are subject and different characteristics
of non-U.S. economies and markets. In addition, the prices of securities of
non-U.S. issuers may be more volatile than those of comparable U.S. issuers.
Certain investment practices also may entail special risks. Prospective
investors should read "Risk Considerations" for more information about risk
factors.
<PAGE>
EXPENSE SUMMARY
The following table summarizes estimated shareholder transaction and annual
operating expenses for each Fund and for its corresponding Portfolio.* Each
Fund invests all of its investable assets in its corresponding Portfolio. The
Trustees of each Fund believe that the aggregate per share expenses of that
Fund and its corresponding Portfolio will be less than or approximately equal
to the expenses that the Fund would incur if the assets of the Fund were
invested directly in the types of securities held by its Portfolio. For more
information on costs and expenses, see "Management" -- page __ and "General
Information -- Expenses" -- page __.
---------------------------------------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
TAX FREE LIQUID U.S. TREASURY
RESERVES(1) RESERVES RESERVES
- -------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES None None None
ANNUAL FUND OPERATING EXPENSES,
AFTER FEE WAIVERS AND REIMBURSE-
MENTS (AS A PERCENTAGE OF AVERAGE
NET ASSETS):
12b-1 Fees(2)(3)..................... .00% .00% .00%
Investment Management Fee(2)......... .10% .06% .05%
Administrative Services Fees(2)...... .05% .05% .05%
Shareholder Servicing Agent Fees(2).. .00% .00% .00%
Other Operating Expenses............. .10% .09% .15%
Total Fund Operating Expenses(2)..... .25% .20% .25%
* This table is intended to assist investors in understanding the various
costs and expenses that a shareholder of a Fund will bear, either
directly or indirectly. The table shows the fees paid to various service
providers after giving effect to expected voluntary partial fee waivers.
(1) Because this Fund is newly organized, all amounts in the table and the
example are estimated for the current fiscal year.
(2) Absent fee waivers and reimbursements, investment management fees, 12b-1
fees, administrative services fees, shareholder servicing agent fees and
total fund operating expenses would be .20%, .10%, .40%, .10% and .90%
for Institutional Tax Free Reserves, .15%, .10%, .40%, .10% and .84% for
Institutional Liquid Reserves and .15%, .10%, .40%, .10% and .90% for
Institutional U.S. Treasury Reserves. There can be no assurance that the
fee waivers and reimbursements reflected in the table will continue at
their present levels. Under each Fund's administrative services plan,
the aggregate of the fee paid to the Administrator and the fees paid to
the Shareholder Servicing Agents may not exceed .45% of the Fund's
average daily net assets on an annualized basis for the Fund's
then-current fiscal year. Individual components of the aggregate may
vary from time to time.
(3) Fees under the 12b-1 distribution plan are asset-based sales charges.
Long-term shareholders in a Fund could pay more in sales charges than
the economic equivalent of the maximum front-end sales charges permitted
by the National Association of Securities Dealers, Inc.
More complete descriptions of the following expenses of the Funds and the
Portfolios are set forth on the following pages: (i) investment management fees
- -- page __, (ii) distribution fees -- page __, (iii) administrative services
fees -- page __, and (iv) shareholder servicing agent fees -- page __.
<PAGE>
EXAMPLE: A shareholder would pay the following expenses on a $1,000 investment,
assuming a 5% annual return and redemption at the end of each period indicated
below:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
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INSTITUTIONAL TAX FREE RESERVES(1)......... $ $ $ $
INSTITUTIONAL LIQUID RESERVES.............. $ $ $ $
INSTITUTIONAL U.S. TREASURY RESERVES....... $ $ $ $
The Example assumes that all dividends are reinvested, and except as noted
expenses are based on each Fund's fiscal year ended August 31, 1996, after
waivers and reimbursements. If waivers and reimbursements were not in place,
the amounts in the Example would be $___, $___, $___, and $___ for
Institutional Tax Free Reserves, $___, $___, $___, and $___ for Institutional
Liquid Reserves and $___, $___, $___, and $___ for Institutional U.S. Treasury
Reserves. The assumption of a 5% annual return is required by the Securities
and Exchange Commission for all mutual funds, and is not a prediction of any
Fund's future performance. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OF ANY FUND. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
CONDENSED FINANCIAL INFORMATION
The following tables provide condensed financial information about
Institutional Liquid Reserves and Institutional U.S. Treasury Reserves for the
periods indicated. This information should be read in conjunction with the
financial statements appearing in each Fund's Annual Report to Shareholders,
which are incorporated by reference in the Statement of Additional Information.
The financial statements and notes, as well as the tables below, covering
periods through August 31, 1996 have been audited by Price Waterhouse LLP (for
the fiscal years ended August 31, 1996, August 31, 1995 and August 31, 1994)
and Deloitte & Touche LLP (for the period prior to the fiscal year ended August
31, 1994), independent accountants, on behalf of Institutional Liquid Reserves,
and by Deloitte & Touche LLP on behalf of Institutional U.S. Treasury Reserves.
The accountants' reports are included in the applicable Fund's Annual Report.
Copies of the Annual Reports may be obtained without charge from an investor's
Shareholder Servicing Agent (see inside of back cover for address and phone
number). Institutional Tax Free Reserves is newly organized and has not yet
issued financial statements.
[To be filed by amendment.]
<PAGE>
INVESTMENT INFORMATION
INVESTMENT OBJECTIVES:
The investment objectives of INSTITUTIONAL TAX FREE RESERVES are to
provide its shareholders with high levels of current income exempt from federal
income taxes, preservation of capital and liquidity.
The investment objective of INSTITUTIONAL LIQUID RESERVES is to provide
its shareholders with liquidity and as high a level of current income as is
consistent with the preservation of capital.
The investment objective of INSTITUTIONAL U.S. TREASURY RESERVES is to
provide its shareholders with liquidity and as high a level of current income
from U.S. Government obligations as is consistent with the preservation of
capital.
The investment objective of each Fund may be changed by its Trustees
without approval by that Fund's shareholders, but shareholders will be given
written notice at least 30 days before any change is implemented. Of course,
there can be no assurance that any Fund will achieve its investment objective.
INVESTMENT POLICIES:
INSTITUTIONAL TAX FREE RESERVES seeks its investment objectives by
investing all of its investable assets in Tax Free Reserves Portfolio. Tax Free
Reserves Portfolio seeks the same objectives as the Fund 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, 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 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.
<PAGE>
See Appendix A for an explanation of Municipal Obligations and Appendix B
for an explanation of ratings of Municipal Obligations. For a comparison of
yields on Municipal Obligations and taxable securities see Appendix C.
Although Tax Free Reserves 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.
INSTITUTIONAL LIQUID RESERVES seeks its objective by investing all of its
investable assets in Cash Reserves Portfolio. Cash Reserves Portfolio seeks the
same objective as the Fund by investing in high quality U.S. dollar-denominated
money market instruments. These instruments include short-term obligations of
the U.S. Government and repurchase agreements covering these obligations, bank
obligations (such as certificates of deposit, bankers' acceptances and fixed
time deposits) of U.S. and non-U.S banks and obligations issued or guaranteed
by the governments of Western Europe, Scandinavia, Australia, Japan and Canada.
The U.S. Government obligations in which the Portfolio invests include U.S.
Treasury bills, notes and bonds, and instruments issued by U.S. Government
agencies or instrumentalities. Some obligations of U.S. Government agencies and
instrumentalities are supported by the "full faith and credit" of the United
States, others by the right of the issuer to borrow from the U.S. Treasury and
others only by the credit of the agency or instrumentality. For more
information regarding the Portfolio's permitted investments and investment
practices, see Appendix A -- Permitted Investments and Investment Practices on
page __.
INSTITUTIONAL U.S. TREASURY RESERVES seeks its objective by investing all
of its investable assets in U.S. Treasury Reserves Portfolio. U.S. Treasury
Reserves Portfolio seeks the same objective as the Fund by investing in U.S.
Treasury bills, notes and bonds, and instruments issued by U.S. Government
agencies or instrumentalities, which are supported by the "full faith and
credit" of the United States. U.S. Treasury Reserves Portfolio will not enter
into repurchase agreements. For more information regarding the Portfolio's
permitted investments and investment practices, see Appendix A -- Permitted
Investments and Investment Practices on page __. ALTHOUGH THE PORTFOLIO INVESTS
IN U.S. GOVERNMENT OBLIGATIONS, NEITHER AN INVESTMENT IN THE FUND NOR AN
INVESTMENT IN THE PORTFOLIO IS INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
CERTAIN ADDITIONAL INVESTMENT POLICIES:
$1.00 NET ASSET VALUE. Each Fund employs specific investment policies and
procedures designed to maintain a constant net asset value of $1.00 per share.
There can be no assurance, however, that a constant net asset value will be
maintained on a continuing basis. See "Net Income and Distributions."
MATURITY AND QUALITY. All of the Portfolios' investments mature or are
deemed to mature within 397 days from the date of acquisition, and the average
maturity of the investments held by each Portfolio (on a dollar-weighted basis)
is 90 days or less. All of the Portfolios' investments are in high quality
securities which have been determined by the Adviser to present minimal credit
risks. To meet a Portfolio's high quality standards a security must be rated in
<PAGE>
the highest rating category (one of the two highest rating categories for Tax
Free Reserves Portfolio) for short-term obligations by at least two nationally
recognized statistical rating organizations (each, an "NRSRO") assigning a
rating to the security or issuer or, if only one NRSRO assigns a rating, that
NRSRO or, in the case of an investment which is not rated, of comparable
quality as determined by the Adviser. Investments in high quality, short-term
instruments may, in many circumstances, result in a lower yield than would be
available from investments in instruments with a lower quality or a longer
term.
PERMITTED INVESTMENTS. Uninvested cash reserves may be held temporarily
for a Fund pending investment. Each Fund may borrow from banks up to 10% of its
total assets for temporary or emergency purposes. For more information
regarding permitted investments and investment practices, see Appendix A --
Permitted Investments and Investment Practices on page __. The Funds will not
necessarily invest or engage in each of the investments and investment
practices in Appendix A but reserve the right to do so.
INVESTMENT RESTRICTIONS. The Statement of Additional Information contains
a list of specific investment restrictions which govern the investment policies
of the Funds and the Portfolios. Certain of these specific restrictions may not
be changed without shareholder approval. Except as otherwise indicated, the
Funds' and Portfolios' investment objectives and policies may be changed
without shareholder approval. If a percentage or rating restriction (other than
a restriction as to borrowing) is adhered to at the time an investment is made,
a later change in percentage or rating resulting from changes in the
Portfolios' securities will not be a violation of policy.
BROKERAGE TRANSACTIONS. The primary consideration in placing the
Portfolios' security transactions with broker-dealers for execution is to
obtain and maintain the availability of execution at the most favorable prices
and in the most effective manner possible.
RISK CONSIDERATIONS
The risks of investing in each Fund vary depending upon the nature of the
securities held, and the investment practices employed, on its behalf. Certain
of these risks are described below.
NON-DIVERSIFIED STATUS. Institutional Tax Free Reserves and Tax Free
Reserves Portfolio are non-diversified mutual funds. This means that they are
not subject to any statutory restrictions under the 1940 Act limiting the
investment of their assets in one or relatively few issuers (although certain
diversification requirements are imposed by the Internal Revenue Code). Since
Tax Free Reserves Portfolio may invest a relatively high percentage of its
assets in the obligations of a limited number of issuers, the value of shares
of Institutional Tax Free Reserves may be more susceptible to any single
economic, political or regulatory occurrence than the value of shares of a
diversified mutual fund would be. Tax Free Reserves 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. Tax Free Reserves 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
<PAGE>
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. For additional information
concerning variable rate instruments and Participation Interests, see Appendix
A.
"CONCENTRATION" IN BANK OBLIGATIONS. Cash Reserves Portfolio invests more
than 25% of its assets, and may invest up to 100% of its assets, in bank
obligations. This concentration policy is fundamental, and may not be changed
without the consent of the Portfolio's investors. Banks are subject to
extensive governmental regulation which may limit both the amounts and types of
loans and other financial commitments which may be made and interest rates and
fees which may be charged. The profitability of this industry is largely
dependent upon the availability and cost of capital funds for the purpose of
financing lending operations under prevailing money market conditions. Also,
general economic conditions play an important part in the operation of this
industry and exposure to credit losses arising from possible financial
difficulties of borrowers might affect a bank's ability to meet its obligations
under a letter of credit or guarantee.
NON-U.S. SECURITIES. Investors in Institutional Liquid Reserves should be
aware that investments in non-U.S. securities involve risks relating to
political, social and economic developments abroad, as well as risks resulting
from the differences between the regulations to which U.S. and non-U.S. issuers
and markets are subject. These risks may include expropriation, confiscatory
taxation, withholding taxes on dividends and interest, limitations on the use
or transfer of Portfolio assets and political or social instability. In
addition, non-U.S. companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may be less
public information about their operations. Non-U.S. markets may be less liquid
and more volatile than U.S. markets, and may offer less protection to investors
such as the Portfolio.
INVESTMENT PRACTICES. Certain of the investment practices employed for
the Portfolios may entail certain risks. See Appendix A -- Permitted
Investments and Investment Practices on page __.
SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE: Unlike other mutual funds
which directly acquire and manage their own portfolio securities, each Fund
seeks its investment objectives by investing all of its investable assets in
its corresponding Portfolio, a registered investment company. Each Portfolio
has the same investment objectives and policies as its corresponding Fund. In
addition to selling beneficial interests to a Fund, a Portfolio may sell
beneficial interests to other mutual funds, collective investment vehicles, or
institutional investors. Such investors will invest in the Portfolio on the
same terms and conditions and will pay a proportionate share of the Portfolio's
expenses. However, the other investors investing in the Portfolio are not
required to sell their shares at the same public offering price as the Fund due
to variations in sales commissions and other operating expenses. Therefore,
investors in a Fund should be aware that these differences may result in
differences in returns experienced by investors in the different funds that
invest in that Portfolio. Such differences in returns are also present in other
mutual fund structures. Information concerning other holders of interests in
the Portfolios is available from the Funds' distributor, LFBDS, at the address
and telephone number indicated on the back cover of this Prospectus.
The investment objective of each Fund may be changed by its Trustees
without the approval of the Fund's shareholders, but not without written notice
thereof to shareholders at least 30 days prior to implementing the change. If
<PAGE>
there is a change in a Fund's investment objective, shareholders should
consider whether the Fund remains an appropriate investment in light of their
then current financial positions and needs. The investment objective of each
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 (and, if a Fund is then invested in the Portfolio, notice to Fund
shareholders) at least 30 days prior to implementing the change. There can, of
course, be no assurance that the investment objective of either a Fund or its
Portfolio will be achieved. See "Investment Objective, Policies and
Restrictions -- Investment Restrictions" in the Statement of Additional
Information for a description of the fundamental policies of each Fund and its
Portfolio that cannot be changed without approval by the holders of a "majority
of the outstanding voting securities" (as defined in the 1940 Act) of the Fund
or Portfolio. Except as stated otherwise, all investment guidelines, policies
and restrictions described herein and in the Statement of Additional
Information are non-fundamental.
Certain changes in a Portfolio's investment objective, policies or
restrictions or a failure by a Fund's shareholders to approve a change in the
Portfolio's investment objective or restrictions, may preclude the Fund from
investing its investable assets in the Portfolio or require the Fund to
withdraw its interest in the Portfolio. Any such withdrawal could result in an
"in kind" distribution of securities (as opposed to a cash distribution) from
the Portfolio which may or may not be readily marketable. If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. The in kind distribution may result in the Fund having
a less diversified portfolio of investments or adversely affect the liquidity
of the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing. The absence of substantial
experience with this investment structure could have an adverse effect on an
investment in the Funds.
Smaller funds investing in a Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large
fund withdraws from the Portfolio, the remaining funds may subsequently
experience higher pro rata operating expenses, thereby producing lower returns.
Additionally, because the Portfolio would become smaller, it may become less
diversified, resulting in increased portfolio risk; however, these
possibilities exist for traditionally structured funds which have large or
institutional investors who may withdraw from a fund. Also, funds with a
greater pro rata ownership in the Portfolio could have effective voting control
of the operations of the Portfolio. If a Fund is requested to vote on matters
pertaining to its Portfolio (other than a vote by the Fund to continue the
operation of the Portfolio upon the withdrawal of another investor in the
Portfolio), the Fund will hold a meeting of its shareholders and will cast all
of its votes proportionately as instructed by such shareholders. The Fund will
vote the shares held by Fund shareholders who do not give voting instructions
in the same proportion as the shares of Fund shareholders who do give voting
instructions. Shareholders of the Fund who do not vote will have no effect on
the outcome of such matters.
Each Fund may withdraw its investment from its Portfolio at any time, if
the Fund's Board of Trustees determines that it is in the best interest of the
Fund to do so. Upon any such withdrawal, the Board of Trustees would consider
what action might be taken, including the investment of all of the investable
assets of the Fund in another pooled investment entity having the same
investment objective as the Fund or the retaining of an investment adviser to
manager the Fund's assets in accordance with the investment policies described
above. In the event the Fund's Trustees were unable to find a substitute
investment company in which to invest the Fund's assets or were unable to
secure directly the services of an investment adviser, the Trustees would
determine the best course of action.
For a description of the management of the Portfolios, see "Management"
- --page __. For descriptions of the expenses of the Portfolios, see "Management"
<PAGE>
and "General Information -- Expenses" -- page __. For a description of the
investment objectives, policies and restrictions of the Portfolios, see
"Investment Information" -- page __.
VALUATION OF SHARES
Net asset value per share of each Fund is determined each day the New
York Stock Exchange is open for trading (a "Business Day"). This determination
is made once each day as of 12:00 noon, Eastern time, for Institutional Tax
Free Reserves and Institutional U.S. Treasury Reserves and 3:00 p.m., Eastern
time, for Institutional Liquid Reserves, by adding the market value of all
securities and other assets of a Fund (including its interest in its
Portfolio), then subtracting the liabilities charged to the Fund, and then
dividing the result by the number of outstanding shares of the Fund. The
amortized cost method of valuing Portfolio securities is used in order to
attempt to stabilize the net asset value of shares of each Fund at $1.00;
however, there can be no assurance that a Fund's net asset value will always
remain at $1.00 per share. The net asset value per share is effective for
orders received and accepted by the Distributor prior to its calculation.
The amortized cost method involves valuing a security at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. Although the amortized cost method provides certainty in valuation, it
may result in periods during which the stated value of a security is higher or
lower than the price a Portfolio would receive if the security were sold.
PURCHASES
Shares of the Funds are offered continuously and may be purchased on any
Business Day without a sales load at the shares' net asset value (normally
$1.00 per share) next determined after an order is transmitted to and accepted
by the Distributor. Shares may be purchased either through a securities broker
which has a sales agreement with the Distributor or through a bank or other
financial institution which has an agency agreement with the Distributor.
Shares of the Funds are being offered exclusively to customers of a Shareholder
Servicing Agent (i.e., a financial institution, such as a federal or
state-chartered bank, trust company, savings and loan association or savings
bank, or a securities broker, that has entered into a shareholder servicing
agreement concerning a Fund). Each Fund and the Distributor reserve the right
to reject any purchase order and to suspend the offering of Fund shares for a
period of time.
While there is no sales load imposed on shares of the Funds, the
Distributor receives fees from each Fund pursuant to a Distribution Plan. See
"Management -- Distribution Arrangements."
Each shareholder's account is established and maintained by his or her
Shareholder Servicing Agent, which will be the shareholder of record of the
Fund. Each Shareholder Servicing Agent may establish its own terms, conditions
and charges with respect to services it offers to its customers. Charges for
these services may include fixed annual fees and account maintenance fees. The
effect of any such fees will be to reduce the net return on the investment of
customers of that Shareholder Servicing Agent.
Shareholder Servicing Agents will not transmit purchase orders to the
Distributor until they have received the purchase price in federal or other
immediately available funds. If Fund shares are purchased by check, there will
be a delay (usually not longer than two business days) in transmitting the
purchase order until the check is converted into federal funds.
EXCHANGES
Shares of each Fund may be exchanged for shares of other Landmark Funds
that are made available by a shareholder's Shareholder Servicing Agent, or may
<PAGE>
be acquired through an exchange of shares of those funds. No initial sales
charge is imposed on shares being acquired through an exchange unless the
shares being acquired are subject to a sales charge that is greater than the
current sales charge of the Fund (in which case an initial sales charge will be
imposed at a rate equal to the difference). Contingent deferred sales charges
may apply to redemptions of some shares of other Landmark Funds disposed of or
acquired through an exchange.
Shareholders must place exchange orders through their Shareholder
Servicing Agents, and may do so by telephone if their account applications so
permit. For more information on telephone transactions see "Redemptions." All
exchanges will be effected based on the relative net asset values per share
next determined after the exchange order is received by the Distributor. See
"Valuation of Shares." Shares of the Funds may be exchanged only after payment
in federal funds for the shares has been made.
This exchange privilege may be modified or terminated at any time, upon
at least 60 days' notice when such notice is required by SEC rules, and is
available only in those jurisdictions where such exchanges legally may be made.
See the Statement of Additional Information for further details. Before making
any exchange, shareholders should contact their Shareholder Servicing Agents to
obtain more information and prospectuses of the Landmark Funds to be acquired
through the exchange.
REDEMPTIONS
Fund shares may be redeemed at their net asset value (normally $1.00 per
share) next determined after a redemption request in proper form is received by
a shareholder's Shareholder Servicing Agent. Shareholders may redeem shares of
a Fund only by authorizing their Shareholder Servicing Agents to redeem such
shares on their behalf through the Distributor.
REDEMPTIONS BY MAIL. Shareholders may redeem Fund shares by sending
written instructions in proper form (as determined by a shareholder's
Shareholder Servicing Agent) to their Shareholder Servicing Agents.
Shareholders are responsible for ensuring that a request for redemption is in
proper form.
REDEMPTIONS BY TELEPHONE. Shareholders may redeem or exchange Fund shares
by telephone, if their account applications so permit, by calling their
Shareholder Servicing Agents. During periods of drastic economic or market
changes or severe weather or other emergencies, shareholders may experience
difficulties implementing a telephone exchange or redemption. In such an event,
another method of instruction, such as a written request sent via an overnight
delivery service, should be considered. The Funds and each Shareholder
Servicing Agent will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. These procedures may include recording
of the telephone instructions and verification of a caller's identity by asking
for the shareholder's name, address, telephone number, Social Security or
taxpayer identification number, and account number. If these or other
reasonable procedures are not followed, the Fund or the Shareholder Servicing
Agent may be liable for any losses to a shareholder due to unauthorized or
fraudulent instructions. Otherwise, the shareholder will bear all risk of loss
relating to a redemption or exchange by telephone.
PAYMENT OF REDEMPTIONS. The proceeds of a redemption are paid in federal
funds normally on the Business Day the redemption is effected, but in any event
within seven days. If a shareholder requests redemption of shares which were
purchased recently, a Fund may delay payment until it is assured that good
payment has been received. In the case of purchases by check, this can take up
to ten days. See "Determination of Net Asset Value" in the Statement of
Additional Information regarding the Funds' right to pay the redemption price
in kind with securities (instead of cash).
<PAGE>
Questions about redemption requirements should be referred to the
shareholder's Shareholder Servicing Agent. The right of any shareholder to
receive payment with respect to any redemption may be suspended or the payment
of the redemption price postponed during any period in which the New York Stock
Exchange is closed (other than weekends or holidays) or trading on the Exchange
is restricted or if an emergency exists.
NET INCOME AND DISTRIBUTIONS
The net income of each Fund is determined each Business Day (and on such
other days as is necessary in order to comply with the 1940 Act). This
determination is made once during each such day as of 12:00 noon, Eastern time,
for Institutional Tax Free Reserves and Institutional U.S. Treasury Reserves
and 3:00 p.m., Eastern time, for Institutional Liquid Reserves. All the net
income of each Fund is declared as a dividend to shareholders of record at the
time of such determination. Shares begin accruing dividends on the day they are
purchased, and accrue dividends up to and including the day prior to
redemption. Dividends are distributed monthly on or prior to the last Business
Day of each month. Unless a shareholder elects to receive dividends in cash
(subject to the policies of the shareholder's Shareholder Servicing Agent),
dividends are distributed in the form of full and fractional additional shares
of the applicable Fund at the rate of one share of the Fund for each one dollar
of dividend income.
Since the net income of each Fund is declared as a dividend each time the
net income of the Fund is determined, the net asset value per share of each
Fund is expected to remain at $1.00 per share immediately after each such
determination and dividend declaration. Any increase in the value of a
shareholder's investment in a Fund, representing the reinvestment of dividend
income, is reflected by an increase in the number of shares of the Fund in the
shareholder's account.
Because of the short-term maturities of the portfolio investments of the
Funds, the Funds do not expect to realize long-term capital gains or losses.
Any net realized short-term capital gains will be declared and distributed to
the applicable Fund's shareholders annually after the close of the Fund's
fiscal year. Distributions of short-term capital gains are taxable to
shareholders as described in "Tax Matters." Any realized short-term capital
losses will be offset against short-term capital gains or, to the extent
possible, utilized as capital loss carryover. Each Fund may distribute
short-term capital gains more frequently than annually, reduce shares to
reflect capital losses or make distributions of capital if necessary in order
to maintain the Fund's net asset value of $1.00 per share.
It is expected that each Fund will have a positive net income at the time
of each determination thereof. If for any reason a Fund's net income is a
negative amount, which could occur, for instance, upon default by an issuer of
a portfolio security, the Fund would first offset the negative amount with
respect to each shareholder account from the dividends declared during the
month with respect to those accounts. If and to the extent that negative net
income exceeds declared dividends at the end of the month, the Fund would
reduce the number of outstanding Fund shares by treating each shareholder as
having contributed to the capital of the Fund that number of full and
fractional shares in the shareholder's account which represents the
shareholder's share of the amount of such excess. Each shareholder would be
deemed to have agreed to such contribution in these circumstances by investment
in a Fund.
MANAGEMENT
TRUSTEES AND OFFICERS: Each Fund is supervised by the Board of Trustees of
Landmark Institutional Trust. Each Portfolio is supervised by its own Board of
Trustees. In each case, a majority of the Trustees are not affiliated with the
Adviser. In addition, a majority of the disinterested Trustees of the Funds are
<PAGE>
different from a majority of the disinterested trustees of their corresponding
Portfolios. More information on the Trustees and officers of the Funds and the
Portfolios appears under "Management" in the Statement of Additional
Information.
INVESTMENT ADVISER: CITIBANK. Each Fund draws on the strength and experience of
Citibank. Citibank offers a wide range of banking and investment services to
customers across the United States and throughout the world, and has been
managing money since 1822. Its portfolio managers are responsible for investing
in money market, equity and fixed income securities. Citibank and its
affiliates manage more than $83 billion in assets worldwide. Citibank is a
wholly-owned subsidiary of Citicorp.
Citibank manages the assets of each Portfolio pursuant to separate
Investment Advisory Agreements. Subject to policies set by the Portfolios'
Trustees, Citibank makes investment decisions for the Portfolios.
ADVISORY FEES. For its services under the Investment Advisory Agreements,
the Adviser receives investment advisory fees, which are accrued daily and paid
monthly, of 0.15% (0.20% for Tax Free Reserves Portfolio) of each Portfolio's
average daily net assets on an annualized basis for the Portfolio's
then-current fiscal year. The Adviser has voluntarily agreed to waive a portion
of its investment advisory fee.
For the fiscal year ended August 31, 1996, the investment advisory fees
paid to Citibank from Cash Reserves Portfolio were, after waiver, 0. % of the
Portfolio's average daily net assets for that fiscal year, and from U.S.
Treasury Reserves Portfolio were, after waiver, 0. % of the Portfolio's average
daily net assets for that fiscal year. Institutional Tax Free Reserves is newly
organized and had no operations during the fiscal year ended August 31, 1996.
BANKING RELATIONSHIPS. Citibank and its affiliates may have deposit, loan
and other relationships with the issuers of securities purchased on behalf of
the Portfolios, including outstanding loans to such issuers which may be repaid
in whole or in part with the proceeds of securities so purchased. Citibank has
informed the Funds and the Portfolios that, in making its investment decisions,
it does not obtain or use material inside information in the possession of any
division or department of Citibank or in the possession of any affiliate of
Citibank.
BANK REGULATORY MATTERS. The Glass-Steagall Act prohibits certain
financial institutions, such as Citibank, from underwriting securities of
open-end investment companies, such as the Funds or the Portfolios. Citibank
believes that its services under the Investment Advisory Agreements and the
activities performed by it or its affiliates as Shareholder Servicing Agents
and sub-administrator are not underwriting and are consistent with the
Glass-Steagall Act and other relevant federal and state laws. However, there is
no controlling precedent regarding the performance of the combination of
investment advisory, shareholder servicing and sub-administrative activities by
banks. State laws on this issue may differ from applicable federal law and
banks and financial institutions may be required to register as dealers
pursuant to state securities laws. Changes in either federal or state statutes
or regulations, or in their interpretations, could prevent Citibank or its
affiliates from continuing to perform these services. If Citibank or its
affiliates were to be prevented from acting as the Adviser, sub-administrator
or a Shareholder Servicing Agent, the Funds or Portfolios would seek
alternative means for obtaining these services. The Funds do not expect that
shareholders would suffer any adverse financial consequences as a result of any
such occurrence.
ADMINISTRATIVE SERVICES PLANS: The Funds and Portfolios have Administrative
Services Plans which provide that the applicable Fund or Portfolio may obtain
the services of an administrator, a transfer agent, a custodian, a fund
accountant, and, in the case of the Funds, one or more Shareholder Servicing
<PAGE>
Agents, and may enter into agreements providing for the payment of fees for
such services. Under the Funds' Administrative Services Plan, the total of the
fees paid to each Fund's Administrator and Shareholder Servicing Agents may not
exceed 0.45% of the Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year. Within this overall limitation, individual
fees may vary. Under each Portfolio's Administrative Services Plan, fees paid
to the Portfolio's Administrator may not exceed 0.05% of the Portfolio's
average daily net assets on an annualized basis for the Portfolio's
then-current fiscal year. See "Administrators," "Shareholder Servicing Agents"
and "Transfer Agent, Custodian and Fund Accountant."
ADMINISTRATORS: LFBDS provides certain administrative services to the Funds,
Tax Free Reserves Portfolio and U.S. Treasury Reserves Portfolio, and Signature
Financial Group (Cayman), Ltd., either directly or through a wholly-owned
subsidiary ("SFG"), provides certain administrative services to Cash Reserves
Portfolio, in each case under administrative services agreements. These
administrative services include providing general office facilities,
supervising the overall administration of the Funds and the Portfolios, and
providing persons satisfactory to the Boards of Trustees to serve as Trustees
and officers of the Funds and Portfolios. These Trustees and officers may be
directors, officers or employees of LFBDS, SFG or their affiliates.
For these services, the Administrators receive fees accrued daily and
paid monthly of 0.35% of the average daily net assets of each Fund and 0.05% of
the assets of each Portfolio, in each case on an annualized basis for the
Fund's or the Portfolio's then-current fiscal year. However, each of the
Administrators has voluntarily agreed to waive a portion of the fees payable to
it.
LFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group,
Inc. "Landmark" is a service mark of LFBDS.
SUB-ADMINISTRATOR: Pursuant to sub-administrative services agreements, Citibank
performs such sub-administrative duties for the Funds and Portfolios as from
time to time are agreed upon by Citibank and LFBDS or SFG. Citibank's
compensation as sub-administrator is paid by LFBDS or SFG.
SHAREHOLDER SERVICING AGENTS: The Funds have entered into separate shareholder
servicing agreements with each Shareholder Servicing Agent pursuant to which
that Shareholder Servicing Agent provides shareholder services, including
answering customer inquiries, assisting in processing purchase, exchange and
redemption transactions and furnishing Fund communications to shareholders. For
these services, each Shareholder Servicing Agent receives a fee from each Fund
at an annual rate of 0.10% of the average daily net assets of the Fund
represented by shares owned by investors for whom such Shareholder Servicing
Agent maintains a servicing relationship.
Some Shareholder Servicing Agents may impose certain conditions on their
customers in addition to or different from those imposed by the Funds, such as
requiring a minimum initial investment or charging their customers a direct fee
for their services. Each Shareholder Servicing Agent has agreed to transmit to
its customers who are shareholders of a Fund appropriate prior written
disclosure of any fees that it may charge them directly and to provide written
notice at least 30 days prior to imposition of any transaction fees.
TRANSFER AGENT, CUSTODIAN AND FUND ACCOUNTANT: State Street Bank and Trust
Company (or its affiliate State Street Canada, Inc.) acts as transfer agent and
dividend disbursing agent for each Fund. State Street (or its affiliate State
Street Canada, Inc.) acts as the custodian of each Fund's and each Portfolio's
assets. Securities held for a Portfolio may be held by a sub-custodian bank
approved by the Portfolio's Trustees. State Street also provides fund
accounting services to the Funds and the Portfolios and calculates the daily
net asset value for the Funds and the Portfolios.
<PAGE>
DISTRIBUTION ARRANGEMENTS: LFBDS is the Distributor of each Fund's shares and
also serves as distributor for each of the other Landmark Funds and as a
Shareholder Servicing Agent for certain investors. As Distributor, LFBDS bears
the cost of compensating personnel involved in the sale of shares of the Funds
and bears all costs of travel, office expenses (including rent and overhead)
and equipment. In those states where LFBDS is not a registered broker-dealer,
shares of the Funds are sold through Signature Broker-Dealer Services, Inc., as
dealer.
Under a Plan of Distribution, each Fund pays the Distributor a fee at an
annual rate not to exceed 0.10% of the average daily net assets of the Fund in
anticipation of, or as reimbursement for, expenses incurred by the Distributor
in connection with the sale of shares, such as advertising expenses and the
expenses of printing (excluding typesetting) and distributing prospectuses and
reports used for sales purposes, expenses of preparing and printing sales
literature and other distribution-related expenses. However, the Distributor
has agreed to waive a portion of these fees for each Fund. The Plan was adopted
in accordance with Rule 12b-1 under the 1940 Act.
The Funds and the Distributor provide to the Trustees quarterly a written
report of amounts expended pursuant to the Plan and the purposes for which the
expenditures were made.
From time to time LFBDS may make payments for distribution and/or
shareholder servicing activities out of its past profits or any other sources
available to it.
TAX MATTERS
This discussion of taxes is for general information only. Investors
should consult their own tax advisers about their particular situations.
FEDERAL INCOME TAXES. Each Fund intends to meet requirements of the
Internal Revenue Code applicable to regulated investment companies so that it
will not be liable for any federal income or excise taxes.
Institutional Tax Free Reserves expects that most of its net income will
be attributable to interest on Municipal Obligations and as a result most of
the Fund's dividends to shareholders will be excludable from shareholders'
gross income. However, the Fund may invest from time to time in taxable
securities, and certain Fund dividends may be subject to the federal
alternative minimum tax. Shareholders of Institutional Liquid Reserves and
Institutional U.S. Treasury Reserves are required to pay federal income tax on
any dividends and other distributions received. It is also possible, but not
intended, that a Fund may realize short-term and long-term capital gains or
losses. Generally, distributions from a Fund's net investment income which are
subject to tax and short-term capital gains will be taxed as ordinary income.
Distributions from long-term net capital gains will be taxed as such regardless
of how long the shares of a Fund have been held. Dividends and distributions
are treated in the same manner for federal tax purposes whether they are paid
in cash or as additional shares.
Fund dividends of tax-exempt income are taken into acount in determining
the amount of a shareholder's social security and railroad retirement benefits
that may be subject to federal income tax. No deduction may be claimed for
interest on indebtedness incurred or carried for the purpose of purchasing or
holding Fund shares. Investors who are, or who are related to, "substantial
users" of facilities financed by private activity bonds should consult their
tax advisers before buying shares of Institutional Tax Free Reseves.
The account application asks each new shareholder to certify that the
shareholder's Social Security or taxpayer identification number is correct and
that the shareholder is not subject to 31% backup withholding for failing to
<PAGE>
report income to the IRS. A Fund may be required to withhold (and pay over to
the IRS for the shareholder's credit) 31% of certain distributions paid to
shareholders who fail to provide this information or otherwise violate IRS
regulations.
Early each year, each Fund will notify its shareholders of the amount and
tax status of distributions paid to shareholders for the preceding year.
STATE AND LOCAL TAXES. Distributions derived from interest on U.S.
Government obligations may be exempt from state and local taxes in certain
states. Fund dividends which are excluded from shareholders' gross income for
federal income tax purposes may not necessarily be exempt from the income or
other tax laws of any state or local taxing authority. Investors should consult
their own tax advisers in this regard.
PERFORMANCE INFORMATION
Fund performance may be quoted in advertising, shareholder reports and
other communications in terms of yield, effective yield, tax equivalent yield,
total rate of return or tax equivalent total rate of return. All performance
information is historical and is not intended to indicate future performance.
Yields and total rates of return fluctuate in response to market conditions and
other factors.
Each Fund may provide its period and average annualized "total rates of
return" and Institutional Tax Free Reserves and Institutional U.S. Treasury
Reserves may also provide "tax equivalent total rates of return." The "total
rate of return" refers to the change in the value of an investment in the Fund
over a stated period and is compounded to include the value of any shares
purchased with any dividends or capital gains declared during such period.
Period total rates of return may be "annualized." An "annualized" total rate of
return assumes that the period total rate of return is generated over a
one-year period. The "tax equivalent total rate of return" refers to the total
rate of return that a fully taxable money market fund would have to generate in
order to produce an after-tax total rate of return equivalent to that of the
applicable Fund. The use of a tax equivalent total rate of return allows
investors to compare the total rates of return of Institutional Tax Free
Reserves and Institutional U.S. Treasury Reserves, the dividends from which may
be exempt from federal and state personal income taxes, respectively, with the
total rates of return of funds the dividends from which are not so tax exempt.
Each Fund may provide annualized "yield" and "effective yield"
quotations, and Institutional Tax Free Reserves and Institutional U.S. Treasury
Reserves may also provide "tax equivalent yield" quotations. The "yield" of a
Fund refers to the income generated by an investment in the Fund over a
seven-day period (which period is stated in any such advertisement or
communication). This income is then annualized; that is, the amount of income
generated by the investment over that period is assumed to be generated each
week over a 365-day period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly, but when annualized the income
earned by the investment during that seven-day period is assumed to be
reinvested. The effective yield is slightly higher than the yield because of
the compounding effect of this assumed reinvestment. The "tax equivalent yield"
refers to the yield that a fully taxable money market fund would have to
generate in order to produce an after-tax yield equivalent to that of the
applicable Fund. The use of a tax equivalent yield allows investors to compare
the yield of Institutional Tax Free Reserves and Institutional U.S. Treasury
Reserves, the dividends from which may be exempt from federal and state
personal income tax, respectively, with yields of funds the dividends from
which are not so tax exempt. A Fund may also provide yield, effective yield and
tax equivalent yield quotations for longer periods.
Of course, any fees charged by a shareholder's Shareholder Servicing
Agent will reduce that shareholder's net return on his or her investment. See
<PAGE>
the Statement of Additional Information for more information concerning the
calculation of yield and total rate of return quotations for the Funds.
GENERAL INFORMATION
ORGANIZATION: Institutional Tax Free Reserves is a non-diversified series, and
Institutional Liquid Reserves and Institutional U.S. Treasury Reserves are
diversified series, of Landmark Institutional Trust, which is a Massachusetts
business trust which was organized on July 8, 1992. Each Fund also is an
open-end management investment company registered under the 1940 Act.
Under the 1940 Act, a diversified series or diversified investment
company must invest at least 75% of its assets in cash and cash items, U.S.
Government securities, investment company securities and other securities
limited as to any one issuer to not more than 5% of the total assets of the
investment company and not more than 10% of the voting securities of the
issuer. See "Risk Considerations" for information about non-diversified series
and investment companies.
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for the trust's
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the trust itself was unable to meet its
obligations.
Each Portfolio is a separate trust organized under the laws of the State
of New York. The Declaration of Trust of each Portfolio provides that a Fund
and other entities investing in a Portfolio are each liable for all obligations
of that Portfolio. However, it is not expected that the liabilities of a
Portfolio would ever exceed its assets.
VOTING AND OTHER RIGHTS: Landmark Institutional Trust (the "Trust") may issue
an unlimited number of shares, may create new series of shares and may divide
shares in each series into classes. Each share of each Fund gives the
shareholder one vote in Trustee elections and other matters submitted to
shareholders for vote. All shares of each series of the Trust have equal voting
rights except that, in matters affecting only a particular Fund or class, only
shares of that particular Fund or class are entitled to vote.
Institutional Liquid Reserves currently offers three classes of shares.
Class A shares are described in this Prospectus. Class C and Class F shares
have different expenses, which will affect performance. Shareholder Servicing
Agents have information on the other classes (see inside back cover for
telephone numbers.
At any meeting of shareholders of a Fund, a Shareholder Servicing Agent
may vote any shares of which it is the holder of record and for which it does
not receive voting instructions proportionately in accordance with instructions
it receives for all other shares of which that Shareholder Servicing Agent is
the holder of record.
As a Massachusetts business trust, the Trust is not required to hold
annual shareholder meetings. Shareholder approval will usually be sought only
for changes in a Fund's or Portfolio's fundamental investment restrictions and
for the election of Trustees under certain circumstances. Trustees may be
removed by shareholders under certain circumstances. Each share of each Fund is
entitled to participate equally in dividends and other distributions and the
proceeds of any liquidation of that Fund.
CERTIFICATES: The Funds' Transfer Agent maintains a share register for
shareholders of record, i.e., Shareholder Servicing Agents. Share certificates
are not issued.
RETIREMENT PLANS: Investors in Institutional Liquid Reserves and Institutional
U.S. Treasury Reserves may be able to establish new accounts in a Fund under
one of several tax-sheltered plans. Such plans include IRAs, Keogh or Corporate
Profit-Sharing and Money-Purchase Plans, 403(b) Custodian Accounts, and certain
other qualified pension and profit-sharing plans. Investors should consult with
their Shareholder Servicing Agents and tax and retirement advisers.
<PAGE>
EXPENSES: For the fiscal year ended August 31, 1996, total operating expenses
of Institutional Liquid Reserves and Institutional U.S. Treasury Reserves,
after allocating to each Fund its share of its Portfolio's expenses and after
giving effect to fee waivers or reimbursements, were as follows: for
Institutional Liquid Reserves, 0.__% of the Fund's average daily net assets for
that fiscal year; and for Institutional U.S. Treasury Reserves, 0.__% of the
Fund's average daily net assets for that fiscal year. All fee waivers are
voluntary and may be reduced or terminated at any time. Institutional Tax Free
Reserves is newly organized and had no operations during the fiscal year ended
August 31, 1996.
_______________
The Statement of Additional Information dated the date hereof contains
more detailed information about the Funds and the Portfolios, including
information related to (i) investment policies and restrictions, (ii) the
Trustees, officers, Adviser and Administrators, (iii) securities transactions,
(iv) the Funds' shares, including rights and liabilities of shareholders, (v)
the method used to calculate performance information, (vi) programs for the
purchase of shares, and (vii) the determination of net asset value.
No person has been authorized to give any information or make any
representations not contained in this Prospectus in connection with the
offering made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Funds
or their distributor. This Prospectus does not constitute an offering by the
Funds or their distributor in any jurisdiction in which such offering may not
lawfully be made.
<PAGE>
APPENDIX A
PERMITTED INVESTMENTS AND
INVESTMENT PRACTICES
MUNICIPAL BONDS. Tax Free Reserves Portfolio may invest in municipal
bonds, which 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. Tax Free Reserves Portfolio may invest in 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. Variable rate
instruments in which Tax Free Reserves Portfolio may invest include
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
<PAGE>
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 Tax Free Reserves 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, Tax Free Reserves 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.
TREASURY RECEIPTS. Each Portfolio may invest in Treasury Receipts, which
are unmatured interest coupons of U.S. Treasury bonds and notes which have been
separated and resold in a custodial receipt program administered by the U.S.
Treasury.
COMMERCIAL PAPER. Cash Reserves Portfolio may invest in commercial paper,
which is unsecured debt of corporations usually maturing in 270 days or less
from its date of issuance.
ASSET-BACKED SECURITIES. Cash Reserves Portfolio may invest in
asset-backed securities, which represent fractional interests in underlying
pools of assets, such as car installment loans or credit card receivables. The
rate of return on asset-backed securities may be affected by prepayment of the
underlying loans or receivables. Reinvestment of principal may occur at higher
or lower rates than the original yield.
REPURCHASE AGREEMENTS. Cash Reserves Portfolio may enter into repurchase
agreements. Repurchase agreements are transactions in which an institution
sells the Portfolio a security at one price, subject to the Portfolio's
obligation to resell and the selling institution's obligation to repurchase
that security at a higher price normally within a seven day period. There may
be delays and risks of loss if the seller is unable to meet its obligation to
repurchase.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements and in order to generate additional income, each Portfolio may
lend its portfolio securities to broker-dealers and other institutional
borrowers. Such loans must be callable at any time and continuously secured by
collateral (cash or U.S. Government securities) in an amount not less than the
<PAGE>
market value, determined daily, of the securities loaned. It is intended that
the value of securities loaned by a Portfolio would not exceed 33 1/3% of the
Portfolio's net assets.
In the event of the bankruptcy of the other party to a securities loan or
a repurchase agreement, the Portfolio could experience delays in recovering
either the securities lent or cash. To the extent that, in the meantime, the
value of the securities lent have increased or the value of the securities
purchased have decreased, the Portfolio could experience a loss.
PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS. Each Portfolio may invest up
to 10% of its net assets in securities for which there is no readily available
market. These illiquid securities may include privately placed restricted
securities for which no institutional market exists. The absence of a trading
market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for the
Portfolio to sell them promptly at an acceptable price.
RESTRICTED SECURITIES. Tax Free Reserves 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.
<PAGE>
APPENDIX B
RATINGS OF MUNICIPAL OBLIGATIONS
The ratings of Moody's Investors Service, Inc., Standard & Poor's Ratings
Group, and Fitch Investors Service, Inc. represent their opinions as to the
quality of various debt securities, and are not absolute standards of quality.
Debt securities with the same maturity, coupon and rating may have different
yields, while debt securities of the same maturity and coupon with different
ratings may have the same yield. The ratings below are as described by the
rating agencies. Ratings are generally given to securities at the time of
issuance. While the rating agencies may, from time to time, revise such
ratings, they undertake no obligation to do so.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
TWO HIGHEST LONG-TERM DEBT RATINGS
AAA Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and generally are referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower then the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
Note: Those bonds in the Aa group which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa 1.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
TWO HIGHEST RATINGS OF STATE AND MUNICIPAL NOTES
Moody's ratings for state and municipal short-term obligations are
designated Moody's Investment Grade ("MIG"). Such ratings recognize the
differences between short-term credit risk and long-term risk. A short-term
rating ("VMIG") may also be assigned to variable rate demand obligations.
Factors affecting the liquidity of the borrower and short-term cyclical
elements are critical in short-term ratings, while other factors of major
importance in bond risk, such as long-term secular trends, may be less
important over the short run.
MIG 1/VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
<PAGE>
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
TWO HIGHEST COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issuers
to repay punctually short-term senior debt obligations not having an original
maturity in excess of one year.
Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics: (1)
leading market positions in well-established industries; (2) high rates of
return on funds employed; (3) conservative capitalization structure with
moderate reliance on debt and ample asset protection; (4) broad margins in
earnings coverage of fixed financial charges and high internal cash generation;
and (5) well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S
TWO HIGHEST LONG-TERM DEBT RATINGS
AAA Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in small degree.
Plus (+) or minus (-): The AA rating may be modified by the addition of a
plus or minus sign to show relative standing within the AA rating category.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S
TWO HIGHEST RATINGS OF STATE AND MUNICIPAL NOTES
An S&P note rating reflects the liquidity factors and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years most likely receive a long-term debt
rating. The following criteria will be used in making that assessment:
Amortization schedule -- the larger the final maturity relative to
other maturities, the more likely it will be treated as a note.
Source of payment -- the more dependent the issue is on the market
for its refinancing, the more likely it will be treated as a note.
Note rating symbols are as follows:
<PAGE>
SP-1 Strong capacity to pay principal and interest. An issue determined to
posses a very strong capacity to pay debt service is given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the term of the
notes.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S
TWO HIGHEST COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood
of timely payment of debt having an original maturity of no more than 365 days.
A Issues assigned the highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1 This description indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this description is
satisfactory. However, the relative degree of safety is not a high as for
issues designated A-1.
DESCRIPTION OF STANDARD & POOR'S
RATINGS GROUP'S DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have a put or demand
feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols for the put option (for
example, "AAA/A-1+"). With short-term demand debt, note rating symbols are used
with the commercial paper rating symbols (for example, "SP-1+/A-1+").
DESCRIPTION OF FITCH INVESTORS SERVICES, INC.'S
TWO HIGHEST BOND RATINGS
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environmental that might affect the
issuer's future financial strength and credit quality.
AAA Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
<PAGE>
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
Plus (+) Minus (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in AAA category.
DESCRIPTION OF FITCH INVESTORS SERVICE, INC.'S
THREE HIGHEST RATINGS OF STATE AND MUNICIPAL NOTES
The short-term rating places greater emphasis than a long-term rating on
the existence of liquidity necessary to meet the issuer's obligations in timely
manner.
F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2 Good Credit Quality. Issues assigned this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.
DESCRIPTION OF FITCH INVESTORS SERVICE, INC.'S
THREE HIGHEST COMMERCIAL PAPER RATINGS
The short-term rating places greater emphasis than a long-term rating on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2 Good Credit Quality. Issues assigned this rating have a satisfactory degree
of assurances for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.
<PAGE>
APPENDIX C
To be filed by amendment
<PAGE>
SHAREHOLDER
SERVICING AGENTS
FOR CITIBANK PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer, Registered Representative
or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117
FOR CITIBANK NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100
<PAGE>
[LOGO] LANDMARK FUNDS
MONEY MARKET FUNDS:
Cash Reserves
Premium Liquid Reserves
Institutional Liquid Reserves
U.S. Treasury Reserves
Premium U.S. Treasury Reserves
Institutional U.S. Treasury Reserves
Tax Free Reserves
Institutional Tax Free Reserves
California Tax Free Reserves
Connecticut Tax Free Reserves
New York Tax Free Reserves
STOCK & BOND FUNDS:
U.S. Government Income Fund
Intermediate Income Fund
National Tax Free Income Fund
New York Tax Free Income Fund
Balanced Fund
Equity Fund
International Equity Fund
Small Cap Equity Fund
Emerging Asian Markets Equity Fund
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue, Boston, MA 02116
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
Price Waterhouse LLP
160 Federal Street, Boston, MA 02110
LEGAL COUNSEL
Bingham, Dana & Gould LLP
150 Federal Street, Boston, MA 02110
SHAREHOLDER SERVICING AGENTS
(See Inside of Cover)
<PAGE>
[LOGO] LANDMARKSM FUNDS
Advised by Citibank, N.A.
LANDMARK
INSTITUIONAL
TAX FREE
RESERVES
LANDMARK
INSTITUTIONAL
LIQUID RESERVES
LANDMARK
INSTITUTIONAL
U.S. TREASURY
RESERVES
PROSPECTUS
JANUARY 2, 1997
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
LANDMARK INSTITUTIONAL TAX FREE RESERVES January 2, 1997
LANDMARK INSTITUTIONAL LIQUID RESERVES
LANDMARK INSTITUTIONAL U.S. TREASURY RESERVES
(Members of the LandmarkSM Family of Funds)
Landmark Institutional Tax Free Reserves ("Tax Free Reserves"), Landmark
Institutional Liquid Reserves ("Liquid Reserves") and Landmark Institutional
U.S. Treasury Reserves ("U.S. Treasury Reserves" and together with Tax Free
Reserves and Liquid Reserves, the "Funds") are each separate series of Landmark
Institutional Trust (the "Trust"). The address and telephone number of the
Trust are 6 St. James Avenue, Boston, Massachusetts 02116, (617) 423-1679. The
Trust invests all of the investable assets of Tax Free Reserves, Liquid
Reserves and U.S. Treasury Reserves in, respectively, Tax Free Reserves
Portfolio, Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio (the
"Portfolios"). The address and telephone number of Tax Free Reserves Portfolio
and U.S. Treasury Reserves Portfolio are 6 St. James Avenue, Boston,
Massachusetts 02116, (617) 423-1679. The address of Cash Reserves Portfolio is
Elizabethan Square, George Town, Grand Cayman, British West Indies.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, CITIBANK, N.A. OR ANY OF ITS AFFILIATES, ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
Table of Contents Page
The Funds
Investment Objectives, Policies and Restrictions
Performance Information
Determination of Net Asset Value
Management
Portfolio Transactions
Description of Shares, Voting Rights and Liabilities
Certain Additional Tax Matters
Independent Accountants and Financial Statements
This Statement of Additional Information sets forth information which may
be of interest to investors but which is not necessarily included in the Funds'
Prospectus, dated January 2, 1997, by which shares of the Funds are offered.
This Statement of Additional Information should be read in conjunction with the
Prospectus, a copy of which may be obtained by an investor without charge by
contacting the Funds' Distributor (see back cover for address and phone number)
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
1. THE FUNDS
The Trust is a no-load, open-end management investment company which was
organized as a business trust under the laws of the Commonwealth of
Massachusetts on July 8, 1992. Shares of the Trust are divided into three
separate series, Landmark Institutional Tax Free Reserves, Landmark
Institutional Liquid Reserves and Landmark Institutional U.S. Treasury
Reserves, which are described in this Statement of Additional Information.
References in this Statement of Additional Information to the Prospectus are to
the Prospectus, dated January 2, 1997, of the Funds by which shares of the
Funds are offered.
Each of the Funds is a type of mutual fund commonly referred to as a
"money market fund." Tax Free Reserves is a "tax-exempt money market fund." The
net asset value of each of the Funds' shares is expected to remain constant at
$1.00, although there can be no assurance that this will be so on a continuing
basis. (See "Determination of Net Asset Value.")
The Trust seeks the investment objectives of the Funds by investing all
the investable assets of Tax Free Reserves, Liquid Reserves and U.S. Treasury
Reserves in, respectively, Tax Free Reserves Portfolio, Cash Reserves Portfolio
and U.S. Treasury Reserves Portfolio. Each of the Portfolios is an open-end
management investment company. Each Portfolio has the same investment
objectives and policies as its corresponding Fund. Tax Free Reserves Portfolio
is non-diversified; Cash Reserves Portfolio and U.S. Treasury Reserve Portfolio
are diversified.
Citibank, N.A. ("Citibank" or the "Adviser") is the investment adviser to
each of the Portfolios. The Adviser manages the investments of each Portfolio
from day to day in accordance with the investment objectives and policies of
that Portfolio. The selection of investments for each Portfolio, and the way
they are managed, depend on the conditions and trends in the economy and the
financial marketplaces.
The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS" or the
"Administrator") supervises the overall administration of the Trust, Tax Free
Reserves Portfolio and U.S. Treasury Reserves Portfolio. Signature Financial
Group (Cayman), Ltd., either directly or through a wholly-owned subsidiary
("SFG"), supervises the overall administration of Cash Reserves Portfolio. The
Boards of Trustees of the Trust and the Portfolios provide broad supervision
over the affairs of the Trust and of the Portfolios, respectively. Shares of
each Fund are continuously sold by LFBDS, the Funds' distributor (the
"Distributor"), only to investors who are customers of a financial institution,
such as a federal or state-chartered bank, trust company, savings and loan
association or savings bank, or a securities broker, that has entered into a
shareholder servicing agreement with the Trust with respect to that Fund
(collectively, "Shareholder Servicing Agents"). Although shares of the Funds
are sold without a sales load, LFBDS may receive fees from the Funds pursuant
to a Distribution Plan adopted in accordance with Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act").
2. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
The investment objectives of LANDMARK INSTITUTIONAL TAX FREE RESERVES are
to provide its shareholders with high levels of current income exempt from
frederal income taxes, preservation of capital and liquidity.
<PAGE>
The investment objectives of LANDMARK INSTITUTIONAL LIQUID RESERVES are
to provide shareholders of the Fund with liquidity and as high a level of
current income as is consistent with the preservation of capital.
The investment objectives of LANDMARK INSTITUTIONAL U.S. TREASURY
RESERVES are to provide shareholders of the Fund with liquidity and as high a
level of current income from U.S. Government obligations as is consistent with
the preservation of capital.
The investment objectives of each Fund may be changed without approval by
the Fund's shareholders. Of course, there can be no assurance that any Fund
will achieve its investment objective.
INVESTMENT POLICIES
The Trust seeks the investment objectives of the Funds by investing all
of the investable assets of Tax Free Reserves, Liquid Reserves and U.S.
Treasury Reserves in, respectively, Tax Free Reserves Portfolio, Cash Reserves
Portfolio and U.S. Treasury Reserves Portfolio, each of which has the same
investment objectives and policies as its corresponding Fund. The Prospectus
contains a discussion of the various types of securities in which each
Portfolio may invest and the risks involved in such investments. The following
supplements the information contained in the Prospectus concerning the
investment objectives, policies and techniques of each Fund and each Portfolio.
Since the investment characteristics of each Fund will correspond directly to
those of the Portfolio in which it invests, the following is a supplementary
discussion with respect to each Portfolio.
The Trust may withdraw the investment of any Fund from its corresponding
Portfolio at any time, if the Board of Trustees of the Trust determines that it
is in the best interests of the Fund to do so. Upon any such withdrawal, a
Fund's assets would be invested in accordance with the investment policies
described below with respect to its corresponding Portfolio. Except for the
policy of Tax Free Reserves with respect to municipal obligations described in
paragraph (1) below for Tax Free Reserves Portfolio, which is fundamental and
may not be changed without the approval of Tax Free Reserves' shareholders, and
except for the concentration policy of Liquid Reserves with respect to bank
obligations described in paragraph (1) below for Cash Reserves Portfolio, which
is fundamental and may not be changed without the approval of Liquid Reserves'
shareholders, the approval of a Fund's shareholders would not be required to
change any of that Fund's investment policies. Likewise, except for the policy
of Tax Free Reserves Portfolio with respect to municipal obligations described
in paragraph (1) below for Tax Free Reserve Portfolio, which is fundamental and
may not be changed without the approval of Tax Free Reserves' investors, and
except for the concentration policy of Cash Reserves Portfolio with respect to
bank obligations described in paragraph (1) below for Cash Reserves Portfolio,
which is fundamental and may not be changed without the approval of Cash
Reserves Portfolio's investors, the approval of the investors in a Portfolio
would not be required to change that Portfolio's investment objectives or any
of that Portfolio's investment policies discussed below, including those
concerning securities transactions.
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Tax Free Reserves Portfolio
Tax Free Reserves 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 and their
authorities, agencies, instrumentalities and political subdivisions, the
interest on which is exempt from federal income taxes, including participation
interests in such obligations issued by banks, insurance companies or other
financial institutions. (These 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. 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.) 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.
For a general discussion of Municipal Obligations and an explanation of
the ratings of Municipal Obligations by Moody's Investors Service, Inc.,
Standard & Poor's Rating Group and Fitch Investors Service, Inc., see Appendix
B to the Prospectus. For a comparison of yields on such Municipal Obligations
and taxable securities, see Appendix C to the Prospectus.
All investments by Tax Free Reserves 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. (See
Appendix B to the Prospectus.)
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:
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(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 the Adviser 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 the
Adviser. 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 the Adviser. 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 Tax Free Reserves 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.
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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.
VARIABLE RATE INSTRUMENTS AND PARTICIPATION INTERESTS
Variable rate instruments that Tax Free Reserves 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 Tax Free Reserves 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 Tax Free Reserves 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 may be 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
<PAGE>
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 Tax Free Reserves 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
<PAGE>
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 Tax
Free Reserves 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 Tax Free Reserves 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
<PAGE>
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 Tax Free Reserves 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 Tax Free Reserves 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 Tax Free Reserves 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.
Circumstances in which the Portfolio may invest in taxable securities include
the following: (a) pending investment in the type of securities described
above; (b) to maintain liquidity for the purpose of meeting anticipated
withdrawals; and (c) 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
Tax Free Reserves 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
<PAGE>
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 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.
Cash Reserves Portfolio
Cash Reserves Portfolio seeks its investment objective through
investments limited to the following types of high quality U.S.
dollar-denominated money market instruments. All investments by Cash Reserves
Portfolio mature or are deemed to mature within 397 days from the date of
acquisition and the average maturity of the investments held by the Portfolio
(on a dollar-weighted basis) is 90 days or less. All investments by the
Portfolio are in "high quality" securities (i.e., securities rated in the
highest rating category for short-term obligations by at least two nationally
recognized statistical rating organizations (each, an "NRSRO") assigning a
rating to the security or issuer or, if only one NRSRO assigns a rating, that
NRSRO or, in the case of an investment which is not rated, of comparable
quality as determined by the Adviser) and are determined by the Adviser to
present minimal credit risks. Investments in high quality, short-term
instruments may, in many circumstances, result in a lower yield than would be
available from investments in instruments with a lower quality or a longer
term. Under the 1940 Act, Liquid Reserves and Cash Reserves Portfolio are each
classified as "diversified," although in the case of Liquid Reserves, all of
its investable assets are invested in the Portfolio. A "diversified investment
company" must invest at least 75% of its assets in cash and cash items, U.S.
Government securities, investment company securities (e.g., interests in the
Portfolio) and other securities limited as to any one issuer to not more than
5% of the total assets of the investment company and not more than 10% of the
voting securities of the issuer.
(1) Bank obligations -- Cash Reserves Portfolio invests at least 25% of its
investable assets, and may invest up to 100% of its assets, in bank
obligations. These obligations include, but are not limited to,
negotiable certificates of deposit, bankers' acceptances and fixed time
<PAGE>
deposits. Cash Reserves Portfolio limits its investments in U.S. bank
obligations (including their non-U.S. branches) to banks having total
assets in excess of $1 billion and which are subject to regulation by an
agency of the U.S. Government. The Portfolio may also invest in
certificates of deposit issued by banks the deposits in which are insured
by the Federal Deposit Insurance Corporation ("FDIC"), through either the
Bank Insurance Fund or the Savings Association Insurance Fund, having
total assets of less than $1 billion, provided that the Portfolio at no
time owns more than $100,000 principal amount of certificates of deposit
(or any higher principal amount which in the future may be fully insured
by FDIC insurance) of any one of those issuers. Fixed time deposits are
obligations which are payable at a stated maturity date and bear a fixed
rate of interest. Generally, fixed time deposits may be withdrawn on
demand by the Portfolio, but they may be subject to early withdrawal
penalties which vary depending upon market conditions and the remaining
maturity of the obligation. Although fixed time deposits do not have a
market, there are no contractual restrictions on the Portfolio's right to
transfer a beneficial interest in the deposit to a third party. This
concentration policy is fundamental and may not be changed without the
approval of the investors in Cash Reserves Portfolio.
U.S. banks organized under federal law are supervised and examined by the
Comptroller of the Currency and are required to be members of the Federal
Reserve System and to be insured by the FDIC. U.S. banks organized under
state law are supervised and examined by state banking authorities and
are members of the Federal Reserve System only if they elect to join.
However, state banks which are insured by the FDIC are subject to federal
examination and to a substantial body of federal law and regulation. As a
result of federal and state laws and regulations, U.S. branches of U.S.
banks, among other things, are generally required to maintain specified
levels of reserves, and are subject to other supervision and regulation
designed to promote financial soundness.
Cash Reserves Portfolio limits its investments in non-U.S. bank
obligations (i.e., obligations of non-U.S. branches and subsidiaries of
U.S. banks, and U.S. and non-U.S. branches of non-U.S. banks) to U.S.
dollar-denominated obligations of banks which at the time of investment
are branches or subsidiaries of U.S. banks which meet the criteria in the
preceding paragraphs or are branches of non-U.S. banks which (i) have
more than $10 billion, or the equivalent in other currencies, in total
assets; (ii) in terms of assets are among the 75 largest non-U.S. banks
in the world; (iii) have branches or agencies in the United States; and
(iv) in the opinion of the Adviser, are of an investment quality
comparable with obligations of U.S. banks which may be purchased by the
Portfolio. These obligations may be general obligations of the parent
bank, in addition to the issuing branch or subsidiary, but the parent
bank's obligations may be limited by the terms of the specific obligation
or by governmental regulation. The Portfolio also limits its investments
in non-U.S. bank obligations to banks, branches and subsidiaries located
in Western Europe (United Kingdom, France, Germany, Belgium, the
Netherlands, Italy, Switzerland), Scandinavia (Denmark, Norway, Sweden),
Australia, Japan, the Cayman Islands, the Bahamas and Canada. Cash
Reserves Portfolio does not purchase any bank obligation of the Adviser
or an affiliate of the Adviser.
Since Cash Reserves Portfolio may hold obligations of non-U.S. branches
and subsidiaries of U.S. banks, and U.S. and non-U.S. branches of
non-U.S. banks, an investment in Liquid Reserves involves certain
additional risks. Such investment risks include future political and
<PAGE>
economic developments, the possible imposition of non-U.S. withholding
taxes on interest income payable on such obligations held by the
Portfolio, the possible seizure or nationalization of non-U.S. deposits
and the possible establishment of exchange controls or other non-U.S.
governmental laws or restrictions applicable to the payment of the
principal of and interest on certificates of deposit or time deposits
that might affect adversely such payment on such obligations held by the
Portfolio. In addition, there may be less publicly-available information
about a non-U.S. branch or subsidiary of a U.S. bank or a U.S. or
non-U.S. branch of a non-U.S. bank than about a U.S. bank and such
branches and subsidiaries may not be subject to the same or similar
regulatory requirements that apply to U.S. banks, such as mandatory
reserve requirements, loan limitations and accounting, auditing and
financial record-keeping standards and requirements.
The provisions of federal law governing the establishment and operation
of U.S. branches do not apply to non-U.S. branches of U.S. banks.
However, Cash Reserves Portfolio may purchase obligations only of those
non-U.S. branches of U.S. banks which were established with the approval
of the Board of Governors of the Federal Reserve System (the "Board of
Governors"). As a result of such approval, these branches are subject to
examination by the Board of Governors and the Comptroller of the
Currency. In addition, such non-U.S. branches of U.S. banks are subject
to the supervision of the U.S. bank and creditors of the non-U.S. branch
are considered general creditors of the U.S. bank subject to whatever
defenses may be available under the governing non-U.S. law and to the
terms of the specific obligation. Nonetheless, Cash Reserves Portfolio
generally will be subject to whatever risk may exist that the non-U.S.
country may impose restrictions on payment of certificates of deposit or
time deposits.
U.S. branches of non-U.S. banks are subject to the laws of the state in
which the branch is located or to the laws of the United States. Such
branches are therefore subject to many of the regulations, including
reserve requirements, to which U.S. banks are subject. In addition, Cash
Reserves Portfolio may purchase obligations only of those U.S. branches
of non-U.S. banks which are located in states which impose the additional
requirement that the branch pledge to a designated bank within the state
an amount of its assets equal to 5% of its total liabilities.
Non-U.S. banks in whose obligations Cash Reserves Portfolio may invest
may not be subject to the laws and regulations referred to in the
preceding two paragraphs.
(2) Obligations of, or guaranteed by, non-U.S. governments. Cash Reserves
Portfolio limits its investments in non-U.S. government obligations to
obligations issued or guaranteed by the governments of Western Europe
(United Kingdom, France, Germany, Belgium, the Netherlands, Italy,
Switzerland), Scandinavia (Denmark, Norway, Sweden), Australia, Japan and
Canada. Generally, such obligations may be subject to the additional
risks described in paragraph 1 above in connection with the purchase of
non-U.S. bank obligations.
(3) Commercial paper rated Prime-1 by Moody's Investors Service, Inc. or A-1
by Standard & Poor's Ratings Group or, if not rated, determined to be of
comparable quality by the Adviser, such as unrated commercial paper
issued by corporations having an outstanding unsecured debt issue
currently rated Aaa by Moody's or AAA by Standard & Poor's.
<PAGE>
(4) Obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities. These include issues of the U.S. Treasury, such as
bills, certificates of indebtedness, notes and bonds, and issues of
agencies and instrumentalities established under the authority of an Act
of Congress. Some of the latter category of obligations are supported by
the full faith and credit of the United States, others are supported by
the right of the issuer to borrow from the U.S. Treasury, and still
others are supported only by the credit of the agency or instrumentality.
Examples of each of the three types of obligations described in the
preceding sentence are (i) obligations guaranteed by the Export-Import
Bank of the United States, (ii) obligations of the Federal Home Loan
Mortgage Corporation, and (iii) obligations of the Student Loan Marketing
Association, respectively.
(5) Repurchase agreements, providing for resale within 397 days or less,
covering obligations of, or guaranteed by, the U.S. Government, its
agencies or instrumentalities which may have maturities in excess of 397
days. A repurchase agreement arises when a buyer purchases an obligation
and simultaneously agrees with the vendor to resell the obligation to the
vendor at an agreed-upon price and time, which is usually not more than
seven days from the date of purchase. The resale price of a repurchase
agreement is greater than the purchase price, reflecting an agreed-upon
market rate which is effective for the period of time the buyer's funds
are invested in the obligation and which is not related to the coupon
rate on the purchased obligation. Obligations serving as collateral for
each repurchase agreement are delivered to the Portfolio's custodian
either physically or in book entry form and the collateral is marked to
the market daily to ensure that each repurchase agreement is fully
collateralized at all times. A buyer of a repurchase agreement runs a
risk of loss if, at the time of default by the issuer, the value of the
collateral securing the agreement is less than the price paid for the
repurchase agreement. If the vendor of a repurchase agreement becomes
bankrupt, Cash Reserves Portfolio might be delayed, or may incur costs or
possible losses of principal and income, in selling the collateral. The
Portfolio may enter into repurchase agreements only with a vendor which
is a member bank of the Federal Reserve System or which is a "primary
dealer" (as designated by the Federal Reserve Bank of New York) in U.S.
Government obligations. The Portfolio will not enter into any repurchase
agreements with the Adviser or an affiliate of the Adviser. The
restrictions and procedures described above which govern the Portfolio's
investment in repurchase agreements are designed to minimize the
Portfolio's risk of losses in making those investments.
(6) Asset-backed securities, which may include securities such as
Certificates for Automobile Receivables ("CARS") and Credit Card
Receivable Securities ("CARDS"), as well as other asset-backed securities
that may be developed in the future. CARS represent fractional interests
in pools of car installment loans, and CARDS represent fractional
interests in pools of revolving credit card receivables. The rate of
return on asset-backed securities may be affected by early prepayment of
principal on the underlying loans or receivables. Prepayment rates vary
widely and may be affected by changes in market interest rates. It is not
possible to accurately predict the average life of a particular pool of
loans or receivables. Reinvestment of principal may occur at higher or
lower rates than the original yield. Therefore, the actual maturity and
realized yield on asset-backed securities will vary based upon the
prepayment experience of the underlying pool of loans or receivables.
(See "Asset-Backed Securities.")
<PAGE>
Cash Reserves Portfolio does not purchase securities which the Portfolio
believes, at the time of purchase, will be subject to exchange controls or
non-U.S. withholding taxes; however, there can be no assurance that such laws
may not become applicable to certain of the Portfolio's investments. In the
event exchange controls or non-U.S. withholding taxes are imposed with respect
to any of the Portfolio's investments, the effect may be to reduce the income
received by the Portfolio on such investments.
ASSET-BACKED SECURITIES
As set forth above, Cash Reserves Portfolio may purchase asset-backed
securities that represent fractional interests in pools of retail installment
loans, both secured (such as Certificates for Automobile Receivables) and
unsecured, leases or revolving credit receivables, both secured and unsecured
(such as Credit Card Receivable Securities). These assets are generally held by
a trust and payments of principal and interest or interest only are passed
through monthly or quarterly to certificate holders and may be guaranteed up to
certain amounts by letters of credit issued by a financial institution
affiliated or unaffiliated with the trustee or originator of the trust.
Underlying automobile sales contracts, leases or credit card receivables
are subject to prepayment, which may reduce the overall return to certificate
holders. Nevertheless, principal repayment rates tend not to vary much with
interest rates and the short-term nature of the underlying loans, leases or
receivables tends to dampen the impact of any change in the prepayment level.
Certificate holders may also experience delays in payment on the certificates
if the full amounts due on underlying loans, leases or receivables are not
realized by the Portfolio because of unanticipated legal or administrative
costs of enforcing the contracts or because of depreciation or damage to the
collateral (usually automobiles) securing certain contracts, or other factors.
If consistent with its investment objectives and policies, Cash Reserves
Portfolio may invest in other asset-backed securities that may be developed in
the future.
U.S. Treasury Reserves Portfolio
U.S. Treasury Reserves Portfolio seeks its investment objective by
investing in obligations of, or guaranteed by, the U.S. Government, its
agencies or instrumentalities including issues of the U.S. Treasury, such as
bills, certificates of indebtedness, notes and bonds, and issues of agencies
and instrumentalities established under the authority of an Act of Congress
which are supported by the full faith and credit of the United States. U.S.
Treasury Reserves Portfolio will not enter into repurchase agreements.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to
generate income, each of the Portfolios may lend its securities to
broker-dealers and other institutional borrowers. Such loans will usually be
made only to member banks of the U.S. Federal Reserve System and to member
firms of the New York Stock Exchange ("NYSE") (and subsidiaries thereof). Loans
of securities would be secured continuously by collateral in cash, cash
equivalents, or U.S. Treasury obligations maintained on a current basis at an
amount at least equal to the market value of the securities loaned. The cash
collateral would be invested in high quality short-term instruments. A
<PAGE>
Portfolio would have the right to call a loan and obtain the securities loaned
at any time on customary industry settlement notice (which will not usually
exceed five days). During the existence of a loan, a Portfolio would continue
to receive the equivalent of the interest or dividends paid by the issuer on
the securities loaned and would also receive compensation based on investment
of the collateral. The Portfolio would not, however, have the right to vote any
securities having voting rights during the existence of the loan, but would
call the loan in anticipation of an important vote to be taken among holders of
the securities or of the giving or withholding of their consent on a material
matter affecting the investment. As with other extensions of credit, there are
risks of delay in recovery or even loss of rights in the collateral should the
borrower fail financially. However, the loans would be made only to entities
deemed by the Adviser to be of good standing, and when, in the judgment of the
Adviser, the consideration which can be earned currently from loans of this
type justifies the attendant risk. If the Adviser determines to make loans, it
is not intended that the value of the securities loaned by a Portfolio would
exceed 33 1/3% of the value of its net assets.
INVESTMENT RESTRICTIONS
The Trust, on behalf of the Funds, and the Portfolios have each adopted
the following policies which may not be changed without approval by holders of
a "majority of the outstanding shares" of the applicable Fund or Portfolio,
which as used in this Statement of Additional Information means the vote of the
lesser of (i) 67% or more of the outstanding voting securities of the Fund or
Portfolio present at a meeting, if the holders of more than 50% of the
outstanding "voting securities" of the Fund or Portfolio are present or
represented by proxy, or (ii) more than 50% of the outstanding "voting
securities" of the Fund or the Portfolio. The term "voting securities" as used
in this paragraph has the same meaning as in the 1940 Act. Whenever the Trust
is requested to vote on a change in the investment restrictions of a Portfolio
(or, in the case of Tax Free Reserves Portfolio, its policy with respect to
municipal obligations described in paragraph (1) under "Investment Policies-Tax
Free Reserves Portfolio," or, in the case of Cash Reserves Portfolio, its
concentration policy described in paragraph (1) under "Investment Policies-Cash
Reserves Portfolio"), the Trust will hold a meeting of the corresponding Fund's
shareholders and will cast its vote as instructed by the shareholders. Each
Fund will vote the shares held by its shareholders who do not give voting
instructions in the same proportion as the shares of that Fund's shareholders
who do give voting instructions. Shareholders of the Funds who do not vote will
have no effect on the outcome of these matters.
Neither the Trust, on behalf of a Fund, nor a Portfolio may:
(1) borrow money, except that as a temporary measure for extraordinary or
emergency purposes either the Trust or the Portfolio may borrow from banks in
an amount not to exceed 1/3 of the value of the net assets of the Fund or the
Portfolio, respectively, including the amount borrowed (moreover, neither the
Trust (on behalf of the Fund) nor the Portfolio may purchase any securities at
any time at which borrowings exceed 5% of the total assets of the Fund or the
Portfolio, respectively (taken in each case at market value)) (it is intended
that the Fund and the Portfolio would borrow money only from banks and only to
accommodate requests for the repurchase of shares of the Fund or the withdrawal
of all or a portion of a beneficial interest in the Portfolio while effecting
an orderly liquidation of securities); for additional related restrictions, see
clause (i) under the caption "Operating Restrictions" below;
(2) purchase any security or evidence of interest therein on margin,
except that either the Trust, on behalf of the Fund, or the Portfolio may
obtain such short term credit as may be necessary for the clearance of
purchases and sales of securities;
<PAGE>
(3) underwrite securities issued by other persons, except that all the
assets of the Fund may be invested in the Portfolio and except insofar as
either the Trust or the Portfolio may technically be deemed an underwriter
under the Securities Act of 1933 in selling a security;
(4) make loans to other persons except (a) through the lending of
securities held by either the Fund or the Portfolio, but not in excess of 33
1/3% of the Fund's or the Portfolio's net assets, as the case may be, (b)
through the use of repurchase agreements (or, in the case of Liquid Reserves
and Cash Reserves Portfolio, fixed time deposits) or the purchase of short term
obligations, or (c) by purchasing all or a portion of an issue of debt
securities of types commonly distributed privately to financial institutions;
for purposes of this paragraph 4 the purchase of a portion of an issue of debt
securities which is part of an issue to the public (and in the case of Tax Free
Reserves, Tax Free Reserves Portfolio, Liquid Reserves and Cash Reserves
Portfolio, short term commercial paper) shall not be considered the making of a
loan; for additional related restrictions, see clause (x) under the caption
"Operating Restrictions" below;
(5) purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the Trust on behalf of each Fund and the
Portfolio reserve the freedom of action to hold and to sell real estate
acquired as a result of the ownership of securities by the Fund or the
Portfolio);
(6) in the case of Liquid Reserves and Cash Reserves Portfolio, purchase
securities of any one issuer (other than obligations of the U.S. Government,
its agencies or instrumentalities, which may be purchased without limitation)
if immediately after such purchase more than 5% of the value of its assets
would be invested in the securities of such issuer (provided, however, that the
Trust may invest, on behalf of Liquid Reserves, all of its assets in a
diversified, open-end management investment company with substantially the same
investment objectives, policies and restrictions as the Fund);
(7) in the case of U.S. Treasury Reserves and U.S. Treasury Reserves
Portfolio, concentrate its investment in any particular industry; provided that
nothing in this Investment Restriction is intended to affect the ability to
invest 100% of U.S. Treasury Reserves' assets in U.S. Treasury Reserves
Portfolio;
(8) in the case of Tax Free Reserves, Tax Free Reserves Portfolio, Liquid
Reserves and Cash Reserves Portfolio, concentrate its investments in any
particular industry, but, if it is deemed appropriate for the achievement of
its investment objective, up to 25% of the assets of Tax Free Reserves, Tax
Free Reserves Portfolio, Liquid Reserves or Cash Reserves Portfolio,
respectively (taken at market value at the time of each investment) may be
invested in any one industry, except that each of Tax Free Reserves Portfolio
and Cash Reserves Portfolio will invest at least 25% of its assets and may
invest up to 100% of its assets in bank obligations; provided that, if the
Trust withdraws the investment of Tax Free Reserves from Tax Free Reserves
Portfolio or Liquid Reserves from Cash Reserves Portfolio, the Trust will
invest the assets of the applicable Fund in bank obligations to the same extent
and with the same reservation as its corresponding Portfolio; and provided,
further that nothing in this Investment Restriction is intended to affect Tax
Free Reserves' ability to invest 100% of its assets in Tax Free Reserves
Portfolio or Liquid Reserves' ability to invest 100% of its assets in Cash
Reserves Portfolio; or
<PAGE>
(9) issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, except as appropriate to evidence a debt
incurred without violating Investment Restriction (1) above.
For purposes of Investment Restriction (8) above, "bank obligations,"
when used with respect to Tax Free Reserves and Tax Free Reserve Portfolio,
shall include bank participation interests in Municipal Obligations.
OPERATING RESTRICTIONS
Neither the Trust, on behalf of any of the Funds, nor the corresponding
Portfolio will as a matter of operating policy:
(i) borrow money for any purpose in excess of 10% of the total assets of
the Fund or Portfolio (taken in each case at cost),
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of
the net assets of the Fund or Portfolio (taken in each case at market value),
(iii) sell any security which it does not own unless by virtue of its
ownership of other securities it has at the time of sale a right to obtain
securities, without payment of further consideration, equivalent in kind and
amount to the securities sold; and provided, that if such right is conditional
the sale is made upon the same conditions,
(iv) invest for the purpose of exercising control or management, except
that all of the assets of the Fund may be invested in the corresponding
Portfolio,
(v) purchase securities issued by any registered investment company,
except that all of the assets of the Fund may be invested in the corresponding
Portfolio and except by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchase other than the
customary broker's commission, and except when such purchase, though not made
in the open market, is part of a plan of merger or consolidation; provided,
however, that the Trust (on behalf of the Fund) and the Portfolio will not
purchase the securities of any registered investment company if such purchase
at the time thereof would cause more than 10% of the total assets of the Fund
or the Portfolio, respectively (taken in each case at the greater of cost or
market value) to be invested in the securities of such issuers or would cause
more than 3% of the outstanding voting securities of any such issuer to be held
by the Fund or Portfolio; and provided, further, that neither the Fund nor the
Portfolio shall purchase securities issued by any open-end investment company,
(vi) taken together with any investments described in clause (x) below,
invest more than 10% of the net assets of the Fund or the Portfolio in
securities that are not readily marketable, including debt securities for which
there is no established market (and, in the case of Liquid Reserves and Cash
Reserves Portfolio, fixed time deposits) and repurchase agreements maturing in
more than seven days, except that all the assets of the Fund may be invested in
the corresponding Portfolio,
(vii) purchase securities of any issuer if such purchase at the time
thereof would cause it to hold more than 10% of any class of securities of such
<PAGE>
issuer, for which purposes all indebtedness of an issuer shall be deemed a
single class, except that all the assets of the Fund may be invested in the
corresponding Portfolio,
(viii) purchase or retain any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or Trustee of
the Trust or the Portfolio, or is an officer or director of the Adviser, if
after the purchase of the securities of such issuer by the Trust, on behalf of
the Fund, or the Portfolio, one or more of such persons owns beneficially more
than 1/2 of 1% of the shares or securities, or both, all taken at market value,
of such issuer, and such persons owning more than 1/2 of 1% of such shares or
securities together own beneficially more than 5% of such shares or securities,
or both, all taken at market value,
(ix) write, purchase or sell any put or call option or any combination
thereof,
(x) taken together with any investments described in clause (vi) above,
invest in securities which are subject to legal or contractual restrictions on
resale (other than, in the case of Liquid Reserves and Cash Reserves Portfolio,
repurchase agreements and fixed time deposits maturing in not more than seven
days) if, as a result thereof, more than 10% of the net assets of the Fund or
the Portfolio, respectively, (in each case taken at market value) would be so
invested (including, in the case of Liquid Reserves and Cash Reserves
Portfolio, repurchase agreements maturing in more than seven days), except that
all the assets of the Fund may be invested in the Portfolio,
(xi) purchase securities of any issuer if such purchase at the time
thereof would cause more than 10% of the voting securities of such issuer to be
held by the Fund or the Portfolio, respectively, except that all the assets of
the Fund may be invested in the Portfolio, or
(xii) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue as, and equal in
amount to, the securities sold short, and unless not more than 10% of the net
assets of the Fund or the Portfolio respectively (in each case taken at market
value) is held as collateral for such sales at any one time (the Funds and the
Portfolios do not presently intend to make such sales).
These policies are not fundamental and may be changed by the Trust with
respect to a Fund without approval by the Fund's shareholders, or by a
Portfolio without approval by the corresponding Fund or its other investors.
DESIGNATION OF ISSUER OF SECURITIES
For purposes of the investment restrictions described above for Tax Free
Reserves and Tax Free Reserves Portfolio, 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.
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,
<PAGE>
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 (other than a
restriction as to borrowing) on investment or utilization of assets set forth
above or referred to in the Prospectus is adhered to at the time an investment
is made or assets are so utilized, a later change in percentage resulting from
changes in the value of the securities held by a Fund or a Portfolio or a later
change in the rating of a security held by the Fund or the Portfolio is not
considered a violation of policy.
3. PERFORMANCE INFORMATION
Any current yield quotation of a Fund which is used in such a manner as
to be subject to the provisions of Rule 482(d) under the Securities Act of
1933, as amended, consists of an annualized historical yield, carried at least
to the nearest hundredth of one percent, based on a specific seven calendar day
period and is calculated by dividing the net change in the value of an account
having a balance of one share at the beginning of the period by the value of
the account at the beginning of the period and multiplying the quotient by
365/7. For this purpose the net change in account value would reflect the value
of additional shares purchased with dividends declared on the original share
and dividends declared on both the original share and any such additional
shares, but would not reflect any realized gains or losses as a result of the
Fund's investment in the Portfolio or any unrealized appreciation or
depreciation on portfolio securities. In addition, any effective yield
quotation of a Fund so used shall be calculated by compounding the current
yield quotation for such period by multiplying such quotation by 7/365, adding
1 to the product, raising the sum to a power equal to 365/7, and subtracting 1
from the result.
Any tax equivalent yield quotation of a Fund is calculated as follows: If
the entire current yield quotation for such period is tax-exempt, the tax
equivalent yield will be the current yield quotation divided by 1 minus a
stated income tax rate or rates. If a portion of the current yield quotation is
not tax-exempt, the tax equivalent yield will be the sum of (a) that portion of
the yield which is tax-exempt divided by 1 minus a stated income tax rate or
rates and (b) the portion of the yield which is not tax-exempt.
A total rate of return quotation for a Fund is calculated for any period
by (a) dividing (i) the sum of the net asset value per share on the last day of
the period and the net asset value per share on the last day of the period of
shares purchasable with dividends and capital gains distributions declared
during such period with respect to a share held at the beginning of such period
and with respect to shares purchased with such dividends and capital gains
distributions, by (ii) the public offering price on the first day of such
period, and (b) subtracting 1 from the result. Any annualized total rate of
return quotation is calculated by (x) adding 1 to the period total rate of
return quotation calculated above, (y) raising such sum to a power which is
equal to 365 divided by the number of days in such period, and (z) subtracting
1 from the result.
Any tax equivalent total rate of return quotation of a Fund is calculated
as follows: If the entire current total rate of return quotation for such
period is tax-exempt, the tax equivalent total rate of return will be the
<PAGE>
current total rate of return quotation divided by 1 minus a stated income tax
rate or rates. If a portion of the current total rate of return quotation is
not tax-exempt, the tax equivalent total rate of return will be the sum of (a)
that portion of the total rate of return which is tax-exempt divided by 1 minus
a stated income tax rate or rates and (b) the portion of the total rate of
return which is not tax-exempt.
Set forth below is total rate of return information, assuming that
dividends and capital gains distributions, if any, were reinvested, for Liquid
Reserves and U.S. Treasury Reserves for the periods indicated, at the beginning
of which periods no sales charges were applicable to purchases of shares of the
Funds. No shares of Tax Free Reserves were outstanding during the fiscal year
ended August 31, 1996.
REDEEMABLE VALUE OF A
HYPOTHETICAL $1,000
ANNUALIZED TOTAL INVESTMENT AT THE END
PERIOD RATE OF RETURN OF THE PERIOD
LIQUID RESERVES
October 2, 1992 (commencement of
operations) to August 31, 1996 4.61% $1,193.13
One year ended August 31, 1996 5.66% $1,056.60
U.S. TREASURY RESERVES
October 2, 1992 (commencement of
operations) to August 31, 1996 4.24% $1,176.36
One year ended August 31, 1996 5.17% $1,051.70
The annualized yield of Liquid Reserves for the seven-day period ended
August 31, 1996 was 5.30%. The effective compound annualized yield of Liquid
Reserves for such period was 5.44%. The annualized yield of U.S. Treasury
Reserves for the seven-day period ended August 31, 1996 was 4.93%, the
effective compound annualized yield of U.S. Treasury Reserves for such period
was 5.05%.
4. DETERMINATION OF NET ASSET VALUE
The net asset value of each of the shares of each Fund is determined on
each day on which the NYSE is open for trading. This determination is made once
during each such day as of 12:00 noon, Eastern time, for Tax Free Reserves and
U.S. Treasury Reserves and 3:00 p.m., Eastern time, for Liquid Reserves, by
dividing the value of the Fund's net assets (i.e., the value of its investment
in its Portfolio and other assets less its liabilities, including expenses
payable or accrued) by the number of shares of the Fund outstanding at the time
the determination is made. As of the date of this Statement of Additional
Information, the NYSE is open for trading every weekday except for the
following holidays (or the days on which they are observed): New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. It is anticipated that the net asset value
of each share of each Fund will remain constant at $1.00 and, although no
assurance can be given that they will be able to do so on a continuing basis,
as described below, the Funds and Portfolios employ specific investment
policies and procedures to accomplish this result.
<PAGE>
The value of a Portfolio's net assets (i.e., the value of its securities
and other assets less its liabilities, including expenses payable or accrued)
is determined at the same time and on the same days as the net asset value per
share of the corresponding Fund is determined. The net asset value of a Fund's
investment in the corresponding Portfolio is equal to the Fund's pro rata share
of the total investment of the Fund and of other investors in the Portfolio
less the Fund's pro rata share of the Portfolio's liabilities.
The securities held by a Fund or Portfolio are valued at their amortized
cost. Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. If fluctuating interest rates cause the market value of the securities
held by the Fund or Portfolio to deviate more than 1/2 of 1% from their value
determined on the basis of amortized cost, the Fund's or Portfolio's Board of
Trustees will consider whether any action should be initiated, as described in
the following paragraph. Although the amortized cost method provides certainty
in valuation, it may result in periods during which the stated value of an
instrument is higher or lower than the price the Fund or Portfolio would
receive if the instrument were sold.
Pursuant to the rules of the Securities and Exchange Commission ("SEC"),
the Trust's and the Portfolios' Boards of Trustees have established procedures
to stabilize the value of the Funds' and Portfolios' net assets within 1/2 of
1% of the value determined on the basis of amortized cost. These procedures
include a review of the extent of any such deviation of net asset value, based
on available market rates. Should that deviation exceed 1/2 of 1% for a Fund or
a Portfolio, the Trust's or Portfolio's Board of Trustees of the applicable
Fund or Portfolio will consider whether any action should be initiated to
eliminate or reduce material dilution or other unfair results to the investors
in the Fund or Portfolio. Such action may include withdrawal in kind, selling
securities prior to maturity and utilizing a net asset value as determined by
using available market quotations. The Funds and Portfolios maintain a
dollar-weighted average maturity of 90 days or less, do not purchase any
instrument with a remaining maturity greater than 397 days or (in the case of
Liquid Reserves and Cash Reserves Portfolio) subject to a repurchase agreement
having a duration of greater than 397 days, limit their investments, including
repurchase agreements, to those U.S. dollar-denominated instruments that are
determined by the Adviser to present minimal credit risks and comply with
certain reporting and recordkeeping procedures. The Trust and Portfolios also
have established procedures to ensure that securities purchased by the Funds
and Portfolios meet high quality criteria. (See "Investment Objectives,
Policies and Restrictions -- Investment Policies.")
Subject to compliance with applicable regulations, the Trust and the
Portfolios have each reserved the right to pay the redemption price of shares
of the Funds or beneficial interests in the Portfolios, either totally or
partially, by a distribution in kind of readily marketable securities (instead
of cash). The securities so distributed would be valued at the same amount as
that assigned to them in calculating the net asset value for the shares or
beneficial interests being sold. If a holder of shares or beneficial interests
received a distribution in kind, such holder could incur brokerage or other
charges in converting the securities to cash.
The Trust or the Portfolios may suspend the right of redemption or
postpone the date of payment for shares of a Fund or beneficial interests in a
Portfolio more than seven days during any period when (a) trading in the
<PAGE>
markets the Fund or Portfolio normally utilizes is restricted, or an emergency,
as defined by the rules and regulations of the SEC, exists making disposal of
the Fund's or Portfolio's investments or determination of its net asset value
not reasonably practicable; (b) the NYSE is closed (other than customary
weekend and holiday closings); or (c) the SEC has by order permitted such
suspension.
5. MANAGEMENT
The Trustees and officers of the Trust and the Portfolios, their ages and
their principal occupations during the past five years are set forth below.
Their titles may have varied during that period. Asterisks indicate that those
Trustees and officers are "interested persons" (as defined in the 1940 Act) of
the Trust or a Portfolio. Unless otherwise indicated below, the address of each
Trustee and officer is 6 St. James Avenue, Boston, Massachusetts. The address
of Cash Reserves Portfolio is Elizabethan Square, George Town, Grand Cayman,
British West Indies. The address of U.S. Treasury Reserves Portfolio is 6 St.
James Avenue, Boston, Massachusetts.
TRUSTEES OF THE TRUST
PHILIP W. COOLIDGE; aged 45* -- President of the Trust and the Portfolios;
Chairman, Chief Executive Officer and President, Signature Financial Group,
Inc. and The Landmark Funds Broker-Dealer Services, Inc. (since December,
1988).
RILEY C. GILLEY; aged 70 -- Vice President and General Counsel, Corporate
Property Investors (December, 1988 to September, 1991); Partner, Breed, Abbott
& Morgan (Attorneys) (retired, December, 1987). His address is 4041 Gulf Shore
Boulevard North, Naples, Florida.
DIANA R. HARRINGTON; aged 56 -- Professor, Babson College (since September,
1993); Visiting Professor, Kellogg Graduate School of Management, Northwestern
University (September, 1992 to September, 1993); Professor, Darden Graduate
School of Business, University of Virginia (September, 1978 to September,
1993); Consultant to Kidder, Peabody & Co. Incorporated (since January, 1990).
Her address is 120 Goulding Street, Holliston, Massachusetts.
SUSAN B. KERLEY; aged 45 -- President, Global Research Associates, Inc.
(Investment Research) (since August, 1990); Manager, Rockefeller & Co. (March,
1988 to July, 1990); Trustee, Mainstay Institutional Funds (since December,
1990). Her address is P.O. Box 9572, New Haven, Connecticut.
TRUSTEES OF THE PORTFOLIOS
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 Trust and the Portfolios;
Chairman, Chief Executive Officer and President, Signature Financial Group,
Inc. and The Landmark Funds Broker-Dealer Services, Inc. (since December,
1988).
<PAGE>
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 (since October, 1988). His address is 3500 Pacific Avenue,
P.O. Box 539, Virginia Beach, Virginia.
WALTER E. ROBB, III; aged 70-- President, Benchmark Consulting Group, Inc.
(since 1991); Principal, Robb Associates (corporate financial advisers) (since
1978); President, Benchmark Advisors, Inc. (Corporate Financial Advisors)
(since 1989); Trustee of certain registered investment companies in the MFS
Family of Funds. His address is 35 Farm Road, Sherborn, Massachusetts.
OFFICERS OF THE TRUST AND THE PORTFOLIOS
PHILIP W. COOLIDGE; aged 45* -- President of the Trust and the Portfolios;
Chairman, Chief Executive Officer and President, Signature Financial Group,
Inc. and The Landmark Funds Broker-Dealer Services, Inc. (since December,
1988).
JOHN R. ELDER; aged 48* -- Treasurer of the Trust and the Portfolios; Vice
President, Signature Financial Group, Inc. (since April 1995); Treasurer,
Phoenix Family of Mutual Funds (Phoenix Home Life Mutual Insurance Company)
(from 1983 to March 1995).
LINDA T. GIBSON; aged 31* -- Assistant Secretary of the Trust and the
Portfolios; Legal Counsel, Signature Financial Group, Inc. (since June 1991);
law student, Boston University School of Law (from September 1989 to May 1992);
Product Manager, Signature Financial Group, Inc. (January 1989 to September
1989).
SUSAN JAKUBOSKI; aged 32* -- Vice President, Assistant Treasurer and Assistant
Secretary of Cash Reserves Portfolio and Assistant Secretary of the Trust
(since August, 1994); Manager, Signature Financial Group (Cayman) Ltd. (since
August, 1994); Senior Fund Administrator, Signature Financial Group, Inc.
(since August, 1994); Assistant Treasurer, Signature Broker-Dealer Services,
Inc. (since September, 1994); Fund Compliance Administrator, Concord Financial
Group (November, 1990 to August, 1994); Senior Fund Accountant, Neuberger &
Berman Management, Inc. (from February, 1988 to November, 1990); Customer
Service Representative, I.B.J. Schroder (prior to 1988). Her address is
Elizabethan Square, George Town, Grand Cayman, Cayman Islands, BWI.
MOLLY S. MUGLER; aged 44* -- Assistant Secretary of the Trust and the
Portfolios; Legal Counsel and Assistant Secretary, Signature Financial Group,
Inc. (since December, 1988); Assistant Secretary, The Landmark Funds
Broker-Dealer Services, Inc. (since December, 1988).
The Trustees and officers of the Trust and the Portfolios also hold
comparable positions with certain other funds for which LFBDS or an affiliate
serves as the distributor or administrator.
<PAGE>
TRUSTEES COMPENSATION TABLE
AGGREGATE AGGREGATE
COMPENSATION FROM COMPENSATION FROM TOTAL COMPENSATION
INSTITUTIONAL LIQUID INSTITUTIONAL U.S. FROM THE TRUST AND
TRUSTEE RESERVES(1) TREASURY RESERVES(1) COMPLEX(2)
Philip W. Coolidge 0 0 0
Riley C. Gilley $11,910 $2,597 $46,000
Diana R. Harrington $11,038 $2,526 $45,000
Susan B. Kerley $10,275 $2,422 $45,000
(1) For the fiscal year ended August 31, 1996.
(2) Information relates to the fiscal year ended August 31, 1996. Messrs.
Coolidge and Gilley and Mses. Harrington and Kerley are trustees of 28, 11, 11
and 11 Funds, respectively, of the Landmark Family of Funds.
As of September 15, 1996, all Trustees and officers as a group owned less
than 1% of each Fund's outstanding shares. As of the same date, more than 95%
of the outstanding shares of Liquid Reserves and more than 95% of the
outstanding shares of U.S. Treasury Reserves were held of record by Citibank,
N.A. or an affiliate, as a Shareholder Servicing Agent of the Funds, for the
accounts of their respective clients, and no shares of Tax Free Reserves were
outstanding.
The Declaration of Trust of each of the Trust and the Portfolios provides
that the Trust or such Portfolio, as the case may be, will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust or such Portfolio, as the case may be, unless, as to liability to the
Trust or such Portfolio or its respective investors, it is finally adjudicated
that they engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in their offices, or unless with
respect to any other matter it is finally adjudicated that they did not act in
good faith in the reasonable belief that their actions were in the best
interests of the Trust or such Portfolio, as the case may be. In the case of
settlement, such indemnification will not be provided unless it has been
determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees of the Trust
or such Portfolio, or in a written opinion of independent counsel, that such
officers or Trustees have not engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties.
ADVISER
Citibank manages the assets of each Portfolio pursuant to separate
investment advisory agreements (the "Advisory Agreements"). Subject to such
policies as the Board of Trustees of a Portfolio may determine, the Adviser
manages the securities of the Portfolio and makes investment decisions for the
Portfolio. The Adviser furnishes at its own expense all services, facilities
and personnel necessary in connection with managing the Portfolios' investments
and effecting securities transactions for each Portfolio. Each of the Advisory
Agreements will continue in effect as long as such continuance is specifically
approved at least annually by the Board of Trustees of the applicable Portfolio
or by a vote of a majority of the outstanding voting securities of the
applicable Portfolio, and, in either case, by a majority of the Trustees of the
applicable Portfolio who are not parties to such Advisory Agreement or
interested persons of any such party, at a meeting called for the purpose of
voting on the Advisory Agreement.
<PAGE>
Each of the Advisory Agreements provides that the Adviser may render
services to others. Each Advisory Agreement is terminable without penalty on
not more than 60 days' nor less than 30 days' written notice by the applicable
Portfolio when authorized either by a vote of a majority of the outstanding
voting securities of the applicable Portfolio or by a vote of a majority of the
Board of Trustees of the applicable Portfolio, or by the Adviser on not more
than 60 days' nor less than 30 days' written notice, and will automatically
terminate in the event of its assignment. Each Advisory Agreement provides that
neither the Adviser nor its personnel shall be liable for any error of judgment
or mistake of law or for any loss arising out of any investment or for any act
or omission in the execution of security transactions for the applicable
Portfolio, except for willful misfeasance, bad faith or gross negligence or
reckless disregard of its or their obligations and duties under the Advisory
Agreement.
The Prospectus contains a description of the fees payable to the Adviser
for services under the Advisory Agreements. Cash Reserves Portfolio: For the
fiscal years ended August 31, 1994, 1995 and 1996, the fees paid from Cash
Reserves Portfolio to Citibank under the Advisory Agreement were $1,806,314,
$4,097,854 and $6,140,512 (of which $943,419, $2,306,161 and $3,426,821,
respectively, were voluntarily waived).
U.S. Treasury Reserves Portfolio: For the fiscal years ended August 31,
1994, 1995 and 1996, the fees payable from U.S. Treasury Reserves Portfolio to
Citibank under the Advisory Agreement were $850,924, $1,148,418 and $1,101,345
(of which $506,109, $753,105 and $727,401, respectively, were voluntarily
waived).
ADMINISTRATORS
Pursuant to Administrative Services Agreements (the "Administrative
Services Agreements"), LFBDS provides the Trust, Tax Free Reserves Portfolio
and U.S. Treasury Reserves Portfolio, and SFG provides Cash Reserves Portfolio,
with general office facilities, and LFBDS supervises the overall administration
of the Trust, Tax Free Reserves Portfolio and U.S. Treasury Reserves Portfolio
and SFG supervises the overall administration of Cash Reserves Portfolio,
including, among other responsibilities, the negotiation of contracts and fees
with, and the monitoring of performance and billings of, the independent
contractors and agents of the Trust and the Portfolios; the preparation and
filing of all documents required for compliance by the Trust and the Portfolios
with applicable laws and regulations; and arranging for the maintenance of
books and records of the Trust and the Portfolios. LFBDS and SFG provide
persons satisfactory to the Board of Trustees of the Trust and the Portfolios
to serve as Trustees and officers of the Trust and the Portfolios. Such
Trustees and officers may be directors, officers or employees of LFBDS, SFG or
their affiliates.
The Prospectus contains a description of the fees payable to LFBDS and
SFG under the Administrative Services Agreements.
Liquid Reserves: For the fiscal years ended August 31, 1994, 1995 and 1996, the
fees payable to LFBDS from Liquid Reserves under the Administrative Services
Agreement were $468,172, $1,014,974 and $4,118,565 (of which $231,690, $914,591
and $3,142,409, respectively, were voluntarily waived). For Cash Reserves
Portfolio's fiscal years ended August 31, 1994, 1995 and 1996, the fees payable
to SFG under the Administrative Services Agreement were $602,105, $1,365,951
and $2,046,838 (all of which were voluntarily waived).
<PAGE>
U.S. Treasury Reserves: For the fiscal years ended August 31, 1994, 1995 and
1996, the fees payable from U.S. Treasury Reserves to LFBDS under the
Administrative Services Agreement were $140,961, $214,600 and $573,577 (of
which $119,704, $80,255 and $451,888, respectively, were voluntarily waived).
For the fiscal years ended August 31, 1994, 1995 and 1996, the fees payable to
LFBDS under the Administrative Services Agreement with U.S. Treasury Reserves
Portfolio were $283,642, $382,806 and $367,115 (all of which were voluntarily
waived).
The Administrative Services Agreement with the Trust acknowledges that
the names "Landmark" and "Landmark Funds" are the property of LFBDS and
provides that if LFBDS ceases to serve as the administrator of the Trust, the
Trust and the Funds will change their respective names so as to delete the word
"Landmark" or the words "Landmark Funds." The Administrative Services Agreement
with the Trust also provides that LFBDS may render administrative services to
others and may permit other investment companies in addition to the Trust to
use the word "Landmark" or the words "Landmark Funds" in their names.
The Administrative Services Agreement with the Trust continues in effect
as to a Fund if such continuance is specifically approved at least annually by
the Trust's Board of Trustees or by a vote of a majority of the outstanding
voting securities of such Fund and, in either case, by a majority of the
Trustees of the Trust who are not interested parties of the Trust or LFBDS. The
Administrative Services Agreement with the Trust terminates automatically if it
is assigned and may be terminated as to a Fund by the Trust without penalty by
vote of a majority of the outstanding voting securities of the Fund or by
either party on not more than 60 days' nor less than 30 days' written notice.
The Administrative Services Agreement with the Trust also provides that neither
LFBDS nor its personnel shall be liable for any error of judgment or mistake of
law or for any act or omission in the administration or management of the
Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of its or their duties or by reason of reckless disregard of its or
their obligations and duties under the Administrative Services Agreement.
LFBDS has agreed to reimburse the Funds for their operating expenses
(exclusive of interest, taxes, brokerage, and extraordinary expenses) which in
any year exceed the limits prescribed by any state in which the Funds' shares
are qualified for sale. The expenses incurred by the Funds for distribution
purposes pursuant to the Trust's Distribution Plans are included within such
operating expenses only to the extent required by any state in which the Funds'
shares are qualified for sale. The Trust may elect not to qualify the Funds'
shares for sale in every state. The Trust believes that currently the most
restrictive expense ratio limitation imposed by any state is 2 1/2 % of the
first $30 million of a Fund's average net assets for its then-current fiscal
year, 2% of the next $70 million of such assets, and 1 1/2 % of such assets in
excess of $100 million. For the purpose of this obligation to reimburse
expenses, the Funds' annual expenses are estimated and accrued daily, and any
appropriate estimated payments will be made by LFBDS. Subject to the obligation
of LFBDS to reimburse the Funds for their excess expenses as described above,
the Trust has, under its Administrative Services Agreement, confirmed its
obligation for payment of all other expenses of the Funds.
The Administrative Services Agreements with the Portfolios provide that
LFBDS or SFG, as the case may be, may render administrative services to others.
The Administrative Services Agreement with each of the Portfolios terminates
<PAGE>
automatically if it is assigned and may be terminated without penalty by a vote
of a majority of the outstanding voting securities of the Portfolio or by
either party on not more than 60 days' nor less than 30 days' written notice.
The Administrative Services Agreement with each of the Portfolios also provides
that neither LFBDS or SFG, as the case may be, nor its personnel shall be
liable for any error of judgment or mistake of law or for any act or omission
in the administration or management of the Portfolio, except for willful
misfeasance, bad faith or gross negligence in the performance of its or their
duties or by reason of reckless disregard of its or their obligations and
duties under the Administrative Services Agreement.
LFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group,
Inc.
Pursuant to Sub-Administrative Services Agreements (the
"Sub-Administrative Agreements"), Citibank performs such sub-administrative
duties for the Trust and the Portfolios as are from time to time agreed upon by
Citibank and, as the case may be, LFBDS or SFG. Citibank's sub-administrative
duties may include providing equipment and clerical personnel necessary for
maintaining the organization of the Trust and the Portfolios, participation in
preparation of documents required for compliance by the Trust and the
Portfolios with applicable laws and regulations, preparation of certain
documents in connection with meetings of Trustees and shareholders of the Trust
and Portfolios, and other functions which would otherwise be performed by LFBDS
as set forth above. For performing such sub-administrative services, Citibank
receives such compensation as is from time to time agreed upon by Citibank and,
as the case may be, LFBDS or SFG not in excess of the amount paid to LFBDS or
SFG for its services under the applicable Administrative Services Agreement.
All such compensation is paid by LFBDS or SFG, as the case may be.
DISTRIBUTOR
The Trust has adopted a Distribution Plan (the "Distribution Plan") in
accordance with Rule 12b-1 under the 1940 Act after having concluded that there
is a reasonable likelihood that the Distribution Plan will benefit the Funds
and their shareholders. The Distribution Plan provides that the Distributor
receives a fee from each Fund at an annual rate not to exceed 0.10% of the
Fund's average daily net assets in anticipation of, or as reimbursement for,
expenses incurred in connection with the sale of shares of the Fund, such as
advertising expenses and the expenses of printing (excluding typesetting) and
distributing prospectuses and reports used for sales purposes, expenses of
preparing and printing sales literature and other distribution related
expenses.
The Distribution Plan continues in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Trust's Trustees and a majority of the Trust's Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial interest in
the operation of the Distribution Plan or in any agreement related to such Plan
("Qualified Trustees"). The Distribution Plan requires that at least quarterly
the Trust and the Distributor provide to the Board of Trustees and the Board of
Trustees review a written report of the amounts expended (and the purposes
therefor) under the Distribution Plan. The Distribution Plan further provides
that the selection and nomination of the Trust's Qualified Trustees is
committed to the discretion of the Trust's disinterested Trustees then in
office. The Distribution Plan may be terminated with respect to the applicable
Fund at any time by a vote of a majority of the Trust's Qualified Trustees or
by a vote of a majority of the outstanding voting securities of that Fund. The
Distribution Plan may not be amended to increase materially the amount of the
Funds' permitted expenses thereunder without the approval of a majority of the
outstanding voting securities of the applicable Fund and may not be materially
<PAGE>
amended in any case without a vote of the majority of both the Trust's Trustees
and the Trust's Qualified Trustees. The Distributor will preserve copies of any
plan, agreement or report made pursuant to the Distribution Plan for a period
of not less than six years from the date of the Distribution Plan, and for the
first two years the Distributor will preserve such copies in an easily
accessible place.
As contemplated by the Distribution Plan, LFBDS acts as the agent of the
Funds in connection with the offering of shares of the Funds pursuant to
Distribution Agreement (the "Distribution Agreement"). After the prospectus and
periodic reports have been prepared, set in type and mailed to existing
shareholders, the Distributor pays for the printing and distribution of copies
of the prospectuses and periodic reports which are used in connection with the
offering of shares of the Funds to prospective investors. The Prospectus
contains a description of fees payable to the Distributor under the
Distribution Agreement.
Liquid Reserves: For the fiscal years ended August 31, 1994, 1995 and 1996, the
fees payable from Liquid Reserves to the Distributor under the Distribution
Agreement were $312,115, $676,649 and $1,176,733 (of which $296,822, $676,649
and $1,176,733 were voluntarily waived), respectively.
U.S. Treasury Reserves: For the the fiscal years ended August 31, 1994,
1995 and 1996, the fees payable from U.S. Treasury Reserves to the Distributor
under the Distribution Agreement were $93,974, $143,067 and $163,879 (of which
$82,858, $141,847 and $159,656 were voluntarily waived), respectively.
SHAREHOLDER SERVICING AGENTS, TRANSFER AGENT AND CUSTODIAN
The Trust has adopted an Administrative Services Plan (the
"Administrative Plan") which provides that the Trust may obtain the services of
an administrator, a transfer agent, a custodian and one or more Shareholder
Servicing Agents, and may enter into agreements providing for the payment of
fees for such services. Under the Administrative Plan, the aggregate of the fee
paid to the Administrator from each Fund and the fees paid to the Shareholder
Servicing Agents from each Fund may not exceed 0.45% of the applicable Fund's
average daily net assets on an annualized basis for the Fund's then-current
fiscal year. The Administrative Plan continues in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Trust's Trustees and a majority of the Trust's Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial interest in
the operation of the Administrative Plan or in any agreement related to such
Plan ("Qualified Trustees"). The Administrative Plan requires that the Trust
provide to the Trust's Board of Trustees and the Trust's Board of Trustees
review, at least quarterly, a written report of the amounts expended (and the
purposes therefor) under the Administrative Plan. The Administrative Plan may
be terminated at any time with respect to a Fund by a vote of a majority of the
Trust's Qualified Trustees or by a vote of a majority of the outstanding voting
securities of the Fund. The Administrative Plan may not be amended to increase
materially the amount of permitted expenses thereunder without the approval of
a majority of the outstanding voting securities of a Fund and may not be
materially amended in any case without a vote of the majority of both the
Trust's Trustees and the Trust's Qualified Trustees.
The Trust has entered into a shareholder servicing agreement (a
"Servicing Agreement") with each Shareholder Servicing Agent and a Transfer
Agency and Service Agreement and a Custodian Agreement with State Street Bank
<PAGE>
and Trust Company ("State Street") pursuant to which State Street (or its
affiliate State Street Canada, Inc.) acts as transfer agent and custodian for
the Trust. For additional information, including a description of fees paid to
the Shareholder Servicing Agents under the Servicing Agreements, see
"Management-Shareholder Servicing Agents" in the Prospectus. For the fiscal
years ended August 31, 1995 and 1996, the aggregate fees payable from Liquid
Reserves to Shareholder Servicing Agents under the Servicing Agreement were
$2,029,949 and $1,176,733 (all of which were voluntarily waived). For the
fiscal years ended August 31, 1995 and 1996, the aggregate fees payable from
U.S. Treasury Reserves to Shareholder Servicing Agents under the Servicing
Agreements were $429,200 and $163,879 (all of which were voluntarily waived).
The Portfolios have also adopted Administrative Services Plans (the
"Portfolio Administrative Plans") which provide that the Portfolios may obtain
the services of an administrator, a transfer agent and a custodian, and may
enter into agreements providing for the payment of fees for such services.
Under the Portfolio Administrative Plans, the administrative services fee
payable to either LFBDS or SFG, as the case may be, may not exceed 0.05% of a
Portfolio's average daily net assets on an annualized basis for its
then-current fiscal year. Each Portfolio Administrative Plan continues in
effect if such continuance is specifically approved at least annually by a vote
of both a majority of the applicable Portfolio's Trustees and a majority of the
Portfolio's Trustees who are not "interested persons" of the Portfolio and who
have no direct or indirect financial interest in the operation of the Portfolio
Administrative Plan or in any agreement related to such Plan ("Qualified
Trustees"). Each Portfolio Administrative Plan requires that the applicable
Portfolio provide to its Board of Trustees and the Board of Trustees review, at
least quarterly, a written report of the amounts expended (and the purposes
therefor) under the Portfolio Administrative Plan. Each Portfolio
Administrative Plan may be terminated at any time by a vote of a majority of
the Portfolio's Qualified Trustees or by a vote of a majority of the
outstanding voting securities of the applicable Portfolio. Neither Portfolio
Administrative Plan may be amended to increase materially the amount of
permitted expenses thereunder without the approval of a majority of the
outstanding voting securities of the applicable Portfolio and may not be
materially amended in any case without a vote of the majority of both the
Portfolio's Trustees and the Portfolio's Qualified Trustees.
Each Portfolio has entered into a Transfer Agency and Service Agreement
and a Custodian Agreement with State Street pursuant to which State Street (or
its affiliate State Street Canada, Inc.) acts as transfer agent and custodian
and performs fund accounting services for the Portfolios.
6. PORTFOLIO TRANSACTIONS
The Portfolios' purchases and sales of portfolio securities usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
There usually are no brokerage commissions paid for such purchases. The
Portfolios do not anticipate paying brokerage commissions. Any transaction for
which a Portfolio pays a brokerage commission will be effected at the best
price and execution available. Purchases from underwriters of portfolio
securities include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price.
Allocation of transactions, including their frequency, to various dealers
is determined by the Adviser in its best judgment and in a manner deemed to be
<PAGE>
in the best interest of investors in the applicable Portfolio rather than by
any formula. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price.
Investment decisions for each Portfolio will be made independently from
those for any other account, series or investment company that is or may in the
future become managed by the Adviser or its affiliates. If, however, a
Portfolio and other investment companies, series or accounts managed by the
Adviser are contemporaneously engaged in the purchase or sale of the same
security, the transactions may be averaged as to price and allocated equitably
to each account. In some cases, this policy might adversely affect the price
paid or received by the Portfolio or the size of the position obtainable for
the Portfolio. In addition, when purchases or sales of the same security for a
Fund, Portfolio and for other investment companies or series managed by the
Adviser occur contemporaneously, the purchase or sale orders may be aggregated
in order to obtain any price advantages available to large denomination
purchases or sales.
No portfolio transactions are executed with the Adviser, or with any
affiliate of the Adviser, acting either as principal or as broker.
7. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trust's Board of Trustees to
issue an unlimited number of full and fractional Shares of Beneficial Interest
($0.00001 par value) of each series and to divide or combine the shares of any
series into a greater or lesser number of shares of that series without thereby
changing the proportionate beneficial interests in that series. Currently, the
Funds are the only three series of shares of the Trust. Each share represents
an equal proportionate interest in a Fund with each other share. Upon
liquidation or dissolution of a Fund, the Fund's shareholders are entitled to
share pro rata in the Fund's net assets available for distribution to its
shareholders. The Trust reserves the right to create and issue additional
series of shares. Shares of each series participate equally in the earnings,
dividends and distribution of net assets of the particular series upon the
liquidation or dissolution of the series. Shares of each series are entitled to
vote separately to approve advisory agreements or changes in investment policy,
but shares of all series may vote together in the election or selection of
Trustees and accountants for the Trust. In matters affecting only a particular
Fund, only shares of that Fund are entitled to vote.
Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the Trust do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the Trust may elect all of the Trustees of the Trust if
they choose to do so and in such event the other shareholders in the Trust
would not be able to elect any Trustee. The Trust is not required and has no
present intention of holding annual meetings of shareholders but the Trust will
hold special meetings of a Fund's shareholders when in the judgment of the
Trust's Trustees it is necessary or desirable to submit matters for a
shareholder vote. Shareholders have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees by a
specified number of shareholders) the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees. Shareholders also have the right to
remove one or more Trustees without a meeting by a declaration in writing by a
specified number of shareholders. No material amendment may be made to the
Trust's Declaration of Trust without the affirmative vote of the holders of a
majority of its outstanding shares.
<PAGE>
The Trust's Declaration of Trust provides that, at any meeting of
shareholders of the Trust or of any series of the Trust, a Shareholder
Servicing Agent may vote any shares of which it is the holder of record and for
which it does not receive voting instructions proportionately in accordance
with the instructions it receives for all other shares of which it is the
holder of record. Shares have no preference, pre-emptive, conversion or similar
rights. Shares, when issued, are fully paid and non-assessable, except as set
forth below.
The Trust may enter into a merger or consolidation, or sell all or
substantially all of its assets (or all or substantially all of the assets
belonging to any series of the Trust), if approved by the vote of the holders
of two-thirds of the Trust's outstanding shares voting as a single class, or of
the affected series of the Trust, as the case may be, except that if the
Trustees of the Trust recommend such sale of assets, merger or consolidation,
the approval by vote of the holders of a majority of the Trust's or the
affected series' outstanding shares would be sufficient. The Trust or any
series of the Trust, as the case may be, may be terminated (i) by a vote of a
majority of the outstanding voting securities of the Trust or the affected
series or (ii) by the Trustees by written notice to the shareholders of the
Trust or the affected series. If not so terminated, the Trust will continue
indefinitely.
Share certificates will not be issued.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the
Trust and provides for indemnification and reimbursement of expenses out of
Trust property for any shareholder held personally liable for the obligations
of the Trust. The Declaration of Trust also provides that the Trust may
maintain appropriate insurance (e.g., fidelity bonding and errors and omissions
insurance) for the protection of the Trust, its shareholders, Trustees,
officers, employees and agents covering possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, but nothing in the Declaration of Trust protects a Trustee against any
liability to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his or her office.
Each Portfolio is organized as a trust under the laws of the State of New
York. Each Portfolio's Declaration of Trust provides that investors in the
Portfolio (e.g., other investment companies (including the corresponding Fund),
insurance company separate accounts and common and commingled trust funds) are
each liable for all obligations of the Portfolio. However, the risk of a Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the applicable
Portfolio itself was unable to meet its obligations. It is not expected that
the liabilities of either Portfolio would ever exceed its assets.
<PAGE>
Each investor in a Portfolio, including the corresponding Fund, may add
to or reduce its investment in the Portfolio on each business day. At 12:00
noon, Eastern time, in the case of Tax Free Reserves Portfolio and U.S.
Treasury Reserves Portfolio, and 3:00 p.m., Eastern time, in the case of Cash
Reserves Portfolio, on each such business day, the value of each investor's
interest in the Portfolio is determined by multiplying the net asset value of
the Portfolio by the percentage representing that investor's share of the
aggregate beneficial interests in the Portfolio effective for that day. Any
additions or withdrawals, which are to be effected on that day, are then
effected. The investor's percentage of the aggregate beneficial interests in
the Portfolio is then re-computed as the percentage equal to the fraction (i)
the numerator of which is the value of such investor's investment in the
Portfolio as of 12:00 noon, Eastern time, for Tax Free Reserves Portfolio and
U.S. Treasury Reserves Portfolio, and 3:00 p.m., Eastern time, for Cash
Reserves Portfolio, on such day plus or minus, as the case may be, the amount
of any additions to or withdrawals from the investor's investment in the
Portfolio effected on such day, and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of 12:00 noon, Eastern time, for
Tax Free Reserves Portfolio and U.S. Treasury Reserves Portfolio, and 3:00
p.m., Eastern time, for Cash Reserves Portfolio, on such day plus or minus, as
the case may be, the amount of the net additions to or withdrawals from the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage so determined is then applied to determine the value of the
investor's interest in the Portfolio as of 12:00 noon, Eastern time, for Tax
Free Reserves Portfolio and U.S. Treasury Reserves Portfolio, and 3:00 p.m.,
Eastern time, for Cash Reserves Portfolio, on the following business day of the
Portfolio.
8. CERTAIN ADDITIONAL TAX MATTERS
Each of the Funds has elected to be treated and intends to qualify each
year as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), by meeting all applicable
requirements of Subchapter M, including requirements as to the nature of the
Fund's gross income, the amount of Fund distributions, and the composition and
holding period of the Fund's portfolio assets. Provided all such requirements
are met and all of a Fund's net investment income and realized capital gains
are distributed to shareholders in accordance with the timing requirements
imposed by the Code, no federal income or excise taxes will be required to be
paid by the Fund. If a Fund should fail to qualify as a regulated investment
company for any year, the Fund would incur a regular corporate federal income
tax upon its taxable income and Fund distributions would generally be taxable
as ordinary dividend income to shareholders. Each of the Portfolios believes
that it will not be required to pay any federal income or excise taxes.
The portion of Tax Free Reserves' distributions of net investment income
that is attributable to interest from tax-exempt securities will be designated
by the Fund as an "exempt-interest dividend" under the Code and will generally
be exempt form federal income tax in the hands of shareholders so long as at
least 50% of the total value of the Fund's assets consists of tax-exempt
securities at the close of each quarter of the Fund's taxable year.
Distributions of tax-exempt interest earned from certain securities may,
however, be treated as an item of tax preference for shareholders under the
federal alternative minimum tax, and all exempt-interest dividends may increase
a corporate shareholder's alternative minimum tax. Unless the Fund provides
shareholders with actual monthly percentage breakdowns, the percentage of
income designated as tax-exempt will be applied uniformly to all distributions
by the Fund of net investment income made during each fiscal year of the Fund
and may differ from the percentage of distributions consisting of tax-exempt
interest in any particular month. Shareholders are required to report
<PAGE>
exempt-interest dividends received from the Fund on their federal income tax
returns.
Investment income received by Liquid Reserves from non-U.S. investments
may be subject to foreign income taxes withheld at the source; Liquid Reserves
does not expect to be able to pass through to shareholders any foreign tax
credits with respect to those foreign taxes. The United States has entered into
tax treaties with many foreign countries that may entitle Liquid Reserves to a
reduced rate of tax or an exemption from tax on these investments. It is not
possible to determine Liquid Reserves' effective rate of foreign tax in advance
since that rate depends upon the proportion of the Cash Reserves Portfolio's
assets ultimately invested within various countries.
Because each Fund expects to earn primarily interest income, it is
expected that no Fund distributions will qualify for the dividends-received
deduction for corporations.
9. INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Deloitte & Touche LLP are the independent certified public accountants
for Tax Free Reserves, Tax Free Reserves Portfolio, U.S. Treasury Reserves and
U.S. Treasury Reserves Portfolio, providing audit services and assistance and
consultation with respect to the preparation of filings with the SEC. Price
Waterhouse LLP and Price Waterhouse are the independent and chartered
accountants for Liquid Reserves and Cash Reserves Portfolio, respectively,
providing audit services and assistance and consultation with respect to the
preparation of filings with the SEC. Deloitte & Touche LLP were the independent
certified public accountants for Liquid Reserves and Cash Reserves Portfolio
through December 31, 1993. The selection of Price Waterhouse LLP and Price
Waterhouse was based on management's decision with respect to certain areas of
expertise and service capabilities. There was no disagreement between the Fund,
the Portfolio and Deloitte & Touche LLP with respect to the accounting and
audit services provided by such firm.
To be filed by amendment.
<PAGE>
SHAREHOLDER SERVICING AGENTS
FOR PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer, Registered Representative
or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY l0043
(212) 559-7117
FOR NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100
<PAGE>
LANDMARK INSTITUTIONAL TAX FREE RESERVES
LANDMARK INSTITUTIONAL LIQUID RESERVES
LANDMARK INSTITUTIONAL U.S. TREASURY RESERVES
TRUSTEES AND OFFICERS
Philip W. Coolidge, President*
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue, Boston, MA 02116
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
Price Waterhouse LLP
160 Federal Street, Boston, MA 02110
LEGAL COUNSEL
Bingham, Dana & Gould LLP
150 Federal Street, Boston, MA 02110
SHAREHOLDER SERVICING AGENTS
(See Inside of Cover)
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements Included in Part A:
To be filed by amendment.
Financial Statements Included in Part B:
To be filed by amendment.
(b) Exhibits.
**** 1(a) Declaration of Trust of the Registrant
**** and 1(b) Amendments to Declaration of Trust of the Registrant
filed
herewith
**** 2(a) Amended and Restated By-Laws of the Registrant
**** 2(b) Amendments to Amended and Restated By-Laws of the
Registrant
* 4 Form of Certificate representing ownership of a share of
beneficial interest in the Registrant
**** 6(a) Distribution Agreement between the Registrant and The
Landmark Funds Broker-Dealer Services, Inc. ("LFBDS")
*** 6(b) Form of Amended and Restated Distribution Agreement,
with respect to Class A Shares of Landmark Institutional
Liquid Reserves, between the Registrant and LFBDS, as
distributor
*** 6(c) Form of Distribution Agreement, with respect to Class
C Shares of Landmark Institutional Liquid Reserves, between
the Registrant and LFBDS, as distributor
*** 6(d) Form of Distribution Agreement, with respect to Class
D Shares of Landmark Institutional Liquid Reserves, between
the Registrant and LFBDS, as distributor
**** 7 Custodian Contract between the Registrant and State Street
Bank and Trust Company ("State Street"), as custodian
**** 9(a) Amended and Restated Administrative Services Plan of the
Registrant with respect to Landmark Institutional U.S.
Treasury Reserves and Landmark Institutional Tax Free
Reserves
*** 9(b) Form of Amended and Restated Administrative Services Plan
of the Registrant, with respect to Class A Shares of
Landmark Institutional Liquid Reserves
**** 9(c) Administrative Services Agreement between the Registrant
and LFBDS, as administrator
**** 9(d) Form of Sub-Administrative Services Agreement between
Citibank, N.A. and LFBDS
*** 9(e)(i) Form of Amendment to Shareholder Servicing Agreement
**** Form of Shareholder Servicing Agreement
9(e)(ii) between the Registrant and Citibank, N.A., as shareholder
servicing agent
**** 9(e)(iii)Form of Shareholder Servicing Agreement between the
Registrant and a federal savings bank, as shareholder
servicing agent
<PAGE>
**** 9(e)(iv) Form of Shareholder Servicing Agreement between the
Registrant and LFBDS, as shareholder servicing agent
**** 9(f) Transfer Agency and Servicing Agreement
between the Registrant and State Street, as transfer agent
**** 9(g) Amended and Restated Exchange Privilege Agreement
between the Registrant, certain other investment companies
and LFBDS, as distributor
**** and 10 Opinion and Consent of Counsel
filed
herewith
**** 15(a) Amended and Restated Distribution Plan of the Registrant
with respect to Landmark Institutional U.S. Treasury
Reserves and Landmark Institutional Tax Free Reserves
*** 15(b) Form of Amended and Restated Distribution Plan of the
Registrant, with respect to Class A Shares of Landmark
Institutional Liquid Reserves
*** 15(c) Form of Service Plan of the Registrant, with respect
to Class C Shares of Landmark Institutional Liquid Reserves
*** 15(d) Form of Service Plan of the Registrant, with respect
to Class D Shares of Landmark Institutional Liquid Reserves
*** 18 Multiple Class Plan with respect to Landmark Institutional
Liquid Reserves
**** 25(a) Powers of Attorney for the Registrant
** and 25(b) Powers of Attorney for U.S. Treasury
**** Reserves Portfolio
** and 25(c) Powers of Attorney for Cash Reserves
**** Portfolio
25(d) Powers of Attorney for Tax Free Reserves Portfolio
- ---------------------
* Information defining the rights of shareholders is contained in the
Registrant's Declaration of Trust, as amended, incorporated herein by
reference.
** Incorporated herein by reference to Post-Effective Amendment No. 4 to the
Registrant's Registration Statement on Form N-1A (File No. 33-49554) as
filed with the Securities and Exchange Commission on November 3, 1994 and
Post-Effective Amendment No. 4 to the Registrant's Registration Statement
on Form N-1A (File No. 33-49552) as filed with the Securities and Exchange
Commission on December 28, 1995.
*** Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A (File No. 33-49552) as
filed with the Securities and Exchange Commission on June 17, 1996.
**** Incorporated herein by reference to Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form N-1A (File No. 33-49552) as
filed with the Securities and Exchange Commission on August 28, 1996.
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
<PAGE>
Item 26. Number of Holders of Securities.
Title of Class Number of Record Holders
Shares of Beneficial Interest As of September 30, 1996
($0.00001 par value)
Landmark Institutional Liquid Reserves 4
Landmark Institutional U.S. Treasury Reserves 3
Landmark Institutional Tax Free Reserves 0
Item 27. Indemnification.
Reference is hereby made to (a) Article V of the Registrant's Declaration
of Trust, filed as an Exhibit to the Registrant's Registration Statement on
Form N-1A; (b) Section 4 of the Distribution Agreement between the Registrant
and The Landmark Funds Broker-Dealer Services, Inc., filed as an Exhibit to the
Registrant's Registration Statement on Form N-1A; and (c) the undertaking of
the Registrant regarding indemnification set forth in its Registration
Statement on Form N-1A.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
Citibank, N.A. ("Citibank") is a commercial bank offering a wide range of
banking and investment services to customers across the United States and
around the world. Citibank is a wholly-owned subsidiary of Citicorp, a
registered bank holding company. Citibank also serves as investment adviser to
the following registered investment companies (or series thereof): The Premium
Portfolios (Balanced Portfolio, Equity Portfolio, Government Income Portfolio,
International Equity Portfolio, Emerging Asian Markets Equity Portfolio and
Small Cap Equity Portfolio), Landmark Multi-State Tax Free Funds (Landmark New
York Tax Free Reserves, Landmark Connecticut Tax Free Reserves and Landmark
California Tax Free Reserves), Landmark Fixed Income Funds (Landmark
Intermediate Income Fund), Landmark Tax Free Income Funds (Landmark New York
Tax Free Income Fund and Landmark National Tax Free Income Fund), Asset
Allocation Portfolios (Asset Allocation Portfolio 200, Asset Allocation
Portfolio 300, Asset Allocation Portfolio 400 and Asset Allocation Portfolio
500), Landmark VIP Funds (Landmark VIP U.S. Government Fund, Landmark VIP
Balanced Fund, Landmark VIP Equity Fund and Landmark VIP International Equity
Fund), 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.,
<PAGE>
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, Boeing Company, Seattle, Washington; Mario Henrique Simonsen, Vice
Chairman, Brazilian Institute of Economics, The Getulio Vargas Foundation;
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
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
<PAGE>
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. Director, Aluminum Company of America Thomas
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, Premium U.S. Treasury
Reserves, Premium Liquid Reserves, Landmark Tax Free Reserves, Landmark Cash
Reserves, Landmark U.S. Treasury Reserves, Landmark New York Tax Free Reserves,
Landmark California Tax Free Reserves, Landmark Connecticut Tax Free Reserves,
Landmark U.S. Government Income Fund, Landmark Intermediate Income Fund,
Landmark Balanced Fund, Landmark Equity Fund, Landmark Small Cap Equity Fund,
Landmark National Tax Free Income Fund, Landmark New York Tax Free Income Fund,
Landmark VIP Funds (Landmark VIP U.S. Government Fund, Landmark VIP Balanced
Fund, Landmark VIP Equity Fund and Landmark VIP International Equity Fund),
CitiSelectSM Folio 200, CitiSelectSM Folio 300, CitiSelectSM Folio 400,
CitiSelectSM Folio 500, 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, Asset
Allocation Portfolio 200, Asset Allocation Portfolio 300, Asset Allocation
Portfolio 400 and Asset Allocation Portfolio 500.
<PAGE>
(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 Services, Inc. 6 St. James Avenue
(administrator and distributor) Boston, MA 02116
State Street Bank and Trust Company 1776 Heritage Drive
(custodian and transfer agent) North Quincy, MA 02171
Citibank, N.A. 153 East 53rd Street
(investment adviser) New York, NY 10043
SHAREHOLDER SERVICING AGENTS
Citibank, N.A. -- The Citibank 153 East 53rd Street
Private Bank New York, NY 10043
Citibank, N.A. -- Citibank Global 153 East 53rd Street
Asset Management New York, NY 10043
Citibank, N.A. -- North American 111 Wall Street
Investor Services New York, NY 10094
The Landmark Funds Broker-Dealer Services, Inc. 6 St. James Avenue
Boston, MA 02116
<PAGE>
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) The Registrant hereby undertakes to file a post-effective amendment
to this Registration Statement, containing reasonably current
financial statements that need not be certified, within four to six
months following the commencement of operations of Landmark
Institutional Tax Free Reserves.
(b) The Registrant hereby undertakes to call a meeting of shareholders
for the purpose of voting upon the question of removal of one or
more of the Trust's Trustees when requested in writing to do so by
the holders of at least 10% of the Registrant's outstanding shares,
and in connection therewith to comply with the provisions of Section
16(c) of the Investment Company Act of 1940 relating to shareholder
communication.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus of Landmark Institutional Liquid Reserves, Landmark
Institutional U.S. Treasury Reserves and Landmark Institutional Tax
Free Reserves is delivered with a copy of the Funds' latest Annual
Report to Shareholders, upon request without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston and
Commonwealth of Massachusetts on the 30th day of September, 1996.
LANDMARK INSTITUTIONAL TRUST
By: Philip W. Coolidge
Philip W. Coolidge, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated below on September 30, 1996.
Signature Title
Philip W. Coolidge President, Principal Executive Officer and
---------------------------- Trustee
Philip W. Coolidge
John R. Elder Principal Accounting and Financial Officer
----------------------------
John R. Elder
Riley C. Gilley* Trustee
----------------------------
Riley C. Gilley
Diana R. Harrington* Trustee
----------------------------
Diana R. Harrington
Susan B. Kerley* Trustee
----------------------------
Susan B. Kerley
*By: Philip W. Coolidge
----------------------------
Philip W. Coolidge
Executed by Philip W. Coolidge on
behalf of those indicated pursuant to
Powers of Attorney.
<PAGE>
SIGNATURES
U.S. Treasury Reserves Portfolio has duly caused this Post-Effective
Amendment to the Registration Statement on Form N-1A of Landmark Institutional
Trust to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston and Commonwealth of Massachusetts on the 30th day of
September, 1996.
U.S. TREASURY RESERVES PORTFOLIO
By: Philip W. Coolidge
Philip W. Coolidge, President
This Post-Effective Amendment to the Registration Statement on Form N-1A
of Landmark Institutional Trust has been signed by the following persons in the
capacities indicated on September 30, 1996.
Signature Title
Philip W. Coolidge President, Principal Executive Officer and
----------------------------- Trustee
Philip W. Coolidge
John R. Elder Principal Accounting and Financial Officer
-----------------------------
John R. Elder
Elliott J. Berv* Trustee
-----------------------------
Elliott J. Berv
Mark T. Finn* Trustee
-----------------------------
Mark T. Finn
Walter E. Robb, III* Trustee
-----------------------------
Walter E. Robb, III
*By: Philip W. Coolidge
-----------------------------
Philip W. Coolidge
Executed by Philip W. Coolidge on
behalf of those indicated pursuant to
Powers of Attorney.
<PAGE>
SIGNATURES
Cash Reserves Portfolio has duly caused this Post-Effective Amendment to
the Registration Statement on Form N-1A of Landmark Institutional Trust to be
signed on its behalf by the undersigned, thereunto duly authorized, in George
Town, Grand Cayman, British West Indies on the 30th day of September, 1996.
CASH RESERVES PORTFOLIO
By: Susan Jakuboski
Susan Jakuboski, Assistant Treasurer
This Post-Effective Amendment to the Registration Statement on Form N-1A
of Landmark Institutional Trust has been signed by the following persons in the
capacities indicated on September 30, 1996.
Signature Title
Philip W. Coolidge* President, Principal Executive Officer and
----------------------------- Trustee
Philip W. Coolidge
John R. Elder* Principal Accounting and Financial Officer
-----------------------------
John R. Elder
Elliott J. Berv* Trustee
-----------------------------
Elliott J. Berv
Mark T. Finn* Trustee
-----------------------------
Mark T. Finn
Walter E. Robb, III* Trustee
-----------------------------
Walter E. Robb, III
*By: Susan Jakuboski
-----------------------------
Susan Jakuboski
Executed by Susan Jakuboski on behalf of
those indicated pursuant to Powers of
Attorney.
<PAGE>
SIGNATURES
Tax Free Reserves Portfolio has duly caused this Post-Effective Amendment
to the Registration Statement on Form N-1A of Landmark Institutional Trust to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston and Commonwealth of Massachusetts on the 30th day of September,
1996.
TAX FREE RESERVES PORTFOLIO
By: Philip W. Coolidge
Philip W. Coolidge, President
This Post-Effective Amendment to the Registration Statement on Form N-1A
of Landmark Institutional Trust has been signed by the following persons in the
capacities indicated on September 30, 1996.
Signature Title
Philip W. Coolidge President, Principal Executive Officer and
----------------------------- Trustee
Philip W. Coolidge
John R. Elder Principal Accounting and Financial Officer
-----------------------------
John R. Elder
Mark T. Finn* Trustee
-----------------------------
Mark T. Finn
Walter E. Robb, III* Trustee
-----------------------------
Walter E. Robb, III
*By: Philip W. Coolidge
-----------------------------
Philip W. Coolidge
Executed by Philip W. Coolidge on behalf
of those indicated pursuant to Powers of
Attorney.
<PAGE>
EXHIBIT INDEX
Exhibit Description
No.
1(b) Amendment to Declaration of Trust of the Registrant
10 Opinion and Consent of Counsel
25(d) Powers of Attorney for Tax Free Reserves Portfolio
Exhibit 1(b)
LANDMARK INSTITUTIONAL TRUST
FORM OF AMENDED AND RESTATED
ESTABLISHMENT AND DESIGNATION OF SERIES OF
SHARES OF BENEFICIAL INTEREST (PAR VALUE $0.00001 PER SHARE)
Pursuant to Section 6.9 of the Declaration of Trust, dated July 10, 1992,
as amended (the "Declaration of Trust"), of Landmark Institutional Trust (the
"Trust"), the undersigned, being a majority of the Trustees of the Trust, do
hereby establish and designate three series of Shares (as defined in the
Declaration of Trust), such series to have the following special and relative
rights:
1. The series shall be designated as follows:
LANDMARK INSTITUTIONAL LIQUID RESERVES
LANDMARK INSTITUTIONAL U.S. TREASURY RESERVES
LANDMARK INSTITUTIONAL TAX FREE RESERVES
2. Each series shall be authorized to invest in cash, securities,
instruments and other property as from time to time described in the Trust's
then currently effective registration statement under the Securities Act of
1933 to the extent pertaining to the offering of Shares of each series. Each
Share of each series shall be redeemable, shall be entitled to one vote or
fraction thereof in respect of a fractional share on matters on which shares of
that series shall be entitled to vote, shall represent a pro rata beneficial
interest in the assets allocated or belonging to such series, and shall be
entitled to receive its pro rata share of the net assets of such series upon
liquidation of the series, all as provided in Section 6.9 of the Declaration of
Trust. The proceeds of sales of Shares of each series, together with any income
and gain thereon, less any diminution or expenses thereof, shall irrevocably
belong to each series unless otherwise required by law.
3. Shareholders of each series shall vote separately as a class on any
matter to the extent required by, and any matter shall be deemed to have been
effectively acted upon with respect to each series as provided in, Rule 18f-2,
as from time to time in effect, under the Investment Company Act of 1940, as
amended, or any successor rule, and by the Declaration of Trust.
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4. The assets and liabilities of the Trust shall be allocated to each
series as set forth in Section 6.9 of the Declaration of Trust.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall
have the right at any time and from time to time to reallocate assets and
expenses or to change the designation of any series now or hereafter created or
otherwise to change the special and relative rights of any such series.
IN WITNESS WHEREOF, the undersigned have executed this Establishment and
Designation of Series on separate counterparts this ____ day of __________,
1996.
H.B. ALVORD PHILIP W. COOLIDGE
RILEY C. GILLEY DIANA R. HARRINGTON
SUSAN B. KERLEY C. OSCAR MORONG, JR.
E. KIRBY WARREN WILLIAM S. WOODS, JR.
EXHIBIT 10
BINGHAM, DANA & GOULD LLP
150 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110-1726
December __, 1996
Landmark Institutional Trust
6 St. James Avenue
Boston, Massachusetts 02116
Ladies and Gentlemen:
We have acted as counsel to Landmark Institutional Trust, a Massachusetts
business trust (the "Trust"), in connection with Post-Effective Amendment No. 7
and Post-Effective Amendment No. 8 to the Trust's Registration Statement on
Form N-1A filed with the Securities and Exchange Commission (the "Commission")
on October 1, 1996 and December __, 1996, respectively (as amended, the
"Registration Statements"), with respect to an indefinite number of Shares of
Beneficial Interest ($0.00001 par value) (the "Shares") of a separate series of
the Trust designated as Landmark Institutional Tax Free Reserves (the "Fund").
In connection with this opinion, we have examined the following described
documents:
(a) the Registration Statements;
(b) a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the existence of the Trust;
(c) copies, certified by the Secretary of State of the Commonwealth of
Massachusetts, of the Trust's Declaration of Trust and of all amendments
thereto on file in the office of the Secretary of State; and
(d) a Certificate executed by Molly S. Mugler, Assistant Secretary of the
Trust, certifying as to, and attaching copies of, the Trust's By-Laws and
certain votes of the Trustees of the Trust authorizing the issuance of the
Shares.
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In such examination, we have assumed the genuineness of all signatures,
the conformity to the originals of all of the documents reviewed by us as
copies, the authenticity and completeness of all original documents reviewed by
us in original or copy form and the legal competence of each individual
executing any document.
This opinion is based entirely on our review of the documents listed
above. We have made no other review or investigation of any kind whatsoever,
and we have assumed, without independent inquiry, the accuracy of the
information set forth in such documents.
This opinion is limited solely to the laws of the Commonwealth of
Massachusetts (other than the Massachusetts Uniform Securities Act, as to which
we express no opinion) as applied by courts in such Commonwealth to the extent
such laws may apply to or govern the matters covered by this opinion.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Based upon and subject to the foregoing, please be advised that it is our
opinion that the Shares, when issued and sold in accordance with the
Registration Statements and the Trust's Declaration of Trust and By-laws, will
be legally issued, fully paid and non-assessable, except that, as set forth in
the Registration Statements, shareholders of the Fund may under certain
circumstances be held personally liable for the Trust's obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statements.
Very truly yours,
BINGHAM DANA & GOULD LLP
EXHIBIT 25(B)
Tax Free Reserves Portfolio for
LANDMARK INSTITUTIONAL TAX FREE RESERVES
The undersigned, a Trustee of Tax Free Reserves Portfolio, hereby constitutes
and appoints Philip W. Coolidge, Molly S. Mugler and John R. Elder and each of
them, with full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all capacities the
Registration Statements on Form N-1A, and any and all amendments thereto, filed
by Landmark Institutional Trust (on behalf of its series Landmark Institutional
Tax Free Reserves) ("the Registrant") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and under the
Investment Company Act of 1940, as amended, and any and all other instruments
which such attorneys and agents, or any of them, deem necessary or advisable to
enable the Registrant to comply with the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other jurisdiction; and the undersigned hereby
ratifies and confirms as his own act and deed any and all that such attorneys
and agents, or any of them shall do or cause to be done by virtue hereof. Any
one of such attorneys and agents shall have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 26th day of
September, 1996
Mark T. Finn
Mark T. Finn
<PAGE>
Tax Free Reserves Portfolio for
LANDMARK INSTITUTIONAL TAX FREE RESERVES
The undersigned, a Trustee of Tax Free Reserves Portfolio, hereby constitutes
and appoints Molly S. Mugler and John R. Elder and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute
in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Institutional Trust (on behalf of its series Landmark Institutional Tax Free
Reserves) ("the Registrant") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms
as his own act and deed any and all that such attorneys and agents, or any of
them shall do or cause to be done by virtue hereof. Any one of such attorneys
and agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 26th day of
September, 1996
Philip W. Coolidge
Philip W. Coolidge
<PAGE>
Tax Free Reserves Portfolio for
LANDMARK INSTITUTIONAL TAX FREE RESERVES
The undersigned, a Trustee of Tax Free Reserves Portfolio, hereby constitutes
and appoints Philip W. Coolidge, Molly S. Mugler and John R. Elder and each of
them, with full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all capacities the
Registration Statements on Form N-1A, and any and all amendments thereto, filed
by Landmark Institutional Trust (on behalf of its series Landmark Institutional
Tax Free Reserves) ("the Registrant") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and under the
Investment Company Act of 1940, as amended, and any and all other instruments
which such attorneys and agents, or any of them, deem necessary or advisable to
enable the Registrant to comply with the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other jurisdiction; and the undersigned hereby
ratifies and confirms as his own act and deed any and all that such attorneys
and agents, or any of them shall do or cause to be done by virtue hereof. Any
one of such attorneys and agents shall have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 26th day of
September, 1996
Walter E. Robb, III
Walter E. Robb, III
