-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jbPhwqxOgS4JAOGmkiYyQ56wX9yIOjmUfJbIsSUxKEMGr0VSviLWCtotHxNx/O5u 4ZcpknqIJGAq7AFT9mD/og== 0000950156-95-000128.txt : 19950615 0000950156-95-000128.hdr.sgml : 19950615 ACCESSION NUMBER: 0000950156-95-000128 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950308 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANDMARK FIXED INCOME FUNDS /MA/ CENTRAL INDEX KEY: 0000795808 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 811-05033 FILM NUMBER: 95519213 BUSINESS ADDRESS: STREET 1: 6ST JAMES AVE 9TH FL CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6174231679 FORMER COMPANY: FORMER CONFORMED NAME: LANDMARK FIXED INCOME FUNDS/ DATE OF NAME CHANGE: 19931117 FORMER COMPANY: FORMER CONFORMED NAME: LANDMARK FIXED INCOME FUNCS/DE DATE OF NAME CHANGE: 19931115 FORMER COMPANY: FORMER CONFORMED NAME: LANDMARK U S GOVERNMENT INCOME FUND DATE OF NAME CHANGE: 19920703 N-30B-2 1 LANDMARK INTERMEDIATE INCOME AR [LOGO]LANDMARK(SM) FUNDS Advised by Citibank, N.A. Landmark Intermediate Income Fund ANNUAL REPORT December 31, 1994 - - -------------------------------------------------------------------------------- A LETTER TO OUR SHAREHOLDERS - - -------------------------------------------------------------------------------- Dear Shareholder: 1994 was a difficult year for financial markets. A stronger-than-expected economy and higher interest rates adversely affected most types of investments, especially the bond market, where prices declined almost 10% since the beginning of 1994. The stock market fell just over 8% from its highs in the first half of the year, but later recouped those losses on the strength of strong corporate earnings and finished the year with a small gain. Throughout the period, the Landmark Funds' investment adviser, Citibank, N.A., managed the Landmark Intermediate Income Fund in a manner consistent with the objective stated in the Fund's prospectus: to provide a high level of monthly income with consideration also given to safety of principal. The Fund seeks to provide an attractive yield from a high quality investment portfolio consisting primarily of intermediate-term securities from a number of fixed-income market sectors. This Annual Report for the period ended December 31, 1994 reviews the Fund's investment activities and performance over the past twelve months, and provides a summary of Citibank's perspective on the financial markets and outlook for the foreseeable future. On behalf of the Board of Trustees of the Landmark Funds, I want to thank our shareholders for their participation and support. We look forward to serving you in the months and years ahead. /s/ Philip W. Coolidge Philip W. Coolidge President January 20, 1995 Remember that Mutual Fund Shares: * Are not bank deposits or FDIC insured * Are not obligations of or guaranteed by Citibank or Citicorp Investment Services * Are subject to investment risks, including possible loss of the principal amount invested. Table of Contents 1 Letter to Shareholders ----------------------------------------- 2 Market Environment Fund Snapshot ----------------------------------------- 3 Portfolio Manager The Portfolio Responds ----------------------------------------- 4 Fund Quotes Strategy and Outlook Landmark Intermediate Income Fund--by the Numbers ----------------------------------------- 5 Fund Data Performance Highlights ----------------------------------------- 6 Portfolio of Investments ----------------------------------------- 8 Statement of Assets and Liabilities ----------------------------------------- 9 Statement of Operations ----------------------------------------- 10 Statement of Changes in Net Assets ----------------------------------------- 11 Financial Highlights ----------------------------------------- 12 Notes to Financial Statements ----------------------------------------- 15 Independent Auditors' Report - - -------------------------------------------------------------------------------- MARKET ENVIRONMENT - - -------------------------------------------------------------------------------- 1994 saw the largest bond market declines in approximately 20 years, with the 5-year U.S. Treasury note producing -4.26% total return while the 30-year U.S. Treasury bond delivered a -11.99% total return over the same time horizon. We attribute the fixed-income market's poor performance to several different economic influences. First, economic growth was stronger than expected, fueling fears of inflation. Despite the Federal Reserve Board's efforts to forestall higher inflation by raising key short-term interest rates six times in 1994 from 3% to 5.5%, many fixed-income investors chose to view tighter monetary policy as a sign of impending inflationary pressure rather than as an indication of the Federal Reserve's inflation-fighting resolve. Yet, at year-end, the economy showed few signs that inflation is about to accelerate significantly--prices increased by only about 3% during 1994. Second, a weak dollar relative to other currencies, especially the Japanese yen, caused many foreign investors to move their capital from the U.S. bond market to other nations. This was exacerbated by surging demand for capital from emerging markets in Latin America and Asia. Finally, problems associated with some investors' highly leveraged fixed-income positions placed additional selling pressure on bonds as some institutional investors were forced to sell their holdings to repay their loans. - - -------------------------------------------------------------------------------- FUND SNAPSHOT - - -------------------------------------------------------------------------------- COMMENCEMENT OF OPERATIONS June 25, 1993 NET ASSETS AS OF 12/31/94 $47.6 million FUND OBJECTIVE To provide a high level of monthly income with consideration also given to safety of principal DIVIDENDS Paid monthly CAPITAL GAINS Distributed annually, if any BENCHMARKS * Lehman Government/Corporate Bond Index * Lipper Intermediate Investment Grade Funds Average INVESTMENT ADVISER Citibank, N.A. 2 - - -------------------------------------------------------------------------------- PORTFOLIO MANAGER - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- Mark Lindbloom Vice President, Citibank, N.A. Mr. Lindbloom has been responsible for managing the Landmark Intermediate Income Fund since its inception in June 1993. He also manages the fixed income portion of the Balanced Portfolio and intermediate maturity fixed income portfolios for investment advisory and institutional accounts at Citibank. Prior to joining Citibank in 1986, Mr. Lindbloom was employed by Brown Brothers Harriman & Company, where he managed discretionary corporate portfolios, holding fixed income assets. - - -------------------------------------------------------------------------------- THE PORTFOLIO RESPONDS - - -------------------------------------------------------------------------------- This Fund's underperformance relative to its benchmark is a result of the dramatic increase in interest rates early in the year. Because we did not expect rates to rise as soon or as rapidly as they did, we had maintained a longer-than-average duration for the Fund, a strategy designed to increase the Portfolio's sensitivity to declining interest rates. In the wake of these surprising economic developments, we gradually reduced the Fund's average duration to a more neutral position. We adopted a "barbell" approach in which short-term investments are balanced by longer term investments, producing a portfolio with an average duration in the intermediate range. Investments in longer term corporate bonds, mortgage-backed securities and U.S. Treasury bonds helped us generate competitive levels of income. At the same time, investments in short-term corporate notes, asset-backed securities and commercial mortgage securities were intended to enhance the portfolio's overall stability. In addition, we actively managed the Fund with an eye toward maintaining shareholder value by managing the mix of investment types in the portfolio, a strategy known as sector rotation. The mix of investment types within the portfolio changed significantly over the 12-month period. At the beginning of the year, 15% of the portfolio was invested in U.S. Treasury securities, 33% in government-backed mortgage securities and 19% in dollar denominated bonds issued in the U.S. by foreign banks/ governments and corporations, known as Yankees. At the end of the year, those proportions were 48%, 29% and 4%, respectively. This allocation change primarily reflected fundamental developments in the fixed income markets. As of December 31, 1994, all securities held by the Fund were rated investment-grade or its equivalent, including 88% in AAA-rated bonds. 3 - - -------------------------------------------------------------------------------- FUND QUOTES FROM THE PORTFOLIO MANAGER - - -------------------------------------------------------------------------------- "All of the countries of the world, no matter where they are in the economic cycle, have experienced just about as much as the U.S. in terms of rising yields and lower bond prices." "The characteristics of the fixed-income market are far different than they were a year ago. A slower pace of economic growth should benefit bonds." - - -------------------------------------------------------------------------------- STRATEGY AND OUTLOOK - - -------------------------------------------------------------------------------- We believe that the bond market's problems in 1994 have set the stage for better fixed-income returns in 1995. If the Federal Reserve is successful in its efforts to dampen economic growth and prevent a rise of inflation, as we expect, inflation fears should subside and intermediate- and long-term interest rates should decline from year-end 1994 levels. The result would be higher bond prices and the possibility of capital appreciation for Fund shareholders. We also expect the new Republican-controlled Congress to be positive for the financial markets, including bonds. If initiatives such as a capital-gains tax cut and the balanced budget amendment are successful, capital should flow into financial assets, driving prices higher. Perhaps most significantly, deficit-reduction measures should help shore up the dollar relative to other currencies, making the U.S. bond market more attractive to overseas investors. Although we expect the combination of moderate economic growth, low inflation, lower taxes on capital gains and foreign investment to be a powerful foundation for bond market gains by year-end 1995, we remain cautious regarding the market's prospects during the early part of the year. Accordingly, we have positioned the Fund defensively to preserve shareholder value, and stand ready to take advantage of rising bond prices as they become available. - - -------------------------------------------------------------------------------- LANDMARK INTERMEDIATE INCOME FUND BY THE NUMBERS - - -------------------------------------------------------------------------------- [THE FOLLOWING DATA IS PRESENTED AS A PIE CHART IN THE PRINTED REPORT] Changes in Portfolio Composition Portfolio of Investments as of 12/31/94 Asset-Backed Securities ............... 19% Cash/Short Term/Other ................. (9)% Corporate Bonds ....................... 9% Mortgage Obligations .................. 29% U.S. Treasury Issues .................. 48% Yankees ............................... 4% Compared to 12/31/93 Asset-Backed Securities ............... 8% Cash/Short Term/Other ................. 16% Corporate Bonds ....................... 9% Mortgage Obligations .................. 33% U.S. Treasury Issues .................. 15% Yankees ............................... 19% 4 - - -------------------------------------------------------------------------------- FUND DATA All Periods Ending December 31, 1994 - - -------------------------------------------------------------------------------- Total Returns -------------------- Since One 6/25/93 Year (Inception) ------- ----------- Landmark Intermediate Income Fund without Sales Charge ... (4.48)% (1.07)% Lipper Intermediate Investment Grade Funds Average ....... (3.36)% (0.56)%* Lehman Government/Corporate Bond Index ................... (3.51)% (0.41)%* Landmark Intermediate Income Fund with Maximum Sales Charge of 4.00% .................................. (8.30)% (3.70)% *From 6/30/93 30-Day SEC Yield 6.57% Income Dividends Per Share $0.516 Capital Gain Distribution $0.016 - - -------------------------------------------------------------------------------- PERFORMANCE HIGHLIGHTS - - -------------------------------------------------------------------------------- A $10,000 investment in the Fund made on inception date would have declined to $9,444 with sales charge (as of 12/31/94). The graph below shows how this compares to our benchmarks over the same period. The graph includes the initial sales charge on the Fund (no comparable charge exists for the other indices) and assumes all dividends and distributions from the Fund are reinvested at Net Asset Value. Landmark Landmark Lipper Intermediate Intermediate Intermediate Income Income Investment Lehman Without With Grade Gov/Corp. Sales Sales Funds Index Charge Charge Average (Unmanaged) ------------ ------------ ------------ ---------- June 93 $10,000 $ 9,600 $10,000 $10,000 $10,030 $ 9,629 $10,000 $10,000 $10,073 $ 9,670 $10,042 $10,064 $10,325 $ 9,912 $10,228 $10,295 $10,405 $ 9,989 $10,288 $10,332 $10,416 $ 9,999 $10,301 $10,374 $10,246 $ 9,836 $10,209 $10,251 - - ----------------------------------------------------------------- Dec. 93 $10,298 $ 9,886 $10,257 $10,295 $10,444 $10,026 $10,387 $10,451 $10,214 $ 9,805 $10,202 $10,223 $ 9,967 $ 9,589 $ 9,980 $ 9,973 $ 9,867 $ 9,472 $ 9,890 $ 9,890 $ 9,840 $ 9,447 $ 9,875 $ 9,871 $ 9,809 $ 9,417 $ 9,856 $ 9,847 $ 9,975 $ 9,576 $10,004 $10,044 $10,003 $ 9,602 $10,024 $10,048 $ 9,835 $ 9,442 $ 9,911 $ 9,897 $ 9,797 $ 9,405 $ 9,896 $ 9,888 $ 9,759 $ 9,369 $ 9,867 $ 9,709 - - ----------------------------------------------------------------- Dec. 94 $ 9,837 $ 9,444 $ 9,915 $ 9,773 Notes: All Fund performance numbers represent past performance, and are no guarantee of future results. The Fund's share price and investment return will fluctuate, so that the value of an investor's shares, when redeemed, may be worth more or less than their original cost. Total returns include change in share price and reinvestment of dividends and distributions, if any. Total return figures "with sales charge" are provided in accordance with SEC guidelines for comparative purposes for prospective investors. 5 - - -------------------------------------------------------------------------------- Landmark Intermediate Income Fund PORTFOLIO OF INVESTMENTS December 31, 1994 - - -------------------------------------------------------------------------------- Principal Amount Issuer (000 omitted) Value - - -------------------------------------------------------------------------------- FIXED INCOME--109.0% - - -------------------------------------------------------------------------------- ASSET BACKED SECURITIES - 18.7% Bank One Credit Card 7.55% due 12/15/99 ....................... $2,000 $ 1,971,860 Carco Auto Loan Master Trust 7.875% due 7/15/99 ....................... 2,000 1,985,000 EQCC Home Equity Loan Trust 8.95% due 10/15/06 ....................... 2,000 2,018,800 General Motors Acceptance Corp. ............ 5.95% due 2/15/97 ........................ 73 72,658 GMAC 1992 E Grantor Trust 4.75% due 8/15/97 ........................ 273 266,371 Household Finance 6.725% due 5/20/08 ....................... 2,000 1,996,860 Merrill Lynch Asset Backed Corp. ........... 5.125% due 7/15/98 ....................... 589 576,944 ----------- 8,888,493 ----------- MORTGAGE OBLIGATIONS - 29.1% Collateralized Mortgage Obligations - 15.7% Federal Home Loan Mortgage Corp. ........................... 6.00% due 3/15/09 ........................ 3,387 2,703,485 Federal National Mortgage Association 6.50% due 9/17/09 ........................ 1,700 1,432,250 Nomura Securities 7.625% due 7/7/03 ........................ 1,337 1,372,095 Resolution Trust Corp. ..................... 6.55% due 6/25/26 ........................ 1,974 1,969,547 ----------- 7,477,377 ----------- Mortgage Backed Securities - 0.2% Federal Home Loan Mortgage Association 8.50% due 4/1/01 ......................... $ 60 $ 59,900 Federal National Mortgage Association 8.0% due 6/1/02 .......................... 28 27,533 ----------- 87,433 ----------- Government National Mortgage Association - 13.2% 6.50% due 1/15/25 ........................ 2,000 1,733,120 6.50% due 2/15/10 ........................ 2,000 1,827,500 7.50% due 1/15/25 ........................ 2,000 1,855,620 8.00% due 12/15/07 ....................... 163 160,714 8.25% due 7/15/05 ........................ 720 686,407 ----------- 6,263,361 ----------- Total Mortgage Obligations 13,828,171 ----------- DOMESTIC CORPORATE BONDS - 8.7% Caterpillar Inc. ........................... 9.00% due 4/15/06 ........................ 1,200 1,233,000 General Motors Acceptance Corp. ............ 8.70% due 3/15/95 ........................ 1,100 1,103,674 5.15% due 9/14/95 ........................ 1,000 982,620 Grand Met. Investment Corp., Zero Coupon Bond due 1/6/04 .......................... 1,700 799,085 ----------- 4,118,379 ----------- 6 - - -------------------------------------------------------------------------------- Landmark Intermediate Income Fund PORTFOLIO OF INVESTMENTS December 31, 1994 continued - - -------------------------------------------------------------------------------- Principal Amount Issuer (000 omitted) Value - - -------------------------------------------------------------------------------- DOMESTIC CORPORATE BONDS - continued YANKEES - 4.0% Aegon, NV 8.00% due 8/15/06 ........................ 1,500 1,437,255 Phillips Electronics, NV 8.375% due 9/15/06 ....................... 500 489,155 ----------- 1,926,410 ----------- UNITED STATES GOVERNMENT OBLIGATIONS - 48.5% United States Government Agency - 6.2% Federal National Mortgage Association 6.14% due 1/21/04 ........................ $1,700 $ 1,474,172 6.28% due 2/3/04 ......................... 1,700 1,495,847 ----------- 2,970,019 ----------- United States Treasury Bonds - 10.0% 7.50% due 11/15/24 ....................... 5,000 4,782,800 ----------- United States Treasury Notes - 28.7% 7.25% due 11/30/96 ....................... 3,300 3,274,722 7.375% due 11/15/97 ...................... 7,500 7,420,275 7.75% due 11/30/99 ....................... 3,000 2,988,750 ----------- 13,683,747 ----------- United States Treasury Stripped Bonds - 3.6% Zero Coupon Bond due 8/15/03 .............................. 1,700 870,893 Zero Coupon Bond due 2/15/04 .............................. 1,700 837,369 ----------- 1,708,262 ----------- Total United States Government Obligations ................... $23,144,828 ----------- Total Fixed Income (Identified Cost $53,014,466) ............ 51,906,281 ----------- - - -------------------------------------------------------------------------------- SHORT TERM OBLIGATION -- 5.9% - - -------------------------------------------------------------------------------- Repurchase Agreement, Salomon 6.00% due 1/3/95, proceeds at maturity $2,793,861 (secured by $2,895,000 U.S. Treasury Note 5.50% due 4/30/96) ....................... 2,792,000 ----------- Total Investments (Identified Cost $55,806,466) ............ 114.9% 54,698,281 Other Assets, Less Liabilities .............................. (14.9) (7,116,604) ----- ----------- Net Assets ................................. 100.0% $47,581,677 ===== =========== See notes to financial statements 7 - - -------------------------------------------------------------------------------- Landmark Intermediate Income Fund STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 - - -------------------------------------------------------------------------------- Assets: Investments, at value (Note 1A) (Identified Cost, $55,806,466) ........................................ $ 54,698,281 Cash ................................................... 725 Receivable for investment sold ......................... 951,094 Receivable for shares of beneficial interest sold ...... 29,011 Interest receivable .................................... 448,602 ------------ Total assets ....................................... 56,127,713 ------------ Liabilities: Payable for investment purchased ....................... 8,370,543 Payable for shares of beneficial interest repurchased .. 94,527 Payable to affiliates: Investment advisory fee (Note 2) ................... $ 5,074 Shareholder servicing agents' fee (Note 3B) ........ 10,127 15,201 ------- Accrued expenses and other liabilities ................. 65,765 ------------ Total liabilities .................................. 8,546,036 ------------ Net Assets for 5,342,279 shares of beneficial interest outstanding ................................. $ 47,581,677 ============ Net Assets Consist of: Paid-in capital ........................................ $ 53,425,583 Undistributed net realized loss on investments ......... (4,763,821) Unrealized depreciation of investments ................. (1,108,185) Undistributed net investment income .................... 28,100 ------------ Total .............................................. $ 47,581,677 ============ Net Asset Value and Redemption Price Per Share of Beneficial Interest .................................. $8.91 ===== Computation of Offering Price: Maximum Offering Price per share based on a 4.00% sales charge ($8.91 / 0.96) .......................... $9.28 ===== See notes to financial statements 8 - - -------------------------------------------------------------------------------- Landmark Intermediate Income Fund STATEMENT OF OPERATIONS For the Year Ended December 31, 1994 - - -------------------------------------------------------------------------------- Interest Income (Note 1B) ............................. $ 3,419,926 Expenses: Shareholder servicing agents' fees (Note 3B) .......... $ 212,916 Investment advisory fees (Note 2) ..................... 186,301 Administrative fees (Note 3A) ......................... 106,458 Legal services ........................................ 55,501 Custodian fees ........................................ 55,144 Shareholder reports ................................... 39,789 Auditing services ..................................... 27,677 Distribution fees (Note 4) ............................ 26,614 Trustees fees ......................................... 16,797 Transfer agent fees ................................... 7,000 Miscellaneous ......................................... 8,134 ---------- Total expenses .................................... 742,331 Less aggregate amount waived by Investment Adviser, Administrator, Shareholder Servicing Agents and Distributor (Notes 2, 3A, 3B, and 4) ................ (263,281) ----------- Net expenses ...................................... 479,050 ----------- Net investment income ............................. 2,940,876 ----------- Net Realized and Unrealized Gain (Loss) on Investments: Net realized loss from investment transactions ........ (4,798,890) Unrealized appreciation (depreciation) of investments: Beginning of period ................................ (377,779) End of period ...................................... (1,108,185) ----------- Net change in unrealized appreciation (depreciation) .................................. (730,406) ----------- Net realized and unrealized gain (loss) on investments .................................. (5,529,296) ----------- Net Decrease in Net Assets Resulting from Operations .. $(2,588,420) =========== See notes to financial statements 9 - - -------------------------------------------------------------------------------- Landmark Intermediate Income Fund STATEMENT OF CHANGES IN NET ASSETS - - --------------------------------------------------------------------------------
For the Period June 25, 1993 (Commencement Year Ended of Operations) to December 31, 1994 December 31, 1993 ----------------- ----------------- Increase (Decrease) in Net Assets from: Operations: Net investment income .................................................................. $ 2,940,876 $ 1,627,455 Net realized gain (loss) on investments ................................................ (4,798,890) 1,047,679 Net change in unrealized depreciation of investments ................................... (730,406) (815,824) ----------- ----------- Net increase (decrease) in net assets resulting from operations ...................... (2,588,420) 1,859,310 ----------- ----------- Distributions Declared to Shareholders from: Net investment income .................................................................. (2,912,776) (1,627,455) In excess of net investment income (Note 1E) ........................................... -- (35,732) Net realized gain on investments ....................................................... (90,585) (922,025) ----------- ----------- Decrease in net assets from distributions declared to shareholders ................... (3,003,361) (2,585,212) ----------- ----------- Transactions in Shares of Beneficial Interest (Note 6): Net proceeds from sale of shares ....................................................... 1,241,851 1,313,456 Net asset value of shares issued to shareholders from reinvestment of distributions ................................................... 2,973,424 2,585,043 Net asset value of shares issued in connection with the acquisition of Income Portfolio (Note 9) ............................................. -- 63,709,288 Cost of shares repurchased ............................................................. (12,224,541) (5,699,161) ----------- ----------- Net increase (decrease) in net assets from transactions in shares of beneficial interest ...................................... (8,009,266) 61,908,626 ----------- ----------- Net Increase (Decrease) in Net Assets .................................................. (13,601,047) 61,182,724 Net Assets: Beginning of period .................................................................... 61,182,724 -- ----------- ----------- End of period (including undistributed net investment income of $28,100 and $0, respectively) .............................................. $47,581,677 $61,182,724 =========== ===========
See notes to financial statement 10 - - -------------------------------------------------------------------------------- Landmark Intermediate Income Fund FINANCIAL HIGHLIGHTS - - -------------------------------------------------------------------------------- For the Period June 25, 1993 (Commencement of Year Ended Operations) to December 31,1994 December 31,1993 ---------------- ---------------- Net Asset Value, beginning of period ........... $ 9.88 $ 10.00 --------- --------- Income From Operations: Net investment income .......................... 0.521 0.261 Net realized and unrealized gain (loss) on investments ............................... (0.959) 0.037 --------- --------- Total from operations ..................... (0.438) 0.298 --------- --------- Less Distributions From: Net investment income ........................ (0.516) (0.261) In excess of net investment income ........... -- (0.006) Net realized gain on investments ............. (0.016) (0.151) --------- --------- Total distributions ...................... (0.532) (0.418) --------- --------- Net Asset Value, end of period ................. $ 8.91 $ 9.88 ========= ========= Ratios/Supplemental Data: Net assets, end of period (000's omitted) ...... $47,582 $61,183 Ratio of expenses to average net assets ........ 0.90% 0.90%* Ratio of net investment income to average net assets .......................... 5.52% 4.95%* Portfolio turnover ............................. 291% 103% Total return ................................... (4.48)% 2.99%+ Note: If Agents of the Fund had not voluntarily agreed to waive a portion of their fees for the periods indicated, the net investment income per share and the ratios would have been as follows: Net investment income per share ........... $ 0.475 $ 0.236 Ratios: Expenses to average net assets ............ 1.39% 1.38%* Net investment income to average net assets 5.03% 4.47%* * Annualized + Not annualized. See notes to financial statements 11 - - -------------------------------------------------------------------------------- Landmark Intermediate Income Fund NOTES TO FINANCIAL STATEMENTS - - -------------------------------------------------------------------------------- 1) SIGNIFICANT ACCOUNTING POLICIES Landmark Intermediate Income Fund (the "Fund") is a separate diversified series of Landmark Fixed Income Funds (the "Trust") which is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end, management investment company. The Investment Adviser of the Fund is Citibank, N.A. ("Citibank"). The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS") acts as the Fund's Administrator and Distributor. Citibank also serves as Sub-Administrator and makes Fund shares available to customers as Shareholder Servicing Agent. The significant accounting policies consistently followed by the Fund are in conformity with generally accepted accounting principles and are as follows: A. INVESTMENT SECURITY VALUATIONS -- Debt securities (other than short-term obligations maturing in 60 days or less) are valued on the basis of valuations furnished by a pricing service, which take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, and other market data, without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of the securities. Short-term obligations (maturing in 60 days or less) are valued at amortized cost, which approximates market value. Securities, if any, for which there are no such valuations or quotations are valued at fair value as determined in good faith by or under guidelines established by the Trustees. B. INCOME -- Interest income is determined on the basis of interest accrued and discount earned, adjusted for amortization of premium or discount on long-term debt securities when required for Federal income tax purposes. Gain and loss from principal paydowns are recorded as ordinary income. C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders all of its taxable income, including any net realized gain on investment transactions. Accordingly, no provision for federal income or excise tax is necessary. D. EXPENSES -- The Fund bears all costs of its operations other than expenses specifically assumed by Citibank and LFBDS. Expenses incurred by the Trust with respect to any two or more funds or series are allocated in proportion to the average net assets of each fund, except when allocations of direct expenses to each fund can otherwise be made fairly. Expenses directly attributable to a fund are charged to that fund. E. DISTRIBUTIONS -- The Fund distinguishes between distributions on a tax basis and a financial reporting basis and requires that only distributions in excess of tax basis earnings and profits be reported in the financial statements as a return of capital. Differences in the recognition or classification of income between the financial statements and tax earnings and profits which result in temporary over-distributions for financial statement purposes, are classified as distributions in excess of net investment income or accumulated net realized gains. F. OTHER -- Investment transactions are accounted for on the date the investments are purchased or sold. Realized gains and losses are determined on the identified cost basis. Distributions to shareholders and shares issuable to shareholders electing to receive distributions in shares are recorded on the ex-dividend date. (2) INVESTMENT ADVISORY FEES The investment advisory fee paid to Citibank, as compensation for overall investment management services amounted to $186,301, of which $120,645 was voluntarily waived for the year ended December 31, 1994. The investment advisory fee is computed at the annual rate of 0.35% of average daily net assets. 12 - - ------------------------------------------------------------------------------- Landmark Intermediate Income Fund NOTES TO FINANCIAL STATEMENTS continued - - -------------------------------------------------------------------------------- (3) ADMINISTRATIVE SERVICES PLAN The Trust has adopted an Administrative Services Plan (the "Administrative Services Plan") which provides that the Trust on behalf of the Fund may obtain the services of an Administrator, one or more Shareholder Servicing Agents and other Servicing Agents, and may enter into agreements providing for the payment of fees for such services. Under the Administrative Services Plan, the aggregate of the fee paid to the Administrator from the Fund, the fees paid to the Shareholder Servicing Agents from the Fund under such Plan and the Basic Distribution Fee paid from the Fund to the Distributor under the Distribution Plan may not exceed 0.65% of the Fund's average daily net assets on an annualized basis for the Fund's then current fiscal year. A. ADMINISTRATIVE FEES -- Under the terms of an Administrative Services Agreement, the administrative services fee payable to the Administrator, as compensation for overall administrative services and general office facilities, is computed at an annual rate of 0.25% of the Fund's average daily net assets, provided that the aggregate of any such fees paid to the Administrator and the basic distribution fees paid to the Distributor may not exceed an amount equal to 0.25% of the Fund's average daily net assets. The Administrator received fees, computed at an annual rate of 0.20% of the Fund's average daily net assets which amounted to $106,458, of which $37,176 was voluntarily waived for the year ended December 31, 1994. Citibank acts as Sub-Administrator and performs such duties and receives such compensation from LFBDS as from time to time is agreed to by LFBDS and Citibank. The Fund pays no compensation directly to any Trustee or any officer who is affiliated with the Administrator, all of whom receive remuneration for their services to the Fund from the Administrator or its affiliates. Certain of the officers and a Trustee of the Fund are officers or directors of the Administrator or its affiliates. B. SHAREHOLDER SERVICING AGENTS FEES -- The Fund has entered into shareholder servicing agreements with each Shareholder Servicing Agent pursuant to which the Shareholder Servicing Agent acts as an agent for its customers and provides other related services. For their services, each Shareholder Servicing Agent receives fees from the Fund, which may be paid periodically, which may not exceed, on an annualized basis, an amount equal to 0.40% of the average daily net assets of the Fund represented by shares owned during the period by investors for whom such Shareholder Servicing Agent maintains a servicing relationship. Shareholder Servicing Agents' fees amounted to $212,916, of which $79,843 was voluntarily waived for the year ended December 31, 1994. (4) DISTRIBUTION FEES The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, under which the Fund reimburses the Distributor for expenses incurred or anticipated in connection with sale of shares of the Fund, at an annual rate not to exceed 0.15% of the Fund's average daily net assets for distribution of the Fund's shares. The Distributor may also receive an additional fee from the Fund not to exceed 0.05% of the Fund's average daily net assets in anticipation of, or as reimbursement for, advertising expenses incurred by the Distributor in connection with the sale of shares of the Fund. No payment of such additional fees has been made during the period. Under the Administrative Services Plan, the distribution fees were computed at an annual rate of 0.05% of the Fund's average daily net assets, which amounted to $26,614, of which $25,617 was voluntarily waived for the year ended December 31, 1994. (5) PURCHASES AND SALES OF INVESTMENTS Purchases and sales of securities, other than U.S. Government securities and short-term obligations, aggregated $87,469,516 and $91,138,873, respectively, for the year ended December 31, 1994. Purchases and sales of U.S. Government securities aggregated $74,324,414 and $63,756,688, respectively. 13 - - -------------------------------------------------------------------------------- Landmark Intermediate Income Fund NOTES TO FINANCIAL STATEMENTS continued - - -------------------------------------------------------------------------------- (6) SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in shares of beneficial interest were as follows: For the Period June 25, 1993 (Commencement Year Ended of Operations) to December 31, 1994 December 31, 1993 ----------------- ----------------- Shares sold ............................ 129,167 128,616 Shares issued to shareholders from reinvestment of distributions ........ 322,052 258,711 Shares issued in connection with the acquisition of Income Portfolio (Note 9) ............................. -- 6,370,929 Shares repurchased ..................... (1,304,223) (562,973) ---------- --------- Net increase (decrease) ................ (853,004) 6,195,283 ========== ========= (7) FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation (depreciation) in value of the investment securities owned at December 31, 1994, as computed on a federal income tax basis, are as follows: Aggregate cost ......................................... $ 55,806,466 ============ Gross unrealized appreciation .......................... $ 33,100 Gross unrealized depreciation .......................... (1,141,285) ------------ Net unrealized depreciation ............................ $ (1,108,185) ------------ (8) LINE OF CREDIT The Fund, along with other Landmark Funds entered into an agreement with a bank which allows the Funds collectively to borrow up to $40 million for temporary or emergency purposes. Interest on borrowings, if any, is charged to the specific fund executing the borrowing at the base rate of the bank. In addition, the $15 million committed portion of the line of credit requires a quarterly payment of a commitment fee based on the average daily unused portion of the line of credit. For the year ended December 31, 1994, the commitment fee allocated to the Fund was $386. Since the line of credit was established there have been no borrowings. (9) ACQUISITION OF INCOME PORTFOLIO On June 25, 1993, the Fund acquired all of the net assets of the Income Portfolio of the Collective Investment Trust for Citibank IRAs pursuant to an Agreement and Plan of Reorganization approved by Income Portfolio participants on February 18, 1993. The acquisition was accomplished by a tax-free exchange of 6,370,929 shares of the Fund (valued at $63,709,288) in exchange for the Income Portfolio's net assets on June 25, 1993. The Income Portfolio's net assets at that date were $63,709,288, which included $438,045 of unrealized appreciation. The aggregate net assets of the Fund after the acquisition were $63,709,288. 14 - - -------------------------------------------------------------------------------- Landmark Intermediate Income Fund INDEPENDENT AUDITORS' REPORT - - -------------------------------------------------------------------------------- To the Trustees and Shareholders of Landmark Intermediate Income Fund: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Landmark Intermediate Income Fund (the "Fund"), a separate series of Landmark Fixed Income Funds (the "Trust") (a Massachusetts business trust), as of December 31, 1994, and the related statement of operations for the year then ended, and the statement of changes in net assets and the financial highlights for the year ended December 31, 1994 and for the period from June 25, 1993 (Commencement of Operations) to December 31, 1993. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the securities owned as of December 31, 1994, by correspondence with the Custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Landmark Intermediate Income Fund at December 31, 1994, the results of its operations, the changes in its net assets, and its financial highlights for the respective stated periods in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Boston, Massachusetts February 1, 1995 15 - - -------------------------------------------------------------------------------- SHAREHOLDER SERVICING AGENTS - - -------------------------------------------------------------------------------- For Citibank New York Retail Banking and Business and Professional Customers: Citibank, N.A. 450 West 33rd Street, New York, NY 10001 (212) 564-3456 or (800) 846-5300 For Citigold Customers: Citibank, N.A. Citigold P.O. Box 5130, New York, NY 10150-5130 Call Your Citigold Executive or (212) 974-0900 or (800) 285-1701 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, Investment Specialist or (212) 559-5959 For Citibank Global Asset Management Clients: Citibank, N.A. Citibank Global Asset Management 153 East 53rd Street, New York, NY 10043 (212) 559-7117 For North American Investor Services Clients: Citibank, N.A. 111 Wall Street, New York, NY 10043 Call Your Account Manager or (212) 657-9100 For Citicorp Investment Services Customers: Citicorp Investment Services One Court Square, Long Island City, NY 11120 Call Your Investment Consultant or (800) 846-5200 (212) 736-8170 in New York City 16 TRUSTEES AND OFFICERS Philip W. Coolidge*, President H. B. Alvord Riley C. Gilley Diana R. Harrington Susan B. Kerley C. Oscar Morong, Jr. Donald B. Otis E. Kirby Warren William S. Woods, Jr. SECRETARY AND TREASURER James B. Craver* ASSISTANT TREASURER Barbara M. O'Dette* ASSISTANT SECRETARY Molly S. Mugler* *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 LEGAL COUNSEL Bingham, Dana & Gould 150 Federal Street, Boston, MA 02110 - - -------------------------------------------------------------------------------- SHAREHOLDER SERVICING AGENTS (See Inside Cover) This report is prepared for the information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by an effective prospectus. This Report is Prepared & Printed on Recycled Paper [graphic omitted] FI/INTI/A/94 -----END PRIVACY-ENHANCED MESSAGE-----