0000950156-95-000635.txt : 19950829 0000950156-95-000635.hdr.sgml : 19950829 ACCESSION NUMBER: 0000950156-95-000635 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950828 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANDMARK FIXED INCOME FUNDS /MA/ CENTRAL INDEX KEY: 0000795808 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [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: 95567377 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 FIXED INCOME FUNDS SA [LOGO] LANDMARK(SM) FUNDS Advised by Citibank, N.A. Landmark U.S. Government Income Fund SEMI-ANNUAL REPORT June 30, 1995 -------------------------------------------------------------------------------- A LETTER TO OUR SHAREHOLDERS -------------------------------------------------------------------------------- Dear Shareholder: The first six months of 1995 saw higher prices for most financial assets, including the U.S. government securities in which the Landmark U.S. Government Income Fund primarily invests through the Government Income Portfolio. In fact, bonds have rallied significantly since the beginning of the year, more than erasing any declines posted in 1994. The Landmark Funds' investment adviser, Citibank, N.A., manages the Government Income Portfolio to provide current income as well as to preserve the value of the investment of its shareholders. The Portfolio seeks to provide an attractive yield, a competitive expense ratio and a high quality investment portfolio consisting solely of securities backed by the full faith and credit of the U.S. government. This Semi-Annual Report for the period ended June 30, 1995, reviews the Fund's investment activities and performance over the past six 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, we 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 July 20, 1995 TABLE OF CONTENTS 1 Letter to Shareholders ------------------------------------------ Market Environment 2 Fund Snapshot Portfolio Manager ------------------------------------------ The Portfolio Manager Responds 3 Fund Quotes Strategy and Outlook ------------------------------------------ 4 Fund Data Performance Highlights ------------------------------------------ LANDMARK U.S. GOVERNMENT INCOME FUND 5 Statement of Assets and Liabilities ------------------------------------------ 6 Statement of Operations ------------------------------------------ 7 Statement of Changes in Net Assets ------------------------------------------ 8 Financial Highlights ------------------------------------------ 9 Notes to Financial Statements ------------------------------------------ GOVERNMENT INCOME PORTFOLIO 11 Portfolio of Investments ------------------------------------------ 12 Statement of Assets and Liabilities Statement of Operations ------------------------------------------ 13 Statement of Changes in Net Assets Financial Highlights ------------------------------------------ 14 Notes to Financial Statements ------------------------------------------ Remember that Mutual Fund Shares: o Are not bank deposits or FDIC insured o Are not obligations of or guaranteed by Citibank or Citicorp Investment Services o Are subject to Investment risks, including possible loss of the principal amount invested -------------------------------------------------------------------------------- MARKET ENVIRONMENT -------------------------------------------------------------------------------- The first six months of 1995 represented the best first-half performance by the U.S. bond market since 1985. Prices on the benchmark 30-year U.S. Treasury bond rose 15.4% during the period. Prices on the three-year U.S. Treasury note, considered by many to be a good measure of short- to intermediate-term fixed-income performance, rose 5.0%. Slower economic growth is the primary reason for the bond market's excellent performance after a disappointing 1994. Fixed-income investors appear to be convinced that the Federal Reserve has been largely successful in its efforts to constrain economic growth without causing either a recession or an acceleration of inflation. Recent economic data suggest that the U.S. is experiencing a "soft landing" after 1994's torrid pace of economic growth, a state of affairs that raises expectations for continued economic expansion with low inflation and, perhaps most important, no need for the Federal Reserve to raise short-term interest rates further. Low inflation tends to be good for bonds as investors worry less that rising prices will erode the purchasing power of their principal and income over time. -------------------------------------------------------------------------------- FUND SNAPSHOT -------------------------------------------------------------------------------- COMMENCEMENT OF OPERATIONS September 8, 1986 NET ASSETS AS OF 6/30/95 $51.0 million FUND OBJECTIVE To generate current income and preserve the value of its shareholders' investment. DIVIDENDS Paid monthly, if any CAPITAL GAINS Paid annually, if any BENCHMARKS o Lipper Short U.S. Government Funds Average o Lehman 1-5 Year U.S. Treasury Index INVESTMENT ADVISER, GOVERNMENT INCOME PORTFOLIO Citibank, N.A. -------------------------------------------------------------------------------- PORTFOLIO MANAGER -------------------------------------------------------------------------------- Thomas Halley Vice President, Citibank, N.A. Mr. Halley has been responsible for managing the Portfolio since its inception after serving as the manager of the Fund since December 1988. He also manages other commingled investment funds at Citibank as well as institutional insurance portfolios. Mr. Halley authors the commentary on economic trends for Citibank Global Asset Management publications. Prior to joining Citibank in 1988, Mr. Halley was a Senior Fixed Income Portfolio Manager with Brown Brothers Harriman & Company. He has more than 20 years of experience in the management of taxable fixed income investments. -------------------------------------------------------------------------------- THE PORTFOLIO MANAGER RESPONDS -------------------------------------------------------------------------------- We began the year with an average duration (a measure of the portfolio's sensitivity to changes in interest rates) in the neutral range in order to maintain competitive yields while remaining flexible enough to take advantage of higher yielding securities if they became available. As it became clear that economic growth was moderating, we lengthened the average maturity somewhat to keep higher-yielding securities in the portfolio for as long as possible. This stance put us in a good position to capture further gains as interest rates continued to fall. Consistent with our sector rotation strategy, we continue to shift assets between U.S. Treasury securities and government-backed mortgage-backed securities issued by the Government National Mortgage Association (GNMA). During the period, we reduced our exposure to GNMA securities from approximately 22% of the portfolio to about 4% in order to avoid the effects of early prepayments by homeowners in a lower interest-rate environment. -------------------------------------------------------------------------------- FUND QUOTES FROM THE PORTFOLIO MANAGER -------------------------------------------------------------------------------- "We've seen a tremendous rally in the bond market during the first six months of this year, including the maturity range in which the Portfolio invests." "As it became obvious that the economy was slowing, the bond market became convinced that inflation wouldn't be the problem investors feared it would be last year." "The key question for the next six months is whether consumers will resume spending and trigger a rebound in the economy, or whether the current deceleration toward a `soft landing' remains on track." -------------------------------------------------------------------------------- STRATEGY AND OUTLOOK -------------------------------------------------------------------------------- In the wake of the healthy gains achieved by the bond market during the first half of the year, we have adopted a more cautious stance, reflecting our conservative management style and our belief that the market has fully incorporated a "soft landing" economic scenario. While a market correction is possible over the near term if the economy strengthens, the relatively short average duration of the Government Income Portfolio should help to shelter shareholders from the brunt of any setbacks affecting the overall market over the near term. Over the longer term, our outlook calls for a true deceleration of economic growth. If the economy does moderate further, the Federal Reserve may lower interest rates, a move that should boost bond prices in every maturity range. Therefore, we will view any near-term market correction as an opportunity to participate in the attractive fixed-income returns we believe are ahead. -------------------------------------------------------------------------------- FUND DATA ALL PERIODS ENDED JUNE 30, 1995 (UNAUDITED) --------------------------------------------------------------------------------
TOTAL RETURNS ------------------------------------------------ SINCE SIX ONE FIVE 9/8/86 MONTHS YEAR YEARS INCEPTION ------ ---- ---------- ---------- Landmark U.S. Government Income Fund without Sales Charge........................... 7.45% 8.02% 7.42% 6.58% Lipper Short U.S. Government Funds Average....... 6.77% 7.33% 6.77% 6.60% Lehman 1-5 Year U.S. Treasury Index.............. 7.94% 8.71% 7.93% 7.61% Landmark U.S. Government Income Fund with Maximum Sales Charge of 1.50%........... 5.85% 6.40% 7.09% 6.40% Not annualized Annualized From 8/31/86
30-Day SEC Yield 5.24% Income Dividends Per Share $0.234 -------------------------------------------------------------------------------- PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- A $10,000 investment in the Fund made on inception date would have grown to $17,277 with sales charge (as of 6/30/95). The graph 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. [The following data is presented as a graph in the printed report] Landmark Landmark U.S. U.S. Government Government Lipper Lehman 1-5 Income - Income - Short Term Yr. US Without With US Govt. Treasury Sales Sales Funds Index Charge Charge Average (Unmanaged) Aug-86 $10,000 $9,850 $10,000 $10,000 Sep-86 $9,660 $9,515 $9,975 $9,958 Oct-86 $9,682 $9,537 $10,085 $10,065 Nov-86 $9,847 $9,700 $10,193 $10,136 Dec-86 $9,881 $9,733 $10,225 $10,155 Jan-87 $9,982 $9,832 $10,322 $10,233 Feb-87 $10,053 $9,902 $10,383 $10,283 Mar-87 $9,985 $9,835 $10,373 $10,289 Apr-87 $9,792 $9,646 $10,208 $10,176 May-87 $9,788 $9,641 $10,212 $10,178 Jun-87 $9,909 $9,761 $10,325 $10,294 Jul-87 $9,904 $9,755 $10,353 $10,339 Aug-87 $9,866 $9,718 $10,348 $10,340 Sep-87 $9,655 $9,511 $10,263 $10,267 Oct-87 $9,965 $9,816 $10,492 $10,515 Nov-87 $10,025 $9,874 $10,555 $10,583 Dec-87 $10,151 $9,999 $10,634 $10,665 Jan-88 $10,479 $10,322 $10,860 $10,863 Feb-88 $10,619 $10,459 $10,965 $10,963 Mar-88 $10,523 $10,365 $10,953 $10,959 Apr-88 $10,495 $10,337 $10,956 $10,961 May-88 $10,455 $10,298 $10,938 $10,935 Jun-88 $10,633 $10,473 $11,060 $11,100 Jul-88 $10,592 $10,433 $11,062 $11,091 Aug-88 $10,574 $10,415 $11,079 $11,103 Sep-88 $10,744 $10,583 $11,222 $11,255 Oct-88 $10,869 $10,706 $11,341 $11,385 Nov-88 $10,780 $10,618 $11,294 $11,325 Dec-88 $10,785 $10,624 $11,314 $11,339 Jan-89 $10,922 $10,758 $11,413 $11,433 Feb-89 $10,818 $10,656 $11,407 $11,414 Mar-89 $10,856 $10,693 $11,452 $11,463 Apr-89 $11,044 $10,878 $11,606 $11,675 May-89 $11,305 $11,136 $11,781 $11,857 Jun-89 $11,595 $11,421 $11,995 $12,115 Jul-89 $11,818 $11,641 $12,165 $12,329 Aug-89 $11,596 $11,422 $12,079 $12,208 Sep-89 $11,628 $11,453 $12,138 $12,271 Oct-89 $11,955 $11,776 $12,335 $12,493 Nov-89 $12,061 $11,880 $12,437 $12,608 Dec-89 $12,080 $11,899 $12,486 $12,654 Jan-90 $11,867 $11,689 $12,467 $12,627 Feb-90 $11,880 $11,702 $12,524 $12,684 Mar-90 $11,864 $11,686 $12,562 $12,709 Apr-90 $11,671 $11,496 $12,576 $12,711 May-90 $12,058 $11,878 $12,763 $12,938 Jun-90 $12,265 $12,081 $12,893 $13,090 Jul-90 $12,441 $12,254 $13,044 $13,265 Aug-90 $12,260 $12,077 $13,065 $13,280 Sep-90 $12,357 $12,172 $13,162 $13,392 Oct-90 $12,523 $12,335 $13,296 $13,560 Nov-90 $12,807 $12,615 $13,442 $13,716 Dec-90 $13,034 $12,839 $13,593 $13,893 Jan-91 $13,183 $12,985 $13,716 $14,029 Feb-91 $13,258 $13,059 $13,795 $14,113 Mar-91 $13,309 $13,110 $13,870 $14,201 Apr-91 $13,442 $13,240 $13,998 $14,345 May-91 $13,510 $13,307 $14,078 $14,430 Jun-91 $13,454 $13,252 $14,107 $14,465 Jul-91 $13,659 $13,454 $14,244 $14,609 Aug-91 $13,982 $13,772 $14,445 $14,850 Sep-91 $14,324 $14,109 $14,613 $15,052 Oct-91 $14,459 $14,242 $14,762 $15,228 Nov-91 $14,535 $14,317 $14,902 $15,401 Dec-91 $14,833 $14,610 $15,152 $15,698 Jan-92 $14,733 $14,512 $15,063 $15,618 Feb-92 $14,802 $14,580 $15,024 $15,658 Mar-92 $14,777 $14,555 $14,937 $15,621 Apr-92 $14,863 $14,640 $15,059 $15,772 May-92 $15,058 $14,832 $15,217 $15,965 Jun-92 $15,215 $14,987 $15,375 $16,172 Jul-92 $15,410 $15,179 $15,560 $16,424 Aug-92 $15,512 $15,279 $15,687 $16,590 Sep-92 $15,649 $15,414 $15,816 $16,791 Oct-92 $15,502 $15,269 $15,693 $16,623 Nov-92 $15,483 $15,251 $15,668 $16,567 Dec-92 $15,657 $15,422 $15,818 $16,752 Jan-93 $15,865 $15,627 $16,017 $17,017 Feb-93 $16,022 $15,781 $16,170 $17,216 Mar-93 $16,078 $15,837 $16,221 $17,275 Apr-93 $16,177 $15,934 $16,312 $17,406 May-93 $16,125 $15,883 $16,293 $17,347 Jun-93 $16,303 $16,059 $16,444 $17,534 Jul-93 $16,295 $16,051 $16,488 $17,566 Aug-93 $16,534 $16,286 $16,650 $17,776 Sep-93 $16,600 $16,351 $16,697 $17,835 Oct-93 $16,637 $16,387 $16,725 $17,878 Nov-93 $16,555 $16,307 $16,677 $17,838 Dec-93 $16,608 $16,359 $16,737 $17,910 Jan-94 $16,709 $16,458 $16,850 $18,058 Feb-94 $16,524 $16,276 $16,711 $17,874 Mar-94 $16,330 $16,085 $16,538 $17,699 Apr-94 $16,208 $15,965 $16,421 $17,596 May-94 $16,240 $15,996 $16,391 $17,616 Jun-94 $16,238 $15,995 $16,390 $17,642 Jul-94 $16,408 $16,162 $16,523 $17,835 Aug-94 $16,441 $16,194 $16,561 $17,890 Sep-94 $16,353 $16,107 $16,503 $17,793 Oct-94 $16,369 $16,123 $16,512 $17,816 Nov-94 $16,280 $16,035 $16,446 $17,727 Dec-94 $16,323 $16,079 $16,483 $17,768 Jan-95 $16,569 $16,320 $16,687 $18,038 Feb-95 $16,797 $16,545 $16,926 $18,330 Mar-95 $16,884 $16,630 $17,014 $18,433 Apr-95 $17,060 $16,804 $17,160 $18,623 May-95 $17,452 $17,190 $17,498 $19,001 Jun-95 $17,540 $17,277 $17,586 $19,115 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. -------------------------------------------------------------------------------- Landmark U.S. Government Income Fund STATEMENT OF ASSETS AND LIABILITIES June 30, 1995 (unaudited) -------------------------------------------------------------------------------- ASSETS: Investment in Government Income Portfolio, at value (Note 1). $51,044,453 Other assets................................................. 4,200 ----------- Total assets............................................. 51,048,653 ----------- LIABILITIES: Payable for shares of beneficial interest repurchased........ 72,286 Accrued expenses and other liabilities....................... 1,315 ----------- Total liabilities........................................ 73,601 ----------- NET ASSETS for 5,241,202 shares of beneficial interest outstanding........................................ $50,975,052 . =========== NET ASSETS CONSIST OF: Paid-in capital.............................................. $54,902,420 Accumulated net realized loss on investments................. (4,101,698) Unrealized appreciation of investments....................... 37,194 Undistributed net investment income.......................... 137,136 ----------- Total.................................................... $50,975,052 =========== NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST .............................. $9.73 ===== COMPUTATION OF OFFERING PRICE: Maximum Offering Price per share based on a 1.50% sales charge ($9.73/0.985)................. ..... $9.88 ===== See notes to financial statements -------------------------------------------------------------------------------- Landmark U.S. Government Income Fund STATEMENT OF OPERATIONS For the six months ended June 30, 1995 (unaudited) -------------------------------------------------------------------------------- INVESTMENT INCOME (Note 1B): Interest Income from Government Income Portfolio........ $1,579,973 Allocated Expenses from Government Income Portfolio..... (96,834) ----------- Net investment income from Government Income Portfolio. ................................. $1,483,139 EXPENSES: Shareholder Servicing Agents' fees (Note 2B)............ $ 102,918 Administrative fees (Note 2A)........................... 42,912 Distribution fees (Note 3).............................. 12,865 Legal fees.............................................. 9,866 Shareholder reports..................................... 8,323 Trustees' fees.......................................... 6,917 Transfer agent fees..................................... 6,000 Auditing fees........................................... 5,627 Custodian fees.......................................... 3,600 Miscellaneous........................................... 4,541 ---------- Total expenses...................................... 203,569 Less aggregate amount waived by Administrator, Shareholder Servicing Agents, and Distributor (Notes 2A, 2B and 3)................. (94,372) ---------- Net expenses....................................... 109,197 ---------- Net investment income.............................. 1,373,942 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) FROM GOVERNMENT INCOME PORTFOLIO: Net realized gain (loss)................................ 239,928 Net change in unrealized appreciation (depreciation).... 2,084,127 ---------- Net realized and unrealized gain (loss) from Government Income Portfolio 2,324,055 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $3,697,997 ========== See notes to financial statements -------------------------------------------------------------------------------- Landmark U.S. Government Income Fund STATEMENT OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- Six Months Ended Year Ended June 30, 1995 December 31, (unaudited) 1994 ------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS: Net investment income..................... $ 1,373,942 $ 3,219,042 Net realized gain (loss) on investment transactions.................. 239,928 (2,780,042) Net change in unrealized appreciation (depreciation) of investments .......................... 2,084,127 (1,924,684) ------------- ------------- Net increase (decrease) in net assets resulting from operations 3,697,997 (1,485,684) ------------- ------------- DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income..................... (1,267,821) (3,193,045) ------------- -------------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 5): Net proceeds from sale of shares.......... 2,223,931 20,093,238 Net asset value of shares issued to shareholders from reinvestment of dividends.......... 1,260,998 3,182,428 Cost of shares repurchased................ (7,873,285) (44,969,764) ------------- -------------- Net decrease in net assets from transactions in shares of beneficial interest..................... (4,388,356) (21,694,098) ------------- -------------- NET DECREASE IN NET ASSETS ............... (1,958,180) (26,372,827) Net Assets: Beginning of period....................... 52,933,232 79,306,059 -------------- ------------- End of period (including undistributed net investment income of $137,136 and $31,015, respectively).................. $ 50,975,052 $ 52,933,232 ============== ============= See notes to financial statements -------------------------------------------------------------------------------- Landmark U.S. Government Income Fund FINANCIAL HIGHLIGHTS --------------------------------------------------------------------------------
Six Months Four Months Ended Ended June 30, Year Ended December 31, 1995, December 31, 1993 Year Ended August 31 (unaudited) 1994 (Note 1F) 1993 1992 1991 1990 ----------- -------- -------------- ---- ---- ---- ---- Net Asset Value, beginning of period ................ $ 9.28 $ 9.91 $ 10.01 $ 9.85 $ 9.42 $ 8.93 $ 9.08 ------- ------- ------- ------- ------- ------- ------- Income From Operations: Net investment income .............. 0.255 0.466 0.183 0.448 0.591 0.710 0.653 Net realized and unrealized gain (loss) on investments ........ 0.429 (0.635) (0.138) 0.183 0.413 0.499 (0.148) ------- ------- ------- ----- ----- ----- ------ Total from operations .......... 0.684 (0.169) 0.045 0.631 1.004 1.209 0.505 ------- ------- ------- ----- ----- ----- ----- Less Distributions From: Net investment income.......... .. (0.234) (0.461) (0.145) (0.464) (0.574) (0.719) (0.655) In excess of net investment income -- -- -- (0.007) -- -- -- ------- ------- ------- ------- ------- ------- ------- Total from distributions... .. (0.234) (0.461) (0.145) (0.471) (0.574) (0.719) (0.655) ------- ------- ------- ------- ------- ------- ------- Net Asset Value, end of period... .. $ 9.73 $ 9.28 $ 9.91 $10.01 $ 9.85 $ 9.42 $ 8.93 ======= ======= ======= ====== ======= ======= ======= RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's omitted) ................... $50,975 $52,933 $79,306 $82,114 $56,159 $ 25,556 21,521 Ratio of expenses to average net assets ................ 0.80%+(A) 0.80%(A) 0.80%+ 0.80% 0.51% 0.97% 1.88% Ratio of net investment income to average net assets ............. 5.34%+ 4.72% 4.34%+ 4.46% 6.03% 7.71% 7.19% Portfolio turnover (B) ............. -- 22% 26% 111% 161% 42% 14% Total return ....................... 7.45%** (1.72)% 0.45%** 6.59% 10.94% 14.04% 5.73% Note: If Agents of the Fund for the periods indicated and Agents of Government Income Portfolio for the period May 1, 1994 to December 31, 1994 and for the six months ended June 30, 1995 had not waived a portion of their fees, the net investment income per share and the ratios would have been as follows: Net investment income per share .... $ 0.235 $ 0.421 $ 0.164 $ 0.400 $ 0.503 $ 0.659 $ 0.648 Ratios: Expenses to average net assets ..... 1.21%+(A) 1.26%(A) 1.27%+ 1.27% 1.41% 1.52% 1.94% Net investment income to average net assets ................. 4.93%+ 4.26% 3.88%+ 3.98% 5.13% 7.16% 7.13% ** Not annualized + Annualized (A) Includes the Fund's share of Government Income Portfolio allocated expenses for the period May, 1 1994 to December 31, 1994 and for the period indicated. (B) Portfolio turnover represents the rate of portfolio activity for the period while the Fund was making investments directly in securities. The portfolio turnover rate for the period since the Fund transferred all of its investable assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in this report. See notes to financial statements
-------------------------------------------------------------------------------- Landmark U.S. Government Income Fund NOTES TO FINANCIAL STATEMENTS (unaudited) -------------------------------------------------------------------------------- (1) SIGNIFICANT ACCOUNTING POLICIES The Landmark U.S. Government Income Fund (the "Fund") is a separate diversified series of Landmark Fixed Income Funds (the "Trust"), a Massachusetts business trust. The Trust is registered under the Investment Company Act of 1940, as amended, as an open-end, management investment company. The Fund invests all of its investable assets in Government Income Portfolio (the "Portfolio"), a management investment company for which Citibank, N.A. ("Citibank") serves as Investment Adviser. The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS") acts as the Trust's Administrator and Distributor. Citibank also serves as Sub-Administrator and makes Fund shares available to customers as Shareholder Servicing Agent. The Trust seeks to achieve the Fund's investment objective to provide shareholders with monthly dividends, as well as to protect the value of the investment of shareholders by investing all of its investable assets in the Portfolio, an open-end, diversified management investment company having the same investment objective and policies and substantially the same investment restrictions as the Fund. The value of such investment reflects the Fund's proportionate interest (94.6% at June 30, 1995) in the net assets of the Portfolio. The financial statements of the Portfolio, including the portfolio of investments, are contained elsewhere in this report and should be read in conjunction with the Fund's financial statements. The significant accounting policies consistently followed by the Fund are in conformity with generally accepted accounting principles and are as follows: A. INVESTMENT VALUATION -- Valuation of securities by the Portfolio is discussed in Note 1A of the Portfolio's Notes to Financial Statements, which are included elsewhere in this report. B. INVESTMENT INCOME -- The Fund earns income, net of Portfolio expenses, daily based on its investment in the Portfolio. 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. At December 31, 1994, the Fund, for federal income tax purposes, had a capital loss carryover of $3,291,171, of which $714,586 will expire on December 31, 1995, $835,037 will expire on December 31, 1996 and $1,741,548 will expire on December 31, 2002. Such capital loss carryover will reduce the Fund's taxable income arising from future net realized capital gain on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. 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. The Fund's share of the Portfolio's expenses are charged against and reduce the amount of the Fund's investment in the Portfolio. E. DISTRIBUTIONS -- Distributions to shareholders are recorded on ex-dividend date. The amount and character of income and net realized gains to be distributed are determined in accordance with income tax rules and regulations, which may differ from generally accepted accounting principles. These differences are attributable to permanent book and tax accounting differences. Reclassifications are made to the Fund's capital accounts to reflect income and net realized gains available for distribution (or available capital loss carryovers) under income tax rules and regulations. For the year ended December 31, 1994, the fund reclassed $212,926 from accumulated net realized loss on investment to paid-in capital. F. CHANGE IN FISCAL YEAR END -- Effective September 1, 1993, the Fund changed its fiscal year end from August 31 to December 31. G. OTHER -- All the net investment income and realized and unrealized gain and loss of the Portfolio is allocated pro rata, based on respective ownership interests, among the Fund and the other investors in the Portfolio at the time of such determination. Investment transactions are accounted for on a trade date basis. (2) ADMINISTRATIVE SERVICES PLAN The Trust has adopted an 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 Trust 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 FEE -- Under the terms of an Administrative Services Agreement, the administrative fee paid to the Administrator, as compensation for overall administrative services and general office facilities, may not exceed an annual rate of 0.20% of the Fund's average daily net assets. For the six months ended June 30, 1995, under the Administrative Services Plan the Administrator received fees computed at an annual rate of 0.15% of the Fund's average daily net assets which amounted to $42,912, all of which was voluntarily waived. 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 Trust, on behalf of the Fund, has entered into shareholder servicing agreements with each Shareholder Servicing Agent pursuant to which that 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 for which payment is being made by investors for whom such Shareholder Servicing Agent maintains a servicing relationship. Shareholder Servicing Agents fees amounted to $102,918, of which $38,595 was voluntarily waived for the six months ended June 30, 1995. (3) DISTRIBUTION FEE The Trust has adopted a Plan of Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the Fund reimburses the Distributor for expenses incurred or anticipated in connection with sales of shares of the Fund, at an annual rate not to exceed 0.15% of the Fund's average daily net assets. 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 $12,865, all of which was voluntarily waived for the six months ended June 30, 1995. (4) INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in the Portfolio for the six months ended June 30, 1995 aggregated $2,229,902 and $8,311,939, respectively. (5) 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: Six Months Ended Year June 30, Ended 1995 December 31, (unaudited) 1994 ----------- ----------- Shares sold................. 231,095 2,047,894 Shares issued to shareholders from rein- vestment of dividends...... 132,435 333,897 Shares repurchased.......... (825,153) (4,683,580) ------- ---------- Net decrease................ (461,623) (2,301,789) ======== =========== -------------------------------------------------------------------------------- Government Income Portfolio PORTFOLIO OF INVESTMENTS June 30, 1995 (unaudited) -------------------------------------------------------------------------------- Principal Amount Issuer (000 omitted) Value -------------------------------------------------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 4.2% 8.00%, 2006............. $347 $ 358,602 8.00%, 2007............. 284 292,759 8.00%, 2017............. 630 645,787 8.00%, 2021............. 292 299,219 8.00%, 2022............. 268 274,236 9.50%, 2016............. 4 3,901 9.50%, 2017............. 74 77,896 9.50%, 2018............. 87 92,036 9.50%, 2019............. 92 97,306 9.50%, 2020............. 84 89,056 ------- TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (Identified Cost $2,189,405) 2,230,798 --------- Principal Amount Issuer (000 omitted) Value ------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS -- 94.5% U.S. Treasury Notes, 4.625%, 2/15/1996...... $ 2,564 $ 2,546,770 5.125%, 3/31/1996...... 1,050 1,045,401 7.25%, 8/31/1996....... 8,250 8,380,185 6.125%, 5/31/1997...... 10,425 10,478,793 6.125%, 5/15/1998...... 9,730 9,793,829 5.375%, 5/31/1998...... 2,100 2,070,138 6.875%, 3/31/2000...... 9,640 9,977,400 6.25%, 5/31/2000....... 3,000 3,032,344 --------- 47,324,860 ---------- United States Treasury Bond 7.50%, 1/31/2000....... 3,420 3,654,065 ---------- TOTAL U.S. GOVERNMENT OBLIGATIONS (Identified Cost $50,959,225) 50,978,925 ---------- TOTAL INVESTMENTS (Identified Cost $53,148,630) 98.7% 53,209,723 OTHER ASSETS LESS OTHER LIABILITIES.. 1.3 722,580 ----- ---------- NET ASSETS............... 100.0% $53,932,303 ===== =========== See notes to financial statements -------------------------------------------------------------------------------- Government Income Portfolio STATEMENT OF ASSETS AND LIABILITIES June 30, 1995 (unaudited) -------------------------------------------------------------------------------- ASSETS: Investments at value (Note 1A) (Identified Cost, $53,148,630)....................... $53,209,723 Cash.................................................. 32,594 Interest receivable................................... 705,623 ---------- Total assets...................................... 53,947,940 ---------- LIABILITIES: Payable to affiliates--Investment advisory fee (Note 2)............................... 15,637 NET ASSETS ........................................... $53,932,303 ========== REPRESENTED BY: Paid-in capital for beneficial interests.............. $53,932,303 ========== See notes to financial statements -------------------------------------------------------------------------------- Government Income Portfolio STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1995 (unaudited) -------------------------------------------------------------------------------- INTEREST INCOME (Note 1B):............................ $1,659,774 EXPENSES: Investment advisory fees (Note 2)..................... $ 94,818 Administrative fees (Note 3).......................... 13,545 Expense fees (Note 6)................................. 500 ---------- Total expenses...................................... 108,863 Less aggregate amount waived by the Investment Advisor and Administrator (Note 2 and Note 3)........ (7,164) ----------- Net Expense........................................... 101,699 ---------- Net investment income............................... 1,558,075 --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 5): Net realized gain from investment transactions........ 301,476 Unrealized appreciation (depreciation) of investments-- Beginning of period................................ (2,077,668) End of period...................................... 61,093 ---------- Net change in unrealized appreciation (depreciation)....................... 2,138,761 ---------- Net realized and unrealized gain on investments.... 2,440,237 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $3,998,312 ========== See notes to financial statements -------------------------------------------------------------------------------- Government Income Portfolio STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
For the Six Months May 1, 1994 Ended (Commencement June 30, 1995 of Operations) to (unaudited) December 31, 1994 ------------- ---------------- INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS: Net investment income...................................................$ 1,558,075 $ 2,240,079 Net realized gain on investment transactions.......................... 301,476 (2,084,009) Net change in unrealized appreciation (depreciation) of investments.... 2,138,761 443,611 --------- --------- Net increase (decrease) in net assets resulting from operations.... 3,998,312 599,681 --------- --------- CAPITAL TRANSACTIONS: Proceeds from contributions............................................ 2,785,166 80,362,853 Value of withdrawals................................................... (8,524,247) (25,289,462) --------- --------- Net increase (decrease) in net assets from capital transactions.... (5,739,081) 55,073,391 --------- --------- NET INCREASE (DECREASE) IN NET ASSETS: ................................ (1,740,769) 55,673,072 NET ASSETS: Beginning of period.................................................... 55,673,072 -- ---------- ----------- End of period.......................................................... $53,932,303 $55,673,072 ========== ========== See notes to financial statements
-------------------------------------------------------------------------------- Government Income Portfolio FINANCIAL HIGHLIGHTS --------------------------------------------------------------------------------
For the For the Period Six Months May 1, 1994 Ended (Commencement of June 30, 1995 Operations) to (unaudited) December 31, 1994 ------------- ---------------- RATIOS/SUPPLEMENTAL DATA: Net Assets, end of period (000 omitted)................................ $53,932 $55,673 Ratio of expenses to average net assets................................ 0.38%* 0.43%* Ratio of net investment income to average net assets................... 5.75%* 5.27%* Portfolio turnover..................................................... 113% 40% Note: If Agents of the Portfolio had not voluntarily waived a portion of their fees during the period indicated, the ratios would have been as follows: RATIOS: Expenses to average net assets......................................... 0.40%* 0.44%* Net investment income to average net assets............................ 5.73%* 5.26%* * Annualized
See notes to financial statements -------------------------------------------------------------------------------- Government Income Portfolio NOTES TO FINANCIAL STATEMENTS (unaudited) -------------------------------------------------------------------------------- (1) SIGNIFICANT ACCOUNTING POLICIES Government Income Portfolio (the "Portfolio"), a separate series of The Premium Portfolios (the "Portfolio Trust"), is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company which was organized as a trust under the laws of the State of New York. The Declaration of Trust permits the Trustees to issue beneficial interests in the Portfolio. The Investment Adviser of the Portfolio is Citibank, N.A. ("Citibank"). Signature Financial Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's Administrator. The significant accounting policies consistently followed by the Portfolio 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 pricing services, 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 on 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 consists of interest accrued and discount earned, adjusted for amortization of premium or discount on long-term debt securities when required for U.S. federal income tax purposes. Gain and loss from principal paydowns are recorded as ordinary income. C. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under the U.S. Internal Revenue Code. Accordingly, no provision for federal income taxes is necessary. D. EXPENSES -- The Portfolio bears all costs of its operations other than expenses specifically assumed by Citibank and SFG. Expenses incurred by the Portfolio Trust with respect to any two or more portfolios or series are allocated in proportion to the average net assets of each portfolio, except when allocations of direct expenses to each portfolio can otherwise be made fairly. Expenses directly attributable to a portfolio are charged to that portfolio. E. 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. (2) INVESTMENT ADVISORY FEES The investment advisory fee paid to Citibank, as compensation for overall investment management services, amounted to $94,818, of which $945 was voluntarily waived for the six months ended June 30, 1995. The investment advisory fee is computed at the annual rate of 0.35% of the Portfolio's average daily net assets. (3) ADMINISTRATIVE FEE Under the terms of an Administrative Services Agreement, the administrative fee paid to the Administrator, as compensation for overall administrative services and general office facilities, is computed at the annual rate of 0.05% of the Portfolio's average daily net assets. The administrative fee amounted to $13,545 of which $6,219 was voluntarily waived, for the six months ended June 30, 1995. Citibank acts as Sub-Administrator and performs such duties and receives such compensation from SFG as from time to time is agreed to by SFG and Citibank. The Portfolio pays no compensation directly to any Trustee or any officer who is affiliated with the Administrator, all of whom receive remuneration for their services to the Portfolio from the Administrator or its affiliates. Certain of the officers and a Trustee of the Portfolio are officers or directors of the Administrator or its affiliates. (4) PURCHASES AND SALES OF INVESTMENTS Purchases and sales of U.S. Government securities, other than short-term obligations, aggregated $59,367,434 and $62,869,456, respectively, for the six months ended June 30, 1995. (5) FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation (depreciation) in value of the investment securities owned at June 30, 1995, as computed on a federal income tax basis, are as follows: Aggregate cost...................... $ 53,148,630 ============== Gross unrealized appreciation....... $ 456,832 Gross unrealized depreciation....... (395,739) -------------- Net unrealized depreciation......... $ 61,093 ============== (6) EXPENSE FEE SFG has entered into an expense agreement with the Portfolio. SFG has agreed to pay all of the ordinary operating expenses (excluding interest, taxes, brokerage commissions, litigation costs or other extraordinary costs or expenses) of the Portfolio, other than fees paid under the Advisory Agreement and Administrative Services Agreement. The Agreement may be terminated by either party upon not less than 30 days nor more than 60 days written notice. The Portfolio has agreed to pay SFG an expense fee on an annual basis, accrued daily and paid monthly; provided, however, that such fee shall not exceed the amount such that immediately after any such payment the aggregate ordinary expenses of the Portfolio would, on an annual basis, exceed an agreed upon rate, currently 0.45% of the Portfolio's average daily net assets. (7) LINE OF CREDIT The Portfolio, along with other Landmark Funds entered into an ongoing 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 six months ended June 30, 1995 the commitment fee allocated to the Portfolio was $221. Since the line of credit was established, there have been no borrowings. -------------------------------------------------------------------------------- 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 10126-5130 Call Your Citigold Executive or, in NY or CT, (800) 285-1701, For all other States, (800) 285-1707 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 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 SECRETARIES Susan Jakuboski* Molly S. Mugler* *Affiliated Person of Administrator and Distributor --------------------------------------------------- INVESTMENT ADVISER (OF GOVERNMENT INCOME PORTFOLIO) 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 State Street Bank and Trust Company 225 Franklin Street, Boston, MA 02110 CUSTODIAN Investors Bank and Trust Company One Lincoln Plaza, Boston, MA 02111 AUDITORS Price Waterhouse LLP 160 Federal 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 [LOGO] FI/USG/S/95 [LOGO] LANDMARK(SM) FUNDS Advised by Citibank, N.A. LANDMARK INTERMEDIATE INCOME FUND SEMI-ANNUAL REPORT June 30, 1995 -------------------------------------------------------------------------------- A LETTER TO OUR SHAREHOLDERS -------------------------------------------------------------------------------- Dear Shareholder: The first six months of 1995 saw higher prices for most financial assets, including the fixed-income securities in which the Landmark Intermediate Income Fund primarily invests. In fact, bonds have rallied significantly since the beginning of the year, erasing any declines posted in 1994. The Landmark Funds' investment adviser, Citibank, N.A., manages the Landmark Intermediate Income Fund to generate a high level of current 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 Semi-Annual Report for the period ended June 30, 1995, reviews the Fund's investment activities and performance over the past six 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, we 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 July 20, 1995 Remember that Mutual Fund Shares: o Are not bank deposits or FDIC insured o Are not obligations of or guaranteed by Citibank or Citicorp Investment Services o 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 Manager Responds Fund Quotes ------------------------------------------- 4 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 -------------------------------------------------------------------------------- MARKET ENVIRONMENT -------------------------------------------------------------------------------- The first six months of 1995 represented the best first-half performance by the U.S. bond market since 1985. Prices on the benchmark 30-year U.S. Treasury bond rose 15.4% during the period. Prices on the five-year U.S. Treasury note, considered by many to be a good measure of intermediate-term fixed-income performance, rose 7.6%. Slower economic growth seems to be the primary reason for the bond market's excellent performance after a disappointing 1994. Fixed-income investors appear to be convinced that the Federal Reserve has been largely successful in its efforts to constrain economic growth without causing either a recession or an acceleration of inflation. Recent economic data suggest that the U.S. is experiencing a "soft landing" after 1994's torrid pace of economic growth, a state of affairs that raises expectations for continued economic expansion with low inflation and, perhaps most important, no need for the Federal Reserve to raise short-term interest rates further. Periods of low inflation tend to benefit the bond market as investors worry less that rising prices will erode the purchasing power of their principal and income over time. -------------------------------------------------------------------------------- FUND SNAPSHOT -------------------------------------------------------------------------------- COMMENCEMENT OF OPERATIONS June 25, 1993 NET ASSETS AS OF 6/30/95 $49.9 million FUND OBJECTIVE To generate a high level of current income and preserve the value of its shareholders' investments DIVIDENDS Paid monthly CAPITAL GAINS Distributed annually, if any BENCHMARKS o Lehman Government/Corporate Bond Index o Lipper Intermediate Investment Grade Funds Average INVESTMENT ADVISER Citibank, N.A. -------------------------------------------------------------------------------- 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 MANAGER RESPONDS -------------------------------------------------------------------------------- In the wake of last year's severe bond market declines, we maintained a longer-than-average duration (a measure of sensitivity to changes in interest rates) in order to keep higher-yielding securities in the Portfolio for as long as possible. In our view, bond prices had declined farther than economic and market conditions warranted, and we expected a rebound as inflation fears abated. This stance put us in a good position not just to take advantage of the market's overreaction to inflation fears, but also to capture further gains as interest rates continued to fall. Consistent with our sector rotation strategy, we decreased the percentage of assets invested in U.S. Treasury securities during the period from 48% of the portfolio on January 1 to 40% of the portfolio on June 30. Simultaneously, we reduced our exposure to mortgage-backed securities and corporate bonds as the differences in yields among the different types of securities narrowed. In our view, mortgages and corporates no longer offered sufficient incremental returns to justify their risks relative to federally backed U.S. Treasury securities. -------------------------------------------------------------------------------- FUND QUOTES FROM THE PORTFOLIO MANAGER -------------------------------------------------------------------------------- "We've seen a tremendous rally in the bond market during the first six months of this year, including the maturity range in which the Fund invests." "As it became obvious that the economy was slowing, fixed-income investors became convinced that inflation wouldn't be the problem they feared it would be last year." "Through March, mortgage and corporate securities performed better than U.S. Treasury securities. The reverse was generally true in the second quarter, particularly with respect to mortgages." -------------------------------------------------------------------------------- STRATEGY AND OUTLOOK -------------------------------------------------------------------------------- In the wake of the substantial gains achieved during the first half of the year, we are maintaining a more cautious approach to the bond market. We have reduced the portfolio's average duration from the long end to just short of neutral, reflecting our belief that the market has fully incorporated a "soft landing" economic scenario and may decline modestly from here. While a market correction is possible over the near term if the economy strengthens, our outlook calls for a true deceleration of economic growth over the longer term. If the economy does moderate further, the Federal Reserve may lower interest rates, a move that should boost bond prices. Therefore, we will view any near-term market correction as a buying opportunity in order to participate in the attractive fixed-income returns we believe are ahead. -------------------------------------------------------------------------------- Landmark Intermediate Income Fund -------------------------------------------------------------------------------- BY THE NUMBERS CHANGES IN PORTFOLIO COMPOSITION Portfolio of Investments as of 6/30/95 [Graphics Omitted: pie charts] Cash/Short Term/Other ..................... 7% Asset Backed Securities ................... 20% Mortgage Obligations ...................... 24% Corporate Bonds ........................... 5% Yankees ................................... 4% U.S. Treasury Issues ...................... 40% Compared to 12/31/94 Cash/Short Term/Other ..................... (9)% Asset Backed Securities ................... 19% Mortgage Obligations ...................... 29% Corporate Bonds ........................... 9% Yankees ................................... 4% U.S. Treasury Issues ...................... 48% -------------------------------------------------------------------------------- FUND DATA all periods ending June 30, 1995 (unaudited) --------------------------------------------------------------------------------
TOTAL RETURNS ------------------------------------------ SIX MONTHS SINCE ENDED ONE 6/25/93 JUNE 30, 1995 YEAR (INCEPTION) --------------- ----- ------------ Landmark Intermediate Income Fund without Sales Charge........... 11.73% 12.05% 4.81% Lipper Intermediate Investment Grade Funds Average............... 10.22% 10.91% 4.49% Lehman Government/Corporate Bond Index........................... 11.80% 12.76% 4.53% Landmark Intermediate Income Fund with Maximum Sales Charge of 4.00% ...................................................... 7.27% 7.57% 2.70% Not Annualized Annualized From 6/30/93
30-Day SEC Yield 5.73% Income Dividends Per Share $0.270 -------------------------------------------------------------------------------- PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- A $10,000 investment in the Fund made on inception date would have grown to $10,551 with sales charge (as of 6/30/95). The graph 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 Lehman Intermediate Intermediate Intermediate Government Income - Income- Investment Corporate Without With Grade Bond Sales Sales Funds Index Charge Charge Average (Unmanaged) May-93 $10,000 $ 9,600 $10,000 $10,000 Jun-93 $10,030 $ 9,629 $10,000 $10,000 Jul-93 $10,073 $ 9,670 $10,042 $10,064 Aug-93 $10,325 $ 9,912 $10,228 $10,295 Sep-93 $10,405 $ 9,989 $10,268 $10,332 Oct-93 $10,416 $ 9,999 $10,301 $10,374 Nov-93 $10,246 $ 9,836 $10,209 $10,251 Dec-93 $10,298 $ 9,886 $10,257 $10,295 Jan-94 $10,444 $10,026 $10,387 $10,451 Feb-94 $10,214 $ 9,805 $10,202 $10,223 Mar-94 $ 9,967 $ 9,569 $ 9,980 $ 9,973 Apr-94 $ 9,867 $ 9,472 $ 9,890 $ 9,890 May-94 $ 9,840 $ 9,447 $ 9,875 $ 9,871 Jun-94 $ 9,809 $ 9,417 $ 9,856 $ 9,847 Jul-94 $ 9,975 $ 9,576 $10,004 $10,044 Aug-94 $10,003 $ 9,602 $10,024 $10,048 Sep-94 $ 9,835 $ 9,442 $ 9,911 $ 9,897 Oct-94 $ 9,797 $ 9,405 $ 9,896 $ 9,886 Nov-94 $ 9,759 $ 9,369 $ 9,867 $ 9,709 Dec-94 $ 9,837 $ 9,444 $ 9,915 $ 9,773 Jan-95 $10,020 $ 9,619 $10,072 $ 9,960 Feb-95 $10,248 $ 9,838 $10,282 $10,191 Mar-95 $10,321 $ 9,908 $10,346 $10,260 Apr-95 $10,438 $10,021 $10,479 $10,403 May-95 $10,929 $10,492 $10,849 $10,839 Jun-95 $10,991 $10,551 $10,917 $10,926 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. -------------------------------------------------------------------------------- Landmark Intermediate Income Fund PORTFOLIO OF INVESTMENTS JUNE 30, 1995 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT ISSUER (000 OMITTED) VALUE -------------------------------------------------------------------------------- FIXED INCOME--92.4% -------------------------------------------------------------------------------- ASSET BACKED SECURITIES-19.6% Contimortgage Home Equity Loan 7.95% due 4/15/10...................... $1,700 $1,753,227 EQCC Home Equity Loan Trust 8.95% due 10/15/06..................... 2,000 2,095,625 First USA Credit Card 6.265% due 10/15/01.................... 2,000 1,997,500 General Motors Acceptance Corp. 5.95% due 2/15/97...................... 32 31,796 GMAC 1992 E Grantor Trust 4.75% due 8/15/97...................... 187 185,053 Household Finance 6.625% due 5/20/08..................... 2,000 2,008,120 United Companies Financial Corp. 7.25% due 12/10/20..................... 1,700 1,693,625 ----------- 9,764,946 ----------- MORTGAGE OBLIGATIONS-23.7% COLLATERALIZED MORTGAGE OBLIGATIONS - 18.6% Federal Home Loan Mortgage Corp. 6.50% due 11/15/21..................... 2,000 1,902,500 Federal National Mortgage Association 5.00% due 11/25/21..................... 1,000 813,430 Nomura Securities 7.328% due 7/7/03...................... 1,331 1,360,533 8.15% due 4/4/27....................... 2,000 2,163,125 Resolution Trust Corp. 6.675% due 6/25/26..................... 1,898 1,898,357 Structured Asset Securities Corp. 7.375% due 9/25/24..................... 1,167 1,166,984 ----------- 9,304,929 ----------- MORTGAGE BACKED SECURITIES-0.2% Federal Home Loan Mortgage Association 8.50% due 4/01/01...................... 52 53,856 Federal National Mortgage Association 8.00% due 6/01/02...................... 26 27,010 ----------- 80,866 ----------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-4.9% 7.00% due 5/20/25...................... 1,568 1,594,704 8.00% due 12/15/07..................... 142 147,034 8.25% due 7/15/05...................... 698 713,309 ----------- 2,455,047 ----------- TOTAL MORTGAGE OBLIGATIONS 11,840,842 ----------- DOMESTIC CORPORATE BONDS-5.2% Kmart Corp. 8.125% due 12/1/06..................... 2,000 2,062,040 12.50% due 3/1/05...................... 400 533,664 ----------- 2,595,704 ----------- YANKEES-3.6% Midland Bank, PLC 7.65% due 5/1/25....................... 1,700 1,796,951 ----------- UNITED STATES GOVERNMENT OBLIGATIONS-40.3% UNITED STATES GOVERNMENT AGENCIES-2.0% Federal Home Loan Banks 8.00% due 4/19/00...................... 1,000 1,005,940 ----------- UNITED STATES TREASURY BONDS-9.1% 7.625% due 2/15/25..................... 4,000 4,517,480 ----------- UNITED STATES TREASURY NOTES-29.2% 4.00% due 1/31/96...................... $ 125 $ 123,789 6.25% due 5/31/00...................... 10,000 10,106,200 7.50% due 2/15/05...................... 4,000 4,355,640 ----------- 14,585,629 ----------- TOTAL UNITED STATES GOVERNMENT OBLIGATIONS 20,109,049 ----------- TOTAL FIXED INCOME (Identified Cost $45,385,322).......... 46,107,492 ----------- SHORT TERM OBLIGATIONS--6.8% Repurchase Agreement, Chase Manhattan 6.125% due 7/3/95, proceeds at maturity $3,392,731 (secured by $3,437,400 U.S. Treasury Note 6.125% due 7/31/96) ..... $ 3,391,000 ----------- TOTAL INVESTMENTS (Identified Cost $48,776,322). 99.2% 49,498,492 OTHER ASSETS, LESS OTHER LIABILITIES................... 0.8 386,971 ----- ----------- NET ASSETS..................... 100.0% $49,885,463 ===== =========== See notes to financial statements Landmark Intermediate Income Fund STATEMENT OF ASSETS AND LIABILITIES June 30, 1995 (unaudited) ASSETS: Investments, at value (Note 1A) (Identified Cost, $48,776,322)............................... $49,498,492 Interest receivable........................................... 467,805 ----------- Total assets................................................ 49,966,297 ----------- LIABILITIES: Payable for shares of beneficial interest repurchased......... 26,942 Payable to affiliates: Shareholder Servicing Agents' fee (Note 3B)................. 10,299 Accrued expenses and other liabilities........................ 43,593 ----------- Total liabilities........................................... 80,834 ----------- NET ASSETS for 5,157,074 shares of beneficial interest outstanding......................................... $49,885,463 =========== NET ASSETS CONSIST OF: Paid-in capital............................................... $51,729,764 Accumulated net realized loss on investments.................. (2,708,806) Unrealized appreciation of investments........................ 722,170 Undistributed net investment income........................... 142,335 ----------- Total....................................................... $49,885,463 =========== NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST....................................... $ 9.67 ====== COMPUTATION OF OFFERING PRICE: Maximum Offering Price per share based on a 4.00% sales charge ($9.67 / 0.96)............................ $10.07 ====== See notes to financial statements Landmark Intermediate Income Fund STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1995 (unaudited) INVESTMENT INCOME (Note 1B)......................... $1,736,093 EXPENSES: Shareholder servicing agents' fees (Note 3B)........ $96,160 Investment advisory fees (Note 2)................... 84,139 Administrative fees (Note 3A)....................... 48,080 Shareholder reports................................. 30,905 Custodian fees...................................... 30,250 Auditing services................................... 19,700 Legal services...................................... 12,332 Distribution fees (Note 4).......................... 12,010 Trustees fees....................................... 8,787 Transfer agent fees................................. 6,000 Miscellaneous....................................... 4,598 ------- Total expenses.................................... 352,961 Less aggregate amount waived by Investment Adviser, Administrator, Shareholder Servicing Agents and Distributor (Notes 2, 3A, 3B, and 4).... (134,153) -------- Net expenses...................................... 218,808 --------- Net investment income............................. 1,517,285 --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from investment transactions...... 2,055,015 Unrealized appreciation (depreciation) of investments: Beginning of period............................... (1,108,185) End of period..................................... 722,170 --------- Net change in unrealized appreciation (depreciation) of investments...................... 1,830,355 --------- Net realized and unrealized gain (loss) on investments............................... 3,885,370 --------- Net Increase in Net Assets Resulting from Operations.................................... $5,402,655 ========== See notes to financial statements Landmark Intermediate Income Fund STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED JUNE 30, 1995 YEAR ENDED (UNAUDITED) DECEMBER 31, 1994 ------------ ----------------- INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS: Net investment income........................ $ 1,517,285 $ 2,940,876 Net realized gain (loss) from investment transactions..................... 2,055,015 (4,798,890) Net change in unrealized appreciation (depreciation) of investments................ 1,830,355 (730,406) ---------- ---------- Net increase (decrease) in net assets resulting from operations....... 5,402,655 (2,588,420) ---------- ---------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS FROM: Net investment income........................ (1,403,050) (2,912,776) Net realized gain on investments............. -- (90,585) ---------- ---------- Decrease in net assets from distributions declared to shareholders.... (1,403,050) (3,003,361) ---------- ---------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 6): Net proceeds from sale of shares............. 436,462 1,241,851 Net asset value of shares issued to shareholders from reinvestment of distributions........................... 1,386,488 2,973,424 Cost of shares repurchased................... (3,518,769) (12,224,541) ---------- ---------- Net decrease in net assets from transactions in shares of beneficial interest (1,695,819) (8,009,266) ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS ....... 2,303,786 (13,601,047) NET ASSETS: Beginning of period.......................... 47,581,677 61,182,724 ---------- ---------- End of period (including undistributed net investment income of $142,335 and $28,100, respectively)...................... $49,885,463 $47,581,677 ========== ========== See notes to financial statements Landmark Intermediate Income Fund FINANCIAL HIGHLIGHTS
FOR THE PERIOD JUNE 25, 1993 SIX MONTHS ENDED (COMMENCEMENT OF JUNE 30, 1995 YEAR ENDED OPERATIONS) TO (UNAUDITED) DECEMBER 31, 1994 DECEMBER 31, 1993 ----------- ---------------- ---------------- Net Asset Value, beginning of period........... $ 8.91 $ 9.88 $10.00 ----- ----- ----- Income From Operations: Net investment income.......................... 0.298 0.521 0.261 Net realized and unrealized gain (loss) on investments ......................... 0.732 (0.959) 0.037 ----- ----- ----- Total from operations........................ 1.030 (0.438) 0.298 ----- ----- ----- Less Distributions From: Net investment income......................... (0.270) (0.516) (0.261) In excess of net investment income............ -- -- (0.006) Net realized gain on investments.............. -- (0.016) (0.151) ----- ----- ----- Total distributions.......................... (0.270) (0.532) (0.418) ----- ----- ----- Net Asset Value, end of period................. $ 9.67 $ 8.91 $ 9.88 ===== ====== ====== RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)...... $49,885 $47,582 $61,183 Ratio of expenses to average net assets........ 0.90%* 0.90% 0.90%* Ratio of net investment income to average net assets 6.31%* 5.52% 4.95%* Portfolio turnover............................. 2.66% 291% 103% Total return................................... 11.73%+ (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................ $0.271 $0.475 $0.236 Ratios: Expenses to average net assets................. 1.47%* 1.39% 1.38%* Net investment income to average net assets.... 5.74%* 5.03% 4.47%* *Annualized +Not annualized See notes to financial statements
Landmark Intermediate Income Fund NOTES TO FINANCIAL STATEMENTS (unaudited) (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. At December 31, 1994, the Fund, for federal income tax purposes, had a capital loss carryover of $3,231,735, which will expire December 31, 2002. Such capital loss carryover will reduce the Fund's taxable income arising from future net realized gain on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of the distributions to shareholders which would otherwise by necessary to relieve the Fund of any liability for federal income or excise tax. 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 $84,139, of which $62,003 was voluntarily waived for the six months ended June 30, 1995. The investment advisory fee is computed at the annual rate of 0.35% of average daily net assets. (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 $48,080, of which $24,080 was voluntarily waived for the six months ended June 30, 1995. 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 $96,160, of which $36,060 was voluntarily waived for the six months ended June 30, 1995. (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 $12,010, all of which was voluntarily waived for the six months ended June 30, 1995. (5) PURCHASES AND SALES OF INVESTMENTS Purchases and sales of securities, other than short-term obligations, aggregated $130,604,088 and $139,933,410, respectfully, for the six months ended June 30, 1995. (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: SIX MONTHS ENDED JUNE 30, 1995 YEAR ENDED (UNAUDITED) DECEMBER 31, 1994 ----------------- ----------------- Shares sold 46,337 129,167 Shares issued to shareholders from reinvestment of distributions 149,460 322,052 Shares repurchased (381,002) (1,304,223) -------- --------- Net decrease (185,205) (853,004) ======== ========= (7) FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation (depreciation) in value of the investment securities owned at June 30, 1995, as computed on a federal income tax basis, are as follows: Aggregate cost $48,776,322 =========== Gross unrealized appreciation $ 797,873 Gross unrealized depreciation (75,703) ----------- Net unrealized appreciation $ 722,170 =========== (8) LINE OF CREDIT The Fund, along with other Landmark Funds entered into an ongoing 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 six months ended June 30, 1995, the commitment fee allocated to the Fund was $191. Since the line of credit was established there have been no borrowings. -------------------------------------------------------------------------------- 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 10126-5130 Call Your Citigold Executive or, in NY or CT (800) 285-1701, or for all other states (800) 285-1707 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 [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. Teasury Reserves 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 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 SECRETARIES Susan Jakuboski* 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 [LOGO] FI/INTI/S/95