Rule 497(e)
File Nos. 2-90519 and
811-4007
LANDMARK FUNDS II
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A
ITEM NO. N-1A ITEM LOCATION
PROSPECTUS
PART A
<S> <C>
Item 1. Cover Page........................................... Cover Page
Item 2. Synopsis............................................. Expense Summary
Item 3. Condensed Financial Information...................... Condensed Financial Information
Item 4. General Description of Registrant.................... Investment Information; General
Information; Appendix
Item 5. Management of the Fund............................... Management; Expenses
Item 5A. Management's Discussion of Fund Performance.......... Not Applicable
Item 6. Capital Stock and Other Securities................... General Information; Classes of
Shares; Voting and Other Rights;
Purchases; Exchanges; Redemptions;
Dividends and Distributions; Tax
Matters
Item 7. Purchase of Securities Being Offered................. Purchases; Exchanges; Redemptions
Item 8. Redemption or Repurchase............................. Purchases; Exchanges; Redemptions
Item 9. Pending Legal Proceedings............................ Not Applicable
STATEMENT OF
ADDITIONAL
PART B INFORMATION
Item 10. Cover Page........................................... Cover Page
Item 11. Table of Contents.................................... Cover Page
Item 12. General Information and History...................... The Funds
Item 13. Investment Objectives and Policies................... Investment Objectives, Policies and
Restrictions
Item 14. Management of the Fund............................... Management
Item 15. Control Persons and Principal Holders of Securities.. Management
Item 16. Investment Advisory and Other Services............... Management
Item 17. Brokerage Allocation and Other Practices............. Portfolio Transactions
Item 18. Capital Stock and Other Securities................... Description of Shares, Voting Rights
and Liabilities
Item 19. Purchase, Redemption and Pricing of Securities Being
Offered.............................................. Description of Shares, Voting Rights
and Liabilities; Determination of Net
Asset Value; Valuation of Securities;
Additional Purchase and Redemption
Information
Item 20. Tax Status........................................... Certain Additional Tax Matters
Item 21. Underwriters......................................... Management
Item 22. Calculation of Performance Data...................... Performance Information
Item 23. Financial Statements................................. Independent Accountants and Financial
Statements
</TABLE>
<PAGE>
PART C Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration
Statement.
<PAGE>
Rule 497(e)
File Nos. 2-90519 and
811-4007
Supplement Dated February 15, 1996 to Prospectus Dated April 3, 1995
LANDMARK SMALL CAP EQUITY FUND
The date of the Prospectus shall now be February 15, 1996.
The first paragraph of the "Condensed Financial Information" section on page 6
of the Prospectus is hereby amended in its entirety to read as follows:
The following tables provide condensed financial information about the
Balanced Fund, the Equity Fund and the Small Cap Equity Fund for the periods
indicated. The information below should be read in conjunction with the
financial statements appearing in the Annual Report to Shareholders of the
Balanced Fund and the Equity Fund, which are incorporated by reference in the
Statement of Additional Information, and the unaudited financial statements of
the Small Cap Equity Fund, which accompany the Statement of Additional
Information. The financial statements and notes, as well as the tables below
with respect to the Balanced Fund and the Equity Fund, have been audited by
Price Waterhouse LLP (for the year ended December 31, 1994) and Deloitte &
Touche LLP (for periods prior to the year ended December 31, 1994), independent
certified public accountants. The report of Price Waterhouse LLP is included in
the Balanced Fund's and the Equity Fund's Annual Report. Copies of the Annual
Reports may be obtained without charge from an investor's Shareholder Servicing
Agent (see inside of back cover for address and phone number).
The following table should precede the "Investment Information" section on page
8 of the Prospectus:
<TABLE>
<CAPTION>
SMALL CAP EQUITY FUND
FINANCIAL HIGHLIGHTS
CLASS A SHARES
(unaudited)
(No Class B shares were outstanding during these periods.)
June 21, 1995
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1995
<S> <C>
Net Asset Value, beginning of period..................... $10.00
------
Income from Operations:
Net investment income.................................... 0.05
Net realized and unrealized gain......................... 4.42
----
Total from operations................................. 4.47
----
Less Distributions from:
Net investment income................................. (0.05)
Net realized gain..................................... (0.10)
-----
Total from distributions.............................. (0.15)
-----
Net Asset Value, end of period........................... $14.32
=====
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................ $5,148
Ratio of expenses to average net assets (A).............. 0%
Ratio of net investment income to average net assets..... 1.21%*
Total return............................................. 44.78%**
</TABLE>
<PAGE>
Note: If Agents of Small Cap Equity Fund for the periods indicated and Agents
of Small Cap Equity Portfolio for the period June 21, 1995 (commencement of
operations) to December 31, 1995 had not voluntarily waived or assumed all of
their fees and had expenses been limited to that required by certain state
securities laws, the net investment income (loss) per share and the ratios
would have been as follows:
Net investment income per share........................... $(0.288)
RATIOS:
Expenses to average net assets (A)........................ 2.50%*
Net investment income to average net assets............... (1.29)%*
*Annualized
**Not Annualized
(A) Includes Small Cap Equity Fund's share of Small Cap Equity Portfolio
allocated expenses for the period indicated.
<PAGE>
Rule 497(e)
File Nos. 2-90519 and
811-4007
Supplement Dated February 15, 1996 to Statement of Additional
Information Dated April 3, 1995
LANDMARK SMALL CAP EQUITY FUND
The date of the Statement of Information shall now be February 15, 1996.
The following paragraphs shall be added at the end of the "Independent
Accountants and Financial Statements" section on page B-39 of the Statement of
Additional Information:
The unaudited financial statements of Small Cap Equity Fund (Statement of
Assets and Liabilities at December 31, 1995, Statement of Operations for the
period from June 21, 1995 (commencement of operations) to December 31, 1995,
Statement of Changes in Net Assets for the period from June 21, 1995
(commencement of operations) to December 31, 1995 and Financial Highlights for
the period from June 21, 1995 (commencement of operations) to December 31,
1995) accompany this Statement of Additional Information.
The unaudited financial statements of Small Cap Equity Portfolio
(Portfolio of Investments at December 31, 1995, Statement of Assets and
Liabilities at December 31, 1995, Statement of Operations for the period from
June 21, 1995 (commencement of operations) to December 31, 1995, Statement of
Changes in Net Assets for the period from June 21, 1995 (commencement of
operations) to December 31, 1995 and Financial Highlights for the period from
June 21, 1995 (commencement of operations) to December 31, 1995) accompany this
Statement of Additional Information.
<PAGE>
LANDMARK FUNDS II
LANDMARK SMALL CAP EQUITY FUND
SMALL CAP EQUITY PORTFOLIO
FINANCIAL STATEMENTS
(UNAUDITED)
<PAGE>
Landmark Small Cap Equity Fund
Statement Of Assets And Liabilities December 31, 1995
Assets:
Investment in Small Cap Equity Portfolio, at value (Note 1A)...... $4,989,277
Receivable for shares of beneficial interest sold................. 158,264
-------
Total Assets.................................................. 5,147,541
-------
Net Assets for 359,566 shares of beneficial interest outstanding.. $5,147,541
-------
Net Assets Consist of:
Paid-in capital................................................... $4,167,496
Unrealized appreciation of investments............................ 725,790
Accumulated net realized gain in investments...................... 254,255
-------
Total......................................................... $5,147,541
-------
Net Asset Value and Redemption Price Per Share of
Beneficial Interest............................................... $14.32
----
Computation of Offering Price:
Maximum Offering Price per share based on a 4.75%
sales charge ($14.32/0.9525)...................................... $15.03
====
See notes to financial statements
<PAGE>
Landmark Small Cap Equity Fund
Statement Of Operations
For the Period June 21, 1995 (Commencement of Operations) to December 31, 1995
Investment Income (Note 1B):
Dividend Income from Small Cap Equity Portfolio.......... $ 5,205
Interest Income from Small Cap Equity Portfolio.......... 11,378 $ 16,583
----
Expenses:
Auditing fees............................................ 15,000
Legal fees............................................... 7,170
Shareholder reports...................................... 6,197
Shareholder Servicing Agents' fees (Note 2B)............. 5,497
Transfer agent fees...................................... 4,000
Custodian fees........................................... 3,750
Administrative fees (Note 2A)............................ 2,063
Distribution fees (Note 3)............................... 687
Trustees fees............................................ 400
Miscellaneous............................................ 2,500
----
Total expenses........................................ 47,264
Less expenses assumed by the administrator............... (39,017)
Less aggregate amount waived by Administrator,
Distributor and Shareholder
Servicing Agents (Note 2A, 2B and 3)................... (8,247)
----
Net expenses........................................ -0-
-------
Net investment income............................... 16,583
-------
Net Realized and Unrealized Gain (Loss) from
Small Cap Equity Portfolio:
Net realized gain (loss)................................. 288,370
Net change in unrealized appreciation (depreciation)..... 725,790
-------
Net realized and unrealized gain (loss) from
Small Cap Equity Portfolio............................... 1,014,160
-------
Net Increase in Net Assets Resulting from Operations .... $1,030,743
=======
See notes to financial statements
<PAGE>
Landmark Small Cap Equity Fund
Statement Of Changes In Net Assets
June 21, 1995
(Commencement
of Operations)to
December 31, 1995
----------------
Increase (Decrease) in Net Assets from:
Operations:
Net investment income........................................ $ 16,583
Net realized gain............................................ 288,370
Net change in unrealized appreciation........................ 725,790
-------
Net increase in net assets resulting from operations....... 1,030,743
-------
Distributions to Shareholders from:
Net investment income........................................ (17,057)
Net realized gain on investments............................. (34,115)
-------
Decrease in net assets from distributions to shareholders.. (51,172)
Transactions in Shares of Beneficial Interest (Note 5):
Net proceeds from sale of shares............................. 4,202,811
Net asset value of shares issued to shareholders from
reinvestment of distributions................................ 51,172
Cost of shares repurchased................................... (86,013)
-------
Net increase in net assets from transactions in
shares of beneficial interest................................ 4,167,970
Net Increase in Net Assets................................... 5,147,541
Net Assets:
Beginning of period --
-------
End of period (including overdistributed net
investment income of $475)................................... $5,147,541
=======
See notes to financial statements
<PAGE>
Landmark Small Cap Equity Fund
Financial Highlights
June 21, 1995
(Commencement of
Operations) to
December 31, 1995
----------------
Net Asset Value, beginning of period $10.00
-----
Income From Operations:
Net investment income........................................ 0.05
Net realized and unrealized gain on
investments................................................ 4.42
-----
Total from operations................................... 4.47
-----
Less Distributions From:
Net investment income...................................... (0.05)
Net realized gain on investments........................... (0.10)
............................................................. -----
Total from distributions .............................. (0.15)
............................................................. _____
Net Asset Value, end of period............................... $14.32
=====
Ratios/Supplemental Data:
Net assets, end of period (000's omitted).................... $5,148
Ratio of expenses to average net assets (A).................. 0%
Ratio of net investment income to average net assets......... 1.21%*
Total return................................................. 44.78%**
Note: If Agents of the Fund for the periods indicated and Agents of Small Cap
Equity Portfolio for the period June 21, 1995 (commencement of operations) to
December 31, 1995 had not waived or assumed all of their fees and had expenses
been limited to that required by certain state securities laws, the net
investment income (loss) per share and the ratios would have been as follows:
Net investment income per share.............................. $(0.288)
Ratios:
Expenses to average net assets (A)........................... 2.50%*
Net investment income to average net assets.................. (1.29)%*
* Annualized
** Not Annualized
(A) Includes the Fund's share of Small Cap Equity Portfolio allocated
expenses for the period indicated.
See notes to financial statements
<PAGE>
Landmark Small Cap Equity Fund
Notes to Financial Statements
Statement Of Assets And Liabilities December 31, 1995
(1) Significant Accounting Policies
The Landmark Small Cap Equity Fund (the "Fund") is a separate diversified
series of Landmark Funds II (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. On June 21, 1995 (commencement of
operations), the Fund began investing all of its investable assets in Small Cap
Equity 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 Fund'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 of long-term capital
growth 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 (99.9%
at December 31, 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.
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.
F. Other -- All the net investment income, 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 the trade
date basis. Realized gains and losses are determined on the identified cost
basis.
<PAGE>
(2) 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 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 payable 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. The
administrative fee amounted to $2,063, all of which was voluntarily waived from
June 21, 1995 (Commencement of Operations) to December 31, 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 to 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 $5,497, all of which was voluntarily waived
for the period June 21, 1995 (Commencement of Operations) to December 31, 1995.
(3) Distribution Fees
The Fund 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 at an annual rate 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 fee has been made during the period. Under the
Administrative Services Plan distribution fees were computed at an annual rate
of 0.05% of the Fund's average daily net assets, which amounted to $687, all of
which was voluntarily waived for the period June 21, 1995 (Commencement of
Operations) to December 31, 1995.
(4) Investment Transactions
Increases and decreases in the Fund's investment in the Portfolio for the
period aggregated $4,044,549 and $86,015 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:
June 21, 1995
(Commencement of
Operations) to
December 31, 1995
Shares sold....................... 362,453
Shares issued to shareholders from
reinvestment of distributions... 3,754
Shares repurchased................ (6,641)
Net increase...................... 359,566
<PAGE>
Small Cap Equity Portfolio
Portfolio Of Investments December 31, 1995
Issuer Shares Value
COMMON STOCKS--92.9%
Autos and Transport - 4.4%
Airborne Freight Corp.................................... 3,500 $ 93,188
Eagle USA AirFreight Inc.*............................... 4,900 128,624
------
......................................................... 221,812
------
Consumer Services - 16.5%
Bally Entertainment Corp.*............................... 6,000 84,000
Central Parking Corp. ................................... 3,100 89,125
Davidson & Associates* .................................. 4,400 96,800
Gadzooks Inc.*........................................... 3,600 90,900
JP Foodservice Inc.*..................................... 4,600 89,700
Logan's Roadhouse Inc.* ................................. 4,800 82,800
Neostar Retail Group Inc.* .............................. 1,800 13,275
Red Lion Hotels Inc.*.................................... 5,300 92,750
Regal Cinemas*........................................... 3,350 99,662
Sports & Recreation Inc.*................................ 12,100 86,213
------
825,225
------
Consumer Staples - 1.7%
Pete's Brewing Company*.................................. 6,000 84,000
------
Financial Services - 15.3%
Affiliated Computer Services*............................ 2,300 86,250
CCB Financial Corp....................................... 1,450 80,475
Charter One Financial Inc................................ 2,300 70,438
First Empire State Corp.................................. 350 76,300
Investors Financial Services Co.*........................ 3,900 80,925
Meadowbrook Insurance Group*............................. 3,300 110,550
Roosevelt Financial Group................................ 5,000 96,875
Susquehanna Bancshares Inc. ............................. 3,300 87,450
Texas Regional Bank Shares "A"........................... 4,300 72,025
------
761,288
------
<PAGE>
Health Care - 15.8%
Community Health Systems*............................... 2,600 92,625
Enterprise Systems Inc.*................................ 3,100 94,550
Interneuron Pharmaceuticals*............................ 4,600 117,300
Lunar Corp.*............................................ 2,775 76,313
Mariner Health Group Inc.*.............................. 5,200 87,100
Mecon Inc.*............................................. 6,500 $103,188
Neuromedical Systems Inc.*.............................. 1,450 29,180
Sierra Health Services Inc.*............................ 2,800 88,900
Vivus Inc.*............................................. 3,100 96,875
------
786,031
------
Integrated Oils - 3.7%
Giant Industries Inc.................................... 8,100 99,225
KCS Energy Inc.......................................... 5,800 87,000
........................................................ ______
........................................................ 186,225
------
Materials & Processing - 3.7%
Carbide/Graphite Group*................................. 6,500 93,437
Intertape Polymer Group................................. 2,900 90,988
........................................................ ______
........................................................ 184,425
------
Other Energy - 3.4%
Input/Output Inc.*...................................... 1,600 92,400
Lomak Petroleum Inc.*................................... 7,700 75,075
------
167,475
------
Producer Durables - 5.7%
Applied Power Inc. Class "A"............................ 3,300 99,000
Blount Inc. Class "A"................................... 3,500 91,875
Hardinge Inc.*.......................................... 3,600 93,600
........................................................ ______
........................................................ 284,475
------
Technology - 19.1%
C.I.S. Technologies Inc.*............................... 21,500 69,875
Citrix Systems Inc.*.................................... 4,500 146,250
Exar Corp.*............................................. 5,700 84,075
McAfee Associates Inc.*................................. 1,700 74,588
Meta-Software Inc.*..................................... 3,200 53,600
Network Appliance Inc.*................................. 5,200 208,650
Network General Corporation*............................ 2,600 86,775
Remedy Corp.*........................................... 1,400 82,950
Silicon Valley Research Inc.*........................... 19,300 72,375
State of the Art Inc.*.................................. 7,700 76,037
------
955,175
------
<PAGE>
Utilities - 3.6%
Atlantic Tele-Network................................. 8,500 91,906
Petersburg Long Distance Inc. ADRs*................... 18,600 88,350
------
180,256
------
Total Common Stock
(Identified Cost $3,910,567)......................... 4,636,387
------
SHORT-TERM OBLIGATIONS--15.8%
Principal
Amount
-------
Investors Cash Reserves
5.357% due 1/2/96.................................... $195,700 195,700
United States Treasury Bill
4.850% due 3/28/96................................... 320,000 296,363
United States Treasury Bill
4.950% due 3/28/96................................... 320,000 296,287
------
788,350
------
Total Short-Term obligations, at amortized Cost.
Total Investments..................................... 108.7% 5,424,737
(Identified Cost $4,698,917)
Other Assets,
Less Liabilities..................................... (8.7) (435,315)
----- ------
Net Assets 100.0% $4,989,422
----- ------
ADR's American Depositary Receipts
* Non income producing
See notes to financial statements
<PAGE>
Small Cap Equity Portfolio
Statement Of Assets And Liabilities
December 31, 1995 Assets:
Investments at value (Note 1A)
(Identified Cost, 4,698,917)........................ $5,424,737
Cash................................................ 385
Interest receivable and other assets................ 1,528
-------
Total assets.................................... 5,426,650
-------
Liabilities:
Payable for investments purchased................... 437,228
-------
Net Assets ......................................... $4,989,422
-------
Represented by:
Paid-in capital for beneficial interests............ $4,989,422
=======
See notes to financial statements
<PAGE>
Small Cap Equity Portfolio
Statement Of Operations
From June 21, 1995 (Commencement of Operations) to December 31, 1995
Investment Income:
Dividend Income........................................... $ 5,205
Interest Income........................................... 11,378 $ 16,583
-----
Expenses:
Auditing fees............................................... 25,000
Investment advisory fees (Note 2)........................... 10,222
Custodian fees.............................................. $ 7,363
Legal fees.................................................. 3,368
Administrative fees (Note 3)................................ 682
Trustee fees................................................ 400
Miscellaneous............................................... 1,300
............................................................ _____
Total expenses............................................ 48,335
Less expense assumed by the Administrator:.................. (37,431)
Less aggregate amount waived by Investment
Adviser and Administrator (Notes 2 and 3).................. (10,904)
-----
Net Expenses.............................................. -0-
-------
Net investment income..................................... 16,583
-------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) from investment transactions....... 288,385
Unrealized appreciation (depreciation) of investments--
Beginning of period...................................... --
End of period............................................ 725,820
-----
Net change in unrealized appreciation (depreciation)....... 725,820
-------
Net realized and unrealized gain (loss) on investments...
............................................................ 1,014,205
-------
Net Increase in Net Assets Resulting from Operations........
............................................................ $1,030,788
=======
See notes to financial statements
<PAGE>
Small Cap Equity Portfolio
Statement Of Changes In Net Assets
June 21, 1995
(Commencement
of Operations) to
December 31, 1995
----------------
Increase (Decrease) in Net Assets from:
Operations:
Net investment income...................................... $ 16,583
Net realized gain on investment transactions............... 288,385
Net change in unrealized appreciation (depreciation)
of investments............................................. 725,820
-------
Net increase in net assets resulting from operations..... 1,030,788
-------
Capital Transactions:
Proceeds from contributions................................ 4,044,649
Value of withdrawals....................................... (86,015)
-------
Net increase in net assets from capital transactions..... 3,958,634
-------
Net Increase in Net Assets: ............................... 4,989,422
Net Assets:
Beginning of period........................................ --
-------
End of period.............................................. $4,989,422
=======
See notes to financial statements
Small Cap Equity Portfolio
Financial Highlights
June 21, 1995
(Commencement
of Operations) to
December 31, 1995
---------------
Ratios/Supplemental Data:
Net Assets, end of period (000 omitted).................... $ 4,989
Ratio of expenses to average net assets ................... -0-
Ratio of net investment income to average net assets....... 1.22%*
Portfolio turnover......................................... 41%
Note: If agents of the Portfolio had not voluntarily
waived a portion of their fees for the periods indicated,
the ratios would have been as follows:
Ratios:
Expenses to average net assets............................. 2.50%*
Net investment income to average net assets................ (1.28%*)
* Annualized
See notes to financial statements
<PAGE>
Small Cap Equity Portfolio
Notes To Financial Statements
(1) Significant Accounting Policies
Small Cap Equity 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 -- Equity securities listed on securities
exchanges or reported through the NASDAQ system are valued at last sale prices.
Unlisted securities or listed securities for which last sales prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations maturing in sixty 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 sixty 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. Dividend
income is recorded on the ex-dividend date.
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 $10,222 all of which was
voluntarily waived for the period June 21, 1995 (Commencement of Operations) to
December 31, 1995. The investment advisory fee is computed at the annual rate
of 0.75% of the Portfolio's average daily net assets.
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(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 an annual rate of 0.05% of the
Portfolio's average daily net assets. The administrative fee amounted to $682
all of which was voluntarily waived for the period June 21, 1995 (Commencement
of Operations) to December 31, 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 investments, other than short-term obligations,
aggregated $4,746,834 and $1,124,652, respectively, for the period June 21,
1995 (Commencement of Operations) to December 31, 1995.
(5)Federal Income Tax Basis Of Investments
The cost and unrealized appreciation (depreciation) in value of the investment
securities owned at December 31, 1995, as computed on a federal income tax
basis, are as follows:
Aggregate cost................................. $4,698,917
=======
Gross unrealized appreciation.................. $ 886,867
Gross unrealized depreciation.................. (161,047)
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Net unrealized appreciation.................... $ 725,820
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(6) Line of Credit
The Portfolio, along with the 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 the 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 period June 21, 1995
(Commencement of Operations) to December 31, 1995, no commitment fee was
allocated to the Portfolio. Since the line of credit was established, there
have been no borrowings.
