LANDMARK FUNDS II, N-30B-2, 1997-08-27

LANDMARK FUNDS II
N-30B-2, 1997-08-27

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<PAGE>

TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge*, President
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
E. Kirby Warren
William S. Woods, Jr.

SECRETARY
Linda T. Gibson*

TREASURER
John R. Elder*

*Affiliated Person of Administrator and Distributor

- -------------------------------------|-|----------------------------------------

INVESTMENT ADVISER
(OF EQUITY 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.

EQ/EI/S/97 Printed on Recycled Paper. [recycle symbol]

[logo] LANDMARK(SM) FUNDS
Advised by Citibank, N.A.

LANDMARK
EQUITY FUND

SEMI-ANNUAL
REPORT
June 30, 1997
<PAGE>

- --------------------------------------------------------------------------------
A LETTER TO OUR SHAREHOLDERS
- --------------------------------------------------------------------------------

Dear Shareholder:

U.S. stocks continued their extraordinary advance, building on the
above-average gains they have produced over the past several years. Why have
American companies' stock prices grown so quickly and for so long? We believe
the answer can be found in the remarkable resiliency of the U.S. economy, which
has expanded without rekindling inflation for most of this decade.

In this favorable environment, the Landmark Funds' investment adviser,
Citibank, N.A., continued to manage the Landmark Equity Fund to achieve its
investment objective: long-term capital growth. Through its investment in Equity
Portfolio, the Fund invests primarily in common stocks of U.S. issuers, with an
emphasis on established companies with medium to large capitalizations and
seasoned management teams.

This report reviews the Portfolio's investment activities and performance
during the six-month period ended June 30, 1997, and provides a summary of
Citibank's perspective on and outlook for the U.S. stock market. On behalf of
the Board of Trustees of the Landmark Funds, I want to thank you for your
confidence and participation.

/s/ Philip W. Coolidge

Philip W. Coolidge
President
July 18, 1997

TABLE OF CONTENTS
1 A Letter to Our Shareholders
- --------------------------------------------------------------------------------
2 Market Environment
Fund Snapshot
- --------------------------------------------------------------------------------
Portfolio Managers
3 The Portfolio Managers Respond
Quotes from the Portfolio Managers
- --------------------------------------------------------------------------------
4 Strategy and Outlook
Equity Portfolio by the Numbers
- --------------------------------------------------------------------------------
5 Fund Data
Performance Highlights

LANDMARK EQUITY FUND
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
6 Statement of Operations
- --------------------------------------------------------------------------------
7 Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
8 Financial Highlights
- --------------------------------------------------------------------------------
10 Notes to Financial Statements
- --------------------------------------------------------------------------------

EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
13 Portfolio of Investments
- --------------------------------------------------------------------------------
15 Statement of Assets and Liabilities
Statement of Operations
- --------------------------------------------------------------------------------
16 Statement of Changes in Net Assets
Financial Highlights
- --------------------------------------------------------------------------------
17 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

<PAGE>

- -------------------------------------------------------------------------------
MARKET ENVIRONMENT
- --------------------------------------------------------------------------------

The first six months of 1997 represented another excellent period for the
U.S. stock market. As measured by the Dow Jones Industrial Average, stocks
gained more than 1,100 points for their best six-month performance in 10 years.
While gains were concentrated primarily in large-capitalization "blue chip"
stocks during the first quarter of the year, the second quarter's rise was
broader, including many medium and small-capitalization stocks in its advance.

The market's rise was fueled by strong corporate earnings and the continued
flow of new money into stocks from individual and institutional investors.
Although few economic sectors did poorly during the period, several industries
led the market higher: financial stocks, health care companies and computer
networking stocks among them.

The road to new highs was not a smooth one, however. In fact, the stock
market experienced a 9.8% correction between late February and mid-April, and
some prognosticators were even pronouncing the end of the bull market. The
sell-off was caused by concern that the economy was growing too strongly,
raising the specter of an acceleration of inflation. Many investors were also
worried that stock prices have become overvalued relative to future earnings
potential. However, the bull market quickly resumed when it became clear that
the economy was slowing and inflation was not likely to become a problem anytime
soon. In fact, the economy appears to have remained on a moderate growth track
as it winds its way through the sixth year of one of the longest expansions
since World War II.

- --------------------------------------------------------------------------------
FUND SNAPSHOT
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
October 19, 1990

NET ASSETS AS OF 6/30/97
$251.0 million

FUND OBJECTIVE
Long-term capital growth; dividend income, if any, is incidental to this
investment objective.

DIVIDENDS
Paid semi-annually, if any

CAPITAL GAINS
Distributed annually, if any

BENCHMARKS
o Standard & Poor's Barra Growth Index
o Lipper Growth Funds Average

INVESTMENT ADVISER,
EQUITY PORTFOLIO
Citibank, N.A.
- --------------------------------------------------------------------------------
<PAGE>

- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------

GRANT HOBSON
Vice President, Citibank, N.A.
RICHARD GOLDMAN
Vice President, Citibank, N.A.

Grant D. Hobson and Richard Goldman are the managers of the Portfolio. Mr.
Hobson is responsible for managing U.S. equity portfolios for trust and pension
accounts of Citibank Global Asset Management and currently manages more than $1
billion of total assets at Citibank. Prior to joining Citibank in 1993, Mr.
Hobson was a Sector Portfolio Manager for Axe Houghton, formerly a division of
USF&G, where he was responsible for equity investments for pension accounts and
mutual funds. Mr. Goldman is responsible for managing approximately $600 million
of total assets and for quantitative equity research for the U.S. institutional
business of Citibank Global Asset Management. He joined Citicorp's Investment
Management Division in 1985 and from 1988 to 1994 was responsible for running
Citicorp's Institutional Investor Relations Department.

- --------------------------------------------------------------------------------
THE PORTFOLIO MANAGERS RESPOND
- --------------------------------------------------------------------------------

We continued to focus our stock selection strategy on finding growing
companies with strong balance sheets and visible earnings growth fueled by
higher revenues. This longstanding approach led us to attractive investments in
the large and medium-capitalization sectors of the stock market. As the period
progressed, we added to some large-cap positions. At the same time, we held onto
those mid-cap companies that we considered to have excellent business prospects
at attractive prices.

Within these broad market sectors, we adjusted the Portfolio's mix of
industries and companies to conform with our economic and market outlooks. For
example, because we expected the Federal Reserve to begin raising interest rates
late in the first quarter of 1997, we reduced our exposure to financial stocks.
At the same time, we increased our positions in manufacturers of non-durable
consumer products--such as beverages and household supplies--because these
companies tend to do well when the economy slows down.

- --------------------------------------------------------------------------------
QUOTES FROM THE PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
"We consider some of our mid-capitalization holdings real 'jewels'-- they have
outstanding fundamentals and are attractively valued."

"We think that very high earnings expectations have been built into current
stock prices, especially in the large-cap sector, so we are concerned about
their vulnerability to disappointments."

"Over the long term, we continue to foresee a positive economic environment."
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
STRATEGY AND OUTLOOK
- --------------------------------------------------------------------------------

Six months ago, we reported that we were cautiously optimistic about the
prospect for further gains in the U.S. stock market. Our position has not
changed. We remain optimistic because the economy is slowing from its robust
pace in the first quarter of the year, and inflation pressures are notably
absent from leading economic indicators. As long as the economy continues to
grow at a non-inflationary rate, we see no reason to change our outlook. On the
other hand, the 1,100-point rally of the past six months sent stock valuations
to the high end of their historical range, suggesting that either profits must
catch up with current stock prices or that prices must moderate to more
reasonable levels relative to earnings.

Nonetheless, we continue to find attractive opportunities in the stocks of
well managed, growing companies. The medium-capitalization sector of the stock
market has lagged its large-capitalization counterpart during this bull market,
and we believe that many individual medium-sized stocks are attractively valued
as a result.

Our outlook suggests that our strategy--emphasizing large and
medium-capitalization stocks with strong revenue and earnings growth,
profitability and healthy balance sheets--is the right one. Of course, we will
continue to review our holdings and remain on the alert for new opportunities,
and we will make any changes we consider appropriate in anticipation of changes
in economic and market conditions.

- --------------------------------------------------------------------------------
Equity Portfolio
- --------------------------------------------------------------------------------
BY THE NUMBERS
- --------------------------------------------------------------------------------

TOP TEN EQUITY HOLDINGS OF THE PORTFOLIO
(As of 6/30/97)
- --------------------------------------------------------------------------------

NAME INDUSTRY SECTOR % OF NET ASSETS

General Electric Co. Producer/Manufacturing 4.50%
Microsoft Corp. Electronics/Technical Services 4.21%
Coca-Cola Co. Consumer-Non Durables 3.93%
Philip Morris Companies
Inc. Producer/Manufacturing 3.02%
Colgate-Palmolive Co. Consumer-Non Durables 2.94%
Gannett Co. Inc. Consumer Services 2.77%
Gillette Co. Consumer-Non Durables 2.52%
PepsiCo Inc. Consumer-Non Durables 2.51%
Abbott Laboratories Health Services/Technology 2.46%
Johnson & Johnson Health Services/Technology 2.35%

- --------------------------------------------------------------------------------
CHANGES IN PORTFOLIO SECTORS
Portfolio of investments
as of 6/30/97
Industrial 1%
Cash/Short Term/Other 3%
Financial 12%
Capital Goods 29%
Consumer 55%

...Compared to 12/31/96
Industrial 14%
Cash/Short Term/Other 3%
Financial 15%
Capital Goods 28%
Consumer 40%
- --------------------------------------------------------------------------------
<PAGE>

- --------------------------------------------------------------------------------
FUND DATA All Periods Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
TOTAL RETURNS
----------------------------------------------
SINCE
SIX ONE FIVE 10/19/90
MONTHS** YEAR YEARS* INCEPTION*
------ -------- ------ ---------
<S> <C> <C> <C> <C>
Landmark Equity Fund without Sales Charge .............. 19.09% 24.34% 16.93% 17.01%
Lipper Growth Funds Average ............................ 14.29% 23.97% 16.90% 18.41%+
S&P Barra Growth Index ................................. 24.58% 38.33% 19.97% 20.97%+
Landmark Equity Fund with Maximum Sales Charge of 4.75% 13.43% 18.43% 15.80% 16.16%

* Average Annual Total Return.
** Not Annualized
+ From 10/31/90
</TABLE>

30-Day SEC Yield 0.35%
Income Dividends Per Share $0.030
Capital Gain Distributions $1.127

- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------

A $10,000 investment in the Fund made on inception date would have grown to
$27,289 with sales charge (as of 6/30/97). The graph shows how the Fund 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
Equity Equity Lipper
Without With Growth S&P Barra
Sales Sales Funds Growth Index
Charge Charge Average (unmanaged)
----------------------------------------------------------------
Oct-90 9,847 9,379 10,000 10,000
Nov-90 10,438 9,942 10,660 10,604
Dec-90 10,534 10,034 11,014 10,941
Jan-91 10,996 10,474 11,690 11,396
Feb-91 11,811 11,250 12,534 12,280
Mar-91 11,888 11,323 12,938 12,744
Apr-91 11,635 11,082 12,922 12,720
May-91 12,427 11,837 13,456 13,200
Jun-91 11,723 11,167 12,795 12,649
Jul-91 12,412 11,822 13,430 13,325
Aug-91 13,111 12,488 13,838 13,754
Sep-91 12,667 12,065 13,712 13,453
Oct-91 12,956 12,340 13,993 13,617
Nov-91 12,401 11,812 13,435 13,270
Dec-91 13,772 13,118 14,921 15,140
Jan-92 13,549 12,905 14,997 14,608
Feb-92 13,883 13,224 15,208 14,695
Mar-92 13,515 12,874 14,755 14,354
Apr-92 13,571 12,927 14,656 14,506
May-92 13,538 12,895 14,738 14,619
Jun-92 13,106 12,484 14,309 14,316
Jul-92 13,665 13,016 14,821 14,962
Aug-92 13,285 12,654 14,499 14,790
Sep-92 13,576 12,931 14,724 14,964
Oct-92 13,923 13,261 15,021 15,189
Nov-92 14,694 13,996 15,769 15,803
Dec-92 14,818 14,114 16,061 15,907
Jan-93 14,897 14,189 16,259 15,735
Feb-93 14,684 13,986 16,004 15,608
Mar-93 15,535 14,797 16,447 15,828
Apr-93 15,289 14,563 15,937 15,098
May-93 15,726 14,979 16,516 15,636
Jun-93 15,572 14,833 16,566 15,503
Jul-93 15,370 14,640 16,526 15,183
Aug-93 16,066 15,302 17,225 15,737
Sep-93 16,110 15,345 17,401 15,497
Oct-93 16,335 15,559 17,643 16,073
Nov-93 16,133 15,367 17,297 16,062
Dec-93 16,635 15,845 17,797 16,174
Jan-94 16,973 16,166 18,322 16,520
Feb-94 16,703 15,909 18,036 16,225
Mar-94 15,961 15,203 17,187 15,475
Apr-94 16,253 15,481 17,244 15,545
May-94 16,579 15,792 17,310 15,798
Jun-94 16,103 15,339 16,727 15,462
Jul-94 16,607 15,819 17,169 15,955
Aug-94 17,020 16,211 17,955 16,807
Sep-94 16,584 15,797 17,632 16,567
Oct-94 16,894 16,091 17,911 16,953
Nov-94 16,333 15,557 17,239 16,397
Dec-94 16,568 15,781 17,398 16,680
Jan-95 16,674 15,882 17,520 17,094
Feb-95 17,260 16,440 18,173 17,761
Mar-95 17,682 16,842 18,678 18,318
Apr-95 17,870 17,021 19,061 18,794
May-95 18,444 17,568 19,616 19,467
Jun-95 18,736 17,846 20,420 20,213
Jul-95 19,328 18,410 21,372 20,858
Aug-95 19,139 18,229 21,537 20,789
Sep-95 19,719 18,782 22,157 21,816
Oct-95 19,778 18,838 21,825 21,990
Nov-95 20,843 19,853 22,585 22,782
Dec-95 21,132 20,128 22,664 23,039
Jan-96 21,685 20,655 23,149 23,920
Feb-96 21,820 20,784 23,672 24,137
Mar-96 22,213 21,158 23,883 24,036
Apr-96 22,385 21,322 24,669 24,505
May-96 22,791 21,708 25,323 25,406
Jun-96 23,042 21,948 24,958 25,724
Jul-96 21,727 20,695 23,475 24,538
Aug-96 22,310 21,250 24,304 24,901
Sep-96 23,551 22,432 25,682 26,629
Oct-96 23,563 22,444 25,857 27,207
Nov-96 24,879 23,697 27,398 29,240
Dec-96 24,057 22,915 27,001 28,564
Jan-97 25,481 24,271 28,381 30,801
Feb-97 25,310 24,107 27,969 31,059
Mar-97 23,978 22,839 26,646 29,585
Apr-97 26,021 24,785 27,637 31,972
May-97 27,313 26,016 29,682 33,868
Jun-97 28,650 27,289 30,851 35,585

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.

<PAGE>

Landmark Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investment in Equity Portfolio, at value (Note 1A) ............................. $251,534,643
Receivable for shares of beneficial interest sold .............................. 30,443
------------
Total assets ............................................................... 251,565,086
------------

LIABILITIES:
Payable for shares of beneficial interest repurchased .......................... 430,028
Payable to affiliates--Shareholder servicing agents' fee (Note 2B) .............. 30,405
Accrued expenses and other liabilities ......................................... 60,791
------------
Total liabilities .......................................................... 521,224
------------

NET ASSETS for 12,190,936 shares of beneficial interest outstanding ............ $251,043,862
============

NET ASSETS CONSIST OF:
Paid-in capital ................................................................ $165,422,946
Unrealized appreciation ........................................................ 56,507,308
Accumulated net realized gain .................................................. 29,040,179
Undistributed net investment income ............................................ 73,429
------------
Total ...................................................................... $251,043,862
============

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST .......... $20.59
======

COMPUTATION OF OFFERING PRICE:
Maximum Offering Price per share based on a 4.75% sales charge ($20.59/0.9525) . $21.62
======
</TABLE>

See notes to financial statements
<PAGE>
Landmark Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME (Note 1B):
Dividend Income from Equity Portfolio ..................................... $1,294,521
Interest Income from Equity Portfolio ..................................... 233,097
Allocated Expenses from Equity Portfolio .................................. (704,538) $ 823,080
----------

EXPENSES:
Shareholder Servicing Agents' fees (Note 2B) .............................. 292,834
Administrative fees (Note 2A) ............................................. 292,834
Distribution fees (Note 3) ................................................ 175,701
Expense fees (Note 6) ..................................................... 117,134
----------
Total expenses ........................................................ 878,503
Less aggregate amount waived by Administrator and Distributor
(Notes 2A and 3) ........................................................ (351,401)
----------
Net expenses ......................................................... 527,102
-----------
Net investment income ................................................ 295,978
-----------

NET REALIZED AND UNREALIZED GAIN FROM EQUITY PORTFOLIO:
Net realized gain ......................................................... 29,058,960
Net change in unrealized appreciation ..................................... 12,103,035
-----------
Net realized and unrealized gain from Equity Portfolio ............... 41,161,995
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...................... $41,457,973
===========
</TABLE>

See notes to financial statements

<PAGE>

Landmark Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
---------------- ----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS:
Net investment income ....................................... $ 295,978 $ 1,497,758
Net realized gain ........................................... 29,058,960 26,516,316
Net change in unrealized appreciation ....................... 12,103,035 1,062,588
------------ ------------
Net increase in net assets resulting from operations ...... 41,457,973 29,076,662
------------ ------------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ....................................... (347,415) (1,433,073)
Net realized gain ........................................... (13,051,223) (14,330,626)
------------ ------------
Decrease in net assets from distributions to shareholders . (13,398,638) (15,763,699)
------------ ------------

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 5):
Net proceeds from sale of shares ............................ 4,105,461 13,950,013
Net asset value of shares issued to shareholders
from reinvestment of distributions ........................ 13,398,487 15,763,320
Cost of shares repurchased .................................. (23,473,668) (27,800,567)
------------ ------------
Net increase (decrease) in net assets from transactions in
shares of beneficial interest ........................... (5,969,720) 1,912,766
------------ ------------
NET INCREASE IN NET ASSETS .................................. 22,089,615 15,225,729

NET ASSETS:
Beginning of period ......................................... 228,954,247 213,728,518
------------ ------------
End of period (including undistributed net investment income
of $73,429 and $124,866, respectively) .................... $251,043,862 $228,954,247
============ ============
</TABLE>

See notes to financial statements

<PAGE>

Landmark Equity Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1997 ---------------------------------------------------------
(UNAUDITED) 1996 1995 1994++ 1993++ 1992++
----------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 18.25 $ 17.20 $ 14.13 $ 14.80 $ 13.23 $ 12.36
-------- -------- -------- -------- -------- -------
Income From Operations:
Net investment income ............... 0.026 0.122 0.211 0.173 0.071** 0.065
Net realized and unrealized gain
(loss) on investments ............. 3.471 2.250 3.651 (0.245) 1.550** 0.868
-------- -------- -------- -------- -------- -------
Total from operations .......... 3.497 2.372 3.862 (0.072) 1.621 0.933
-------- -------- -------- -------- -------- -------
Less Distributions From:
Net investment income ............. (0.030) (0.118) (0.210) (0.169) (0.051) (0.063)
Net realized gain on investments .. (1.127) (1.204) (0.582) (0.429) -- --
-------- -------- -------- -------- -------- -------
Total from distributions (1.157) (1.322) (0.792) (0.598) (0.051) (0.063)
-------- -------- -------- -------- -------- -------
Net Asset Value, end of period ...... $ 20.59 $ 18.25 $ 17.20 $ 14.13 $ 14.80 $ 13.23
======== ======== ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $251,044 $228,954 $213,729 $183,975 $200,903 $10,973
Ratio of expenses to average net assets 1.05%(A)* 1.05%(A) 1.05%(A) 1.05%(A) 1.07% 1.40%
Ratio of net investment income to average
net assets ........................ 0.25% * 0.67% 1.30% 1.15% 0.52% 0.53%
Portfolio turnover(B) ............... -- -- -- 1% 23% 79%
Total return ........................ 19.09%+ 13.84% 27.55% (0.41)% 12.26% 7.60%

Note: If Agents of the Fund for the periods indicated had not voluntarily waived a portion of their fees and
had expenses been limited to that required by certain state securities laws for the year ended December 31, 1992,
the net investment income (loss) per share and the ratios would have been as follows:
Net investment income (loss) per share $(0.003) $0.067 $0.170 $0.136 $0.029** $(0.070)
Ratios:
Expenses to average net assets ...... 1.35%(A)* 1.35%(A) 1.30%(A) 1.29%(A) 1.37% 2.50%
Net investment income (loss) to
average net assets ................. (0.05)%* 0.37% 1.05% 0.91% 0.21% (0.57)%

* Annualized.
** The per share amounts were computed using a monthly average number of shares outstanding during the year.
(A) Includes the Fund's share of Equity Portfolio allocated expenses for the periods subsequent to May 1, 1994.
(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.
+ Not Annualized.
++ On May 1, 1994 the fund began investing all of its investable assets in Equity Portfolio.

See notes to financial statements
</TABLE>

<PAGE>

Landmark Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)

(1) SIGNIFICANT ACCOUNTING POLICIES

The Landmark 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. The Fund invests all of its investable assets in
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 (77.2% at
June 30, 1997) 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 preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.

The Fund has approval to issue Class A and Class B shares as described more
fully in the Fund's prospectus. No Class B shares have yet to be offered,
therefore the information presented in these financial statements relates solely
to Class A shares.

The significant accounting policies consistently followed by the Fund 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. For the year ended December
31, 1996, the fund reclassified $9,627 from undistributed net investment income,
$274,873 to paid-in capital and $265,246 from accumulated net realized gain on
investments.

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.

(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 fees 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 fees payable to the Administrator, as compensation
for overall administrative services and general office facilities, may not
exceed an annual rate of 0.25% of the Fund's average daily net assets. The
Administrative fees amounted to $292,834 of which $234,267 was voluntarily
waived for the six months ended June 30, 1997. 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
0.25% 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 $292,834 for the six months ended June 30,
1997.

(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 compensates the
Distributor at an annual rate not to exceed 0.15% of the Fund's average daily
net assets. The Distribution fees amounted to $175,701, of which $117,134 was
voluntarily waived for the six months ended June 30, 1997. 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.

(4) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio for the six
months ended June 30, 1997 aggregated $4,566,640 and $24,403,814, respectively.

<PAGE>

(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:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
--------- ---------
<S> <C> <C>
Shares sold ............................................... 210,172 770,660
Shares issued to
shareholders from reinvestment of distributions .......... 643,230 862,316
Shares repurchased ........................................ (1,207,769) (1,514,522)
---------- ----------
Net increase (decrease) (354,367) 118,454
========== ==========
</TABLE>

(6) EXPENSE FEES
LFBDS has entered into an expense agreement with the Fund. LFBDS 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
Fund, other than fees paid under the Administrative Services Agreement,
Distribution Agreement, and the Shareholder Servicing Agreements. The Agreement
may be terminated by either party upon not less than 30 days nor more than 60
days written notice.

The Fund has agreed to pay LFBDS 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
operating expenses of the Fund including expenses allocated from the Portfolio
less expenses waived by the Administrator and Distributor would, on an annual
basis, exceed an agreed upon rate, currently 1.05% of the Fund's average daily
net assets.

<PAGE>
Equity Portfolio
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited)

ISSUER SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS--97.7%
- -------------------------------------------------------------------------------

COMMERCIAL SERVICES - 1.6%
Interpublic Group Inc. ................... 83,600 $ 5,125,724
------------

COMMODITIES & PROCESSING - 1.5%
Praxair Inc. ............................. 88,800 4,972,800
------------
CONSUMER-NON DURABLES - 23.0%
Clorox Co. ............................... 39,000 5,148,000
Coca-Cola Co ............................. 189,800 12,811,500
Colgate-Palmolive Co. .................... 146,800 9,578,700
Gap Stores ............................... 86,700 3,370,463
Gillette Co. ............................. 86,500 8,195,875
Home Depot Inc. .......................... 51,500 3,550,280
Illinois Tool Works Inc. ................. 128,800 6,431,950
Kimberly-Clark Corp. ..................... 78,200 3,890,450
Leggett & Platt Inc. ..................... 78,700 3,409,900
Motorola, Inc ............................ 43,500 3,306,000
PepsiCo Inc. ............................. 217,630 8,174,727
Procter & Gamble Co. ..................... 50,050 7,069,563
------------
74,937,408
------------
CONSUMER SERVICES - 8.6%
Carnival Corp. ........................... 120,600 4,974,750
Consolidated Store Corp. ................. 160,375 5,573,031
Gannett Co. Inc. ......................... 91,300 9,015,874
Service Corp
International Corp. ................... 129,700 4,263,888
Walt Disney Company ...................... 53,700 4,309,425
------------
28,136,968
------------
ELECTRONICS/TECHNICAL SERVICES - 16.2%
Automatic Data Processing ................ 12,690 $ 5,964,300
Compaq Computer .......................... 29,800 2,957,650
Emerson Electronic ....................... 84,400 4,647,275
First Data Corporation ................... 117,600 5,167,050
Hewlett Packard Company .................. 64,400 3,606,400
Intel Corp. .............................. 50,200 7,118,988
Microsoft Corp.* ......................... 108,500 13,711,688
NuCor Corp. .............................. 52,900 2,988,850
Perkin-Elmer Corp. ....................... 81,900 6,516,169
------------
52,678,370
------------
FINANCE - 12.0%
American International
Group Inc. ............................ 24,600 3,674,625
Chubb Corp. .............................. 72,100 4,821,687
Federal National Mortgage
Association ........................... 71,100 3,101,738
Franklin Resources Inc. .................. 64,100 4,651,256
Norwest Corp. ............................ 60,000 3,375,000
Sherwin Williams Co. ..................... 127,000 3,921,125
State Street Boston Corp. ................ 83,400 3,857,250
Travelers Group Inc. ..................... 84,200 5,309,863
Ucar International Inc ................... 57,000 2,607,750
Zions BanCorporation ..................... 102,000 3,837,750
------------
39,158,044
------------
HEALTH SERVICES/TECHNOLOGY - 17.8%
Abbott Laboratories ...................... 120,200 8,023,350
E.I. duPont De Nemours ................... 108,000 6,790,500
Eli Lilly & Company ...................... 46,600 5,093,962
Health Management Associates ............. 161,200 4,594,200
Johnson & Johnson ........................ 119,000 7,660,625
Merck & Co Inc. .......................... 55,800 5,775,300
Pfizer Inc. .............................. 62,300 7,444,850
Schering Plough Corp. .................... 116,000 5,553,500
Warner-Lambert Co. ....................... 56,600 7,032,550
------------
57,968,837
------------
PRODUCER/MANUFACTURING - 13.0%
Applied Material Inc.* ................... 46,600 3,299,863
Deere & Co. .............................. 127,600 7,002,050
General Electric Co. ..................... 224,300 14,663,612
Philip Morris Companies Inc. ............. 222,000 9,851,250
Xerox Corp. .............................. 96,100 7,579,888
------------
42,396,663
------------
RETAIL TRADE - 4.0%
Kohls Corporation ........................ 107,300 5,680,194
Walgreen Co. ............................. 136,000 7,293,000
------------
12,973,194
------------
TOTAL COMMON STOCK
(Identified Cost $248,321,825) ........ 318,348,008
------------
SHORT-TERM OBLIGATIONS - 2.5%
Fuji Repurchase Agreement ................ $ 8,150,000
------------
5.85% due 7/01/97 proceeds at maturity
$8,151,324 (collateralized by
$13,390,000 U.S. Treasury strips due
11/15/04)
TOTAL INVESTMENTS
(Identified Cost $256,471,825) ........ 100.2% 326,498,008
OTHER ASSETS,
LESS LIABILITIES ...................... (0.2) (633,025)
------ ------------
NET ASSETS ............................... 100.0% $325,864,983
====== ============

* Non income producing

See notes to financial statements
<PAGE>

Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investments at value (Note 1A) (Identified Cost, $256,471,825) ..................... $326,498,008
Cash ............................................................................... 171
Dividends and interest receivable .................................................. 383,403
Receivable for investments sold .................................................... 6,398,908
------------
Total assets ................................................................... 333,280,490
------------

LIABILITIES:
Payable for investments purchased .................................................. 7,251,045
Payable to affiliates--Investment advisory fees (Note 2) ........................... 75,269
Accrued expenses and other liabilities ............................................. 89,193
------------
Total liabilities .............................................................. 7,415,507
------------
NET ASSETS ......................................................................... $325,864,983
============

REPRESENTED BY:
Paid-in capital for beneficial interests ........................................... $325,864,983
============
</TABLE>

See notes to financial statements

<PAGE>

Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ............................................................. $ 1,660,990
Interest .............................................................. 299,122
-----------
Total investment income ............................................. $ 1,960,112

EXPENSES:
Investment advisory fees (Note 2) ..................................... 752,685
Administrative fees (Note 3) .......................................... 75,269
Expense fees (Note 6) ................................................. 75,269
-----------
Total expenses ...................................................... 903,223
-----------
Net investment income ............................................... 1,056,889
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from investment transactions ........................ 34,163,022
Unrealized appreciation of investments--
Beginning of period ................................................ 51,354,299
End of period ...................................................... 70,026,183
-----------
Net change in unrealized appreciation ................................ 18,671,884
-----------
Net realized and unrealized gain on investments .................... 52,834,906
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. $53,891,795
===========
</TABLE>

See notes to financial statements
<PAGE>

Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
------------ ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ............................................ $ 1,056,889 $ 3,049,790
Net realized gain on investment transactions ..................... 34,163,022 28,518,761
Net change in unrealized appreciation of investments ............. 18,671,884 4,832,223
------------ ------------
Net increase in net assets resulting from operations ......... 53,891,795 36,400,774
------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from contributions ...................................... 21,554,667 61,756,061
Value of withdrawals ............................................. (38,143,751) (55,752,909)
------------ ------------
Net increase (decrease) in net assets from capital transactions (16,589,084) 6,003,152
------------ ------------
NET INCREASE IN NET ASSETS: ...................................... 37,302,711 42,403,926
NET ASSETS:
Beginning of period .............................................. 288,562,272 246,158,346
------------ ------------
End of period .................................................... $325,864,983 $288,562,272
============ ============
</TABLE>

See notes to financial statements

<PAGE>

Equity Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SIX MONTHS MAY 1, 1994
ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT
JUNE 30, 1997 ------------------------ OF OPERATIONS) TO
(UNAUDITED) 1996 1995 DECEMBER 31, 1994
----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) $325,865 $288,562 $246,158 $186,685
Ratio of expenses to average net assets . 0.60%* 0.60% 0.60% 0.60%*
Ratio of net investment income to average net assets 0.70%* 1.10% 1.73% 1.81%*
Portfolio turnover ...................... 68% 90% 67% 35%
Average Commission rate per share (A) ... $ 0.0373 $ 0.0585 N/A N/A

* Annualized
(A) The average commission rate paid is applicable for Funds that invest greater than 10% of average net assets
in equity transactions on which commissions are charged. This disclosure is required for fiscal periods
beginning on or after September 1, 1995.
</TABLE>

See notes to financial statements

<PAGE>

Equity Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------

(1) SIGNIFICANT ACCOUNTING POLICIES
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 preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosure in the financial
statements. Actual results could differ from those estimates.

The significant accounting policies consistently followed by the Portfolio 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 approved by Board of Trustees 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. Short-term obligations, maturing in sixty
days or less, are valued at amortized cost, which constitutes fair value as
determined by the Trustees. 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. REPURCHASE AGREEMENTS -- It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established by the Portfolio to monitor, on a
daily basis, the market value of the repurchase agreement's underlying
investments to ensure the existence of a proper level of collateral.

E. 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.

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.

(2) INVESTMENT ADVISORY FEES
The Investment advisory fees paid to Citibank, as compensation for overall
investment management services, amounted to $752,685 for the six months ended
June 30, 1997. The investment advisory fees are computed at the annual rate of
0.50% of the Portfolio's average daily net assets.

(3) ADMINISTRATIVE FEES
Under the terms of an Administrative Services Agreement, the administrative fees
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 fees amounted to
$75,269 for the six months ended June 30, 1997. 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 $197,007,375 and $213,811,423, respectively, for the six months ended
June 30, 1997.

(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in value of the investment
securities owned at June 30, 1997, as computed on a federal income tax basis,
are as follows:

Aggregate cost ..................... $256,471,825
============

Gross unrealized appreciation ...... $ 71,595,629
Gross unrealized depreciation ...... (1,569,446)
------------
Net unrealized appreciation $ 70,026,183
============

(6) EXPENSE FEES
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 less expenses waived by the Administrator would, on an
annual basis, exceed an agreed upon rate, currently 0.60% of average daily net
assets.

(7) 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 $60
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 six months ended June 30, 1997,
the commitment fee allocated to the Portfolio was $620. Since the line of credit
was established, there have been no borrowings.
<PAGE>
- -------------------------------------------------------------------------------
SHAREHOLDER
SERVICING AGENTS
- -------------------------------------------------------------------------------

FOR NEW YORK RETAIL BANKING AND
BUSINESS AND PROFESSIONAL CUSTOMERS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
(212) 820-2383 or (800) 846-5300

FOR CITIGOLD CUSTOMERS:
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 CITIBANK PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer
Registered Representative or (212) 559-5959

FOR CITIBANK GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117

FOR CITIBANK NORTH AMERICAN
INVESTOR SERVICES CLIENTS:
Citibank, N.A.
Master Trust Accounts
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9659

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) 820-2380 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. Treasury Reserves

Tax Free Reserves
Institutional Tax Free Reserves

California Tax Free Reserves
Connecticut Tax Free Reserves
New York Tax Free Reserves

STOCK & BOND FUNDS:
U.S. Government Income Fund
Intermediate Income Fund
National Tax Free Income Fund
New York Tax Free Income Fund

Balanced Fund
Equity Fund
International Equity Fund
Small Cap Equity Fund
Emerging Asian Markets Equity Fund
<PAGE>

[logo] LANDMARK(SM) FUNDS
Advised by Citibank, N.A.

LANDMARK
SMALL CAP
EQUITY FUND

SEMI-ANNUAL
REPORT
June 30, 1997

TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge*, President
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
E. Kirby Warren
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor

- --------------------------------------|-|--------------------------------------

INVESTMENT ADVISER
(OF SMALL CAP EQUITY 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.

EQ/SC/S/97 Printed on Recycled Paper [recycle symbol]

<PAGE>

- -------------------------------------------------------------------------------

A LETTER TO OUR SHAREHOLDERS

Dear Shareholder:

Small capitalization stocks provided positive and respectable returns
during the first half of 1997, but they did not match the gains experienced by
the largest and best known U.S. and multinational businesses. Investors appeared
to prefer the liquidity and relative safety of large, established companies over
their smaller and lesser known -- but faster growing -- counterparts in the
small-capitalization sector.

During the period, the Landmark Funds' investment adviser, Citibank, N.A.,
continued to manage the Landmark Small Cap Equity Fund to achieve its investment
objective: long-term capital growth. Through its investment in Small Cap Equity
Portfolio, the Fund participates primarily in the ownership of common stocks
issued by domestic companies with market capitalizations of $750 million or
less.

This report reviews the Portfolio's investment activities and performance
during the six-month period ended June 30, 1997, and provides a summary of
Citibank's perspective on and outlook for the U.S. small-capitalization stock
market. On behalf of the Board of Trustees of the Landmark Funds, I want to
thank you for your confidence and participation.

/s/ Philip W. Coolidge

Philip W. Coolidge
President
July 18, 1997

TABLE OF CONTENTS
1 A Letter to Our Shareholders
- --------------------------------------------------------------------------------
2 Market Environment
Fund Snapshot
- --------------------------------------------------------------------------------
Portfolio Manager
3 Quotes from the Portfolio Manager
The Portfolio Manager Responds
- --------------------------------------------------------------------------------
Strategy and Outlook
4 Small Cap Equity Portfolio
by the Numbers
- --------------------------------------------------------------------------------
5 Fund Data
Performance Highlights

LANDMARK SMALL CAP EQUITY FUND
6 Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
7 Statement of Operations
- --------------------------------------------------------------------------------
8 Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
9 Financial Highlights
- --------------------------------------------------------------------------------
10 Notes to Financial Statements
- --------------------------------------------------------------------------------
SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
12 Portfolio of Investments
- --------------------------------------------------------------------------------
14 Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
15 Statement of Operations
- --------------------------------------------------------------------------------
16 Statement of Changes in Net Assets
Financial Highlights
- --------------------------------------------------------------------------------
17 Notes to Financial Statements

- --------------------------------------------------------------------------------
Remember that Mutual Fund Shares:

<PAGE>

- -------------------------------------------------------------------------------
MARKET ENVIRONMENT
- --------------------------------------------------------------------------------

1997 marked the third consecutive year in which small-capitalization stocks
have underperformed large-capitalization stocks. Individual and institutional
investors continued to prefer the predictable, consistent earnings growth of
well established firms whose shares trade easily and in high volume on U.S.
exchanges. In addition, because large-cap firms are often better able to take
advantage of productivity improvements than smaller companies, they can more
easily translate cost savings into higher margins. This combination of top-line
and bottom-line growth has helped large-capitalization stock prices reach the
high end of their range relative to earnings, making them expensive relative to
smaller companies.

During the second quarter of 1997, however, the small-cap market finally
began to show renewed signs of strength relative to larger stocks. After the
9.8% correction in large-cap stocks during March and April, small-cap stocks
joined their larger counterparts in the rally that sent several different
indexes -- including measures of both large and small stock performance -- to
new highs. For example, the Russell 2000, a small-cap index, rose 16.1% during
the second quarter, nearly matching the S&P 500's (a large-cap stock index)
return of 17.1 percent. We recognize the possibility that this may be the start
of a period of renewed focus on small-cap stocks by investors who are attempting
to anticipate the market's future leadership as general economic growth slows.
If this turns out to be the case, a slower growth environment should favor
companies in young, fast-growing markets over large- well established companies
in mature markets.

- --------------------------------------------------------------------------------
FUND SNAPSHOT
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
June 21, 1995

NET ASSETS AS OF 6/30/97
$25.7 million

FUND OBJECTIVE
Long-term capital growth; dividend income, if any, is incidental to this
investment objective.

DIVIDENDS
Paid semi-annually, if any

CAPITAL GAINS
Distributed annually, if any

BENCHMARK
o Lipper Small Company Growth Fund Average
o Russell 2000(R) Index

INVESTMENT ADVISER,
SMALL CAP EQUITY PORTFOLIO
Citibank, N.A.
- --------------------------------------------------------------------------------
<PAGE>

- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
- --------------------------------------------------------------------------------

LINDA J. INTINI
Vice President, Citibank, N.A.

Linda J. Intini has managed the Portfolio since February 24, 1997. Ms. Intini
has over nine years of experience specializing in the management of small cap
equities, including over $300 million of Citibank's small cap portfolios for
trusts and individuals. Prior to joining Citibank, she was a Portfolio Manager
and Research Analyst with Manufacturers Hanover in the Special Equity area. She
also specialized in equity research at Eberstadt Fleming.

- --------------------------------------------------------------------------------
QUOTES FROM THE PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
"With many large-cap stocks trading at high valuations, investors should start
to look at the more attractively priced small-cap area for superior returns."

"During the difficult small-cap market, we've continued to hold companies that
have demonstrated above-average revenue and earnings growth."

"While it is too early to call the May/June small-cap rally a turnaround, we are
encouraged by the breadth of the rally so far."

- --------------------------------------------------------------------------------
THE PORTFOLIO MANAGER RESPONDS
- --------------------------------------------------------------------------------

We worked throughout the semi-annual period to position the Portfolio for the
small-cap rally that finally appeared in May and June. First, we sharpened our
focus on growth companies, selling some holdings that may have been more
attractive from a value perspective than from an earnings-growth standpoint. At
the same time, we identified and invested in several companies that met our
disciplined growth criteria for management strength, market leadership and
potential. These changes produced several changes in the overall Portfolio.
First, the average market capitalization of the companies in the Portfolio
increased from about $350 million to approximately $570 million. We have
gradually increased the number of holdings in order to obtain the benefits of
diversification, which we view as particularly important in the small-cap arena.
In addition, we changed the mix of industries and economic sectors within the
Portfolio, increasing our exposure to energy and financial companies while
decreasing our holdings of technology and health care companies.

<PAGE>

- --------------------------------------------------------------------------------
STRATEGY AND OUTLOOK
- --------------------------------------------------------------------------------

We are quite optimistic regarding the growth potential of small-cap stocks
over both the near and long terms. Over the near term, we expect U.S. economic
growth to slow from the torrid pace of the first quarter of the year to a level
that, while still positive, will allay any remaining fears of a resurgence of
inflation. In such an environment, corporate earnings growth for large companies
should slow commensurately. If and when this happens, we believe that many
investors will look for investments with higher growth rates, a search that
should lead them to small-capitalization stocks. If small-cap stocks are
"rediscovered" by investors as we expect, their prices could rise quickly and
decisively.

In the meantime, we continue to find ample opportunities for investment in
small-cap stocks. We are finding especially attractive companies that meet our
growth criteria in the basic industries sector. We have also identified
attractive pockets within the technology sector, including information
technology and management information systems consulting businesses. Over the
long term, we expect small-cap stock averages to continue to outperform the
averages for large-cap stocks, as they have for approximately 70 years. The
small stocks of today will become the blue-chips of tomorrow, and those who
invest early in their growth should reap superior rewards.

- --------------------------------------------------------------------------------
Small Cap Equity Portfolio
BY THE NUMBERS
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
TOP TEN EQUITY HOLDINGS OF THE PORTFOLIO
(As of 6/30/97)
- --------------------------------------------------------------------------------
NAME INDUSTRY SECTOR % OF NET ASSETS

Abacus Direct Corp. Commercial Services 2.91%
Suiza Foods Corp. Commercial Services 2.75%
Integrated Living Community Health Services/Technology 2.41%
Rental Services Corp. Commercial Services 2.33%
Premier Parks Inc. Consumer Services 2.33%
Regal Cinemas Consumer Services 2.32%
Parexel International Corp. Health Services/Technology 2.27%
Lamar Advertising Co. Commercial Services 2.26%
Dawson Production Services Energy Mineral 2.25%
Worthington Foods Inc. Consumer Non-Durables 2.24%
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FUND DATA All Periods Ended June 30, 1997 (unaudited)

<TABLE>
<CAPTION>
TOTAL RETURNS
-------------------------------------
SINCE
SIX ONE 6/21/95
MONTHS** YEAR INCEPTION*
------------ ---------- -----------
<S> <C> <C> <C>
Landmark Small Cap Equity Fund without Sales Charges ......... 8.35% 8.28% 46.26%
Lipper Small Company Growth Funds Average .................... 9.00% 13.72% 21.63%+
Russell 2000(R)Index .......................................... 10.20% 16.33% 14.20%+
Landmark Small Cap Equity Fund with Maximum Sales Charge of 4.75% 3.20% 3.13% 42.79%

* Average Annualized Total Return
** Not Annualized
+ From 6/30/95
</TABLE>

Capital Gain Distribution $0.068

- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------

A $10,000 investment in the Fund made on inception date would have grown to
$20,588 with sales charge (as of 6/30/97). The graph shows how the Fund compares
to our benchmarks over the same period.

Landmark Landmark
Small Cap Small Cap Lipper Russell
Fund - Without Fund - With Small Cap 2000 Index
Sales Charge Sales Charge Funds Average (unmanaged)
Jun-95 10,050 9,573 10,000 10,000
Jul-95 10,970 10,449 10,748 10,576
Aug-95 11,640 11,087 10,925 10,795
Sep-95 12,000 11,430 11,188 10,988
Oct-95 11,980 11,411 10,812 10,497
Nov-95 13,550 12,906 11,212 10,938
Dec-95 14,478 13,790 11,375 11,227
Jan-96 14,842 14,137 11,295 11,214
Feb-96 16,297 15,523 11,763 11,564
Mar-96 17,126 16,313 12,077 11,804
Apr-96 19,199 18,287 12,980 12,435
May-96 20,584 19,606 13,547 12,925
Jun-96 19,963 19,015 13,023 12,394
Jul-96 17,674 16,835 11,903 11,311
Aug-96 19,870 18,927 12,624 11,968
Sep-96 20,712 19,728 13,265 12,436
Oct-96 20,076 19,122 13,000 12,606
Nov-96 20,445 19,474 13,378 12,724
Dec-96 19,950 19,002 13,582 12,692
Jan-97 20,804 19,816 13,929 12,748
Feb-97 19,599 18,668 13,333 12,771
Mar-97 18,416 17,541 12,634 12,731
Apr-97 17,868 17,019 12,538 12,853
May-97 20,497 19,524 14,062 12,946
Jun-97 21,615 20,588 14,804 13,045

<PAGE>

Landmark Small Cap Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investment in Small Cap Equity Portfolio, at value (Note 1A) ................................ $25,605,232
Receivable for shares of beneficial interest sold ........................................... 54,938
Receivable from the Administrator ........................................................... 11,806
Other assets ................................................................................ 9,702
- -----------
Total assets ............................................................................ 25,681,678
- -----------

LIABILITIES:
Payable for shares of beneficial interest repurchased ....................................... 6,341
Payable to affiliates - Shareholder servicing agents' fees (Note 2B) ........................ 5,147
Accrued expenses and other liabilities ...................................................... 11,806
- -----------
Total liabilities ....................................................................... 23,294
- -----------
NET ASSETS for 1,305,214 shares of beneficial interest outstanding .......................... $25,658,384
===========

NET ASSETS CONSIST OF:
Paid-in capital ............................................................................. $21,467,738
Unrealized appreciation ..................................................................... 4,649,006
In excess of net investment income .......................................................... (99,677)
Accumulated net realized loss ............................................................... (358,683)
- -----------
Total ................................................................................... $25,658,384
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST ....................... $19.66
======
COMPUTATION OF OFFERING PRICE:
Maximum Offering Price per share based on a 4.75% sales charge ($19.66/0.9525) .............. $20.64
======
</TABLE>

See notes to financial statements
<PAGE>

Landmark Small Cap Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME (Note 1B):
Dividend Income from Small Cap Equity Portfolio ........................... $ 42,578
Interest Income from Small Cap Equity Portfolio ........................... 22,057
Allocated Expenses from Small Cap Equity Portfolio ........................ (103,459) $ (38,824)
----------

EXPENSES:
Shareholder Servicing Agents' fees (Note 2B) .............................. 30,427
Administrative fees (Note 2A) ............................................. 30,427
Distribution fees (Note 3) ................................................ 18,256
Shareholder reports ....................................................... 6,663
Auditing fees ............................................................. 6,650
Legal fees ................................................................ 5,938
Custodian fees ............................................................ 5,250
Transfer agent fees ....................................................... 5,000
Trustees fees ............................................................. 4,873
Registration fees ......................................................... 3,340
Miscellaneous ............................................................. 4,518
----------
Total expenses ......................................................... 121,342
Less expenses assumed by the Administrator (Note 6) ....................... (11,806)
Less aggregate amount waived by Administrator, and Distributor (Note 2A and 3) (48,683)
----------

Net expenses ......................................................... 60,853
----------
Net investment loss .................................................. (99,677)
----------

NET REALIZED AND UNREALIZED GAIN (LOSS) FROM SMALL CAP EQUITY PORTFOLIO:
Net realized loss ......................................................... (270,293)
Net change in unrealized appreciation (depreciation) ...................... 2,177,852
----------
Net realized and unrealized gain (loss) from Small Cap Equity Portfolio 1,907,559
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...................... $1,807,882
==========
</TABLE>

See notes to financial statements
<PAGE>

Landmark Small Cap Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment loss ............................................... $ (99,677) $ (20,835)
Net realized gain (loss) .......................................... (270,293) 1,458,685
Net change in unrealized appreciation ............................. 2,177,852 1,745,364
----------- -----------
Net increase in net assets resulting from operations ............ 1,807,882 3,183,214
----------- -----------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain ................................................. (88,390) (1,756,057)
----------- -----------
Decrease in net assets from distributions to shareholders ....... (88,390) (1,756,057)
----------- -----------

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 5):
Net proceeds from sale of shares .................................. 4,376,644 20,246,660
Net asset value of shares issued to shareholders
from reinvestment of distributions .............................. 86,659 1,743,625
Cost of shares repurchased ........................................ (4,835,680) (4,253,714)
----------- -----------
Net increase (decrease) in net assets from transactions in shares
of beneficial interest .......................................... (372,377) 17,736,571
----------- -----------

NET INCREASE IN NET ASSETS ........................................ 1,347,115 19,163,728

NET ASSETS:
Beginning of period ............................................... 24,311,269 5,147,541
----------- -----------
End of period (including in excess of net investment income of
$99,677 and undistributed net investment income of $0,
respectively) ................................................... $25,658,384 $24,311,269
=========== ===========
</TABLE>

See notes to financial statements

<PAGE>

Landmark Small Cap Equity Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

JUNE 21, 1995
SIX MONTHS ENDED (COMMENCEMENT OF
JUNE 30, 1997 YEAR ENDED OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1996 DECEMBER 31, 1995
---------------- ---------------- ----------------

<S> <C> <C> <C>
Net Asset Value, beginning of period ......... $ 18.21 $ 14.32 $ 10.00
------- ------- -------
Income From Operations:
Net investment income (loss) ................. (0.076) (0.016) 0.05
Net realized and unrealized gain ............. 1.594 5.407 4.42
------- ------- -------
Total from investment operations ........ 1.518 5.391 4.47
------- ------- -------

Less Distributions From:
Net investment income ...................... -- -- (0.05)
Net realized gain .......................... (0.068) (1.501) (0.10)
------- ------- -------
Total from distributions ............... (0.068) (1.501) (0.15)
------- ------- -------
Net Asset Value, end of period ............... $ 19.66 $ 18.21 $ 14.32
======= ======= =======

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) .... $25,658 $24,311 $ 5,148
Ratio of expenses to average net assets (A) .. 1.35%* 0.88% 0%
Ratio of net investment income (loss)
to average net assets ..................... (0.82)%* (0.13)% 1.21%*
Total return ................................. 8.35%** 37.80% 44.78%**

Note: If Agents of the Fund and Agents of Small Cap Equity Portfolio had not voluntarily waived a portion of their fees,
assumed Fund expenses for the periods indicated and had expenses been limited to that required by certain state securities
laws for the period ended December 31, 1995, the net investment income (loss) per share and the ratios would have been as
follows:

Net investment loss per share ................ $(0.123) $(0.133) $(0.288)
Ratios:
Expenses to average net assets (A) ........... 1.85%* 1.83% 2.50%*
Net investment loss to average net assets .... (1.32)%* (1.08)% (1.29)%*

* Annualized
** Not Annualized
(A) Includes the Fund's share of Small Cap Equity Portfolio allocated expenses for the periods indicated.
</TABLE>

See notes to financial statements

<PAGE>

Landmark Small Cap Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------

(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. The Fund invests 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 (57.5% at
June 30, 1997) 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 preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosure in the financial statements. Actual
results could differ from those estimates.

The significant accounting policies consistently followed by the Fund 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.

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, 1996, the Fund reclassified $20,835 to net investment income, $41,889 to
accumulated net gain on investments and $62,724 from paid-in-capital.

(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 FEES -- Under the terms of an Administrative Services
Agreement, the administrative fees payable to the Administrator, as compensation
for overall administrative services and general office facilities, may not
exceed an annual rate of 0.25% of the Fund's average daily net assets. The
Administrative fees amounted to $30,427, all of which was voluntarily waived for
the six months ended June 30, 1997. 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.

(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 compensates the
Distributor at an annual rate not to exceed 0.15% of the Fund's average daily
net assets. The Distribution fees amounted to $18,256, all of which was
voluntarily waived for the six months ended June 30, 1997. 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.

(4) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio for the period
aggregated $4,497,410 and $5,103,701, respectively.

SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
------------ -----------
Shares sold ......................... 236,899 1,099,302
Shares issued to shareholders from
reinvestment of distributions .... 4,539 96,298
Shares repurchased .................. (271,137) (220,253)
-------- --------
Net increase (decrease) ............. (29,699) 975,347
======== ========

(6) ASSUMPTION OF EXPENSES
LFBDS has voluntarily agreed to pay a portion of the unwaived expenses of the
Fund for the six months ended June 30, 1997, which amounted to $11,806.

<PAGE>

Small Cap Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited)

ISSUER SHARES VALUE
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
COMMON STOCKS -- 93.9%
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES - 20.1%
Abacus Direct Corp.* ..................... 39,900 $ 1,296,750
Lamar Advertising Co.* ................... 39,550 1,008,525
Melita International Corp.* .............. 30,200 377,500
Metris Companies Inc.* ................... 14,500 475,781
Metro Networks Inc.* ..................... 34,500 836,625
NFO Research Inc.* ....................... 18,800 465,300
Profit Recovery Group Intl* .............. 15,000 208,125
Rental Services Corp.* ................... 39,600 1,039,500
Snyder Communications Inc.* .............. 32,000 862,000
Suiza Foods Corp.* ....................... 29,900 1,225,900
Tower Automotive* ........................ 15,500 666,500
Wilmar Industries Inc.* .................. 19,500 475,313
-----------
8,937,819
-----------
COMMODITIES & PROCESSING - 1.4%
Om Group Inc. ............................ 18,800 622,750
-----------
CONSUMER NON-DURABLES - 4.4%
General Cigar Holdings Inc.* ............. 2,900 85,369
Performance Food Group Co.* .............. 41,900 879,900
Worthington Foods Inc. ................... 40,700 997,150
-----------
1,962,419
-----------
CONSUMER SERVICES - 14.8%
Activision Inc.* ......................... 64,000 920,000
Central Parking Corp. .................... 18,200 633,588
Equity Corp. Intl. * ..................... 40,600 982,012
Gray Communication Systems ............... 4,000 83,500
Heftel Broadcasting Corp.* ............... 17,000 939,250
Premier Parks Inc.* ...................... 28,100 1,036,186
Regal Cinemas* ........................... 31,350 1,034,550
Suburban Lodges America* ................. 46,000 966,000
-----------
6,595,086
-----------
ELECTRONICS/TECHNOLOGICAL SERVICES - 13.4 %
Claremont Technology Group Inc.* 39,200 931,000
E Trade Group Inc.* ...................... 36,400 714,350
Iona Technologies ADRs* .................. 29,800 588,550
Periphonics Corp.* ....................... 36,000 774,000
Pure Atria Corp.* ........................ 43,100 608,788
Registry Inc.* ........................... 19,700 906,200
Whittman-Hart Inc.* ...................... 31,500 885,937
Xionics Document Technology Inc.* ........ 37,600 554,600
-----------
5,963,425
-----------
ENERGY/MINERAL - 6.0%
Dawson Production* ....................... 71,500 1,001,000
Forcenergy Gas Exploration* .............. 29,000 880,875
Lomak Petroleum Inc. ..................... 44,300 789,093
-----------
2,670,968
-----------
FINANCE - 11.6%
Allied Group ............................. 21,000 798,000
Executive Risk Inc. ...................... 16,700 868,400
Investors Financial Services Co. ......... 20,000 950,000
Sirrom Capital Corp. ..................... 22,000 759,000
Texas Regional Bank Shares A ............. 21,800 915,600
WestAmerica Bancorp ...................... 11,700 889,200
-----------
5,180,200
-----------
HEALTH SERVICES/TECHNOLOGY - 13.7%
Cytyc Corp.* ............................. 35,000 949,375
Henry Schein Inc.* ....................... 27,000 843,750
Human Genome Sciences Inc.* .............. 15,600 518,700
Integrated Living Community* ............. 93,300 1,072,950
Occusystems Inc.* ........................ 26,500 768,500
Parexel International Corp.* ............. 31,800 1,009,650
Renal Treatment Center* .................. 35,300 948,687
-----------
6,111,612
-----------
MISCELLANEOUS - .1 %
Pierce Leahy Corp* ....................... 1,000 18,000
-----------
PRODUCER/MANUFACTURING - 3.9%
Hardinge Inc. ............................ 31,800 930,150
Miller Industries Inc./Tenn.* ............ 37,200 595,200
Synthetic Industries Inc.* ............... 11,300 238,713
-----------
1,764,063
-----------
RETAIL TRADE - 2.4%
CDW Computer Center Inc.* ................ 11,300 599,608
Men's Wearhouse Inc.* .................... 15,000 472,500
-----------
1,072,108
-----------
TRANSPORTATION - 2.1 %
Eagle USA Airfreight Inc.* ............... 34,000 922,250
-----------
TOTAL COMMON STOCK
(Identified Cost $34,130,546) ........... 41,820,700
-----------

- --------------------------------------------------------------------------------
SHORT TERM--4.7%
- --------------------------------------------------------------------------------
U.S. Treasury Bill
5.085% due 9/04/97 ...................... 990,678
Salomon Repurchase Agreement
5.50% due 7/01/97 proceeds at maturity
$1,129,217 (collateralized by
$318,727 U.S. Treasury Note 8.75% due 8/15/20,
$570,844 U.S. Treasury Note 9.125% due 5/15/18,
$188,473 U.S. Treasury Note 9.00% due 11/15/18 and
$72,230 U.S. Treasury Bond 7.50% due 12/15/16) 1,129,044
-----------
2,119,722
-----------
TOTAL INVESTMENTS
(Identified Cost $36,250,268) ........... 98.6% 43,940,422
OTHER ASSETS
LESS LIABILITIES ........................ 1.4 621,104
----- -----------
NET ASSETS ............................... 100.0% $44,561,526
===== ===========
ADRs--American Depositary Receipts
* Non income producing
See notes to financial statements

<PAGE>

Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------

ASSETS:
Investments at value (Note 1A) (Identified Cost, $36,250,268) .... $43,940,422
Receivable for securities sold ................................... 772,627
Dividend and interest receivable ................................. 3,433
-----------
Total assets ................................................. 44,716,482
-----------

LIABILITIES:
Payable for investments purchased ................................ 90,937
Payable to affiliates - Investment advisory fees (Note 2) ........ 26,632
Accrued expenses and other liabilities ........................... 37,387
-----------
Total liabilities ............................................ 154,956
-----------
NET ASSETS ....................................................... $44,561,526
===========

REPRESENTED BY:
Paid-in capital for beneficial interests ......................... $44,561,526
===========

See notes to financial statements
<PAGE>

Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividend Income ..................................................... $ 74,819
Interest Income ..................................................... 39,282 $ 114,101
---------
EXPENSES:
Investment advisory fees (Note 2) ..................................... 161,509
Custodian fees ........................................................ 47,933
Administrative fees (Note 3) .......................................... 10,767
Auditing fees ......................................................... 8,400
Legal fees ............................................................ 5,938
Trustee fees .......................................................... 412
Miscellaneous ......................................................... 926
---------
Total expenses ...................................................... 235,885
Less aggregate amount waived by Investment
Adviser and Administrator (Notes 2 and 3) ............................ (52,841)
---------
Net expenses ........................................................ 183,044
----------
Net investment loss ................................................. (68,943)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from investment transactions ........................ (2,197,428)
Unrealized appreciation of investments--
Beginning of period ................................................ 2,242,702
End of period ...................................................... 7,690,154
---------
Net change in unrealized appreciation ................................ 5,447,452
----------
Net realized and unrealized gain (loss) on investments ............. 3,250,024
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. $3,181,081
==========
</TABLE>

See notes to financial statements

<PAGE>

Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income (loss) ...................................... $ (68,943) $ 28,536
Net realized gain (loss) on investment transactions ............... (2,197,428) 1,063,995
Net change in unrealized appreciation of investments .............. 5,447,452 1,516,882
----------- ------------
Net increase in net assets resulting from operations .......... 3,181,081 2,609,413
----------- ------------

CAPITAL TRANSACTIONS:
Proceeds from contributions ....................................... 12,043,732 45,631,942
Value of withdrawals .............................................. (17,805,609) (6,088,455)
----------- ------------
Net increase (decrease) in net assets from capital transactions (5,761,877) 39,543,487
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS: ............................ (2,580,796) 42,152,900
NET ASSETS:
Beginning of period ............................................... 47,142,322 4,989,422
----------- ------------
End of period ..................................................... $44,561,526 $ 47,142,322
=========== ============

</TABLE>
See notes to financial statements

<PAGE>

Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
JUNE 21, 1995
SIX MONTHS ENDED (COMMENCEMENT
JUNE 30, 1997 YEAR ENDED OF OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1996 DECEMBER 31, 1995
-------------- ---------------- -----------------
<S> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) .... $44,562 $47,142 $4,989
Ratio of expenses to average net assets ...... 0.85%* 0.61% 0
Ratio of net investment income (loss) to
average net assets ......................... (0.32)%* 0.15% 1.22%*
Portfolio turnover ........................... 66% 89% 41%
Average commission rate per share (A) ........ $0.0489 $0.0467 N/A

Note: If Agents of the Portfolio had not voluntarily waived a portion of their fees and assumed Portfolio expenses
for the periods indicated and had expenses been limited to that required by certain state securities law for the
period ended June 30, 1997, the ratios would have been as follows:
RATIOS:
Expenses to average net assets ............... 1.10%* 1.17% 2.50%*
Net investment loss to average net assets .... (0.57)%* (0.41)% (1.28)%*

(A) The average commission rate paid is applicable for Funds that invest greater than 10% of average net assets in
equity transactions on which commissions are charged. This disclosure is required for fiscal periods beginning
on or after September 1, 1995.
* Annualized
</TABLE>

See notes to financial statements

<PAGE>

Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------

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

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

A. 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.

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. REPURCHASE AGREEMENTS -- It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established by the Portfolio to monitor, on a
daily basis, the market value of the repurchase agreement's underlying
investments to ensure the existence of a proper level of collateral.

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.

(2) INVESTMENT ADVISORY FEES
The investment advisory fees paid to Citibank, as compensation for overall
investment management services, amounted to $161,509 of which $42,074 was
voluntarily waived for the six months ended June 30, 1997. The investment
advisory fees are computed at the annual rate of 0.75% of the Portfolio's
average daily net assets.

(3) ADMINISTRATIVE FEES
Under the terms of an Administrative Services Agreement, the administrative fees
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 fees amounted to
$10,767 all of which was voluntarily waived for the six months ended June 30,
1997. 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 $28,137,162 and $38,040,989, respectively, for the six months ended
June 30, 1997.

Aggregate cost ..................... $36,250,268
===========
Gross unrealized appreciation ...... $ 8,159,474
Gross unrealized depreciation ...... (469,320)
-----------
Net unrealized appreciation ........ $ 7,690,154
===========

(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 $60
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. 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, 1997, the commitment fee allocated to the Portfolio was $93.
Since the line of credit was established, there have been no borrowings.

<PAGE>

- --------------------------------------------------------------------------------
SHAREHOLDER
SERVICING AGENTS
- --------------------------------------------------------------------------------

FOR NEW YORK RETAIL BANKING AND
BUSINESS AND PROFESSIONAL CUSTOMERS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
(212) 820-2383 or (800) 846-5300

FOR CITIGOLD CUSTOMERS:
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 CITIBANK PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
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 CITIBANK NORTH AMERICAN
INVESTOR SERVICES CLIENTS:
Citibank, N.A.
Master Trust Accounts
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) 820-2380 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. Treasury Reserves

Tax Free Reserves
Institutional Tax Free Reserves

California Tax Free Reserves
Connecticut Tax Free Reserves
New York Tax Free Reserves

STOCK & BOND FUNDS:
U.S. Government Income Fund
Intermediate Income Fund
National Tax Free Income Fund
New York Tax Free Income Fund

Balanced Fund
Equity Fund
International Equity Fund
Small Cap Equity Fund
Emerging Asian Markets Equity Fund