LANDMARK FUNDS III, N-30B-2, 1995-11-06

LANDMARK FUNDS III
N-30B-2, 1995-11-06

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<PAGE>
[LOGO] LANDMARK(SM) FUNDS
Advised by Citibank, N.A.

LANDMARK
CASH RESERVES

ANNUAL
REPORT
August 31, 1995
<PAGE>

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

Dear Shareholder:

The past year has been one of marked contrasts for the U.S. economy and its
financial markets. During the first half of the year, short-term cash equivalent
investments such as Landmark Cash Reserves did relatively well as interest rates
rose in response to inflation fears, while longer term bonds and stocks fared
poorly. As the economy slowed in the second half of the fiscal year, broad
measures of stock and bond performance rallied to new highs and yields on most
money market investments remained relatively stable.

The Landmark Funds' investment adviser, Citibank, N.A., manages Cash
Reserves Portfolio to provide liquidity and as high a level of current income as
is consistent with the preservation of capital. The Fund seeks to offer an
attractive yield by investing in a high-quality portfolio of short-term domestic
and foreign dollar-denominated money market instruments.

This Annual Report reviews the Portfolio's investment activities and
performance over the past 12 months and provides a summary of Citibank's
perspective on and outlook for the financial markets. On behalf of the Board of
Trustees of the Landmark Funds, I want to thank you for your confidence and
participation. We look forward to serving you in the months and years ahead.

/S/ Philip W. Coolidge
- - ------------------------
Philip W. Coolidge
President
September 20, 1995

Remember that Mutual Fund Shares:
o Are not bank deposits or FDIC insured
o Are not obligations of or guaranteed by Citibank or Citicorp Investment
Services
o Are subject to investment risks, including possible loss of the
principal amount invested

TABLE OF CONTENTS
- - ---------------------------------------
1 Letter to Shareholders
- - ---------------------------------------
2 Market Environment
Fund Snapshot
- - ---------------------------------------
3 Fund Quotes
The Portfolio Manager Responds
Strategy and Outlook
- - ---------------------------------------
4 Fund Data
7-Day Yield Comparisons

LANDMARK CASH RESERVES
5 Statement of Assets and Liabilities
Statement of Operations
- - ---------------------------------------
6 Statement of Changes in Net Assets
Financial Highlights
- - ---------------------------------------
7 Notes to Financial Statements
- - ---------------------------------------
8 Independent Auditors' Report

CASH RESERVES PORTFOLIO
9 Portfolio of Investments
- - ---------------------------------------
11 Statement of Assets and Liabilities
Statement of Operations
- - ---------------------------------------
12 Statement of Changes in Net Assets
Financial Highlights
- - ---------------------------------------
13 Notes to Financial Statements
- - ---------------------------------------
14 Independent Auditors' Report
<PAGE>

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

When the Fund's fiscal year began on September 1, 1994, the U.S. economy
was growing faster than its available supply of labor and materials, fueling
inflation fears. Investors reacted by selling stocks and bonds and shifting
assets to short-term money market securities. As a result, stocks and bonds
provided below-average returns in 1994 while yields on U.S. Treasury bills,
commercial paper and other cash equivalents rose.

In the face of these inflationary pressures, the Federal Reserve Board
continued to raise short-term interest rates in an effort to slow the rate of
economic growth enough to forestall a further acceleration of inflation. By the
beginning of 1995, signs began to emerge that the economy was indeed slowing to
a pace below the rate at which inflationary pressures become a problem. As the
rate of economic growth moderated and the likelihood of further interest-rate
hikes receded, yields on money market securities generally declined during the
second half of the Fund's fiscal year.

The Federal Reserve's monetary policy did not affect all money market
securities equally, however. As the economy slowed and investors began to
anticipate the first reduction in key short-term interest rates in almost two
years, yields on longer term money market securities began to decline faster
than their shorter term counterparts, reducing the yield spread between the long
and short ends of the money market maturity spectrum. By the same token, the
differences in yields between U.S. Treasury bills and commercial paper also
narrowed as the economy slowed. Later in the period, the reverse was true:
spreads widened after the Federal Reserve lowered interest rates in July as
investors anticipated a modest economic rebound.

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

COMMENCEMENT OF OPERATIONS
August 31, 1984

NET ASSETS AS OF 8/31/95
$931.9 million

FUND OBJECTIVE
To provide its shareholders with liquidity and as high a level of current income
as is consistent with the preservation of capital.

DIVIDENDS
Declared daily, paid monthly

BENCHMARKS
o Lipper Taxable Money Market Funds Average
o IBC/Donoghue 1st Tier Taxable Money Market Funds
Average

INVESTMENT ADVISER, CASH RESERVES PORTFOLIO
Citibank, N.A.

- - --------------------------------------------------------------------------------
FUND QUOTES FROM THE PORTFOLIO MANAGER
- - --------------------------------------------------------------------------------

"Money market funds outperformed both stocks and bonds during the last four
months of 1994, helping shareholders preserve their capital during a period of
volatility in the longer term markets."

"The Fund extended its average maturity to the long end of its range during most
of the first half of 1995 to take advantage of higher yields among longer-dated
money market securities."

"Looking forward, we expect interest rates to decline modestly if the Federal
Reserve eases monetary policy in response to a weakening economy."

- - --------------------------------------------------------------------------------
THE PORTFOLIO MANAGER RESPONDS
- - --------------------------------------------------------------------------------
We carefully monitored the various influences affecting the short-term
fixed-income marketplace during the year and took action opportunistically. For
example, in March when the economy was slowing and yield spreads were relatively
wide, we extended maturities to the longer end of the Portfolio's maturity range
to lock in higher yields before interest rates declined. Conversely, we reduced
the Portfolio's average maturity to a more neutral position in July as signs of
renewed economic strength caused yield spreads to narrow, enabling us to keep
funds available for higher yielding securities if interest rates rose.

We also sought to enhance yields incrementally allocating funds among the
various sectors of the short-term fixed-income marketplace. For example, in May
when the yield spreads between U.S. Treasury bills and other comparable-maturity
money market securities were wide, the Portfolio's assets were predominantly
invested in the higher yielding money market securities. But when spreads
narrowed in July and August, the Portfolio increased its position in longer
dated Treasury holdings.

- - --------------------------------------------------------------------------------
STRATEGY AND OUTLOOK
- - --------------------------------------------------------------------------------
Our forecast for the U.S. economy calls for slow-but-positive growth over
the near term. The Federal Reserve appears to have been successful in its
efforts to slow the U.S. economy to non-inflationary levels without causing a
recession, and, despite July's modest interest-rate reduction, we expect
monetary policy to remain unchanged over the next few months. As long as the
economy does not pick up unexpectedly, money market yields should remain near
current levels over the near term.

Over the longer term, we expect the Federal Reserve to resume easing if the
U.S. economy shows further signs of weakness. The prospect of recession is
unacceptable to many in Washington, D.C., especially in an election year. We
believe, therefore, that lower yields are more likely than higher yields over
the intermediate term. Accordingly, we will adjust the Portfolio's average
maturity and asset mix opportunistically to maximize yields without sacrificing
preservation of capital.

- - --------------------------------------------------------------------------------
FUND DATA All Periods Ended August 31, 1995
- - --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
TOTAL RETURNS
--------------------------------------------------------
SINCE
ONE FIVE TEN 8/31/84
YEAR YEARS* YEARS* (INCEPTION)*
------ --------- ---------- ----------
<S> <C> <C> <C> <C>
Landmark Cash Reserves................... 5.30% 4.40% 5.79% 6.06%
Lipper Taxable Money Market Funds Average 5.13% 4.26% 5.72% 5.98%

*Average Annual Total Return
</TABLE>

7-DAY YIELDS
- - ----------
Annualized Current 5.37%
Effective 5.52%

The Annualized Current 7-Day Yield reflects the amount of income generated by
the investment during that seven-day period and assumes that the income is
generated each week over a 365 day period. The yield is shown as a percentage of
the investment.

The Effective 7-Day Yield is calculated similarly, but when annualized the
income earned by the investment during that seven-day period is assumed to be
reinvested.

The effective yield is slightly higher than the current yield because of the
compounding effect of this assumed reinvestment.

IMPORTANT TAX INFORMATION

For the fiscal year ended August 31, 1995, the Fund paid $0.05174 per share to
shareholders from net investment income. For such period 8.60% of dividends paid
were derived from interest earned from U.S. Government and U.S. Government
agency obligations. The Fund designates for income tax purposes $118,480 of its
capital gains distributions as long term capital gains.

- - --------------------------------------------------------------------------------
7-Day Yield Comparisons
- - --------------------------------------------------------------------------------

As the graph illustrates, Landmark Cash Reserves generally provided a higher
annualized seven-day yield than the average of comparable Money Market Funds, as
published in IBC/Donoghue's Money Fund Report over most of the one year period.

COMPARISON OF 7-DAY YIELD FOR LANDMARK CASH RESERVES VS.
IBC/DONOGHUE 1ST TIER TAXABLE MONEY MARKET FUNDS AVERAGE

IBC/Donoghue
1st. Tier
Taxable
Landmark Money Market
Cash Funds
Reserves Average
9/6/94 4.25% 4.03%
9/13/94 4.23% 4.07%
9/20/94 4.26% 4.10%
9/27/94 4.28% 4.14%
10/4/94 4.34% 4.20%
10/11/94 4.31% 4.24%
10/18/94 4.33% 4.28%
10/25/94 4.27% 4.31%
11/1/94 4.40% 4.36%
11/8/94 4.27% 4.39%
11/15/94 4.43% 4.46%
11/22/94 4.74% 4.68%
11/29/94 4.93% 4.76%
12/6/94 5.21% 4.85%
12/13/94 4.96% 4.94%
12/20/94 4.98% 5.04%
12/27/94 5.04% 5.12%
1/3/95 5.50% 5.18%
1/10/95 5.02% 5.19%
1/17/95 4.98% 5.19%
1/24/95 5.06% 5.20%
1/31/95 5.21% 5.24%
2/7/95 5.37% 5.35%
2/14/95 5.47% 5.40%
2/21/95 5.54% 5.46%
2/28/95 5.53% 5.44%
3/7/95 5.53% 5.45%
3/14/95 5.54% 5.46%
3/21/95 5.58% 5.48%
3/28/95 5.61% 5.49%
4/4/95 5.63% 5.51%
4/11/95 5.60% 5.48%
4/18/95 5.63% 5.49%
4/25/95 5.60% 5.47%
5/2/95 5.65% 5.48%
5/9/95 5.61% 5.47%
5/16/95 5.62% 5.47%
5/23/95 5.56% 5.46%
5/30/95 5.61% 5.45%
6/6/95 5.57% 5.44%
6/13/95 5.58% 5.43%
6/20/95 5.56% 5.42%
6/27/95 5.52% 5.41%
7/4/95 5.58% 5.41%
7/11/95 5.54% 5.38%
7/18/95 5.41% 5.31%
7/25/95 5.41% 5.29%
8/1/95 5.39% 5.27%
8/8/95 5.39% 5.24%
8/15/95 5.37% 5.22%
8/22/95 5.39% 5.22%
8/29/95 5.37% 5.22%

Notes: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns and
yields would have been lower.
<PAGE>
- - --------------------------------------------------------------------------------
Landmark Cash Reserves
- - --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1995
- - --------------------------------------------------------------------------------

ASSETS:
Investment in Cash Reserves Portfolio, at value (Note 1)....... $935,645,830
============
LIABILITIES:
Dividends payable.............................................. 3,192,559
Payable to affiliate-Shareholder Servicing Agents' fees
(Note 3B).................................................... 187,693
Accrued expenses and other liabilities......................... 379,370
------------
Total liabilities.......................................... 3,759,622
------------

NET ASSETS for 931,886,208 shares of beneficial interest
outstanding.................................................. $931,886,208
============
NET ASSETS CONSIST OF:
Paid-in capital................................................ $931,886,208
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $1.00
=====

INVESTMENT INCOME (Note 1B):
Income from Cash Reserves Portfolio................. $37,351,227
Allocated expenses from Cash Reserves Portfolio..... (626,460)
-----------
Net investment income from Cash Reserves Portfolio $36,724,767
EXPENSES:
Shareholder Servicing Agents' fees (Note 3B)........ 2,506,138
Administrative fees (Note 3A)....................... 1,566,336
Distribution fees (Note 4).......................... 313,267
Registration fee.................................... 110,616
Shareholder reports................................. 25,465
Trustees' fees...................................... 24,455
Custodian fees ..................................... 22,815
Auditing fees....................................... 14,150
Transfer agent fees................................. 11,389
Legal fees.......................................... 9,323
Miscellaneous....................................... 35,703
-----------
Total expenses.................................... 4,639,657
Less aggregate amount waived by Shareholder
Servicing Agents (Note 3B)...................... (939,802)
-----------
Net expenses.................................... 3,699,855
-----------
Net investment income........................... $33,024,912
===========

See notes to financial statements
<PAGE>

YEAR ENDED AUGUST 31,
-----------------------------
1995 1994
------------- -------------
FROM INVESTMENT ACTIVITIES:
Net investment income, declared as dividends
to shareholders (Note 2)................... $ 33,024,912 $ 14,289,507
============== =============

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
AT NET ASSET VALUE OF $1.00 PER SHARE (NOTE 5):
Proceeds from sale of shares................. $1,184,702,544 $ 764,152,050
Net asset value of shares issued to shareholders
from reinvestment of dividends............. 7,811,033 5,001,747
Cost of shares repurchased .................. (706,226,981) (794,312,393)
-------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS ....... 486,286,596 (25,158,596)
NET ASSETS:
Beginning of period.......................... 445,599,612 470,758,208
-------------- -------------
End of period................................ $ 931,886,208 $ 445,599,612
============== =============

- - --------------------------------------------------------------------------------
Landmark Cash Reserves
- - --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------------------------
1995 1994 1993 1992 1991
----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period........... $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income.......................... 0.05174 0.03137 0.02671 0.04010 0.06606
Less dividends from net investment income...... (0.05174) (0.03137) (0.02671) (0.04010) (0.06606)
-------- -------- -------- -------- --------
Net Asset Value, end of period................. $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000 omitted)........ $931,886 $445,600 $470,758 $498,447 $580,052
Ratio of expenses to average net assets*....... 0.69% 0.69% 0.69% 0.67% 0.61%
Ratio of net investment income to
average net assets........................... 5.17% 3.12% 2.67% 4.05% 6.48%
Total return................................... 5.30% 3.18% 2.70% 4.13% 6.81%

Note: If agents of the Fund and agents of Cash Reserves Portfolio had not waived all or a portion of their
fees during the periods indicated, the net investment income per share and the ratios would have been as
follows:
Net investment income per share................ $0.04895 $0.02840 $0.02381 $0.03753 $0.06025
RATIOS:
Expenses to average net assets*................ 0.97% 0.99% 0.98% 0.93% 0.94%
Net investment income to average net assets.... 4.89% 2.82% 2.38% 3.79% 5.91%

* Includes the Fund's share of Cash Reserves Portfolio's allocated expenses.
</TABLE>

See notes to financial statements
<PAGE>
- - --------------------------------------------------------------------------------
Landmark Cash Reserves
- - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------

(1) SIGNIFICANT ACCOUNTING POLICIES
Landmark Cash Reserves (the "Fund") is a separate diversified series of Landmark
Funds III (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 Cash
Reserves Portfolio (the "Portfolio"), a management investment company for which
Citibank, N.A. ("Citibank") serves as investment adviser. The Landmark Funds
Broker-Dealer Services, Inc. ("LFBDS") acts as the Trust's Administrator and
Distributor. Citibank also serves as Sub-Administrator and makes shares
available to customers as Shareholder Servicing Agent.

The Trust seeks to achieve the Fund's investment objective to provide liquidity
and as high a level of current income as is consistent with the preservation of
capital by investing all of its investable assets in the Portfolio, an open-end,
diversified management investment company having the same investment objective
as the Fund. The value of such investment reflects the Fund's proportionate
interest (19.6% at August 31, 1995) in the net assets of the Portfolio.

The financial statements of the Portfolio, including the portfolio of
investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.

The significant accounting policies consistently followed by the Fund are in
conformity with generally accepted accounting principles and are as follows:

A. INVESTMENT VALUATION -- Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements, which are included
elsewhere in this report.

B. INVESTMENT INCOME -- The Fund earns income, net of Portfolio expenses, daily
based on its investment in the Portfolio.

C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders all of its taxable income. 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 in the 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. OTHER -- All the net investment income 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.

(2) DIVIDENDS
The net income of the Fund is determined once daily, as of 3:00 p.m., New York
City time, and all of the net income of the Fund so determined is declared as a
dividend to shareholders of record at the time of such determination. Dividends
are distributed in the form of additional shares of the Fund or, at the election
of the shareholder, in cash (subject to the policies of the shareholder's
Shareholder Servicing Agent) on or prior to the last business day of the month.

(3) ADMINISTRATIVE SERVICES PLAN
The Trust has adopted an Administrative Services Plan which provides that the
Trust, on behalf of each 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's 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 0.70% 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, LFBDS is entitled to an administrative fee from the Fund, as
compensation for overall administrative services and general office facilities,
which is accrued daily and paid monthly at an annual rate of 0.25% of average
daily net assets. The administrative fees amounted to $1,566,336, for the year
ended August 31, 1995. Citibank acts as Sub-Administrator and performs such
duties and receives such compensation from LFBDS as from time to time is agreed
to by LFBDS and Citibank. The Fund pays no compensation directly to any Trustee
or 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 and a
director 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 the Shareholder Servicing Agent acts as an agent for its
customers and provides other related services. For their services, each
Shareholder Servicing Agent receives fees from the Fund, which may be paid
periodically, which may not exceed, on an annualized basis, an amount equal to
0.40% of the average daily net assets of the Fund represented by shares owned
during the period for which payment has been made by investors for whom such
Shareholder Servicing Agent maintains a servicing relationship. The Shareholder
Servicing Agents fees amounted to $2,506,138, of which $939,802 was voluntarily
waived for the year ended August 31, 1995.

(4) DISTRIBUTION FEES
The Trust has adopted a Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, in which the Fund reimburses the
Distributor for expenses incurred or anticipated in connection with the sale of
shares of the Fund, at an annual rate not to exceed 0.10% of the Fund's average
daily net assets. Under the Administrative Services Plan, the distribution fees
were computed at an annual rate of 0.05% of the Fund's average daily net assets.
The distribution fees amounted to $313,267, for the year ended August 31, 1995.
The Distributor may also receive an additional fee from the Fund not to exceed
0.10% 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 payments of such additional
fees have been made to date.

(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).

(6) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$775,147,872 and $323,253,463, respectively, for the year ended August 31, 1995.

TO THE TRUSTEES OF LANDMARK FUNDS III (THE TRUST) AND THE SHAREHOLDERS OF
LANDMARK CASH RESERVES

In our opinion, the accompanying statement of assets and liabilities, and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Landmark Cash Reserves (the "Fund"), a series of Landmark Funds III, at August
31, 1995 and the results of its operations, the changes in its net assets and
the financial highlights for the periods indicated in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of investments owned at August 31, 1995,
provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP
Boston, Massachusetts
October 5, 1995

- - --------------------------------------------------------------------------------
Cash Reserves Portfolio
- - --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS August 31, 1995
- - --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- - --------------------------------------------------------------------
BANK NOTES--5.3%
Bank of New York
6.90%, due 11/28/95......... $50,000 $ 49,986,402
J.P. Morgan & Co., Inc.
6.50%, due 5/6/96........... 50,000 49,992,165
National Bank of Detroit
6.44%, due 4/19/96.......... 50,000 50,006,025
Nationsbank, Texas
7.55%, due 1/9/96........... 25,000 25,003,013
WestDeusche LandsBank
6.85%, due 3/1/96........... 75,000 75,009,696
--------------
249,997,301
--------------

CERTIFICATES OF DEPOSIT
(EURODOLLARS)--2.5%
Barclays Bank
6.91%, due 10/17/95......... 42,000 41,996,253
6.94%, due 10/17/95......... 25,000 25,000,284
Commerzbank AG, N.Y.
6.76%, due 4/4/96........... 50,000 50,016,855
--------------
117,013,392
--------------

CERTIFICATES OF DEPOSIT
(YANKEE)--33.2%
ABN Amro
5.77%, due 12/15/95......... 45,000 44,995,579
Banque Paribas
5.73%, due 1/4/96........... 50,000 50,000,000
Bayerische Landesbank
5.95%, due 7/18/96.......... 150,000 150,000,000
Commerzbank AG, N.Y.
5.77%, due 12/5/95.......... 50,000 49,992,139
Dai Ichi Kangyo Bank, New York
5.94%, due 9/18/95.......... 83,000 83,000,000
5.80%, due 9/20/95.......... 75,000 75,000,000
5.81%, due 9/29/95.......... 50,000 49,993,973
Dresdner Bank
6.62%, due 3/15/96.......... 65,000 65,003,316
Deutsche Bank
6.02%, due 8/8/96........... 50,000 50,008,433
Fuji Bank
6.03%, due 9/1/95........... 25,000 25,000,000
5.80%, due 9/18/95.......... 100,000 100,000,000
Industrial Bank of Japan
5.87%, due 10/30/95......... 200,000 200,000,000
Mitsubishi Bank, New York
7.35%, due 12/6/95.......... 50,000 50,000,000
7.62%, due 12/29/95......... 25,000 25,014,493
Royal Bank of Canada
5.72%, due 12/22/95......... 40,000 40,000,000
Sanwa Bank
5.90%, due 9/25/95.......... 100,000 100,000,663
5.87%, due 10/23/95......... 100,000 100,001,430
Societe Generale Bank
5.80%, due 9/22/95.......... 100,000 100,000,000
7.41%, due 1/23/96.......... 25,000 25,000,930
Sumitomo Bank
5.81%, due 9/6/95........... 100,000 100,000,138
5.81%, due 9/7/95........... 100,000 100,000,165
--------------
1,583,011,259
--------------

COMMERCIAL PAPER--21.3%
ABN Amro
5.63%, due 12/19/95......... 25,000 24,573,840
5.66%, due 2/21/96.......... 45,000 43,776,025
5.66%, due 2/23/96.......... 100,000 97,248,610
Associates Corp.
5.87%, due 9/1/95........... 100,000 100,000,000
Bankers Trust Corp.
5.75%, due 12/29/95......... 70,000 68,669,514
Cregem North America
5.565%, due 12/15/95........ 50,000 49,188,438
General Electric Co.
5.87%, due 9/1/95........... 100,000 100,000,000
General Electric Capital Co.
6.73%, due 10/16/95......... 25,000 24,789,688
Goldman Sachs
5.85%, due 9/14/95.......... 150,000 149,683,125
Kingdom of Sweden
5.95%, due 1/10/96.......... 25,000 24,458,715
5.58%, due 2/21/96.......... 80,000 77,854,800
Svenska Handelsbanken
5.73%, due 9/15/95.......... 106,000 105,763,797
UBS Finance Delaware, Inc.
5.82%, due 9/1/95........... 150,000 150,000,000
--------------
1,016,006,552
--------------

FLOATING RATE NOTES--28.1%
Bank One, Chicago
6.06%, due 2/12/96.......... 50,000 50,000,000
Bank One, Dayton
5.94%, due 8/30/96.......... 70,000 69,959,162
Bank One, Milwaukee
5.96%, due 8/28/96.......... 76,000 75,970,150
Bankers Trust Corp.
6.10%, due 9/29/95.......... 90,000 90,000,000
6.01%, due 12/18/95......... 70,000 70,000,000
Beneficial Corp.
6.04%, due 6/17/96.......... 100,000 100,000,000
5.95%, due 8/26/96.......... 100,000 99,950,954
Boatments First National Bank,
Kansas
6.10%, due 2/14/96.......... 40,000 40,000,000
FCC National Bank, Delaware
6.08%, due 12/20/95......... 50,000 50,000,000
Federal National Mortgage
Association
5.95%, due 10/16/95......... 150,000 149,997,300
General Electric Capital Co.
6.025%, due 2/16/96......... 50,000 49,991,923
J.P. Morgan & Co., Inc.
6.00%, due 3/8/96........... 75,000 74,981,023
Key Bank, N.Y.
5.76%, due 9/26/95.......... 150,000 149,898,450
6.00%, due 9/26/95.......... 50,000 49,997,260
Merrill Lynch & Co., Inc.
6.017%, due 12/4/95......... 140,000 140,000,000
Society National Bank
6.00%, due 9/6/95........... 50,000 49,999,397
SMMTrust
5.895%, due 6/14/96......... 30,000 30,000,000
--------------
1,340,745,619
--------------

MEDIUM TERM NOTES--1.1%
General Electric Capital Co.
6.55%, due 3/25/96.......... 50,000 49,974,741
--------------

TIME DEPOSIT--2.4%
Chemical Bank
5.875%, due 9/1/95.......... 116,518 116,518,000
--------------

UNITED STATES GOVERNMENT
AGENCY--9.1%
Federal Farm Credit Bank
5.75%, due 8/1/96........... 100,000 99,961,557
Federal National Mortgage
Association
6.86%, due 2/28/96.......... 35,000 34,985,167
5.813%, due 7/5/96.......... 100,000 99,918,632
5.725%, due 8/16/96......... 100,000 99,944,230
5.76%, due 9/3/96........... 100,000 99,952,000
--------------
434,761,586
--------------

UNITED STATES TREASURY--3.0%
United States Treasury Bills
5.49%, due 8/22/96.......... 25,000 23,642,750
5.52%, due 8/22/96.......... 25,000 23,635,333
5.535%, due 8/22/96......... 50,000 47,263,250
5.55%, due 8/22/96.......... 50,000 47,255,833
--------------
141,797,166
--------------

TOTAL INVESTMENTS
AT AMORTIZED COST.......... 106.0% 5,049,825,616
OTHER ASSETS, LESS LIABILITIES (6.0%) (284,419,511)
------ -------------
NET ASSETS.................... 100.0% $4,765,406,105
====== ==============

See notes to financial statements
<PAGE>
- - --------------------------------------------------------------------------------
Cash Reserves Portfolio
- - --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES August 31, 1995
- - --------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A).................................. $5,049,825,616
Cash............................................................ 609
Interest receivable............................................. 41,822,762
--------------
Total assets................................................ $5,091,648,987
--------------
LIABILITIES:
Payable for investments purchased............................... 325,869,262
Payable to affiliate--investment advisory fee (Note 2A)......... 290,532
Accrued expenses and other liabilities.......................... 83,088
--------------
Total liabilities........................................... 326,242,882
--------------
NET ASSETS ..................................................... $4,765,406,105
==============
REPRESENTED BY:
Paid-in capital for beneficial interests........................ $4,765,406,105
==============

Cash Reserves Portfolio
- - --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- - --------------------------------------------------------------------------------
For the Year Ended August 31, 1995
- - --------------------------------------------------------------------------------
INTEREST INCOME (Note 1B)......................... $163,277,950
EXPENSES:
Investment advisory fees (Note 2A)................ $ 4,097,854
Administrative fees (Note 2B)..................... 1,365,951
Custodian fees.................................... 782,540
Trustees' fees.................................... 40,605
Auditing fees..................................... 40,500
Amortization of organization expenses............. 7,878
Legal fees........................................ 6,167
Miscellaneous..................................... 65,368
------------
Total expenses............................... 6,406,863

Less aggregate amount waived by Investment
Adviser and Administrator (Notes 2A and 2B) (3,672,112)
------------
Net expenses................................. 2,734,751
------------
Net investment income........................ $160,543,199
============

See notes to financial statements
<PAGE>
Cash Reserves Portfolio
- - --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income.......................... $ 160,543,199 $ 46,640,474
--------------- ----------------

CAPITAL TRANSACTIONS:
Proceeds from contributions.................... 23,437,948,762 11,522,208,314
Value of withdrawals........................... (20,980,446,443) (10,202,958,307)
--------------- ----------------
Net increase in net assets from capital transactions 2,457,502,319 1,319,250,007
--------------- ----------------

NET INCREASE IN NET ASSETS .................... 2,618,045,518 1,365,890,481
NET ASSETS:
Beginning of period............................ 2,147,360,587 781,470,106
--------------- ----------------
End of period.................................. $ 4,765,406,105 $ 2,147,360,587
================ ================
</TABLE>

Cash Reserves Portfolio
- - --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets (000 omitted)..................... $4,765,406 $2,147,361 $781,470 $901,024 $847,811
Ratio of expenses to average net assets...... 0.10% 0.11% 0.20% 0.25% 0.25%
Ratio of net investment income to
average net assets......................... 5.88% 3.87% 3.15% 4.42% 6.75%
Note: If agents of the Portfolio had not voluntarily waived a portion of their fees for the periods indicated,
the ratios would have been as follows:
RATIOS:
Expenses to average net assets............... 0.23% 0.24% 0.25% 0.25% 0.25%
Net investment income to average net assets.. 5.75% 3.74% 3.10% 4.42% 6.75%
</TABLE>
See notes to financial statements
<PAGE>
Cash Reserves Portfolio
- - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------

(1) SIGNIFICANT ACCOUNTING POLICIES
Cash Reserves Portfolio (the "Portfolio") is registered under the U.S.
Investment Company Act of 1940, as amended, as a no-load, 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. Signature Financial Group (Grand Cayman),
Ltd. ("SFG") acts as the Portfolio's Administrator and Citibank, N.A.
("Citibank") acts as the Investment Adviser.

The significant accounting policies consistently followed by the Portfolio are
in conformity with U.S. generally accepted accounting principles and are as
follows:

A. VALUATION OF INVESTMENTS -- Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
This method involves valuing a portfolio security at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium. The
Portfolio's use of amortized cost is subject to the Portfolio's compliance with
certain conditions as specified under Rule 2a-7 of the Investment Company Act of
1940.

B. INTEREST INCOME AND EXPENSES -- Interest income consists of interest accrued
and discount earned (including both original issue and market discount) on the
investments of the Portfolio, accrued ratably to the date of maturity, plus or
minus net realized gain or loss, if any, on investments. Expenses of the
Portfolio are accrued daily. The Portfolio bears all costs of its operations
other than expenses specifically assumed by Citibank and SFG.

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 agreement
investments. 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. OTHER -- Purchases, maturities and sales of money market instruments are
accounted for on the date of the transaction.

(2) INVESTMENT ADVISORY FEE AND ADMINISTRATIVE FEE
A. INVESTMENT ADVISORY FEE -- The investment advisory fee paid to Citibank, as
compensation for overall investment management services, amounted to $4,097,854,
of which $2,306,161 was voluntarily waived for the year ended August 31, 1995.
The investment advisory fee is computed at an annual rate of 0.15% of the
Portfolio's average daily net assets.

B. ADMINISTRATIVE FEE -- Under the terms of an Administrative Services
Agreement, the administrative fee paid to the Administrator, as compensation for
overall administrative services and general office facilities, is computed at
the annual rate of 0.05% of the Portfolio's average daily net assets. The
administrative fee amounted to $1,365,951, all of which was voluntarily waived
for the year ended August 31, 1995. The Portfolio 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 Portfolio from the
Administrator or its affiliates. Certain of the officers and a Trustee of the
Portfolio are officers and a director of the Administrator or its affiliates.

(3) INVESTMENT TRANSACTIONS
Purchases, maturities and sales of money market instruments aggregated
$145,318,101,772 and $142,492,747,680, respectively, for the year ended August
31, 1995.

(4) LINE OF CREDIT
The Portfolio, along with other Landmark Funds, entered into an agreement with a
bank which allows the Funds collectively to borrow up to $40 million for
temporary or emergency purposes. Interest on borrowings, if any, is charged to
the specific fund executing the borrowing at the base rate of the bank. In
addition, the $15 million committed portion of the line of credit requires a
quarterly payment of a commitment fee based on the average daily unused portion
of the line of credit. For the year ended August 31, 1995, the commitment fee
allocated to the Portfolio was $19,641. Since the line of credit was
established, there have been no borrowings.

Cash Reserves Portfolio
- - --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- - --------------------------------------------------------------------------------
TO THE TRUSTEES AND THE INVESTORS OF CASH RESERVES PORTFOLIO:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Cash Reserves Portfolio (the "Portfolio") as at
August 31, 1995 and the related statements of operations and of changes in net
assets and the financial highlights for the periods indicated. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of investments owned at
August 31, 1995, by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Portfolio as at August 31, 1995, the
results of its operations and the changes in its net assets and the financial
highlights for the periods indicated in accordance with U.S. generally accepted
accounting principles.

PRICE WATERHOUSE
Chartered Accountants

Toronto, Ontario
October 5, 1995
<PAGE>

SHAREHOLDER
SERVICING AGENTS

FOR CITIBANK NEW YORK RETAIL BANKING AND
BUSINESS AND PROFESSIONAL CUSTOMERS:
Citibank, N.A.
450 West 33rd Street, New York, NY 10001
(212) 564-3456 or (800) 846-5300

FOR CITIGOLD CUSTOMERS:
Citigold
P.O. Box 5130, New York, NY 10126-5130
Call Your Citigold Executive or, in NY or CT, or (800) 285-1701,
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.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100

FOR CITICORP INVESTMENT SERVICES CUSTOMERS:
Citicorp Investment Services
One Court Square, Long Island City, NY 11120
Call Your Investment Consultant or (800) 846-5200
(212) 736-8170 in New York City

[logo] LANDMARK
FUNDS

MONEY MARKET FUNDS:
Cash Reserves
Premium Liquid Reserves
Institutional Liquid Reserves

U.S. Treasury Reserves
Premium U.S. Treasury Reserves
Institutional U.S. Treasury Reserves

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

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

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

TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
H. B. Alvord
C. Oscar Morong, Jr.
E. Kirby Warren

ASSISTANT TREASURER
Barbara M. O'Dette*

ASSISTANT SECRETARIES
Susan Jakuboski*
Molly S. Mugler*
*Affiliated Person of Administrator and Distributor
------------------------| |-------------------------------
INVESTMENT ADVISER
(OF CASH RESERVES 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 AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110

AUDITORS
Price Waterhouse LLP
160 Federal Street, Boston, MA 02110

LEGAL COUNSEL
Bingham, Dana & Gould
150 Federal Street, Boston, MA 02110
------------------------| |-------------------------------
SHAREHOLDER SERVICING AGENTS
(See Inside Cover)

This report is prepared for the information of shareholders. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.

This Report is Prepared & Printed on Recycled Paper [Recycle Logo]

MM/CR/A/95

<PAGE>

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

LANDMARK
U.S. TREASURY
RESERVES

ANNUAL
REPORT
August 31, 1995

<PAGE>
A LETTER TO OUR SHAREHOLDERS

Dear Shareholder:

The past year has been one of marked contrasts for the U.S. economy and its
financial markets. During the first half of the year, short-term cash equivalent
investments such as Landmark U.S. Treasury Reserves did relatively well as
interest rates rose in response to inflation fears, while longer term bonds and
stocks fared poorly. As the economy slowed in the second half of the fiscal
year, broad measures of stock and bond performance rallied to new highs and
yields on most money market investments remained relatively stable.

The Landmark Funds' investment adviser, Citibank, N.A., manages U.S.
Treasury Reserves Portfolio to provide liquidity and as high a level of current
income as is consistent with the preservation of capital. The Fund seeks to
offer an attractive yield and a competitive expense ratio by investing in a
high-quality portfolio composed exclusively of U.S. Treasury securities.

/s/ Philip W. Coolidge
Philip W. Coolidge
President
September 20, 1995

TABLE OF CONTENTS
1 Letter to Shareholders
- - ------------------------------------------------------------------------------
2 Market Environment
Fund Snapshot
- - ------------------------------------------------------------------------------
3 Fund Quotes
The Portfolio Manager Responds
Strategy and Outlook
- - ------------------------------------------------------------------------------
4 Fund Data

LANDMARK U.S. TREASURY RESERVES
- - ------------------------------------------------------------------------------
5 Statement of Assets and Liabilities
Statement of Operations
- - ------------------------------------------------------------------------------
6 Statement of Changes in Net Assets
Financial Highlights
- - ------------------------------------------------------------------------------
7 Notes to Financial Statements
- - ------------------------------------------------------------------------------
9 Independent Auditors' Report
- - ------------------------------------------------------------------------------
U.S. TREASURY RESERVES PORTFOLIO
- - ------------------------------------------------------------------------------
10 Portfolio of Investments
- - ------------------------------------------------------------------------------
11 Statement of Assets and Liabilities
Statement of Operations
- - ------------------------------------------------------------------------------
12 Statement of Changes in Net Assets
Financial Highlights
- - ------------------------------------------------------------------------------
13 Notes to Financial Statements
- - ------------------------------------------------------------------------------
14 Independent Auditors' Report
- - ------------------------------------------------------------------------------
<PAGE>
- - ------------------------------------------------------------------------------
MARKET ENVIRONMENT
- - ------------------------------------------------------------------------------

In the face of these inflationary pressures, the Federal Reserve Board
continued to raise short-term interest rates in an effort to slow the rate of
economic growth enough to forestall a further acceleration of inflation. By the
beginning of 1995, signs began to emerge that the economy was indeed slowing to
a pace below the rate at which inflationary pressures become a problem. As the
rate of economic growth moderated and the likelihood of further interest-rate
hikes receded, yields on U.S. Treasury securities generally declined during the
second half of the Fund's fiscal year.

The Federal Reserve's monetary policy did not affect all U.S. Treasury
securities equally, however. As the economy slowed and investors began to
anticipate the first reduction in key short-term interest rates in almost two
years, yields on longer term U.S. Treasury bills began to decline faster than
their shorter term counterparts, reducing the yield spread between the long and
short ends of the maturity spectrum. Later in the period, the reverse was true:
spreads widened after the Federal Reserve lowered interest rates in July as
investors anticipated a modest economic rebound.

- - ------------------------------------------------------------------------------
FUND SNAPSHOT
- - ------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
May 3, 1991

NET ASSETS AS OF 8/31/95
$256.5 million

FUND OBJECTIVE
To provide liquidity and as high a level of current income from U.S. Government
obligations as is consistent with the preservation of capital.

DIVIDENDS
Declared daily, paid monthly

BENCHMARK
o Lipper U.S. Treasury Money Market Funds Average

INVESTMENT ADVISER,
U.S. TREASURY RESERVES PORTFOLIO
Citibank, N.A.
<PAGE>
- - ------------------------------------------------------------------------------
FUND QUOTES FROM THE PORTFOLIO MANAGER
- - ------------------------------------------------------------------------------

"Money market funds outperformed both stocks and bonds during the last four
months of 1994, helping shareholders preserve their capital during a period of
volatility in the longer term markets."

"The Fund extended its average maturity to the long end of its range during most
of the first half of 1995 to take advantage of higher yields available in
longer-term Treasury securities."

"Looking forward, we expect interest rates to decline modestly if the Federal
Reserve eases monetary policy in response to a weakening economy."

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

We carefully monitored the various influences affecting the short-term
fixed-income marketplace during the year and took action opportunistically. For
example, in March when the economy was slowing and yield spreads were relatively
wide, we extended maturities to the longer end of the Portfolio's maturity range
to lock in higher yields before interest rates declined. Conversely, we reduced
the Portfolio's average maturity to a more neutral position in July as signs of
renewed economic strength caused yield spreads to narrow, enabling us to keep
funds available for higher yielding securities as they became available if
interest rates rose.

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

Our forecast for the U.S. economy calls for slow-but-positive growth over
the near term. The Federal Reserve appears to have been successful in its
efforts to slow the U.S. economy to non-inflationary levels without causing a
recession, and, despite July's modest interest-rate reduction, we expect
monetary policy to remain unchanged over the next few months. As long as the
economy does not heat up unexpectedly, yields on U.S. Treasury bills should
remain near current levels over the near term.

Over the longer term, we expect the Federal Reserve to resume easing if the
U.S. economy shows further signs of weakness. The prospect of recession is
unacceptable to many in Washington, D.C., especially in an election year. We
believe, therefore, that lower yields are more likely than higher yields over
the intermediate term. Accordingly, we will adjust the Portfolio's average
maturity opportunistically to maximize yields without sacrificing either
preservation of capital or the Portfolio's AAA rating.*

*Although the Fund is permitted by prospectus to extend its average maturity to
as much as 90 days, we do not anticipate exceeding an average weighted maturity
of 60 days in order to maintain our current Aaa rating with Moody's and AAAm
rating with Standard & Poor's.
<PAGE>
- - ------------------------------------------------------------------------------
FUND DATA All Periods Ended August 31, 1995
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>

TOTAL RETURNS
---------------------
SINCE
ONE 5/3/91
YEAR INCEPTION<F1>
----- ----------
<S> <C> <C>
Landmark U.S. Treasury Reserves............................................ 4.86% 3.70%
Lipper U.S. Treasury Money Market Funds Average............................ 5.01% 3.81%<F2>

<FN>
<F1> Annualized
<F2> From 4/30/91
</TABLE>

7-DAY YIELDS
- - ----------
Annualized Current 4.86%
Effective 4.98%

The Annualized Current 7-Day Yield reflects the amount of income generated by
the investment during that seven day period and assumes that the income is
generated each week over a 365 day period. The yield is shown as a percentage of
the investment.

The Effective 7-Day Yield is calculated similarly, but when annualized the
income earned by the investment during that seven day period is assumed to be
reinvested.

The effective yield is slightly higher than the current yield because of the
compounding effect of this assumed reinvestment.

IMPORTANT TAX INFORMATION
- - -------------------------
For the fiscal year ended August 31, 1995, the Fund paid $0.04751 per share to
shareholders from net investment income. For such period, 100% of income
dividends paid were derived from interest earned from U.S. Treasury Bills, Notes
and Bonds.

NOTES: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns and
yields would have been lower.

- - ------------------------------------------------------------------------------
Landmark U.S. Treasury Reserves
- - ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES August 31, 1995
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in U.S. Treasury Reserves Portfolio, at value (Note 1)............................. $257,045,583
- ------------
LIABILITIES:
Dividend payable.............................................................................. 427,295
Payable for shares of beneficial interest sold................................................ 10,000
Payable to affiliate - Shareholder Servicing Agents' fee (Note 3B)............................ 53,822
Accrued expenses and other liabilities........................................................ 102,821
------------
Total liabilities......................................................................... 593,938
------------

NET ASSETS for 256,451,645 shares of beneficial interest outstanding.......................... $256,451,645
============

NET ASSETS CONSIST OF:
Paid-in capital............................................................................... $256,451,645
============

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE................................ $1.00
=====

</TABLE>
<TABLE>
<S> <C> <C>
INVESTMENT INCOME (Note 1A):
Income from U.S. Treasury Reserves Portfolio............................... $12,287,830
Allocated expenses from U.S. Treasury Reserves Portfolio................... (225,445)
-----------
Net investment income from U.S. Treasury Reserves Portfolio............ $12,062,385
EXPENSES:
Shareholder Servicing Agents' fees (Note 3B)............................... 898,272
Administrative fees (Note 3A).............................................. 561,420
Distribution fees (Note 4)................................................. 112,284
Shareholder reports........................................................ 29,015
Custodian fees............................................................. 21,050
Auditing fees.............................................................. 15,100
Trustee fees............................................................... 13,338
Transfer agent fees........................................................ 13,000
Legal fees................................................................. 3,971
Miscellaneous.............................................................. 23,986
-----------
Total expenses........................................................... 1,691,436
Less aggregate amounts waived by Shareholder Servicing Agents
and Distributor (Notes 3B and 4)....................................... (344,652)
-----------
Net expenses............................................................. 1,346,784
-----------
Net investment income.................................................... $10,715,601
===========
See notes to financial statements
<PAGE>
- - ------------------------------------------------------------------------------
Landmark U.S. Treasury Reserves
- - ------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- - ------------------------------------------------------------------------------

</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------

1995 1994
--------- ----------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income, declared as dividends to shareholders (Note 2)..... $ 10,715,601 $ 6,490,716
============= =============
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT NET ASSET VALUE OF
$1.00 PER SHARE (Note 5):
Proceeds from sale of shares.............................................. $ 581,106,568 $ 374,714,235
Net asset value of shares issued to shareholders from reinvestment of
dividends 7,374,410 5,256,070
Cost of shares repurchased................................................ (535,429,512) (426,036,248)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS .................................... 53,051,466 (46,065,943)
NET ASSETS:
Beginning of period....................................................... 203,400,179 249,466,122
------------- -------------
End of period............................................................. $ 256,451,645 $ 203,400,179
============= =============
</TABLE>
- - ------------------------------------------------------------------------------
Landmark U.S. Treasury Reserves
- - ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 3, 1991
(COMMENCEMENT
YEAR ENDED YEAR ENDED EIGHT MONTHS ENDED, YEAR ENDED OF OPERATIONS)TO
AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993 DECEMBER 31, 1992 DECEMBER 31, 1991
--------------- --------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning
of period...................... $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income............ 0.04751 0.02837 0.01662 0.03117 0.03411
Less dividends from
net investment income........... (0.04751) (0.02837) (0.01662) (0.03117) (0.03411)
-------- -------- -------- -------- --------
Net Asset Value, end of period... $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted)................ $256,452 $203,400 $249,466 $338,719 $548,722
Ratio of expenses to average
net assets<F1>................. 0.70% 0.70% 0.66%<F2> 0.70% 0.53%<F2>
Ratio of net investment income to
average net assets.............. 4.77% 2.81% 2.49%<F2> 3.19% 4.89%<F2>
Total return..................... 4.86% 2.87% 2.53%<F2> 3.16% 3.46%<F2>
Note: If agents of the Fund and agents of U.S. Treasury Reserves Portfolio had not waived all or a portion of their fees
during the periods indicated, the net investment income per share and the ratios would have been as follows:
Net investment income per share.. $0.04452 $0.02514 $0.01455 $0.02853 $0.03076
RATIOS:
Expenses to average net assets<F1>.. 1.00% 1.02% 0.97%<F2> 0.96% 1.02%<F2>
Net investment income to
average net assets.............. 4.47% 2.49% 2.18%<F2> 2.92% 4.41%<F2>
<FN>
<F1> Includes the Fund's share of U.S. Treasury Reserves Portfolio's allocated expenses.
<F2> Annualized.
</TABLE>
See notes to financial statements
<PAGE>
- - ------------------------------------------------------------------------------
Landmark U.S. Treasury Reserves
- - ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- - ------------------------------------------------------------------------------

(1) SIGNIFICANT ACCOUNTING POLICIES
Landmark U.S. Treasury Reserves (the "Fund") is a separate diversified series of
Landmark Funds III (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
U.S. Treasury Reserves Portfolio (the "Portfolio"), a management investment
company for which Citibank, N.A. ("Citibank") serves as Investment Adviser. The
Landmark Funds Broker-Dealer Services, Inc. ("LFBDS") acts as the Trust's
Administrator and Distributor. Citibank also serves as Sub-Administrator and
makes Fund shares available to customers through various Shareholder Servicing
Agents.

The Trust seeks to achieve the Fund's investment objective of providing
shareholders with liquidity and as high a level of current income from U.S.
Government obligations as is consistent with preservation of capital by
investing all of its investable assets in the Portfolio, an open-end,
diversified management investment company having the same investment objective
as the Fund. The value of such investment reflects the Fund's proportionate
interest (30.9% at August 31, 1995) in the net assets of the Portfolio.

The financial statements of the Portfolio, including the portfolio of
investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.

The significant accounting policies consistently followed by the Fund are in
conformity with generally accepted accounting principles and are as follows:

A. INVESTMENT INCOME -- The Fund earns income, net of Portfolio expenses, daily
on its investment in the Portfolio.

B. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders all of its taxable income. Accordingly, no provision
for federal income or excise tax is necessary.

C. 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 in a series are allocated in proportion to the
average net assets of each Fund, except where allocations of direct expenses to
each Fund can otherwise be made fairly. Expenses directly attributable to a Fund
are charged to that Fund.

D. OTHER -- All the net investment income of the Portfolio is allocated pro
rata, based on respective ownership interests, among the Fund and other
investors in the Portfolio at the time of such determination.

(2) DIVIDENDS
The net income of the Fund is determined once daily, as of 12:00 noon, New York
City time, and all of the net income of the Fund so determined is declared as a
dividend to shareholders of record at the time of such determination. Dividends
are distributed in the form of additional shares of the Fund or, at the election
of the shareholder, in cash (subject to the policies of the shareholder's
Shareholder Servicing Agent) on or prior to the last business day of the month.

(3) ADMINISTRATIVE SERVICES PLAN
The Trust has adopted an Administrative Services Plan which provides that the
Trust, on behalf of each 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's 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 0.70% 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, LFBDS is entitled to an administrative fee from the Fund, as
compensation for overall administrative services and general office facilities,
which is accrued daily and paid monthly at an annual rate of 0.25% of average
daily net assets of the Fund. The administrative fee amounted to $561,420, for
the year ended August 31, 1995. Citibank acts as Sub-Administrator and performs
such duties and receives such compensation from LFBDS as from time to time is
agreed to by LFBDS and Citibank. The Fund pays no compensation directly to any
Trustee or to any officer who is affiliated with the Administrator, all of whom
receive remuneration for their services to the Fund from the Administrator or
its affiliates. Certain of the officers and a Trustee of the Fund are officers
and a director of the Administrator or its affiliates.

B. SHAREHOLDER SERVICING AGENT FEES -- The Trust, on behalf of the Fund, has
entered into shareholder servicing agreements with each Shareholder Servicing
Agent pursuant to which that Shareholder Servicing Agent acts as an agent for
its customers and provides other related services. For their services, each
Shareholder Servicing Agent receives fees from the Fund, which may be paid
periodically, which may not exceed, on an annualized basis, an amount equal to
0.40% of the average daily net assets of the Fund represented by shares owned
during the period for which payment is being made by investors for whom such
Shareholder Servicing Agent maintains a servicing relationship. The Shareholder
Servicing Agent fees amounted to $898,272, of which $336,852 was voluntarily
waived for the year ended August 31, 1995.

(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).

(6) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$265,097,581 and $223,761,616, respectively, for the year ended August 31, 1995.
<PAGE>
- - ------------------------------------------------------------------------------
Landmark U.S. Treasury Reserves
- - ------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- - ------------------------------------------------------------------------------

TO THE TRUSTEES AND SHAREHOLDERS OF LANDMARK U.S. TREASURY RESERVES:

We have audited the accompanying statement of assets and liabilities of
Landmark U.S. Treasury Reserves (the "Fund"), a separate series of Landmark
Funds III (the "Trust") (a Massachusetts business trust), as of August 31, 1995,
the related statement of operations for the year then ended, the statement of
changes in net assets for the years ended August 31, 1995 and 1994 and the
financial highlights for each of the years in the two-year period ended August
31, 1995, the eight months ended August 31, 1993, the year ended December 31,
1992 and the period from May 3, 1991 (Commencement of Operations) to December
31, 1991. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Landmark U.S.
Treasury Reserves at August 31, 1995, the result of its operations, the changes
in its net assets, and its financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
October 9, 1995
<PAGE>
- - ------------------------------------------------------------------------------
U.S. Treasury Reserves Portfolio
- - ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS August 31, 1995
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- - --------------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS--105.9%
U.S. TREASURY BILLS -- 99.8%
due 9/21/1995...................................... $ 34,009 $ 33,907,937
due 9/28/1995...................................... 120,485 119,998,077
due 10/05/1995..................................... 43,490 43,268,506
due 10/12/1995..................................... 70,000 69,568,703
due 10/19/1995..................................... 184,155 182,819,403
due 10/26/1995..................................... 115,605 114,650,087
due 11/02/1995..................................... 105,000 104,035,254
due 11/16/1995..................................... 110,110 108,838,950
due 12/14/1995..................................... 54,375 53,525,467
------------
830,612,384
------------

U.S. TREASURY NOTES -- 6.1%
9.25% due 1/15/1996................................ 50,000 50,623,642
------------
<S> <C> <C>
TOTAL INVESTMENTS, AT AMORTIZED COST .......... 105.9% 881,236,026
OTHER ASSETS, LESS LIABILITIES ................ (5.9) (48,977,649)
----- ------------
NET ASSETS .................................... 100.0% $832,258,377
===== ============
</TABLE>

See notes to financial statements
<PAGE>
- - ------------------------------------------------------------------------------
U.S. Treasury Reserves Portfolio
- - ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES August 31, 1995
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at amortized cost and value (Note 1A)............................................ $881,236,026
Cash.......................................................................................... 54,248
Interest receivable........................................................................... 603,261
Deferred organization expenses (Note 1D)...................................................... 1,210
------------
Total assets................................................................................ 881,894,745
------------
LIABILITIES:
Payable for investments purchased............................................................. 49,545,333
Payable to affiliate-- investment advisory fee (Note 2A)...................................... 41,524
Accrued expenses and other liabilities........................................................ 49,511
------------
Total liabilities........................................................................... 49,636,368
------------
NET ASSETS.................................................................................... $832,258,377
============
REPRESENTED BY:
Paid-in capital for beneficial interests...................................................... $832,258,377
============
- - ------------------------------------------------------------------------------
U.S. Treasury Reserves Portfolio
- - ------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1995
- - ------------------------------------------------------------------------------

</TABLE>
<TABLE>
<S> <C> <C>
INTEREST INCOME (Note 1B).................................................. $41,794,322
EXPENSES:
Investment Advisory fees (Note 2A)......................................... $1,148,418
Administrative fees (Note 2B).............................................. 382,806
Custodian fees............................................................. 257,830
Auditing fees.............................................................. 21,800
Trustee fees............................................................... 15,714
Legal fees................................................................. 11,529
Amortization of organization expenses (Note 1D)............................ 4,307
Miscellaneous.............................................................. 58,728
----------
Total expenses........................................................... 1,901,132
Less aggregate amount waived by Investment Adviser and
Administrator (Notes 2A and 2B)........................................ (1,135,911)
----------
Net expenses............................................................. 765,221
-----------
Net investment income.................................................... $41,029,101
===========
</TABLE>

Net investment income..................................................... $ 41,029,101 $ 19,484,825
-------------- ---------------
CAPITAL TRANSACTIONS:
Proceeds from contributions............................................... 2,996,270,146 1,195,331,966
Value of withdrawals...................................................... (2,931,609,982) (1,010,065,239)
-------------- ---------------
Net increase in net assets from capital transactions.................... 64,660,164 185,266,727
-------------- ---------------
NET INCREASE IN NET ASSETS................................................ 105,689,265 204,751,552
NET ASSETS:
Beginning of period....................................................... 726,569,112 521,817,560
-------------- ---------------
End of period............................................................. $ 832,258,377 $ 726,569,112
============== ===============

- - ------------------------------------------------------------------------------
U.S. Treasury Reserves Portfolio
- - ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- - ------------------------------------------------------------------------------

</TABLE>
<TABLE>
<CAPTION>
MARCH 1, 1991
YEAR ENDED AUGUST 31, (COMMENCEMENT
---------------------- EIGHT MONTHS ENDED YEAR ENDED OF OPERATIONS) TO
1995 1994 AUGUST 31, 1993 DECEMBER 31, 1992 DECEMBER 31, 1991
------ ------ --------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) $832,258 $726,569 $521,818 $590,769 $675,332
Ratio of expenses to average net assets 0.10% 0.12% 0.20%<F1> 0.24% 0.19%<F1>
Ratio of net investment income to average
net assets............................. 5.36% 3.43% 2.96%<F1> 3.59% 5.26%<F1>

Note: If the agents of the Portfolio had not voluntarily waived a portion of their fees for the periods indicated, the ratios
would have been as follows:
RATIOS:
Expenses to average net assets........... 0.25% 0.26% 0.25%<F1> 0.25% 0.25%<F1>
Net investment income to average
net assets............................. 5.21% 3.30% 2.91%<F1> 3.58% 5.19%<F1>

<FN>
<F1> Annualized.
</TABLE>

(1) SIGNIFICANT ACCOUNTING POLICIES
U.S. Treasury Reserves Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load, 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 Landmark Funds Broker-Dealer
Services, Inc. ("LFBDS") acts as the Portfolio's Administrator and Citibank,
N.A. ("Citibank") acts as the Investment Adviser.

The significant accounting policies consistently followed by the Portfolio are
in conformity with generally accepted accounting principles and are as follows:

B. INTEREST INCOME AND EXPENSES -- Interest income consists of interest accrued
and discount earned (including both original issue and market discount),
adjusted for amortization of premium, on the investments of the Portfolio,
accrued ratably to the date of maturity, plus or minus net realized gain or
loss, if any, on investments. Expenses of the Portfolio are accrued daily.

C. FEDERAL INCOME TAXES -- The Portfolio's policy is to comply with the
applicable provisions of the Internal Revenue Code. Accordingly, no provision
for federal income taxes is necessary.

D. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization have been deferred and are being amortized on a
straight-line basis not to exceed five years.

E. OTHER -- Purchases, maturities and sales of money market instruments are
accounted for on the date of the transaction.

(2) INVESTMENT ADVISORY FEES AND ADMINISTRATIVE FEES
A. INVESTMENT ADVISORY FEES -- The investment advisory fees paid to Citibank, as
compensation for overall investment management services, amounted to $1,148,418,
of which $753,105 was voluntarily waived for the year ended August 31, 1995. The
investment advisory fee is computed at an annual rate of 0.15% of the
Portfolio's average daily net assets.

B. ADMINISTRATIVE FEES -- Under the terms of an Administrative Services
Agreement, the administrative fee paid to the Administrator, as compensation for
overall administrative services and general office facilities, is accrued daily
and paid monthly at the annual rate of 0.05% of the Portfolio's average daily
net assets. The administrative fee amounted to $382,806, all of which was
voluntarily waived for the year ended August 31, 1995. 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 and a director of the Administrator or
its affiliates.

(3) INVESTMENT TRANSACTIONS
Purchases, maturities and sales of U.S. Treasury obligations, aggregated
$9,905,935,862 and $9,782,029,952, respectively, for the year ended August 31,
1995.

(4) LINE OF CREDIT
The Portfolio, along with other Landmark Funds, entered into an agreement with a
bank which allows the Funds collectively to borrow up to $40 million for
temporary or emergency purposes. Interest on borrowings, if any, is charged to
the specific fund executing the borrowing at the base rate of the bank. In
addition, the $15 million committed portion of the line of credit requires a
quarterly payment of a commitment fee based on the average daily unused portion
of the line of credit. For the year ended August 31, 1995, the commitment fee
allocated to the Portfolio was $5,418. Since the line of credit was established,
there have been no borrowings.

- - ------------------------------------------------------------------------------
U.S. Treasury Reserves Portfolio
- - ------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- - ------------------------------------------------------------------------------

TO THE TRUSTEES AND INVESTORS OF U.S. TREASURY RESERVES PORTFOLIO:

We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of U.S. Treasury Reserves Portfolio (a
New York Trust) as of August 31, 1995, the related statement of operations for
the year then ended, the statement of changes in net assets for the years ended
August 31, 1995 and 1994 and the financial highlights for each of the years in
the two-year period ended August 31, 1995, the eight months ended August 31,
1993, the year ended December 31, 1992 and the period from March 1, 1991
(Commencement of Operations) to December 31, 1991. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
August 31, 1995, by correspondence with the Custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of U.S. Treasury
Reserves Portfolio at August 31, 1995, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
October 9, 1995
<PAGE>
- - ------------------------------------------------------------------------------
SHAREHOLDER
SERVICING AGENTS
- - ------------------------------------------------------------------------------

FOR CITIBANK NEW YORK RETAIL BANKING AND
BUSINESS AND PROFESSIONAL CUSTOMERS:
Citibank, N.A.
450 West 33rd Street, New York, NY 10001
(212) 564-3456 or (800) 846-5300

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

FOR CITIBANK NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100

FOR CITICORP INVESTMENT SERVICES CUSTOMERS:
Citicorp Investment Services
One Court Square, Long Island City, NY 11120
Call Your Investment Consultant or (800) 846-5200,
(212) 736-8170 in New York City

[LOGO] LANDMARK
FUNDS

MONEY MARKET FUNDS:
Cash Reserves
Premium Liquid Reserves
Institutional Liquid Reserves

U.S. Treasury Reserves
Premium U.S. Treasury Reserves
Institutional U.S. Treasury Reserves

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

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

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

TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
H. B. Alvord
C. Oscar Morong, Jr.
E. Kirby Warren

ASSISTANT TREASURER
Barbara M. O'Dette*

ASSISTANT SECRETARIES
Susan Jakuboski*
Molly S. Mugler*
*Affiliated Person of Administrator and Distributor
------------------------| |-------------------------------
INVESTMENT ADVISER
(OF U.S. TREASURY RESERVES 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 AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110

AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110

LEGAL COUNSEL
Bingham, Dana & Gould
150 Federal Street, Boston, MA 02110
------------------------| |-------------------------------
SHAREHOLDER SERVICING AGENTS
(See Inside of Cover)

This report is prepared for the information of shareholders. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.

This Report is Prepared & Printed on Recycled Paper [Recycle logo]
MM/UST/A/95