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(LOGO) LANDMARK(SM) FUNDS
Advised by Citibank, N.A.
Landmark
New York Tax Free
Income Fund
ANNUAL
REPORT
December 31, 1994
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- - --------------------------------------------------------------------------------
A LETTER TO OUR SHAREHOLDERS
- - --------------------------------------------------------------------------------
Dear Shareholder:
1994 was a difficult year for financial markets. A stronger-than-expected
economy and higher interest rates adversely affected most types of investments,
especially the taxable and tax-exempt bond markets, where prices declined almost
10% since the beginning of 1994. The stock market fell just over 8% from its
highs in the first half of the year, but later recouped those losses on the
strength of strong corporate earnings and finished the year with a small gain.
Throughout the period, the Landmark Funds' investment adviser, Citibank,
N.A., managed the Landmark New York Tax Free Income Fund in a manner consistent
with its investment objectives: to provide monthly dividends exempt from
federal, New York State and New York City personal income taxes, as well as to
protect the value of its shareholders' investments. Consistent with this
objective, the Fund seeks to provide an attractive tax-free yield from a high
quality investment portfolio consisting of municipal obligations primarily of
New York State, its municipalities and their agencies.
This Annual Report for the period ended December 31, 1994 reviews the
Fund's investment activities and performance over the past twelve months, and
provides a summary of Citibank's perspective on the financial markets and
outlook for the foreseeable future. On behalf of the Board of Trustees of the
Landmark Funds, I want to thank our shareholders for their participation and
support. We look forward to serving you in the months and years ahead.
/s/Philip W. Coolidge
Philip W. Coolidge
President
January 20, 1995
Remember that Mutual Fund Shares:
* Are not bank deposits or FDIC insured
* Are not obligations of or guaranteed by Citibank or Citicorp Investment
Services
* Are subject to investment risks, including possible loss of the principal
amount invested.
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TABLE OF CONTENTS
1 Letter to Shareholders
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2 Market Environment
Fund Snapshot
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3 Portfolio Manager
The Portfolio Responds
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4 Fund Quotes
Strategy and Outlook
Landmark New York Tax Free
Income Fund--by the Numbers
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5 Fund Data
Performance Highlights
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6 Portfolio of Investments
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8 Statement of Assets and Liabilities
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9 Statement of Operations
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10 Statement of Changes in Net Assets
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11 Financial Highlights
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12 Notes to Financial Statements
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15 Independent Auditors' Report
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MARKET ENVIRONMENT
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1994 saw the largest municipal bond market declines in approximately seven
years, with New York State bonds losing 11% of their value. The tax-exempt
market's poor performance was a reflection of the problems experienced by
virtually all fixed-income securities, including the taxable market, during the
year.
Municipal bonds declined primarily in response to a tighter monetary policy on
the part of the Federal Reserve Board. During 1994, the Federal Reserve raised
the federal funds rate (the rate banks charge each other for overnight loans)
six times, from 3% to 5.5%, in an effort to prevent an acceleration of
inflation. We believe, however, that inflation fears alone are not a sufficient
explanation for the market's decline -- prices increased by only about 3% during
1994. Municipal bonds were also affected by adverse tax legislation regarding
discount bonds and selling pressure caused by redemptions from municipal bond
mutual funds.
In New York State, municipal bond prices declined despite the strength of
the local economy and a relatively scarce supply of new tax-exempt bond issues.
New York ended the 1994 fiscal year with a significant budget surplus, a stark
contrast to the shortfalls of just a few years ago. Similarly, New York City's
financial condition is generally sound, especially in light of spending cuts
implemented by Mayor Giuliani.
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FUND SNAPSHOT
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COMMENCEMENT OF OPERATIONS
September 8, 1986
NET ASSETS AS OF 12/31/94
$86.4 million
Fund Objective To provide monthly dividends exempt from Federal, New York State
and New York City personal income taxes,+ as well as to protect the value of the
investment of shareholders through investing in debt obligations consisting
primarily of municipal bonds and notes.
DIVIDENDS
Paid monthly
CAPITAL GAINS
Distributed annually, if any
BENCHMARKS
* Lipper New York Municipal Bond Funds Average
* Lehman Municipal Bond Index
INVESTMENT ADVISER
Citibank, N.A.
+ A portion of the income may be subject to the Federal Alternative Minimum Tax.
Consult your personal tax advisor.
2
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PORTFOLIO MANAGER
- - --------------------------------------------------------------------------------
FRANK FLAMMINO
Vice President, Citibank, N.A.
Mr. Flammino has been responsible for managing Landmark New York Tax Free Income
Fund since February 1992. He also has responsibility for managing $1.6 billion
in tax-exempt securities and has supervisory responsibility for all trading of
tax-exempt securities at Citibank. Prior to joining Citibank in 1992, Mr.
Flammino was associated with First Buckingham Corporation from 1990-1992. He
also worked for Home Capital Services from 1981-1990, where he was director of
Fixed Income and managed both taxable and tax-exempt portfolios.
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THE PORTFOLIO RESPONDS
- - --------------------------------------------------------------------------------
We actively managed the Fund with an eye toward maintaining shareholder
value and generating competitive levels of tax-free income. To that end, we
continually adjusted the portfolio's sensitivity to rising interest rates. For
example, in the second half of the year, we lowered the Fund's average duration
(a measure of the portfolio's sensitivity to changes in interest rates) from a
high of 8.7 years to 7.3 years as the outlook for the municipal bond market
deteriorated. Shorter-than-average durations enabled us to take advantage of
higher yielding securities as they became available, thereby improving the
Fund's returns in a difficult market environment.
The municipal market's decline presented some outstanding investment
opportunities for the Fund which we expect to benefit shareholders in the months
ahead. For example, pre-refunded bonds (AAA-rated securities backed by U.S.
Treasury securities) offered high yields relative to other types of fixed-income
securities, as did AMT bonds (securities that finance private enterprises such
as sports stadiums). In addition, bonds issued by Puerto Rico provided
attractive values, and comprised 11% of the portfolio at year-end. Income from
Puerto Rican bonds is exempt from federal, state and local taxes for all U.S.
residents. As of December 31, 1994, all securities held by the Fund were rated
investment-grade or its equivalent, including 46% in A-rated bonds or better.
It is important to note that new tax regulations enacted by Congress in
1993 will affect shareholders of Landmark New York Tax-Free Income Fund as well
as every other mutual fund holding Original Issue Discount bonds: a portion of
the returns generated by these bonds are now considered taxable income. As a
result, a relatively small portion of your Fund's 1994 income must be reported
to the IRS.
3
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FUND QUOTES FROM THE PORTFOLIO MANAGER
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"A-rated municipal bonds were providing up to 90% of the yield of taxable
Treasury securities during the year, an indication that municipal bonds are
significantly undervalued." "The supply of new issues of municipal bonds is down
almost 50% from last year's record levels, which should help support bond prices
as the market recovers."
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STRATEGY AND OUTLOOK
- - --------------------------------------------------------------------------------
We believe that the municipal bond market's problems in 1994 have set the
stage for better returns in 1995. If the Federal Reserve is successful in its
efforts to dampen economic growth and prevent a rise of inflation, as we expect,
inflation fears should subside and intermediate-term interest rates should
decline from year-end 1994 levels. The result would be higher bond prices and
the possibility of some capital appreciation for Fund shareholders.
On the other hand, uncertainty regarding the tax policies of Governor
Pataki and the possibility of slower economic growth suggest caution. A less
robust economy is expected to cause sales tax revenues to decline from year-ago
levels, and a modest budget deficit is forecast for fiscal year 1995. If the new
governor cuts income taxes without offsetting spending cuts or increases in
other taxes, the state's financial condition could deteriorate, putting pressure
on municipal bond values.
Although we expect municipal bond market gains by year-end as inflation
fears subside, we remain cautious regarding the market's prospects during the
early part of 1995. Accordingly, we have positioned the Fund defensively to
preserve shareholder value, and we stand ready to take advantage of rising bond
prices as they become available.
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Landmark New York Tax Free Income Fund
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BY THE NUMBERS
- - --------------------------------------------------------------------------------
CHANGES IN PORTFOLIO COMPOSITION
Portfolio of Investments
as of 12/31/94
Cash/Short Term/Other ................. 1%
General Obligations Bonds.............. 7%
Gtd./Prerefunded ...................... 20%
Housing Revenue ....................... 10%
Other Revenue ........................ 13%
Power Revenue ......................... 4%
State Agencies ........................ 17%
Transport Revenue ..................... 12%
Water/Sewer Revenue ................... 16%
Compared to 12/31/93
Cash/Short Term/Other ................. 4%
General Obligations Bonds.............. 10%
Gtd./Prerefunded ...................... 17%
Housing Revenue ....................... 11%
Other Revenue ........................ 9%
Power Revenue ......................... 4%
State Agencies ........................ 20%
Transport Revenue ..................... 15%
Water/Sewer Revenue ................... 10%
4
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FUND DATA All Periods Ending December 31, 1994
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Total Returns
----------------------------
Since
One Five 9/8/86
Year Years* (Inception)*
---- ------ ------------
Landmark New York Tax Free
Income Fund without Sales Charge ....... (7.47)% 5.88% 5.99%
Lipper New York Municipal Bond
Funds Average .......................... (7.54)% 6.21% 6.40%+
Lehman Municipal Bond Index .............. (5.17)% 6.87% 7.24%+
Landmark New York Tax Free
Income Fund with Maximum
Sales Charge of 4.00% .................. (11.16)% 5.01% 5.46%+
*Annualized
+From 8/31/86
30-Day SEC Yield 5.69%
Income Dividends Per Share $0.601
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PERFORMANCE HIGHLIGHTS
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A $10,000 investment in the Fund made on inception date would have grown to
$15,572 with sales charge (as of 12/31/94). The graph below shows how this
compares to our benchmarks over the same period.
The graph includes the initial sales charge on the Fund (no comparable charge
exists for the other indices) and assumes all dividends and distributions from
the Fund are reinvested at Net Asset Value.
The following data is presented as a graph in the printed report.
Landmark Landmark
NY Tax Free NY Tax Free Lipper Lehman
Income - Income - NY State Muni Bond
With Without Muni Funds Index
Sales Charge Sales Charge Average (Unmanaged)
------------ ------------ ------------ -----------
Sept. 86 $10,000 $ 9,600 $10,000 $10,000
$ 9,900 $ 9,504 $ 9,956 $ 9,958
$10,141 $ 9,735 $10,198 $10,065
$10,329 $ 9,915 $10,370 $10,136
- - ------------------------------------------------------------------
Dec. 86 $10,331 $ 9,917 $10,375 $10,155
$10,535 $10,113 $10,586 $10,233
$10,603 $10,179 $10,679 $10,283
$10,556 $10,134 $10,631 $10,289
$ 9,731 $ 9,342 $ 9,887 $10,176
$ 9,608 $ 9,224 $ 9,779 $10,178
$ 9,973 $ 9,574 $10,019 $10,294
$10,042 $ 9,641 $10,120 $10,339
$10,053 $ 9,651 $10,157 $10,340
$ 9,453 $ 9,075 $ 9,681 $10,267
$ 9,430 $ 9,052 $ 9,725 $10,515
$ 9,804 $ 9,412 $ 9,991 $10,583
- - ------------------------------------------------------------------
Dec. 87 $ 9,996 $ 9,596 $10,205 $10,665
$10,399 $ 9,983 $10,608 $10,863
$10,514 $10,094 $10,709 $10,963
$10,187 $ 9,779 $10,480 $10,959
$10,219 $ 9,810 $10,529 $10,961
$10,249 $ 9,839 $10,535 $10,935
$10,431 $10,014 $10,701 $11,100
$10,490 $10,071 $10,766 $11,091
$10,523 $10,102 $10,805 $11,103
$10,737 $10,308 $11,012 $11,255
$11,011 $10,571 $11,255 $11,385
$10,879 $10,444 $11,123 $11,325
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Dec. 88 $11,111 $10,666 $11,293 $11,339
$11,250 $10,800 $11,454 $11,433
$11,082 $10,639 $11,353 $11,414
$11,120 $10,675 $11,336 $11,463
$11,443 $10,986 $11,626 $11,675
$11,713 $11,245 $11,846 $11,857
$11,862 $11,388 $12,003 $12,115
$12,017 $11,536 $12,128 $12,329
$11,837 $11,363 $12,009 $12,208
$11,696 $11,228 $11,955 $12,271
$11,862 $11,387 $12,058 $12,493
$12,073 $11,591 $12,242 $12,608
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Dec. 89 $12,191 $11,704 $12,341 $12,654
$12,058 $11,576 $12,210 $12,627
$12,111 $11,627 $12,314 $12,686
$12,115 $11,630 $12,283 $12,709
$11,924 $11,447 $12,130 $12,711
$12,246 $11,756 $12,442 $12,938
$12,415 $11,919 $12,588 $13,090
$12,691 $12,183 $12,823 $13,265
$12,389 $11,893 $12,558 $13,280
$12,319 $11,826 $12,507 $13,392
$12,485 $11,986 $12,631 $13,560
$12,888 $12,372 $12,919 $13,716
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Dec. 90 $12,915 $12,398 $12,961 $13,893
$13,131 $12,606 $13,138 $14,029
$13,114 $12,589 $13,210 $14,113
$13,113 $12,588 $13,259 $14,201
$13,318 $12,785 $13,466 $14,345
$13,432 $12,895 $13,571 $14,430
$13,420 $12,883 $13,557 $14,465
$13,618 $13,073 $13,777 $14,609
$13,816 $13,264 $13,975 $14,850
$14,036 $13,474 $14,185 $15,052
$14,183 $13,616 $14,321 $15,228
$14,197 $13,629 $14,341 $15,401
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Dec. 91 $14,508 $13,928 $14,636 $15,698
$14,457 $13,879 $14,556 $15,618
$14,493 $13,914 $14,610 $15,658
$14,449 $13,871 $14,656 $15,621
$14,542 $13,961 $14,812 $15,772
$14,787 $14,195 $15,028 $15,965
$15,086 $14,482 $15,339 $16,172
$15,605 $14,981 $15,900 $16,424
$15,379 $14,764 $15,659 $16,590
$15,431 $14,814 $15,706 $16,791
$15,153 $14,547 $15,445 $16,623
$15,498 $14,878 $15,823 $16,567
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Dec. 92 $15,648 $15,022 $16,026 $16,752
$15,896 $15,260 $16,223 $17,017
$16,505 $15,845 $16,866 $17,216
$16,369 $15,714 $16,694 $17,275
$16,494 $15,834 $16,877 $17,406
$16,531 $15,869 $16,995 $17,347
$16,804 $16,132 $17,281 $17,534
$16,810 $16,138 $17,276 $17,566
$17,099 $16,415 $17,652 $17,776
$17,297 $16,605 $17,848 $17,835
$17,327 $16,633 $17,882 $17,878
$17,170 $16,483 $17,682 $17,838
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Dec. 93 $17,530 $16,829 $18,053 $17,910
$17,700 $16,992 $18,245 $18,058
$17,264 $16,573 $17,787 $17,874
$16,482 $15,822 $16,986 $17,699
$16,512 $15,852 $17,003 $17,596
$16,651 $15,985 $17,170 $17,616
$16,449 $15,791 $17,050 $17,642
$16,777 $16,106 $17,350 $17,835
$16,856 $16,182 $17,407 $17,890
$16,525 $15,864 $17,073 $17,793
$16,209 $15,561 $16,701 $17,816
$15,845 $15,211 $16,246 $17,727
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Dec. 94 $16,220 $15,572 $16,696 $17,768
Notes: All Fund performance numbers represent past performance, and are no
guarantee of future results. The Fund's share price and investment return will
fluctuate, so that the value of an investor's shares, when redeemed, may be
worth more or less than their original cost. Total returns include change in
share price and reinvestment of dividends and distributions, if any. Total
return figures "with sales charge" are provided in accordance with SEC
guidelines for comparative purposes for prospective investors.
5
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Landmark New York Tax Free Income Fund
PORTFOLIO OF INVESTMENTS December 31, 1994
- - --------------------------------------------------------------------------------
Moody's Principal
Bond Amount
Rating Issuer (000's omitted) Value
- - --------------------------------------------------------------------------------
MUNICIPAL BONDS -- 98.7%
- - --------------------------------------------------------------------------------
General Obligation Bonds -- 7.1%
BAA New York City, NY Series B,
5.75% due 8/15/13.................. $ 900 $ 758,862
BAA1 New York City, NY Series F,
7.65% due 2/1/06................... 3,000 3,212,310
BAA1 New York City, NY Series F,
8.40% due 11/15/06................. 2,000 2,193,720
-----------
6,164,892
-----------
Guaranteed/Prerefunded and ETM -- 19.8%
AAA New York State Housing
Finance Agency, ETM,
7.90% due 11/1/06.................. 5,750 6,541,660
NR Puerto Rico Commonwealth
Highway Authority,
6.625% due 7/1/12.................. 2,000 1,980,100
BAA1 Puerto Rico Commonwealth
Highway Authority,
8.00% due 7/1/05................... 2,900 3,195,945
BAA1 Puerto Rico Commonwealth,
5.50% due 7/1/13................... 4,500 3,903,975
BAA1 Puerto Rico Commonwealth,
6.00% due 7/1/14................... 1,600 1,476,736
-----------
17,098,416
-----------
Housing Revenue -- 10.1%
AA New York State Mortgage
Agency Revenue, AMT,
6.65% due 4/1/26................... 1,000 942,340
AA New York State Mortgage
Agency Revenue, AMT,
7.25% due 10/1/07.................. 6,075 6,248,684
AA New York State Mortgage
Agency Revenue, AMT,
7.75% due 10/1/23.................. 1,480 1,516,689
-----------
8,707,713
-----------
Power Revenue -- 4.0%
AAA New York State Energy
Research & Development
Authority, AMT, 5.95%
due 12/1/27........................ 2,000 1,730,800
BA1 New York State Energy
Research & Development
Authority, AMT, 6.90%
due 8/1/22......................... 2,000 1,747,520
-----------
3,478,320
-----------
State Agencies -- 16.7%
BAA1 New York State Dormitory
Authority, 5.00% due 7/1/20........ 2,000 1,479,080
BAA1 New York State Dormitory
Authority, 5.625% due 5/15/13...... 1,000 848,300
BAA1 New York State Dormitory
Authority, 5.75% due 7/1/07........ 4,500 4,056,840
BAA1 New York State Dormitory
Authority, 5.875% due 5/15/11...... 3,000 2,690,820
BAA1 New York State Dormitory
Authority, 6.375% due 7/1/08....... 2,900 2,775,155
A New York State Local
Government Assistance,
7.00% due 4/1/10................... 1,000 1,023,710
BAA1 New York State Urban
Development Revenue,
5.75% due 1/1/13................... 500 435,830
BAA1 New York State Urban
Development Revenue,
5.875% due 4/1/09.................. 1,245 1,106,518
-----------
14,416,253
-----------
Transportation Revenue -- 12.2%
BAA1 Metropolitan Transportation,
Authority, NY, 5.75%
due 7/1/08......................... 5,725 5,097,254
6
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Landmark New York Tax Free Income Fund
PORTFOLIO OF INVESTMENTS December 31, 1994 continued
- - --------------------------------------------------------------------------------
Moody's Principal
Bond Amount
Rating Issuer (000's omitted) Value
- - --------------------------------------------------------------------------------
Transportation Revenue (cont'd)
BAA1 New York State Thruway
Authority, 5.875% due 4/1/14....... $1,000 $ 875,930
AA Triborough Bridge & Tunnel
Authority, 6.625% due 1/1/12....... 3,000 3,028,230
AA Triborough Bridge & Tunnel
Authority, 7.25% due 1/1/10........ 1,500 1,539,090
-----------
10,540,504
-----------
Water and Sewer Revenue -- 15.6%
A New York City Municipal Water
Finance Authority,
7.50% due 6/15/12.................. 3,000 3,174,300
AA New York State Environmental
Facilities, 5.75% due 6/15/10 ..... 3,000 2,746,110
AA New York State Environmental
Facilities, 6.50% due 12/1/14...... 2,000 1,955,500
AA New York State Environmental
Facilities, 7.00% due 6/15/12...... 3,360 3,424,042
AA New York State Environmental
Facilities, 7.125% due 7/1/12...... 2,100 2,175,852
-----------
13,475,804
-----------
Other -- 13.2%
NR New York City Industrial
Development Agency, 7.00%
due 5/1/08........................ 800 771,384
A New York City Industrial
Development Agency, AMT,
6.00% due 1/1/19................... 2,000 1,741,620
BAA New York State Medical
Care Facilities, 6.125%
due 8/15/13........................ 2,000 1,726,740
BAA1 New York State Medical
Care Facilities, 6.375%
due 8/15/14........................ 2,000 1,844,600
AAA New York State Medical
Care Facilities, 6.90%
due 8/15/34........................ 3,000 3,010,620
BAA Onondaga County, NY
Resource Recovery Revenue,
AMT, 7.00% due 5/1/15.............. 2,500 2,319,900
-----------
11,414,864
-----------
Total Municipal Bonds
(Identified Cost $85,463,319)............... 85,296,766
-----------
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VARIABLE RATE DEMAND NOTES* -- 3.8%
- - --------------------------------------------------------------------------------
New York State Local
Government Assistance,
due 4/1/23 .............................. 2,600 2,600,000
New York City, NY, due 8/15/23.............. 700 700,000
-----------
Total Variable Rate Demand Notes,
at amortized cost.................. 3,300,000
-----------
Total Investments
(Identified Cost, $88,763,319)............ 102.5% 88,596,766
Other Assets,
Less Liabilities.......................... (2.5) (2,197,690)
----- -----------
Net Assets.................................. 100.0% $86,399,076
===== ===========
AMT - Subject to Alternate Minimum Tax
ETM - Escrow to Maturity for timely payment of principal
*Variable rate demand notes have a demand feature under which the Fund could
tender them back to the issuer on no more than 7 days' notice.
See notes to financial statements
7
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Landmark New York Tax Free Income Fund
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994
- - --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A)
(Identified Cost, $88,763,319) ...................... $88,596,766
Cash .................................................. 28,622
Interest receivable ................................... 1,837,879
Receivable for shares of beneficial interest sold ..... 5,140
-----------
Total assets ...................................... 90,468,407
-----------
LIABILITIES:
Payable for investments purchased ..................... 2,965,657
Payable for shares of beneficial interest repurchased . 1,012,450
Payable to affiliates:
Investment advisory fees (Note 2) ................. $ 9,013
Shareholder servicing agents' fees (Note 3B) ...... 18,677 27,690
--------
Accrued expenses and other liabilities ................ 63,534
-----------
Total liabilities ................................. 4,069,331
-----------
NET ASSETS for 8,560,116 shares of
beneficial interest outstanding ..................... $86,399,076
===========
Net Assets Consist of:
Paid-in capital ....................................... $95,542,665
Accumulated net realized loss on investments .......... (9,021,892)
Unrealized depreciation of investments ................ (166,553)
Undistributed net investment income ................... 44,856
-----------
Total ............................................. $86,399,076
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST .............................. $10.09
======
COMPUTATION OF OFFERING PRICE:
Maximum Offering Price per share based on
a 4.00% sales charge ($10.09 / 0.96) ................ $10.51
======
See notes to financial statements
8
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Landmark New York Tax Free Income Fund
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
- - --------------------------------------------------------------------------------
Investment Income (Note 1B):
Interest ........................................... $ 6,658,939
Expenses:
Investment advisory fees (Note 2) .................. $421,226
Shareholder servicing agents' fees (Note 3B) ....... 421,226
Administrative fees (Note 3A) ...................... 210,613
Custodian fees ..................................... 82,669
Distribution fees (Note 4) ......................... 52,653
Legal services ..................................... 36,394
Auditing services .................................. 32,877
Shareholder reports ................................ 28,172
Trustee fees ....................................... 26,809
Transfer agent fees ................................ 6,607
Miscellaneous ...................................... 21,362
----------
Total expenses ................................ 1,340,608
Less aggregate amount waived by Investment Adviser,
Administrator, Shareholder Servicing Agents
and Distributor (Notes 2, 3A, 3B, and 4) ......... (498,095)
----------
Net expenses .................................. 842,513
------------
Net investment income ......................... 5,816,426
------------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized loss on investment transactions ....... (6,997,961)
Unrealized appreciation (depreciation)
of investments--
Beginning of period ........................... (7,417,895)
End of period ................................. (166,553)
----------
Net change in unrealized appreciation
(depreciation) ................................... (7,584,448)
------------
Net realized and unrealized gain (loss)
on investments ................................... (14,582,409)
------------
Net Decrease in Net Assets Resulting
from Operations .................................. $ (8,765,983)
============
See notes to financial statements
9
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Landmark New York Tax Free Income Fund
STATEMENT OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Four Months Ended
Year Ended December 31, 1993 Year Ended
December 31, 1994 (Note 1E) August 31, 1993
----------------- --------- ---------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income ..................................................... $ 5,816,426 $ 1,879,457 $ 4,761,978
Net realized gain (loss) on investment transactions ....................... (6,997,961) 488,945 1,973,333
Net change in unrealized appreciation (depreciation) of investments ....... (7,584,448) 556,056 3,256,252
------------- ------------- -------------
Net increase (decrease) in net assets resulting from operations ........... (8,765,983) 2,924,458 9,991,563
------------- ------------- -------------
Equalization (Note 1D) .................................................... -- 14,830 53,028
------------- ------------- -------------
Dividends Declared to Shareholders from:
Net investment income ..................................................... (5,834,049) (1,887,709) (4,707,500)
------------- ------------- -------------
Transactions in Shares of Beneficial Interest (Note 6):
Net proceeds from sale of shares .......................................... 10,231,447 18,329,545 40,050,646
Net asset value of shares issued to shareholders from
reinvestment of dividends ............................................... 5,829,596 1,736,998 4,048,949
Cost of shares repurchased ................................................ (35,886,289) (11,877,246) (19,038,405)
------------- ------------- -------------
Net increase (decrease) in net assets from
transactions in shares of beneficial interest ......................... (19,825,246) 8,189,297 25,061,190
------------- ------------- -------------
Net Increase (Decrease) in Net Assets ..................................... (34,425,278) 9,240,876 30,398,281
Net Assets:
Beginning of period ....................................................... 120,824,354 111,583,478 81,185,197
------------- ------------- -------------
End of period (including undistributed net investment
income of $44,856, $423,363 and $176,034, respectively) ................. $ 86,399,076 $ 120,824,354 $ 111,583,478
============= ============= =============
</TABLE>
See notes to financial statements
10
<PAGE>
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------------------
Landmark New York Tax Free Income Fund
FINANCIAL HIGHLIGHTS
- - -------------------------------------------------------------------------------------------------------------------------------
Four Months Ended
Year Ended December 31, Year Ended August 31,
December 31, 1993 --------------------------------------------------
1994 (Note 1E) 1993 1992 1991 1990
----------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ........... $ 11.54 $ 11.44 $ 10.82 $ 10.27 $ 9.77 $ 9.89
-------- -------- -------- -------- -------- --------
Income From Operations:
Net investment income .......................... 0.566 0.210 0.567 0.589 0.583 0.565
Net realized and unrealized
gain (loss) on investments ................... (1.415) 0.076 0.610 0.541 0.510 (0.117)
-------- -------- -------- -------- -------- --------
Total from operations ..................... (0.849) 0.286 1.177 1.130 1.093 0.448
-------- -------- -------- -------- -------- --------
Less Dividends From:
Net investment income ........................ (0.601) (0.186) (0.557) (0.580) (0.593) (0.568)
-------- -------- -------- -------- -------- --------
Net Asset Value, end of period ............... $ 10.09 $ 11.54 $ 11.44 $ 10.82 $ 10.27 $ 9.77
======== ======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period
(000's omitted) .............................. $ 86,399 $120,824 $111,583 $ 81,185 $ 73,884 $ 76,442
Ratio of expenses to average
net assets ................................... 0.80% 0.80%<F1> 0.80% 0.80% 0.81% 1.37%
Ratio of net investment income
to average net assets ........................ 5.52% 4.84%<F1> 5.11% 5.58% 5.82% 5.73%
Portfolio turnover ............................. 150% 46% 149% 143% 337% 170%
Total return ................................... (7.47)% 2.52%<F2> 11.19% 11.31% 11.52% 4.66%
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion of their fees for the periods indicated, the net
investment income per share and the ratios would have been as follows:
Net investment income per share $0.508 $0.191 $0.515 $0.537 $0.540 $0.561
Ratios:
Expenses to average net assets 1.27% 1.23%<F1> 1.27% 1.30% 1.24% 1.40%
Net investment income to
average net assets 5.05% 4.40%<F1> 4.64% 5.09% 5.39% 5.69%
<FN>
<F1>Annualized
<F2>Not annualized
</TABLE>
See notes to financial statements
11
<PAGE>
- - --------------------------------------------------------------------------------
Landmark New York Tax Free Income Fund
NOTES TO FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Landmark New York Tax Free Income Fund (the "Fund") is a separate
non-diversified series of Landmark Tax Free Income Funds (the "Trust"), a
Massachusetts business trust. The Trust is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The Investment Adviser of the Fund is Citibank, N.A. ("Citibank"). The Landmark
Funds Broker-Dealer Services, Inc. ("LFBDS") acts as the Fund's Administrator
and Distributor. Citibank also serves as Sub-Administrator and makes shares
available to customers as Shareholder Servicing Agent.
The significant accounting policies consistently followed by the Fund are in
conformity with generally accepted accounting principles and are as follows:
A. INVESTMENT SECURITY VALUATIONS -- Debt securities (other than short-term
obligations maturing in 60 days or less) are valued on the basis of valuations
furnished by a pricing service which takes into account appropriate factors such
as institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, and other market data, without exclusive
reliance upon quoted prices or exchange or over-the-counter prices, since such
valuations are believed to reflect more accurately the fair value of the
securities. Short-term obligations (maturing in 60 days or less) are valued at
amortized cost, which approximates market value. Securities, if any, for which
there are no such valuations or quotations are valued at fair value as
determined in good faith by or under guidelines established by the Trustees.
B. INCOME -- Interest income is determined on the basis of interest accrued and
discount earned, adjusted for amortization of premium or discount on long-term
debt securities when required for federal income tax purposes.
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, including any net realized
gain on investment transactions. Accordingly, no provision for federal income or
excise tax is necessary. Dividends by the Fund from net interest received on
tax-exempt municipal bonds are not includable by shareholders as gross income
for federal income tax purposes because the Fund intends to meet certain
requirements of the Internal Revenue Code applicable to regulated investment
companies which will enable the Fund to pay exempt interest dividends. The
portion of such interest, if any, earned on private activity bonds issued after
August 7, 1986, may be considered a tax preference item to shareholders. At
December 31, 1994, the Fund, for federal income tax purposes, had a capital loss
carryover of $8,989,415, of which $610,517 will expire on December 31, 1995,
$1,380,937 will expire on December 31, 1996 and $6,997,961 will expire on
December 31, 2002. Such capital loss carryover will reduce the Fund's taxable
income arising from future net realized gain on investment transactions, if any,
to the extent permitted by the Internal Revenue Code, and thus will reduce the
amount of the distributions to shareholders which would otherwise be necessary
to relieve the Fund of any liability for federal income or excise tax.
D. EQUALIZATION -- As of January 1, 1994, the Fund discontinued equalization
accounting. This has no effect on the Fund's net assets, results of operations,
or net asset value per share.
E. CHANGE IN FISCAL YEAR END -- Effective September 1, 1993, the Fund changed
its fiscal year end from August 31 to December 31.
F. DISTRIBUTIONS -- Effective September 1, 1993, the Fund adopted Statement of
Position (SOP) 93-2, Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions by
Investment Companies. The SOP distinguishes between distributions on a tax basis
and a financial reporting basis and requires that only distributions in excess
of tax basis earnings and profits be reported in the financial statements as a
return of capital. The SOP also requires that differences in the recognition or
classification of income between the financial statements and tax earnings and
12
<PAGE>
- - --------------------------------------------------------------------------------
Landmark New York Tax Free Income Fund
NOTES TO FINANCIAL STATEMENTS continued
- - --------------------------------------------------------------------------------
profits which result in temporary over-distributions for financial statement
purposes, are classified as distributions in excess of net investment income or
accumulated net realized gains. The cumulative effect of adopting the SOP
increased undistributed net investment income, decreased accumulated realized
gain on investments and decreased paid-in capital by $240,751, $4,784 and
$235,967, respectively. During the year ended December 31, 1994, $360,884 was
reclassified from undistributed net investment income to paid-in capital due to
differences between book and tax accounting for equalization. These changes had
no effect on the net assets and the net asset value per share.
G. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses are determined on
the identified cost basis. Distributions to shareholders and shares issuable to
shareholders electing to receive distributions in shares are recorded on the
ex-dividend date.
(2) INVESTMENT ADVISORY FEES
The investment advisory fee paid to Citibank, as compensation for overall
investment management services amounted to $421,226, of which $229,257 was
voluntarily waived for the year ended December 31, 1994. The investment advisory
fee is computed at the annual rate of 0.40% of average daily net assets.
(3) ADMINISTRATIVE SERVICES PLAN
The Trust, on behalf of the Fund, has adopted an Administrative Services Plan
(the "Administrative Services Plan") which provides that the Trust may obtain
the services of an Administrator, one or more Shareholder Servicing Agents and
other Servicing Agents and may enter into agreements providing for the payment
of fees for such services. Under the Administrative Services Plan, the aggregate
of the fee paid to the Administrator from the Fund, the fees paid to the
Shareholder Servicing Agents from the Fund 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 fee paid to the Administrator, as compensation for
overall administrative services and general office facilities, is accrued daily
and paid monthly at an annual rate of 0.20% of the Fund's average daily net
assets. The Administrative fee amounted to $210,613, of which $58,225 was
voluntarily waived for the year ended December 31, 1994. Citibank acts as
Sub-Administrator and performs such duties and receives such compensation from
LFBDS as from time to time is agreed to by LFBDS and Citibank. The Fund pays no
compensation directly to any Trustee or any officer who is affiliated with the
Administrator, all of whom receive remuneration for their services to the Fund
from the Administrator or its affiliates. Certain of the officers and a Trustee
of the Fund are officers and directors of the Administrator or its affiliates.
B. SHAREHOLDER SERVICING AGENTS FEES -- The Trust, on behalf of the Fund, has
entered into shareholder servicing agreements with each Shareholder Servicing
Agent pursuant to which that Shareholder Servicing Agent acts as an agent for
its customers and provides other related services. For their services, each
Shareholder Servicing Agent receives fees from the Fund, which may be paid
periodically, which may not exceed, on an annualized basis, an amount equal to
0.40% of the average daily net assets of the Fund represented by shares owned
during the period for which payment is being made by investors for whom such
Shareholder Servicing Agent maintains a servicing relationship. Shareholder
Servicing Agents' fees amounted to $421,226, of which $157,960 was voluntarily
waived for the year ended December 31, 1994.
(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 sales of
shares of the Fund, at an annual rate not to exceed 0.15% of the Fund's average
daily net assets. The Distributor may also receive an additional fee from the
13
<PAGE>
- - --------------------------------------------------------------------------------
Landmark New York Tax Free Income Fund
NOTES TO FINANCIAL STATEMENTS continued
- - --------------------------------------------------------------------------------
Fund at an annual rate not to exceed 0.05% of the Fund's average daily net
assets in anticipation of, or as reimbursement for, advertising expenses
incurred by the Distributor in connection with the sale of shares of the Fund.
No payment of such additional fee has been made during the period. Under the
Administrative Services Plan distribution fees were computed at an annual rate
of 0.05% of the Fund's average daily net assets, which amounted to $52,653, all
of which was voluntarily waived for the year ended December 31, 1994.
(5) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $152,617,077 and $169,415,861, respectively.
(6) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional Shares of Beneficial Interest (without par value).
Transactions in shares of beneficial interest were as follows:
Four Months
Ended
Year Ended December 31, Year Ended
December 31, 1993 August 31,
1994 (Note 1E) 1993
------------ ------------ -----------
Shares sold ........................... 921,675 1,601,228 3,608,691
Shares issued to shareholders from
reinvestment of dividends ............ 549,080 151,555 366,206
Shares repurchased .................... (3,381,031) (1,037,187) (1,725,675)
----------- ----------- -----------
Net increase
(decrease) ......................... (1,910,276) 715,596 2,249,222
=========== =========== ===========
(7) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in value of the investment
securities owned at December 31, 1994, as computed on a federal income tax
basis, are as follows:
Aggregate cost ............................................... $88,763,319
===========
Gross unrealized appreciation ................................ $ 1,516,722
Gross unrealized depreciation ................................ (1,683,275)
-----------
Net unrealized depreciation .................................. $ (166,553)
===========
Effective September 1, 1993, the Fund changed the method used in determining
cost of securities sold for financial statement purposes from average cost to
identified cost. This change had no effect on the realized gains previously
reported for financial reporting purposes, net assets, net asset value per share
or distributions. The new method of accounting for the cost of securities was
adopted because it better matches specific costs with proceeds from sales of
securities and more closely conforms realized gains with related distributions.
(8) LINE OF CREDIT
The Fund, along with other Landmark Funds, entered into an agreement with a bank
which allows the Funds collectively to borrow up to $40 million for temporary or
emergency purposes. Interest on borrowings, if any, is charged to the specific
fund executing the borrowing at the base rate of the bank. In addition, the
committed portion of the line of credit requires a quarterly payment of a
commitment fee based on the average daily unused portion of the line of credit.
For the year ended December 31, 1994, the commitment fee allocated to the Fund
was $1,108. Since the line of credit was established there have been no
borrowings.
14
<PAGE>
- - --------------------------------------------------------------------------------
Landmark New York Tax Free Income Fund
INDEPENDENT AUDITORS' REPORT
- - --------------------------------------------------------------------------------
TO THE TRUSTEES AND SHAREHOLDERS OF LANDMARK NEW YORK TAX FREE INCOME FUND:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Landmark New York Tax Free Income
Fund, a separate series of Landmark Tax Free Income Funds (the "Trust") (a
Massachusetts business trust), as of December 31, 1994, the related statement of
operations for the year ended December 31, 1994, the statements of changes in
net assets for the year ended December 31, 1994, the four months ended December
31, 1993 and for the year ended August 31, 1993, and the financial highlights
for the year ended December 31, 1994, the four months ended December 31, 1993
and for each of the years in the four-year period ended August 31, 1993. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
December 31, 1994, by correspondence with the Custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Landmark New York
Tax Free Income Fund at December 31, 1994, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 1, 1995
<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:
Citibank, N.A.
Citigold
P.O. Box 5130, New York, NY 10150-5130
Call Your Citigold Executive or (212) 974-0900 or (800) 285-1701
For Private Banking Clients:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
Investment Specialist or (212) 559-5959
For Citibank Global Asset Management Clients:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117
For North American Investor Services Clients:
Citibank, N.A.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100
For Citicorp Investment Services Customers:
Citicorp Investment Services
One Court Square, Long Island City, NY 11120
Call Your Investment Consultant or (800) 846-5200
(212) 736-8170 in New York City
15
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
H. B. Alvord
Elliott J. Berv
Mark T. Finn
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
C. Oscar Morong, Jr.
Walter E. Robb, III
E. Kirby Warren
William S. Woods, Jr.
SECRETARY AND TREASURER
James B. Craver*
ASSISTANT TREASURER
Barbara M. O'Dette*
ASSISTANT SECRETARY
Molly S. Mugler*
*Affiliated Person of Administrator and Distributor
- - --------------------------------|--|-------------------------------------------
INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue, Boston, MA 02116
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham, Dana & Gould
150 Federal Street, Boston, MA 02110
- - --------------------------------|--|-------------------------------------------
SHAREHOLDER SERVICING AGENTS
(See Inside Cover)
This report is prepared for the information of shareholders. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
This Report is Prepared & Printed on Recycled Paper(Recycle Logo)
NYTFI/A/94
