<PAGE>
- --------------------------------------------------------------------------------
A LETTER TO OUR SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Shareholder:
The first half of 1996 represented a difficult time for most U.S. bond
markets. Stronger-than-expected economic growth produced fear among fixed-income
investors that the rate of inflation might accelerate, causing them to bid down
prices of most bonds. While municipal bonds--including those issued by the State
of New York, its municipalities and authorities--were affected by the adverse
investment environment, tax-free issues performed significantly better during
the period than comparable U.S. Treasury securities.
As the Fund's prospectus describes, the Landmark Funds' investment adviser,
Citibank, N.A., manages the Landmark New York Tax-Free Income Fund to generate
high levels of current income exempt from federal, New York State and New York
City personal income taxes, and to preserve the value of its shareholders'
investment. Consistent with this objective, the Fund seeks to provide an
attractive yield from a high-quality investment portfolio consisting of
municipal obligations primarily of New York State, its municipalities and their
agencies.
This Semi-Annual Report reviews the Fund's investment activities and
performance and provides a summary of Citibank's perspective on and outlook for
the U.S. 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
July 19, 1996
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
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2 Market Environment
Fund Snapshot
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Portfolio Manager
3 The Portfolio Manager Responds
Quotes from the Portfolio Manager
- --------------------------------------------------------------------------------
Strategy and Outlook
4 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
- --------------------------------------------------------------------------------
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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<PAGE>
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MARKET ENVIRONMENT
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When the year began, many market-watchers, including Citibank, called for
slow economic growth during the first half of 1996. We expected inflation
pressures to remain low, giving the officials at the Federal Reserve the
elbow-room they needed to lower short-term interest rates further. As a result,
long-term bond yields were expected to fall slightly, creating a positive
environment for both stocks and bonds.
The consensus forecast proved inaccurate. The economy grew faster than we
expected, fueled by higher spending among both businesses and consumers. In
addition, stronger-than-expected employment figures caused concern among
fixed-income investors that the rate of inflation would accelerate. As a result,
the yield on the 30-year U.S. Treasury bond, considered a benchmark for
long-term interest rates, rose during the period from around 6.0% to almost
6.9%.
Yet, municipal bonds generally performed better during the period than
their taxable counterparts. Most significantly, it became increasingly unlikely
that proposals for a flat personal income tax, if passed by Congress, would do
away with the tax advantages of municipal bonds. This change in market
psychology made investors more comfortable committing their assets to
longer-term municipal bonds, which helped boost demand. At the same time, supply
of new municipal bond issues continues to be quite limited, creating a
supply-and-demand imbalance that benefits existing bondholders.
<PAGE>
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FUND SNAPSHOT
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COMMENCEMENT OF OPERATIONS
September 8, 1986
NET ASSETS AS OF 6/30/96
$85.5 million
FUND OBJECTIVE
To generate high levels of current income exempt from federal, New York State
and New York City personal income taxes, and to preserve the value of its
shareholders' investment through investing in debt obligations consisting
primarily of municipal bonds and notes.
DIVIDENDS
Paid monthly, if any
CAPITAL GAINS
Distributed annually, if any
BENCHMARKS
o Lipper New York Municipal Bond Funds Average
o 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.
<PAGE>
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PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
CARLA WROCKLAGE
Vice President, Citibank, N.A.
Ms. Wrocklage assumed responsibility for the management of the Fund on July 1,
1995. Ms. Wrocklage has over 9 years of tax exempt portfolio management
experience. Prior to joining the Adviser in 1995, she was a municipal bond fund
portfolio manager for Prudential Insurance Company of America. She began her
career with Keystone Group.
- --------------------------------------------------------------------------------
THE PORTFOLIO MANAGER RESPONDS
- --------------------------------------------------------------------------------
We actively managed the New York Tax Free Income Fund to take advantage of
changing market conditions. Although we maintained the Fund's average duration
(a measure of sensitivity to changes in interest rates) on the longer end of
neutral for much of the period in anticipation of a bond market rally, we pulled
back to a neutral stance when it became apparent that the economy's strength was
likely to continue.
In this adverse interest-rate environment, we attempted to capture
incrementally higher yields by increasing the percentage of assets allocated to
investments at the lower end of the investment-grade range. We attempted to pick
up additional yield by investing in a large liquid, nonrated issue that
Citibank's credit analysts considered to be the equivalent of investment-grade-
rated bonds.
- --------------------------------------------------------------------------------
QUOTES FROM THE PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
"Because municipal bonds were oversold at the beginning of the year, tax-free
securities performed better than their taxable counterparts during the first six
months of 1996."
"We are optimistic about the relative prospects for municipal bonds because of
our expectations for a strong economy, low inflation and greater demand for
investments than available supply."
"Our strategy in this high-demand, low-supply environment is to look for
relative values in tax-free bonds wherever they can be found."
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<PAGE>
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STRATEGY AND OUTLOOK
- --------------------------------------------------------------------------------
We expect a relatively strong rate of economic growth to persist through
the second half of 1996. These conditions should continue to fuel concerns about
rising inflation among economists and bond investors. In turn, this concern may
cause the Federal Reserve to reverse direction and raise short-term interest
rates later this year. If such a change in monetary policy occurs, bond
yields--including those of New York municipal bonds--should rise from current
levels. However, the dramatic rise in yields that has already occurred this year
has left bonds fairly valued, which should limit the risk of further declines
even if the Federal Reserve begins to raise short-term interest rates.
At the same time, we expect the current municipal supply-and-demand
imbalance to continue. In July, billions of dollars will be returned to
municipal bond investors in the form of redemptions, bond calls and interest
payments. Investors will be hard-pressed to find comparable tax-free returns
from existing investments, and municipalities are unlikely to issue enough new
bonds to absorb all of the expected demand. Accordingly, we believe that
existing municipal bondholders, such as the Fund, are well positioned to take
advantage of the opportunities such an imbalance should produce.
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LANDMARK NEW YORK TAX FREE INCOME FUND
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BY THE NUMBERS
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--------------------------------------------------------------------------
CHANGES IN PORTFOLIO COMPOSITION
Portfolio of Investments as of 6/30/96 ... Compared to 12/31/95
CASH/SHORT TERM/OTHER 3% CASH/SHORT TERM/OTHER 2%
OTHER REVENUE 19% OTHER REVENUE 16%
WATER/SEWER REVENUE 13% WATER/SEWER REVENUE 13%
TRANSPORTATION REVENUE 10% TRANSPORTATION REVENUE 13%
POWER REVENUE 2% POWER REVENUE 5%
HOUSING REVENUE 9% HOUSING REVENUE 9%
GTD./PREREFUNDED 14% GTD./PREREFUNDED 13%
GENERAL OBLIGATION BONDS 10% GENERAL OBLIGATION BONDS 12%
STATE AGENCIES 20% STATE AGENCIES 17%
--------------------------------------------------------------------------
<PAGE>
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FUND DATA All Periods Ending June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
TOTAL RETURNS
---------------------------------------------
<CAPTION>
SINCE
SIX ONE FIVE 9/8/86
MONTHS** YEAR YEARS* (INCEPTION)*
-------- ---- ------ ------------
<S> <C> <C> <C> <C>
Landmark New York Tax Free Income Fund
without Sales Charge (1.50)% 5.96% 7.02% 6.66%
Lipper New York Municipal Bond Funds Average (1.40)% 5.54% 7.43% 6.87%
Lehman Municipal Bond Index (0.45)% 6.64% 7.78% 7.80%
Landmark New York Tax Free Income Fund
with Maximum Sales Charge of 4.00% (5.44)% 1.72% 6.15% 6.22%
</TABLE>
* Average annual total return
** Not Annualized
+ From 8/31/86
30-Day SEC Yield 5.10%
Income Dividends Per Share $0.30
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
A $10,000 investment in the Fund made on inception date would have grown to
$18,085 with sales charge (as of 6/30/96). The graph shows how this compares to
our benchmark over the same period.
The graph includes the initial 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.
<PAGE>
LANDMARK
N.Y. TAX LANDMARK
FREE N.Y. TAX
INCOME - FREE LIPPER NY LEHMAN
WITHOUT INCOME - STATE MUNI MUNI BOND
SALES WITH SALES FUNDS INDEX
CHARGE CHARGE AVERAGE (UNMANAGED)
------------------------------------------------------------
Aug-86 $10,000 $ 9,600 $10,000 $10,000
Sep-86 $ 9,900 $ 9,504 $ 9,956 $10,025
Oct-86 $10,141 $ 9,735 $10,198 $10,198
Nov-86 $10.329 $ 9,915 $10,370 $10,400
Dec-86 $10,331 $ 9,917 $10,375 $10,372
Jan-87 $10,535 $10,113 $10,586 $10,684
Feb-87 $10,603 $10,179 $10,679 $10,736
Mar-87 $10,556 $10,134 $10,631 $10,623
Apr-87 $ 9,731 $ 9,342 $ 9,887 $10,090
May-87 $ 9,608 $ 9,224 $ 9,779 $10,040
Jun-87 $ 9,973 $ 9,574 $10,019 $10,334
Jul-87 $10,042 $ 9,641 $10,120 $10,440
Aug-87 $10,053 $ 9,651 $10,157 $10,463
Sep-87 $ 9,453 $ 9,075 $ 9,681 $10,077
Oct-87 $ 9,430 $ 9,052 $ 9,725 $10,113
Nov-87 $ 9,804 $ 9,412 $ 9,991 $10,377
Dec-87 $ 9,996 $ 9,596 $10,205 $10,528
Jan-88 $10,399 $ 9,983 $10,608 $10,903
Feb-88 $10,514 $10,094 $10,709 $11,018
Mar-88 $10,187 $ 9,779 $10,480 $10,890
Apr-88 $10,219 $ 9,810 $10,529 $10,972
May-88 $10,249 $ 9,839 $10,535 $10,941
Jun-88 $10,431 $10,014 $10,701 $11,101
Jul-88 $10,490 $10,071 $10,766 $11,173
Aug-88 $10,523 $10,102 $10,805 $11,183
Sep-88 $10,737 $10,308 $11,012 $11,385
Oct-88 $11,011 $10,571 $11,255 $11,586
Nov-88 $10,879 $10,444 $11,123 $11,480
Dec-88 $11,111 $10,666 $11,293 $11,598
Jan-89 $11,250 $10,800 $11,454 $11,837
Feb-89 $11,082 $10,639 $11,353 $11,702
Mar-89 $11,120 $10,675 $11,336 $11,674
Apr-89 $11,443 $10,986 $11,626 $11,952
May-89 $11,713 $11,245 $11.846 $12,200
Jun-89 $11,862 $11,388 $12,003 $12,365
Jul-89 $12,017 $11,536 $12,128 $12,534
Aug-89 $11,837 $11,363 $12,009 $12,411
Sep-89 $11,696 $11,228 $11,955 $12,374
Oct-89 $11,862 $11,387 $12,058 $12,525
Nov-89 $12,073 $11,591 $12,242 $12,745
Dec-89 $12,191 $11,704 $12,341 $12,849
Jan-90 $12,058 $11,576 $12,210 $12,788
Feb-90 $12,111 $11,627 $12,314 $12,902
Mar-90 $12,115 $11,630 $12,283 $12,906
Apr-90 $11,924 $11,447 $12,130 $12,813
May-90 $12,246 $11,756 $12,442 $13,093
Jun-90 $12,415 $11,919 $12,588 $13,208
Jul-90 $12,691 $12,183 $12,823 $13,403
Aug-90 $12,389 $11,893 $12,558 $13,208
Sep-90 $12,319 $11,826 $12,507 $13,215
Oct-90 $12,485 $11,986 $12,631 $13,455
Nov-90 $12,888 $12,372 $12,919 $13,726
Dec-90 $12,915 $12,398 $12,961 $13,785
Jan-91 $13,131 $12,606 $13,138 $13,970
Feb-91 $13,114 $12,589 $13,210 $14,092
Mar-91 $13,113 $12,588 $13,259 $14,097
Apr-91 $13,318 $12,785 $13,466 $14,285
May-91 $13,432 $12,895 $13,571 $14,412
Jun-91 $13,420 $12,883 $13,557 $14,398
Jul-91 $13,618 $13,073 $13,777 $14,573
Aug-91 $13,816 $13,264 $13,975 $14,765
Sep-91 $14,036 $13,474 $14,185 $14,958
Oct-91 $14,183 $13,616 $14,321 $15,092
Nov-91 $14,197 $13,629 $13,341 $15,134
Dec-91 $14,508 $13,928 $14,636 $15,459
Jan-92 $14,457 $13,879 $14,556 $15,494
Feb-92 $14,493 $13,914 $14,610 $15,499
Mar-92 $14,449 $13,871 $14,656 $15,505
Apr-92 $14,542 $13,961 $14,812 $15,643
May-92 $14,787 $14,195 $15,028 $15,827
Jun-92 $15,086 $14,482 $15,339 $16,093
Jul-92 $15,605 $14,981 $15,900 $16,575
Aug-92 $15,379 $14,764 $15,659 $16,414
Sep-92 $15,431 $14,814 $15,706 $16,521
Oct-92 $15,153 $14,547 $15,445 $16,358
Nov-92 $15,498 $14,878 $15,823 $16,651
Dec-92 $15,648 $15,022 $16,026 $16,821
Jan-93 $15,896 $15,260 $16,223 $17,017
Feb-93 $16,505 $15,845 $16,866 $17,633
Mar-93 $16,369 $15,714 $16,694 $17,446
Apr-93 $16,494 $15,834 $16,877 $17,622
May-93 $16,531 $15,869 $16,995 $17,721
Jun-93 $16,804 $16,132 $17,281 $18,017
Jul-93 $16,810 $16,138 $17,276 $18,041
Aug-93 $17,099 $16,415 $17,652 $18,416
Sep-93 $17,297 $16,605 $17,848 $18,626
Oct-93 $17,327 $16,634 $17,882 $18,661
Nov-93 $17,170 $16,483 $17,682 $18,497
Dec-93 $17,530 $16,829 $18,053 $18,887
Jan-94 $17,701 $16,993 $18,245 $19,103
Feb-94 $17,264 $16,574 $17,787 $18,608
Mar-94 $16,482 $15,823 $16,986 $17,851
Apr-94 $16,513 $15,852 $17,003 $18,002
May-94 $16,652 $15,986 $17,170 $18,159
Jun-94 $16,450 $15,792 $17,050 $18,054
Jul-94 $16,778 $16,107 $17,350 $18,384
Aug-94 $16,856 $16,182 $17,407 $18,441
Sep-94 $16,526 $15,865 $17,073 $18,170
Oct-94 $16,209 $15,561 $16,701 $17,846
Nov-94 $15,845 $15,211 $16,246 $17,523
Dec-94 $16,221 $15,572 $16,696 $17,909
Jan-95 $16,672 $16,005 $17,167 $18,421
Feb-95 $17,157 $16,471 $17,720 $18,957
Mar-95 $17,353 $16,659 $17,871 $19,175
Apr-95 $17,368 $16,673 $17,892 $19,198
May-95 $18,024 $17,303 $18,468 $19,811
Jun-95 $17,777 $17,065 $18,221 $19,638
Jul-95 $17,863 $17,148 $18,334 $19,825
Aug-95 $18,097 $17,373 $18,541 $20,077
Sep-95 $18,148 $17,422 $18,637 $20,203
Oct-95 $18,551 $17,809 $18,939 $20,496
Nov-95 $18,956 $18,198 $19,303 $20,836
Dec-95 $19,126 $18,361 $19,502 $21,036
Jan-96 $19,212 $18,443 $19,589 $21,196
Feb-96 $18,972 $18,213 $19,425 $21,052
Mar-96 $18,681 $17,934 $19,104 $20,783
Apr-96 $18,595 $17,851 $19,024 $20,724
May-96 $18,629 $17,884 $19,022 $20,716
Jun-96 $18,839 $18,085 $19,224 $20,942
Notes: All Fund performance numbers represent past performance, and are no
guarantee of future results. The Fund's share price and investment return will
fluctuate, so that the value of an investor's shares, when redeemed, may be
worth more or less than their original cost. Total returns include change in
share price and reinvestment of dividends and distributions, if any. Total
return figures "with sales charge" are provided in accordance with SEC
guidelines for comparative purposes for prospective investors.
<PAGE>
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Landmark New York Tax Free Income Fund
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
MOODY'S
BOND PRINCIPAL
RATING AMOUNT
(UNAUDITED) ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS--97.7%
- --------------------------------------------------------------------------------
GENERAL OBLIGATION BONDS -- 9.5%
Baa1 New York City, NY Series A,
6.25% due 8/1/12 ................... $3,200 $ 3,148,000
Baa1 New York City, NY Series B,
6.375% due 8/15/11 ................. 1,500 1,494,390
Baa1 New York City, NY Series F,
7.65% due 2/1/06 ................... 3,000 3,317,220
Baa1 New York City, NY Series F,
8.40% due 11/15/06 ................. 175 200,737
-----------
$ 8,160,347
-----------
GUARANTEED/PREREFUNDED AND ETM -- 14.1%
Aaa New York City, NY Series F,
8.40% due 11/15/06 ................. 1,825 2,153,646
Aaa New York State Housing
Finance Agency, ETM,
7.90% due 11/1/06 .................. 5,750 6,734,113
Aaa Puerto Rico Commonwealth
Highway Authority,
8.00% due 7/1/05 ................... 2,900 3,170,889
-----------
12,058,648
-----------
HOUSING REVENUE -- 9.4%
Aa New York State Mortgage
Agency Revenue, AMT,
7.25% due 10/1/07 .................. 6,075 6,468,478
Aa New York State Mortgage
Agency Revenue, AMT,
7.75% due 10/1/23 .................. 1,470 1,558,082
-----------
8,026,560
-----------
POWER REVENUE -- 2.3%
Baa1 Puerto Rico Electric
Power Authority,
6.125% due 7/1/09 .................. 1,000 1,056,230
Baa1 Puerto Rico Electric
Power Authority,
5.25% due 7/1/21 ................... 1,000 902,260
----------
1,958,490
----------
STATE AGENCIES -- 20.2%
Baa1 New York State Dormitory
Authority, 6.50% due 2/15/11 ....... 1,610 1,685,058
Baa1 New York State Dormitory
Authority, 5.25% due 5/15/13 ....... 2,000 1,817,300
Baa1 New York State Dormitory
Authority, Dept. of Health
5.75% due 7/01/17 .................. 2,000 1,883,380
Aaa New York State Dormitory
Authority, City University
5.75% due 7/1/18 ................... 3,000 2,992,500
Aaa New York State Dormitory
Authority, City University
5.00% due 7/1/20 ................... 2,000 1,775,020
Baa1 New York State Dormitory
Authority, 5.25% due 5/15/21 ....... 1,000 865,270
Baa1 New York State Dormitory
Authority, 5.70% due 7/1/21 ........ 2,000 1,840,200
Baa1 New York State Dormitory
Authority, 5.40% due 5/15/23 ....... 1,690 1,489,803
Baa1 New York State Urban
Development Revenue,
5.875% due 4/1/09 .................. 1,245 1,213,950
Baa1 New York State Urban
Development Revenue,
5.25% due 1/1/21 ................... 2,000 1,736,840
----------
17,299,321
----------
TRANSPORTATION REVENUE -- 9.7%
Baa1 Metropolitan Transportation
Authority, NY, 5.75% due 7/1/13 .... $4,000 $ 3,826,800
Baa1 New York State Thruway
Authority, 5.875% due 4/1/14 ....... 1,000 955,670
Baa1 Puerto Rico Commonwealth
Highway Authority,
5.50% due 7/1/13 ................... 1,125 1,121,119
Baa1 Puerto Rico Commonwealth
Highway Authority,
5.50% due 7/1/15 ................... 1,000 984,840
Baa1 Puerto Rico Commonwealth
Highway Authority,
5.50% due 7/1/26 ................... 500 468,070
Baa1 Triborough Bridge & Tunnel
Authority, 5.00% due 1/1/20 ........ 1,000 890,930
-----------
8,247,429
-----------
WATER AND SEWER REVENUE -- 13.1%
Aaa New York City Municipal Water
Finance, 5.75% due 6/15/26 ......... 2,000 1,961,000
Aa New York State Environmental
Facilities, 7.00% due 6/15/12 ...... 3,360 3,676,915
Aa New York State Environmental
Facilities, 7.50% due 6/15/12 ...... 3,000 3,307,110
A1 New York State Environmental
Facilities, 7.125% due 7/1/12 ...... 2,100 2,268,441
-----------
11,213,466
-----------
OTHER REVENUE -- 19.4%
AA Municipal Assistance Corp.,
Series E, 6.00% due 7/1/04 ......... 2,000 2,125,460
AA Municipal Assistance Corp.,
Series E, 6.00% due 7/1/06 ......... 2,000 1,059,240
N/R New York City Industrial
Development Agency,
7.00% due 5/1/08 ................... 800 814,392
A New York City Industrial
Development Agency, AMT,
6.00% due 1/1/15 ................... 2,000 1,955,980
A New York State Local Government
Assistance Series "E",
6.00% due 4/1/14 ................... 2,000 2,065,740
A New York State Local Government
Assistance Series "A",
5.25% due 4/1/19 ................... $4,000 $3,633,760
Aaa New York State Medical
Care Facilities,
6.90% due 8/15/34 .................. 1,000 1,087,500
N/R Port Authority New York and
New Jersey Special Obligation,
6.75% due 10/1/19 .................. 3,850 3,844,648
-----------
16,586,720
-----------
TOTAL MUNICIPAL BONDS
(Identified Cost $80,500,727) 83,550,981
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES*
AT AMORTIZED COST--2.4%
- --------------------------------------------------------------------------------
New York, NY, due 8/1/21 ................. 700 700,000
New York City Municipal Water
Finance Authority, due 6/15/24 ......... 1,300 1,300,000
-----------
TOTAL VARIABLE RATE DEMAND NOTES
at Amortized Cost 2,000,000
-----------
TOTAL INVESTMENTS
(Identified Cost $82,500,727) .......... 100.1% $85,550,981
OTHER ASSETS,
LESS LIABILITIES ........................ (0.1) (58,974)
---- ----------
NET ASSETS ............................... 100.0% $85,492,007
===== ===========
AMT - Subject to Alternative 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
<PAGE>
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Landmark New York Tax Free Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A)
(Identified Cost, $82,500,727) ........................ $85,550,981
Cash ................................................... 38,882
Receivable for securities sold ......................... 1,880,431
Interest receivable .................................... 1,525,997
Receivable for shares of beneficial interest sold ...... 4,677
-----------
Total assets ....................................... 89,000,968
-----------
LIABILITIES:
Payable for securities purchased ....................... 3,120,832
Payable for shares of beneficial interest repurchased .. 290,535
Payable to affiliates:
Investment advisory fees (Note 2) .................... $ 7,384
Shareholder servicing agents' fees (Note 3B) ......... 17,411 24,795
-------
Accrued expenses and other liabilities ................. 72,799
----------
Total liabilities .................................. 3,508,961
-----------
NET ASSETS for 7,929,906 shares of beneficial
interest outstanding .................................. $85,492,007
===========
NET ASSETS CONSIST OF:
Paid-in capital ........................................ $88,798,328
Accumulated net realized loss on investments ........... (6,337,796)
Unrealized appreciation of investments ................. 3,050,254
Distributions in excess of net investment income ....... (18,779)
------------
Total .............................................. $85,492,007
=============
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE OF BENEFICIAL INTEREST .......................... $10.78
======
COMPUTATION OF OFFERING PRICE:
Maximum Offering Price per share based on a
4.00% sales charge ($10.78 / 0.96) .................... $11.23
======
See notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
Landmark New York Tax Free Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest ........................................... $ 2,662,334
EXPENSES:
Investment advisory fees (Note 2) .................. $173,920
Administrative fees (Note 3A) ...................... 108,700
Shareholder servicing agents' fees (Note 3B) ....... 108,700
Distribution fees (Note 4) ......................... 65,220
Custodian fees ..................................... 36,403
Auditing services .................................. 15,700
Shareholder reports ................................ 12,203
Trustee fees ....................................... 11,499
Legal services ..................................... 9,092
Transfer agent fees ................................ 6,000
Miscellaneous ...................................... 3,430
-------
Total expenses ................................. 550,867
Less aggregate amount waived by Investment Adviser,
Administrator and Distributor (Notes 2, 3A, and 4) (201,508)
Less fees paid indirectly (Note 1G) ................ (1,511)
-------
Net expenses ................................... 347,848
----------
Net investment income .......................... 2,314,486
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions ....... 189,266
Unrealized appreciation (depreciation) of investments--
Beginning of period .............................. 6,911,315
End of period .................................... 3,050,254
---------
Net change in unrealized appreciation (depreciation) ............ (3,861,061)
----------
Net realized and unrealized gain (loss) on investments ...... (3,671,795)
----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $(1,357,309)
===========
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Landmark New York Tax Free Income Fund
- --------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------------------------
Six Months Ended
June 30, 1996 Year Ended
(unaudited) December 31, 1995
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ...................................................... $ 2,314,486 $ 4,973,561
Net realized gain on investment transactions ............................... 189,266 2,495,369
Net change in unrealized appreciation (depreciation) of investments ........ (3,861,061) 7,077,868
----------- -----------
Net increase (decrease) in net assets resulting from operations ............ (1,357,309) 14,546,798
----------- -----------
DIVIDENDS DECLARED TO SHAREHOLDERS FROM:
Net investment income ...................................................... (2,390,512) (4,916,314)
----------- -----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 6):
Net proceeds from sale of shares ........................................... 6,407,178 3,497,861
Net asset value of shares issued to shareholders from
reinvestment of dividends ................................................ 2,369,699 4,906,229
Cost of shares repurchased ................................................. (9,801,289) (14,169,410)
----------- -----------
Net decrease in net assets from
transactions in shares of beneficial interest .......................... (1,024,412) (5,765,320)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETs ...................................... (4,772,233) 3,865,164
NET ASSETS:
Beginning of period ........................................................ 90,264,240 86,399,076
----------- -----------
End of period (including undistributed (distribution in excess of)
net investment income of $(18,779) and $57,247, respectively) ............. $85,492,007 $ 90,264,240
=========== ===========
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Landmark New York Tax Free Income Fund
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS FOUR MONTHS
ENDED YEAR ENDED ENDED
JUNE 30, DECEMBER 31, DECEMBER 31, YEAR ENDED AUGUST 31
1996 ------------------- 1993 -------------------------------
(UNAUDITED) 1995 1994 (NOTE 1D) 1993 1992 1991
----------- ---- ---- --------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period ..................................... $ 11.25 $ 10.09 $ 11.54 $ 11.44 $ 10.82 $ 10.27 $ 9.77
-------- ------- ------- ------- ------- ------- --------
Income From Operations:
Net investment income ........................ 0.290 0.607 0.566 0.210 0.567 0.589 0.583
Net realized and unrealized
gain (loss) on investments ................. (0.460) 1.153 (1.415) 0.076 0.610 0.541 0.510
-------- ------- ------- ------- ------- ------- --------
Total from operations .................... (0.170) 1.760 (0.849) 0.286 1.177 1.130 1.093
-------- ------- ------- ------- ------- ------- --------
Less Dividends From:
Net investment income ...................... (0.300) (0.600) (0.601) (0.186) (0.557) (0.580) (0.593)
-------- ------- ------- ------- ------- ------- --------
Net Asset Value, end of period ............. $ 10.78 $ 11.25 $ 10.09 $ 11.54 $ 11.44 $ 10.82 $ 10.27
======== ======= ======= ======= ======= ======= ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) ............................ $85,492 $90,264 $86,399 $120,824 $111,583 $81,185 $73,884
Ratio of expenses to average
net assets ................................. 0.80% 0.80% 0.80% 0.80%+ 0.80% 0.80% 0.81%
Ratio of net investment income
to average net assets ...................... 5.32% 5.62% 5.52% 4.84%+ 5.11% 5.58% 5.82%
Portfolio turnover ........................... 37% 98% 150% 46% 149% 143% 337%
Total return ................................. (1.50)%** 17.89% (7.47)% 2.52%** 11.19% 11.31% 11.52%
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion of their fees for the periods indicated and
the expenses were not reduced for fees paid indirectly for the fiscal year ended December 31, 1995 and for the six months
ended June 30, 1996, the net investment income per share and the ratios would have been as follows:
Net investment income per share .............. $0.264 $0.555 $0.508 $0.191 $0.515 $0.537 $0.540
Ratios:
Expenses to average net assets ............... 1.27%+ 1.27% 1.27% 1.23%+ 1.27%+ 1.30% 1.24%
Net investment income to
average net assets ......................... 4.85%+ 5.15% 5.05% 4.40%+ 4.64% 5.09% 5.39%
+ Annualized
** Not annualized
See notes to financial statements
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Landmark New York Tax Free Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
(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 preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The 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, 1995, the Fund, for federal income tax purposes, had a capital loss
carryover of $6,527,062 of which $933,500 will expire on December 31, 1996 and
$5,593,562 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. CHANGE IN FISCAL YEAR END -- Effective September 1,
1993, the Fund changed its fiscal year end from August 31 to December 31.
E. DISTRIBUTIONS -- The Fund distinguishes between distributions on a tax basis
and a financial reporting basis and requires that only distributions in excess
of tax basis earnings and profits be reported in the financial statements as a
return of capital. Differences in the recognition or classification of income
between the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
F. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses are determined on
the identified cost basis. Distributions to shareholders and shares issuable to
shareholders electing to receive distributions in shares are recorded on the
ex-dividend date.
G. FEES PAID INDIRECTLY -- The Fund's custodian bank calculates its fee based on
the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
H. EXPENSES -- The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and LFBDS. Expenses incurred by the Trust with
respect to any two or more funds or series are allocated in proportion to the
average net assets of each fund, except when allocations of direct expenses to
each fund can otherwise be made fairly. Expenses directly attributable to a fund
are charged to that fund.
(2) INVESTMENT ADVISORY FEES
The investment advisory fee paid to Citibank, as compensation for overall
investment management services amounted to $173,920, of which $126,625 was
voluntarily waived for the six months ended June 30, 1996. 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 0.25% of the Fund's average daily net
assets. The Administrative fee amounted to $108,700, of which $9,663 was
voluntarily waived for the six months ended June 30, 1996. 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, but may not exceed, on an annualized basis, an amount equal to
0.25% of the average daily net assets of the Fund represented by shares owned
during the period for which payment is being made by investors for whom such
Shareholder Servicing Agent maintains a servicing relationship. Shareholder
Servicing Agents' fees amounted to $108,700, for the six months ended June 30,
1996.
(4) DISTRIBUTION FEES
The Trust, on behalf of the Fund, has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the
Fund reimburses the Distributor for expenses incurred or anticipated in
connection with sales of shares of the Fund, at an annual rate not to exceed
0.15% of the Fund's average daily net assets. The Distribution Fee amounted to
$65,220, all of which was voluntarily waived for the six months ended June 30,
1996. The Distributor may also receive an additional fee from the Fund at an
annual rate not to exceed 0.05% of the Fund's average daily net assets in
anticipation of, or as reimbursement for, advertising expenses incurred by the
Distributor in connection with the sale of shares of the Fund. No payment of
such additional fees has been made during the period.
(5) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $30,782,214 and $32,055,947, 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:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
----------- ------------
Shares sold ............................... 580,475 323,585
Shares issued to
shareholders from
reinvestment of
dividends ............................... 217,782 457,160
Shares repurchased ........................ (890,090) (1,319,122)
------- ---------
Net decrease .............................. (91,833) (538,377)
======= =========
(7) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in value of the investment
securities owned at June 30, 1996, as computed on a federal income tax basis,
are as follows:
Aggregate cost $82,500,727
===========
Gross unrealized appreciation $ 3,379,281
Gross unrealized depreciation (329,027)
-----------
Net unrealized appreciation $ 3,050,254
===========
(8) LINE OF CREDIT
The Fund, along with other Landmark Funds, entered into an ongoing agreement
with a bank which allows the Funds collectively to borrow up to $40 million for
temporary or emergency purposes. Interest on borrowings, if any, is charged to
the specific fund executing the borrowing at the base rate of the bank. In
addition, the committed portion of the line of credit requires a quarterly
payment of a commitment fee based on the average daily unused portion of the
line of credit. For the six months ended June 30, 1996, the commitment fee
allocated to the Fund was $249. Since the line of credit was established there
have been no borrowings.
<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 10126-5130
Call Your Citigold Executive or, in NY or CT (800) 285-1701
or for all other States (800) 285-1707
FOR PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
Registered Representative or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117
FOR 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
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 Resrves
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
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
Thomas M. Lenz*
TREASURER
John R. Elder*
*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.
[LOGO]
LANDMARK(SM) FUNDS
Advised by Citibank, N.A.
LANDMARK
NEW YORK TAX FREE
INCOME FUND
SEMI-ANNUAL
REPORT
June 30, 1996
NYTFI/S/96 Printed on Recycled Paper [Recycle Symbol]
<PAGE>
- --------------------------------------------------------------------------------
A LETTER TO OUR SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Shareholder:
The first half of 1996 represented a difficult time for most U.S. bond
markets. Stronger-than-expected economic growth produced fear among fixed-income
investors that the rate of inflation might accelerate, causing them to bid down
prices of most bonds. While municipal bonds were affected by the adverse
investment environment, tax-free issues performed significantly better during
the period than comparable U.S. Treasury securities.
As the Fund's prospectus describes, the Landmark Funds' investment adviser,
Citibank, N.A., manages the Landmark National Tax-Free Income Fund to generate
high levels of current income exempt from federal personal income taxes, and to
preserve the value of its shareholders' investment. Consistent with this
objective, the Fund seeks to provide an attractive yield from a high-quality
investment portfolio consisting of municipal obligations primarily of states,
municipalities and their agencies.
This Semi-Annual Report reviews the Fund's investment activities and
performance and provides a summary of Citibank's perspective on and outlook for
the U.S. 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
July 19, 1996
Remember that Mutual Fund Shares:
o Are not bank deposits or FDIC insured
o Are not obligations of or guaranteed by
Citibank or Citicorp Investment Services
o Are subject to investment risks, including possible loss of the principal
amount invested.
TABLE OF CONTENTS
1 Letter to Shareholders
-----------------------------------------------------------------------------
2 Market Environment
Fund Snapshot
-----------------------------------------------------------------------------
3 Portfolio Manager
The Portfolio Manager Responds
Quotes from the Portfolio Manager
-----------------------------------------------------------------------------
4 Strategy and Outlook
Landmark National Tax Free Income Fund--by the Numbers
-----------------------------------------------------------------------------
5 Fund Data
Performance Highlights
-----------------------------------------------------------------------------
6 Portfolio of Investments
-----------------------------------------------------------------------------
7 Statement of Assets and Liabilities
-----------------------------------------------------------------------------
8 Statement of Operations
-----------------------------------------------------------------------------
9 Statement of Changes in Net Assets
-----------------------------------------------------------------------------
10 Financial Highlights
------------------------------------------------------------------------------
11 Notes to Financial Statements
------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MARKET ENVIRONMENT
- --------------------------------------------------------------------------------
When the year began, many market-watchers, including Citibank, called for
slow economic growth during the first half of 1996. We expected inflation
pressures to remain low, giving the officials at the Federal Reserve the
elbow-room they needed to lower short-term interest rates further. As a result,
long-term bond yields were expected to fall slightly, creating a positive
environment for both stocks and bonds.
The consensus forecast proved inaccurate. The economy grew faster than we
expected, fueled by higher spending among both businesses and consumers. In
addition, stronger-than-expected employment figures caused concern among
fixed-income investors that the rate of inflation would accelerate. As a result,
the yield on the 30-year U.S. Treasury bond, considered a benchmark for
long-term interest rates, rose during the period from around 6.0% to almost
6.9%.
Yet, municipal bonds generally performed better during the period than
their taxable counterparts. Most significantly, it became increasingly unlikely
that proposals for a flat personal income tax, if passed by Congress, would do
away with the tax advantages of municipal bonds. This change in market
psychology made investors more comfortable committing their assets to
longer-term municipal bonds, which helped boost demand. At the same time, supply
of new municipal bond issues continues to be quite limited, creating a
supply-and-demand imbalance that benefits existing bondholders.
- --------------------------------------------------------------------------------
FUND SNAPSHOT
- --------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
August 17, 1995
NET ASSETS AS OF 6/30/96
$1.9 million
FUND OBJECTIVE
To generate high levels of current income exempt from federal income taxes+ and
to preserve the value of its shareholders' investment. The Fund invests
primarily in municipal obligations that pay interest that is exempt from federal
income taxes.
DIVIDENDS
Paid monthly
CAPITAL GAINS
Distributed annually, if any
BENCHMARKS
o Lipper General Municipal Bond Funds Average
o 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.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
CARLA WROCKLAGE
Vice President, Citibank, N.A.
Ms. Wrocklage has been responsible for the management of the Fund since the
Fund's commencement of operations August 17, 1995. Ms. Wrocklage has over 9
years of tax exempt portfolio management experience. Prior to joining the
Adviser in 1995, she was a municipal bond fund portfolio manager for Prudential
Insurance Company of America. She began her career at Keystone Group.
- --------------------------------------------------------------------------------
THE PORTFOLIO MANAGER RESPONDS
- --------------------------------------------------------------------------------
We actively managed the National Tax Free Income Fund to take advantage of
changing market conditions. Although we maintained the Fund's average duration
(a measure of sensitivity to changes in interest rates) on the longer end of
neutral for much of the period in anticipation of a bond market rally, we pulled
back to a neutral stance when it became apparent that the economy's strength was
likely to continue.
In this adverse interest-rate environment, we attempted to capture
incrementally higher yields by increasing the percentage of assets allocated to
investments at the lower end of the investment-grade range. We focused on buying
bonds from high-tax states such as New York and California because they are
trading at levels unusually close to non-specialty states. We anticipate that
this strategy will benefit the Fund when these relationships return to more
normal levels.
- --------------------------------------------------------------------------------
QUOTES FROM THE PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
"Because municipal bonds were oversold at the beginning of the year,
tax-free securities performed better than their taxable counterparts during the
first six months of 1996."
"We are optimistic about the relative prospects for municipal bonds because of
our expectations for a strong economy, low inflation and greater demand for
investments than available supply."
"Our strategy in this high-demand, low-supply environment is to look for
relative values in tax-free bonds wherever they can be found."
<PAGE>
- --------------------------------------------------------------------------------
STRATEGY AND OUTLOOK
- --------------------------------------------------------------------------------
We expect a relatively strong rate of economic growth to persist through
the second half of 1996. These conditions should continue to fuel concerns about
rising inflation among economists and bond investors and may cause the Federal
Reserve to reverse direction and raise short-term interest rates sooner rather
than later this year. If such a change in monetary policy occurs, bond
yields--including those of municipal bonds--should rise from current levels.
However, the dramatic rise in yields that has already occurred this year has
left bonds fairly valued, which should limit the risk of further declines even
if the Federal Reserve begins to raise short-term interest rates.
At the same time, we expect the current supply-and-demand imbalance for
municipals to continue. In July, billions of dollars will be returned to
municipal bond investors in the form of redemptions, bond calls and interest
payments. Investors will be hard-pressed to find comparable tax-free returns
from existing investments, and municipalities are unlikely to issue enough new
bonds to absorb all of the expected demand. Accordingly, we believe that
existing municipal bondholders such as the Fund are well positioned to take
advantage of the opportunities such an imbalance should produce.
- --------------------------------------------------------------------------------
Landmark National Tax Free Income Fund
- --------------------------------------------------------------------------------
BY THE NUMBERS
- --------------------------------------------------------------------------------
CHANGES IN PORTFOLIO COMPOSITION
Portfolio of Investments
as of 6/30/96 . . . Compared to 12/31/95
GENERAL OBLIGATION BONDS 31% GENERAL OBLIGATION BONDS 31%
OTHER REVENUE 25% TRANSPORTATION REVENUE 16%
TRANSPORTATION REVENUE 12% OTHER REVENUE 15%
EDUCATION 10% WATER/SEWER REVENUE 12%
POWER REVENUE 10% CASH/SHORT TERM/OTHER 10%
STATE AGENCIES 5% STATE AGENCIES 7%
HOSPITAL REVENUE 3% POWER REVENUE 5%
WATER/SEWER REVENUE 3% HOUSING REVENUE 4%
CASH/SHORT TERM/OTHER 1%
<PAGE>
- --------------------------------------------------------------------------------
FUND DATA Period Ending June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Returns
----------------------
Since
Six 8/17/95
Months** (Inception)*
------- -----------
<S> <C> <C>
Landmark National Tax Free Income Fund without Sales Charge ................. (1.81)% 5.49%
Lipper General Municipal Bond Funds Average ................................. (1.38)%+ 4.95%+
Lehman Municipal Bond Index ................................................. (0.45)%+ 6.11%+
Landmark National Tax Free Income Fund with Maximum Sales Charge of 4.00% ... (5.73)% 1.27%
* Total Return from 8/17/95 (Commencement of Operations) to June 30,1996
** Not Annualized
+ From 8/31/95
</TABLE>
30-Day SEC Yield 5.31%
Income Dividends Per Share $0.27
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
A $10,000 investment in the Fund made on inception date would have grown to
$10,127 with sales charge (as of 6/30/96). The graph shows how this compares to
our benchmark over the same period.
The graph includes the initial 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.
<PAGE>
NATIONAL TAX FREE INCOME FUND
LANDMARK LANDMARK
NATIONAL NATIONAL LIPPER
TAX FREE TAX FREE GENERAL LEHMAN
INCOME INCOME MUNICIPAL MUNICIPAL
FUND - FUND-WITH BOND BOND
WITHOUT SALES FUNDS INDEX
SALES CHARGE CHARGE AVERAGE (UNMANAGED)
------------------------------------------------------------
Aug-95 $10,190 $ 9,782 $10,110 $10,127
Sep-95 $10,248 $ 9,838 $10,170 $10,191
Oct-95 $10,456 $10,038 $10,327 $10,339
Nov-95 $10,636 $10,211 $10,527 $10,510
Dec-95 $10,743 $10,314 $10,644 $10,611
Jan-96 $10,840 $10,407 $10,696 $10,692
Feb-96 $10,712 $10,283 $10,612 $10,619
Mar-96 $10,491 $10,072 $10,442 $10,483
Apr-96 $10,434 $10,017 $10,393 $10,454
May-96 $10,398 $ 9,982 $10,397 $10,450
Jun-96 $10,549 $10,127 $10,495 $10,563
Notes: All Fund performance numbers represent past performance, and are no
guarantee of future results. The Fund's share price and investment return will
fluctuate, so that the value of an investor's shares, when redeemed, may be
worth more or less than their original cost. Total returns include change in
share price and reinvestment of dividends and distributions, if any. Total
return figures "with sales charge" are provided in accordance with SEC
guidelines for comparative purposes for prospective investors.
<PAGE>
- --------------------------------------------------------------------------------
Landmark National Tax Free Income Fund
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
MOODY'S
BOND PRINCIPAL
RATING AMOUNT
(UNAUDITED) ISSUER (000's OMITTED) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS--98.4%
- --------------------------------------------------------------------------------
GENERAL OBLIGATION BONDS -- 31.6%
Aaa Johnston County, North Carolina,
5.10% due 2/1/05 ....................... $100 $ 99,608
Aaa Massachusetts State, Construction Loan,
5.625% due 8/1/13 ...................... 50 49,305
Aa Metro, Oregon Open Space Program
Series A, 5.50% due 9/1/10 ............. 50 49,774
Aaa Montgomery, New Jersey,
5.45% due 8/1/06 ....................... 70 71,291
Baa1 New York, New York, 6.25% due 8/1/12 ... 50 49,187
Baa1 New York, New York, 6.25% due 8/1/17 ... 200 195,162
Aaa San Anselmo, California,
5.60% due 8/1/11 ....................... 50 49,633
Aa1 Winston Salem, North Carolina,
5.40% due 6/1/11 ....................... 50 49,468
----------
613,428
----------
EDUCATION -- 9.9%
BBB- Connecticut State Education,
University of New Haven,
6.70% due 7/1/26 ....................... 100 98,225
Aaa Pleasanton, California School District,
5.60% due 8/1/11 ....................... 50 50,119
Aaa University of Montana
5.00% due 11/15/17 ..................... 50 44,620
----------
192,964
----------
HOSPITAL REVENUE -- 3.2%
Aa Michigan State Hospital Finance
Authority, 5.25% due 5/15/26 ........... 70 62,922
----------
POWER REVENUE -- 9.6%
Aa Intermountain Power Agent Utility,
5.00% due 7/1/21 ....................... 80 69,608
A1 New York State Energy Research &
Development Authority,
7.50% due 7/1/25 ....................... 60 64,347
Aaa Sikeston, Missouri, Electrical Revenue,
6.00% due 6/1/14 ....................... 50 51,832
----------
185,787
----------
STATE AGENCIES -- 4.6%
Baa1 New York State Dormitory Authority,
5.50% due 5/15/23 ...................... 100 89,323
----------
TRANSPORTATION REVENUE -- 12.2%
Baa1 Arapahoe County, Colorado Capital
Improvement, 7.00% due 8/31/26 ......... 150 155,844
Aaa Puerto Rico Commonwealth, Highway
Series Y, 6.25% due 7/1/05 ............. 75 81,141
----------
236,985
----------
WATER AND SEWER REVENUE -- 2.6%
Aaa Bexar, Texas Metropolitan Water
District, 6.00% due 5/1/15 ............. 50 50,809
----------
OTHER REVENUE -- 24.7%
Aaa Connecticut State Special Assessment,
5.50% due 11/15/00 ..................... 90 92,653
Aaa Connecticut State Special Tax
Obligation, 4.70% due 10/1/04 .......... 50 49,066
Aa Municipal Assistance Corp., Series E,
6.00% due 7/1/05 ....................... 100 106,177
Aa Pennsylvania Housing Finance Agency,
7.45% due 10/1/10 ...................... 80 83,554
NR Port Authority New York & New Jersey
Special Obligation,
6.75% due 10/1/19 ...................... 150 149,792
----------
481,242
----------
TOTAL MUNICIPAL BONDS
(Identified Cost $1,909,940) .................. 1,913,460
----------
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES*
AT AMORTIZED COST--2.6%
- --------------------------------------------------------------------------------
Saint Charles Parish, LA Pollution Control
Authority, 3.55% due 10/1/22 .................. 50 50,000
----------
TOTAL INVESTMENTS
(Identified Cost $1,959,940) ................. 101.0% 1,963,460
OTHER ASSETS, LESS LIABILITIES ................. (1.0) (18,686)
----- -------
NET ASSETS ..................................... 100.0% $1,944,774
===== ==========
*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
<PAGE>
- --------------------------------------------------------------------------------
Landmark National Tax Free Income Fund
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (Identified Cost, $1,959,940) ..... $1,963,460
Cash .............................................................. 37,675
Receivable for securities sold .................................... 48,216
Interest receivable ............................................... 31,793
Receivable for shares of beneficial interest sold ................. 150
----------
Total assets .................................................. 2,081,294
----------
LIABILITIES:
Payable for securities purchased .................................. 133,870
Dividends Payable ................................................. 2,650
----------
Total liabilities ............................................. 136,520
----------
NET ASSETS for 192,660 shares of beneficial interest outstanding .. $1,944,774
==========
NET ASSETS CONSIST OF:
Paid-in capital ................................................... $1,952,534
Unrealized appreciation of investments ............................ 3,520
Accumulated net realized loss on investment ....................... (10,796)
Distributions in excess of net investment income .................. (484)
----------
Total ......................................................... $1,944,774
==========
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
<PAGE>
- --------------------------------------------------------------------------------
Landmark National Tax Free Income Fund
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest .......................................... $ 46,214
EXPENSES:
Custodian fees .................................... $25,057
Auditing services ................................. 17,700
Trustee fees ...................................... 6,447
Transfer agent fees ............................... 6,000
Legal services .................................... 5,483
Shareholder reports ............................... 5,026
Investment advisory fees (Note 2) ................. 3,506
Administrative fees (Note 3A) ..................... 3,506
Shareholder servicing agents' fees (Note 3B) ...... 2,191
Distribution fees (Note 4) ........................ 438
Miscellaneous ..................................... 3,000
-------
Total expenses ................................ 78,354
Less aggregate amount waived by Investment Adviser,
Administrator, Shareholder Servicing Agents and
Distributor (Notes 2, 3A, 3B, and 4) ............ (9,641)
Less fees paid indirectly (Note 1E) ............... (1,500)
Expenses Assumed by the Administrator (Note 8) .... (67,213)
-------
Net expenses .................................. --
--------
Net investment income ......................... 46,214
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions ...... (10,796)
Unrealized appreciation (depreciation) of investments--
Beginning of period ............................. 62,916
End of period ................................... 3,520
-------
Net change in unrealized appreciation
(depreciation) ................................... (59,396)
--------
Net realized and unrealized gain (loss)
on investments .............................. (70,192)
--------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................................. $(23,978)
========
See notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
Landmark National Tax Free Income Fund
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months August 17, 1995
Ended (Commencement of
June 30, 1996 Operations) to
(unaudited) December 31, 1995
-------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ................................................. $ 46,214 $ 22,587
Net realized loss on investment transactions .......................... (10,796) --
Net change in unrealized appreciation (depreciation) of investments ... (59,396) 62,916
---------- ----------
Net increase (decrease) in net assets resulting from operations ....... (23,978) 85,503
---------- ----------
DIVIDENDS DECLARED TO SHAREHOLDERS FROM:
Net investment income ................................................. (46,698) (22,707)
---------- ----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 6):
Net proceeds from sale of shares ...................................... 723,690 1,477,019
Net asset value of shares issued to shareholders from
reinvestment of dividends ........................................... 45,634 21,014
Cost of shares repurchased (60,001) (254,702)
---------- ----------
Net Increase in Net Assets from
transactions in shares of beneficial interest ..................... 709,323 1,243,331
---------- ----------
NET INCREASE IN NET ASSETS ............................................ 638,647 1,306,127
NET ASSETS:
Beginning of period ................................................... 1,306,127 --
---------- ----------
End of period (Including distributions in excess of net investment
income of $(484) at June 30, 1996) .................................. $1,944,774 $1,306,127
========== ==========
</TABLE>
See notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
Landmark National Tax Free Income Fund
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS AUGUST 17, 1995
ENDED (COMMENCEMENT OF
JUNE 30, 1996 OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1995
------------- ------------------
Net Asset Value, beginning of period ......... $10.55 $ 10.00
------ -------
Income From Operations:
Net investment income ........................ 0.269 0.187
Net realized and unrealized gain (loss)
on investments ............................. (0.459) 0.551
------ -------
Total from operations ................ (0.190) 0.738
------ -------
Less Dividends From:
Net investment income ...................... (0.270) (0.188)
------ -------
Net Asset Value, end of period ............. $10.09 $ 10.55
====== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) .... $1,945 $ 1,306
Ratio of expenses to average net assets ...... 0% 0%
Ratio of net investment income to
average net assets ......................... 5.27%+ 5.20%+
Portfolio turnover ........................... 37% 0%
Total return ................................. (1.81)%** 7.43%**
Note: If Agents of the Fund had not voluntarily agreed to waive all of their
fees for the period, the expenses were not reduced for fees paid indirectly
and had expenses been limited to that required by certain state securities
law, the net investment income per share and the ratios would have been as
follows:
Net investment income per share ............. $0.141 $0.098
Ratios:
Expenses to average net assets .................. 2.50%+ 2.50%+
Net investment income to
average net assets ............................ 2.77%+ 2.70%+
+ Annualized
** Not annualized
See notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
Landmark National Tax Free Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Landmark National 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 preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The 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.
D. DISTRIBUTIONS -- The Fund distinguishes between distributions on a tax basis
and a financial reporting basis and requires that only distributions in excess
of tax basis earnings and profits be reported in the financial statements as a
return of capital. Differences in the recognition or classification of income
between the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
E. FEES PAID INDIRECTLY -- The Fund's custodian bank calculates its fee based on
the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expense on the Statement of Operations.
F. EXPENSES -- The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and LFBDS. Expenses incurred by the Trust with
respect to any two or more funds or series are allocated in proportion to the
average net assets of each fund, except when allocations of direct expenses to
each fund can otherwise be made fairly. Expenses directly attributable to a fund
are charged to that fund.
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 $3,506, all of which was voluntarily
waived for the six months ended June 30, 1996. 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 and of the fees paid to the
Shareholder Servicing Agents from the Fund under such 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 0.40% of the Fund's average daily net
assets. The Administrative fee amounted to $3,506, all of which was voluntarily
waived for the six months ended June 30, 1996. 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 SERVCING AGENTS -- 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, but may not exceed, on an annualized basis, an amount equal to
0.25% of the average daily net assets of the Fund represented by shares owned
during the period for which payment is being made by investors for whom such
Shareholder Servicing Agent maintains a servicing relationship. Shareholder
Servicing Agents' fees amounted to $2,191, all of which was voluntarily waived
for the six months endedJune 30, 1996.
(4) DISTRIBUTION FEES
The Trust, on behalf of the Fund, has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the
Fund reimburses the Distributor for expenses incurred or anticipated in
connection with sales of shares of the Fund, at an annual rate not to exceed
0.05% of the Fund's average daily net assets. The Distributor may also receive
an additional fee from the Fund at an annual rate not to exceed 0.05% of the
Fund's average daily net assets in anticipation of, or as reimbursement for,
advertising expenses incurred by the Distributor in connection with the sale of
shares of the Fund. No payment of such additional fees has been made during the
period. The Distribution fee amounted to $438, all of which was voluntarily
waived for the six months ended June 30, 1996.
(5) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $1,373,704 and $574,289, 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:
Six Months August 17, 1995
Ended (Commencement of
June 30, 1996 Operations) to
(unaudited) December 31, 1995
------------- -----------------
Shares sold......................... 70,184 146,053
Shares issued to shareholders
from reinvestment of dividends 4,477 2,033
Shares repurchased.................. (5,774) (24,313)
------ -------
Net increase........................ 68,887 123,773
====== =======
(7) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in value of the investment
securities owned at June 30, 1996, as computed on a federal income tax basis,
are as follows:
Aggregate cost ................................................. $1,959,940
==========
Gross unrealized appreciation .................................. 22,615
Gross unrealized depreciation .................................. (19,095)
----------
Net unrealized appreciation .................................... $ 3,520
==========
(8) ASSUMPTION OF EXPENSES
LFBDS has voluntarily agreed to pay a portion of the unwaived expenses of the
Fund for the six months ended June 30, 1996 which amounted to $67,213.
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER
SERVICING AGENTS
- --------------------------------------------------------------------------------
FOR CITIBANK NEW YOUR 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, in NY or CT, (800) 285-1701
for all other states, (800) 285-1707
FOR PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
Registered Representative or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117
FOR 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
<PAGE>
[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
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
Thomas M. Lenz*
TREASURER
John R. Elder*
*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.
NTFI/S/96 Printed on Recycled Paper [Recycle Symbol]
<PAGE>
[Logo]
LANDMARK(SM) FUNDS
Advised by Citibank, N.A.
LANDMARK
NATIONAL TAX FREE
INCOME FUND
SEMI ANNUAL
REPORT
June 30, 1996
