<PAGE>
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TAX FREE RESERVES PORTFOLIO
- - --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS February 28, 1995 (unaudited)
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PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- - --------------------------------------------------------------------------------
TAX-EXEMPT COMMERCIAL PAPER -- 8.2%
Brazos River, Texas Pollution Control
Authority, AMT, 4.30%, due 5/12/95......... $ 2,000 $ 2,000,000
Delaware County, Pennsylvania, Pollution
Control Authority, 4.05%, due 4/11/95...... 2,000 2,000,000
Halifax County, Virginia Industrial
Development Authority, 4.35%,
due 4/7/95................................. 4,900 4,900,000
Lincoln County, Wyoming Pollution Control, AMT,
4.10%, due 3/8/95.......................... 1,500 1,500,000
Maricopa County, Arizona Pollution Control
Authority, 3.90%, due 4/6/95............... 1,500 1,500,000
Saint Lucie County, Florida Pollution Control
Authority, 4.10%, due 5/12/95.............. 3,000 3,000,000
Salt Lake City, Utah Revenue, 4.00%,
due 4/10/95................................ 1,300 1,300,000
Sarasota County, Florida Public Hospital
Authority, 4.10%, due 4/10/95.............. 2,300 2,300,000
Texas Municipal Power Agency Revenue 9.50%,
due 9/1/95................................. 650 677,474
Wake County, North Carolina Industrial
Facilities Authority, 3.75%, due 3/8/95.... 6,825 6,825,000
------------
26,002,474
------------
GENERAL OBLIGATION NOTES -- 0.6%
Louisiana Public Facilities Authority,
4.60%, due 8/31/95.......................... 500 500,965
New Mexico State, 5.20%, due 7/1/95............ 1,000 1,003,894
Northborough, Texas Municipal Utility District,
11.375%,due 9/1/95.......................... 500 516,096
------------
2,020,955
------------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE BONDS AND NOTES (PUTS) -- 33.7%
Arapahoe County, Colorado Capital Improvement
Trust, 4.45%, due 8/31/95................... 4,500 4,500,000
Atlanta, Georgia Urban Residential, 4.30%,
due 5/1/95.................................. 5,300 5,300,000
Aurora Hanover Park, Illinois Mortgage, AMT
4.41%, due 7/15/95.......................... 9,410 9,410,000
Anchorage, Alaska Hospital Revenue, 9.625%,
due 10/1/95................................. 2,000 2,097,524
California Housing Finance Agency, 4.15%,
due 5/1/95.................................. 635 635,000
Clackmas County, Oregon Hospital Facilities
Authority, 3.85% due 4/1/95................. 3,500 3,500,000
Clark County, Nevada Airport Revenue, 10.10%,
due 6/1/95.................................. 1,030 1,045,139
Dallas Texas WaterWorks & Sewer System Revenue,
8.30%, due 10/1/95.......................... 2,225 2,272,982
Denver Colorado City & County, 7.75%,
due 8/1/95.................................. 3,000 3,060,245
District of Columbia, 4.05%, due 7/1/95........ 1,400 1,400,000
East Baton Rouge, Louisiana Single Family
Mortgage Revenue, 5.00%, due 6/15/95 ....... 4,000 4,000,000
Fairfax County, Virginia, 8.00%, due 11/1/95 .. 1,000 1,034,492
Georgia State, 6.80%, due 8/1/95............... 2,190 2,214,506
Gulf Coast, Texas Waste Disposal Authority,
4.75% due 7/15/95........................... 2,640 2,640,942
Harris County, Texas Flood Control, 9.60%,
due 10/1/95................................. 2,000 2,057,036
Hawaii State, 6.00%, due 11/1/95............... 1,000 1,009,387
Indiana University, 9.40%, due 8/1/95.......... 3,000 3,091,265
Illinois State,
6.50%, due 6/1/95........................... 1,000 1,005,058
Intermountain Utah Power Revenue,
3.75%, due 3/15/95.......................... 4,000 4,000,000
Intermountain Utah Power Revenue, 7.00%,
due 7/1/95.................................. 9,000 9,085,191
Iowa Municipalities Workers, 3.95%, due 7/1/95. 2,500 2,500,000
Jackson County, Mississippi, 4.45%, due 8/1/95. 1,500 1,500,000
Jacksonville, Florida Electric Authority,
6.80%, due 10/1/95.......................... 1,000 1,028,944
Jacksonville, Florida Electric Authority,
7.38%, due 10/1/95 ......................... 1,275 1,315,363
Jacksonville, Florida Electric Authority,
9.50%, due 10/1/95 ......................... 1,750 1,834,192
Klamath Falls, Oregon Electric, 3.75%,
due 5/2/95.................................. 4,000 4,000,000
La Plata County, Colorado Pollution Control
Authority, 3.75%, due 3/1/95................ 1,080 1,080,000
Louisiana State Recovery District, 7.75%,
due 7/1/95.................................. 2,750 2,836,944
Marion County,Tennessee Industrial Environmental
Development Authority, AMT, 4.85%, due 8/1/95 6,000 6,000,000
Massachusetts Bay Transportation Authority,
4.40%, due 9/1/95........................... 1,000 1,000,000
Massachusetts State Housing Finance Authority,
AMT, 3.85%, due 6/1/95 ..................... 3,600 3,600,000
North Texas Municipal Water Authority, 9.70%,
due 6/1/95.................................. 1,035 1,073,616
Oklahoma State Water Authority, 3.85%,
due 3/1/95.................................. 4,000 4,000,000
Oklahoma State Water Authority, 4.50%,
due 9/1/95.................................. 5,000 5,000,000
South Columbia Basin Irrigation District,
9.00%, due 12/1/95.......................... 1,000 1,027,086
Trinity River Authority, Texas Project Revenue,
9.00%, due 8/1/95........................... 1,000 1,035,773
Washington State, 8.75%, due 9/1/95............ 1,700 1,737,455
Washington State, 7.00%, due 10/1/95........... 1,000 1,013,595
Wil County, Illinois Community Unit School
District, 9.80%, due 12/1/95................ 1,000 1,037,855
York County, South Carolina Pollution Control
Revenue, 3.75%, due 3/15/95..,,,,,,,........ 1,000 1,000,000
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106,979,590
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REVENUE, TAX, BOND AND TAX REVENUE ANTICIPATION NOTES -- 5.5%
California State, 5.00%, due 6/28/95........... 2,000 2,005,114
Iowa Financial Authority Single Family Mortgage
Revenue, 4.80%, due 2/2/96 ................. 4,510 4,510,000
Los Angeles County, California, 4.50%,
due 6/30/95................................. 2,000 2,004,149
Maine State, 6.60%, due 3/1/95................. 1,000 1,000,000
Michigan Municipal Bond Authority, 4.75%,
7/20/95..................................... 3,200 3,208,912
Milwaukee, Wisconsin, 5.50%, 2/22/96........... 1,000 1,006,831
Providence, Rhode Island, 5.20%, 3/15/95....... 3,900 3,901,195
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17,636,201
------------
VARIABLE RATE DEMAND NOTES* -- 53.1%
Abilene, Texas Health Facilities Authority,
due 10/1/17................................. 3,200 3,200,000
Baltimore, Maryland, Port Facilities Authority,
due 10/14/11................................ 1,000 1,000,000
Baltimore County, Maryland, due 7/1/16........ 2,000 2,000,000
Beaufort County, North Carolina, Pollution
Control Revenue, due 12/1/00................ 1,000 1,000,000
Beltrami County, Minnesota Environmental
Control, due 12/1/21........................ 500 500,000
Brazos River Harbor, Texas, due 12/1/19........ 1,100 1,100,000
Brazos, Texas, Harbor Industrial Development
Authority, due 12/1/13...................... 2,900 2,900,000
Buffalo County, Nebraska Hospital Authority,
due 1/1/16.................................. 1,000 1,000,000
Burke County, Georgia Development Authority,
Pollution Control, due 7/1/24............... 2,100 2,100,000
California Health Facility Financing Revenue,
due 7/1/20.................................. 800 800,000
California Pollution Control Recovery, AMT,
due 9/1/20.................................. 1,200 1,200,000
Charleston County, South Carolina Industrial
Revenue, due 1/1/07......................... 1,300 1,300,000
Cherokee County, South Carolina Industrial
Revenue, AMT, due 8/1/19.................... 200 200,000
Clark County, Nebraska, Airport Improvement
Revenue, due 7/1/12......................... 400 400,000
Cocoino County, Arizona Pollution Control,
due 10/1/29................................. 800 800,000
Colorado Health Facilities Authority Revenue,
due 10/1/14................................. 4,850 4,850,000
Colorado Health Facilities Authority Revenue,
due 5/15/20................................. 200 200,000
Colorado Housing Finance Authority,
due 12/01/05................................ 3,400 3,400,000
Columbia, Missouri, Water & Electric Revenue,
due 8/15/99................................. 500 500,000
District of Columbia, due 10/1/07.............. 900 900,000
District of Columbia, due 10/1/15 ............. 500 500,000
District of Columbia, due 10/1/22.............. 13,400 13,400,000
East Baton Rouge Parish, Louisiana AMT,
due 12/1/12................................. 2,500 2,500,000
Eastern Municipal Water District, California,
due 7/1/20.................................. 800 800,000
El Paso, Texas Health Facilities, due 5/15/19 100 100,000
Florida Housing Finance Authority, due 12/1/08 600 600,000
Fort Wayne, Indiana Economic Development
Revenue, due 12/1/03 ....................... 1,000 1,000,000
Grapevine, Texas Industrial Development Corp,
due 3/1/10.................................. 700 700,000
Hammond, Indiana Pollution Control Revenue,
due 11/15/06................................ 700 700,000
Harris County, Texas Industrial Development
Corp AMT, due 8/15/27 ...................... 1,200 1,200,000
Hopkinsville, Kentucky Industrial Building
Revenue, AMT, due 4/1/04.................... 600 600,000
Illinois Development Finance Authority, AMT,
due 3/1/17.................................. 3,300 3,300,000
Illinois Educational Facilities Authority,
due 9/1/25.................................. 1,000 1,000,000
Illinois Educational Facilities Authority,
due 3/1/27.................................. 2,000 2,000,000
Illinois Health Facilities Authority, due 1/1/06 1,900 1,900,000
Illinois Health Facilities Authority, due 5/1/11 700 700,000
Iowa Finance Authority, due 11/1/15 ........... 3,000 3,000,000
Jackson County, Mississippi Pollution Control,
due 12/1/16................................. 6,455 6,455,000
Jackson County, Mississippi Pollution Control,
due 6/1/23 ................................. 400 400,000
Jefferson Parish, Louisiana Hospital,
due 12/1/15 ................................ 2,700 2,700,000
Los Angeles, California Community Redevelopment
Agency, due 12/1/05 ........................ 2,300 2,300,000
Los Angeles, California Metropolitan
Transportation, due 7/1/20.................. 2,000 2,000,000
Luisa County, Virginia Industrial Development
Authority, due 1/1/20....................... 5,000 5,000,000
Lynchburg, Virginia Industrial Development
Authority, due 12/1/25...................... 3,400 3,400,000
Maricopa County, Arizona Pollution Control
Revenue, due 5/1/29......................... 4,400 4,400,000
Mecklenburg, North Carolina Pollution Control
Authority, due 12/1/04...................... 1,000 1,000,000
Memphis, Tennessee, due 7/1/04................. 2,900 2,900,000
Michigan State Strategic Limited Obligation,
due 6/1/10.................................. 1,500 1,500,000
Monroe County, Mississippi Economic Development
Corp., due 10/1/24.......................... 800 800,000
Moon, Pennsylvania Industrial Development
Authority, due 11/1/15...................... 1,000 1,000,000
Nash County, North Carolina Industrial
Facilities and Pollution Control Revenue,
due 12/1/14................................. 1,000 1,000,000
New York, NY due 8/1/12........................ 900 900,000
North Texas Higher Education Student Loan, AMT,
due 3/1/05.................................. 2,800 2,800,000
North Texas Higher Education
Student Loan, due 4/1/20.................... 3,200 3,200,000
Oklahoma City, Oklahoma Industrial & Cultural
Revenue, due 6/1/06........................ 2,200 2,200,000
Orangeburg County, South Carolina Solid Waste,
AMT, due 11/1/24........................... 1,400 1,400,000
Pennsylvania State Higher Education Student
Loan, AMT, due 1/1/18...................... 5,000 5,000,000
Pennsylvania State Higher Education Student
Loan, AMT, due 7/1/18...................... 5,000 5,000,000
Pennsylvania State Higher Education Student
Loan, AMT, due 12/1/24..................... 3,000 3,000,000
Perry County, Mississippi Pollution Control
Authority, due 3/1/02...................... 4,600 4,600,000
Person County, North Carolina Pollution Control
Authority, due 11/1/19 .................... 3,000 3,000,000
Pitkin County, Colorado Industrial Development
Revenue, AMT, due 4/1/14................... 900 900,000
Purdue University, Indiana, due 7/1/17......... 1,500 1,500,000
Purdue University, Indiana, due 7/1/20......... 2,000 2,000,000
Putnam County, West Virginia Industrial
Development Revenue, due 10/1/11............ 600 600,000
St Charles County, Missouri Industrial
Development Authority, due 12/1/07.......... 1,000 1,000,000
Saint Charles Parish, Louisiana, due 11/1/21... 1,700 1,700,000
Savanna, Illinois Industrial Development
Revenue, due 6/1/04......................... 600 600,000
South East Texas Housing Single Family Mortgage,
AMT, due 11/1/25............................ 5,840 5,840,000
Sublette County, Wyoming Pollution Control
Revenue, due 11/1/14........................ 1,100 1,100,000
Sweetwater County, Wyoming Pollution Control
Revenue, due 12/1/14 ....................... 3,000 3,000,000
Tracy, California, due 5/1/15.................. 300 300,000
Uinta County, Wyoming Pollution Control
Authority, due 8/15/20...................... 900 900,000
Uinta County, Wyoming Pollution Control
Authority, due 12/1/22...................... 600 600,000
University of Arkansas, due 12/1/19............ 9,000 9,000,000
University of Michigan, due 4/1/11............. 4,210 4,210,000
Valdez, Arkansas Marine Revenue, due 10/1/25... 700 700,000
West Baton Rouge, Louisiana Public Improvement,
AMT, due 12/1/23............................ 1,700 1,700,000
West Virginia State Hospital Finance Authority,
due 12/1/25................................. 2,800 2,800,000
Wisconsin State, due 5/1/04.................... 1,000 1,000,000
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168,755,000
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TOTAL INVESTMENTS AT AMORTIZED COST............ 101.1% $321,394,220
OTHER ASSETS-OTHER LIABILITIES................. (1.1) (3,632,993)
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NET ASSETS..................................... 100.0% $317,761,227
====== ============
AMT-Subject to Alternative Minimum Tax
* 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>
Tax Free Reserves Portfolio
STATEMENT OF ASSETS AND LIABILITIES February 28, 1995 (unaudited)
ASSETS:
Investments at amortized cost (Note 1A)....................... $321,394,220
Cash........................................................... 8,417
Interest receivable............................................ 2,447,212
Prepaid expenses and other assets.............................. 1,441
------------
Total assets............................................... 323,851,290
------------
LIABILITIES:
Payable for investments purchased.............................. 6,000,000
Payable to affiliate-- investment advisory fees (Note 2A)...... 47,180
Accrued expenses and other liabilities......................... 42,883
------------
Total liabilities.......................................... 6,090,063
------------
NET ASSETS..................................................... $317,761,227
============
REPRESENTED BY:
Capital paid-in for beneficial interests....................... $317,761,227
============
Tax Free Reserves Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1995 (unaudited)
INVESTMENT INCOME (Note 1B)................. $4,927,814
EXPENSES:
Investment Advisory fees (Note 2A).......... $267,630
Administrative fees (Note 2B)............... 66,907
Custodian fees.............................. 64,513
Auditing fees............................... 13,600
Trustee fees................................ 5,260
Legal fees.................................. 5,103
Miscellaneous............................... 10,408
--------
Total................................... 433,421
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Net investment income................... 4,494,393
==========
See notes to financial statements
<PAGE>
Tax Free Reserves Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
----------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM:
<S> <C> <C>
OPERATIONS:
Net investment income..................................................... $ 4,494,393 $ 5,749,881
Net realized gain (loss) on investments................................... -- (1,494)
------------- -------------
Increase in net assets from operations................................ $ 4,494,393 5,748,387
------------- -------------
CAPITAL TRANSACTIONS:
Proceeds from contributions............................................... $ 238,229,391 354,949,138
Value of withdrawals...................................................... (158,070,139) (355,183,409)
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Net increase (decrease) in net assets from capital transactions........ 80,159,252 (234,271)
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NET INCREASE IN NET ASSETS ............................................... 84,653,645 5,514,116
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NET ASSETS:
Beginning of period....................................................... 233,107,582 227,593,466
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End of period............................................................. $ 317,761,227 $ 233,107,582
============= =============
</TABLE>
Tax Free Reserves Portfolio
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 5, 1991
SIX MONTHS ENDED YEAR ENDED AUGUST 31, (COMMENCEMENT
FEBRUARY 28, 1995 ------------------------------------------ OF OPERATIONS) TO
(UNAUDITED) 1994 1993 1992 AUGUST 31, 1991
-------------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000 omitted).... $317,761 $233,108 $277,593 $212,502 $200,361
Ratio of expenses to average net assets.... 0.32%<F1> 0.31% 0.31% 0.31% 0.35%<F1>
Ratio of net investment income to average
net assets................................ 3.36%<F1> 2.33% 2.35% 3.43% 4.41%<F1>
Note: If Agents of the Portfolio had not voluntarily waived a portion of their fees during the periods
indicated, the ratios would have been as follows:
Ratios:
Expenses to average net assets............. 0.32%<F1> 0.32% 0.33% 0.35% 0.36%<F1>
Net investment income to average net assets 3.36%<F1> 2.32% 2.32% 3.39% 4.41%<F1>
<FN>
<F1> Annualized
</TABLE>
See notes to financial statements
<PAGE>
Tax Free Reserves Portfolio
NOTES TO FINANCIAL STATEMENTS (unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES
Tax Free Reserves Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940, as amended, as a no-load, non-diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Declaration of Trust permits the Trustees to issue
beneficial interests in the Portfolio. The Landmark Funds Broker-Dealer
Services, Inc. ("LFBDS") acts as the Portfolio's Administrator. Citibank, N.A.
("Citibank") acts as the Investment Adviser. The significant accounting policies
consistently followed by the Portfolio are in conformity with generally accepted
accounting principles and are as follows:
A. VALUATION OF INVESTMENTS -- Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
The Portfolio's use of amortized cost is subject to the Portfolio's compliance
with certain conditions as specified under Rule 2a-7 of the Investment Company
Act of 1940.
B. INTEREST INCOME -- Interest income consists of interest accrued, less the
amortization of any premium and accretion of market discount on the investments
of the Portfolio.
C. FEDERAL INCOME TAXES -- The Portfolio's policy is to comply with the
applicable provisions of the Internal Revenue Code. Accordingly, no provision
for federal income taxes is necessary.
D. OTHER -- Purchases, maturities and sales, of money market instruments are
accounted for on the date of the transaction.
(2) INVESTMENT ADVISORY FEE AND ADMINISTRATIVE FEE
A. INVESTMENT ADVISORY FEE -- The investment advisory fee paid to Citibank, as
compensation for overall investment management services, amounted to $267,630,
for the six months ended February 28, 1995. The investment advisory fee is
computed at the annual rate of 0.20% of the Portfolio's average daily net
assets.
B. ADMINISTRATIVE FEE -- Under the terms of an Administrative Services
Agreement, the administrative fee payable to the Administrator, as compensation
for overall administrative services and general office facilities, is computed
at the annual rate of 0.05% of the Portfolio's average daily net assets and
amounted to $66,907, for the six months ended February 28, 1995. The Portfolio
pays no compensation directly to any Trustee or any officer who is affiliated
with the Administrator, all of whom receive remuneration for their services to
the Portfolio from the Administrator or its affiliates. Certain of the officers
and a Trustee of the Portfolio are officers and a director of the Administrator
or its affiliates.
(3) INVESTMENT TRANSACTIONS
Purchases, and maturities and sales of money market instruments, exclusive of
securities purchased subject to repurchase agreements, aggregated $576,831,373
and $490,775,000, respectively for the six months ended February 28, 1995.
(4) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost of investment securities owned at February 28, 1995, for federal income
tax purposes, amounted to $321,394,220.
(5) LINE OF CREDIT
The Portfolio, along with other Landmark Funds, entered into an agreement with a
bank which allows the Funds collectively to borrow up to $40 million for
temporary or emergency purposes. Interest on borrowings, if any, is charged to
the specific fund executing the borrowing at the base rate of the bank. In
addition, the $15 million committed portion of the line of credit requires a
quarterly payment of a commitment fee based on the average daily unused portion
of the line of credit. For the six months ended February 28, 1995, the
commitment fee allocated to the Portfolio was $1,031. Since the line of credit
was established, there have been no borrowings.
