TAX FREE RESERVES PORTFOLIO
N-30B-2, 1996-04-25
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<PAGE>
Tax Free Reserves Portfolio
PORTFOLIO OF INVESTMENTS  February 29, 1996 (unaudited)

                                   PRINCIPAL
                                    AMOUNT
ISSUER                          (000'S OMITTED)       VALUE
- --------------------------------------------------------------------------------

 TAX-EXEMPT COMMERCIAL PAPER--7.0%

Chesterfield County Virginia lndustrial
   Development, 3.40% due 5/14/96    $ 3,000     $  3,000,000
Cornell, Michigan Economic
   Development Corp.,
   3.15% due 4/9/96............        2,500        2,500,000
Houston, Texas Airport, AMT,
   3.15% due 4/9/96............        4,000        4,000,000
Lower Colorado River Authority,
   Series B, 3.20% due 5/8/96..        3,000        3,000,000
Mesa, Arizona Municipal Development
   Corp., 3.20% due 4/9/96.....        1,500        1,500,000
Peninsula Ports, Virginia
   3.20% due 4/8/96............        1,000        1,000,000
Pinellas County, Florida Educational
   Facilities, 3.10% due 6/6/96        3,000        3,000,000
Port Anacortes, Washington Industrial
   Development Authority,
   3.15% due 3/7/96............        2,000        2,000,000
Texas Finance Authority,
   3.38% due 3/6/96............        3,000        3,000,000
Texas Public Finance Authority,
   3.20% due 5/8/96............        5,000        5,000,000
                                                 ------------
                                                   28,000,000
                                                 ------------
GENERAL OBLIGATION BONDS AND NOTES--9.7%

Albuquerque, New Mexico,
   5.00% due 7/1/96............        3,375        3,393,796
Anne Arundel County, Maryland,
   5.80% due 3/1/97............        1,150        1,178,886
Austin, Texas,
   7.75% due 9/1/96............        1,340        1,365,830
Chicago, Illinois,
   5.00% due 1/1/97............        4,310        4,369,788
DeKalb County, Georgia,
   7.30% due 1/1/97............        1,000        1,053,427
Florida State Board of Education
   Capital Outlay,
   6.40% due 6/1/96............        3,000        3,019,474
Georgia State,
   7.70% due 4/1/96............        2,000        2,006,531
Iowa School Corps.,
   4.75% due 6/28/96...........        4,500        4,512,670
Michigan State,
   4.00% due 9/30/96...........        6,000        6,034,386
Milwaukee Wisconsin,
   4.75% due 6/15/96...........        1,835        1,840,156
Minnesota State,
   6.50% due 8/1/96............        1,000        1,011,457
Missouri State,
   7.05% due 8/1/96............        2,600        2,687,838
Missouri State,
   7.50% due 8/1/96............        1,000        1,034,741
North Slope Borough, Arkansas,
   6.25% due 6/30/96...........        1,150        1,161,104
North Slope Borough, Arkansas,
   6.60% due 6/30/96...........        1,000        1,010,801
Salt Lake City, Utah School District,
   4.40% due 3/1/97............        2,090        2,113,040
Tennessee State,
   5.00% due 3/1/97............        1,065        1,082,687
                                                 ------------
                                                   38,876,612
                                                 ------------

ANNUAL AND SEMI-ANNUAL TENDER REVENUE BONDS AND NOTES (PUTS)--29.6%

Arkansas State Financial Authority
   Single Family Mortgage Revenue,
   3.80% due 3/1/96............        3,000        3,000,000
Arkansas State Financial Authority
   Single Family Mortgage Revenue,
   AMT, 3.90% due 3/1/96.......        2,240        2,240,000
Arkansas State Financial Authority
   Single Family Mortgage Revenue,
   AMT, 3.90% due 8/1/96.......        3,200        3,200,000
Atlanta, Georgia
   Urban Resource Finance Authority,
   3.75% due 5/1/96............        6,000        6,000,000
Chicago, Illinois
   Single Family Mortgage Revenue,
   AMT, 3.30% due 10/15/96.....        5,000        5,000,000
Clackmas County, Oregon Hospital
   Facilities Authority,
   3.70% due 4/1/96............        4,400        4,400,000
Council Bluffs, Indiana Revenue,
   4.00% due 4/1/96............        3,975        3,975,000
Dallas, Texas,
   6.70% due 5/1/96............        3,000        3,014,188
Florida State, Sunshine Skyway Revenue,
   7.25% due 6/1/96............          500          514,185
Harrisonburg, Virginia Multi-Family
   Housing Revenue,
   3.50% due 2/1/97............        2,000        2,000,000
Hawaii State Department of Budget and
   Finance, 3.75% due 3/1/96...        3,710        3,710,000
Illinois Housing Development
   Authority, 3.45% due 9/3/96.        4,100        4,100,000
Indiana State Single Family Housing,
   AMT, 4.00% due 7/1/96.......        2,500        2,500,000
Indianapolis, Indiana Local Public
   Bond Bank, 5.00% due 2/1/97         1,000        1,017,375
Iowa, Single Family Authority Revenue,
   3.20% due 2/27/97...........        2,905        2,905,000
Iowa Municipalities Workers,
   4.10% due 7/1/96............        3,000        3,000,000
Jackson County, Mississippi,
   3.90% due 8/1/96............        1,900        1,900,000
Los Angeles, California
   Certificates of Participation,
   3.70% due 2/1/97............        2,550        2,564,162
Lower Neches Valley, Texas
   Pollution Control Revenue,
   3.10% due 8/15/96...........        2,900        2,900,000
Marion County, Tennessee
   Industrial Environmental, AMT,
   3.50% due 8/1/96............        6,000        6,000,000
Massachusetts Bay Transportation
   Authority, 7.00% due 3/1/97.        2,160        2,237,639
Massachusetts State College Building,
   7.25% due 5/1/96............        1,850        1,896,017
Milwaukee, Wisconsin Metropolitan
   Sewer District, 9.00% due 5/1/96    6,000        6,050,817
Missouri State Housing Development,
   AMT, 4.20% due 11/1/96......        2,000        2,000,000
Montgomery County, Maryland
   Housing Opportunities,
   3.90% due 11/14/96..........        4,500        4,500,000
New Jersey State,
   7.00% due 4/1/96............        1,500        1,503,625
New Mexico Mortgage Finance
   Authority, AMT,
   3.85% due 8/28/96...........        3,500        3,500,000
New Mexico Mortgage Finance Authority,
   AMT, 3.25% due 2/28/97......        4,000        4,000,000
Oklahoma State Industrial Authority
   Revenue, 3.44% due 8/15/96..        2,085        2,085,000
Oklahoma State Water Reserve Board,
   3.80% due 3/1/96............        4,000        4,000,000
Oklahoma State Water Reserve Board,
   3.95% due 3/1/96............        4,700        4,700,000
Pennsylvania Intergovernmental Corp,
   5.20% due 6/15/96...........        1,750        1,756,892
Pennsylvania State Higher Education
   Revenue, 3.25% due 8/26/96..        3,000        3,000,000
Pennsylvania State Turnpike Common
   Revenue, 4.25% due 12/1/96..        1,760        1,772,225
Peoria Moline And Freeport Illinios,
   AMT, 4.00% due 5/15/96......        3,930        3,930,000
Texas State,
   AMT, 3.85% due 7/17/96......        1,000        1,000,000
Texas State,
   AMT, 3.90% due 11/6/96......        1,000        1,000,000
Travis County, Texas,
   10.35% due 3/1/96...........        1,000        1,000,000
University of Minnesota,
   3.25% due 8/1/96............        1,725        1,725,000
Virginia State Public School Authority,
   7.50% due 1/1/97............        1,000        1,034,736
Washington State Housing Finance
   Commission, AMT,
   4.10% due 6/1/96............          615        615,044
Washington Suburban Sanitation
   District, 4.25% due 6/1/96..        1,750        1,752,685
                                                 ------------
                                                  118,999,590
                                                 ------------

REVENUE, TAX, BOND AND TAX REVENUE ANTICIPATION NOTES--6.9%

California State,
   5.75% due 4/25/96...........       10,310       10,342,102
Colorado State General Fund Revenue,
   4.50% due 6/27/96...........        5,250        5,263,049
Houston, Texas,
   4.50% due 6/27/96...........        3,000        3,005,752
Pennsylvania State,
   4.50% due 6/28/96...........        1,800        1,806,754
Texas State,
   4.75% due 8/30/96...........        7,500        7,536,511
                                                 ------------
                                                   27,954,168
                                                 ------------

VARIABLE RATE DEMAND NOTES*--45.9%

Alabama Housing Finance Authority
   Single Family, due 4/1/17...        5,000        5,000,000
Alaska State Housing Finance Authority,
   due 6/1/26..................        1,500        1,500,000
Arkansas Hospital Finance Authority,
   due 11/1/10.................        3,000        3,000,000
Baltimore County, Maryland,
   due 7/1/16..................        2,000        2,000,000
Baltimore, Maryland, Port Facilities
   Authority, due 10/14/11.....        1,000        1,000,000
Beaufort County, North Carolina,
   Pollution Control Revenue,
   due 12/1/00.................        1,000        1,000,000
Bexar County Texas Health Facilities
   Development, due 7/11/11....        1,000        1,000,000
Boulder County, Colorado
   Industrial Development Revenue,
   due 12/1/04.................        2,730        2,730,000
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
Burke County, Georgia Pollution
   Control Authority, due 7/1/24       2,200        2,200,000
Calcasieu Parish, Louisiana Industrial
   Income, AMT, due 3/1/25.....        1,000        1,000,000
California Health Facilities Financing
   Revenue, due 7/1/13.........        1,400        1,400,000
California Pollution Control Recovery,
   AMT, due 9/1/20.............        1,000        1,000,000
California Statewide Community
   Development, due 11/1/15....        1,430        1,430,000
Cherokee County, South Carolina
   Industrial Revenue, AMT,
   due 8/1/19..................          200          200,000
Clinton Township, Michigan Economic
   Development Corp., due 5/1/13         500          500,000
Colorado Health Facilities Authority
   Revenue, due 5/15/20........          200          200,000
Columbia, Missouri Water and Electric
   Revenue, due 8/15/99........          500          500,000
Connecticut State Pollution Developmental
   Authority, due 9/1/28.......          600          600,000
Dade County, Florida Spa Revenue,
   due 8/1/15..................        7,000        7,000,000
District of Columbia,
   due 10/1/15.................          500          500,000
Fayetteville, Arkansas Industrial
   Development, AMT due 12/1/04        1,100        1,100,000
Florida Housing Finance Authority,
   due 12/1/08.................          600          600,000
Forsyth County, Georgia Development
   Authority Industrial, due 1/1/07    2,000        2,000,000
Fort Wayne, Indiana Economic
   Development Revenue, due 12/1/03    1,000        1,000,000
Grand Rapids, Michigan Water Supply
   Systems, due 1/1/20.........          400          400,000
Grapevine, Texas Industrial Development
   Corp., due 3/1/10...........          600          600,000
Gulf Coast, Texas Industrial Development
   Authority, AMT, due 5/1/25..          300          300,000
Gwinett County, Georgia Industrial
   Development Revenue,
   AMT, due 6/1/05.............        1,500        1,500,000
Illinois Educational Facilities Authority,
   due 9/1/25..................        1,000        1,000,000
Iowa Finance Small Business
   Development Revenue,
   due 11/1/15.................        3,000        3,000,000
Jackson, Mississippi Industrial
   Development Revenue,
   due 12/1/15.................        1,825        1,825,000
Jackson County, Mississippi Pollution
   Control Revenue, due 6/1/23.        3,700        3,700,000
Jefferson Parish, Louisiana Hospital
   District 2, due 12/1/15.....        2,700        2,700,000
Kansas City, Kansas Industrial Revenue,
   due 8/1/15..................          200          200,000
Kansas City, Missouri Hospital Facilities
   Revenue, due 4/15/15........          400          400,000
Kentucky Finance Development
   Authority Revenue, due 12/1/15      2,000        2,000,000
Kentucky League of Cities Revenue,
   due 3/1/97..................        1,500        1,500,000
Kern County, California Certificates of
   Participation, due 8/1/06...          800          800,000
Kokomo, Indiana Economic Development
   Revenue, AMT, due 9/1/30....        2,940        2,940,000
Lincoln County, Wyoming Pollution
   Control, due 8/1/15.........          600          600,000
Louisa County, Virginia Industrial
   Development Authority,
   due 1/1/20..................        5,000        5,000,000
Louisiana State Offshore Terminal,
   due 9/1/06..................          700          700,000
Lynchburg, Virginia Industrial
   Development Authority,
   due 12/1/25.................        3,400        3,400,000
Maine Health & Higher Educational
   Facilities, due 7/1/25......        7,000        7,000,000
Manatee County, Florida Housing Finance
   Authority, AMT, due 4/15/96.        6,335        6,335,000
Maricopa County, Arizona Hospital
   Facilities Authority, due 12/1/08   1,100        1,100,000
Marion County, West Virginia Solid Waste
   Disposal, AMT, due 10/1/17..        2,900        2,900,000
Marion County, West Virginia Solid
   Waste Disposal, due 10/1/17.        1,500        1,500,000
Mecklenburg, North Carolina Pollution
   Control Authority, due 12/1/04      1,000        1,000,000
Medford, Oregon Hospital Facilities
   Authority, due 5/1/21.......        3,500        3,500,000
Missouri State Health and Educational
   Facilities Authority, due 12/1/19   1,300        1,300,000
Missouri Higher Education Student
   Loan, AMT, due 6/1/17.......        5,100        5,100,000
Nash County, North Carolina Industrial
   Facilities and Pollution Control
   Revenue, due 12/1/14........        1,000        1,000,000
New Hanover County, North Carolina,
   due 3/1/13..................        2,250        2,250,000
New Hanover County, North Carolina,
   due 3/1/14..................        2,250        2,250,000
New York, New York,
   due 8/1/23..................          500          500,000
North Carolina Medical
   Care Community, due 9/1/02..        2,300        2,300,000
North Carolina
   Medical Care Hospital,
   due 6/1/22..................        4,700        4,700,000
North Texas Higher Education
   Student Loan, due 3/1/05....        2,800        2,800,000
Orange County, Florida Industrial
   Development Authority, due 1/1/11   1,550        1,550,000
Pennsylvania State Higher Education
   Student Loan, due 7/1/18....        2,000        2,000,000
Pennsylvania State Higher Education
   Student Loan, AMT, due 12/1/24      3,100        3,100,000
Person County, North Carolina
   Pollution Control Authority,
   due 11/1/19.................        3,000        3,000,000
Phoenix, Arizona,
   due 6/1/20..................        2,000        2,000,000
Pima County, Arizona Multi-Family
   Housing Revenue,
   AMT, due 6/1/34.............        1,100        1,100,000
Port Arthur, Texas Navigation District,
   due 10/1/24.................          300          300,000
Purdue University, Indiana,
   due 7/1/17..................        1,400        1,400,000
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
Rhode Island State Industrial Facilities
   Corp., AMT, due 6/1/05......        5,500        5,500,000
Rhode Island State Industrial Facilities
   Corp., due 11/1/05..........        5,300        5,300,000
Savanna, Illinois Industrial Development
   Revenue, due 6/1/04.........          600          600,000
South Carolina Jobs, 
   due 11/1/25.................        3,000        3,000,000
St Charles County, Missouri Industrial
   Development Authority,
   due 12/1/07.................        1,000        1,000,000
Tipton, Indiana Economic Development
   Revenue, due 7/1/22.........        1,105        1,105,000
Tracy, California,
   due 5/1/15..................          300          300,000
Unita County, Wyoming, Pollution
   Control Revenue, due 8/15/20        1,600        1,600,000
Unita County, Wyoming, Pollution
   Control Revenue, due 12/1/22          700          700,000
University of Arkansas,
   due 12/1/19.................        9,100        9,100,000
University Athletic Association Inc.
   Florida, due 2/1/20.........        2,100        2,100,000
Utah State Board of Regents
   Student Loan, due 11/1/25...        6,000        6,000,000
Volusia County, Florida
   Health Facilities Authority,
   due 9/1/20..................        2,000        2,000,000
Washington Public Power Supply,
   due 7/1/18..................        2,295        2,295,000
Washington State Health Care
   Facilities, due 10/1/05.....        1,200        1,200,000
West Feliciana Parish, Louisiana,
   due 12/1/15.................        1,300        1,300,000
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
                                                 ------------ 
                                                  184,510,000
                                                 ------------

TOTAL INVESTMENTS
   AT AMORTIZED COST...........        99.1%      398,340,370
OTHER ASSETS, LESS LIABILITIES.         0.9         3,504,665
                                      -----      ------------
NET ASSETS.....................       100.0%     $401,845,035
                                      =====      ============

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 29, 1996 (unaudited)

ASSETS:
Investments, at amortized cost (Note 1A)......................    $398,340,370
Cash..........................................................          68,814
Interest receivable...........................................       3,527,164
                                                                  ------------
    Total assets..............................................     401,936,348
                                                                  ------------

LIABILITIES:
Payable to affiliate--investment advisory fees (Note 2A)......          64,145
Accrued expenses and other liabilities........................          27,168
                                                                  ------------
    Total liabilities.........................................          91,313
                                                                  ------------
NET ASSETS....................................................    $401,845,035
                                                                  ============

REPRESENTED BY:
Capital paid-in for beneficial interests......................    $401,845,035
                                                                  ============

See notes to financial statements

<PAGE>
Tax Free Reserves Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (unaudited)

INVESTMENT INCOME (Note 1B).............................            $7,242,486

EXPENSES:

Investment Advisory fees (Note 2A)...................... $384,045
Administrative fees (Note 2B)...........................   96,011
Custodian fees..........................................   69,893
Auditing fees...........................................    9,300
Legal fees..............................................    6,715
Trustee fees............................................    4,609
Miscellaneous...........................................    7,690
                                                         --------
    Total Expenses......................................  578,263
Less fees paid indirectly (Note 1D).....................   (2,196)
                                                         --------
    Net expenses........................................               576,067
                                                                    ----------
    Net investment income...............................             6,666,419
NET REALIZED LOSS ON INVESTMENTS........................                   (63)
                                                                    ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....            $6,666,356
                                                                    ==========

See notes to financial statements

<PAGE>
Tax Free Reserves Portfolio
STATEMENT OF CHANGES IN NET ASSETS

                                               SIX MONTHS ENDED
                                               FEBRUARY 29, 1996   YEAR ENDED
INCREASE (DECREASE) IN NET ASSETS FROM            (UNAUDITED)    AUGUST 31, 1995
                                               ----------------- ---------------
OPERATIONS:

Net investment income.......................... $  6,666,419    $  10,884,482
Net realized gain (loss) on investments........          (63)          75,464
                                                ------------    -------------
    Increase in net assets from operations.....    6,666,356       10,959,946
                                                ------------    -------------

CAPITAL TRANSACTIONS:
Proceeds from contributions....................  235,665,352      487,327,869
Value of withdrawals........................... (234,708,924)    (337,173,146)
                                                ------------    -------------
   Net increase in net assets from
     capital transactions......................      956,428      150,154,723
                                                ------------    -------------
NET INCREASE IN NET ASSETS ....................    7,622,784      161,114,669
NET ASSETS:

Beginning of period............................  394,222,251      233,107,582
                                                ------------     ------------
End of period.................................. $401,845,035     $394,222,251
                                                ============     ============

Tax Free Reserves Portfolio
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                                                                                     FEBRUARY 5, 1991
                                        SIX MONTHS ENDED             YEAR ENDED AUGUST 31,            (COMMENCEMENT
                                        FEBRUARY 29, 1996  ---------------------------------------   OF OPERATIONS) TO
                                           (UNAUDITED)       1995      1994       1993       1992     AUGUST 31, 1991
                                           ----------      --------  --------   --------   --------   ---------------
RATIOS/SUPPLEMENTAL DATA:
<S>                                         <C>            <C>       <C>        <C>        <C>             <C>     
Net Assets, end of period (000 omitted)...  $401,845       $394,222  $233,108   $277,593   $212,502        $200,361
Ratio of expenses to average net assets...     0.30%*         0.32%     0.31%      0.31%      0.31%          0.35%*
Ratio of net investment income to average
 net assets...............................     3.47%*         3.55%     2.33%      2.35%      3.43%          4.41%*

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............     0.30%*         0.32%     0.32%      0.33%      0.35%         0.36%*
Net investment income to average net assets    3.47%*         3.55%     2.32%      2.32%      3.39%         4.41%*

* Annualized

See notes to financial statements
</TABLE>
<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 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 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. FEES PAID INDIRECTLY -- The Fund's custodian bank calculates its fees 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.

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

(2) INVESTMENT ADVISORY FEE AND ADMINISTRATIVE FEE

A. INVESTMENT ADVISORY FEE -- The investment advisory fee paid to Citibank, as
compensation for overall investment management services, amounted to $384,045
for the six months ended February 29, 1996. 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 $96,011 for the six months ended February 29, 1996. 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 $625,148,747
and $629,329,225, respectively, for the six months ended February 29, 1996.

(4) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES

The cost of investment securities owned at February 29, 1996, for federal income
tax purposes, amounted to $398,340,370.

(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 29, 1996, the
commitment fee allocated to the Portfolio was $1,067. Since the line of credit
was established, there have been no borrowings.



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