<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
H. B. Alvord
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
C. Oscar Morong, Jr.
Donald B. Otis
E. Kirby Warren
William S. Woods, Jr.
SECRETARY
Thomas M. Lenz*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
- ------------------------------------ |--| -------------------------------------
INVESTMENT ADVISER
(OF INTERNATIONAL
EQUITY PORTFOLIO)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue, Boston, MA 02116
(617) 423-1679
TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
CUSTODIAN
Investors Bank and Trust Company
One Lincoln Plaza, Boston, MA 02111
AUDITORS
Price Waterhouse LLP
160 Federal Street, Boston, MA 02110
LEGAL COUNSEL
Bingham, Dana & Gould
150 Federal Street, Boston, MA 02110
- ------------------------------------ |--| -------------------------------------
SHAREHOLDER SERVICING AGENTS
(See Inside Cover)
This report is prepared for the information of shareholders. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
This Report is Prepared & Printed on Recycled Paper. [recycle logo]
INTL/IA/A/95
LANDMARK(SM) FUNDS
Advised by Citibank, N.A.
LANDMARK
INTERNATIONAL
EQUITY FUND
ANNUAL
REPORT
December 31, 1995
<PAGE>
- -----------------------------------------------------------------------------
A Letter To Our Shareholders
Dear Shareholder:
Overall, 1995 was a mixed year for the international equity markets.
Economies in developed nations (with the notable exception of Japan) continued
to improve slowly during the year, creating a positive market environment
characterized by low inflation, declining interest rates and strong corporate
earnings. Emerging markets fared less well, however, as economic problems,
rising inflation and lack of participation by foreign investors constrained the
rise of stock prices.
The Landmark Funds' investment adviser, Citibank, N.A., manages the
Landmark International Equity Fund to provide long-term capital growth. Through
its investment in International Equity Portfolio, the Fund invests primarily in
common stocks of non-U.S. issuers, including issuers in developing countries,
with an emphasis on established companies with medium to large capitalizations
and seasoned management teams.
This Annual Report reviews the Portfolio's investment activities and
performance and provides a summary of Citibank's perspective on and outlook for
financial markets outside of the United States. 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 Coolidge
Philip W. Coolidge
President
January 20, 1996
TABLE OF CONTENTS
1 Letter to Shareholders
- -----------------------------------------------------------------------------
2 Market Environment
Fund Snapshot
Portfolio Managers
- -----------------------------------------------------------------------------
3 The Portfolio Managers Respond
Fund Quotes
Strategy and Outlook
- -----------------------------------------------------------------------------
4 International Equity Portfolio
by the Numbers
- -----------------------------------------------------------------------------
5 Performance Highlights
LANDMARK INTERNATIONAL EQUITY FUND
- -----------------------------------------------------------------------------
6 Statement of Assets and Liabilities
- -----------------------------------------------------------------------------
7 Statement of Operations
- -----------------------------------------------------------------------------
8 Statement of Changes in Net Assets
- -----------------------------------------------------------------------------
9 Financial Highlights
- -----------------------------------------------------------------------------
10 Notes to Financial Statements
- -----------------------------------------------------------------------------
13 Independent Auditors' Report
- -----------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
14 Portfolio of Investments
- -----------------------------------------------------------------------------
18 Statement of Assets and Liabilities
Statement of Operations
- -----------------------------------------------------------------------------
19 Statement of Changes in Net Assets
Financial Highlights
- -----------------------------------------------------------------------------
20 Notes to Financial Statements
- -----------------------------------------------------------------------------
22 Independent Auditors' Report
- -----------------------------------------------------------------------------
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
<PAGE>
- -----------------------------------------------------------------------------
MARKET ENVIRONMENT
Many international economies slowed decisively during 1995, heralding a
significant change in attitude among global investors. In 1994, a widespread
fear of inflation caused rising interest rates and relative weakness in many
securities markets. The reverse occurred in 1995 as economic growth slowed,
inflation fears dissipated and interest rates fell. These fundamental changes
benefitted many established international markets, particularly those in
developed European countries. Investments in Japan, Latin America and the Far
East fared less well, however, as these regions struggled with economic
problems.
As the world economic outlook changed, so did investors' perspectives
toward the international stock markets. In an environment of slow economic
growth, investors placed a premium on the stocks of companies that could deliver
consistent earnings gains regardless of prevailing economic conditions. As a
result, investors shifted their attention from economically sensitive stocks to
growth companies. This shift toward growth benefitted our investment style,
which focuses on reasonably valued companies that can produce above-average
earnings-per-share gains.
- -----------------------------------------------------------------------------
FUND SNAPSHOT
COMMENCEMENT OF OPERATIONS
March 1, 1991
NET ASSETS AS OF 12/31/95
$32.2 million
FUND OBJECTIVE
Long-term capital growth; dividend
income, if any, is incidental to this investment objective.
DIVIDENDS
Paid semi-annually, if any
CAPITAL GAINS
Distributed annually, if any
BENCHMARKS
o Lipper International Equity Funds Average
o Morgan Stanley Capital International Europe-
Australia-Far East (MSCI EAFE) Index
INVESTMENT ADVISER,
INTERNATIONAL EQUITY PORTFOLIO
Citibank, N.A.
- -----------------------------------------------------------------------------
PORTFOLIO MANAGERS
TREVOR FORBES
Vice President, Citibank, N.A.
NEIL ROBSON
Vice President, Citibank, N.A.
Mr. Forbes and Mr. Robson, who are based in Citibank's London office, are
managers of the International Equity Portfolio. Mr. Forbes is the head of
Citibank's International Equity Department in London and the senior portfolio
manager of global, non-U.S. equity and European equity portfolios for
institutional accounts. Before joining Citibank in 1991, Mr. Forbes managed the
investment business of Abbey Life. Mr. Robson is a senior equity portfolio
manager with responsibilities for the Canadian and German equity markets and
plays a key role in general asset allocation decisions regarding equity
portfolios. Prior to joining Citibank in 1989, Mr. Robson was a portfolio
manager in European equities for County National Westminster Investment
Management. The selection of specific securities is made by committees of
Citibank investment personnel specializing in investments in the countries
selected by Mr. Forbes and Mr. Robson.
- -----------------------------------------------------------------------------
THE PORTFOLIO MANAGERS RESPOND
As 1995 began, the Portfolio was well positioned to participate in an
environment that favored growth companies. Consequently, we maintained exposure
to select growth companies in a number of different regions and countries. We
placed particular emphasis on stocks in European markets such as Switzerland and
the United Kingdom while de-emphasizing nations such as Japan that were
experiencing economic difficulties. This approach produced excellent returns for
shareholders as global investors bid up the prices of companies able to provide
consistent earnings growth.
Toward the end of the year, however, the economic slowdown and shift toward
growth became increasingly recognized within stock markets. In our view,
premiums for growth stocks were becoming extreme, so we decided to lock in gains
by taking some profits. (It is important to note that these capital gains were
taken in a way that should have few or no tax implications for shareholders.)
The proceeds of those sales were reinvested in stocks that provided not
just potential for above-average earnings growth, but that were selling at
attractive prices as well. As a result, we have reallocated the Portfolio's
holdings toward markets that we believe provide good values, such as Germany and
France. We are increasing our investment in Japanese companies in anticipation
of an economic recovery and a resolution of local banking problems. In addition,
we are adopting a broadly diversified approach to emerging markets, with initial
positions in developing Asian nations.
- -----------------------------------------------------------------------------
FUND QUOTES FROM THE PORTFOLIO MANAGERS
"Technology and pharmaceutical stocks did well in 1995 because they provide
growth that is largely independent of the economy."
"What's helped the Fund is having a greater allocation in Europe than Japan,
especially during the first half of the year."
"Premiums for growth stocks are getting extreme, so we think it is time to put
more emphasis on value."
- -----------------------------------------------------------------------------
STRATEGY AND OUTLOOK
We continue to find attractive investment opportunities throughout the
world. As of year-end, the Portfolio contained investments in 102 different
companies in 19 nations. 56% of assets were apportioned to Europe, 20% to Japan,
21% to Asia (ex. Japan) and 3% to other regions.
These allocations reflect our view that markets are especially attractive
in Europe and Japan where strengthening economic fundamentals and higher
corporate earnings should be positive for global equities. Japan, which has been
in or near recession for almost two years, is actively addressing its problems
though economic stimuli and banking reform. We expect interest rates to remain
low and the yen to continue to fall during 1996, which will help strengthen the
local economy and drive corporate earnings higher. At the same time, a more
moderate rate of economic growth should benefit the emerging markets of Asia. As
inflation comes under control and interest rates stabilize, these volatile
markets should recover after two years of relative underperformance.
<PAGE>
International Equity Portfolio
- -----------------------------------------------------------------------------
BY THE NUMBERS
- -----------------------------------------------------------------------------
TOP TEN HOLDINGS OF THE PORTFOLIO
(As of 12/31/95)
NAME NATION % OF NET ASSETS
Fila Holdings ADR 3.40%
Marui Co. Japan 2.60%
Ito Yokado Corp Japan 2.30%
Tomkins United Kingdom 2.20%
Luxottica Group S.P.A. ADR 2.19%
Shoh Koh Fund Japan 2.11%
Amway Japan Ltd. Japan 2.11%
DDI Corporation Japan 1.93%
Sampo Corporation Taiwan 1.93%
Amway Asia Pacific Ltd. ADR 1.78%
- -----------------------------------------------------------------------------
INDUSTRIES AS A % OF THE PORTFOLIO
INDUSTRIES % OF COMMON STOCKS
-------- ----------------
Retailing 10.4%
Banks & Finance 10.2%
Multi Industry 8.7%
Pharmaceuticals & Health 7.7%
Telecommunications 7.0%
Merchandising 6.8%
Beverages & Tobacco 6.8%
Machinery 6.7%
Financial Services 6.1%
Business Services 5.0%
Electronics 3.3%
Automobiles 3.0%
Insurance 2.8%
Industrial Components 2.1%
Building & Construction 2.0%
Miscellaneous Materials 1.5%
Utilities 1.4%
Energy Sources 1.4%
Chemicals 1.3%
Food Retail-Merchandising 1.3%
Basic Goods 1.2%
Data Processing 0.8%
Forest Product & Paper 0.6%
Aerospace & Defense 0.5%
Instruments and Components 0.5%
Leisure & Tourism 0.5%
Steel 0.4%
CHANGES IN PORTFOLIO ASSET ALLOCATION
Portfolio of investments
as of 12/31/95
Europe 44%
Pacific Basin 36%
Japan 17%
North America 2%
Latin America 1%
...Compared to 12/31/94
Europe 44%
Pacific Basin 26%
Japan 22%
Latin America 6%
North America 2%
- -----------------------------------------------------------------------------
FUND DATA All Periods Ending December 31, 1995
<TABLE>
<CAPTION>
TOTAL RETURNS
-------------------------
SINCE
ONE 3/1/91
YEAR INCEPTION<F1>
--------- ----------
<S> <C> <C>
Landmark International Equity Fund
without Sales Charge................................................ 18.08% 6.55%
Lipper International Equity Funds Average............................ 9.41% 8.42%<F2>
MSCI EAFE Index...................................................... 11.55% 7.13%<F2>
Landmark International Equity Fund
with Maximum Sales Charge of 4.75%.................................. 12.47% 5.48%
<FN>
<F1> Average Annual Total Return.
<F2> Since 2/28/91
</TABLE>
Income Dividends Per Share $0.048
- -----------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
A $10,000 investment in the Fund made on inception date would have grown to
$12,945 with sales charge (as of 12/31/95). The graph shows how this compares to
our benchmarks over the same period.
The graph includes the initial sales charge on the Fund (no comparable charge
exists for the other indices) and assumes all dividends and distributions from
the Fund are reinvested at Net Asset Value.
LANDMARK INTERNATIONAL EQUITY FUND
LANDMARK
INTERNATIONAL LANDMARK LIPPER
EQUITY - INTERNATIONAL INTERNATIONAL
WITHOUT EQUITY - EQUITY MSCI
SALES WITH SALES FUNDS EAFE INDEX
CHARGE CHARGE AVERAGE (UNMANAGED)
- -----------------------------------------------------------------------------
$10,000 $9,525 $10,000 $10,000
Mar-91 $9,420 $8,973 $9,708 $9,400
Apr-91 $9,740 $9,277 $9,831 $9,495
May-91 $9,740 $9,277 $9,942 $9,595
Jun-91 $9,760 $9,296 $9,451 $8,889
Jul-91 $9,800 $9,335 $9,828 $9,329
Aug-91 $9,910 $9,439 $9,749 $9,141
Sep-91 $10,150 $9,668 $10,023 $9,659
Oct-91 $10,200 $9,716 $10,082 $9,798
Nov-91 $9,860 $9,392 $9,746 $9,344
Dec-91 $10,161 $9,678 $10,204 $9,832
Jan-92 $10,411 $9,917 $10,282 $9,628
Feb-92 $10,602 $10,098 $10,283 $9,289
Mar-92 $10,090 $9,611 $9,928 $8,681
Apr-92 $10,361 $9,869 $10,144 $8,728
May-92 $10,933 $10,414 $10,650 $9,317
Jun-92 $10,622 $10,118 $10,358 $8,881
Jul-92 $10,171 $9,688 $9,972 $8,660
Aug-92 $10,221 $9,735 $10,073 $9,209
Sep-92 $9,910 $9,439 $9,865 $9,033
Oct-92 $9,749 $9,286 $9,595 $8,565
Nov-92 $9,900 $9,430 $9,633 $8,650
Dec-92 $10,013 $9,537 $9,742 $8,700
Jan-93 $10,013 $9,537 $9,792 $8,705
Feb-93 $9,973 $9,499 $10,039 $8,973
Mar-93 $10,536 $10,035 $10,603 $9,761
Apr-93 $10,797 $10,284 $11,148 $10,692
May-93 $11,089 $10,562 $11,401 $10,923
Jun-93 $10,827 $10,313 $11,172 $10,755
Jul-93 $10,797 $10,284 $11,506 $11,133
Aug-93 $11,390 $10,849 $12,241 $11,737
Sep-93 $11,501 $10,955 $12,216 $11,475
Oct-93 $12,044 $11,472 $12,791 $11,831
Nov-93 $11,813 $11,251 $12,383 $10,799
Dec-93 $12,999 $12,381 $13,609 $11,581
Jan-94 $13,632 $12,985 $14,401 $12,563
Feb-94 $13,089 $12,468 $14,076 $12,530
Mar-94 $12,144 $11,567 $13,424 $11,993
Apr-94 $12,144 $11,567 $13,750 $12,505
May-94 $12,084 $11,510 $13,714 $12,436
Jun-94 $11,903 $11,338 $13,559 $12,615
Jul-94 $12,185 $11,606 $13,935 $12,739
Aug-94 $12,748 $12,142 $14,347 $13,043
Sep-94 $12,456 $11,864 $13,993 $12,635
Oct-94 $12,345 $11,759 $14,259 $13,058
Nov-94 $11,973 $11,405 $13,559 $12,434
Dec-94 $11,509 $10,962 $13,419 $12,515
Jan-95 $10,654 $10,148 $12,739 $12,036
Feb-95 $10,915 $10,397 $12,757 $12,005
Mar-95 $11,771 $11,211 $13,162 $12,758
Apr-95 $12,052 $11,480 $13,590 $13,241
May-95 $12,243 $11,662 $13,703 $13,086
Jun-95 $12,666 $12,064 $13,703 $12,860
Jul-95 $13,330 $12,697 $14,439 $13,664
Aug-95 $13,360 $12,726 $14,169 $13,146
Sep-95 $13,642 $12,994 $14,378 $13,406
Oct-95 $13,481 $12,840 $14,206 $13,050
Nov-95 $13,340 $12,706 $14,351 $13,416
Dec-95 $13,590 $12,945 $14,787 $13,960
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 International Equity Fund
- ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in International Equity Portfolio, at value (Note 1A)............................. $32,152,321
Deferred organization expenses (Note 1D)..................................................... 9,459
Other assets................................................................................. 49,083
-----------
Total assets............................................................................. 32,210,863
-----------
LIABILITIES:
Payable for shares of beneficial interest repurchased........................................ 38,279
Payable to affiliates--Shareholder servicing agents' fees (Note 2B).......................... 6,825
Accrued expenses............................................................................. 6,511
-----------
Total liabilities........................................................................ 51,615
-----------
NET ASSETS for 2,389,918 shares of beneficial interest outstanding........................... $32,159,248
===========
NET ASSETS CONSIST OF:
Paid-in capital.............................................................................. $26,837,671
Unrealized appreciation...................................................................... 3,484,670
Accumulated net realized gain................................................................ 1,817,871
Undistributed net investment income.......................................................... 19,036
-----------
Total.................................................................................... $32,159,248
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST ...................... $13.46
=====
COMPUTATION OF OFFERING PRICE:
Maximum Offering Price per share based on a 4.75% sales charge ($13.46/0.9525)............... $14.13
=====
</TABLE>
See notes to financial statements
<PAGE>
Landmark International Equity Fund
- ------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME (Note 1B):
Dividend Income from International Equity Portfolio........................ $ 425,693
Interest Income from International Equity Portfolio........................ 104,351
Other Income Foreign Tax Reclaim........................................... 18,075
Allocated Expenses from International Equity Portfolio..................... (354,441)
-----------
$ 193,678
EXPENSES:
Shareholder Servicing Agents' fees (Note 2B)............................... 74,013
Administrative fees (Note 2A).............................................. 29,605
Distribution fees (Note 3)................................................. 29,605
Amortization of organization expenses (Note 1D)............................ 16,786
Expense fees (Note 6)...................................................... 12,765
-----------
Total expenses......................................................... 162,774
------------
Net investment income................................................. 30,904
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) AND FOREIGN CURRENCY
TRANSACTIONS FROM INTERNATIONAL EQUITY PORTFOLIO:
Net realized gain (loss) .................................................. 3,448,708
Net change in unrealized appreciation (depreciation) ...................... 1,423,077
------------
Net realized and unrealized gain (loss) from International Equity Portfolio 4,871,785
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...................... $ 4,902,689
============
</TABLE>
See notes to financial statements
<PAGE>
Landmark International Equity Fund
- ---------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income........................................ $ 30,904 $ 2,063
Net realized gain (loss)..................................... 3,448,708 (216,066)
Net change in unrealized appreciation (depreciation)......... 1,423,077 (3,691,345)
------------ ------------
Net increase (decrease) in net assets resulting from operations 4,902,689 (3,905,348 )
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................................ (114,253) (2,063)
In excess of net investment income........................... -- (18,560)
------------ ------------
Total distributions to shareholders......................... (114,253) (20,623)
------------ ------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 5):
Net proceeds from sale of shares............................. 9,618,936 16,309,543
Net asset value of shares issued to shareholders from
reinvestment of dividends................................... 102,765 18,998
Cost of shares repurchased................................... (11,199,133) (11,641,920)
--------- ---------
Net increase (decrease) in net assets resulting from
transactions in shares of beneficial interest............... (1,477,432) 4,686,621
------------ ------------
NET INCREASE IN NET ASSETS .................................. 3,311,004 760,650
NET ASSETS:
Beginning of period.......................................... 28,848,244 28,087,594
------------ ------------
End of period (including undistributed net investment income
of $19,036 and distributions in excess of net investment
income of $8,976)........................................... $ 32,159,248 $ 28,848,244
============ ============
</TABLE>
See notes to financial statements
<PAGE>
Landmark International Equity Fund
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MARCH 1, 1991
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
-------------------------------------------- OPERATIONS) TO
1995 1994# 1993# 1992# DECEMBER 31, 1991#
------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period..... $ 11.44 $ 12.93 $ 9.96 $ 10.13 $ 10.00
------- ------- ------- ------- -------
Income From Operations:
Net investment income (loss)............. 0.013** 0.001** (0.003)** 0.052 0.098
Net realized and unrealized gain (loss).. 2.055** (1.483)** 2.973** (0.199) 0.062
------- ------- ------- ------- -------
Total from investment operations.... 2.068 (1.482) 2.970 (0.147) 0.160
------- ------- ------- ------- -------
Less Distributions From:
Net investment income............... (0.048) (0.001) -- (0.023) (0.030)
In excess of net investment income.. -- (0.007) -- -- --
------- ------- ------- ------- -------
Total from distributions............ (0.048) (0.008) -- (0.023) (0.030)
------- ------- ------- ------- -------
Net Asset Value, end of period........... $ 13.46 $ 11.44 $ 12.93 $ 9.96 $ 10.13
======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $32,159 $28,848 $28,088 $ 6,711 $ 4,031
Ratio of expenses to average net assets.. 1.75%(A) 1.75%(A) 1.75% 1.75% 1.75%*
Ratio of net investment income (loss) to
average net assets.................... 0.10% 0.00% (0.02)% 0.57% 1.03%*
Portfolio turnover (B)................... -- 5% 36% 42% 29%
Total return............................. 18.08% (11.46)% 29.82% (1.45)% 1.61%+
Note: If Agents of the Fund for the periods indicated had not voluntarily waived a portion of their fees and expenses had been
limited to that required by certain state securities laws, the net investment income (loss) per share and the ratios would have
been as follows:
Net investment income per share....... $0.013 $(0.018)** $(0.116)** $(0.016) $0.028
Ratios:
Expenses to average net assets........ 1.75%(A) 1.90%(A) 2.50% 2.50% 2.50%*
Net investment income (loss) to
average net assets................... 0.10% (0.15)% (0.77)% (0.18)% 0.29%*
<FN>
* Annualized
+ Not Annualized
** The per share amounts were computed using a monthly average number of shares outstanding during the year.
(A) Includes the Fund's share of International Equity Portfolio allocated expenses for the periods subsequent to May 1,
1994.
(B) Portfolio turnover represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The portfolio turnover rate for the period since the Fund transferred all of its investable
assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in this
report.
# On May 1, 1994, the Fund began investing all of its investable assets in International Equity Portfolio.
</TABLE>
See notes to financial statements
<PAGE>
Landmark International Equity Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
Landmark International Equity Fund (the "Fund") is a separate diversified series
of Landmark International Funds (the "Trust"), a Massachusetts business trust.
The Trust is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end, management investment company. The Fund invests all of
its investable assets in International EquityPortfolio (the "Portfolio"), a
management investment company for which Citibank, N.A. ("Citibank") serves as
Investment Adviser. The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS")
acts as the Fund's Administrator and Distributor. Citibank also serves as
Sub-Administrator and makes Fund shares available to customers as Shareholder
Servicing Agent.
The Trust seeks to achieve the Fund's investment objective of long-term growth
of capital by investing all of its investable assets in the Portfolio, an
open-end, diversified management investment company having the same investment
objective and policies and substantially the same investment restrictions as the
Fund. The value of such investment reflects the Fund's proportionate interest
(approximately 80.2% at December 31, 1995) in the net assets of the Portfolio.
The preparation of financial statements 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 financial statements of the Portfolio, including the portfolio of
investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The following significant accounting policies consistently followed by the Fund
are in conformity with generally accepted accounting principles and are as
follows:
A. INVESTMENT VALUATIONS -- Valuation of securities by the Portfolio is
discussed in Note 1A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. ACCOUNTING FOR INVESTMENTS -- The Fund earns income, net of Portfolio
expenses, daily based on its investment in the Portfolio. All the net investment
income, realized and unrealized gain or loss of the Portfolio is allocated pro
rata, based on respective ownership interests, among the Fund and the other
investors in the Portfolio at the time of such determination. Dividend income
and other distributions from portfolio securities are recorded on the
ex-dividend date, except, if the ex-dividend date has passed, certain dividends
from foreign securities are recorded as the Fund is informed of the ex-dividend
date. Dividend income is recorded net of foreign taxes withheld where recovery
of such taxes is not assured. Interest income is accrued daily.
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 required.
D. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization have been deferred and are being amortized on a
straightline basis through 1996.
E. 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. The Fund's share of the Portfolio's expenses are
charged against and reduce the amount of the Fund's investment in the Portfolio.
F. DISTRIBUTIONS -- Distributions to shareholders are recorded on ex-dividend
date. The amount and character of income and net realized gains to be
distributed are determined in accordance with income tax rules and regulations,
which may differ from generally accepted accounting principles. These
differences are attributable to permanent book and tax accounting differences.
Reclassifications are made to the Fund's capital accounts to reflect income and
net realized gains available for distribution (or available capital loss
carryovers) under income tax rules and regulations. For the year ended December
31, 1995, the Fund reclassed $111,361 to undistributed net investment income,
$13,067 to paid-in- capital and $124,428 from accumulated loss on investments.
(2) ADMINISTRATIVE SERVICES PLAN
The Fund has adopted an Administrative Services Plan (the "Administrative
Services Plan") which provides that the Fund may obtain the services of an
Administrator, and 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 by the Fund and the Portfolio, the fees paid to the
Shareholder Servicing Agents by the Fund and the Basic Distribution Fee paid by
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 Ad-
ministrative Services Agreement, the administrative services fees paid to the
Administrator, as compensation for overall administrative services, including
general office facilities, may not exceed an annual rate of 0.15% of the Fund's
average daily net assets and 0.05% of the Portfolio's average daily net assets.
For the year ended December 31, 1995 under the Administrative Services Plan the
Administrator received fees computed at an annual rate of 0.10% of the Fund's
average daily net assets which amounted to $29,605. 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 officers and a Trustee of the
Fund are officers and directors of the Administrator or its affiliates .
B. SHAREHOLDER SERVICING AGENTS' FEES -- The Fund has entered into shareholder
servicing agreements with each Shareholder Servicing Agent pursuant to which the
Shareholder Servicing Agent acts as an agent for its customers and provides
other related services. For their services, each Shareholder Servicing Agent
receives fees from the Fund, which may be paid periodically, which may not
exceed, on an annualized basis, an amount equal to 0.25% 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. The Shareholder Servicing Agents' fees,
computed at an annual rate of 0.25%, amounted to $74,013 for the year ended
December 31, 1995.
(3) DISTRIBUTION FEES
The Trust has adopted a Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, in which the Fund reimburses the
Distributor for expenses incurred or anticipated, in connection with the sale of
shares of the Fund, at an annual rate not to exceed 0.10% of the Fund's average
daily net assets for distribution of the Fund's shares. Distribution fees,
computed at an annual rate of 0.10%, amounted to $29,605 for the year ended
December 31, 1995. 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 fee has been made during the period.
(4) INVESTMENT TRANSACTIONS
Increase and decrease in the Fund's investment in the Portfolio for the year
ended December 31, 1995 aggregated $9,764,106 and $11,630,526, respectively.
(5) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional Shares of Beneficial Interest (par value $0.00001).
Transactions in shares of beneficial interest were as follows:
YEAR ENDED DECEMBER 31,
----------------------
1995 1994
---- ----
Shares sold.............................. 783,692 1,288,330
Shares issued to shareholders from
reinvestment of dividends.............. 7,761 --
Shares repurchased....................... (924,006) (937,614)
-------- --------
Net (decrease) increase (132,553) 350,716
======== ========
(6) EXPENSE FEES
LFBDS has entered into an expense agreement with the Fund. LFBDS had agreed to
pay all of the ordinary operating expenses (excluding interest, taxes, brokerage
commissions, litigation costs or other extraordinary costs or expenses) of the
Fund, other than fees paid under the Administrative Services Agreement,
Distribution Agreement and Shareholder Servicing Agreements and other than
amortization of expenses related to the organization of the Fund. The Agreement
may be terminated by either party upon not less than 30 days nor more than 60
days written notice
The Fund has agreed to pay to LFBDS an expense fee, on an annual basis, accrued
daily and paid monthly; provided, however, that such fee shall not exceed the
amount such that immediately after any such payment the aggregate ordinary
operating expenses of the Fund, including expenses allocated from the Portfolio,
would on an annual basis exceed an agreed upon rate, currently 1.75% of average
daily net assets.
<PAGE>
Landmark International Equity Fund
- ------------------------------------------------------------------------------
INDEPENDENT AUTDITORS' REPORT
TO THE TRUSTEES AND THE SHAREHOLDERS OF LANDMARK INTERNATIONAL FUNDS (THE
TRUST): LANDMARK INTERNATIONAL EQUITY FUND
In our opinion, the accompanying statement of assets and liabilities, and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Landmark International Equity Fund (the "Fund") at December 31, 1995, and the
results of its operations, the changes in its net assets and the financial
highlights for the periods indicated in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of investments owned at December 31, 1995 by correspondence with
the custodian, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 7, 1996
<PAGE>
International Equity Portfolio
- -----------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS December 31, 1995
ISSUER/INDUSTRY SHARES VALUE
- -----------------------------------------------------------------------------
COMMON STOCKS - 81.2%
AMERICAN DEPOSITARY RECEIPTS (ADR) - 10.5%
Amway Asia Pacific Ltd.*
Telecommunications..... 20,000 $ 712,500
Belize Holdings Inc.
Basic Goods............ 25,297 398,436
EK Chor China
Motorcycle Co. Ltd.
Retailing.............. 35,000 406,875
Fila Holdings S.P.A.*
Merchandising.......... 30,000 1,365,000
Iochphe Maxion
Machinery & Engineering 33,000 89,975
Luxottica Group S.P.A.
Pharmaceuticals & Health 15,000 877,500
Petersburg Long Distance*
Telecommunications..... 76,000 361,000
Turkiye Garanti Bankasi
Financial Services..... 1,800 15,300
-----------
4,226,586
-----------
GLOBAL DEPOSITARY RECEIPTS (GDR) - 3.4%
Samsung Electronics Co. Ltd.
Electronics 144A....... 10,000 635,000
Samsung Electronics Co. Ltd. Wts.
Electronics 144A....... 10 635
Samsung Electronics Co. Ltd. Rts.
Electronics 144A....... 148 9,398
Samsung Electronics Co. Ltd.
(Preferred Shares)
Electronics 144A....... 1,979 206,806
Turkiye Garanti Bankasi
Financial Services..... 60,000 510,000
-----------
1,361,839
-----------
AUSTRALIA - 2.8%
Amcor Limited
Miscellaneous Materials 71,250 503,087
News Corp.
Business & Public...... 100,480 536,216
News Corp. (Preferred Shares)
Business & Public...... 20,325 95,020
-----------
1,134,323
-----------
CANADA - 0.5%
Future Shop Ltd.*
Retailing.............. 20,900 225,824
-----------
FRANCE - 6.7%
AXA Company
Insurance.............. 4,200 283,030
Castorama Dubois Investisse
Retailing.............. 1,667 273,011
Credit Commercial de France
Financial Services..... 5,200 265,362
Credit Local de France
Financial Services..... 3,300 264,162
Groupe Danone
Food & Household Products 1,600 263,998
Lafarge Coppee French
Building & Construction 1,900 122,412
Louis Vitton-Moet Hennesy
Beverages & Tobacco.... 1,400 291,607
Pinault Printemps Redoute SA
Retailing.............. 1,300 259,363
Promodes
Retailing.............. 1,100 258,546
Usinor Sacilor
Steel.................. 9,000 119,000
Valeo
Industrial Components.. 5,800 268,622
-----------
2,669,113
-----------
GERMANY - 6.2%
Commerzbank AG
Banking................ 2,300 543,534
Deutsche Bank AG
Banking................ 5,700 270,079
Karstadt AG
Retailing.............. 600 244,685
Mannesmann AG
Machinery & Engineering 1,300 413,879
Rhoen-Klinikum
Pharmaceuticals & Health 2,000 197,978
SAP AG VORZUG (Preferred Shares)
Data Processing........ 1,700 257,164
Tarkett International
Food & Household Products 7,000 151,273
Volkswagen AG
Automobiles............ 1,200 401,199
-----------
2,479,791
-----------
HONG KONG - 1.2%
Swire Pacific Ltd. "A"
Multi-Industry......... 60,000 465,567
-----------
INDONESIA - 3.9%
PT Hanjaya Mandala Sampoerna
Beverages & Tobacco.... 150,000 1,561,338
-----------
JAPAN - 16.5%
Amway Japan Ltd.
Merchandising.......... 20,000 844,552
Autobacs Seven
Automobiles............ 6,000 498,596
DDI Corporation
Telecommunications..... 100 774,818
Fanuc Company
Machinery & Engineering 13,000 562,809
Ito Yokado Ltd.
Retailing.............. 15,000 923,971
Marui Co.
Multi-Industry......... 50,000 1,041,162
Rohm Co. Ltd.
Multi-Industry......... 8,000 451,719
Secom Co. Ltd.
Business & Public...... 10,000 695,400
Shohkoh Fund
Financial Services..... 4,500 845,521
-----------
6,638,548
-----------
MALAYSIA - 2.3%
Leader Universal Holdings Ltd
Industrial Components.. 116,000 264,913
United Engineers
Machinery & Engineering 100,000 637,871
-----------
902,784
-----------
NETHERLANDS - 1.9%
Hunter Douglas NV
Machinery & Engineering 860 39,873
International Nederlanden Group
Insurance.............. 1,800 120,247
Philips Electronics NV
Industrial Components.. 4,200 151,804
Royal Dutch Petroleum Co.
Energy Sources......... 2,000 279,429
Vendex International NV
Retailing.............. 1,400 41,615
Verenigde Nederlandse
Business & Public...... 1,000 137,284
-----------
770,252
-----------
SPAIN - 3.0%
Alba Corp. Finance
Financial Services..... 1,200 73,899
Auto Pistas del Mari Nostro
Building & Construction 5,500 71,641
Banco de Santander S.A.
Banking................ 6,500 326,340
Banco Popular Espanola
Banking................ 1,400 258,186
Fomento Const. & Contra
Building & Construction 1,150 88,170
Gas Natural SDG S.A.
Utilities.............. 500 77,906
Iberdrola I S.A.
Utilities.............. 12,000 109,810
Sevillana de Electricidad
Utilities.............. 11,000 85,425
Telefonica de Espana
Telecommunications..... 8,000 110,800
-----------
1,202,177
-----------
SWEDEN - 1.9%
Astra AB
Pharmaceuticals & Health 5,000 198,354
Atlas Copco AB
Machinery & Engineering 5,000 75,420
Ericcson AB
Electronics............ 12,000 235,310
Hennes & Mauritz
Retailing.............. 1,000 55,811
Sparbanken Sverige AB
Banking................ 9,000 114,714
Volvo Aktiebolag
Automobiles............ 3,000 61,543
-----------
741,152
-----------
SWITZERLAND - 4.0%
BBC Brown Boveri & CIE
Instruments & Components 140 162,635
Ciba-Geigy AG-R
Chemicals.............. 466 410,048
CS Holdings
Banking................ 2,300 235,782
Sandoz AG
Pharmaceuticals & Health 450 411,964
Schweizerischer Bankverein
Banking................ 503 205,386
Zurich Versicherunges
Insurance.............. 650 194,408
-----------
1,620,223
-----------
THAILAND - 1.7%
Bangkok Bank Co. Ltd.
Banking................ 6,000 72,886
Bangkok Bank Public Co. Ltd.
Banking................ 70,000 600,233
-----------
673,119
-----------
UNITED KINGDOM - 14.7%
Bass PLC
Beverages & Tobacco.... 16,000 178,533
British Aerospace PLC
Aeorspace & Defense.... 14,000 173,022
Burmah Castrol PLC
Energy Sources......... 11,000 159,470
Cable & Wireless
Telecommunications..... 26,000 185,739
Dixons Group PLC
Retailing.............. 27,000 187,222
Glaxo Wellcome PLC
Pharmaceuticals & Health 17,000 241,569
Glynwed International PLC
Machinery & Engineering 34,000 168,438
Kwik Save Discount Group PLC
Retailing.............. 19,000 147,535
Lloyds TSB Group PLC
Banking................ 37,000 190,196
Logica PLC
Business & Public...... 24,000 169,588
London International Group
Pharmaceuticals & Health 96,000 192,324
MFI Furniture Group PLC
Retailing.............. 70,000 173,936
Pilkington Brothers
Building & Construction 57,000 178,813
Royal Bank of Scotland Group PLC
Banking................ 30,000 273,017
Securicor Group PLC "A"
Telecommunications..... 10,000 137,441
Severn Trent Water Co.
Utilities.............. 17,000 181,507
Smith (D.S.) Holdings
Forest Products & Paper 46,000 202,170
Smith and Nephew Associated
Pharmaceuticals & Health 58,000 168,438
Smiths Industries PLC
Machinery & Engineering 19,000 187,665
Standard Chartered PLC
Banking................ 27,000 229,782
Storehouse PLC
Retailing.............. 40,000 207,481
Sun Alliance Group
Insurance.............. 55,000 319,025
Thorn EMI PLC
Leisure & Tourism...... 7,000 164,859
Tomkins PLC
Multi-Industry......... 202,197 883,944
Whitbread & Co. Class "A"
Beverages & Tobacco.... 17,000 179,659
Wolseley PLC
Building & Construction 29,000 203,117
Zeneca Group PLC
Pharmaceuticals & Health 11,000 212,769
-----------
5,897,259
-----------
TOTAL COMMON STOCKS
(Identified Cost $28,641,933) 32,569,895
-----------
CORPORATE BONDS - 3.3%
PRINCIPAL
AMOUNT
-------
Industrial Credit & Investment
of India 2.50% due 4/03/00 $750,000$ 566,250
Sampo Corporation
2.625% due 11/23/01.... 700,000 773,500
-----------
TOTAL CORPORATE BONDS
(Identified Cost $1,460,000) 1,339,750
-----------
SHORT-TERM OBLIGATIONS - 6.5%
Salomon Repurchase Agreement
5.375% due 1/2/96, proceeds
at maturity $2,601,553
(secured by $2,422,886
US Treasury Bill 5.15%
due 6/13/96 and $236,366
and $236,366 US Treasury
Bill 5.15% due 6/6/96.... 2,600,000
-------
TOTAL INVESTMENTS
(Identified Cost $32,701,933) 91.0% 36,509,645
OTHER ASSETS,
LESS LIABILITIES....... 9.0% 3,603,918
----- -----------
NET ASSETS............... 100.0% $40,113,563
===== ===========
* Non-income producing security
Rule 144A securities -- These securities are traded under SEC Rule 144A among
qualified institutional buyers. At December 31, 1995 these securities were at
$851,839 or 2% of net assets.
See notes to financial statements.
<PAGE>
International Equity Portfolio
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (Note 1A) (Identified Cost, $32,701,933)....................... $ 36,509,645
Foreign currency, at value (Cost, $245,107)......................................... 242,747
Cash................................................................................ 2,572,488
Receivable for investments sold .................................................... 748,616
Dividends and interest receivable................................................... 80,562
--------------
Total assets.................................................................... 40,154,058
--------------
LIABILITIES:
Payable to affiliates--Investment advisory fees (Note 2)............................ 33,746
Accrued expenses and other liabilities.............................................. 6,749
--------------
Total liabilities............................................................... 40,495
--------------
NET ASSETS ......................................................................... $ 40,113,563
==============
REPRESENTED BY:
Paid-in capital for beneficial interests............................................ $ 40,113,563
==============
See notes to financial statements
<CAPTION>
International Equity Portfolio
- --------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $97,005).................. $ 496,059
Interest............................................................... 121,452
----------
Total investment income.............................................. $ 617,511
EXPENSES:
Investment advisory fees (Note 2)...................................... 345,632
Administrative fees (Note 3)........................................... 17,281
Expense fees (Note 6).................................................. 51,863
----------
Total expenses....................................................... 414,776
------------
Net investment income................................................ 202,735
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from investment transactions.................. 3,667,021
Net realized gain on foreign exchange transactions..................... 112,731
----------
Net realized gain.................................................... 3,779,752
------------
Unrealized appreciation (depreciation) of investments--
Beginning of period................................................. 1,928,747
End of period....................................................... 3,807,712
------------
Translation of other assets and liabilities denominated
in foreign currencies--net........................................... (367)
------------
Net change in unrealized appreciation (depreciation)................ 1,878,598
------------
Net realized and unrealized gain on investments..................... 5,658,350
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $ 5,861,085
============
See notes to financial statements
</TABLE>
<PAGE>
International Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR MAY 1, 1994
ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
1995 DECEMBER 31, 1994
--------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income............................................. $ 202,735 $ 130,501
Net realized gain (loss) on investments and foreign exchange transactions 3,779,752 (535,968)
Net change in unrealized appreciation (depreciation) of investments 1,878,598 (1,277,393)
----------- -----------
Net increase (decrease) in net assets resulting from operations 5,861,085 (1,682,860)
----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from contributions....................................... 14,645,582 40,565,403
Value of withdrawals.............................................. (12,545,928) (6,729,719)
----------- -----------
Net increase in net assets from capital transactions.......... 2,099,654 33,835,684
----------- -----------
NET INCREASE IN NET ASSETS: ...................................... 7,960,739 32,152,824
NET ASSETS:
Beginning of period............................................... 32,152,824 --
----------- -----------
End of period..................................................... $40,113,563 $32,152,824
=========== ===========
See notes to financial statements
</TABLE>
International Equity Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR MAY 1, 1994
ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
1995 DECEMBER 31, 1994
--------------- ----------------
<S> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted)......................... $40,114 $32,153
Ratio of expenses to average net assets........................... 1.20% 1.22%*
Ratio of net investment income to average net assets.............. 0.59% 0.60%*
Portfolio turnover................................................ 51% 25%
*Annualized
See notes to financial statements
</TABLE>
<PAGE>
International Equity Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
International Equity Portfolio (the "Portfolio"), a separate series of The
Premium Portfolios (the "Portfolio Trust"), is registered under the Investment
Company Act of 1940, as amended, as a 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 Investment Adviser of the Portfolio is Citibank
N.A. ("Citibank"). Signature Financial Group (Grand Cayman), Ltd. ("SFG") acts
as the Fund's Administrator.
The preparation of financial statements in accordance with generally accepted
accounting principles require 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 following significant accounting policies consistently followed by the
Portfolio are in conformity with generally accepted accounting principles and
are as follows:
A. INVESTMENT SECURITY VALUATIONS -- Equity securities in the portfolio are
valued at the last sale price on the exchange on which they are primarily
traded, or at the quoted bid price for securities in which there were no sales
during the day, or for unlisted securities not reported on the NASDAQ system.
Securities listed on a foreign exchange are valued at the last quoted sale price
available. Bonds and other fixed income securities (other than short-term
obligations maturing in sixty days or less) in the portfolio are valued on the
basis of valuations furnished by a pricing service approved by the Board of
Trustees, the use of which has been approved by the Trustees. In making such
valuations, the pricing service utilizes both dealer-supplied valuations and
electronic data processing techniques which take into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other market data, without exclusive reliance upon quoted prices or
exchanges or over-the-counter prices. Short-term obligations maturing in sixty
days or less, are valued at amortized cost, which constitutes fair value as
determined by the Trustees. Portfolio securities for which there are no such
quotations or valuations are valued at fair value as determined in good faith by
or at the direction of the Trustees. Trading in securities on most foreign
exchanges and over-the-counter markets is normally completed before the close of
the New York Stock Exchange and may also take place on days which the New York
Stock Exchange is closed. If events materially affecting the value of foreign
securities occur between the time when the exchange on which they are traded
closes, such securities will be valued at fair value in accordance with
procedures established by and under the general supervision of the Trustees.
B. FOREIGN CURRENCY TRANSLATION -- The accounting records of the Portfolio are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange to determine the value of investments,
assets and liabilities. Purchases and sales of securities, and income and
expenses are translated at the prevailing rate of exchange on the respective
dates of such transactions. The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments. Translation of foreign currency
includes net exchange gains and losses, disposition of foreign currency and the
difference between the amount of investment income and foreign taxes withheld
recorded and the actual amount received or paid.
C. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Portfolio may enter into
forward foreign currency exchange contracts ("contracts") in connection with
planned purchases or sales of securities, to hedge the U.S. dollar value of
portfolio securities denominated in a particular currency. The Portfolio could
be exposed to risks if the counter-parties to the contracts are unable to meet
the terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. Dollar. The forward foreign currency
exchange contracts are adjusted by the daily exchange rate of the underlying
currency and any gains or losses are recorded for financial statement purposes
as unrealized gains or losses until the contract settlement date.
D. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
the trade date. Realized gains and losses on security transactions are
determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend date,
except, if the ex-dividend date has passed, certain dividends from foreign
securities are recorded as soon as the Portfolio is informed of the ex-dividend
date. Dividend income is recorded net of foreign taxes withheld where recovery
of such taxes is not assured. Interest income is accrued daily.
E. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code. Accordingly, no provision for federal income
taxes is necessary.
F. EXPENSES -- The Portfolio bears all costs of its operations other than
expenses specifically assumed by Citibank and SFG. Expenses incurred by the
Portfolio Trust with respect to any two or more portfolios or series are
allocated in proportion to the average net assets of each portfolio, except when
allocations of direct expenses to each portfolio can otherwise be made fairly.
Expenses directly attributable to a portfolio are charged to that portfolio.
G. REPURCHASE AGREEMENTS -- It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custidian bank's
vault, all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established by the Portfolio to monitor, on a
daily basis, the market value of the repurchase agreement's underlying
investments to ensure the existence of a proper level of collateral.
(2) INVESTMENT ADVISORY FEES
The investment advisory fees paid to Citibank, as compensation for overall
investment management services, amounted to $345,632 for the year ended December
31, 1995. The investment advisory fees are computed at the annual rate of 1.00%
of the Portfolio's average daily net assets.
(3) ADMINISTRATIVE FEES
Under the terms of an Administrative Services Agreement, the administrative
services fees paid to the Administrator, as compensation for overall
administrative services including general office facilities, is computed at an
annual rate of 0.05% of the Portfolio's average daily net assets. The
administrative fees amounted to $17,281 for the year ended December 31, 1995.
The Portfolio pays no compensation directly to any Trustee or any officer who is
affiliated with the Administrator, all of whom receive remuneration for their
services to the Portfolio from the Administrator or its affiliates. Certain
officers and a Trustee of the Portfolio are officers and directors of the
Administrator or its affiliates.
(4) PURCHASES AND SALES OF INVESTMENTS
For the year ended December 31, 1995, purchases and sales of investment
securities, other than short-term investments, aggre-gated $16,354,320 and
$19,831,485, respectively.
(5) FEDERAL INCOME TAX BASIS
OF INVESTMENTS
The cost and unrealized appreciation/(depreciation) in value of the investment
securities owned at December 31, 1995, as com puted on a federal income tax
basis, are as follows:
Aggregate cost...................... $ 32,701,933
============
Gross unrealized appreciation....... $ 5,877,260
Gross unrealized depreciation....... (2,069,548)
------------
Net unrealized appreciation......... $ 3,807,712
============
(6) EXPENSE FEES
SFG has entered into an expense agreement with the Portfolio. SFG has agreed to
pay all of the ordinary operating expenses (excluding interest, taxes, brokerage
commissions, litigation costs or other extraordinary costs or expenses) of the
Portfolio, other than fees paid under the Advisory Agreement, and Administrative
Services Agreement. The Agreement may be terminated by either party upon not
less than 30 days nor more than 60 days written notice.
The Portfolio has agreed to pay SFG an expense fee, on an annual basis, accrued
daily and paid monthly; provided, however, that such fee shall not exceed the
amount such that immediately after any such payment the aggregate expenses of
the Portfolio would on an annual basis exceed an agreed upon rate, currently
1.20% of average daily net assets.
(7) FINANCIAL INSTRUMENTS
The Portfolio may trade financial instruments with off-balance sheet risk in the
normal course of its investing activities and to assist in managing exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments include forward foreign currency exchange contracts.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when related and offsetting transactions are considered. No such instruments
were held at December 31, 1995.
(8) LINE OF CREDIT
The Portfolio, along with the other Landmark Funds, entered into an ongoing
agreement with a bank which allows the Landmark Funds collectively to borrow up
to $40 million for temporary or emergency purposes. Interest on the borrowings,
if any, is charged to the specific fund executing the borrowing at the base rate
of the bank. In addition, the $15 million committed portion of the line of
credit requires a quarterly payment of a commitment fee based on the average
daily unused portion of the line of credit. For the year ended December 31,
1995, the commitment fee allocated to the Portfolio was $235. Since the line of
credit was established, there have been no borrowings.
<PAGE>
International Equity Portfolio
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND THE INVESTORS OF THE PREMIUM PORTFOLIOS (THE TRUST), WITH
RESPECT TO ITS SERIES, INTERNATIONAL EQUITY PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of International Equity Portfolio (the
"Portfolio"), a series of The Premium Portfolios, as at December 31, 1995 and
the related statements of operations and of changes in net assets and the
financial highlights for the periods indicated. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of investments owned as
at December 31, 1995 by correspondence with the custodian, provide a reasonable
basis for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Portfolio as at December 31, 1995, the
results of its operations and the changes in its net assets and the financial
highlights for the periods indicated in accordance with U.S. generally accepted
accounting principles.
PRICE WATERHOUSE
Chartered Accountants
Toronto, Ontario
February 7, 1996
<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,
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
[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
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
C. Oscar Morong, Jr.
Donald B. Otis
E. Kirby Warren
William S. Woods, Jr.
SECRETARY
Thomas M. Lenz*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
- ------------------------------------ |--| -------------------------------------
INVESTMENT ADVISER
(OF EMERGING ASIAN MARKETS
EQUITY PORTFOLIO)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
The Landmark Funds Broker-Dealer Services, Inc.
6 St. James Avenue, Boston, MA 02116
(617) 423-1679
TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
CUSTODIAN
Investors Bank and Trust Company
One Lincoln Plaza, Boston, MA 02111
AUDITORS
Price Waterhouse LLP
160 Federal Street, Boston, MA 02110
LEGAL COUNSEL
Bingham, Dana & Gould
150 Federal Street, Boston, MA 02110
- ------------------------------------ |--| -------------------------------------
SHAREHOLDER SERVICING AGENTS
(See Inside Cover)
This report is prepared for the information of shareholders. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
INTL/EAE/A/95 Printed on Recycled Paper [logo]
LANDMARK(SM) FUNDS
Advised by Citibank, N.A.
LANDMARK
EMERGING
ASIAN MARKETS
EQUITY FUND
ANNUAL
REPORT
December 31, 1995
<PAGE>
- --------------------------------------------------------------------------------
A LETTER TO OUR SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Shareholder:
While 1995 was an excellent year for the U.S. stock market, emerging Asian
equity markets did not keep pace. Despite high rates of economic growth, gains
in corporate earnings and the emergence of a new middle class, the region's
stock markets in 1995 failed to match the strong gains produced in previous
years. Yet, we remain optimistic regarding the long-term prospects for emerging
Asian markets. A more moderate rate of economic growth, limited inflation
increases and stable interest rates should offer opportunities for gains in the
region's stocks in 1996 and beyond.
The Landmark Funds' investment adviser, Citibank, N.A., manages Emerging
Asian Markets Equity Fund to provide long-term capital growth. Through its
investment in Emerging Asian Markets Equity Portfolio, the Fund invests
primarily in equity securities of companies in Asian countries with emerging
markets and developing economies, including the Philippines, Malaysia, Indonesia
and Thailand, and with the potential to invest in South Korea, Taiwan, the
People's Republic of China, India, Pakistan, Sri Lanka and Vietnam.
This Annual Report reviews the Portfolio's investment activities and
performance since commencement of operation in August, 1995, and provides a
summary of Citibank's perspective on and outlook for emerging Asian 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
January 20, 1996
TABLE OF CONTENTS
1 Letter to Shareholders
- --------------------------------------------------------------------------------
Market Environment
2 Fund Snapshot
Fund Quotes
- --------------------------------------------------------------------------------
Portfolio Managers
3 The Portfolio Managers Respond
Strategy and Outlook
- --------------------------------------------------------------------------------
4 Emerging Asian Markets Equity
Portfolio by the Numbers
- --------------------------------------------------------------------------------
5 Fund Data
Performance Highlights
LANDMARK EMERGING ASIAN MARKETS EQUITY FUND
- --------------------------------------------------------------------------------
6 Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
7 Statement of Operations
- --------------------------------------------------------------------------------
8 Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
9 Financial Highlights
- --------------------------------------------------------------------------------
10 Notes to Financial Statements
- --------------------------------------------------------------------------------
12 Independent Auditors' Report
- --------------------------------------------------------------------------------
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
13 Portfolio of Investments
- --------------------------------------------------------------------------------
15 Statement of Assets and Liabilities
Statement of Operations
- --------------------------------------------------------------------------------
16 Statement of Changes in Net Assets
Financial Highlights
- --------------------------------------------------------------------------------
17 Notes to Financial Statements
- --------------------------------------------------------------------------------
19 Independent Auditors' Report
- --------------------------------------------------------------------------------
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
<PAGE>
- --------------------------------------------------------------------------------
MARKET ENVIRONMENT
The second half of 1995 was a period of relative weakness in most emerging
Asian markets. In our view, two primary factors are responsible for the relative
underperformance of the region's stocks: an inflationary economy and a temporary
lack of liquidity in local financial markets.
The growth of Asian economies in the 1990s has been nothing short of
remarkable. Even when most of the world fell into recession several years ago,
developing Asian nations continued to grow rapidly. But when economies grow
faster than the available supply of local labor and other resources, inflation
tends to accelerate. To combat rising inflation, the central banks of these
countries raised interest rates. However, higher interest rates often constrain
corporate profits by making borrowing more expensive, which, in turn, puts
pressure on stock prices. As the rate of inflation moderates in 1996, we expect
interest rates to stabilize and stock prices to recover.
At the same time that persistently higher inflation depressed investor
sentiment in Asia, the flow of funds from foreign investors slowed. Although
Asia does not share many of the problems that affect Latin American economies,
the sudden devaluation of Mexico's currency early in the year produced caution
among investors toward all developing economies. Many investors pulled their
money out of the region and invested instead in high-quality U.S. companies. We
believe that this period of caution is temporary and that the flow of funds into
Asian markets will resume as investors again recognize the long-term
opportunities there.
- --------------------------------------------------------------------------------
FUND SNAPSHOT
COMMENCEMENT OF OPERATIONS
August 23, 1995
NET ASSETS AS OF 12/31/95
$5.9 million
FUND OBJECTIVE
Long-term capital growth; dividend income, if any, is incidental to this
investment objective.
DIVIDENDS
Paid semi-annually, if any
CAPITAL GAINS
Distributed annually, if any
BENCHMARKS
o Lipper Emerging Markets Funds Average
o MSCI EMF Far East Index (excluding Korea)
INVESTMENT ADVISER,
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
Citibank, N.A.
- --------------------------------------------------------------------------------
FUND QUOTES FROM THE PORTFOLIO MANAGERS
"We foresee declining interest rates in 1996, which should create a positive
environment for emerging Asian equity markets."
"The region's economic growth is expected to be very robust, so there is little
threat of recession."
"As Wall Street consolidates in '96, fund flows to Asian markets should resume
as they did in '92 and '93."
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
PANSY PHUA
Vice President
SHERN LIANG TAN
Vice President
Ms. Phua is a Senior Portfolio Manager in Citibank Global Asset Management's
Singapore investment unit, responsible for managing Asian equities for both
individual accounts and funds. She joined Citibank as a Portfolio Manager in
1990. She manages over $850 million in client assets.
Ms. Phua has over eighteen years of financial services experience including
the last ten as an investment manager. Prior to joining Citibank, she worked for
Jardine-Fleming and several banks in Singapore in various capacities serving
both individual and institutional clients and investors.
Mr. Tan is a Portfolio Manager for the Citibank Private Bank's Singapore
investment unit. His responsibilities include managing both Asian equity mutual
funds and portfolios for high net worth investors. His comprehensive expertise
includes the emerging as well as developed markets of Asia.
Mr. Tan has six years' experience managing investments in Asian equities. He
specializes in industrialized and emerging opportunities in Hong Kong, Thailand,
the Philippines, and New Zealand. He also covers the equity markets in
Australia, Singapore and Indonesia.
Mr. Tan graduated with Distinction from the University of Michigan, Ann
Arbor, and is a Certified Financial Analyst.
- --------------------------------------------------------------------------------
THE PORTFOLIO MANAGERS RESPOND
Since the Portfolio's inception, we have found attractive opportunities for
growth in select Asian markets. 46% of net assets are invested in Malaysia, 30%
in Thailand, 13% in Indonesia and 8% in the Philippines.
A thorough analysis of trends in the region revealed several long-term
investment themes that should provide strong gains. For example, we have found
fast-growing companies in industries that participate in the development of
Asia's infrastructure. As local economies continue to thrive, businesses and
consumers will require new roads, more electricity and improved
telecommunications. The stocks of companies that provide these facilities and
services should do quite well.
In addition, expanding economies have created new wealth for millions of
Asian consumers. Retail outlets are packed with shoppers in Malaysia, Thailand
and the Philippines, and telephone service is expanding to homes throughout the
region. Because local banks are financing much of the area's growth, we have
also found good opportunities in a number of Asian financial institutions. And
as demand for housing continues to grow, we expect real estate developers to
provide excellent returns on investment.
- --------------------------------------------------------------------------------
STRATEGY AND OUTLOOK
We are optimistic about the prospects for Asian equities in 1996 and
beyond. Government and economic officials are making progress toward reducing
the rate of inflation, which should help interest rates stabilize. As stock
market gains moderate in the U.S. and Europe, we expect to see a resumption of
foreign investment. And as long as problems persist in Latin America, we believe
that emerging-markets investors will be more likely to allocate funds to Asia,
which should further support stock prices there.
Despite this optimism, it is important to understand that emerging markets
tend to be more volatile than their industrialized counterparts. That is why we
encourage shareholders to maintain a long-term perspective. We believe that a
patient approach, when combined with our disciplined investment style, should
produce above-average gains for investors seeking long-term capital growth.
<PAGE>
Emerging Asian Markets Equity Portfolio
- --------------------------------------------------------------------------------
BY THE NUMBERS
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS OF THE PORTFOLIO
(As of 12/31/95)
NAME NATION % OF NET ASSETS
Bangkok Bank Co. Thailand 5.3%
PTTelecomunikasion Indonesia 4.8%
Systems Telekom Malaysia Malaysia 4.7%
Tenaga Nasional Berhad Malaysia 4.4%
Arab-Malaysian Merchant Bank Malaysia 4.2%
Thai Farmers Bank Thailand 3.8%
101 Properties Berhad Malaysia 3.7%
Dhana Siam Finance Thailand 3.6%
Malayan Banking Berhad Malaysia 3.4%
Advanced Info Services Thailand 3.3%
- --------------------------------------------------------------------------------
INDUSTRIES AS A % OF THE PORTFOLIO
INDUSTRIES % OF COMMON STOCKS
-------- ----------------
Banking 24.1%
Telecommunications 16.6%
Real Estate 13.0%
Finance 14.5%
Amusement &Recreation 5.5%
Building Materials 5.3%
Public Utilities 4.6%
Miscellaneous 3.0%
Pharmaceuticals 3.0%
Consumer 2.6%
Motor Vehicles &Equipment 1.9%
Water Transport of Freight 1.8%
Natural Gas 1.0%
Infrastructure 0.9%
Utilities 0.8%
Hotels, Tourist Courts &Motels 0.6%
Air Transportation 0.6%
Plantation 0.2%
PORTFOLIO COUNTRY ALLOCATION
Portfolio of investments
as of 12/31/95
MALAYSIA 47%
THAILAND 31%
INDONESIA 13%
PHILIPPINES 9%
<PAGE>
- --------------------------------------------------------------------------------
FUND DATA All Periods Ending December 31, 1995
TOTAL RETURNS
-------------
SINCE
8/23/95
INCEPTION*
-----------
Landmark Emerging Asian Markets Equity Fund
without Sales Charge................................. 0.26%
Lipper Emerging Markets Funds Average................. (5.40%)+
MSCI EMF/Far East Index (excluding Korea)............. (3.85%)+
Landmark Emerging Asian Markets Equity Fund
with Maximum Sales Charge of 4.75%................... (4.50%)
*Not annualized
+Since 7/31/95
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
A $10,000 investment in the Fund made on inception date would have declined to
$9,550 with sales charge (as of 12/31/95). The graph shows how this compares to
our benchmarks over the same period.
The graph includes the initial sales charge on the Fund (no comparable charge
exists for the other indices) and assumes all dividends and distributions from
the Fund are reinvested at Net Asset Value.
- --------------------------------------------------------------------------------
EMERGING ASIAN MARKETS EQUITY FUND
Landmark Landmark
Emerging Emerging Lipper MSCI EMF
Asian Markets Asian Markets Emerging Far East
Equity Fund Equity Fund Market Index
Without With Funds (Excluding
Sales Charge Sales Charge Average Korea)
$10,000 $9,525 $10,000 $10,000
Aug-95 $9,870 $9,401 $9,798 $9,820
Sep-95 $9,600 $9,144 $9,798 $9,631
Oct-95 $9,380 $8,934 $9,370 $9,266
Nov-95 $9,200 $8,763 $9,171 $9,010
Dec-95 $10,026 $9,550 $9,460 $9,615
- --------------------------------------------------------------------------------
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 Emerging Asian Markets Equity Fund
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES December 31, 1995
ASSETS:
Investment in Emerging Asian Markets Equity Portfolio,
at value (Note 1A)........................................ $5,963,373
Receivable for shares of beneficial interest sold........... 4,765
Other assets................................................ 480
----------
NET ASSETS for 596,589 shares of beneficial interest
outstanding............................................... $5,968,618
==========
NET ASSETS CONSIST OF:
Paid-in capital............................................. $5,685,532
Unrealized appreciation of investments and foreign currency
translations.............................................. 286,140
Undistributed net investment loss........................... (3,054)
----------
Total................................................... $5,968,618
==========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF
BENEFICIAL INTEREST ..................................... $10.00
======
COMPUTATION OF OFFERING PRICE:
Maximum Offering Price per share based on a 4.75%
sales charge ($10.00/0.9525).............................. $10.50
======
See notes to financial statements
<PAGE>
Landmark Emerging Asian Markets Equity Fund
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the period August 23, 1995 (Commencement of Operations)
to December 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest Income from Emerging Asian Markets Equity Portfolio............... $14,841
Dividend Income from Emerging Asian Markets Equity Portfolio............... 4,143
Other Income Foreign Tax Reclaim........................................... 14
-------
$ 18,998
EXPENSES:
Shareholder Servicing Agents' fees (Note 2B)............................... 3,149
Administrative fees (Note 2A).............................................. 1,260
Distribution fees (Note 3)................................................. 1,260
Expense fee (Note 6)....................................................... 4,712
-------
Total expenses......................................................... 10,381
Less aggregate amount waived by Administrator, Shareholder Servicing Agents
and Distributor (Notes 2A, 2B and 3)..................................... (5,669)
Expenses assumed by the Administrator...................................... (4,712)
-------
NET EXPENSES .............................................................. --
--------
Net investment income................................................. 18,998
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) AND FOREIGN CURRENCY
TRANSACTIONS FROM EMERGING ASIAN MARKETS EQUITY PORTFOLIO:
Net realized gain (loss) .................................................. (6,799)
Net change in unrealized appreciation (depreciation) ...................... 286,140
--------
Net realized and unrealized gain (loss).................................... 279,341
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...................... $298,339
========
</TABLE>
See notes to financial statements
<PAGE>
Landmark Emerging Asian Markets Equity Fund
- ----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
AUGUST 23, 1995
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1995
----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income..................................... $18,998
Net realized loss ........................................ (6,799)
Net change in unrealized appreciation..................... 286,140
---------
Net increase in net assets resulting from operations...... 298,339
---------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................... (15,388)
---------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 5):
Net proceeds from sale of shares.......................... 5,784,355
Net asset value of shares issued to shareholders from
reinvestment of dividends................................ 15,388
Cost of shares repurchased................................ (114,076)
---------
Net increase in net assets resulting from transactions
in shares of beneficial interest......................... 5,685,667
---------
NET INCREASE IN NET ASSETS ............................... 5,968,618
NET ASSETS:
Beginning of period....................................... --
---------
End of period (undistributed net investment loss
of $3,054).............................................. $5,968,618
==========
See notes to financial statements
<PAGE>
Landmark Emerging Asian Markets Equity Fund
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AUGUST 23, 1995
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1995
-----------------
Net Asset Value, beginning of period...................... $10.00
------
Income From Operations:
Net investment income (loss).............................. 0.026
Net realized and unrealized gain (loss)................... --
------
Total from investment operations..................... 0.026
------
Less Distributions:
From net investment income.............................. (0.026)
------
Total from distributions............................ (0.026)
------
Net Asset Value, end of period............................ $10.00
======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................. $5,969
Ratio of expenses to average net assets(A)................ 0%
Ratio of net investment income (loss) to
average net assets..................................... 1.50%*
Total return.............................................. 0.26%**
Note: If Agents of the Fund for the periods indicated had not voluntarily
waived all of their fees and expenses had been limited to that required by
certain state securities law, the net investment income (loss) per share
and the ratios would have been as follows:
Net investment income per share........................ $(0.046)
Ratios:
Expenses to average net assets......................... 1.85%
Net investment income (loss) to
average net assets.................................... (0.35)%*
* Annualized.
** Not annualized.
(A)Includes the Fund's share of Emerging Asian Markets Equity Portfolio
allocated expenses for the period August 23, 1995 to December 31, 1995.
See notes to financial statements
<PAGE>
Landmark Emerging Asian Markets Equity Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
Landmark Emerging Asian Markets Equity Fund (the "Fund") is a separate
diversified series of Landmark International Funds (the "Trust"), a
Massachusetts business trust. The Trust is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end, management
investment company. The Fund invests all of its investable assets in Emerging
Asian Markets Equity Portfolio (the "Portfolio"), a management investment
company for which Citibank, N.A. ("Citibank") serves as Investment Adviser. The
Landmark Funds Broker-Dealer Services, Inc. ("LFBDS") acts as the Fund's
Administrator and Distributor. Citibank also serves as Sub-Administrator and
makes Fund shares available to customers as Shareholder Servicing Agent.
The Trust seeks to achieve the Fund's investment objective of long-term growth
of capital by investing all of its investable assets in the Portfolio, an
open-end, diversified management investment company having the same investment
objective and policies and substantially the same investment restrictions as the
Fund. The value of such investment reflects the Fund's proportionate interest
(approximately 99.9% at December 31, 1995) in the net assets of the Portfolio.
The financial statements of the Portfolio, including the portfolio of
investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The 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 following significant accounting policies consistently followed by the Fund
are in conformity with generally accepted accounting principles and are as
follows:
A. INVESTMENT VALUATIONS -- Valuation of securities by the Portfolio is
discussed in Note 1A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. ACCOUNTING FOR INVESTMENTS -- The Fund earns income, net of Portfolio
expenses, daily based on its investment in the Portfolio. All the net investment
income, realized and unrealized gain or loss of the Portfolio is allocated pro
rata, based on respective ownership interests, among the Fund and the other
investors in the Portfolio at the time of such determination. Dividend income
and other distributions from portfolio securities are recorded on the
ex-dividend date, except, if the ex-dividend date has passed, certain dividends
from foreign securities were recorded as the Fund is informed of the ex-dividend
date. Dividend income is recorded net of foreign taxes withheld where recovery
of such taxes is not assured. Interest income was accrued daily.
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 required.
D. EXPENSES -- The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and LFBDS. Expenses incurred by the Trust with
respect to any two or more funds 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. The Fund's share of the Portfolio's expenses are
charged against and reduce the amount of the Fund's investment in the Portfolio.
E. DISTRIBUTIONS -- Distributions to shareholders are recorded on ex-dividend
date. The amount and character of income and net realized gains to be
distributed are determined in accordance with income tax rules and regulations,
which may differ from generally accepted accounting principles. These
differences are attributable to permanent book and tax accounting differences.
Reclassifications are made to the Fund's capital accounts to reflect income and
net realized gains available for distribution (or available capital loss
carryovers) under income tax rules and regulations. For the year ended December
31, 1995, the Fund reclassed $3,610 from undistributed net investment loss, and
$3,610 to accumulated realized loss relating to foreign currency transactions.
(2) ADMINISTRATIVE SERVICES PLAN
The Fund has adopted an Administrative Services Plan (the "Administrative
Services Plan") which provides that the Fund may obtain the services of an
Administrator, and 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 fees paid
to the Administrator by the Fund and the Portfolio, the fees paid to the
Shareholder Servicing Agents by the Fund and the Basic Distribution Fee paid by
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 services fees paid to the Administrator, as
compensation for overall administrative services, including general office
facilities, may not exceed an annual rate of 0.15% of the Fund's average daily
net assets and 0.05% of the Portfolio's average daily net assets. For the period
August 23, 1995 to December 31, 1995 under the Administrative Services Plan the
Administrator received fees computed at an annual rate of 0.10% of the Fund's
average daily net assets which amounted to $1,260, all of which was voluntarily
waived. 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
officers and a Trustee of the Fund are officers and directors of the
Administrator or its affiliates.
B. SHAREHOLDER SERVICING AGENTS' FEES -- The Fund has entered into shareholder
servicing agreements with each Shareholder Servicing Agent pursuant to which the
Shareholder Servicing Agent acts as an agent for its customers and provides
other related services. For their services, each Shareholder Servicing Agent
receives fees from the Fund, which may be paid periodically, which may not
exceed, on an annualized basis, an amount equal to 0.25% 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. The Shareholder Servicing Agents' fees,
computed at an annual rate of 0.25%, amounted to $3,149, all of which was
voluntarily waived, for the period August 23, 1995 to December 31, 1995.
(3) DISTRIBUTION FEES
The Trust has adopted a Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, in which the Fund reimburses the
Distributor for expenses incurred or anticipated, in connection with the sale of
shares of the Fund, at an annual rate not to exceed 0.10% of the Fund's average
daily net assets for distribution of the Fund's shares. Distribution fees,
computed at an annual rate of 0.10%, amounted to $1,260, all of which was
voluntarily waived, for the period August 23, 1995 to December 31, 1995. 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
fee has been made during the period.
(4) INVESTMENT TRANSACTIONS
Increase and decrease in the Fund's investment in the Portfolio for the period
August 23, 1995 to December 31, 1995 aggregated $5,779,224 and $114,076,
respectively.
(5) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional Shares of Beneficial Interest (par value $0.00001).
Transactions in shares of beneficial interest were as follows:
AUGUST 23, 1995
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1995
-----------------
Shares sold................... 607,542
Shares issued to shareholders
from reinvestment of dividends 1,559
Shares repurchased............ (12,512)
-------
Net increase................ 596,589
=======
(6) EXPENSE FEES
LFBDS has entered into an expense agreement with the Fund. LFBDS had agreed to
pay all of the ordinary operating expenses (excluding interest, taxes, brokerage
commissions, litigation costs or other extraordinary costs or expenses) of the
Fund, other than fees paid under the Administrative Services Agreement,
Distribution Agreement and Shareholder Servicing Agreements and other than
amortization of expenses related to the organization of the Fund. The Agreement
may be terminated by either party upon not less than 30 days nor more than 60
days written notice.
The Fund has agreed to pay to LFBDS an expense fee, on an annual basis, accrued
daily and paid monthly; provided, however, that such fee shall not exceed the
amount such that immediately after any such payment the aggregate ordinary
operating expenses of the Fund, including expenses allocated from the Portfolio,
would on an annual basis exceed an agreed upon rate, currently 1.85% of average
daily net assets.
<PAGE>
Landmark Emerging Asian Markets Equity Fund
- -----------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND THE SHAREHOLDERS OF LANDMARK INTERNATIONAL FUNDS (THE
TRUST): LANDMARK EMERGING ASIAN MARKETS EQUITY FUND
In our opinion, the accompanying statement of assets and liabilities, and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Landmark Emerging Asian Markets Equity Fund (the "Fund"), a series of Landmark
International Funds, at December 31, 1995, the results of its operations, the
changes in its net assets and the financial highlights for the period August 23,
1995 (commencement of operations) to December 31, 1995, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of investments owned at December 31, 1995, by
correspondence with the custodian, provides a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 7, 1996
<PAGE>
Emerging Asian Markets Equity Portfolio
- ---------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS December 31, 1995
ISSUER/INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------
INDONESIA - 12.5%
Kalbe Farma
Pharmaceuticals.......................... 49,500 $ 167,778
PT Hanjaya Mandala Sampoerna
Consumer................................. 5,000 52,045
PT Hero Mini Supermarke
Consumer................................. 46,500 99,650
PT Indocement Tugnnal Parka
Building Materials....................... 15,000 50,350
PT Jaya Real Property
Real Estate.............................. 16,000 43,035
PT Semen Gresik
Building Materials....................... 16,000 44,784
PT Telecomunikasion
Telecommunications....................... 220,000 288,651
----------
746,293
----------
MALAYSIA - 45.5%
Arab-Malaysian Merchant Bank
Finance................................... 22,000 251,211
Commerce Asset Held Berhad
Banking................................... 8,000 40,320
DCB Holdings Berhad
Banking................................... 29,000 84,498
Edaran Otomobile Nasional BH
Motor Vehicles & Equipment................ 9,000 67,685
Faber Group Berhad*
Hotels, Tourist Courts & Motels.......... 40,000 34,177
Genting Berhad
Amusement & Recreation................... 18,000 150,254
Hong Leong Bank
Banking.................................. 38,000 104,737
Hong Leong Bank-Warrants
Banking.................................. 5,700 1,436
IOI Properties Berhad
Real Estate.............................. 88,000 220,025
Kedah Cement Berhad
Building Materials....................... 57,000 97,854
Kuala Lumpar Kepong Berhad
Plantation............................... 4,000 12,679
Malayan Banking Berhad
Banking.................................. 24,000 202,229
Malaysian Airline System BH
Air Transportation....................... 10,000 32,484
Malaysian Intern Shipping
Water Transport of Freight............... 40,000 104,737
MBF Capital Berhad
Finance.................................. 50,000 50,597
Multi-Purpose Holdings
Miscellaneous............................ 70,000 102,532
Public Bank-BHD
Banking.................................. 42,000 80,372
Public Finance Berhad
Finance.................................. 36,000 77,962
Resorts World Berhad
Amusement & Recreation................... 31,000 166,004
Selangor Properties Berhad
Real Estate.............................. 71,000 67,933
Sime Darby Berhad
Miscellaneous............................ 17,000 45,183
Systems Telekom Malaysia
Telecommunications....................... 36,000 280,663
Technology Resources*
Telecommunications....................... 28,000 82,687
Tenaga Nasional Berhad
Public Utilities......................... 67,000 263,810
UMW Holdings Berhad
Motor Vehicles & Equipment............... 15,000 40,162
United Engineers
Infrastructure........................... 8,000 51,030
----------
2,713,261
----------
PHILIPPINES - 8.4%
C&P Homes
Real Estate.............................. 170,000 $ 124,762
Petron Corp.
Utilities................................ 90,000 46,321
Philippine Long Distance TE
Telecommunications....................... 1,300 70,625
Philippine National Bank
Banking.................................. 4,200 46,435
San Miguel Corp. Class B
Miscellaneous............................ 8,000 27,297
SM Prime Holdings
Real Estate.............................. 640,000 182,997
----------
498,437
----------
THAILAND - 29.9%
Advanced Info Services
Telecommunications....................... 11,100 194,768
Bangkok Bank Co. Ltd.
Banking.................................. 26,200 318,269
Dhana Siam Finance
Finance.................................. 37,100 212,083
Finance One Co. LTD
Finance.................................. 15,300 106,292
Krung Thai Bank LTD
Banking.................................. 39,500 163,081
Land & House PLC
Real Estate.............................. 6,500 106,828
Phatra Thanakit Co.
Finance.................................. 16,000 $ 137,197
PTT Expl. & Production Public
Natural Gas.............................. 5,400 56,595
Siam Cement Co.
Building Materials....................... 2,000 110,838
Siam Commercial Bank
Banking.................................. 8,600 113,347
Thai Telephone & Telecomm
Telecommunications....................... 6,800 36,983
Thai Farmers Bank
Banking.................................. 22,700 228,891
----------
1,785,172
----------
TOTAL COMMON STOCKS
(Identified Cost, $5,457,018)............ 5,743,163
----------
SHORT-TERM OBLIGATIONS -- 3.6%
Saloman Repurchase Agreement, 5.375% due
1/2/96 proceeds at maturity $217,646
(secured by $202,672 US Treasury Bill
5.15% due 6/13/96 and $19,771 US
Treasury Bill 5.15% due 6/6/96........... 217,518
----------
TOTAL INVESTMENTS
(Identified Cost, $5,674,536) 99.9% 5,960,681
OTHER ASSETS,
LESS LIABILITIES......................... 0.1 2,792
----- ----------
NET ASSETS.................... 100.0% $ 5,963,473
===== ===========
*Non-income producing
See notes to financial statements
<PAGE>
Emerging Asian Markets Equity Portfolio
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES December 31, 1995
ASSETS:
Investments at value (Note 1A) (Identified Cost, $5,674,536)... $5,960,681
Foreign currency, at value (Cost, $1,922)...................... 1,927
Dividends and interest receivable.............................. 2,301
----------
Total assets............................................... 5,964,909
----------
LIABILITIES:
Payable for investments purchased.............................. 1,436
----------
NET ASSETS .................................................... $5,963,473
==========
REPRESENTED BY:
Paid-in capital for beneficial interests....................... $5,963,473
==========
See notes to financial statements
<PAGE>
Emerging Asian Markets Equity Portfolio
- ----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Period August 23, 1995 (Commencement of Operations)
to December 31, 1995
INVESTMENT INCOME:
Interest........................................ $ 14,841
Dividends (net of foreign withholding tax
of $1,573).................................... 4,143
---------
Total investment income....................... $ 18,984
EXPENSES:
Investment advisory fees (Note 2)............... 12,307
Administrative fees (Note 3).................... 615
---------
Total expenses................................ 12,922
Less aggregate amount waived by Investment
Adviser and Administrator (Notes 2 and 3)..... (12,922)
---------
Net Expenses.................................... --
--------
Net investment income......................... 18,984
--------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) from investment
transactions................................ --
Net realized gain (loss) on foreign exchange
transactions................................ (6,799)
---------
Net realized gain (loss).................... (6,799)
--------
Unrealized appreciation (depreciation)
of investments--
Beginning of period........................ --
End of period.............................. 286,145 286,145
---------
Translation of other assets and liabilitie
denominated in foreign currencies--net..... (5)
--------
Net change in unrealized appreciation
(depreciation)............................ 286,140
--------
Net realized and unrealized gain on
investments............................... 279,341
--------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $298,325
========
See notes to financial statements
<PAGE>
Emerging Asian Markets Equity Portfolio
- ----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
AUGUST 23, 1995
(COMMENCEMENT
OF OPERATIONS) TO
DECEMBER 31, 1995
----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income..................................... $ 18,984
Net realized gain (loss) on investments and foreign
exchange transactions.................................... (6,799)
Net change in unrealized appreciation (depreciation)
of investments........................................... 286,140
----------
Net increase in net assets resulting from operations.. 298,325
----------
CAPITAL TRANSACTIONS:
Proceeds from contributions............................... 5,779,224
Value of withdrawals...................................... (114,076)
----------
Net increase (decrease) in net assets from capital
transactions........................................ 5,665,148
----------
Net Increase in Net Assets: .............................. 5,963,473
Net Assets:
Beginning of period....................................... --
----------
End of period............................................. $5,963,473
==========
See notes to financial statements
<PAGE>
Emerging Asian Markets Equity Portfolio
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AUGUST 23, 1995
(COMMENCEMENT
OF OPERATIONS) TO
DECEMBER 31, 1995
----------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted)................ $5,963
Ratio of expenses to average net assets.................. 0%
Ratio of net investment income to average net assets..... 1.53%*
Portfolio turnover....................................... 0%
Note: If Agents of the Portfolio had no voluntarily waived all of their
fees for the periods indicated, the ratio would have been as follows:
Ratios:
Expenses to average net assets........................ 1.05%*
Net investment income to average net assets........... 0.48%
*Annualized
See notes to financial statements
<PAGE>
Emerging Asian Markets Equity Portfolio
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
Emerging Asian Equity Portfolio (the "Portfolio"), a separate series of The
Premium Portfolios (the "Portfolio Trust"), is registered under the Investment
Company Act of 1940, as amended, as a 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 Investment Adviser of the Portfolio is Citibank
N.A. ("Citibank"). Signature Financial Group (Grand Cayman), Ltd. ("SFG") acts
as the Fund's Administrator.
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 following significant accounting policies consistently followed by the
Portfolio are in conformity with generally accepted accounting principles and
are as follows:
A. INVESTMENT SECURITY VALUATIONS -- Equity securities in the portfolio are
valued at the last sale price on the exchange on which they are primarily
traded, or at the quoted bid price for securities in which there were no sales
during the day, or for unlisted securities not reported on the NASDAQ system.
Securities listed on a foreign exchange are valued at the last quoted sale price
available. Bonds and other fixed income securities (other than short-term
obligations maturing in sixty days or less) in the portfolio are valued on the
basis of valuations furnished by a pricing service, the use of which has been
approved by the Trustees. In making such valuations, the pricing service
utilizes both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon quoted prices or exchanges or
over-the-counter prices, since such valuations and techniques are believed to
reflect more accurately the fair value of such securities. Short-term
obligations maturing in sixty days or less, are valued at amortized cost, which
constitutes fair value as determined by the Trustees. Portfolio securities for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Trustees. Trading in
securities on most foreign exchanges and over-the-counter markets is normally
completed before the close of the New York Stock Exchange and may also take
place on days which the New York Stock Exchange is closed. If events materially
affecting the value of foreign securities occur between the time when the
exchange on which they are traded closes, such securities will be valued at fair
value in accordance with procedures established by and under the general
supervision of the Trustees.
B. FOREIGN CURRENCY TRANSLATION -- The accounting records of the Portfolio are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange to determine the value of investments,
assets and liabilities. Purchases and sales of securities, and income and
expenses are translated at the prevailing rate of exchange on the respective
dates of such transactions. The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments. Translation of foreign currency
includes net exchange gains and losses, disposition of foreign currency and the
difference between the amount of investment income and foreign taxes withheld
recorded and the actual amount received or paid.
C. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Portfolio may enter into
forward foreign currency exchange contracts ("contracts") in connection with
planned purchases or sales of securities, to hedge the U.S. dollar value of
portfolio securities denominated in a particular currency. The Portfolio could
be exposed to risks if the counter-parties to the contracts are unable to meet
the terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. Dollar. The forward foreign currency
exchange contracts are adjusted by the daily exchange rate of the underlying
currency and any gains or losses are recorded for financial statement purposes
as unrealized gains or losses until the contract settlement date.
D. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
the trade date. Realized gains and losses on security transactions are
determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend date,
except, if the ex-dividend date has passed, certain dividends from foreign
securities are recorded as soon as the Portfolio is informed of the ex-dividend
date. Dividend income is recorded net of foreign taxes withheld where recovery
of such taxes is not assured. Interest income is accrued daily.
E. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code. Accordingly, no provision for federal income
taxes is necessary.
F. EXPENSES -- The Portfolio bears all costs of its operations other than
expenses specifically assumed by Citibank and SFG. Expenses incurred by the
Portfolio Trust with respect to any two or more portfolios or series are
allocated in proportion to the average net assets of each portfolio, except when
allocations of direct expenses to each portfolio can otherwise be made fairly.
Expenses directly attributable to a portfolio are charged to that portfolio.
G. REPURCHASE AGREEMENTS -- It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established by the Portfolio to monitor, on a
daily basis, the market value of the repurchase agreement's underlying
investments to ensure the existence of a proper level of collateral.
(2) INVESTMENT ADVISORY FEES
The investment advisory fees paid to Citibank, as compensation for overall
investment management services, amounted to $12,307, all of which was
voluntarily waived, for the period August 23, 1995 to December 31, 1995. The
investment advisory fees are computed at the annual rate of 1.00% of the
Portfolio's average daily net assets.
(3) ADMINISTRATIVE FEES
Under the terms of an Administrative Services Agreement, the administrative
services fees paid to the Administrator, as compensation for overall
administrative services including general office facilities, is computed at an
annual rate of 0.05% of the Portfolio's average daily net assets. The Portfolio
accrued fees aggregating $615 for these services for the period August 23, 1995
to December 31, 1995, all of which was voluntarily waived. 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 officers and a
Trustee of the Portfolio are officers and directors of the Administrator or its
affiliates.
(4) PURCHASES AND SALES OF INVESTMENTS
For the period ended December 31, 1995, purchases and sales of investment
securities, other than short-term investments, aggre-gated 5,457,018 and -0-,
respectively.
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/(depreciation) in value of the investment
securities owned at December 31, 1995, as computed on a federal income tax
basis, are as follows:
Aggregate cost...................... $5,674,536
==========
Gross unrealized appreciation....... $ 376,734
Gross unrealized depreciation....... (90,589)
----------
Net unrealized appreciation......... $ 286,145
==========
(6) EXPENSE FEES
SFG has entered into an expense agreement with the Portfolio. SFG has agreed to
pay all of the ordinary operating expenses (excluding interest, taxes, brokerage
commissions, litigation costs or other extraordinary costs or expenses) of the
Portfolio, other than fees paid under the Advisory Agreement, and Administrative
Services Agreement. The Agreement may be terminated by either party upon not
less than 30 days nor more than 60 days written notice.
The Portfolio has agreed to pay SFG an expense fee, on an annual basis, accrued
daily and paid monthly; provided, however, that such fee shall not exceed the
amount such that immediately after any such payment the aggregate expenses of
the Portfolio would on an annual basis exceed an agreed upon rate, currently
1.20% of average daily net assets.
(7) FINANCIAL INSTRUMENTS
The Portfolio may trade financial instruments with off-balance sheet risk in the
normal course of its investing activities and to assist in managing exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments include forward foreign currency exchange contracts.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when related and offsetting transactions are considered. No such instruments
were held at December 31, 1995.
(8) LINE OF CREDIT
The Portfolio, along with the other Landmark Funds, entered into an ongoing
agreement with a bank which allows the Landmark Funds collectively to borrow up
to $40 million for temporary or emergency purposes. Interest on the 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 period August 23, 1995 to
December 31, 1995, there was no commitment fee allocated to the Portfolio. Since
the line of credit was established, there have been no borrowings.
<PAGE>
Emerging Asian Markets Equity Portfolio
- ----------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES OF THE PREMIUM PORTFOLIOS (THE TRUST) AND THE SHAREHOLDERS OF
EMERGING ASIAN MARKETS EQUITY PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Emerging Asian Markets Equity
Portfolio (the "Portfolio"), a series of The Premium Portfolios, as at
December 31, 1995 and the related statements of operations and of changes
in net assets and the financial highlights for the period August 23, 1995
(commencement of operations) to December 31, 1995. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Portfolio's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of investments owned as
at December 31, 1995, by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provides a reasonable basis for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Portfolio as at December 31, 1995, the
results of its operations and the changes in its net assets and the financial
highlights for the period August 23, 1995 (commencement of operations) to
December 31, 1995 in accordance with U.S. generally accepted accounting
principles.
PRICE WATERHOUSE
Chartered Accountants
Toronto, Ontario
February 7, 1996
<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,
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,
Investment Specialist or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117
FOR NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9100
FOR CITICORP INVESTMENT SERVICES CUSTOMERS:
Citicorp Investment Services
One Court Square, Long Island City, NY 11120
Call Your Investment Consultant or (800) 846-5200
(212) 736-8170 in New York City
