<PAGE>
________________________________________________________________________________
Annual Report
December 31, 1995
________________________________________________________________________________
Landmark\SM/ VIP Funds
Landmark VIP U.S. Government Fund
Landmark VIP Balanced Fund
Landmark VIP Equity Fund
Landmark VIP International Equity Fund
We are pleased to present this annual report for the Landmark VIP Funds. The
report covers the period between the Funds inception in March, 1995, and
December 31, 1995. During that time, the Funds investment adviser, Citibank,
N.A., has been busy putting your variable annuity or variable life insurance
assets to work in order to help you reach your long-term financial goals.
- --------------------------------------------------------------------------------
CONTENTS
Portfolio Manager
The Portfolio Manager Responds
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
- --------------------------------------------------------------------------------
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>
________________________________________________________________________________
LANDMARK VIP U.S. GOVERNMENT FUND
PORTFOLIO MANAGER
________________________________________________________________________________
LEON FARHI
Vice President, Citibank, N.A.
Leon Farhi is the manager of the Fund. Mr. Farhi also manages other U.S.
dollar, fixed income portfolios for institutional clients of Citibank.
Prior to joining Citibank in 1988, Mr. Farhi worked with Metropolitan Life
Insurance Company as a fixed income portfolio manager.
________________________________________________________________________________
THE PORTFOLIO MANAGER RESPONDS
________________________________________________________________________________
1995 was an excellent year for the U.S. bond market. Contrary to many
investors expectations at the end of 1994, the year was characterized by modest
economic growth, low inflation and declining interest rates.
Soon after the Fund began operations, the majority of the portfolios assets
were invested in U.S. Treasury securities to avoid the risks associated with
mortgage-backed securities when interest rates decline. In a low interest rate
environment, mortgage holders often refinance at more favorable terms. The
resulting return of principal must then be reinvested at the lower, prevailing
interest rate. During 1996, if rates stabilize, we expect to increase our
exposure to mortgage securities in order to capture the higher yields they
typically provide.
Looking forward, we do not expect the bond market in 1996 to match its 1995
performance. However, we remain optimistic and expect positive returns. We
believe that inflation will remain relatively low, economic growth will be
modest for most of the coming year and Federal Reserve policy will remain
accommodative. These factors should help create a positive environment for
fixed-income securities.
________________________________________________________________________________
LANDMARK VIP BALANCED FUND
PORTFOLIO MANAGERS
________________________________________________________________________________
GRANT HOBSON
Vice President, Citibank, N.A.
RICHARD GOLDMAN
Vice President, Citibank, N.A.
MARK LINDBLOOM
Vice President, Citibank, N.A.
Grant D. Hobson, Richard Goldman and Mark Lindbloom are the managers of the
Landmark VIP Balanced Fund. Mr. Hobson and Mr. Goldman manage the equity portion
of the portfolio. Mr. Hobson is responsible for managing U.S. equity portfolios
for trust and pension accounts of Citibank Global Asset Management and currently
manages more than $1 billion of total assets at Citibank. Prior to joining
Citibank in 1993, Mr. Hobson was a Sector Portfolio Manager for Axe Houghton,
formerly a division of USF&G, where he was responsible for equity investments
for pension accounts and mutual funds. Mr. Goldman is responsible for managing
approximately $600 million of total assets and for quantitative equity research
for the U.S. institutional business of Citibank Global Asset Management. He
joined Citicorps Investment Management Division in 1985 and from 1988 to 1994
was responsible for running Citicorps Institutional Investor Relations
Department. Mr. Lindbloom manages the fixed income portion of the portfolio. He
came to Citibank in 1986 from Brown Brothers Harriman & Co., where he managed
fixed income assets for discretionary corporate portfolios.
________________________________________________________________________________
THE PORTFOLIO MANAGER RESPONDS
________________________________________________________________________________
In stark contrast to many investors expectations when the year began, 1995
was characterized by lower interest rates, benign inflation and increased demand
for U.S. securities from domestic and overseas investors. Bond yields declined
rapidly in anticipation of lower interest rates, producing above-average bond
market returns. At the same time, lower interest rates drove equity valuations
higher, and broad measures of stock market performance set several new records
during the year.
In the fixed-income portion of the portfolio, we maintained a
longer-than-average duration for most of the year to realize greater
appreciation of portfolio holdings and to capture higher yields as interest
rates fell. We focused primarily on U.S. Treasury securities during the year as
they provided good values relative to other bond classes. In the equity portion
of the portfolio, we focused on well established growth companies with strong
cash flows, seasoned management teams and reasonable valuations. We maintained
diversified positions in growth-oriented industries such as health care,
consumer goods and companies that are expected to benefit from the outsourcing
of corporate services and data processing.
Our outlook for stocks and bonds is positive as interest rates should
continue to decline modestly and inflation should remain relatively low.
However, we believe that 1996 probably will not produce the magnitude of returns
we saw in 1995. In the bond market, interest rate declines should be more
limited than they were in 1995. As slower economic growth restrains the rate of
corporate earnings growth, it is possible that the stock market could experience
a temporary correction. In our view, any such declines should be viewed as
opportunities to buy growing companies at attractive prices.
As of December 29, 1995, Portfolio Manager Dwight Hyde has retired from
Citibank. We are pleased to announce that his portfolio management duties for
the Portfolios equity component have been assumed by Grant Hobson and Richard
Goldman, both of whom are experienced investment managers and longstanding
members of Mr. Hydes equity team. We wish Dwight the very best in his
retirement, and we congratulate Grant and Rich on their new responsibilities.
The fixed-income portion of the Portfolio continues to be managed by Mark
Lindbloom.
<PAGE>
________________________________________________________________________________
LANDMARK VIP EQUITY FUND
PORTFOLIO MANAGER
________________________________________________________________________________
GRANT HOBSON
Vice President, Citibank, N.A.
RICHARD GOLDMAN
Vice President, Citibank, N.A.
Grant D. Hobson and Richard Goldman are the managers of the Landmark VIP
Equity Fund. Mr. Hobson is responsible for managing U.S. equity portfolios for
trust and pension accounts of Citibank Global Asset Management and currently
manages more than $1 billion of total assets at Citibank. Prior to joining
Citibank in 1993, Mr. Hobson was a Sector Portfolio Manager for Axe Houghton,
formerly a division of USF&G, where he was responsible for equity investments
for pension accounts and mutual funds. Mr. Goldman is responsible for managing
approximately $600 million of total assets and for quantitative equity research
for the U.S. institutional business of Citibank Global Asset Management. He
joined Citicorps Investment Management Division in 1985 and from 1988 to 1994
was responsible for running Citicorps Institutional Investor Relations
Department.
________________________________________________________________________________
THE PORTFOLIO MANAGER RESPONDS
________________________________________________________________________________
After a period of uncertainty very early in the year, economic conditions
proved to be quite positive for the stocks of U.S. companies in 1995. Lower
interest rates, benign inflation and increased demand for equities from domestic
and overseas investors helped broad measures of stock market performance set
several new records during the year.
Consistent with our conservative management policies, we maintained a
cautious approach toward the stock market at the start of the year in an effort
to avoid excessive risks and volatility. We focused on putting funds to work in
well established growth companies with strong cash flows, seasoned management
teams and reasonable valuations. At mid-year, this approach paid off handsomely
as market leadership shifted to the kind of large, well managed growth companies
in which the Fund invests. We participated in the gains provided by several
sectors of the equity marketplace, including the health care industry and select
consumer stocks as well as companies that provide corporate services.
Our outlook for 1996 is positive, despite the possibility of a market
correction sometime during the year. Over the longer term, low inflation and low
interest rates should support stock prices, especially among companies that can
provide strong earnings in a slow-growth environment. Accordingly, we intend to
continue to attempt to identify the stocks of high-quality companies that we
anticipate will deliver consistent, predictable earnings growth. Regardless of
the short-term fluctuations of the stock market, we believe that this
conservative, long-term approach provides an excellent way to build wealth over
time without assuming excessive risks.
As of December 29, 1995, Portfolio Manager Dwight Hyde has retired from
Citibank. We are pleased to announce that portfolio management duties have been
assumed by Grant Hobson and Richard Goldman, both of whom are experienced
investment managers and longstanding members of Mr. Hydes equity team. We wish
Dwight the very best in his retirement, and we congratulate Grant and Rich on
their new responsibilities.
________________________________________________________________________________
LANDMARK VIP INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGERS
________________________________________________________________________________
TREVOR FORBES
Vice President, Citibank, N.A.
Trevor Forbes and Neil Robson, who are based in Citibanks London office,
are the managers of the Fund. Mr. Forbes is the head of Citibanks 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.
NEIL ROBSON
Vice President, Citibank, N.A.
Mr. Robson is a senior equity portfolio manager with responsibilities for
the Canadian and German equity markets who plays a key role in the 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
________________________________________________________________________________
1995 was a mixed year for the international equity markets. Economies in
Europes developed nations continued to improve slowly during the year, creating
a positive market environment characterized by low inflation, declining interest
rates and strong corporate earnings. Japan fared less well as persistent
economic problems and a troubled banking system kept stock prices weak. Emerging
markets in Asia and Latin America also lagged because of economic problems,
rising inflation and lack of participation by foreign investors.
In a global 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. This emphasis on growth benefitted
our investment style, which focuses on reasonably valued companies that can
produce above-average gains. We found particularly attractive opportunities in
European markets such as Switzerland and the United Kingdom. We de-emphasized
nations such as Japan that were experiencing economic difficulties.
Toward the end of the year, however, as growth became increasingly
recognized within stock markets, we shifted our focus to stocks that provided
not just potential for strong earnings growth, but that were selling at
attractive prices as well. As a result, we have reallocated the portfolio toward
markets with good values, such as Germany and France. We are increasing our
investment in Japan in anticipation of an economic recovery there. And we are
adopting a broadly diversified approach to emerging markets, with initial
positions in developing Asian nations. We believe that these moves will position
us well for the global economic environment we expect to develop in 1996.
<PAGE>
________________________________________________________________________________
Landmark VIP US Government Fund
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
________________________________________________________________________________
PRINCIPAL
AMOUNT MARKET
ISSUER (000's) VALUE
- -------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 96.9%
________________________________________________________________________________
United States Treasury Note
7.25% due 2/15/98 ..................... $ 200 $ 207,968
United States Treasury Note
6.25% due 5/31/00 ..................... 100 103,359
United States Treasury Note
6.125% due 7/31/00 .................... 100 102,937
United States Treasury Note
6.25% due 8/31/00 ..................... 70 72,417
United States Treasury Note
7.875% due 11/15/04 ................... 200 231,500
United States Treasury Note
5.875% due 11/15/05 ................... 50 51,125
United States Treasury Note
7.50% due 2/15/05 ..................... 200 226,688
United States Treasury Note
7.50% due 11/15/24 .................... 170 204,345
----------
1,200,339
----------
United States Treasury Bond
6.25%, due 8/15/23 .................... 50 51,446
----------
TOTAL INVESTMENTS
(Identified Cost $1,210,172) 96.9% 1,251,785
OTHER ASSETS LESS LIABILITIES ........... 3.1 39,984
----- ----------
NET ASSETS .............................. 100.0% $1,291,769
===== ==========
See notes to financial statements
<PAGE>
________________________________________________________________________________
Landmark VIP Balanced Fund
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
________________________________________________________________________________
Issuer Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS - 49.7%
________________________________________________________________________________
COMMODITIES -2.3%
Air Products & Chemicals Inc. ........... 300 $ 15,825
E I Dupont De Nemours & Co. Inc. ........ 250 17,469
Temple Inland Inc. ...................... 200 8,825
----------
42,119
----------
COMMERCIAL SERVICES - 1.1%
Sysco Corp. ............................. 600 19,500
----------
CONSUMER DURABLES - 1.8%
General Motors Corp. .................... 150 7,931
Mattel .................................. 400 12,300
Whirlpool Corp. ......................... 300 15,975
----------
36,206
----------
CONSUMER NON-DURABLES - 4.8%
Colgate-Palmolive Co. ................... 200 14,050
Kimberly Clark Corp. .................... 351 29,045
PepsiCo Inc. ............................ 400 22,350
Philip Morris Comp Cos Inc. ............. 250 22,625
----------
88,070
----------
CONSUMER SERVICES - 3.2%
Capital Cities/ABC Inc. ................. 100 12,338
Carnival Corp. .......................... 800 19,500
Times Mirror Company .................... 800 27,100
----------
58,938
----------
ELECTRONICS/TECHNOLOGICAL SERVICES- 7.3%
3 Com Corp. ............................. 220 10,257
Computer Associates Intl. Inc. .......... 450 25,594
DSC Communications ...................... 300 11,063
First Data Corp. ........................ 317 21,210
General Motors Corp. Class "E" .......... 500 26,000
Hewlett-Packard Inc. .................... 250 20,938
Intel Corp. ............................. 200 11,350
LSI Logic Corp........................... 220 7,205
----------
133,617
----------
ENERGY MINERALS - 5.7%
Amoco Corp. ............................ 300 21,563
Exxon Corp. ............................ 400 32,050
Mobile Corp. ........................... 195 21,840
Royal Dutch Petroleum Co. ADRs ......... 200 28,224
----------
103,677
----------
FINANCE - 4.2%
BankAmerica Corp. ...................... 250 16,188
Federal National Mortgage Association .. 200 24,825
State Street Boston Corp. .............. 500 22,500
USF & G Corp. .......................... 800 13,500
----------
77,013
----------
HEALTH SERVICES/TECHNOLOGY - 4.8%
Community Health Systems ............... 525 18,703
Johnson & Johnson ...................... 250 21,406
Manor Care Inc. ........................ 700 24,500
Pfizer Inc. ............................ 350 22,050
----------
86,659
----------
INDUSTRIAL SERVICES - 2.0%
Fluor Corp. ............................ 400 26,400
WMX Technologies ....................... 300 8,963
----------
35,363
----------
PRODUCER MANUFACTURING - 3.9%
Danaher Corp. .......................... 600 19,050
Emerson Electric Co. ................... 300 24,524
Xerox Corp. ............................ 200 27,400
----------
70,974
----------
RETAIL TRADE - 2.5%
Gap Stores ............................. 250 10,500
Nine West Group Inc. ................... 450 16,875
Wal-Mart Stores Inc. ................... 800 17,900
----------
45,275
----------
TRANSPORTATION - 1.4%
Canadian National Railway .............. 400 6,000
Norfolk Southern Co. ................... 250 19,844
----------
25,844
----------
UTILITIES - 4.7%
FPL Group, Inc. ........................ 150 6,956
GTE Corp. .............................. 600 26,400
Pacificorp ............................. 1,100 23,375
Texas Utilities ........................ 700 28,788
----------
85,519
----------
TOTAL COMMON STOCKS
(Identified Cost $800,195) 908,774
----------
________________________________________________________________________________
FIXED INCOME - 41.8%
________________________________________________________________________________
PRINCIPAL
AMOUNT
----------
MORTGAGE OBLIGATIONS - 5.6%
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION
8.00% due 7/15/25 .................... $48,171 50,221
7.50% due 8/15/25 .................... 50,830 52,335
----------
102,556
----------
UNITED STATES GOVERNMENT OBLIGATIONS - 36.2%
UNITED STATES TREASURY BOND - 2.5%
6.875% due 8/15/25 ................... 40,000 45,112
----------
UNITED STATES TREASURY NOTES - 33.7%
6.125% due 5/15/98 ................... 85,000 86,700
6.25% due 5/31/00 .................... 280,000 289,405
6.50% due 5/15/05 .................... 225,000 239,380
----------
615,485
----------
TOTAL FIXED INCOME
(Identified Cost $746,607) 763,153
----------
________________________________________________________________________________
SHORT-TERM OBLIGATIONS - AT AMORTIZED COST - 6.8%
________________________________________________________________________________
United States Treasury Bill
due 2/08/96 .......................... $125,000 $ 123,302
----------
TOTAL INVESTMENTS
(Identified Cost $1,670,104) 98.3% 1,795,229
OTHER ASSETS, LESS LIABILITIES ......... 1.7 31,490
NET ASSETS ............................. 100.0% $1,826,719
======== ==========
ADRs - American Depositary Receipts
See notes to financial statements
<PAGE>
________________________________________________________________________________
Landmark VIP Equity Fund
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
________________________________________________________________________________
________________________________________________________________________________
COMMON STOCKS - 94.0%
________________________________________________________________________________
COMMODITIES - 4.4%
Air Products & Chemicals ............... 550 $ 29,013
E I DuPont De Nemours .................. 470 32,841
Temple Inland Inc. ..................... 475 20,959
----------
82,813
----------
COMMERCIAL SERVICES - 2.5%
Sysco Corp. ............................ 1,450 47,125
----------
CONSUMER-DURABLES - 4.5%
General Motors Corp. ................... 500 26,438
Mattel ................................. 1,040 31,980
Whirlpool Corp. ........................ 500 26,625
----------
85,043
----------
CONSUMER NON-DURABLES - 9.2%
Colgate-Palmolive Co. .................. 475 33,369
Kimberly Clark Group Corp. ............. 624 51,636
PepsiCo Inc. ........................... 800 44,700
Philip Morris Comp Cos Inc. ............ 500 45,250
----------
174,955
----------
CONSUMER SERVICES - 7.0%
Capital Cities/ABC Inc. ................ 200 24,675
Carnival Corp. ......................... 1,300 31,688
McDonalds Corp. ........................ 700 31,588
Times Mirror Company ................... 1,300 44,037
----------
131,988
----------
ELECTRONICS/TECHNOLOGICAL SERVICES - 13.4%
3 Com Corp. ............................ 440 20,515
Computer Associates Intl. Inc. ......... 825 46,922
DSC Communications ..................... 600 22,125
First Data Corp. ....................... 317 21,211
General Motors Corp. Class E ........... 1,000 52,000
Hewlett Packard Inc. ................... 400 33,500
Intel Corp. ............................ 300 17,025
LSI Logic Corp. ........................ 590 19,322
Silicon Graphics ....................... 770 21,175
----------
253,795
----------
ENERGY MINERALS - 10.6%
Amoco Corp. ............................ 650 46,719
Exxon Corp. ............................ 650 52,081
Mobile Corp. ........................... 330 36,960
Royal Dutch Petroleum Co. ADRs ......... 400 56,450
Union Pacific Resources Group .......... 300 7,613
----------
199,823
----------
FINANCE - 8.3%
BankAmerica Corp. ...................... 520 33,670
Federal National Mortgage Association .. 400 49,650
State Street Boston Corp. .............. 800 36,000
USF & G Corp. .......................... 2,240 37,800
----------
157,120
----------
HEALTH SERVICES/TECHNOLOGY - 8.7%
Community Health Systems ............... 1,265 $45,066
Johnson & Johnson ...................... 400 34,250
Manor Care Inc. ........................ 1,100 38,500
Pfizer Inc. ............................ 750 47,250
----------
165,066
----------
INDUSTRIAL SERVICES - 3.4%
Fluor Corp. ............................ 700 46,200
WMX Technologies ....................... 640 19,120
----------
65,320
----------
PRODUCER MANUFACTURING - 7.1%
Danaher Corp. .......................... 1,155 36,671
Emerson Electric Co. ................... 600 49,050
Xerox Corp. ............................ 350 47,950
----------
133,671
----------
RETAIL TRADE - 4.9%
Gap Stores Inc. ........................ 800 33,600
Nine West Group Inc. ................... 750 28,125
Wal-Mart Stores Inc. ................... 1,400 31,325
----------
93,050
----------
TRANSPORTATION - 2.7%
Canadian National Railway .............. 800 12,000
Norfolk Southern Co. ................... 500 39,687
----------
51,687
----------
UTILITIES - 7.3%
FPL Group, Inc. ........................ 525 24,347
GTE Corp. .............................. 900 39,600
Pacifcorp .............................. 1,800 38,250
Texas Utilities ........................ 875 35,984
----------
138,181
----------
TOTAL COMMON STOCK
(Identified Cost $1,594,941) 1,779,637
----------
________________________________________________________________________________
SHORT-TERM OBLIGATIONS AT AMORTIZED COST - 5.2%
________________________________________________________________________________
United States Treasury Bill
due 3/28/96 .......................... 98,787
----------
TOTAL INVESTMENTS
(Identified Cost $1,693,728) 99.2% 1,878,424
OTHER ASSETS-OTHER LIABILITIES ......... 0.8 15,657
----- ----------
NET ASSETS ............................. 100.0% $1,894,081
----- ----------
ADRs - American Depositary Receipts.
See notes to financial statements.
<PAGE>
________________________________________________________________________________
Landmark VIP International Equity Fund
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
________________________________________________________________________________
Issuer/Industry Shares Value
- -------------------------------------------------------------------------------
COMMON STOCK - 73.6%
________________________________________________________________________________
FRANCE - 10.0%
Alcatel Alsthom
Electrical & Electronics ............. 420 $ 36,248
Axa Company
Insurance ............................ 470 31,705
Castorama Dubois Investisse
Retailing ............................ 250 40,985
Cie Generale Des Eaux
Electrical and Gas Utilities ......... 350 34,979
Club Mediterranee
Leisure & Tourism .................... 400 31,971
Credit Foncier De France
Financial Service .................... 810 11,723
Credit Local De France
Financial Service .................... 270 21,635
Groupe Danone Food &
Household Products ................... 240 39,640
Lafarge Coppee French
Building Material .................... 352 22,702
Louis Vitton-Moet Hennesy
Beverage & Tobacco ................... 220 45,871
Promodes
Retailing ............................ 180 42,351
Sanofi
Pharmaceutical and Health ............ 308 19,763
Union Du Credit Bail
Real Estate .......................... 150 15,515
Unisor Sacilor
Steel ................................ 1,400 18,530
Valeo
Industrial Components ................ 800 37,089
----------
450,707
----------
GERMANY - 11.0%
Commerzbank AG
Banking .............................. 320 75,754
Daimler-Benz AG
Automobiles .......................... 70 35,293
Deutche Bank AG
Banking .............................. 810 38,447
Karstadt AG
Retailing ............................ 130 53,108
Mannesmann AG
Machinery & Engineering .............. 190 60,596
Rhoen Klinikum AG
Pharmaceuticals & Health ............. 360 35,698
Siemens AG
Electrical & Electronics ............. 120 65,782
SAP AG (Preferred Shares)
Data Processing ...................... 250 37,884
SKW Trostberg AG
Chemicals ............................ 1,400 29,574
Tarkett AG
Food & Household Products ............ 900 19,483
Voltswagen AG
Automobiles .......................... 139 46,553
----------
498,172
----------
JAPAN - 23.4%
DDI Corporation
Telephone Utilities .................. 10 77,482
Fanuc Company
Machinery & Electronics .............. 2,000 86,586
Hitachi Ltd.
Electrical & Electronics ............. 8,000 80,581
Industrial Bank of Japan
Banking .............................. 3,000 90,944
Kyocera Corp.
Multi Corp, .......................... 1,000 74,286
National House Industrial Ltd.
Building & Construction .............. 5,000 91,526
Nikko Securities Co.
Financial Services ................... 8,000 103,051
Okumura
Building & Construction .............. 10,000 91,041
Sankyo Co. Ltd.
Pharmaceutical and Health ............ 4,000 89,879
Seven Eleven Japan Ltd.
Retailing ............................ 1,000 70,508
Toyota Motor Co.
Automobiles .......................... 4,000 84,843
Yamato Transport Co. Ltd.
Road & Rail Transport ................ 10,000 119,128
----------
1,059,855
----------
NETHERLANDS - 3.5%
European Vinyls Corp.
Textiles ............................. 180 4,687
Hunter Douglas NV
Machinery and Engineering ............ 190 8,826
International Nederlanden Group
Insurance ............................ 459 30,724
Philips Electronics NV
Industrial Components ................ 600 21,730
Royal Dutch Petroleum Co. ADRs
Energy ............................... 460 64,397
Royal PTT Nederland NV
Telephone Utilities .................. 240 8,737
Vendex International NV
Retailing ............................ 300 8,935
Verenigde Nederlandse
Business & Public Services ........... 70 9,629
----------
157,665
----------
SPAIN - 1.8%
Austuriana De Zinc
Nonferrous Metals .................... 1,300 10,314
Banco Bilbao Vizcaya
Banking .............................. 150 5,406
Banco De Santander
Banking .............................. 280 14,064
Banco Popular Espanola
Banking 110 20,294
Corporacion Mapfre
Insurance ............................ 113 6,328
Fomento Const y Contra
Building & Construction .............. 45 3,452
Iberdrola SA
Utilities ............................ 770 7,049
Sevillana de Electricidad
Utilities ............................ 575 4,467
Telefonica de Espana
Telecommunications ................... 730 10,115
----------
81,489
----------
SWEDEN - 2.0%
Astra AB B Free
Pharmaceuticals & Health ............. 360 14,278
Ericsson AB
Electronics .......................... 2,640 51,756
Ericsson LM
Electronics .......................... 264 5,176
Sparkbanken Sverige AB
Banking .............................. 970 12,360
Volvo Aktiebolag B Free
Automobiles .......................... 280 5,743
----------
89,313
----------
SWITZERLAND - 6.0%
BBC Brown Boveri & CIE
Instruments & Components ............. 23 26,795
Ciba-Geigy AG-R
Chemicals ............................ 60 52,947
CS Holdings
Banking .............................. 326 33,515
Nestle
Food & Household Products ............ 40 44,374
Sandoz AG
Pharmaceuticals & Health ............. 63 58,169
Schweizerischer Bankverein
Banking .............................. 65 26,617
Zurich Versicherungs
Insurance ............................ 91 27,295
----------
269,712
----------
UNITED KINGDOM - 15.9%
British Aerospace PLC
Aerospace & Defense .................. 2,023 24,994
British Petroleum Co. PLC
Energy ............................... 3,200 26,753
Cable & Wireless
Telephone Utilities .................. 3,800 27,138
Dixon Group PLC
Retailing ............................ 3,874 26,854
East Midlands Electricity PLC
Electrical & Gas Utilities ........... 1,000 10,347
Forte PLC
Hotels and Leisure ................... 4,400 22,576
General Electric PLC
Electrical & Electronics ............. 3,700 20,392
Glaxo Wellcome PLC
Pharmaceuticals & Health ............. 2,014 28,610
Glynwed International PLC
Machinery & Engineering .............. 4,800 23,772
Kwik Save Group
Retailing ............................ 2,000 15,525
Lloyds TSB Group PLC
Banking .............................. 9,448 48,551
Logica PLC
Business & Public Services ........... 3,300 23,311
London International Group PLC
Pharmaceutical & Health .............. 11,800 23,632
MFI Furniture Group PLC
Retailing ............................ 13,206 32,804
Pilkington Brothers
Building Materials ................... 8,375 26,265
Royal Bank of Scotland Group PLC
Banking .............................. 2,900 26,383
Securicor Group Class A
Telephone Utilities .................. 1,300 17,862
Severn Trent Water Co.
Utilities ............................ 2,100 22,414
Smith (David S) Holdings PLC
Forest Products & Paper .............. 5,200 22,847
Smith and Nephew Associated
Pharmaceuticals & Health ............. 7,000 20,322
Smiths Industries
Machinery & Engineering .............. 2,300 22,710
Standard Chartered PLC
Banking .............................. 3,628 30,866
Storehouse PLC
Retailing ............................ 4,336 22,484
Sun Alliance Group PLC
Insurance ............................ 6,100 35,371
Thorn EMI PLC
Leisure & Tourism .................... 1,250 29,430
Tibbett and Britten Group
Road & Rail Transportation ........... 2,400 15,463
Tomkins PLC
Multi-Industry ....................... 5,200 22,726
Whitbread & Co. Class A
Beverage & Tobacco ................... 2,644 27,933
Zeneca Group PLC
Pharmaceuticals & Health ............. 900 17,403
----------
715,738
----------
TOTAL COMMON STOCKS
(Identified Cost $3,231,398) ......... 3,322,651
----------
________________________________________________________________________________
SHORT-TERM OBLIGATIONS AT AMORTIZED COST - 4.7%
________________________________________________________________________________
Salomon Repurchase Agreement,
5.17% due 1/2/96 proceeds at
maturity $214,193 (secured by
$222,938 U.S. Treasury Note
5.75% due 9/30/97) .................... 214,076
----------
TOTAL INVESTMENTS
(Identified Cost $3,445,474) ...... 78.3% 3,536,727
OTHER ASSETS - OTHER LIABILITIES .... 21.7 977,773
----- ----------
NET ASSETS .......................... 100.0% $4,514,500
===== ==========
See notes to financial statements
<PAGE>
________________________________________________________________________________
Landmark VIP Funds
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1995
________________________________________________________________________________
<TABLE>
<CAPTION>
LANDMARK VIP
LANDMARK VIP LANDMARK VIP LANDMARK VIP INTERNATIONAL
U.S. GOVERNMENT FUND BALANCED FUND EQUITY FUND EQUITY FUND
-------------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Note 1A)(Identified Cost,
$1,210,172, $1,670,104, $1,693,728, $3,445,474,
respectively) ..................................... $1,251,785 $1,795,229 $1,878,424 $3,536,727
Foreign currency, at value ($0, $0, $0, $517,736,
respectively) ..................................... -- -- -- 520,321
Cash ................................................ 13,859 22,834 12,296 464,889
Receivable for securities sold ...................... -- -- -- 9,733
Receivable for Capital Stock sold ................... 5,000 -- 254 254
Dividend receivable ................................. -- 1,667 2,783 9,476
Interest receivable ................................. 21,125 6,989 324 3,494
---------- ---------- ---------- ----------
Total assets ..................................... 1,291,769 1,826,719 1,894,081 4,544,894
---------- ---------- ---------- ----------
LIABILITIES:
Payable for Securities Purchased .................... -- -- -- 30,394
---------- ---------- ---------- ----------
NET ASSETS for 123,259, 165,691, 164,588, 437,750
shares, respectively, of beneficial interest outstanding $1,291,769 $1,826,719 $1,894,081 $4,514,500
========== ========== ========== ==========
NET ASSETS CONSIST OF:
Paid-in capital ..................................... $1,250,156 $1,701,656 $1,708,839 $4,441,217
Accumulated net realized gain (loss) on investments . -- (62) 371 (23,643)
Unrealized appreciation (depreciation) of investments and
foreign currency translations ..................... 41,613 125,125 184,696 93,838
Undistributed net investment income ................. -- -- 175 3,088
---------- ---------- ---------- ----------
Total ............................................. $1,291,769 $1,826,719 $1,894,081 $4,514,500
========== ========== ========== ==========
NET ASSET VALUE PER SHARE OF BENEFICIAL INTEREST .... $10.48 $11.02 $11.51 $10.31
====== ====== ====== ======
See notes to financial statements
</TABLE>
<PAGE>
________________________________________________________________________________
Landmark VIP Funds
STATEMENTS OF OPERATIONS
For the Period March 10, 1995 (Commencement of Operations) to December 31, 1995
________________________________________________________________________________
<TABLE>
<CAPTION>
LANDMARK VIP
LANDMARK VIP LANDMARK VIP LANDMARK VIP INTERNATIONAL
U.S. GOVERNMENT FUND BALANCED FUND EQUITY FUND* EQUITY FUND
-------------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INCOME:
Interest (Note 1B)............................... $42,680 $ 26,696 $ 6,114 $ 35,218
Dividends ....................................... -- 8,614 14,244 26,607
------- -------- -------- --------
Total Income .................................. 42,680 35,310 20,358 61,825
------- -------- -------- --------
EXPENSES:
Custodian fees .................................. 33,956 34,828 36,464 65,514
Auditing services ............................... 14,438 14,438 14,438 14,438
Investment advisory fees (Note 2) ............... 2,598 3,331 4,047 24,004
Trustees fees ................................... 2,396 2,396 2,396 2,396
Shareholder reports ............................. 2,295 2,295 2,295 2,295
Administrative fees (Note 3) .................... 1,299 1,665 1,704 4,801
Legal services .................................. 1,500 1,500 1,502 1,500
Distribution fees (Note 4) ...................... 325 416 405 1,200
Miscellaneous ................................... 100 100 100 100
------- -------- -------- --------
Total expenses ................................ 58,907 60,969 63,351 116,248
Less aggregate amount waived by Investment
Adviser, Administrator, and Distributor
(Notes 2, 3, and 4) ........................... (4,222) (5,413) (6,155) (30,005)
Less expenses assumed by the administrator (54,685) (55,556) (57,196) (86,243)
------- -------- -------- --------
Net expenses .................................. -- -- -- --
------- -------- -------- --------
Net investment income ......................... 42,680 35,310 20,358 61,825
------- -------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from investment transactions -- (62) 371 (26,623)
Net change in unrealized appreciation (depreciation) 41,613 125,125 184,696 93,838
------- -------- -------- --------
Net realized and unrealized gain (loss) on investments 41,613 125,063 185,067 67,215
------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ............................... $84,293 $160,373 $205,425 $129,040
======= ======== ======== ========
* Commencement of Operations March 9, 1995
See notes to financial statements
</TABLE>
<PAGE>
________________________________________________________________________________
Landmark VIP Funds
STATEMENT OF CHANGES IN NET ASSETS
________________________________________________________________________________
<TABLE>
<CAPTION>
LANDMARK VIP
LANDMARK VIP LANDMARK VIP LANDMARK VIP INTERNATIONAL
U.S. GOVERNMENT FUND BALANCED FUND EQUITY FUND EQUITY FUND
-------------------- ------------- ------------ -------------
March 10, 1995 March 10, 1995 March 9, 1995 March 10, 1995
(Commencement (Commencement (Commencement (Commencement
of Operations) to of Operations) to of Operations) to of Operations) to
December 31, 1995 December 31, 1995 December 31, 1995 December 31, 1995
-------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ........................... $ 42,680 $ 35,310 $ 20,358 $ 61,825
Net realized gain (loss) from investment
transactions .................................. -- (62) 371 (26,623)
Net change in unrealized appreciation
(depreciation) of investments ................. 41,613 125,125 184,696 93,838
---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations ................... 84,293 160,373 205,425 129,040
Distribution to shareholder from
Net investment income ......................... (42,680) (35,310) (20,183) (40,629)
Net realized gains on investments ............. -- -- -- (15,128)
---------- ---------- ---------- ----------
Decrease in net assets from distributions
to shareholder .............................. (42,680) (35,310) (20,183) (55,757)
---------- ---------- ---------- ----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 6):
Net proceeds from sale of shares ................ 1,212,528 1,685,179 1,695,380 4,399,512
Net asset value of shares issued to shareholders
from reinvestment of distributions ............ 42,680 35,310 20,183 55,757
Cost of shares repurchased ...................... (5,052) (18,833) (6,724) (14,052)
---------- ---------- ---------- ----------
Net increase in net assets from transactions
in shares of beneficial interest ............ 1,250,156 1,701,656 1,708,839 4,441,217
NET INCREASE IN NET ASSETS ...................... 1,291,769 1,826,719 1,894,081 4,514,500
NET ASSETS:
Beginning of period.............................. -- -- -- --
---------- ---------- ---------- ----------
End of period (including undistributed
net investment income of $0, $0, $175 and
$3,088, respectively) ......................... $1,291,769 $1,826,719 $1,894,081 $4,514,500
========== ========== ========== ==========
See notes to financial statements
</TABLE>
<PAGE>
________________________________________________________________________________
Landmark VIP Funds
FINANCIAL HIGHLIGHTS
________________________________________________________________________________
<TABLE>
<CAPTION>
LANDMARK VIP
LANDMARK VIP LANDMARK VIP LANDMARK VIP INTERNATIONAL
U.S. GOVERNMENT FUND BALANCED FUND EQUITY FUND EQUITY FUND
-------------------- ------------- ------------ -------------
March 10, 1995 March 10, 1995 March 9, 1995 March 10, 1995
(Commencement (Commencement (Commencement (Commencement
of Operations) to of Operations) to of Operations) to of Operations) to
December 31, 1995 December 31, 1995 December 31, 1995 December 31, 1995
-------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period .......... $10.00 $10.00 $10.00 $10.00
------ ------ ------ ------
Income From Operations:
Net investment income ......................... 0.36 0.22 0.12 0.10
Net realized and unrealized gain (loss)
on investments .............................. 0.48 1.02 1.51 0.34
------ ------ ------ ------
Total from operations ..................... 0.84 1.24 1.63 0.44
------ ------ ------ ------
Less Distributions From:
Net investment income ....................... (0.36) (0.22) (0.12) (0.09)
Net realized gain on investments ............ -- -- -- (0.04)
------ ------ ------ ------
Total distributions........................ (0.36) (0.22) (0.12) (0.13)
------ ------ ------ ------
Net Asset Value, end of period ................ $10.48 $11.02 $11.51 $10.31
====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ...... $1,292 $1,826 $1,894 $4,515
Ratio of expenses to average net assets ....... 0% 0% 0% 0%
Ratio of net investment income to average
net assets .................................. 6.57%* 4.24%* 2.51%* 2.58%*
Portfolio turnover ............................ 0% 8% 8% 34%
Total return .................................. 8.45%+ 12.42%+ 16.36%+ 4.41%+
Note: If Agents of the Fund had not voluntarily agreed to waive a portion of their fees, the administrator not assumed expenses
and had expenses been limited to that required by certain state securities laws, for the periods indicated, the net investment
income per share and the ratios would have been as follows:
Net investment income (loss) per share ........ $0.22 $0.09 $0.00 $0.00
Ratios:
Expenses to average net assets ................ 2.50%* 2.50%* 2.50%* 2.50%*
Net investment income to average net assets ... 4.07%* 1.74%* 0.01%* 0.08%*
* Annualized
+ Not annualized
See notes to financial statements
</TABLE>
<PAGE>
________________________________________________________________________________
Landmark VIP Funds
NOTES TO FINANCIAL STATEMENTS
________________________________________________________________________________
(1) SIGNIFICANT ACCOUNTING POLICIES
Landmark VIP U.S. Government Fund, Landmark VIP Balanced Fund, Landmark VIP
Equity Fund and Landmark VIP International Equity Fund (the Funds) are each a
separate diversified series of Landmark VIP Funds (the Trust) which is organized
as a Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as an open-end, management investment company. The
Investment Adviser of each Fund is Citibank, N.A. (Citibank). The Landmark
Funds Broker-Dealer Services, Inc. (LFBDS) acts as the Funds Administrator and
Distributor. Shares of each Fund may only be purchased or redeemed through
variable annuity contracts and variable life insurance policies offered by the
separate accounts of participating insurance companies.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Funds are
in conformity with generally accepted accounting principles and are as follows:
A. INVESTMENT SECURITY VALUATIONS -- Equity securities 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) 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. 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 under guidelines established by 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 on 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 and the time when each Funds net asset value is calculated, such
securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Trustees.
B. INCOME -- Interest income consists of interest accrued and discount earned,
adjusted for amortization of premium or discount on long-term debt securities
when required for Federal income tax purposes. Gain and loss from principal
paydowns are recorded as interest income. Dividend income and other
distributions from investments are recorded on ex-dividend date, except if the
ex-dividend date passed, certain dividends from foreign securities are recorded
as the Fund is informed of ex-dividend date. Dividend income is recorded net of
foreign taxes withheld where recovery of such taxes is not assured.
C. FOREIGN CURRENCY TRANSLATION -- The accounting records of each of the Funds,
are maintained in U.S. dollars. For each of the Funds, except Landmark VIP U.S.
Government Fund which invests only in U.S. dollar denominated securities,
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
Funds do 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. Translations
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 amount actually received or paid.
D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- Each of the Funds except
Landmark VIP U.S. Government Fund 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. Each of the Funds except Landmark VIP U.S. Government
Fund 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.
E. FEDERAL TAXES -- Each Funds policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders all of its taxable income, including any net realized
gain on investment transactions. Accordingly, no provision for federal income or
excise tax is necessary.
F. EXPENSES -- Each 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 are allocated in proportion to the average net
assets of each Fund, except when allocations of direct expenses to each fund can
otherwise be made fairly. Expenses directly attributable to a fund are charged
to that Fund.
G. DISTRIBUTIONS -- Each fund determines the amount and character of income and
net realized gains to be distributed 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 Funds 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 period ended
December 31, 1995, the Landmark VIP International Equity Fund reclassed $18,108
to undistributed net investment income from accumulated loss on investment.
H. OTHER -- Investment transactions are accounted for on the trade date.
Realized gains and losses on investment transactions are determined on the
identified cost basis. All dividends and distributions will be received on the
ex-dividend date, and will be automatically reinvested in additional shares of a
fund issued at the net asset value of such shares on the payment date of such
dividends and distributions.
I. BENEFICIAL INTEREST -- At December 31, 1995, insurance companies or their
separate accounts were the record owners of all the shares of each Fund.
(2) INVESTMENT ADVISORY FEES
The investment advisory fee paid to Citibank, as compensation for overall
investment management services is accrued daily and computed at the following
annual rate of average daily net assets:
o Landmark VIP U.S. Government Fund ....... 0.40%
o Landmark VIP Balanced Fund .............. 0.40%
o Landmark VIP Equity Fund ................ 0.50%
o Landmark VIP International Equity Fund .. 1.00%
The investment adviser has waived all of its fees for each Fund for the period
ended December 31, 1995.
(3) ADMINISTRATIVE FEES
Under the terms of an Administrative Services Agreement, the administrative
service fees payable to the Administrator, as compensation for overall
administrative services and general office facilities, is computed at an annual
rate of .20% of the Funds average daily net assets, all of which was voluntarily
waived for the period ended December 31, 1995. 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 Trust pays no
compensation directly to any Trustee or any other officer who is affiliated with
the Administrator, all of whom receive remuneration for their services to the
Trust from the Administrator or its affiliates.
(4) DISTRIBUTION FEES
The Trust has adopted a Plan of Distribution pursuant to rule 12b-1 under
the Investment Company act of 1940, as amended, under which the Fund reimburses
the Distributor for expenses incurred or anticipated in connection with the
distribution of shares of the Funds at an annual rate not to exceed 0.05 % of
each Funds average daily net assets, all of which was voluntarily waived for the
period ended December 31, 1995.
(5) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities, other than short-term obligations, for
the period ended December 31, 1995, were as follows:
Purchases Sales
---------- ----------
Landmark VIP U.S. Government Fund ................... $1,210,077 $ -0-
Landmark VIP Balanced Fund .......................... 1,652,771 104,166
Landmark VIP Equity Fund ............................ 1,700,326 105,812
Landmark VIP International Equity Fund .............. 4,308,529 1,068,616
(6) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in shares of beneficial interest were as follows:
LANDMARK VIP U.S. GOVERNMENT FUND
Shares sold .............................................. 119,629
Shares reinvested ........................................ 4,127
Shares repurchased ....................................... (497)
-------
Net increase ............................................. 123,259
=======
LANDMARK VIP BALANCED FUND
Shares sold .............................................. 164,181
Shares reinvested ........................................ 3,266
Shares repurchased ....................................... (1,756)
-------
Net increase ............................................. 165,691
=======
LANDMARK VIP EQUITY FUND
Shares sold .............................................. 163,440
Shares reinvested ........................................ 1,780
Shares repurchased ....................................... (632)
-------
Net increase ............................................. 164,588
=======
LANDMARK VIP INTERNATIONAL EQUITY FUND
Shares sold .............................................. 433,612
Shares reinvested ........................................ 5,504
Shares repurchased ....................................... (1,366)
-------
Net increase ............................................. 437,750
=======
<PAGE>
(7) 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:
Landmark Landmark Landmark Landmark
VIP VIP VIP VIP
U.S. Government Balanced Equity International
Fund Fund Fund Equity Fund
--------------- ---------- ----------- -------------
Aggregate Cost ..... $1,210,172 $1,670,916 $1,693,728 $3,450,910
========== ========== ========== ==========
Gross unrealized
appreciation ..... $ 41,613 $ 139,006 $ 222,366 $ 206,430
Gross unrealized
depreciation ..... -- (14,693) (37,670) (120,613)
---------- ---------- ---------- ----------
Net unrealized
appreciation
(depreciation) ... $ 41,613 $ 124,313 $ 184,696 $ 85,817
========== ========== ========== ==========
<PAGE>
________________________________________________________________________________
Landmark VIP Funds
REPORT OF INDEPENDENT ACCOUNTANTS
________________________________________________________________________________
To the Trustees and the Shareholders of
Landmark VIP Funds:
Landmark VIP Balanced Fund
Landmark VIP Equity Fund
Landmark VIP International Equity Fund
Landmark VIP U.S. Government Fund
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, 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 each of the four funds constituting
Landmark VIP Funds (hereafter referred to as the Trust) at December 31, 1995,
the results of each of their operations, the changes in each of their net assets
and their financial highlights for the period March 9, 1995 (commencement of
operations for the Landmark VIP Equity Fund) and March 10, 1995 (commencement of
operations for the remaining Funds in the Trust) 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 Trusts 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 and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provides
a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
February 20, 1996
