<PAGE>
Semi-Annual Report
June 30, 1996 (unaudited)
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 semi-annual report for the Landmark VIP Funds.
The report covers the six month period ending June 30, 1996. During that time,
the Fund's investment advisor, 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
FRANCIS L. MUSTARO
Vice President, Citibank, N.A.
Francis L. Mustaro is the manager of the Landmark VIP U.S. Government
Fund. Mr. Mustaro, a Vice President of Citibank, has over twenty years
experience as a trader and portfolio manager, with emphasis on fixed income
products. Prior to joining Citibank in 1989, he served as Team Leader and Fixed
Income Product Manager at Citicorp Securities Markets, Inc.
THE PORTFOLIO MANAGER RESPONDS
The first half of 1996 represented a difficult time for the U.S. bond
markets. Stronger-than-expected economic growth produced fear among fixed-income
investors that the rate of inflation might accelerate, causing them to bid down
prices of most bonds. Longer term fixed-income investments such as those in
which the Landmark VIP U.S. Government Fund invests were among the financial
instruments that were severely affected by inflation fears.
We managed the Fund to take advantage of changing market conditions.
Although we maintained the Portfolio's average duration (a measure of
sensitivity to changes in interest rates) on the longer end of neutral for most
of the period in anticipation of a bond market rally, we offset some of the
effects of higher interest rates by shifting assets to the better performing
sectors of the U.S. government securities marketplace, including
government-guaranteed mortgage-backed securities.
Looking forward, we expect a strong rate of economic growth to persist,
which may cause the Federal Reserve to raise short-term interest rates sooner
rather than later this year. If such a change in monetary policy occurs, bond
yields should rise from current levels. Therefore, we are reducing the Fund's
average duration. In addition, we will continue to shift funds among various
types of U.S. government securities in order to participate in those with the
most promising prospects.
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
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 Citicorp's Investment Management Division in 1985 and from 1988 to 1994
was responsible for running Citicorp's 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 MANAGERS RESPONDS
The first half of 1996 saw mixed results in the U.S. stock and bond
markets. Stronger-than-expected economic growth fueled concerns among
fixed-income investors that inflation might accelerate, and bond prices declined
precipitously. On the other hand, stocks continued to rise in response to strong
corporate earnings reports and uninterrupted inflows of new money, and many
stock indexes established new highs during the period.
We reduced our investments in U.S. Treasury securities and corporate bonds
in favor of mortgage-backed securities and asset-backed securities, enabling us
to capture higher yields and maintain relative price stability. In the stock
market, we focused on high-quality growth companies with consistent revenue and
earnings growth. We found such stocks primarily in the non-fashion retail,
technology and pharmaceutical industries.
We expect a strong rate of economic growth to persist, causing bond yields
to rise slightly. Therefore, we are reducing the average duration of our
fixed-income investments. In the equity markets, we are cautiously optimistic
because we expect corporate earnings and inflows of new money to remain strong.
Yet, we temper that optimism with caution because of the possibility of a
short-term market correction, especially if the Federal Reserve reverses
direction and raises short-term interest rates later this year.
Landmark VIP Equity Fund
PORTFOLIO MANAGERS
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 Citicorp's Investment Management Division in 1985 and from 1988 to 1994
was responsible for running Citicorp's Institutional Investor Relations
Department.
THE PORTFOLIO MANAGERS RESPONDS
The first half of 1996 saw U.S. stocks continue to rise, and many stock
indexes established new highs. Yet, the domestic equity markets experienced more
volatility during the six-month period than they have in several years. The
stock market's leadership shifted several times as investors strove to identify
the most promising industries. In 1995, investments in blue-chip companies were
the recipe for success. So far in 1996, no single group has emerged as the
dominant sector.
Rather than try to respond to market conditions, we strive to maintain a
representative weighting among the different market sectors in order to avoid
taking large bets on any one group of stocks. The value we add is through stock
selection--identifying and investing in individual companies that meet our
stringent standards. We found such stocks primarily in the non-fashion retail,
technology and pharmaceutical industries. Conversely, few stocks in the finance,
utilities, commodities and transportation sectors passed our screens.
We are cautiously optimistic about stocks over the intermediate term.
Strong corporate earnings and inflows of new funds from individuals and
institutions should continue to outweigh the negatives of a robust economy. Yet,
we are cautious because of the possibility of a temporary market correction.
Regardless of the twists and turns of the economy, however, we will continue to
focus on finding high-quality stocks with superior growth characteristics.
Landmark VIP International Equity Fund
PORTFOLIO MANAGER
TREVOR FORBES
Vice President, Citibank, N.A.
Trevor Forbes is based in Citibank's London office, is the manager of the Fund.
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.
THE PORTFOLIO MANAGER RESPONDS
The stock markets of Japan and much of Europe outperformed the U.S. stock
market in local currency terms during the first six months of 1996. While a
strong U.S. dollar eroded those gains somewhat for U.S. investors, international
markets performed well even after taking currency relationships into account.
We increased our investments in Japan during the period, primarily in the
stocks of cyclical exporters and financial companies. We have reduced our
investments in Europe, avoiding the United Kingdom because of political
concerns. Yet, we continue to find attractive investments in Germany, France,
The Netherlands, Spain and Italy, where low interest rates should benefit
economically sensitive companies. We have also invested selectively in Australia
and Canada, where we expect companies that produce metals such as gold and other
resources to do well as inflation concerns mount in the wake of a strong U.S.
economy.
We expect more of the same over the next six months: steady economic growth
and low interest rates in Europe and Japan, creating positive environments for
international equities. In addition, strong inflows of cash into local mutual
funds should be augmented by new capital flows from international and global
mutual funds in the United States. Just as they have in the U.S., these inflows
should support rising stock prices in the months ahead.
<PAGE>
Landmark VIP US Government Fund
PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (unaudited)
PRINCIPAL
AMOUNT
ISSUER (000's) VALUE
- -------------------------------------------------------------------------------
UNITED STATES GOVERNMENT AND
GOVERNMENT AGENCIES - 18.0%
Asian Development Bank
6.25% due 10/24/05 ..................... $ 80 $ 75,802
InterAmerican Development Bank
6.125% due 8/03/06 ...................... 80 75,150
International Bank Reconstruction &
Development 9.875% due 1/10/97 .......... 80 83,578
----------
234,530
----------
UNITED STATES GOVERNMENT AGENCY - 18.8%
Federal Home Loan Bank
5.97% due 12/15/05 ....................... 80 74,250
Federal Home Loan Mortgage Corp.
5.98% due 8/12/05 ........................ 80 74,287
Federal National Mortgage Association
6.55% due 12/09/05 ...................... 100 97,156
----------
245,693
----------
UNITED STATES GOVERNMENT AGENCY - 54.7%
UNITED STATES TREASURY NOTE - 32.9%
7.25% due 2/15/98 ........................ 50 50,883
6.25% due 5/31/00 ........................ 100 99,359
6.125% due 7/31/00 ....................... 100 98,891
6.25% due 8/31/00 ........................ 70 69,508
5.875% due 11/15/05 ...................... 50 47,102
7.50% due 2/15/05 ........................ 60 63,122
----------
428,865
----------
UNITED STATES TREASURY BOND - 21.8%
6.25% due 8/15/23 ........................ 50 45,328
7.875% due 11/15/04 ...................... 80 85,987
7.50% due 11/15/24 ....................... 70 74,200
6.875% due 8/15/25 ....................... 80 79,187
----------
284,702
----------
SHORT-TERM OBLIGATIONS - 3.8%
United States Treasury Bill
due 9/12/96 .............................. 50 49,465
----------
TOTAL INVESTMENTS
(Identified Cost $1,279,402) ............. 95.3% 1,243,255
OTHER ASSETS LESS LIABILITIES ............. 4.7 61,532
----- ----------
NET ASSETS ................................ 100.0% $1,304,787
===== ==========
See notes to financial statements
<PAGE>
Landmark VIP Balanced Fund
PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited)
ISSUER SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS - 48.7%
COMMODITIES & PROCESSING - 1.7%
Praxair, Inc. ............................. 450 $ 19,013
Sigma Aldrich Corp. ....................... 400 21,400
--------
40,413
--------
COMMERCIAL SERVICES - 1.9%
Interpublic Group, Inc. ................... 400 18,750
Sysco Corp. ............................... 762 26,099
--------
44,849
--------
CONSUMER DURABLES - 1.0%
Mattel Inc. .............................. 850 24,330
--------
CONSUMER NON-DURABLES - 4.3%
Colgate-Palmolive. ....................... 200 16,950
Gillette Co. ............................. 200 12,475
PepsiCo Inc. ............................. 800 28,300
Procter & Gamble Co. ..................... 250 22,656
Sara Lee Corp. ........................... 575 18,616
--------
98,997
--------
CONSUMER SERVICES - 1.0%
Carnival Corp. ........................... 800 23,100
--------
ELECTRONICS/TECHNOLOGICAL SERVICES - 8.9%
Affiliated Computer Service A* ........... 100 4,700
Andrew Corp.* ............................ 350 18,813
Applied Materials, Inc. .................. 260 7,930
Cisco Systems, Inc.* ..................... 400 22,650
Computer Associates Intl. Inc. ........... 410 29,213
Electronic Data Systems Corp. ............ 500 26,875
First Data Corp. ......................... 318 25,321
Hewlett-Packard Inc. ..................... 250 24,906
Oracle Corp. ............................. 270 10,630
Parametric Technology Corp.* ............. 280 12,110
Solectron Corp. .......................... 350 13,256
Sungard Data Systems* .................... 300 12,038
--------
208,442
--------
ENERGY MINERALS - 4.7%
Amoco Corp. .............................. 300 21,713
Exxon Corp. .............................. 400 34,750
Mobil Corp. .............................. 195 21,864
Royal Dutch Petroleum Co. ADRs ........... 200 30,750
--------
109,077
--------
FINANCE - 3.1%
American International Group ............. 190 18,739
Federal National Mortgage Association .... 800 26,800
State Street Boston Corp. ................ 500 25,500
---------
71,039
---------
HEALTH SERVICES/TECHNOLOGY - 5.2%
Cardinal Health Inc. ..................... 260 18,753
Health Management Associates ............. 945 19,136
Johnson & Johnson ........................ 500 24,750
Manor Care Inc. .......................... 540 21,263
Pacificare Health Systems, Inc. .......... 25 1,694
Pfizer Inc. .............................. 350 24,980
Schein Henry, Inc.* ...................... 300 11,475
---------
122,051
---------
INDUSTRIAL SERVICES - 1.5%
Fluor Corp. .............................. 400 26,150
WMX Technologies ......................... 300 9,825
---------
35,975
---------
PRODUCER MANUFACTURING - 4.8%
Danaher Corp. ............................ 600 26,100
Emerson Electric Co. ..................... 300 27,113
Federal Signal Corp. ..................... 570 13,395
General Electric Co. ..................... 250 21,625
Xerox Corp. .............................. 420 22,470
---------
110,703
---------
RETAIL TRADE - 6.4%
Autozone Inc.* ........................... 590 20,502
Gap Inc. ................................. 500 16,062
Home Depot ............................... 400 21,600
Kohls Corp.* ............................. 660 24,173
Nine West Group Inc.* .................... 500 25,563
Viking Office Products, Inc.* ............ 790 24,688
Walgreen Co. ............................. 460 15,410
---------
147,998
---------
TRANSPORTATION - 0.9%
Wisconsin Central Transportation ......... 650 21,124
---------
UTILITIES - 3.3%
FPL Group, Inc. .......................... 350 16,100
GTE Corp. ................................ 480 21,480
Pacificorp ............................... 890 19,803
Texas Utilities Co. ...................... 440 18,810
---------
76,193
---------
TOTAL COMMON STOCKS
(Identified Cost $965,169) ............... 1,134,291
---------
FIXED INCOME - 41.1%
PRINCIPAL
AMOUNT
---------
MORTGAGE OBLIGATIONS - 12.2%
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 4.0%
8.00% due 7/15/25 ........................ $44,190 44,743
7.50% due 8/15/25 50,544 49,863
--------
94,606
--------
PRINCIPAL
ISSUER AMOUNT VALUE
- -------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 8.2%
6.00% due 6/1/11 ........................ $101,000 $ 95,540
6.50% due 5/1/26 ........................ 100,999 94,500
--------
190,040
--------
TOTAL MORTGAGE OBLIGATIONS ............... 284,646
--------
UNITED STATES GOVERNMENT OBLIGATIONS - 28.9%
UNITED STATES TREASURY NOTES - 27.2%
6.125% due 5/15/98 ...................... 85,000 85,000
6.25% due 5/31/00 ....................... 280,000 278,205
6.50% due 5/15/05 ....................... 275,000 271,389
--------
634,594
--------
UNITED STATES TREASURY BONDS - 1.7%
6.875% due 8/15/25 ...................... 40,000 39,594
--------
TOTAL UNITED STATES GOVERNMENT
OBLIGATIONS .............................. 674,188
--------
TOTAL FIXED INCOME
(Identified Cost $986,343) .............. 958,834
--------
SHORT-TERM OBLIGATIONS AT AMORTIZED COST - 8.5%
United States Treasury Bill
due 9/12/96 ............................. $ 197,859
----------
TOTAL INVESTMENTS
(Identified Cost $2,149,371) ............ 98.3% 2,290,984
OTHER ASSETS LESS LIABILITIES ............ 1.7 40,590
----- ----------
NET ASSETS ............................... 100.0% $2,331,574
===== ==========
ADRs - American Depositary Receipts.
*Non income producing.
See notes to financial statements
<PAGE>
Landmark VIP Equity Fund
PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (unaudited)
ISSUER SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS - 95.3%
COMMERCIAL SERVICES - 3.6%
Interpublic Group ........................ 800 $ 37,500
Sysco Corp. .............................. 1,450 49,662
--------
87,162
--------
COMMODITIES & PROCESSING - 3.2%
Phaxair, Inc. ........................... 825 34,856
Sigma Aldrich Corp. ..................... 800 42,800
--------
77,656
--------
CONSUMER-DURABLES - 2.1%
Mattel Inc. ............................. 1,800 51,525
--------
CONSUMER NON-DURABLES - 8.5%
Colgate-Palmolive Co. ................... 475 40,256
Gillette Co. ............................ 400 24,950
PepsiCo Inc. ............................ 1,600 56,600
Procter & Gamble Co. .................... 500 45,312
Sara Lee Corp. .......................... 1,200 38,850
--------
205,968
--------
CONSUMER SERVICES - 2.9%
Carnival Corp. .......................... 1,300 37,538
McDonalds Corp. ......................... 700 32,725
--------
70,263
--------
ELECTRONICS/TECHNICAL SERVICES - 17.3%
Affiliated Computer Services* ........... 212 9,964
Andrew Corp.* ........................... 800 43,000
Applied Materials, Inc. ................. 660 20,130
Cisco Systems, Inc.* .................... 900 50,963
Computer Associates Intl. Inc. .......... 825 58,781
Electronic Data Systems Corp. ........... 1,000 53,750
First Data Corp. ........................ 611 48,651
Hewlett-Packard Inc. .................... 400 39,850
Oracle Corp. ............................ 645 25,397
Parametric Technology Corp.* ............ 600 25,950
Solectron Corp. ......................... 475 17,990
Sungard Data Systems* ................... 600 24,075
--------
418,501
--------
ENERGY MINERALS - 8.3%
Amoco Corp. ............................. 650 47,044
Exxon Corp. ............................. 650 56,469
Mobil Corp. ............................. 330 37,001
Royal Dutch Petroleum Co. ADRs .......... 400 61,500
--------
202,014
--------
FINANCE - 5.4%
American International Group Inc. ....... 365 35,998
Federal National Mortgage Association ... 1,600 53,600
State Street Boston Corp. ............... 800 40,800
--------
130,398
--------
HEALTH SERVICES/TECHNOLOGY - 10.2%
Cardinal Health Inc. .................... 450 32,456
Health Management Associates* ........... 1,913 38,728
Johnson & Johnson ....................... 900 44,550
Manor Care Inc. ......................... 1,100 43,313
Pacificare Health Systems, Inc. ......... 150 10,163
Pfizer Inc. ............................. 750 53,531
Schein Henry, Inc.* ..................... 600 22,950
----------
245,691
----------
INDUSTRIAL SERVICES - 2.8%
Fluor Corp. ............................. 700 45,763
WMX Technologies ........................ 640 20,960
----------
66,723
----------
PRODUCER MANUFACTURING - 9.8%
Danaher Corp. ........................... 1,155 50,243
Emerson Electric Co. .................... 600 54,225
Federal Signal Corp. .................... 1,455 34,192
General Electric Co. .................... 500 43,250
Xerox Corp. ............................. 1,050 56,175
----------
238,085
----------
RETAIL TRADE - 13.1%
Autozone Inc.* .......................... 1,280 44,480
Gap Inc. ................................ 1,250 40,156
Hannaford Brothers Co. .................. 200 6,525
Home Depot .............................. 850 45,900
Kohls Corp.* ............................ 1,450 53,106
Nine West Group Inc.* ................... 1,000 51,125
Viking Office Products, Inc.* ........... 1,430 44,688
Walgreen Co. ............................ 950 31,825
----------
317,805
----------
TRANSPORTATION - 1.8%
Wisconsin Central Transportation ........ 1,300 42,250
----------
Utilities - 6.3%
FPL Group, Inc. ......................... 755 34,730
GTE Corp. ............................... 900 40,275
Pacificorp .............................. 1,800 40,050
Texas Utilities Co. ..................... 875 37,406
----------
152,461
----------
TOTAL COMMON STOCKS
(Identified Cost $1,978,352) ............ 2,306,502
----------
SHORT-TERM OBLIGATINS AT AMORTIZED COST - 2.0%
United States Treasury Bill
Due 9/19/96 ........................... 49,417
----------
TOTAL INVESTMENTS
(Identified Cost $2,027,769) ........... 97.3% 2,355,919
OTHER ASSETS LESS LIABILITIES ........... 2.7 65,025
----- ----------
NET ASSETS .............................. 100.0% $2,420,944
===== ==========
ADRs - American Depositary Receipts.
*Non income producing.
See notes to financial statements
<PAGE>
Landmark VIP International Equity Fund
PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (unaudited)
ISSUER SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS - 77.7%
CANADA - 3.1%
Alcan Aluminum Ltd
Non-Ferrous Metals ..................... 375 $ 11,342
Avenor Inc.
Forest Products & Paper ................ 700 11,457
Berrick Gold Corp.
Gold Mines ............................. 750 20,185
Canadian Natural Resources LTD
Energy Sources ......................... 900 16,774
Cominco Ltd
Non-Ferrous Metals ..................... 750 16,230
Franco-Nevada Mining Ltd
Miscellaneous Materials ................ 250 15,846
Inco Ltd
Steel .................................. 600 19,268
Placer Dome Group Inc. Com
Multi-Industry ......................... 400 9,579
Renaissance Energy Ltd
Energy Sources ......................... 400 10,546
Talisman Energy Inc
Energy Sources ......................... 750 17,439
Westmmin Resources
Miscellaneous Materials ................ 1,900 10,157
--------
158,823
--------
FRANCE - 10.4%
AGF (Assurances Generales de France)
Insurance .............................. 800 21,673
Air Liquide French
Chemicals .............................. 100 17,666
AXA Company
Insurance .............................. 387 21,180
Axime (Ex Segin)
Financial Service ...................... 200 27,987
Bouygues
Building & Construction ................ 190 21,195
Canal Plus
Business & Public Services ............. 100 24,468
Carrefour Supermarche
Retailing .............................. 40 22,420
Carrefour Supermarche (Rights)
Retailing .............................. 40 11,054
CIE Generale Des Eaux
Electrical and Gas Utilities ........... 350 39,112
Credit Commerciale De France
Banking ................................ 400 18,548
Credit Local De France
Financial Service ...................... 230 18,729
Legris Industries
Building & Construction ................ 500 22,933
Louis Vitton-Moet Hennesy
Beverage & Tobacco ..................... 220 52,205
Michelin "B" Shares
Industrial Components .................. 500 24,449
Poliet- Ex Lambert Freres
Buildng Materials ...................... 220 23,558
Primagaz
Energy Sources ......................... 150 16,646
Printemps
Retailing .............................. 170 59,502
Sodexho
Multi-Industry ......................... 60 26,633
Salomon SA
Household Appliances ................... 8 6,700
Total Cie Francaise Petroles
Energy Sources ......................... 300 22,260
Unibail
Real Estate ............................ 220 21,976
--------
520,894
--------
GERMANY - 9.4%
Allianz AG Holdings
Insurance .............................. 25 43,285
Bayer AG
Chemicals .............................. 700 24,722
Daimler-Benz AG
Automobiles ........................... 70 37,463
Daimler-Benz AG (Rights)
Automobiles ............................ 70 10
Deutche Bank AG
Banking ................................ 1,495 70,727
Gehe AG
Pharmaceuticals & Health ............... 30 20,146
Mannesmann AG
Machinery & Engineering ................ 90 31,106
Puma AG
Leisure & Tourism ...................... 113 4,058
Rhoen-Klinikum AG
Pharmaceuticals & Health ............... 360 47,309
SAP AG (Preferred Shares)
Data Processing ........................ 170 25,211
SGL Carbon AG
Non-Ferrous Metals ..................... 181 21,170
Siemens AG
Instruments & Components ............... 500 26,710
Tarkett International AG
Food & Household Products .............. 1,000 21,092
Veba AG
Electrical & Gas Utilities ............. 1,440 76,518
Volkswagenwerk AG DM50
Automobiles ............................ 49 18,207
--------
467,734
--------
ITALY - 3.4%
Assicurazione Generali Itl
Insurance .............................. 543 12,580
Credito Italiano
Banking ................................ 14,634 17,192
Eni Spa
Energy Sources ......................... 5,405 26,972
Fiat Spa
Automobiles ............................ 5,929 19,998
Instituto Bancario San Paolo Torino
Banking ................................ 3,603 23,191
Instituto Mobiliare Italiano
Banking ................................ 2,337 19,639
Italgas
Electrical & Gas Utilities ............. 1,814 6,800
Stet D Risp Non Cvt
Telephone Utilities .................... 3,313 8,714
Telecom Italia Mobile
Telephone Utilities .................... 14,548 32,605
----------
167,691
----------
JAPAN - 32.0%
Dai-Ichi Kangyo Bank
Banking ................................ 4,000 74,493
DDI Corporation
Telephone Utilities ................... 10 87,274
Ebara Corporation
Machinery & Engineering ................ 5,000 79,880
Fuji Bank
Banking ................................ 4,000 86,179
Industrial Bank of Japan
Banking ................................ 2,000 49,662
Kyocera Corp.
Multi Industry ......................... 1,000 70,750
Mitsubishi Trust
Financial Service ...................... 2,000 33,778
National House Industrial Ltd.
Building & Construction ................ 5,000 78,053
NKK
Steel ................................... 25,000 75,771
Okumura
Building & Construction ................ 10,000 83,622
Osaka Gas Co. Ltd.
Electrical & Gas Utilities ............. 15,000 54,911
Sankyo Co. Ltd.
Pharmacutical & Health ................. 4,000 103,706
Sanyo Electric Co. Ltd.
Instruments & Components ............... 12,000 73,288
Sanwa Bank
Banking ................................ 2,000 37,064
Seven Eleven Japan Ltd.
Retailing .............................. 1,100 70,194
Sumitomo Electric Industries
Industrial Components .................. 5,000 71,663
TDK Corp.
Instruments & Components ............... 2,000 119,408
The Bank of Tokyo Mitsubishi
Banking ................................ 3,000 69,564
Tohoku Electric Power
Electrical & Gas Utilities ............. 2,500 55,916
Toyota Motor Co.
Automobiles ............................ 4,000 100,055
Yamato Transport Co. Ltd.
Road & Rail Transport .................. 10,000 117,765
----------
1,592,996
----------
NETHERLANDS - 4.7%
Elsevier
Business & Public Services ............. 2,200 $ 33,388
Heineken NV
Beverages & Tobacco .................... 100 22,349
IHC Caland NV
Building & Construction ................ 250 12,305
International Nederlanden Group
Insurance .............................. 1,072.5 31,988
KLM Royal Dutch Airlines
Airlines ............................... 500 15,997
Oce-Van Der Grinten
Machinery & Engineering ................ 252 26,697
Royal Dutch Petroleum Co. ADRs
Energy Sources ......................... 190 29,346
Security Capital U.S. Realty
Real Estate ............................ 1,000 11,400
Unilever NV
Food & Household Products .............. 120 17,368
Vendex International NV
Retailing .............................. 600 20,919
Verenigde Nederlandse
Business & Public Services ............. 700 10,870
--------
232,627
--------
SPAIN - 4.0%
Acerinox SA
Multi-Industry ......................... 85 8,886
Alba Corp. Finance
Machinery & Engineering ................ 113 9,405
Banco Bilbao Vizcaya
Banking ................................ 699 28,325
Banco Popular Espanola
Banking ................................ 131 23,361
Corporacion Mapfre
Insurance .............................. 322 16,327
Gas Natural SDG SA
Electrical & Gas Utilities ............. 87 18,272
Iberdrola SA
Electrical & Gas Utilities ............. 1,971 20,236
Repsol SA
Energy Sources ......................... 559 19,444
Sevillana de Electricidad
Electrical & Gas Utilities ............. 1 9
Sol Melia SA
Leisure & Tourism ...................... 282 5,945
Telefonica de Espana
Telecommunications ..................... 2,124 39,137
Union Electrica Fenosa SA
Electrical & Gas Utilities ............. 1,555 10,004
--------
199,351
--------
SWEDEN - 3.1%
Astra AB
Pharmacuticals ......................... 470 20,476
Ericsson AB
Electrical & Electronics ............... 720 15,521
Esselte
Business & Public Services ............. 470 9,601
Hennes & Mauritz AB "B-F"
Retailing .............................. 205 19,006
Kinnevik AB
Machinery & Engineering ................ 495 14,999
Sparbanken Sverige AB
Banking ................................ 1,680 21,780
Stora Kopparberges
Forest Products & Paper ................ 1,630 21,501
Svedala Industri AB
Machinery & Engineering ................ 296 5,600
Swedish Match AB
Miscellaneous Materials ................ 940 2,919
Tornet Fastighets AB
Real Estate ............................ 147 1,197
Volvo Akitebolag
Automobiles ............................ 940 21,397
--------
153,997
--------
UNITED KINGDOM - 7.6%
BAT Industries
Multi-Industry ......................... 1,532 11,925
British Aerospace PLC
Aerospace & Defense .................... 1,007 15,278
British Petroleum Co. PLC
Energy Sources ......................... 1,680 14,735
British Telecommunications PLC
Telephone Utilities .................... 3,520 18,868
Cable & Wireless
Telephone Utilities .................... 1,431 9,460
Cadbury Schweppes PLC
Food & Household Products .............. 1,543 12,203
Dixons Group PLC
Retailing .............................. 1,657 13,568
Glaxo Wellcome PLC
Pharmacuticals & Health ................ 1,203 16,196
Glynwed International PLC
Machinery & Engineering ................ 2,394 11,754
Hanson Trust PLC
Multi-Industry ......................... 3,891 10,911
Inchape PLC
Business & Public Services ............. 2,536 11,545
Kingfisher PLC
Retailing .............................. 1,237 12,425
Lloyds TSB Group PLC
Banking ................................ 2,344 11,472
Logica PLC
Business & Public Services ............. 1,134 11,364
Lodon International Group PLC
Pharmacutical & Health ................. 4,976 11,732
MFI Furniture Group PLC
Retailing .............................. 8,226 22,175
Pilkington Brothers
Building Materials ..................... 3,543 9,964
Royal Bank of Scotland Group PLC
Banking ................................ 1,498 11,474
RTZ Corp.
Non-Ferrous Metals ..................... 1,125 16,658
Securicor Group PLC "A"
Multi-Industry ......................... 1,844 7,492
Smiths Industries PLC
Machinery & Engineering ................ 1,056 11,551
Standard Chartered PLC
Banking ................................ 1,369 13,634
Sun Alliance Group
Insurance .............................. 2,406 13,906
Thorn EMI PLC
Leisure & Tourism ...................... 587 16,362
Tomkins PLC
Multi-Industry ......................... 2,806 10,507
Whitbread & Co. Class "A"
Beverage & Tobacco 2,054 22,626
WPP Group
Business & Public Services ............. 3,702 12,481
Zeneca Group PLC
Pharmacuticals & Health ................ 618 13,668
----------
375,934
----------
TOTAL INVESTMENTS
(Identified Cost $3,671,316) ........... 77.7% 3,870,047
OTHER ASSETS LESS LIABILITIES ........... 22.3 1,110,766
----- ----------
NET ASSETS .............................. 100.0% $4,980,813
===== ==========
See notes to financial statements
<PAGE>
Landmark VIP Funds
Statements of Assets and Liabilities June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
LANDMARK VIP
LANDMARK VIP LANDMARK VIP LANDMARK VIP INTERNATIONAL
U.S. GOVERNMENT BALANCED EQUITY EQUITY
FUND FUND FUND FUND
--------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Note 1A) (Identified Cost, $1,279,402,
$2,149,371, $2,027,769, and $3,671,316, respectively) ......... $ 1,243,255 $ 2,290,984 $ 2,355,919 $ 3,870,047
Foreign currency, at value ($0, $0, $0, and $964,494,
repectively) .................................................. -- -- -- 976,358
Cash .............................................................. 41,486 24,725 75,331 140,714
Receivable for securities sold .................................... -- -- -- 23,184
Receivable for capital stock sold ................................. -- 21,460 16,500 13,944
Dividend receivable ............................................... -- 1,367 2,554 18,313
Interest receivable ............................................... 20,046 8,052 667 879
----------- ----------- ----------- -----------
Total assets .................................................. 1,304,787 2,346,588 2,450,971 5,043,439
----------- ----------- ----------- -----------
LIABILITIES:
Payable for securities purchased .................................. -- 15,014 30,027 62,626
----------- ----------- ----------- -----------
NET ASSETS for 128,802, 202,877, 191,379, and 464,014
shares, respectively, of beneficial interest outstanding .......... $ 1,304,787 $ 2,331,574 $ 2,420,944 $ 4,980,813
=========== =========== =========== ===========
NET ASSETS CONSIST OF:
Paid-in capital ................................................... $ 1,305,332 $ 2,120,235 $ 2,037,949 $ 4,717,087
Accumulated net realized gain (loss) on investments ............... (5,422) 22,798 20,969 1,028
Unrealized appreciation (depreciation) of investments and
foreign currency transactions ................................... (36,147) 141,613 328,150 210,389
Undistributed net investment income ............................... 41,024 46,928 33,876 52,309
----------- ----------- ----------- -----------
Total ......................................................... $ 1,304,787 $ 2,331,574 $ 2,420,944 $ 4,980,813
=========== =========== =========== ===========
NET ASSETS VALUE PER SHARE OF BENEFICIAL INTEREST ................. $10.13 $11.49 $12.65 $10.73
====== ====== ====== ======
See notes to financial statements
</TABLE>
<PAGE>
Landmark VIP Funds
Statements of Operations
For the six months ended June 30, 1996 (unaudited)
<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) .......................................... $ 41,024 $ 31,651 $ 1,995 $ 10,130
Dividends ................................................... -- 15,277 31,706 39,091
--------- --------- --------- ---------
Total income ............................................ $ 41,024 46,928 33,701 49,221
--------- --------- --------- ---------
EXPENSES:
Custodian fees .............................................. 25,649 24,583 26,161 65,776
Auditing Services ........................................... 7,000 7,000 7,000 7,500
Investment adviser fees (Note 2) ............................ 2,493 4,081 5,273 23,373
Trustees fees ............................................... 1,875 1,875 1,875 1,875
Shareholder reports ......................................... 4,000 4,000 4,000 4,000
Administrative fees (Note 3) ................................ 1,246 2,040 2,109 4,675
Legal services .............................................. 1,000 1,000 1,000 1,000
Distribution fees (Note 4) .................................. 312 510 527 1,169
Miscellaneous ............................................... 3,500 3,500 3,500 3,500
--------- --------- --------- ---------
Total expenses .......................................... 47,075 48,589 51,445 112,868
Less aggregate amount waived by Investment Adviser,
Administrator, and Distributor (Notes 2, 3, and 4) ........ (4,051) (6,631) (7,909) (29,217)
Less expenses assumed by the administrator .................. (43,024) (41,958) (43,536) (83,651)
--------- --------- --------- ---------
Net expenses ............................................ -- -- -- --
--------- --------- --------- ---------
Net investment income ................................... 41,024 46,928 33,701 49,221
--------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT:
Net realized gain (loss) from investment transactions ....... (5,422) 24,865 22,496 29,291
Net change in unrealized appreciation (depreciation) ........ (77,760) 16,488 143,454 116,551
--------- --------- --------- ---------
Net realized and unrealized gain (loss) on investments ...... (83,182) 41,353 165,950 145,842
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ......................................... $ (42,158) $ 88,281 $ 199,651 $ 195,063
========= ========= ========= =========
See notes to financial statements
</TABLE>
<PAGE>
Landmark VIP Funds
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
LANDMARK VIP U.S. GOVERNMENT FUND LANDMARK VIP BALANCED FUND
--------------------------------- ---------------------------------
SIX MONTHS MARCH 10, 1995 SIX MONTHS MARCH 10, 1995
ENDED (COMMENCEMENT ENDED (COMMENCEMENT
JUNE 30, 1996 OF OPERATIONS) TO JUNE 30, 1996 OF OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1995 (UNAUDITED) DECEMBER 31, 1995
-------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income .......................................... $ 41,024 $ 42,680 $ 46,928 $ 35,310
Net realized gain (loss) from investment transactions .......... (5,422) -- 24,865 (62)
Net change in unrealized appreciation (depreciation)
of investments ............................................. (77,760) 41,613 16,488 125,125
---------- ---------- ---------- ----------
Net increase (decrease) in net assets resulting from
operations ............................................... (42,158) 84,293 88,281 160,373
---------- ---------- ---------- ----------
Distribution to shareholder from
Net investment income ...................................... -- (42,680) -- (35,310)
Net realized gains on investment ........................... -- -- (2,005) --
---------- ---------- ---------- ----------
Decrease in net assets from distributions to shareholder ... -- (42,680) (2,005) (35,310)
---------- ---------- ---------- ----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 6):
Net proceeds from sale of shares ............................... 73,515 1,212,528 446,904 1,685,179
Net asset value of shares issued to shareholders from
reinvestment of distributions .............................. -- 42,680 2,005 35,310
Cost of shares repurchased ..................................... (18,339) (5,052) (30,330) (18,833)
---------- ---------- ---------- ----------
Net increase in net assets from transactions in shares of
beneficial interst ..................................... 55,176 1,250,156 418,579 1,701,656
---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS ..................................... 13,018 1,291,769 504,855 1,826,719
NET ASSETS:
Beginning of period ............................................ 1,291,769 -- 1,826,719 --
---------- ---------- ---------- ----------
End of period (including undistributed net investment income
of $41,024, $0, $46,928 and $0 respectively) ............... $1,304,787 $1,291,769 $2,331,574 $1,826,719
========== ========== ========== ==========
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
Landmark VIP Funds
Statement of Changes in Net Assets
<CAPTION>
LANDMARK VIP
LANDMARK VIP EQUITY FUND INTERNATIONAL EQUITY FUND
-------------------------------- ---------------------------------
SIX MONTHS MARCH 10, 1995 SIX MONTHS MARCH 10, 1995
ENDED (COMMENCEMENT ENDED (COMMENCEMENT
JUNE 30, 1996 OF OPERATIONS) TO JUNE 30, 1996 OF OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1995 (UNAUDITED) DECEMBER 31, 1995
------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ........................................... $ 33,701 $ 20,358 $ 49,221 $ 61,825
Net realized gain (loss) from investment transactions ........... 22,496 371 29,291 (26,623)
Net change in unrealized appreciation (depreciation)
of investments .............................................. 143,454 184,696 116,551 93,838
---------- ---------- ---------- ----------
Net increase (decrease) in net assets resulting from
operations ................................................ 199,651 205,425 195,063 129,040
---------- ---------- ---------- ----------
Distribution to shareholder from
Net investment income ....................................... -- (20,183) -- (40,629)
Net realized gains on investment ............................ (1,898) -- (4,620) (15,128)
---------- ---------- ---------- ----------
Decrease in net assets from distributions to shareholder .... (1,898) (20,183) (4,620) (55,757)
---------- ---------- ---------- ----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 6):
Net proceeds from sale of shares ................................ 350,087 1,695,380 282,281 4,399,512
Net asset value of shares issued to shareholders from
reinvestment of distributions ............................... 1,898 20,183 4,620 55,757
Cost of shares repurchased ...................................... (22,875) (6,724) (11,031) (14,052)
---------- ---------- ---------- ----------
Net increase in net assets from transactions in shares of
beneficial interst ...................................... 329,110 1,708,839 275,870 4,441,217
---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS ...................................... 526,863 1,894,081 466,313 4,514,500
NET ASSETS:
Beginning of period ............................................. 1,894,081 -- 4,514,500 --
---------- ---------- ---------- ----------
End of period (including undistributed net investment income
of $33,876, $175 and $52,309 and $3,088 respectively) ....... $2,420,944 $1,894,081 $4,980,813 $4,514,500
========== ========== ========== ==========
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
Landmark VIP Funds
Financial Highlights
<CAPTION>
LANDMARK VIP GOVERNMENT FUND LANDMARK VIP BALANCED FUND
-------------------------------- ---------------------------------
SIX MONTHS MARCH 10, 1995 SIX MONTHS MARCH 10, 1995
ENDED (COMMENCEMENT ENDED (COMMENCEMENT
JUNE 30, 1996 OF OPERATIONS) TO JUNE 30, 1996 OF OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1995 (UNAUDITED) DECEMBER 31, 1995
------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ........................... $10.48 $10.00 $11.02 $10.00
------ ------ ------ ------
Income From Operations:
Net Investment Income .......................................... 0.32 0.36 0.23 0.22
Net realized and unrealized gain (loss) on investments ......... (0.67) 0.48 0.25 1.02
------ ------ ------ ------
Total from operations ...................................... (0.35) 0.84 0.48 1.24
------ ------ ------ ------
Less Distributions from:
Net investment income ...................................... -- (0.36) -- (0.22)
Net realized gain on investment ............................ -- -- (0.01) --
------ ------ ------ ------
Total distributions ........................................ -- (0.36) (0.01) (0.22)
------ ------ ------ ------
Net Asset Value, end of period ................................. $10.13 $10.48 $11.49 $11.02
====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net investment income .......................................... $1,305 $1,292 $2,332 $1,826
Ratio of expenses to average net assets ........................ 0% 0% 0% 0%
Ratio of net investment income to average net assets ........... 6.58%* 6.57%* 4.60%* 4.24%*
Portfolio turnover ............................................. 47% 0% 21% 8%
Total return ................................................... (3.34%)+ 8.45%+ 4.36%+ 12.42%+
Average brokerage commissions (A) .............................. N/A N/A $ 0.06 N/A
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 ......................... ($0.05) $0.22 ($0.01) $0.09
Ratios:
Expenses to average net assets ................................. 7.55%* 2.50%* 4.76%* 2.50%*
Net investment income to average net assets .................... (0.97%)* 4.07%* (0.16%)* 1.74%*
(A) The average commission rate paid is applicable for Funds that invest greater
than 10% of average net assets in equity transactions on which commissions
are charged. This disclosure is required for fiscal periods beginning on or
after September 1, 1995.
* Annualized
+ Not annualized
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
Landmark VIP Funds
Financial Highlights
<CAPTION>
LANDMARK VIP
LANDMARK VIP EQUITY FUND INTERNATIONAL EQUITY FUND
-------------------------------- ---------------------------------
SIX MONTHS MARCH 9, 1995 SIX MONTHS MARCH 10, 1995
ENDED (COMMENCEMENT ENDED (COMMENCEMENT
JUNE 30, 1996 OF OPERATIONS) TO JUNE 30, 1996 OF OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1995 (UNAUDITED) DECEMBER 31, 1995
------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ............................ $11.51 $10.00 $10.31 $10.00
------ ------ ------ ------
Income From Operations:
Net Investment Income ........................................... 0.18 0.12 0.11 0.10
Net realized and unrealized gain (loss) on investments .......... 0.97 1.51 0.32 0.34
------ ------ ------ ------
Total from operations ....................................... 1.15 1.63 0.43 0.44
------ ------ ------ ------
Less Distributions from:
Net investment income ....................................... -- (0.12) -- (0.09)
Net realized gain on investment ............................. (0.01) -- (0.01) (0.04)
------ ------ ------ ------
Total distributions ......................................... (0.01) (0.12) (0.01) (0.13)
------ ------ ------ ------
Net Asset Value, end of period .................................. $12.65 $ 11.51 $10.73 $10.31
====== ======= ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net investment income ........................................... $2,421 $ 1,894 $4,981 $4,515
Ratio of expenses to average net assets ......................... 0% 0% 0% 0%
Ratio of net investment income to average net assets ............ 3.20%* 2.51%* 2.11%* 2.58%*
Portfolio turnover .............................................. 33% 8% 71% 34%
Total return .................................................... 9.99%+ 16.36%+ 4.17%+ 4.41%+
Average brokerage commissions (A) ............................... $ 0.05 N/A $ 0.03 N/A
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 .......................... ($0.09) $ 0.00 ($0.14) $ 0.00
Ratios:
Expenses to average net assets .............................. 4.88%* 2.50%* 4.83%*+ 2.50%*
Net investment income to average net assets ................. (1.68%)* 0.01%* (2.72%)* 0.08%*
(A) The average commission rate paid is applicable for Funds that invest greater
than 10% of average net assets in equity transactions on which commissions
are charged. This disclosure is required for fiscal periods beginning on or
after September 1, 1995.
* Annualized
+ Not annualized
See notes to financial statements.
</TABLE>
<PAGE>
Landmark VIP Funds
Notes to Financial Statements (unaudited)
(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 Fund's 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 soon 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 gain or losses until the contract settlement date.
E. FEDERAL TAXES -- Each Fund's 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 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 period
ended December 31, 1995, the Landmark VIP International Equity Fund reclassified
$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 recorded 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
dividend and distributions.
I. BENEFICIAL INTEREST -- At June 30, 1996, 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 U.S. Balance Fund ................................. 0.40%
o Landmark VIP U.S. Equity Fund .................................. 0.40%
o Landmark VIP U.S. International Equity Fund .................... 0.40%
The investment adviser has waived all of its fees for each Fund for the six
months ended June 30, 1996.
(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 0.20% of the Fund's average daily net assets, all of which was
voluntarily waived for the six months ended June 30, 1996. Citibank acts as
Sub-Administrator and performs such duties and receives such compensation from
LFBDS as from time to time is agreed to by LFBDS and Citibank. The 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 Fund's average daily net assets, all of which was voluntarily waived for
the six months ended June 30, 1996.
(5) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities, other than short-term obligations, for
the period ended June 30, 1996, were as follows:
PURCHASES SALES
-------- -----
Landmark VIP U.S. Government Fund .............. $ 574,630 $ 549,794
Landmark VIP U.S. Balanced Fund ................ 780,025 395,819
Landmark VIP Equity Fund ....................... 1,096,299 735,382
Landmark VIP International Equity Fund ......... 2,764,786 2,369,671
(6) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in shares of beneficial interest were as follows:
SIX MONTHS MARCH 10,1995
ENDED (COMMENCEMENT
JUNE 30, 1996 OF OPERATION) TO
(UNAUDITED) DECEMBER 31, 1995
----------- -----------------
LANDMARK VIP U.S. GOVERNMENT FUND
Shares sold ............................ 7,358 119,629
Shares reinvested ...................... -- 4,127
Shares repurchased ..................... (1,815) (497)
-------- --------
Net increase ........................... 5,543 123,259
======== ========
LANDMARK VIP BALANCED FUND
Shares sold ............................ 39,705 164,181
Shares reinvested ...................... 177 3,266
Shares repurchased ..................... (2,696) (1,756)
-------- --------
Net increase ........................... 37,186 165,691
======== ========
LANDMARK VIP EQUITY FUND
Shares sold ............................ 28,520 163,440
Shares reinvested ...................... 152 1,780
Shares repurchased ..................... (1,881) (632)
-------- --------
Net increase ........................... 26,791 164,588
======== ========
LANDMARK VIP INTERNATIONAL EQUITY FUND
Shares sold ............................ 26,877 433,612
Shares reinvested ...................... 431 5,504
Shares repurchased ..................... (1,044) (1,366)
-------- --------
Net increase ........................... 26,264 437,750
======== ========
(7) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at June 30,1996, as computed on a federal income tax
basis, are as follows:
<PAGE>
<TABLE>
<CAPTION>
LANDMARK LANDMARK LANDMARK LANDMARK
VIP VIP VIP VIP
U.S. GOVERNMENT BALANCED EQUITY INTERNATIONAL
FUND FUND FUND EQUITY FUND
--------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Aggregate Cost ..................... $1,279,402 $2,144,371 $2,027,769 $ 3,671,316
========== ========== ========== ===========
Gross unrealized appreciation ..... $ 2,272 $ 180,494 $ 351,870 $ 299,865
Gross unrealized depreciation ...... (38,419) (38,881) (23,720) (101,134)
---------- ---------- ---------- ---------
Net unrealized appreciation
(depreciation) ................. $ (36,147) $ 141,613 $ 328,150 $ 198,731
========== ========== ========== =========
</TABLE>
