<PAGE>
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ANNUAL REPORT December 31, 1996
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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 year ended December 31, 1996. During that time, the Funds'
investment adviser, Citibank, N.A., has been busy putting your variable annuity
insurance assets to work in order to help you reach your long-term financial
goals.
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CONTENTS
- -------------------------------------------
Portfolio Manager
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The Portfolio Manager Responds
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Portfolio of Investments
- -------------------------------------------
Statement of Assets and Liabilities
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Statement of Operations
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Statement of Changes in Net Assets
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Financial Highlights
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Notes to Financial Statements
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Report of Independent Accountants
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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
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PORTFOLIO MANAGER
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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.
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THE PORTFOLIO MANAGER RESPONDS
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U.S. government securities produced modestly positive total rates of return
in 1996 despite a sharp rise in interest rates early in the year. Bond yields
subsequently retraced much of their rise during the second half as it became
clearer that the economy would grow modestly, monetary policy would hold steady
and inflation would remain low, albeit with a moderately upward bias.
Consistent with our conservative management approach, we employed
average-duration and sector-rotation strategies to allocate Fund assets among
U.S. Treasury securities and mortgage-backed securities issued by the Government
National Mortgage Association, a government-guaranteed Federal agency.
Looking forward, we are optimistic regarding the U.S. bond market in 1997.
We expect the first part of the year to show slow growth, an unchanged monetary
policy and modestly lower interest rates. In addition, the prospect of continued
moderate inflation during the seventh year of an economic recovery should make
investors more comfortable investing in bonds for the longer term. The bond
market could become particularly attractive if President Clinton and the
Republican Congress make substantial progress toward further reducing the
federal budget deficit.
Landmark VIP Balanced Fund
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PORTFOLIO MANAGERS
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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 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.
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THE PORTFOLIO MANAGERS RESPOND
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While stocks produced above-average returns in 1996, the bond market did
not keep pace, generating modestly positive rates of total return. Both markets
were influenced by an economy characterized by moderate growth, low inflation,
reasonable interest rates and a monetary policy unchanged since January.
Large-capitalization stocks did particularly well during the second half of the
year as investors placed a significant premium on earnings consistency,
liquidity and risk management. In the bond market, sharp declines in the first
half of the year were mostly recovered in the second half, contributing to
modestly positive total returns.
In the stock market, we found attractive growth companies in the
large-capitalization and mid-capitalization market sectors, including the
consumer non-durables, consumer services, finance and technology industries. We
sold a number of utility and energy stocks, and we shifted our holdings in the
health care industry out of HMOs into other types of companies with stronger,
more visible growth potential.
In the bond market, finding high-quality bonds offering competitively high
yields proved difficult in an environment of narrower-than-normal differences in
rates among the various classes of fixed-income securities. Ultimately, we
obtained attractive yields from certain mortgage-backed securities, a sector
that performed well in the 1996 market environment.
We are cautiously optimistic regarding U.S. stocks and bonds in 1997. We
are optimistic because current indicators suggest that the first part of 1997's
economy will show an unchanged monetary policy and, modestly lower interest
rates. The bond market could become particularly attractive if the federal
government makes progress toward further reducing the federal budget deficit.
Our stock market outlook is more cautious. The fundamentals of rising corporate
earnings and good liquidity suggest that the bull market has a way to go, but
stock prices relative to earnings are at the high end of their historical range.
Therefore, we cannot rule out a short-term correction that will bring stock
valuations down to more sustainable levels.
Landmark VIP Equity Fund
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PORTFOLIO MANAGERS
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- --------------------------------------------------------------------------------
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.
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The Portfolio Managers Respond
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1996 was an excellent year for the U.S. stock market, especially
established, large-capitalization stocks. The market was driven higher by
positive economic developments, strong corporate earnings and, as it has been
for the past several years, substantial inflows of money from individuals and
retirement plans. Small-cap and mid-cap companies fared less well, however, due
to a mid-summer correction in the formerly high-flying technology sector.
During 1996, we found attractive growth stocks in both the
large-capitalization and mid-capitalization sectors of the stock market. To take
advantage of these opportunities, we sold some of the Portfolio's less
growth-oriented positions, including stocks of utilities and energy companies.
Additions to the Portfolio during the second half of 1996 consisted mainly of
companies in the consumer non-durables, consumer services, finance and
technology industries. We also shifted our holdings in the health care industry
out of HMOs into other types of companies with stronger, more visible growth
potential.
We are cautiously optimistic regarding the U.S. stock market in 1997. The
economy appears to be on a steady course in which it should neither overheat to
inflationary levels nor deteriorate into recession. But because the recent rally
has been exceptional in both magnitude and duration, we cannot rule out a
short-term correction. We would view a possible correction as an excellent
opportunity to buy high-quality growth companies at attractively low prices.
Landmark VIP International Equity Fund
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PORTFOLIO MANAGER
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TREVOR FORBES
Vice President, Citibank, N.A.
Trevor Forbes, based in Citibank's London office, is the manager of the
Landmark VIP International Equity 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.
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- --------------------------------------------------------------------------------
THE PORTFOLIO MANAGER RESPONDS
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1996 was a time of change in international stock markets, producing mixed
investment results. In Europe, where certain markets were up as much as 40%,
many companies were engaged in the sort of restructuring activities that have
already helped U.S. companies cut costs and boost earnings. Asian markets fared
less well than their European counterparts, however. Persistent economic and
political difficulties in Japan continued to constrain the performance of its
stock market, and the emerging markets of Asia had to compete for assets with
strong U.S. and European markets.
We implemented significant strategic changes in both asset allocation and
security selection during the second half of 1996, modifications designed to
reduce short-term volatility and position the Portfolio for improved
performance. We have substantially reduced the Portfolio's cash position,
shifting most of those assets to the established markets represented in the
widely recognized EAFE (Europe, Asia, Far East) Index. In addition, the
leadership of many overseas markets appears to be shifting from growth-oriented
stocks to stocks selling at attractive prices relative to future earnings. To
ensure that we are prepared for this eventuality, and to manage volatility
effectively, we are placing greater emphasis on the value-oriented component of
our disciplined stock selection process.
<PAGE>
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Landmark VIP US Government Fund
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PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996
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PRINCIPAL
AMOUNT
ISSUER (000'S) VALUE
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UNITED STATES GOVERNMENT AND OTHER GOVERNMENT AGENCIES - 16.3%
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Asian Development Bank
6.25% due 10/24/05 .......................... $ 80 $ 78,029
InterAmerican Development Bank
6.125% due 3/08/06 .......................... 80 77,236
International Bank Reconstruction & Development
9.875% due 10/01/97 ......................... 80 82,371
---------
237,636
---------
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UNITED STATES GOVERNMENT AGENCY - 29.6%
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Federal Home Loan Bank
5.97% due 12/15/05 ......................... 80 76,125
Federal Home Loan Mortgage Corp.
5.98% due 12/08/05 ......................... 80 76,138
Federal National Mortgage Association
6.55% due 9/12//05 ......................... 100 99,453
Government National Mortgage Association
7.50% due 5/15/26 .......................... 105 105,046
Government National Mortgage Association
8.00% due 10/15/26 ......................... 74 75,687
----------
432,449
---------
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UNITED STATES GOVERNMENT OBLIGATIONS - 52.2%
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UNITED STATES TREASURY NOTES - 38.2%
7.25% due 2/15/98 .......................... $ 50 $ 50,821
6.125% due 3/31/98 ......................... 75 75,363
6.25% due 5/31/00 .......................... 100 100,406
6.125% due 7/31/00 ......................... 100 100,000
6.25% due 8/31/00 .......................... 70 70,263
6.125% due 12/31/01 ........................ 50 49,812
7.50% due 2/15/05 .......................... 60 64,172
5.875% due 11/15/05 ........................ 50 48,211
----------
559,048
----------
UNITED STATES TREASURY BONDS - 14.0%
6.25% due 8/15/23 .......................... 50 46,875
7.50% due 11/15/24 ......................... 70 76,562
6.875% due 8/15/25 ......................... 80 81,575
----------
205,012
----------
TOTAL INVESTMENTS
(Identified Cost $1,443,765) 98.1% 1,434,145
OTHER ASSETS LESS LIABILITIES 1.9% 28,165
----- ---------
NET ASSETS 100.0% $1,462,310
===== ==========
<PAGE>
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Landmark VIP Balanced Fund
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PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 47.5%
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES - 0.5%
Interpublic Group, Inc. ...................... 300 $ 14,250
----------
COMMODITIES & PROCESSING - 2.3%
Morton International Inc. .................... 300 12,225
Praxair, Inc. ................................ 525 24,216
Sigma Aldrich Corp. .......................... 400 24,975
----------
61,416
----------
CONSUMER NON-DURABLES - 5.7%
Coca-Cola Co. ................................ 250 13,156
Colgate-Palmolive Co. ........................ 275 25,369
Clorox Co. ................................... 240 24,090
Gillette Co. ................................. 425 33,044
Kimberly-Clark Corp. ......................... 300 28,575
Procter & Gamble Co. ......................... 250 26,875
----------
151,109
----------
CONSUMER SERVICES - 3.4%
Carnival Corp. ............................... 800 26,400
CUC International Inc.* ...................... 900 21,375
Gannett Co. Inc. ............................. 150 11,231
Regal Cinemas* ............................... 500 15,375
Washington Post Co. .......................... 50 16,756
----------
91,137
----------
ELECTRONICS/TECHNOLOGICAL SERVICES - 7.9%
Affiliated Computer Service A* ............... 400 11,900
Andrew Corp.* ................................ 450 23,877
Automatic Data Processing Inc. ............... 575 24,653
Cisco Systems, Inc.* ......................... 350 22,269
Computer Associates Intl. Inc. ............... 615 30,596
Intel Corp. .................................. 180 23,569
Network General Corp.* ....................... 150 4,538
Oracle Corp.* ................................ 570 23,798
Parametric Technology Corp.* ................. 280 14,385
Perkin-Elmer Corp. ........................... 340 20,018
Sungard Data Systems, Inc.* .................. 300 11,850
----------
211,453
----------
ENERGY MINERALS - 3.7%
Exxon Corp. .................................. 250 24,500
Mobil Corp. .................................. 195 23,839
Royal Dutch Petroleum Co ..................... 150 25,613
Unocal Corp. ................................. 600 24,375
----------
98,327
----------
FINANCE - 7.4%
American International Group ................. 290 31,393
Federal National Mortgage Association ........ 800 29,800
Franklin Resources Inc. ...................... 330 22,563
MBIA Inc. .................................... 150 15,188
Norwest Corporation .......................... 600 26,100
State Street Boston Corp. .................... 500 32,250
Travelers Inc. ............................... 542 24,578
Zions Bancorporation ......................... 150 15,600
----------
197,472
----------
HEALTH SERVICES/TECHNOLOGY - 6.9%
Cardinal Health Inc. ......................... 465 27,086
Health Management Associates* ................ 1,245 28,012
Johnson & Johnson ............................ 500 24,875
Medtronic, Inc. .............................. 400 27,200
Pfizer Inc. .................................. 300 24,863
Schein Henry, Inc.* .......................... 350 12,031
Schering-Plough Corp. ........................ 275 17,806
Warner Lambert Co. ........................... 300 22,500
----------
184,373
----------
PRODUCER MANUFACTURING - 5.6%
Crane Company ................................ 750 21,750
Danaher Corp. ................................ 300 13,988
Deere & Co. .................................. 520 21,124
Emerson Electric Co. ......................... 300 29,025
Federal Signal Corp. ......................... 970 25,099
General Electric Co. ......................... 250 24,719
Xerox Corp. .................................. 245 12,893
----------
148,598
----------
RETAIL TRADE - 3.1%
Hannaford Brothers Co. ....................... 450 15,300
Kohls Corp.* ................................. 340 13,345
Nine West Group Inc.* ........................ 600 27,825
Walgreen Co. ................................. 660 26,400
----------
82,870
----------
TRANSPORTATION - 1.0%
Wisconsin Central Transport* ................. 650 25,756
----------
TOTAL COMMON STOCKS
(Identified Cost $1,079,310) 1,266,761
----------
<PAGE>
PRINCIPAL
ISSER AMOUNT VALUE
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- --------------------------------------------------------------------------------
FIXED INCOME - 38.6%
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MORTGAGE OBLIGATIONS - 10.7%
GOVERNMENT NATIONAL MORTGAGE
OBLIGATIONS - 3.5%
8.00% due 7/15/25 ...................... $ 42,044 $ 43,076
7.50% due 8/15/25 ...................... 48,980 49,067
----------
$ 92,143
----------
FEDERAL NATIONAL MORTGAGE
OBLIGATIONS - 7.2%
6.00% due 6/1/11 ....................... 98,906 95,113
6.50% due 5/1/26 ....................... 100,408 95,918
--------
191,031
--------
TOTAL MORTGAGE OBLIGATIONS 283,174
--------
UNITED STATES GOVERNMENT
OBLIGATIONS - 27.9%
UNITED STATES TREASURY NOTES - 24.1%
6.125% due 5/15/98 ..................... 85,000 85,410
6.25% due 5/31/00 ...................... 280,000 281,137
6.50% due 5/15/05 ...................... 275,000 276,848
--------
643,395
--------
UNITED STATES TREASURY BONDS - 3.8%
6.875% due 8/15/25 ..................... 100,000 101,969
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TOTAL UNITED STATES GOVERNMENT
OBLIGATIONS .............................. 745,364
--------
TOTAL FIXED INCOME
(Identified Cost $1,060,780) ........... 1,028,538
----------
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SHORT-TERM OBLIGATIONS AT AMORTIZED COST - 13.0%
- --------------------------------------------------------------------------------
United States Treasury Bill
due 2/6/97 ............................. $350,000 $ 348,058
----------
TOTAL INVESTMENTS
(Identified Cost $2,488,148) ........... 99.1% 2,643,357
OTHER ASSETS LESS LIABILITIES ............ 0.9 23,160
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NET ASSETS ............................... 100.0% $2,666,517
===== ==========
ADRs - American Depositary Receipts.
*Non income producing.
See notes to financial statements
<PAGE>
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Landmark VIP Equity Fund
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PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 89.1%
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COMMERCIAL SERVICES - 3.1%
Interpublic Group Inc. ................... 525 $ 24,938
Regal Cinemas Inc.* ...................... 1,100 33,825
Washington Post Co. ...................... 100 33,512
----------
92,275
----------
COMMODITIES & PROCESSING - 4.8%
Morton International Inc. ................ 700 28,525
Praxair, Inc. ............................ 1,125 51,891
Sigma Aldrich Corp. ...................... 1,000 62,438
--------
142,854
--------
CONSUMER NON-DURABLES - 10.6%
Clorox Co. ............................... 500 50,187
Coca-Cola Co. ............................ 550 28,944
Colgate-Palmolive Co. .................... 575 53,044
Gillette Co. ............................. 950 73,863
Kimberly-Clark Corp. ..................... 550 52,388
Procter & Gamble Co. ..................... 500 53,750
--------
312,176
--------
CONSUMER SERVICES - 4.3%
Carnival Corp. ........................... 1,550 51,150
CUC International Inc.* .................. 2,025 48,094
Gannett Co. Inc. ......................... 350 26,206
--------
125,450
--------
ELECTRONICS/TECHNICAL SERVICES - 15.4%
Affiliated Computer Services-A-* ......... 824 24,513
Andrew Corp.* ............................ 1,000 53,063
Automatic Processing ..................... 1,300 55,738
Cisco Systems, Inc.* ..................... 700 44,538
Computer Associates International Inc. ... 1,238 61,591
Intel Corp. .............................. 400 52,375
Network General Corp.* ................... 400 12,100
Oracle Corp.* ............................ 1,345 55,986
Parametric Technology Corp.* ............. 600 30,825
Perkin-Elmer Corp. ....................... 700 41,213
Sungard Data Systems Inc.* ............... 600 23,700
--------
455,642
--------
ENERGY MINERALS - 6.7%
Exxon Corp. .............................. 550 53,900
Mobil Corp. .............................. 330 40,342
Royal Dutch Petroleum Co. ................ 300 51,225
Unocal Corp. ............................. 1,250 50,781
--------
196,248
--------
FINANCE - 13.6%
American International Group Inc. ........ 590 63,868
Federal National Mortgage Association .... 1,600 59,600
Franklin Resources Inc. .................. 760 51,965
MBIA ..................................... 300 30,375
Norwest Corp. ............................ 1,300 56,550
State Street Boston Corp. ................ 800 51,600
Travelers Inc. ........................... 1,242 56,340
Zions Bancorporation ..................... 300 31,200
--------
401,498
--------
HEALTH SERVICES/TECHNOLOGY - 13.1%
Cardinal Health Inc. ..................... 937 54,580
Health Management Associates* ............ 2,512 56,531
Johnson & Johnson ........................ 900 44,774
Medtronic, Inc. .......................... 800 54,400
Pfizer Inc. .............................. 650 53,868
Schein Henry, Inc.* ...................... 750 25,781
Schering-Plough Corp. .................... 650 42,088
Warner Lambert Co. ....................... 750 56,250
----------
388,272
----------
PRODUCER MANUFACTURING - 10.3%
Crane Company ............................ 1,800 52,200
Danaher Corp. ............................ 630 29,373
Deere & Co. .............................. 800 32,500
Emerson Electric Co. ..................... 600 58,050
Federal Signal Corp. ..................... 2,055 53,173
General Electric Co. ..................... 500 49,437
Xerox Corp. .............................. 550 28,944
----------
303,677
----------
RETAIL TRADE - 5.5%
Hannaford Brothers Co. ................... 800 27,200
Kohls Corp.* ............................. 690 27,082
Nine West Group Inc.* .................... 1,200 55,650
Walgreen Co. ............................. 1,325 53,000
----------
162,932
----------
TRANSPORTATION - 1.7%
Wisconsin Central Transport* ............. 1,300 51,513
----------
TOTAL COMMON STOCKS
(Identified Cost $2,302,814) ............. 2,632,537
----------
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SHORT-TERM OBLIGATIONS AT AMORTIZED COST - 10.1%
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
---------
United States Treasury Bills
due 3/27/97 ........................... $150,000 148,223
due 4/3/97 ............................ 151,000 149,041
----------
297,264
----------
TOTAL INVESTMENTS
(Identified Cost $2,600,078) .......... 99.2% 2,929,801
OTHER ASSETS LESS LIABILITIES ........... 0.8 24,894
----- ----------
NET ASSETS .............................. 100.0% $2,954,695
===== ==========
ADRs - American Depositary Receipts.
*Non income producing.
See notes to financial statements
<PAGE>
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Landmark VIP International Equity Fund
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PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS - 88.9%
- --------------------------------------------------------------------------------
AUSTRALIA - 1.9%
Australia & New Zealand Bank
Banking ................................... 5,800 $ 36,540
Broken Hill Proprietary
Energy Sources ............................ 2,500 35,591
Centaur Mining & Exploration Ltd.
Gold Mines ................................ 4,300 6,661
News Corp. Ltd.
Business & Public ......................... 2,000 10,550
North Limited
Non-Ferrous Metals ........................ 2,300 6,724
Woodside Petroleum Ltd. Energy Sources ..... 1,000 7,301
----------
103,367
----------
CANADA - 4.4%
Alcan Aluminum Ltd.
Non-Ferrous Metals ........................ 477 16,084
Avenor Inc.
Forest Products & Paper ................... 700 10,364
Barrick Gold Corp.
Gold Mines ................................ 600 17,177
Canadian Natural Resources Ltd.
Energy Sources ........................... 1,250 34,280
Cominco Ltd.
Non-Ferrous Metals ....................... 900 22,384
Franco-Nevada Mining Ltd.
Miscellaneous Materials .................. 500 22,884
Goldcorp Incorporated
Miscellaneous Materials .................. 600 5,142
Inco Ltd.
Steel .................................... 750 23,932
MacMillan Bloee Ltd.
Forest Products & Paper .................. 500 6,546
Philex Gold Inc.
Miscellaneous Materials .................. 940 5,656
Placer Dome Group Inc. Com
Non-Ferrous Metals ....................... 400 8,767
Renaissance Energy Ltd.
Energy Sources ........................... 750 25,519
Talisman Energy Inc.
Energy Sources ........................... 900 29,933
Westmin Resources
Miscellaneous Materials .................. 1,875 9,094
--------
237,762
--------
DENMARK - 2.6%
Carli Gry International AS
Textiles ................................. 325 15,552
Danisco AS
Multi-Industry ........................... 225 13,668
Den Danske Bank
Banking .................................. 175 14,105
Falck AS
Multi-Industry ............................ 55 16,426
Inwear Group
Textiles .................................. 48 2,093
Kobenhavns Lufthavne
Airlines .................................. 145 14,763
Novo-Nordisk AS
Pharmaceuticals & Health ................. 125 23,544
Sophus Berendsen AS
Multi-Industry ............................ 160 20,580
Tele Danmark "B"
Telephone Utilities ....................... 320 17,647
--------
138,378
--------
FRANCE - 5.5%
Air Liquide French
Chemicals ................................. 55 8,580
AXA Company
Insurance ................................. 200 12,711
Axime (Ex Segin)
Financial Service ......................... 100 11,555
BIC
Household Appliances ...................... 150 22,475
Carrefour Supermarche
Retailing ................................. 40 26,007
CIE Generale Des Eaux
Electrical & Gas Utilities ............... 150 18,575
Credit Commercial De France
Banking ................................... 250 11,555
Credit Local De France
Financial Service ......................... 150 13,057
Legris Industries SA
Building & Construction ................... 300 12,624
Louis Vitton-Moet Hennesy
Beverages & Tobacco ....................... 100 27,906
Michelin "B" Shares
Industrial Components ..................... 200 10,789
Printemps
Retailing ................................. 70 27,744
Salomon SA
Household Appliances ...................... 250 21,425
Sanofi SA
Pharmaceuticals & Health .................. 150 14,906
Sodexho
Multi-Industry ............................ 20 11,131
Ste. Guilbert SA
Business & Public ......................... 100 19,547
Total SA Series B
Energy Sources ............................ 300 24,381
--------
294,968
--------
GERMANY - 11.5%
Bayer AG
Chemicals ................................. 1,130 46,065
Bayerische Vereinsbank AG
Banking ................................... 1,120 45,949
Buderus
Machinery & Engineering ................... 60 29,601
Daimler-Benz AG
Automobiles ............................... 1,050 72,249
Deutsche Telekom AG
Telephone Utilities ....................... 1,921 40,465
Dresdner Bank AG
Banking ................................... 1,980 59,252
Gehe AG
Pharmaceuticals & Health ................. 500 31,970
Hornbach Holding AG (Preferred Shares)
Retailing ................................ 395 28,205
Mannesmann AG
Machinery & Engineering .................. 195 84,430
Metro AG
Retailing ................................. 345 27,770
Rhoen-Klinikum AG
Pharmaceuticals & Health ................. 315 32,921
SGL Carbon AG
Non-Ferrous Metals ....................... 241 30,350
Tarkett International AG
Food & Household Products ................ 805 16,043
Veba AG
Electrical & Gas Utilities ............... 1,200 69,328
--------
614,598
--------
HONG KONG - 1.7%
HSBC Holdings PLC
Banking ................................... 800 17,117
Hutchison Whampoa
Multi-Industry ............................ 5,000 39,270
Sung Hung Kai Properties Ltd.
Real Estate ............................... 3,000 36,749
--------
93,136
--------
ITALY - 3.6%
Eni Spa
Energy Sources ............................ 10,919 56,109
Fiat Spa
Automobiles ............................... 3,893 11,719
Instituto Banc San Paolo Torina
Banking .................................. 7,203 44,115
Italgas
Electrical & Gas Utilities ................ 1,814 7,588
Mediaset Spa
Business & Public ......................... 2,332 10,770
Stet D Risp
Telephone Utilities ....................... 4,713 15,897
Telecom Italia Mobile
Telephone Utilities ...................... 14,548 36,837
Unicem Spa
Building Materials ........................ 1,300 8,476
---------
191,511
---------
JAPAN - 29.3%
Canon Inc.
Electrical & Electronics .................. 1,000 22,093
Dai-Ichi Kangyo Bank
Banking ................................... 3,000 43,236
DDI Corporation
Telephone Utilities ....................... 10 66,106
Ebaba Corporation
Machinery & Engineering ................... 5,000 65,156
Fuji Bank
Banking ................................... 3,000 43,754
Fujistu Ltd.
Instruments & Components .................. 4,000 37,282
Industrial Bank of Japan
Banking ................................... 2,160 37,468
Ito Yokado Corp.
Retailing ................................. 1,000 43,495
Japan Tobacco Inc.
Beverages & Tobacco ....................... 8 54,196
Kyocera Corp.
Instruments & Components .................. 1,000 62,309
Marubeni Corp.
International Trade ....................... 7,000 30,084
Mitsubishi Estate Co. Ltd.
Real Estate ............................... 2,000 20,539
Mitsubishi Heavy
Machinery & Engineering ................... 4,000 31,758
Mitsubishi Trus
Financial Service ......................... 2,000 26,753
National House Industrial Ltd.
Building & Construction .................. 5,000 66,451
Nippon Sheet Glass
Miscellaneous Materials .................. 7,000 24,829
NKK Corporation
Steel ..................................... 25,000 56,311
Okumura
Building & Construction ................... 10,000 60,755
Osaka Gas Co. Ltd.
Electrical
& Gas Utilities .......................... 15,000 41,036
Sankyo Co. Ltd.
Pharmaceuticals & Health ................. 3,000 84,919
Sanyo Electric Co. Ltd.
Instruments & Components ................. 12,000 49,709
Seven Eleven Japan Ltd.
Retailing ................................. 1,100 64,362
Sharp Corp.
Electrical & Electronics .................. 3,000 42,718
Shin-Etsu Chemical Co.
Chemicals ................................. 2,000 36,419
Sumitomo Electric Industries
Industrial Components .................... 5,000 69,905
TDK Corp.
Instruments & Components ................. 1,000 65,156
The Bank of Tokyo Mitsubishi
Banking ................................... 3,000 55,663
Tohoku Electric Power
Electrical & Gas Utilities ............... 2,500 49,622
Tokio Marine & Fire Ins
Insurance ................................. 3,000 28,220
Toyota Motor Co
Automobiles ............................... 4,000 114,951
Yamato Transport Co. Ltd.
Road & Rail Transport .................... 7,000 72,492
------ ---------
1,567,747
---------
NETHERLANDS - 5.2%
Akzo Dutch
Chemicals ................................ 250 34,134
Elsevier
Business & Public Services ............... 2,200 37,165
IHC Caland NV
Building & Construction .................. 350 19,986
Ing Groep NV
Insurance ................................ 700 25,190
Royal Dutch Petroleum Co.
Energy Sources ........................... 440 77,105
Unilever NV
Food & Household Products ................ 220 38,896
Vendex International NV
Retailing ................................. 600 25,652
Verenigde Nederlandse
Business & Public Services ............... 1,000 20,885
--------
279,013
--------
NORWAY - 1.3%
Kvaerner
Machinery & Engineering .................. 115 5,598
Norsk Hydro
Energy Sources ............................ 580 31,459
Orkla AS A-Aksjer
Multi-Industry ........................... 145 10,160
Petroleum Geo-Services
Energy Sources ........................... 245 9,602
Schibsted
Business & Public ........................ 220 4,052
Uni-Storebrand AS-"A" Shares
Machinery & Engineering .................. 1,135 6,583
--------
67,454
--------
SPAIN - 1.8%
Acerinox SA
Multi-Industry ............................ 46 6,638
Alba Corp. Finance
Machinery & Engineering .................. 48 4,844
Banco Bilboa Vizcaya
Banking ................................... 318 17,147
Banco Intercontinental
Banking ................................... 45 6,968
Corporacion Mapfre
Insurance ................................. 114 6,936
Gas Natural Sdg SA
Electrical & Gas Utilities ............... 42 9,757
Iberdrola I SA
Electrical & Gas Utilities ............... 1,260 17,833
Sol Melia ISA
Leisure & Tourism ......................... 194 6,939
Telefonica
Telephone Utilities ....................... 740 17,162
--------
94,224
--------
SWEDEN - 0.3%
Assa Abloy AB-B
Multi-Industry ............................ 765 $ 13,906
Ericsson AB
Automobiles ............................... 70 2,165
--------
16,071
--------
UNITED KINGDOM - 19.8%
3I Group PLC
Financial Services ....................... 3,178 26,501
BAT Industrie
Multi-Industry ........................... 2,208 18,337
British Aerospace PLC
Aerospace & Defense ...................... 1,444 31,649
British Petroleum Co. PLC
Energy Sources ........................... 4,730 56,735
British Telecommunications PLC
Telephone Utilities ...................... 6,331 42,820
Burmah Castrol PLC
Energy Sources ........................... 1,658 31,257
Cadbury Schweppes PLC
Food & Household Products ................ 3,975 33,521
Commercial Union Assurance
Insurance ................................ 1,800 21,066
Courtaulds PLC
Chemicals ................................ 3,128 21,157
Dixons Group PLC
Retailing ................................ 1,160 10,786
Edinburgh Small Co. Trust
Financial Services ....................... 12,000 19,931
Glaxo Wellcome PLC
Pharmaceuticals & Health ................. 3,239 52,577
Glynwed International PLC
Machinery & Engineering .................. 3,436 19,769
Grand Metropolitan PLC
Beverages & Tobacco ...................... 3,642 28,687
HSBC Holdings PLC
Banking .................................. 1,765 39,500
Inchape PLC
Business & Public Services ............... 5,079 23,568
Kingfisher PLC
Retailing ............................... 3,402 36,932
Lloyds TSB Group PLC
Banking .................................. 11,096 81,794
Logica PLC Business
& Public Services ........................ 1,782 27,950
London International Group PLC
Pharmaceuticals & Health ................. 11,141 31,477
Marks & Spencer PLC
Retailing ................................ 3,359 28,240
National Power PLC
Electrical & Gas Utilities ............... 2,600 21,770
Pilkington Brothers
Building Materials ....................... 6,397 17,307
Prudential Corp.
Insurance ................................ 4,366 36,744
Royal & Sun Alliance Ins.
Insurance ................................ 3,848 29,387
RTZ Corp.
Non-Ferrous Metals ....................... 1,356 21,779
Sainsbury (J) PLC
Retailing ................................ 4,026 26,748
Severn Trent ORD
Electrical & Gas Utilities ............... 1,400 15,966
Smiths Industries PLC
Machinery & Engineering .................. 2,005 27,534
Standard Chartered PLC
Banking .................................. 1,041 12,852
Thorn EMI PLC
Leisure & Tourism ........................ 4,080 17,570
Tomkins PLC
Multi-Industry ........................... 6,488 29,995
Williams Holdings PLC
Multi-Industry ........................... 4,157 24,450
Wolseley PLC
Building Materials ....................... 3,762 29,889
WPP Group
Business & Public Services ............... 5,668 24,554
Yorkshire Electricity PLC
Electrical & Gas Utilities ............... 763 10,517
Zeneca Group PLC
Pharmaceuticals & Health ................. 983 27,731
----------
1,059,047
----------
TOTAL INVESTMENTS
(Identified Cost $4,600,563) 88.9% 4,757,276
Other Assets Less Liabilities 11.1 590,995
------ ----------
Net Assets 100.0% $5,348,271
======= ==========
See notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
Landmark VIP Funds
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<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,
$1,443,765, $2,488,148, $2,600,078, and $4,600,563,
respectively) ....................................... $1,434,145 $2,643,357 $2,929,801 $4,757,276
Foreign currency, at value (Identified cost $0, $0, $0,
and $81,716, respectively) .......................... -- -- -- 117,512
Cash .................................................. 6,687 14,929 27,682 370,862
Receivable for securities sold ........................ -- -- -- 120,806
Dividend receivable ................................... -- 1,036 2,086 14,594
Interest receivable ................................... 21,478 9,970 900 438
---------- ---------- ---------- ----------
Total assets ...................................... 1,462,310 2,669,292 2,960,469 5,381,488
---------- ---------- ---------- ----------
LIABILITIES:
Payable for securities purchased ...................... -- 2,775 5,667 33,112
Payable for capital stock repurchased ................. -- -- 107 105
---------- ---------- ---------- ----------
Total liabilities ................................. -- 2,775 5,774 33,217
---------- ---------- ---------- ----------
NET ASSETS for 146,330, 233,735, 232,901 and 504,293
shares, respectively, of beneficial interest
outstanding ......................................... $1,462,310 $2,666,517 $2,954,695 $5,348,271
========== ========== ========== ==========
NET ASSETS CONSIST OF:
Paid-in capital ....................................... $1,481,837 $2,479,295 $2,566,866 $5,140,695
Undistributed net investment income ................... -- -- 1,085 --
Accumulated net realized gain (loss) on investments ... (9,907) 32,013 57,021 15,067
Unrealized appreciation (depreciation) of investments
and foreign currency transactions ................... (9,620) 155,209 329,723 192,509
---------- ---------- ---------- ----------
Total ............................................. $1,462,310 $2,666,517 $2,954,695 $5,348,271
========== ========== ========== ==========
NET ASSET VALUE PER SHARE OF BENEFICIAL INTEREST ...... $9.99 $11.41 $12.69 $10.61
===== ====== ====== ======
</TABLE>
See notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
Landmark VIP Funds
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
<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) .................................... $ 88,051 $ 71,015 $ 9,961 $ 13,762
Dividends ............................................. -- 23,221 46,250 64,912
-------- -------- --------- --------
Total income ...................................... 88,051 94,236 56,211 78,674
-------- -------- --------- --------
EXPENSES:
Custodian fees ........................................ 43,402 45,973 45,793 108,720
Auditing services ..................................... 14,000 14,000 14,000 14,000
Shareholder reports ................................... 6,750 6,750 6,750 6,750
Investment adviser fees (Note 2) ...................... 5,331 9,020 11,912 48,867
Trustees fees ......................................... 3,750 3,750 3,750 3,750
Administrative fees (Note 3) .......................... 2,665 4,510 4,765 9,774
Legal services ........................................ 2,000 2,000 2,000 2,000
Distribution fees (Note 4) ............................ 666 1,127 1,191 2,442
Miscellaneous ......................................... 7,000 7,000 7,000 7,000
-------- -------- --------- --------
Total expenses .................................... 85,564 94,130 97,161 203,303
Less aggregate amount waived by Investment Adviser,
Administrator, and Distributor (Notes 2, 3, and 4) .. (8,662) (14,657) (17,868) (61,083)
Less expenses assumed by the administrator ............ (76,902) (79,473) (79,293) (142,220)
-------- -------- --------- --------
Net expenses ...................................... -- -- -- --
-------- -------- --------- --------
Net investment income ............................. 88,051 94,236 56,211 78,674
-------- -------- --------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from investment transactions . (9,907) 68,175 103,692 112,795
Net change in unrealized appreciation (depreciation) .. (51,233) 30,084 145,027 98,671
-------- -------- --------- --------
Net realized and unrealized gain (loss) on investments (61,140) 98,259 248,719 211,466
-------- -------- --------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ..................................... $ 26,911 $192,495 $ 304,930 $290,140
======== ======== ========= ========
</TABLE>
See notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
Landmark VIP Funds
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LANDMARK VIP U.S. GOVERNMENT FUND LANDMARK VIP BALANCED FUND
------------------------------------------ -----------------------------------------
MARCH 10, 1995 MARCH 10, 1995
YEAR (COMMENCEMENT YEAR (COMMENCEMENT
ENDED OF OPERATIONS) TO ENDED OF OPERATIONS) TO
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ............ $ 88,051 $ 42,680 $ 94,236 $ 35,310
Net realized gain (loss) from
investment transactions ........ (9,907) -- 68,175 (62)
Net change in unrealized
appreciation (depreciation)
of investments ................. (51,233) 41,613 30,084 125,125
---------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from
operations ................. 26,911 84,293 192,495 160,373
---------- ---------- ---------- ----------
Distributions to shareholders from
Net investment income ........ (88,161) (42,680) (93,738) (35,310)
Net realized gains on
investments ................ -- -- (36,598) --
---------- ---------- ---------- ----------
Decrease in net assets from
distributions to shareholder (88,161) (42,680) (130,336) (35,310)
---------- ---------- ---------- ----------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST (Note 6):
Net proceeds from sale of shares . 177,765 1,212,528 773,962 1,685,179
Net asset value of shares issued
to shareholders from reinvestment
of distributions ............... 88,161 42,680 130,336 35,310
Cost of shares repurchased ....... (34,135) (5,052) (126,659) (18,833)
---------- ---------- ---------- ----------
Net increase in net assets
from transactions in shares
of beneficial interest ..... 231,791 1,250,156 777,639 1,701,656
---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS ....... 170,541 1,291,769 839,798 1,826,719
NET ASSETS:
Beginning of period .............. 1,291,769 -- 1,826,719 --
---------- ---------- ---------- ----------
End of period (including
undistributed net investment
income of $0, $0, $0 and $0,
respectively) .................. $1,462,310 $1,291,769 $2,666,517 $1,826,719
========== ========== ========== ==========
</TABLE>
See notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
Landmark VIP Funds
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LANDMARK VIP EQUITY FUND LANDMARK VIP INTERNATIONAL EQUITY FUND
------------------------------------------ -----------------------------------------
MARCH 9, 1995 MARCH 10, 1995
YEAR (COMMENCEMENT YEAR (COMMENCEMENT
ENDED OF OPERATIONS) TO ENDED OF OPERATIONS) TO
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ............ $ 56,211 $ 20,358 $ 78,674 $ 61,825
Net realized gain (loss) from
investment transactions ........ 103,692 371 112,795 (26,623)
Net change in unrealized
appreciation (depreciation)
of investments ................. 145,027 184,696 98,671 93,838
---------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from
operations ................. 304,930 205,425 290,140 129,040
---------- ---------- ---------- ----------
Distributions to shareholders from
Net investment income ........ (55,301) (20,183) (66,284) (40,629)
Net realized gains on
investments ................ (47,042) -- (89,563) (15,128)
---------- ---------- ---------- ----------
Decrease in net assets from
distributions to shareholder (102,343) (20,183) (155,847) (55,757)
---------- ---------- ---------- ----------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST (Note 6):
Net proceeds from sale of shares . 837,576 1,695,380 621,519 4,399,512
Net asset value of shares issued
to shareholders from
reinvestment of distributions .. 102,343 20,183 155,847 55,757
Cost of shares repurchased ....... (81,892) (6,724) (77,888) (14,052)
---------- ---------- ---------- ----------
Net increase in net assets
from transactions in shares
of beneficial interest ..... 858,027 1,708,839 699,478 4,441,217
---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS ....... 1,060,614 1,894,081 833,771 4,514,500
NET ASSETS:
Beginning of period .............. 1,894,081 -- 4,514,500 --
---------- ---------- ---------- ----------
End of period (including
undistributed net investment
income of $1,085, $175, $0 and
$3,088, respectively) .......... $2,954,695 $1,894,081 $5,348,271 $4,514,500
========== ========== ========== ==========
</TABLE>
See notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
Landmark VIP Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LANDMARK VIP GOVERNMENT FUND LANDMARK VIP BALANCED FUND
------------------------------------------ -----------------------------------------
MARCH 10, 1995 MARCH 10, 1995
YEAR (COMMENCEMENT YEAR (COMMENCEMENT
ENDED OF OPERATIONS) TO ENDED OF OPERATIONS) TO
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1996 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 .............. 0.64 0.36 0.42 0.22
Net realized and unrealized gain
(loss) on investments ............ (0.49) 0.48 0.56 1.02
------ ------ ------ ------
Total from operations .......... 0.15 0.84 0.98 1.24
------ ------ ------ ------
Less Distributions from:
Net investment income .......... (0.64) (0.36) (0.42) (0.22)
Net realized gain on investment -- -- (0.17) --
------ ------ ------ ------
Total distributions ............ (0.64) (0.36) (0.59) (0.22)
------ ------ ------ ------
Net Asset Value, end of period ..... $ 9.99 $10.48 $11.41 $11.02
====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period
(000's omitted) .................. $1,462 $1,292 $2,667 $1,826
Ratio of expenses to average net
assets ........................... 0% 0% 0% 0
Ratio of net investment income to
average net assets ............... 6.61% 6.57%* 4.18% 4.24%*
Portfolio turnover ................. 51% 0% 46% 8%
Total return ....................... 1.43% 8.45%+ 8.84% 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 for the periods indicated, the net investment income per share and the ratios would have been as follows:
Net investment income (loss) per
share ............................ $0.02 $0.22 $0.00 $0.09
Ratios:
Expenses to average net assets ..... 6.42% 9.07%* 4.17% 7.32%*
Net investment income to average net
assets ........................... 0.19% 4.07%* 0.01% 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
</TABLE>
See notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
Landmark VIP Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LANDMARK VIP EQUITY FUND LANDMARK VIP INTERNATIONAL EQUITY FUND
------------------------------------------ -----------------------------------------
MARCH 9, 1995 MARCH 10, 1995
YEAR (COMMENCEMENT YEAR (COMMENCEMENT
ENDED OF OPERATIONS) TO ENDED OF OPERATIONS) TO
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1996 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 .............. 0.25 0.12 0.15 0.10
Net realized and unrealized gain
(loss) on investments ............ 1.39 1.51 0.47 0.34
------ ------ ------ ------
Total from operations .......... 1.64 1.63 0.62 0.44
------ ------ ------ ------
Less Distributions from:
Net investment income .......... (0.25) (0.12) (0.14) (0.09)
Net realized gain on investment (0.21) -- (0.18) (0.04)
------ ------ ------ ------
Total distributions ............ (0.46) (0.12) (0.32) (0.13)
------ ------ ------ ------
Net Asset Value, end of period ..... $12.69 $11.51 $10.61 $10.31
====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's
omitted) ......................... $2,955 $1,894 $5,348 $4,515
Ratio of expenses to average net
assets ........................... 0% 0% 0% 0%
Ratio of net investment income to
average net assets ............... 2.36% 2.51%* 1.61% 2.58%*
Portfolio turnover ................. 77% 8% 108% 34%
Total return ....................... 14.20% 16.36%+ 6.07% 4.41%+
Average brokerage commissions (A) .. $0.06 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 ............................ ($0.19) $0.00 ($0.23) $0.00
Ratios:
Expenses to average net assets . 4.08% 7.83%* 4.16% 4.84%*
Net investment income to average
net assets ................... (1.72%) 0.01%* (2.55%) 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
</TABLE>
See notes to financial statements.
<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 for 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. 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 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. At December 31, 1996, the Landmark VIP U.S. Government
Fund, for federal income tax purposes, had a capital loss carryover of $9,907,
which will expire December 31, 2004. Such capital loss carryover will reduce the
Fund's taxable income arising from future net realized gain on investment
transactions, if any, to the extent permitted by the Internal Revenue Code, and
thus will reduce the amount of the distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for Federal income
or excise tax.
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, 1996, the Landmark VIP International Equity Fund reclassified
$15,478 from undistributed net investment income to accumulated gain on
investments. The Landmark VIP U.S. Government Fund reclassified $110 from
undistributed net investment income to paid-in capital. The Landmark VIP
Balanced Fund reclassified $498 from undistributed net investment income to
accumulated gain on investments.
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 December 31, 1996, an insurance companies or its
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 .................. 0.50%
o Landmark VIP U.S. International Equity Fund .... 1.00%
The investment adviser has waived all of its fees for each Fund for the year
ended December 31, 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 year ended December 31, 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 year ended December 31, 1996.
(5) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities, other than short-term obligations, for
the year ended December 31, 1996, were as follows:
PURCHASES SALES
--------- -----
Landmark VIP U.S. Government Fund ......... $ 878,071 $ 635,019
Landmark VIP U.S. Balanced Fund ........... 1,445,193 909,448
Landmark VIP Equity Fund .................. 2,383,947 1,782,653
Landmark VIP International Equity Fund .... 5,274,878 4,039,516
(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:
YEAR MARCH 10,1995
ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATION) TO
1996 DECEMBER 31, 1995
------------ -----------------
LANDMARK VIP U.S. GOVERNMENT FUND
Shares sold ....................... 17,588 119,629
Shares reinvested ................. 8,807 4,127
Shares repurchased ................ (3,324) (497)
------ -------
Net increase ...................... 23,071 123,259
====== =======
LANDMARK VIP BALANCED FUND
Shares sold ....................... 67,670 164,181
Shares reinvested ................. 11,395 3,266
Shares repurchased ................ (11,021) (1,756)
------ -------
Net increase ...................... 68,044 165,691
====== =======
LANDMARK VIP EQUITY FUND*
Shares sold ....................... 66,769 163,440
Shares reinvested ................. 8,049 1,780
Shares repurchased ................ (6,505) (632)
------ -------
Net increase ...................... 68,313 164,588
====== =======
LANDMARK VIP INTERNATIONAL EQUITY FUND
Shares sold ....................... 58,808 433,612
Shares reinvested ................. 15,056 5,504
Shares repurchased ................ (7,321) (1,366)
------ -------
Net increase ...................... 66,543 437,750
====== =======
* Commencement operations on March 9, 1995.
(7) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at December 31,1996, 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 $1,443,765 $2,488,148 $2,600,078 $4,604,055
========== ========== ========== ==========
Gross unrealized
appreciation .. $ 8,348 $ 184,666 $ 357,329 $ 472,524
Gross unrealized
depreciation .. (17,968) (29,457) (27,606) (319,303)
---------- ---------- ---------- ----------
Net unrealized
appreciation
(depreciation) $ (9,620) $ 155,209 $ 329,723 $ 153,221
========== ========== ========== ==========
<PAGE>
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Landmark VIP Funds
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REPORT OF INDEPENDENT ACCOUNTANTS
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To the Trustees and the Shareholders of
Landmark VIP Funds:
Landmark VIP U.S. Government Fund
Landmark VIP Balanced Fund
Landmark VIP Equity Fund
Landmark VIP International Equity Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolios of investments and the related statement 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, 1996,
the results of each of their operations, the changes in each of their net assets
and their financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities owned at December 31, 1996 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
February 4, 1997