<PAGE> 1
EATON VANCE MUNICIPALS TRUST
FOR THE FUNDS:
* EV Marathon Arizona Tax Free Fund
* EV Marathon Colorado Tax Free Fund
* EV Marathon Connecticut Tax Free Fund
* EV Marathon Michigan Tax Free Fund
* EV Marathon Minnesota Tax Free Fund
* EV Marathon New Jersey Tax Free Fund
* EV Marathon Pennsylvania Tax Free Fund
* EV Marathon Texas Tax Free Fund
- --------------------------------------------------------------------------------
[GRAPHIC OF A DOOR]
- --------------------------------------------------------------------------------
Annual Shareholder Report
July 31, 1995
<PAGE> 2
<TABLE>
Table of Contents
<CAPTION>
Item Page
<S> <C>
One-year results................................................................................................ 3
President's letter to shareholders.............................................................................. 4
Management Reports:
EV Marathon Arizona Tax Free Fund ................................................................... 5
EV Marathon Colorado Tax Free Fund................................................................... 6
EV Marathon Connecticut Tax Free Fund .............................................................. 7
EV Marathon Michigan Tax Free Fund................................................................... 8
EV Marathon Minnesota Tax Free Fund.................................................................. 9
EV Marathon New Jersey Tax Free Fund................................................................. 10
EV Marathon Pennsylvania Tax Free Fund............................................................... 11
EV Marathon Texas Tax Free Fund...................................................................... 12
Financial Results.................................................................................... 13
</TABLE>
2
<PAGE> 3
<TABLE>
INFORMATION ABOUT YOUR MUTUAL FUND INVESTMENT
- ------------------------------------------------------------------------------------------------------------------------------------
RESULTS FOR THE YEAR Fund's The after-tax
ENDED JULY 31, 1995. Dividends paid Fund's NAV distribution If your combined equivalent Federal
by Fund per share rate at Federal & state yield you income tax
during period at 7/31/95 7/31/95 tax rate is... would need is... information*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EV Marathon ARIZONA $0.521 $10.53 4.70% [GRAPHIC OF 40.42% 7.86% 99.07%
Tax Free Fund ARIZONA]
- ------------------------------------------------------------------------------------------------------------------------------------
EV Marathon COLORADO $0.523 $10.02 4.97% [GRAPHIC OF 39.20% 8.14% 99.01%
Tax Free Fund COLORADO]
- ------------------------------------------------------------------------------------------------------------------------------------
EV Marathon CONNECTICUT $0.513 $ 9.97 4.89% [GRAPHIC OF 38.88% 8.14% 99.35%
Tax Free Fund CONNECTICUT]
- ------------------------------------------------------------------------------------------------------------------------------------
EV Marathon MICHIGAN $0.510 $10.25 4.83% [GRAPHIC OF 41.44% 8.21% 99.35%
Tax Free Fund MICHIGAN]
- ------------------------------------------------------------------------------------------------------------------------------------
EV Marathon MINNESOTA $0.513 $ 9.95 4.89% [GRAPHIC OF 41.44% 8.33% 99.12%
Tax-Free Fund MINNESOTA]
- ------------------------------------------------------------------------------------------------------------------------------------
EV Marathon NEW JERSEY $0.546 $10.36 5.02% [GRAPHIC OF 40.21% 8.38% 99.45%
Tax-Free Fund NEW JERSEY]
- ------------------------------------------------------------------------------------------------------------------------------------
EV Marathon PENNSYLVANIA $0.536 $10.32 4.94% [GRAPHIC OF 37.79% 7.94% 99.72%
Tax-Free Fund PENNSYLVANIA]
- ------------------------------------------------------------------------------------------------------------------------------------
EV Marathon TEXAS $0.552 $10.28 5.12% [GRAPHIC OF 36.00% 7.98% 99.51%
Tax-Free Fund TEXAS]
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Percentages represent the amounts of the total dividends paid by the Funds, from net investment income during the year that ended
July 31, 1995, that have been designated as tax-exempt interest dividends. Tax legislation eliminated the exception to the
market discount rules applicable to tax-exempt obligations.As a result, certain tax-exempt obligations acquired by the Portfolio
at market discounts may generate a small amount of ordinary taxable income.
</TABLE>
3
<PAGE> 4
TO SHAREHOLDERS:
The global economy continues to demonstrate a pattern of slow growth with low
inflation. The U.S. economy is no exception, with Gross Domestic Product
poised to grow only modestly during 1995, between 2% and 3%, with inflation
of less than 3%. These characteristics bode well for all capital markets and
particularly fixed-income markets, including municipal bonds.
Indeed, municipal bonds performed well during the first half of 1995, posting
strong price gains as a result of this favorable investment environment.
However, during this period the municipal market underperformed the taxable
market because of concern about the potential passage of major tax reform
(e.g., flat tax, value-added tax or consumption tax) legislation.
Were major tax reform to become law, municipal bonds would likely be
underperformers relative to taxable bonds because the current tax-advantaged
status of municipal bonds probably would be eliminated.
However, we at Eaton Vance believe there is little chance of major tax reform
legislation being enacted. Many reasons have led us to this conclusion. For
example, the inherent regressivity of the various flat tax proposals will
provoke much opposition, as will proposals to eliminate such tax breaks as
deductions for mortgage interest and state and local taxes. Also, such
proposals could seriously depress entire sectors of the U.S. economy.
Accordingly, we view this recent underperformance by municipal bonds due to
fears of tax reform as a potential buying opportunity. Municipal bonds could
represent an attractive asset class at these current relative trading
relationships, with the potential for future outperform-ance for those
investors willing to adopt a patient, long-term investment horizon.
In addition, proposals are now circulating in both Congress and the White House
to reduce the nation's budget deficit by severely cutting expenditures over the
next decade. If enacted, such a concept would drastically reduce the federal
government's borrowing needs and, as a result, would exert a meaningful downward
influence on interest rates across the entire yield curve. All fixed-income
instruments, including municipal bonds, would benefit.
Headline: "DESPITE TAX UNCERTAINTIES, TAX-EXEMPT BONDS YIELD MORE THAN 88% OF
TREASURIES."
Yield Bar Chart
30-Year AA GOs 6.05%
GOs Tax Equity 9.45%
30-year Treasury 6.90%
This bar chart demonstrates the narrow difference between the yields of 30-year
Treasury bonds and those of 30-year AA-rated general obligation bonds. It also
shows the taxable equivalent yield of GOs in the 36% tax bracket.
Source: Bloomberg; 7/31/95
Principal and interest payments of Treasury securities are guaranteed by the
U.S. government. *Bloomberg GO yield is a compilation of a representative
variety of general obligation bonds and is not necessarily represented by the
Fund's yield. Statistics as of July 31, 1995. Past performance is no guarantee
of future results.
We will continue to monitor changes in economic and political conditions and to
pursue the goal of your Fund: to provide you with a competitive distribution of
tax-free income from a portfolio of quality municipal bonds.+
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
President
September 20, 1995
+ A portion of the Portfolios' income could be subject to Federal alternative
minimum tax.
Included in the pages that follow are performance charts that compare your
Fund's total return with that of a broad-based securities market index. The
lines on the chart represent the total returns of $10,000 hypothetical
investments in your Fund and the unmanaged Lehman Brothers Municipal Bond
Index. The solid line on the chart represents the Fund's performance. The
Fund's total return figure reflects fund expenses and portfolio transaction
costs, and assumes the reinvestment of income dividends and capital gain
distributions. The dotted line represents the performance of the Lehman
Brothers Municipal Bond Index, a broad-based, widely recognized unmanaged
index of municipal bonds. Whereas the Fund's portfolio is composed
principally of bonds solely from your individual state, the Index is composed
of bonds from all 50 states and many jurisdictions. The Index's total return
does not reflect any commissions or expenses that would be incurred if an
investor individually purchased or sold the securities represented in the
Index.
4
<PAGE> 5
EV MARATHON ARIZONA TAX FREE FUND
YOUR INVESTMENT AT WORK
Navajo County PCR
Arizona Public Service Co.
The Arizona Public Service Company is one of the largest public utilities in
Arizona. Proceeds from this Navajo County Pollution Control Revenue bond
issue were directed toward various construction projects. In addition, funds
were used to upgrade the operations and maintenance facilities at the Navajo
County pollution control plant in the Painted Desert. The bond, which has a
coupon of 5.5%, is insured by AMBAC and is rated Aaa by Moody's rating
service. The issue was representative of management's focus on quality during
the period. Naturally, private insurance does not remove the market risks
associated with this investment.
<TABLE>
PORTFOLIO OVERVIEW
Based on market value as of July 31, 1995
<S> <C>
Number of issues............................ 89
Average quality............................ Aa-
Investment grade.......................... 95.9%
Effective maturity........................ 17.17 yrs.
Largest sectors:
Utilities............................. 20.3%
Insured hospitals..................... 13.1*
Insured general obligations............ 8.6*
Water & sewer.......................... 8.5
General obligations.................... 7.9
<FN>
* Private insurance does not remove the risk of loss of principal due to
changes in market conditions that is associated with this investment.
</TABLE>
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: ARIZONA
Arizona's economic growth has slowed in recent months but has nevertheless
remained well ahead of the rest of the nation. The state's unemployment rate
hovered near the 5% level during the first quarter of 1995 - one full
percentage point lower than a year earlier - before rising to 5.5% at mid-year
due to weakness in the construction industry. Manufacturing - widely viewed as
the lynchpin of economic growth - has slowed somewhat from its torrid 1994
pace, when the sector accounted for nearly 10,000 new jobs, the strongest
yearly gain in a decade.
Manufacturing jobs now represent about 11% of the state's total employment.
Efforts to diversify the Arizona economy beyond mining and agriculture
continued to pay dividends in the past year. Most of the growth has centered
on the service sectors - including finance, banking, and healthcare - which
support the state's large population of retirees. Arizona remains in sound
financial condition. The state's general fund balance was boosted by cost
cuts and strong tax revenue gains in fiscal 1994 and 1995. However, scheduled
tax cuts for 1996 and 1997 will produce a financial challenge for the state
if the economy slows significantly.
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<TABLE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON ARIZONA
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From July 31, 1991, through July 31, 1995
<CAPTION>
CUMULATIVE 1 Life of Value of
TOTAL RETURN Year Fund* Investment at 7/31
<S> <C> <C> <C>
With CDSC 1.6% 7.4% $13,215
Without CDSC 6.6% 7.8% $13,415
</TABLE>
<TABLE>
[BAR CHART USING THE FOLLOWING FIGURES AS PLOT POINTS]
<CAPTION>
EV MARATHON LEHMAN BROS
DATE ARIZONA TAX FREE FUND MUNICIPAL BOND INDEX
<S> <C> <C>
7/91+ 10,000 10,000
8/91 10,079 10,132
9/91 10,310 10,264
10/91 10,411 10,356
11/91 10,396 10,385
12/91 10,736 10,608
1/92 10,698 10,632
2/92 10,719 10,635
3/92 10,635 10,639
4/92 10,720 10,734
5/92 10,931 10,860
6/92 11,146 11,043
7/92 11,621 11,374
8/92 11,343 11,263
9/92 11,385 11,337
10/92 11,046 11,225
11/92 11,437 11,426
12/92 11,598 11,543
1/93 11,624 11,677
2/93 12,298 12,099
3/93 12,152 11,972
4/93 12,276 12,092
5/93 12,348 12,160
6/93 12,637 12,363
7/93 12,615 12,379
8/93 12,969 12,637
9/93 13,126 12,781
10/93 13,169 12,806
11/93 12,987 12,693
12/93 13,335 12,961
1/94 13,491 13,109
2/94 13,061 12,769
3/94 12,293 12,249
4/94 12,351 12,353
5/94 12,468 12,460
6/94 12,330 12,388
7/94 12,580 12,611
8/94 12,614 12,655
9/94 12,367 12,469
10/94 12,011 12,248
11/94 11,673 12,026
12/94 12,044 12,291
1/95 12,533 12,642
2/95 13,007 13,010
3/95 13,142 13,159
4/95 13,134 13,175
5/95 13,573 13,595
6/95 13,348 13,477
7/95 13,415 13,604
<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 7/25/91. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
</TABLE>
FROM THE PORTFOLIO MANAGER:
"The market recovered significantly in the first six months of the year from
the collapse of 1994, although questions over tax reform proposals caused some
lingering uncertainty. The Portfolio benefited from its holdings of discount
issues which rallied sharply with the decline in interest rates. Because the
Arizona market was characterized by its typically low issuance and narrow
quality spreads, I have focused on upgrading quality. Moreover, I balanced a
large weighting in high quality, insured bonds with positions in
higher-yielding issues to boost the Fund's income. "
Cynthia J. Clemson
5
<PAGE> 6
EV MARATHON COLORADO TAX FREE FUND
YOUR INVESTMENT AT WORK
Colorado Health Facilities Auth.
Sisters of Charity Health Care
Revenue Bonds
The proceeds of these bonds were used to finance the cost of equipment,
capital expenditures and renovations on several Colorado hospitals, as well
as to refund previous outstanding debt of the Sisters of Charity Healthcare
Systems. The Colorado Health Facilities Authority provides financing for
health care facilities and is a vehicle by which Colorado health care
institutions may refinance outstanding debt. The issue has a 5.25% coupon and
is insured by MBIA. Naturally, private insurance does not remove the market
risk associated with this investment.
<TABLE>
PORTFOLIO OVERVIEW
Based on market value as of July 31, 1995
<S> <C>
Number of issues............................ 46
Average quality............................ Aa-
Investment grade.......................... 99.0%
Effective maturity........................ 17.18 yrs.
Largest sectors:
Insured hospitals..................... 15.0%*
Housing .............................. 11.6
Insured general obligations........... 11.4*
Transportation........................ 11.1
Hospitals............................. 10.4
<FN>
* Private insurance does not remove the risk of loss of principal due to
changes in market conditions that is associated with this investment.
</TABLE>
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THE STATE OF THE STATE: Colorado
The Colorado economy has reflected the slowdown at the national level.
Employment growth for the state is expected to rise a modest 2.8% for the
year, a decline from the 4.7% job growth registered in 1994. Restructuring at
several large employers in the transportation and utilities sectors -
including Lowry Air Force Base, Public Service Co., Continental Airlines, and
U.S. West - resulted in layoffs that hit the state especially hard. However,
it's expected that when the restructurings are completed, the sector will
resume its fast growth rate.
Elsewhere, the financial, insurance and real estate sectors should enjoy
above-average employment growth. Colorado's finances remain in excellent
health, thanks in part to blockbuster revenue performance in fiscal 1994 and a
very strong 5.5% revenue growth in fiscal 1995. Income and excise tax revenues
were especially strong. Colorado's successful efforts to diversify its economic
base have resulted in the state's economy more closely mirroring the national
picture. While the state's growth may be impeded somewhat by higher interest
rates, Colorado should continue to enjoy a gentler "soft landing" than the U.S.
as a whole.
- --------------------------------------------------------------------------------
<TABLE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON COLORADO
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From August 31, 1992, through July 31, 1995
<CAPTION>
CUMULATIVE 1 Life of Value of
TOTAL RETURN Year Fund* Investment at 7/31
<S> <C> <C> <C>
With CDSC 0.6% 4.3% $11,276
Without CDSC 5.6% 5.6% $11,675
</TABLE>
<TABLE>
[BAR CHART USING THE FOLLOWING FIGURES AS PLOT POINTS]
<CAPTION>
EV MARATHON LEHMAN BROS
DATE COLORADO TAX FREE FUND MUNICIPAL BOND INDEX
<S> <C> <C>
8/92+ 10,000 10,000
9/92 10,020 10,066
10/92 9,762 9,966
11/92 10,205 10,145
12/92 10,353 10,249
1/93 10,465 10,368
2/93 10,896 10,743
3/93 10,746 10,629
4/93 10,900 10,736
5/93 10,964 10,797
6/93 11,147 10,977
7/93 11,166 10,991
8/93 11,430 11,220
9/93 11,575 11,348
10/93 11,604 11,370
11/93 11,475 11,270
12/93 11,707 11,508
1/94 11,847 11,639
2/94 11,443 11,338
3/94 10,776 10,876
4/94 10,839 10,968
5/94 10,957 11,063
6/94 10,809 10,999
7/94 11,058 11,197
8/94 11,068 11,236
9/94 10,854 11,071
10/94 10,573 10,875
11/94 10,309 10,678
12/94 10,592 10,913
1/95 11,005 11,225
2/95 11,427 11,551
3/95 11,505 11,684
4/95 11,475 11,698
5/95 11,819 12,071
6/95 11,613 11,966
7/95 11,675 12,079
<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 8/25/92. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
</TABLE>
FROM THE PORTFOLIO MANAGER:
"Following the most difficult year on record, the bond market managed to
recover much lost ground in early 1995. Insured bonds played a large role in
the Portfolio as tight supply and narrow spreads dictated a continuing emphasis
on quality. As rates declined early in the year, the market rallied strongly.
The Fund benefited from its positions in higher-yielding bonds and discount
issues, which were established in the wake of last year's market decline. These
positions offered an attractive balance to the Portfolio's insured holdings."
Cynthia J. Clemson
6
<PAGE> 7
EV MARATHON CONNECTICUT TAX FREE FUND
YOUR INVESTMENT AT WORK
Loomis Chaffee School
MBIA Insured bonds
Issued in 1995 under the aegis of the Connecticut Health and Educational
Facilities Authority, the proceeds of these bonds were used to finance the
construction of a new dormitory and various renovations at Loomis Chaffee
School, a private secondary school located in Windsor. The school maintains a
selective admissions policy, has an endowment of $30 million, and has an
outstanding debt of only half that amount. The school's impressive profile
and balanced finances gave MBIA the comfort to insure this issue, which is
rated Aaa/AAA. Naturally, private insurance does not remove the market risk
associated with this investment.
<TABLE>
PORTFOLIO OVERVIEW
Based on market value as of July 31, 1995
<S> <C>
Number of issues........................... 100
Average quality............................ Aa-
Investment grade.......................... 99.5%
Effective maturity........................ 16.6 yrs.
Largest sectors:
Healthcare (Non-hospital)............. 12.5%
Education............................. 10.8
Insured hospitals..................... 10.0*
Housing................................ 8.2
Solid waste............................ 8.1
<FN>
* Private insurance does not remove the risk of loss of principal due to
changes in market conditions that is associated with this investment.
</TABLE>
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THE STATE OF THE STATE: Connecticut
The economy in Connecticut is beginning to regain its luster. Economic
indicators such as job growth and personal income continue to strengthen from
their late 1980s bout with layoffs and restructuring that afflicted the state.
The state's deep recession led to major job losses in such industries as
finance, real estate, insurance and defense, which were hard-hit by industry
restructurings, and shrinking government appropriations. Together, those
setbacks eroded the state's economic base. However, while the employment
outlook for those industries remains relatively weak, job gains in
construction, service, trade, health care and tourism have partially offset
those losses and have helped put the state on the road to recovery.
While the municipal market has been roiled by uncertainties over tax reform
and the fallout from the Orange County debacle, investors in Connecticut
tax-exempt debt can feel comfortable knowing that this state has a long
history of conservative financial management and employs good disclosure
practices. Connecticut is steadily advancing beyond the difficulties of its
recent past and is moving to improve its financial future.
- --------------------------------------------------------------------------------
<TABLE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON CONNECTICUT
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From May 31, 1992, through July 31, 1995
<CAPTION>
CUMULATIVE 1 Life of Value of
TOTAL RETURN Year Fund* Investment at 7/31
<S> <C> <C> <C>
With CDSC -0.4% 4.7% $11,506
Without CDSC 4.6% 5.5% $11,803
</TABLE>
<TABLE>
[BAR CHART USING THE FOLLOWING FIGURES AS PLOT POINTS]
<CAPTION>
EV MARATHON LEHMAN BROS
DATE CONNECTICUT TAX FREE FUND MUNICIPAL BOND INDEX
<S> <C> <C>
5/92+ 10,000 10,000
6/92 10,215 10,168
7/92 10,616 10,473
8/92 10,409 10,371
9/92 10,416 10,438
10/92 10,131 10,336
11/92 10,491 10,521
12/92 10,617 10,628
1/93 10,741 10,752
2/93 11,179 11,141
3/93 11,048 11,023
4/93 11,173 11,134
5/93 11,237 11,197
6/93 11,455 11,384
7/93 11,442 11,399
8/93 11,710 11,636
9/93 11,835 11,769
10/93 11,821 11,791
11/93 11,679 11,687
12/93 11,933 11,934
1/94 12,043 12,070
2/94 11,686 11,758
3/94 11,084 11,279
4/94 11,102 11,375
5/94 11,200 11,473
6/94 11,071 11,406
7/94 11,290 11,612
8/94 11,298 11,652
9/94 11,057 11,481
10/94 10,736 11,278
11/94 10,353 11,073
12/94 10,697 11,317
1/95 11,104 11,641
2/95 11,486 11,979
3/95 11,576 12,117
4/95 11,568 12,131
5/95 11,881 12,518
6/95 11,706 12,409
7/95 11,803 12,526
<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 5/1/92. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
</TABLE>
FROM THE PORTFOLIO MANAGER:
" The extreme market volatility of last autumn created a good opportunity to
purchase deep discount bonds - even among high quality AA- and AAA-rated
bonds - and pick up yield without sacrificing credit quality. By the Spring
of 1995, the market had rallied sharply and these discount bonds had
significantly outperformed other segments of the market, adding to the
performance of the Fund. The market has quieted in recent months, especially
the Connecticut market, where new issuance is limited largely to generic
general obligation issues."
Nicole Anderes
7
<PAGE> 8
EV MARATHON MICHIGAN TAX FREE FUND
YOUR INVESTMENT AT WORK
City of Detroit,MI
Convention Facility Tax Revenue
Cobo Hall Expansion Project
The proceeds of these bonds were used to pre-refund a previous bond issued in
1985. The previous bond financed the acquisition and construction costs of
expanding Detroit's Cobo Hall Convention Center, a major convention and
entertainment complex. This bond is backed by the City's share of
distributions of the state of Michigan hotel occupancy tax and liquor tax
deposited in the Convention Facility Development Fund. The bond has a coupon
of 5.25% and is a good example of the Fund's efforts during the period to
seek value in non-rated bonds.
<TABLE>
PORTFOLIO OVERVIEW
Based on market value as of July 31, 1995
<S> <C>
Number of issues........................... 105
Average quality............................ AA-
Investment grade.......................... 98.6%
Effective maturity........................ 15.52 yrs.
Largest sectors:
Hospitals............................. 12.9%
Insured general obligations........... 12.8*
Insured hospitals..................... 12.4*
Insured water & sewer.................. 7.5*
Insured electric utilities............. 6.3*
<FN>
* Private insurance does not remove the risk of loss of principal due to
changes in market conditions that is associated with this investment.
</TABLE>
THE STATE OF THE STATE: MICHIGAN
Michigan's economy remained on the upswing in 1995. The state's unemployment
rate fell to 5.1% in July as the retail, construction, and manufacturing
sectors of the economy each continued to post good results. Motor vehicle
sales, while below 1994's blistering 8.5% growth rate, continued at an annual
rate well above 15 million units.The state's wage and salary levels rose
slightly from last year, with construction employment especially robust,
registering a 12% gain. Reflecting a strong regional economy, housing starts
in the midwest region surpassed those nationally.
Michigan's 1995 tax revenues are running well above last year's, with baseline
revenues rising a strong 15.4% in June. Most of the revenue increase is the
result of strong growth in income, single-business, and use taxes. The state
has also benefited from a 200% increase in the cigarette tax rate, as well as
the start-up of the new state education property and real estate taxes. As a
result of cost containment measures, tax and educational funding reforms,
strong personal income growth and tax revenue growth, Michigan's financial
picture has brightened dramatically. Reflecting that improvement, the state's
credit rating has been upgraded to AA.
- --------------------------------------------------------------------------------
<TABLE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON MICHIGAN
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From April 30, 1991, through July 31, 1995
<CAPTION>
CUMULATIVE 1 Life of Value of
TOTAL RETURN Year Fund* Investment at 7/31
<S> <C> <C> <C>
With CDSC 0.6% 6.3% $12,968
Without CDSC 5.6% 6.7% $13,168
</TABLE>
<TABLE>
[BAR CHART USING THE FOLLOWING FIGURES AS PLOT POINTS]
<CAPTION>
EV MARATHON LEHMAN BROS
DATE MICHIGAN TAX FREE FUND MUNICIPAL BOND INDEX
<S> <C> <C>
4/91+ 10,000 10,000
5/91 10,030 10,089
6/91 9,968 10,079
7/91 10,180 10,202
8/91 10,338 10,336
9/91 10,488 10,471
10/91 10,592 10,565
11/91 10,576 10,594
12/91 10,887 10,822
1/92 10,911 10,846
2/92 10,901 10,850
3/92 10,846 10,854
4/92 10,955 10,951
5/92 11,118 11,079
6/92 11,327 11,265
7/92 11,761 11,603
8/92 11,518 11,490
9/92 11,550 11,565
10/92 11,189 11,451
11/92 11,579 11,657
12/92 11,713 11,776
1/93 11,851 11,913
2/93 12,329 12,343
3/93 12,166 12,213
4/93 12,292 12,336
5/93 12,375 12,405
6/93 12,589 12,613
7/93 12,551 12,629
8/93 12,818 12,892
9/93 12,943 13,039
10/93 12,962 13,064
11/93 12,831 12,949
12/93 13,126 13,222
1/94 13,281 13,373
2/94 12,868 13,027
3/94 12,164 12,496
4/94 12,243 12,602
5/94 12,348 12,711
6/94 12,219 12,637
7/94 12,469 12,866
8/94 12,501 12,910
9/94 12,287 12,721
10/94 11,975 12,495
11/94 11,669 12,269
12/94 12,005 12,539
1/95 12,434 12,897
2/95 12,836 13,272
3/95 12,958 13,425
4/95 12,937 13,441
5/95 13,302 13,870
6/95 13,087 13,748
7/95 13,165 13,878
<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 4/19/91. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
</TABLE>
FROM THE PORTFOLIO MANAGER:
"Although quality spreads - the yield difference between bonds of varying
quality - were narrow during the period, management sought opportunities in
non-rated bonds and private placements. These bonds offered opportunities to
add incremental yield to the Fund. The Fund concurrently reduced its exposure
to AA bonds, adopting a barbell strategy. That strategy should benefit the
Fund in coming months if, as I believe, income begins to comprise an
increasingly large part of total return for fixed-income investments."
Timothy T. Browse
8
<PAGE> 9
EV MARATHON MINNESOTA TAX FREE FUND
YOUR INVESTMENT AT WORK
Duluth MN Economic Dev. Auth
Health Care Facilities
The Duluth Clinic Ltd
The proceeds of these bonds were used to finance improvements for the
Duluth-based health clinic, as well as to refund bonds previously issued by the
Clinic. The issue financed the acquisition of land and the building of a
55,000-square-feet clinic addition, the remodelling of additional facilities,
and the purchase and installation of new medical equipment. The bonds have a
6.2% coupon and are insured by AMBAC. Naturally, private insurance does not
remove the market risk associated with this investment.
<TABLE>
PORTFOLIO OVERVIEW
Based on market value as of July 31, 1995
<S> <C>
Number of issues............................ 75
Average quality............................. AA
Investment grade.......................... 98.8%
Effective maturity........................ 16.73 yrs.
Largest sectors:
Insured hospitals..................... 19.7%*
Housing............................... 13.6
General obligations................... 11.2
Indust. development/pollution control.. 8.8
Hospitals.............................. 6.9
<FN>
* Private insurance does not remove the risk of loss of principal due to
changes in market conditions that is associated with this investment.
</TABLE>
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: MINNESOTA
The Minnesota economy gathered momentum in the first half of 1995, with
significant employment gains and a boost in real income. The state's jobless
rate neared historic lows as manufacturing and large retail expansions resulted
in fast job growth. Once again, the state's computer, electronics, and
technology industries were responsible for much of the employment gains. The
agricultural and food-processing sectors also enjoyed job additions. The
state's economy also benefited from infrastructure repairs and construction in
areas ravaged by the previous year's floods.
Due to Minnesota's resurgent economy, it is likely that income tax and sales
tax receipts will exceed previous budget forecasts. In a robust economic
environment, the state has been able to restore its previously depleted
reserve funds. Minnesota continues to benefit from its wide exposure to the
rapidly growing health care and technology sectors, and should be able to
weather a potential slowdown at the national level. However, the state is
concurrently facing growing social services and public safety costs that may
prove a larger financial burden in the future.
- --------------------------------------------------------------------------------
<TABLE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON MINNESOTA
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From July 31, 1991, through July 31, 1995
<CAPTION>
CUMULATIVE 1 Life of Value of
TOTAL RETURN Year Fund* Investment at 7/31
<S> <C> <C> <C>
With CDSC -0.5% 5.2% $12,313
Without CDSC 4.4% 5.6 $12,513
</TABLE>
<TABLE>
[BAR CHART USING THE FOLLOWING FIGURES AS PLOT POINTS]
<CAPTION>
EV MARATHON LEHMAN BROS
DATE MINNESOTA TAX FREE FUND MUNICIPAL BOND INDEX
<S> <C> <C>
7/91+ 10,000 10,000
8/91 10,050 10,132
9/91 10,196 10,264
10/91 10,299 10,356
11/91 10,303 10,385
12/91 10,502 10,608
1/92 10,556 10,632
2/92 10,555 10,635
3/92 10,521 10,639
4/92 10,517 10,734
5/92 10,746 10,860
6/92 10,919 11,043
7/92 11,273 11,374
8/92 11,087 11,263
9/92 11,096 11,337
10/92 10,805 11,225
11/92 11,156 11,426
12/92 11,288 11,543
1/93 11,411 11,677
2/93 11,812 12,099
3/93 11,696 11,972
4/93 11,819 12,092
5/93 11,889 12,160
6/93 12,076 12,363
7/93 12,063 12,379
8/93 12,303 12,637
9/93 12,459 12,781
10/93 12,466 12,806
11/93 12,349 12,693
12/93 12,598 12,961
1/94 12,703 13,109
2/94 12,370 12,769
3/94 11,718 12,749
4/94 11,749 12,353
5/94 11,876 12,460
6/94 11,775 12,388
7/94 11,984 12,611
8/94 12,017 12,655
9/94 11,797 12,469
10/94 11,468 12,248
11/94 11,110 12,026
12/94 11,463 12,291
1/95 11,834 12,642
2/95 12,227 13,010
3/95 12,372 13,159
4/95 12,339 13,175
5/95 12,671 13,595
6/95 12,448 13,477
7/95 12,513 13,604
<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 7/29/91. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
</TABLE>
FROM THE PORTFOLIO MANAGER:
"Market conditions have resulted in very narrow quality spreads in 1995. In
this climate, I have employed a "barbell" strategy, emphasizing quality on
one hand and incremental yield additions on the other. The Portfolio's
insured bonds have been an important source of quality and liquidity.
Meanwhile, I have generally avoided par bonds in favor of discount issues.
Finally, I have carefully researched high-yielding issues as a way to add
selectively to the Fund's yield and have added to the health care sector,
which has grown more attractive in recent months."
Robert B. MacIntosh
9
<PAGE> 10
EV MARATHON NEW JERSEY TAX FREE FUND
YOUR INVESTMENT AT WORK
Gloucester County, NJ
Utility Authority
Water & Sewer Revenue Bonds
Issued by the Gloucester County Utility Authority, this bond was dedicated to
funding Phase III of a waste treatment facility in Gloucester County.
Specifically, the program is designed to upgrade the maintenance and
operating efficiency of a waste treatment facility. By constructing a second
sludge incinerator, the plant should reach a 20% increase in its daily
capacity. The bond provided improvements for the County, while representing
an attractive yielding investment supported by residents' water and sewer
bill payments.
<TABLE>
PORTFOLIO OVERVIEW
Based on market value as of July 31, 1995
<S> <C>
Number of issues........................... 130
Average quality.............................. A
Investment grade.......................... 87.6%
Effective maturity........................ 16.25 yrs.
Largest sectors:
Transportation........................ 15.1%
General obligations................... 13.3
Solid waste............................ 6.8
Hospitals.............................. 6.6
Insured lease revenue.................. 5.8*
<FN>
* Private insurance does not remove the risk of loss of principal due to
changes in market conditions that is associated with this investment.
by the service segment, including business, management, engineering,
retailing, food services, and health care. And while housing starts were
depressed, outlays for commercial construction and public works projects
remained fairly strong.
</TABLE>
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: NEW JERSEY
The New Jersey economy has reflected the slower activity of the national
scene. Declines in the housing market, manufacturing, and consumer spending
have contributed to the state's slowdown. Nearly 10,000 jobs have been lost
in manufacturing alone this year. The state's unemployment rate stood at 6.8%
in July, remaining well above the national rate. On a more positive note, the
service sector continued to add jobs. More than two-thirds of the 52,000
private sector jobs created in the past year within the state were generated
New Jersey has benefited from its increasingly well-managed financial
operations and a strong display of fiscal prudence by the Whitman
administration. Implementing stricter cost controls and reductions in
expenditures, New Jersey is providing a model for other states hoping to
control social spending.
- --------------------------------------------------------------------------------
<TABLE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON NEW JERSEY
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From January 31, 1991, through July 31, 1995
<CAPTION>
CUMULATIVE 1 Life of Value of
TOTAL RETURN Year Fund* Investment at 7/31
<S> <C> <C> <C>
With CDSC 0.1% 6.6% $13,267
Without CDSC 5.0% 7.0% $13,467
</TABLE>
<TABLE>
[BAR CHART USING THE FOLLOWING FIGURES AS PLOT POINTS]
<CAPTION>
EV MARATHON LEHMAN BROS
DATE NEW JERSEY TAX FREE FUND MUNICIPAL BOND INDEX
<S> <C> <C>
1/91+ 10,000 10,000
2/91 10,097 10,087
3/91 10,089 10,091
4/91 10,236 10,225
5/91 10,353 10,316
6/91 10,243 10,306
7/91 10,448 10,432
8/91 10,618 10,369
9/91 10,739 10,707
10/91 10,834 10,803
11/91 10,818 10,833
12/91 11,095 11,066
1/92 11,077 11,091
2/92 11,078 11,094
3/92 11,054 11,098
4/92 11,122 11,197
5/92 11,317 11,329
6/92 11,494 11,519
7/92 11,932 11,865
8/92 11,731 11,749
9/92 11,775 11,826
10/92 11,477 11,709
11/92 11,805 11,919
12/92 11,959 12,041
1/93 12,121 12,181
2/93 12,660 12,622
3/93 12,486 12,488
4/93 12,649 12,614
5/93 12,734 12,685
6/93 12,953 12,897
7/93 12,943 12,914
8/93 13,181 13,183
9/93 13,323 13,333
10/93 13,323 13,359
11/93 13,196 13,241
12/93 13,467 13,520
1/94 13,615 13,675
2/94 13,275 13,320
3/94 12,617 12,778
4/94 12,666 12,886
5/94 12,752 12,998
6/94 12,626 12,922
7/94 12,821 13,155
8/94 12,870 13,201
9/94 12,659 13,007
10/94 12,349 12,776
11/94 12,008 12,545
12/94 12,363 12,821
1/95 12,762 13,188
2/95 13,108 13,571
3/95 13,217 13,727
4/95 13,237 13,744
5/95 13,597 14,182
6/95 13,409 14,058
7/95 13,467 14,191
<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 1/8/91. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
</TABLE>
FROM THE PORTFOLIO MANAGER:
"The past year has proven to be a highly volatile period for the bond market,
given last year's sharp decline and the subsequent strong market rally we
have enjoyed in 1995. I have focused on the insured sector to provide quality
and ensure good liquidity for the Portfolio. At the same time, I've increased
slightly the Portfolio's exposure to the health care sector, which has
improved somewhat in recent months, and have added some select high-yielding
situations, which helped add yield to the Fund."
Robert B. MacIntosh
10
<PAGE> 11
EV MARATHON PENNSYLVANIA TAX FREE FUND
Your investment at work
Chester County
Industrial Development Auth. Senior Life Choice of Kimberton
The proceeds of these bonds are being used to fund the construction of the
Continuing Care Retirement Center, an assisted living project in Kimberton,
PA. This issue is a good example of the Portfolio's efforts to focus on
non-rated bonds and private placement issues. Because the issue was purchased
in its entirety by Eaton Vance, we were able to structure the deal with
favorable terms. With an 8.05% coupon, the bonds represent a
250 basis point advantage over other long-term Pennsylvania issues.
<TABLE>
PORTFOLIO OVERVIEW
Based on market value as of July 31, 1995
<S> <C>
Number of issues........................... 132
Average quality............................ Aa-
Investment grade.......................... 95.1%
Effective maturity........................ 14.13 yrs.
Largest sectors:
Hospitals............................. 22.6%
Housing............................... 12.3
Industrial development authority....... 8.7
Insured hospitals...................... 7.1*
Escrowed............................... 6.5
<FN>
* Private insurance does not remove the risk of loss of principal due to
changes in market conditions that is associated with this investment.
</TABLE>
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: PENNSYLVANIA
The Pennsylvania economy continues to demonstrate the beneficial effects of a
shift from its past reliance on manufacturing toward a growing
diversification into the service sectors. Pennsylvania's unemployment rate
declined sharply during the period, falling to 5.4% in July. The service
sector continued to account for nearly two-thirds of the state's job gains,
with health services and social services pacing the gains. Durable goods
manufacturing also added significantly to job growth, led by metals and
industrial machinery.
Pennsylvania has now posted three consecutive years with surplus operations.
That marks a significant departure from the early 1990s, when a declining
cyclical economy and rising social costs played havoc with the state's
finances. Importantly, with an improved economic mix and a stronger national
and regional picture, Pennsylvania has returned to fiscal balance in recent
years. The Commonwealth's fiscal outlook has benefited from a tax package
implemented in 1991, as well as from stricter cost controls and an improving
revenue base resulting from a stronger economy.
- --------------------------------------------------------------------------------
<TABLE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON
PENNSYLVANIA TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX
From January 31, 1991, through July 31, 1995
<CAPTION>
CUMULATIVE 1 Life of Value of
TOTAL RETURN Year Fund* Investment at 7/31
<S> <C> <C> <C>
With CDSC 0.3% 6.5% $13,267
Without CDSC 5.2% 6.9% $13,467
</TABLE>
<TABLE>
[BAR CHART USING THE FOLLOWING FIGURES AS PLOT POINTS]
<CAPTION>
EV MARATHON LEHMAN BROS
DATE PENNSYLVANIA TAX FREE FUND MUNICIPAL BOND INDEX
<S> <C> <C>
1/91+ 10,000 10,006
2/91 10,096 10,087
3/91 10,109 10,091
4/91 10,268 10,225
5/91 10,366 10,316
6/91 10,306 10,306
7/91 10,465 10,432
8/91 10,617 10,569
9/91 10,772 10,707
10/91 10,901 10,803
11/91 10,887 10,833
12/91 11,169 11,066
1/92 11,131 11,091
2/92 11,134 11,094
3/92 11,101 11,098
4/92 11,214 11,197
5/92 11,380 11,329
6/92 11,594 11,519
7/92 12,014 11,865
8/92 11,780 11,749
9/92 11,803 11,826
10/92 11,471 11,709
11/92 11,890 11,919
12/92 12,024 12,041
1/93 12,165 12,181
2/93 12,649 12,622
3/93 12,486 12,488
4/93 12,628 12,614
5/93 12,680 12,685
6/93 12,866 12,897
7/93 12,856 12,914
8/93 13,143 13,183
9/93 13,308 13,333
10/93 13,319 13,359
11/93 13,202 13,241
12/93 13,523 13,520
1/94 13,672 13,675
2/94 13,270 13,320
3/94 12,548 12,778
4/94 12,595 12,886
5/94 12,693 12,998
6/94 12,590 12,922
7/94 12,797 13,155
8/94 12,821 13,201
9/94 12,621 13,007
10/94 12,320 12,776
11/94 11,901 12,545
12/94 12,219 12,821
1/95 12,618 13,188
2/95 13,016 13,571
3/95 13,168 13,727
4/95 13,150 13,744
5/95 13,561 14,182
6/95 13,384 14,058
7/95 13,467 14,191
<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 1/8/91. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
</TABLE>
FROM THE PORTFOLIO MANAGER:
"The market outlook for the municipal sector has improved significantly
following a difficult 1994. With a slow growth economy and relatively low
municipal supply, the municipal market has fared well in 1995. Accordingly, I
have become somewhat more constructive toward the market, adding to positions
in bonds that tend to be more sensitive to interest rate changes. Elsewhere,
I've continued to be very selective about investments in hospital bonds.
Finally, in a fairly quiet market, I have looked increasingly to private
placements and non-rated bonds for opportunities to increase the Fund's yield."
David C. Reilly
11
<PAGE> 12
EV MARATHON TEXAS TAX FREE FUND
YOUR INVESTMENT AT WORK
Round Rock TX School District
Permanent School Fund
The Round Rock, TX school district serves a small community north of Austin.
Insured by the state's Permanent School Fund, the issue is rated AAA. The
state's Permanent School Fund finances Texas public education, with interest
and dividend income subsidizing local school operations. PSF bonds are
popular with investors because they benefit Texas schools only and represent
a diversification away from the major national municipal insurers. Naturally,
private insurance does not remove the market risk associated with this
investment.
<TABLE>
PORTFOLIO OVERVIEW
Based on market value as of July 31, 1995
<S> <C>
Number of issues............................ 60
Average quality............................. AA
Investment grade.......................... 97.3%
Effective maturity........................ 16.49 yrs.
Largest sectors:
General obligations................... 16.8%
Insured electric utilities............ 14.5*
Insured transportation................ 12.0*
Hospitals............................. 11.1
Industrial develop./pollution control.. 7.0
<FN>
* Private insurance does not remove the risk of loss of principal due to
changes in market conditions that is associated with this investment.
</TABLE>
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: TEXAS
The Texas economy has outpaced the national output throughout the 1990s. The
economy continues to expand while diversifying its employment base. In 1994
alone, 250,000 jobs were added. That pace is expected to continue into 1995,
as the state increases its exposure to the manufacturing and service sectors.
Construction has been especially strong as the state has seen a strong
in-migration from other states. That is a marked departure from the 1980s,
when the oil and gas economy was wracked by a deep recession. In July, the
state's unemployment rate hovered around the 6% level, slightly above the
national rate.
The Texas financial picture is improving. Despite a 10% growth in budgeted
expenditures, the state has returned to a balanced budget due to a surge in
income tax and sales tax revenues. The state is expanding its economy and is
poised to benefit from increased trade with Latin America. Texas is also
addressing important fiscal issues, including Medicaid, welfare reform, and
educational funding.
- --------------------------------------------------------------------------------
<TABLE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON TEXAS
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From March 31, 1992, through July 31, 1995
<CAPTION>
CUMULATIVE 1 Life of Value of
TOTAL RETURN Year Fund* Investment at 7/31
<S> <C> <C> <C>
With CDSC 1.4% 5.9% $12,137
Without CDSC 6.4% 6.7% $12,437
</TABLE>
<TABLE>
[BAR CHART USING THE FOLLOWING FIGURES AS PLOT POINTS]
<CAPTION>
EV MARATHON LEHMAN BROS
DATE TEXAS TAX FREE FUND MUNICIPAL BOND INDEX
<S> <C> <C>
3/92+ 10,000 10,000
4/92 10,080 10,089
5/92 10,286 10,208
6/92 10,501 10,379
7/92 10,970 10,690
8/92 10,710 10,586
9/92 l0,761 10,655
l0/92 10,421 10,550
11/92 10,788 10,740
12/92 10,914 10,849
1/93 10,979 10,975
2/93 11,532 11,372
3/93 11,336 11,252
4/93 11,445 11,366
5/93 11,523 10,429
6/93 11,694 10,620
7/93 11,685 10,635
8/93 11,972 10,878
9/93 12,137 10,013
10/93 12,116 10,036
11/93 11,987 10,930
12/93 12,287 10,182
1/94 12,459 10,321
2/94 12,0SS 10,002
3/94 11,344 10,513
4/94 11,412 11,611
5/94 11,517 11,711
6/94 11,432 11,643
7/94 11,694 11,853
8/94 11,729 11,894
9/94 11,499 11,720
10/94 11,187 11,512
11/94 10,929 11,303
12/94 11,295 11,552
1/95 11,726 11,883
2/95 12,1SS 12,228
3/95 12,262 12,369
4/95 12,222 12,383
5/95 12,593 12,778
6/95 12,382 12,667
7/95 12,437 12,787
<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 3/24/92. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
</TABLE>
FROM THE PORTFOLIO MANAGER:
"In a market characterized by narrow quality spreads, insured bonds composed
a significant portion of the Portfolio, affording continuing high quality as
well as good liquidity. While insured bonds provided quality, I looked to the
non-rated sectors to add yield to the Fund. I sought to take advantage of
market inefficiencies in that sector to add attractive issues to the
Portfolio. In my view, income is likely to be an increasingly important
component of total return in coming months."
Timothy T. Browse
12
<PAGE> 13
- --------------------------------------------------------------------------------
EV Marathon Tax Free Funds
Financial Statements
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $138,219,835 $42,975,487 $191,081,521 $182,108,942
Unrealized appreciation (depreciation) 3,868,603 1,150,854 (1,489,773) 4,641,667
------------ ----------- ------------ ------------
Total investment in Portfolio, at value (Note 1A) $142,088,438 $44,126,341 $189,591,748 $186,750,609
Receivable for Fund shares sold 126,538 21,210 133,811 255,184
Deferred organization expenses (Note 1D) 5,192 5,829 5,756 5,760
------------ ----------- ------------ ------------
Total assets $142,220,168 $44,153,380 $189,731,315 $187,011,553
------------ ----------- ------------ ------------
LIABILITIES:
Dividends payable $ 256,327 $ 83,907 $ 355,259 $ 345,769
Payable for Fund shares redeemed 74,547 165,088 448,062 256,185
Payable to affiliates --
Trustees' fees 275 14 271 275
Custodian fee 555 193 700 --
Accrued expenses 29,418 4,351 26,862 46,614
------------ ----------- ------------ ------------
Total liabilities $ 361,122 $ 253,553 $ 831,154 $ 648,843
------------ ----------- ------------ ------------
NET ASSETS $141,859,046 $43,899,827 $188,900,161 $186,362,710
============ =========== ============ ============
SOURCES OF NET ASSETS:
Paid-in capital $143,767,156 $45,297,327 $195,878,669 $188,054,570
Accumulated net realized loss on investment and
financial futures transactions (computed on the
basis of identified cost) (5,849,269) (2,644,557) (5,140,934) (6,629,430)
Accumulated undistributed (distributions in excess
of ) net investment income 72,556 96,203 (347,801) 295,903
Unrealized appreciation (depreciation) of investments
and financial futures contracts from Portfolio
(computed on the basis of identified cost) 3,868,603 1,150,854 (1,489,773) 4,641,667
------------ ----------- ------------ ------------
Total $141,859,046 $43,899,827 $188,900,161 $186,362,710
============ =========== ============ ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 13,466,638 4,379,901 18,944,082 18,181,906
============ =========== ============ ============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
(NOTE 6) PER SHARE (net assets / shares of beneficial
interest outstanding) $10.53 $10.02 $9.97 $10.25
====== ====== ===== ======
</TABLE>
See notes to financial statements
13
<PAGE> 14
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $76,783,335 $392,396,758 $484,040,627 $27,294,801
Unrealized appreciation 2,524,465 13,675,262 14,097,829 487,059
----------- ------------ ------------ -----------
Total investment in Portfolio, at value (Note 1A) $79,307,800 $406,072,020 $498,138,456 $27,781,860
Receivable for Fund shares sold 29,787 360,285 111,849 --
Receivable from the Administrator (Note 4) -- -- -- 46,683
Deferred organization expenses (Note 1D) 6,371 4,387 3,951 9,158
----------- ------------ ------------ -----------
Total assets $79,343,958 $406,436,692 $498,254,256 $27,837,701
----------- ------------ ------------ -----------
LIABILITIES:
Dividends payable $ 148,674 $ 781,090 $ 943,876 $ 54,514
Payable for Fund shares redeemed 209,206 718,646 1,333,242 14,563
Payable to affiliates --
Trustees' fees 135 271 275 14
Custodian fee 333 1,000 -- 117
Accrued expenses 15,582 75,168 121,214 6,470
----------- ------------ ------------ -----------
Total liabilities $ 373,930 $ 1,576,175 $ 2,398,607 $ 75,678
----------- ------------ ------------ -----------
NET ASSETS $78,970,028 $404,860,517 $495,855,649 $27,762,023
=========== ============ ============ ===========
SOURCES OF NET ASSETS:
Paid-in capital $81,358,392 $408,101,830 $503,949,176 $28,401,903
Accumulated net realized loss on investment and
financial futures transactions (computed on the
basis of identified cost) (4,808,195) (16,585,607) (22,487,448) (1,205,802)
Accumulated undistributed (distributions in excess
of ) net investment income (104,634) (330,968) 296,092 78,863
Unrealized appreciation of investments and financial
futures contracts from Portfolio (computed on the
basis of identified cost) 2,524,465 13,675,262 14,097,829 487,059
----------- ------------ ------------ -----------
Total $78,970,028 $404,860,517 $495,855,649 $27,762,023
=========== ============ ============ ===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING 7,937,457 39,081,951 48,066,461 2,701,690
=========== ============ ============ ===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
(NOTE 6) PER SHARE (net assets / shares of beneficial
interest outstanding) $9.95 $10.36 $10.32 $10.28
===== ====== ====== ======
</TABLE>
See notes to financial statements
14
<PAGE> 15
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 9,190,194 $ 2,776,063 $11,744,474 $11,967,396
Expenses allocated from Portfolio (753,139) (110,381) (994,723) (909,671)
----------- ----------- ----------- -----------
Net investment income from Portfolio $ 8,437,055 $ 2,665,682 $10,749,751 $11,057,725
----------- ----------- ----------- -----------
Expenses --
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 3,249 $ 134 $ 2,671 $ 3,249
Distribution costs (Note 5) 1,267,060 369,688 1,635,477 1,688,823
Custodian fees (Note 4) 13,840 7,169 18,136 2,388
Transfer and dividend disbursing agent fees 104,967 30,622 133,977 143,381
Printing and postage 48,853 23,412 48,256 65,574
Legal and accounting services 16,001 11,369 15,011 14,287
Amortization of organization expenses (Note 1D) 5,300 3,719 3,406 8,106
Registration costs -- 2,128 1,863 --
Miscellaneous 8,796 3,944 20,348 12,552
----------- ----------- ----------- -----------
Total expenses $ 1,468,066 $ 452,185 $ 1,879,145 $ 1,938,360
----------- ----------- ----------- -----------
Net investment income $ 6,968,989 $ 2,213,497 $ 8,870,606 $ 9,119,365
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from Portfolio --
Investment transactions (identified cost basis) $(4,776,096) $(1,694,444) $(2,501,329) $(3,632,822)
Financial futures contracts (977,548) (689,900) (2,702,509) (2,359,255)
----------- ----------- ----------- -----------
Net realized loss on investments $(5,753,644) $(2,384,344) $(5,203,838) $(5,992,077)
Change in unrealized appreciation of investments and
financial futures contracts 7,699,454 2,698,422 4,383,108 6,691,551
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss) $ 1,945,810 $ 314,078 $ (820,730) $ 699,474
----------- ----------- ----------- -----------
Net increase in net assets from operations $ 8,914,799 $ 2,527,575 $ 8,049,876 $ 9,818,839
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
15
<PAGE> 16
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
<TABLE>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
----------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 4,957,678 $ 26,485,856 $32,886,927 $1,666,007
Expenses allocated from Portfolio (369,669) (2,131,981) (2,497,782) (20,382)
----------- ------------ ------------ ----------
Net investment income from Portfolio $ 4,588,009 $ 24,353,875 $30,389,145 $1,645,625
----------- ------------ ------------ ----------
Expenses --
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 1,335 $ 2,672 $ 3,249 $ 163
Distribution costs (Note 5) 692,333 3,626,130 4,540,227 228,528
Custodian fees (Note 4) 3,549 20,355 -- 3,110
Transfer and dividend disbursing agent fees 54,651 273,650 336,214 18,333
Printing and postage 35,485 110,978 133,784 19,185
Legal and accounting services 13,775 14,420 18,549 8,988
Amortization of organization expenses (Note 1D) 6,450 10,371 9,074 5,592
Registration costs 7,155 19,159 -- 804
Miscellaneous 6,518 29,655 32,851 4,235
----------- ------------ ------------ ----------
Total expenses $ 821,251 $ 4,107,390 $ 5,073,948 $ 288,938
Deduct allocation of expenses to the Administrator (Note
4) -- -- -- 46,683
----------- ------------ ------------ ----------
Net expenses $ 821,251 $ 4,107,390 $ 5,073,948 $ 242,255
----------- ------------ ------------ ----------
Net investment income $ 3,766,758 $ 20,246,485 $25,315,197 $1,403,370
----------- ------------ ------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from Portfolio --
Investment transactions (identified cost basis) $(3,420,042) $(12,877,283) $(13,642,965) $ (567,112)
Financial futures contracts (1,489,762) (4,707,191) (6,412,974) (388,714)
----------- ------------ ------------ ----------
Net realized loss on investments $(4,909,804) $(17,584,474) $(20,055,939) $ (955,826)
Change in unrealized appreciation of investments and
financial futures contracts 4,461,066 16,459,157 18,812,212 1,206,948
----------- ------------ ------------ ----------
Net realized and unrealized gain (loss) $ (448,738) $ (1,125,317) $(1,243,727) $ 251,122
----------- ------------ ------------ ----------
Net increase in net assets from operations $ 3,318,020 $ 19,121,168 $24,071,470 $1,654,492
============ ============= =============== ===========
</TABLE>
See notes to financial statements
16
<PAGE> 17
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 6,968,989 $ 2,213,497 $ 8,870,606 $ 9,119,365
Net realized loss on investments (5,753,644) (2,384,344) (5,203,838) (5,992,077)
Change in unrealized appreciation of investments 7,699,454 2,698,422 4,383,108 6,691,551
------------ ----------- ------------ ------------
Net increase in net assets from operations $ 8,914,799 $ 2,527,575 $ 8,049,876 $ 9,818,839
------------ ----------- ------------ ------------
Distributions to shareholders (Note 2) --
From net investment income $ (6,968,989) $(2,213,497) $(8,870,606) $ (9,119,365)
In excess of net investment income (337,851) (105,001) (811,572) (345,753)
------------ ----------- ------------ ------------
Total distributions to shareholders $ (7,306,840) $(2,318,498) $(9,682,178) $ (9,465,118)
------------ ----------- ------------ ------------
Transactions in shares of beneficial interest (Note
3) --
Proceeds from sales of shares $ 18,037,914 $ 8,881,835 $21,244,459 $ 12,430,305
Net asset value of shares issued to shareholders
in
payment of distributions declared 2,931,820 1,176,328 5,534,626 4,966,547
Cost of shares redeemed (31,597,214) (8,452,610) (24,699,479) (28,469,861)
------------ ----------- ------------ ------------
Increase (decrease) in net assets from Fund
share transactions $(10,627,480) $ 1,605,553 $ 2,079,606 $(11,073,009)
------------ ----------- ------------ ------------
Net increase (decrease) in net assets $ (9,019,521) $ 1,814,630 $ 447,304 $(10,719,288)
NET ASSETS:
At beginning of year 150,878,567 42,085,197 188,452,857 197,081,998
------------ ----------- ------------ ------------
At end of year $141,859,046 $43,899,827 $188,900,161 $186,362,710
============ =========== ============ ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF)
NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END
OF YEAR $ 72,556 $ 96,203 $ (347,801) $ 295,903
============ =========== ============ ============
</TABLE>
See notes to financial statements
17
<PAGE> 18
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 3,766,758 $ 20,246,485 $ 25,315,197 $ 1,403,370
Net realized loss on investments (4,909,804) (17,584,474) (20,055,939) (955,826)
Change in unrealized appreciation of investments 4,461,066 16,459,157 18,812,212 1,206,948
----------- ------------ ------------ -----------
Net increase in net assets from operations $ 3,318,020 $ 19,121,168 $ 24,071,470 $ 1,654,492
----------- ------------ ------------ -----------
Distributions to shareholders (Note 2) --
From net investment income $(3,766,758) $(20,246,485) $(25,315,197) $(1,403,370)
In excess of net investment income (299,978) (1,398,634) (1,189,501) (36,998)
In excess of realized gain on investments -- (226,540) -- --
----------- ------------ ------------ -----------
Total distributions to shareholders $(4,066,736) $(21,871,659) $(26,504,698) $(1,440,368)
----------- ------------ ------------ -----------
Transactions in shares of beneficial interest (Note 3)
--
Proceeds from sales of shares $ 9,450,064 $ 38,658,018 $ 34,704,368 $ 4,225,665
Net asset value of shares issued to shareholders in
payment of distributions declared 2,269,724 11,455,602 12,534,067 518,070
Cost of shares redeemed (11,223,976) (62,619,284) (79,064,263) (3,872,565)
----------- ------------ ------------ -----------
Increase (decrease) in net assets from Fund share
transactions $ 495,812 $(12,505,664) $(31,825,828) $ 871,170
----------- ------------ ------------ -----------
Net increase (decrease) in net assets $ (252,904) $(15,256,155) $(34,259,056) $ 1,085,294
NET ASSETS:
At beginning of year 79,222,932 420,116,672 530,114,705 26,676,729
----------- ------------ ------------ -----------
At end of year $78,970,028 $404,860,517 $495,855,649 $27,762,023
=========== ============ ============ ===========
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF)
NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF
YEAR $ (104,634) $ (330,968) $ 296,092 $ 78,863
=========== ============ ============ ===========
</TABLE>
See notes to financial statements
18
<PAGE> 19
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended July 31, 1994*
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 5,414,072 $ 1,319,691 $ 6,595,409 $ 7,351,726
Net realized gain (loss) on investments (58,305) (218,607) 610,264 573,735
Change in unrealized depreciation of investments (11,757,120) (2,745,461) (15,782,341) (15,592,944)
------------ ----------- ------------ ------------
Net decrease in net assets from operations $ (6,401,353) $(1,644,377) $ (8,576,668) $ (7,667,483)
------------ ----------- ------------ ------------
Distributions to shareholders (Note 2) --
From net investment income $ (5,414,072) $(1,319,691) $ (6,595,409) $ (7,351,726)
In excess of net investment income (947,130) (230,642) (1,342,272) (1,152,241)
From net realized gain on investment transactions (2,924,958) -- (286,794) (502,258)
In excess of net realized gain on investments (131,173) -- -- (279,409)
------------ ----------- ------------ ------------
Total distributions to shareholders $ (9,417,333) $(1,550,333) $ (8,224,475) $ (9,285,634)
------------ ----------- ------------ ------------
Transactions in shares of beneficial interest (Note
3) --
Proceeds from sales of shares $ 42,179,243 $21,335,847 $ 49,324,695 $ 33,887,806
Net asset value of shares issued to shareholders
in
payment of distributions declared 4,225,584 802,023 4,806,513 4,945,770
Cost of shares redeemed (15,231,944) (1,705,163) (9,666,939) (13,088,366)
------------ ----------- ------------ ------------
Increase in net assets from Fund share
transactions $ 31,172,883 $20,432,707 $ 44,464,269 $ 25,745,210
------------ ----------- ------------ ------------
Net increase in net assets $ 15,354,197 $17,237,997 $ 27,663,126 $ 8,792,093
NET ASSETS:
At beginning of year 135,524,370 24,847,200 160,789,731 188,289,905
------------ ----------- ------------ ------------
At end of year $150,878,567 $42,085,197 $188,452,857 $197,081,998
============== ============ ============ ============
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME INCLUDED IN NET ASSETS AT END OF YEAR $ (274,433) $ (15,438) $ (450,353) $ (318,743)
============== ============ ============ ============
<FN>
* For the ten months ended July 31, 1994 (Note 8).
</TABLE>
See notes to financial statements
19
<PAGE> 20
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended July 31, 1994*
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 2,726,368 $ 16,118,616 $ 20,587,267 $ 849,335
Net realized gain (loss) on investments 376,789 1,945,284 (1,551,449) (180,468)
Change in unrealized depreciation of investments (6,068,338) (34,469,067) (40,787,897) (1,446,955)
----------- ------------ ------------ -----------
Net decrease in net assets from operations $(2,965,181) $(16,405,167) $(21,752,079) $ (778,088)
----------- ------------ ------------ -----------
Distributions to shareholders (Note 2) --
From net investment income $(2,726,368) $(16,118,616) $(20,587,267) $ (849,335)
In excess of net investment income (514,703) (2,879,872) (3,363,289) (149,130)
From net realized gain on investment transactions (66,779) (1,071,457) (1,976,886) --
In excess of net realized gain on investments -- -- (838,470) --
----------- ------------ ------------ -----------
Total distributions to shareholders $(3,307,850) $(20,069,945) $(26,765,912) $ (998,465)
----------- ------------ ------------ -----------
Transactions in shares of beneficial interest (Note 3) --
Proceeds from sales of shares $21,406,266 $ 88,640,764 $101,917,886 $12,783,796
Net asset value of shares issued to shareholders in
payment of distributions declared 1,813,238 10,655,530 13,060,476 408,280
Cost of shares redeemed (5,727,063) (38,125,816) (35,946,725) (1,076,938)
----------- ------------ ------------ -----------
Increase in net assets from Fund share
transactions $17,492,441 $ 61,170,478 $ 79,031,637 $12,115,138
----------- ------------ ------------ -----------
Net increase in net assets $11,219,410 $ 24,695,366 $ 30,513,646 $10,338,585
NET ASSETS:
At beginning of year 68,003,522 395,421,306 499,601,059 16,338,144
----------- ------------ ------------ -----------
At end of year $79,222,932 $420,116,672 $530,114,705 $26,676,729
=========== ============ ============ ===========
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME INCLUDED IN NET ASSETS AT END OF YEAR $ (191,248) $ (948,423) $ (1,060,829) $ (23,101)
=========== ============ ============ ===========
<FN>
* For the ten months ended July 31, 1994 (Note 8).
</TABLE>
See notes to financial statements
20
<PAGE> 21
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended September 30, 1993
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 4,148,628 $ 509,772 $ 4,574,650 $ 6,451,998
Net realized gain (loss) on investments 3,034,880 (41,606) (193,633) 129,142
Change in unrealized appreciation of investments 6,546,546 1,193,289 9,615,241 10,582,765
------------ ----------- ------------ ------------
Net increase in net assets from operations $ 13,730,054 $ 1,661,455 $ 13,996,258 $ 17,163,905
------------ ----------- ------------ ------------
Distributions to shareholders (Note 2) --
From net investment income $ (4,148,628) $ (508,630) $ (4,574,650) $ (6,451,998)
In excess of net investment income (1,061,030) (100,645) (1,161,488) (1,527,111)
From net realized gain on investments (522,568) -- (34,580) (666,285)
In excess of net realized gain on investments -- -- -- (405,736)
------------ ----------- ------------ ------------
Total distributions to shareholders $ (5,732,226) $ (609,275) $ (5,770,718) $ (9,051,130)
------------ ----------- ------------ ------------
Transactions in shares of beneficial interest (Note
3) --
Proceeds from sales of shares $ 68,258,062 $21,464,433 $103,968,631 $ 76,591,745
Net asset value of shares issued to shareholders
in
payment of distributions declared 2,349,832 300,535 3,319,752 4,814,567
Cost of shares redeemed (5,579,681) (434,363) (4,754,821) (8,263,162)
------------ ----------- ------------ ------------
Increase in net assets from Fund share
transactions $ 65,028,213 $21,330,605 $102,533,562 $ 73,143,150
------------ ----------- ------------ ------------
Net increase in net assets $ 73,026,041 $22,382,785 $110,759,102 $ 81,255,925
NET ASSETS:
At beginning of year 62,498,329 2,464,415 50,030,629 107,033,980
------------ ----------- ------------ ------------
At end of year $135,524,370 $24,847,200 $160,789,731 $188,289,905
============ =========== ============ ============
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME INCLUDED IN NET ASSETS AT END OF YEAR $ (235,360) $ -- $ (227,014) $ (394,180)
============ =========== ============ ============
</TABLE>
See notes to financial statements
21
<PAGE> 22
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended September 30, 1993
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 2,055,802 $ 14,317,282 $ 18,135,961 $ 347,902
Net realized gain (loss) on investments (121,964) 590,474 3,551,372 (62,873)
Change in unrealized appreciation of investments 3,689,531 23,522,206 25,509,297 649,042
----------- ------------ ------------ -----------
Net increase in net assets from operations $ 5,623,369 $ 38,429,962 $ 47,196,630 $ 934,071
----------- ------------ ------------ -----------
Distributions to shareholders (Note 2) --
From net investment income $(2,055,802) $(14,317,282) $(18,135,961) $ (347,902)
In excess of net investment income (541,897) (3,125,213) (4,027,076) (71,238)
From net realized gain on investments -- (1,398,409) (544,280) --
In excess of realized gain on investments (81,322) -- -- (9,479)
----------- ------------ ------------ -----------
Total distributions to shareholders $(2,679,021) $(18,840,904) $(22,707,317) $ (428,619)
----------- ------------ ------------ -----------
Transactions in shares of beneficial interest (Note 3)
--
Proceeds from sales of shares $39,350,246 $150,798,341 $202,179,016 $12,248,490
Net asset value of shares issued to shareholders in
payment of distributions declared 1,487,243 10,015,364 11,054,532 173,297
Cost of shares redeemed (2,448,121) (20,305,110) (18,314,833) (608,952)
----------- ------------ ------------ -----------
Increase in net assets from Fund share
transactions $38,389,368 $140,508,595 $194,918,715 $11,812,835
----------- ------------ ------------ -----------
Net increase in net assets $41,333,716 $160,097,653 $219,408,028 $12,318,287
NET ASSETS:
At beginning of year 26,669,806 235,323,653 280,193,031 4,019,857
----------- ------------ ------------ -----------
At end of year $68,003,522 $395,421,306 $499,601,059 $16,338,144
=========== ============ ============ ===========
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME INCLUDED IN NET ASSETS AT END OF YEAR $ (142,762) $ (675,167) $ (998,755) $ (6,132)
=========== ============ ============ ===========
</TABLE>
See notes to financial statements
22
<PAGE> 23
<TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON ARIZONA FUND MARATHON COLORADO FUND
-------------------------------------------------- --------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, SEPTEMBER 30, JULY 31, SEPTEMBER 30,
------------------- ---------------------------- ----------------- ------------------
1995 1994*** 1993 1992 1991* 1995 1994*** 1993 1992++
-------- -------- -------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year $ 10.390 $ 11.570 $ 10.700 $10.320 $10.000 $10.010 $10.960 $10.060 $ 10.000
-------- -------- -------- ------- ------- ------- ------- ------- --------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.492 $ 0.404 $ 0.496 $ 0.526 $ 0.088 $ 0.494 $ 0.403 $ 0.484 $ 0.026
Net realized and unrealized gain
(loss) on investments 0.164 (0.862) 1.076 0.520 0.339+++ 0.033 (0.880) 0.996 0.082+++
-------- -------- -------- ------- ------- ------- ------- ------- --------
Total income (loss) from
operations $ 0.656 $ (0.458) $ 1.572 $ 1.046 $ 0.427 $ 0.527 $(0.477) $ 1.480 $ 0.108
-------- -------- -------- ------- ------- ------- ------- ------- --------
LESS DISTRIBUTIONS:
From net investment income $ (0.492) $ (0.404) $ (0.496) $(0.526) $(0.088) $(0.494) $(0.403) $(0.484) $ (0.026)
In excess of net investment
income (0.024) (0.074) (0.127) (0.120) (0.019) (0.023) (0.070) (0.096) (0.022)
From net realized gain on
investment transactions -- (0.233) (0.079) (0.020) -- -- -- -- --
In excess of net realized gain on
investment transactions -- (0.011) -- -- -- -- -- -- --
-------- -------- -------- ------- ------- ------- ------- ------- --------
Total distributions $ (0.516) $ (0.722) $ (0.702) $(0.666) $(0.107) $(0.517) $(0.473) $(0.580) $ (0.048)
-------- -------- -------- ------- ------- ------- ------- ------- --------
NET ASSET VALUE, end of year $ 10.530 $ 10.390 $ 11.570 $10.700 $10.320 $10.020 $10.010 $10.960 $ 10.060
======== ======== ======== ======= ======= ======= ======= ======= ========
TOTAL RETURN (3) 6.64% (4.16)% 15.29% 10.43% 4.03% 5.58% (4.46)% 15.52% 0.60%
RATIOS/SUPPLEMENTAL DATA**:
Net assets, end of period
(000 omitted) $141,859 $150,879 $135,524 $62,498 $11,501 $43,900 $42,085 $24,847 $ 2,464
Ratio of net expenses to average
daily net assets (1) 1.53% 1.46%+ 1.53% 1.52% 1.37%+ 1.28% 1.09%+ 1.00% 1.00%+
Ratio of net investment income to
average daily net assets 4.81% 4.47%+ 4.42% 4.83% 4.33%+ 5.03% 4.59%+ 4.49% 2.26%+
PORTFOLIO TURNOVER (2) -- -- 39% 133% 8% -- -- 3% 0%
<FN>
** For the period from the start of business, July 25, 1991, to September 30,
1991, and for the year ended September 30, 1992 (for Marathon Arizona Fund)
and for the period from the start of business, August 25, 1992, to September
30, 1992, for the year ended September 30, 1993, for the ten months ended
July 31, 1994 and for the year ended July 31, 1995 (for Marathon Colorado
Fund), the operating expenses of the Funds and the Portfolios may reflect a
reduction of the investment adviser fee, an allocation of expenses to the
Investment Adviser, or both. Had such actions not been taken, net investment
income per share and the ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $ 0.513 $ 0.082 $ 0.479 $ 0.373 $ 0.387 $ 0.011
======= ======= ======= ======= ======= ========
RATIOS (As a percentage of average
daily
net assets):
Expenses(1) 1.64% 1.65%+ 1.43% 1.42%+ 1.90% 2.34%+
Net investment income 4.71% 4.05%+ 4.88% 4.26%+ 3.60% 0.92%+
+ Annualized.
++ For the period from the start of business, August 25, 1992 to September 30, 1992.
+++ The per share amount is not in accord with the net realized and unrealized gain (loss) for the period because of the
timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such
time.
* For the period from the start of business, July 25, 1991 to September 30, 1991.
*** For the ten months ended July 31, 1994 (Note 8).
(1) Includes the Fund's share of its corresponding Portfolio's allocated expenses subsequent to February 1, 1993.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The portfolio turnover for the period since the Fund transferred substantially all of its
investable assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in
this report.
(3) Total return is calculated assuming purchase at the net asset value on the first day and a sale at the net asset
value on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at
the net asset value on the payable date. Amount is computed on a nonannualized basis.
</TABLE>
See notes to financial statements
23
<PAGE> 24
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
<TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON CONNECTICUT FUND MARATHON MICHIGAN FUND
---------------------------------------- ---------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, SEPTEMBER 30, JULY 31, SEPTEMBER 30,
------------------- ------------------ ------------------- -----------------------------
1995 1994*** 1993 1992++ 1995 1994*** 1993 1992 1991*
-------- -------- -------- ------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of
year $ 10.050 $ 11.030 $ 10.270 $10.000 $ 10.210 $ 11.110 $ 10.570 $ 10.220 $10.000
-------- -------- -------- ------- -------- -------- -------- -------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.465 $ 0.388 $ 0.471 $ 0.192 $ 0.486 $ 0.398 $ 0.480 $ 0.499 $ 0.247
Net realized and unrealized
gain
(loss) on investments (0.037) (0.883) 0.885 0.331+++ 0.059 (0.794) 0.745 0.507 0.267
-------- -------- -------- ------- -------- -------- -------- -------- -------
Total income (loss) from
operations $ 0.428 $ (0.495) $ 1.356 $ 0.523 $ 0.545 $ (0.396) $ 1.225 $ 1.006 $ 0.514
-------- -------- -------- ------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.465) $ (0.388) $ (0.471) $(0.192) $ (0.486) $ (0.398) $ (0.480) $ (0.499) $(0.247)
In excess of net investment
income (0.043) (0.079) (0.120) (0.061) (0.019) (0.062) (0.114) (0.144) (0.047)
From net realized gain on
investment transactions -- (0.018) (0.005) -- -- (0.028) (0.058) (0.013) --
In excess of net realized gain
on investment transactions -- -- -- -- -- (0.016) (0.033) -- --
-------- -------- -------- ------- -------- -------- -------- -------- -------
Total distributions $ (0.508) $ (0.485) $ (0.596) $(0.253) $ (0.505) $ (0.504) $ (0.685) $ (0.656) $(0.294)
-------- -------- -------- ------- -------- -------- -------- -------- -------
NET ASSET VALUE, end of year $ 9.970 $ 10.050 $ 11.030 $10.270 $ 10.250 $ 10.210 $ 11.110 $ 10.570 $10.220
======== ======== ======== ======= ======== ======== ======== ======== =======
TOTAL RETURN (3) 4.55% (4.61)% 13.62% 5.00% 5.61% (3.66)% 12.06% 10.13% 4.98%
RATIOS/SUPPLEMENTAL DATA**:
Net assets, end of year
(000 omitted) $188,900 $188,453 $160,790 $50,031 $186,363 $197,082 $188,290 $107,034 $31,322
Ratio of net expenses to
average
daily net assets (1) 1.55% 1.43%+ 1.56% 1.35%+ 1.51% 1.49%+ 1.54% 1.61% 1.29%+
Ratio of net investment income
to average daily net assets 4.77% 4.42%+ 4.33% 4.13%+ 4.84% 4.49%+ 4.40% 4.65% 5.12%+
PORTFOLIO TURNOVER (2) -- -- 14% 16% -- -- 28% 72% 5%
<FN>
** For the period from the start of business, May 1, 1992, to September 30,
1992, (for Marathon Connecticut Fund) and for the period from the start of
business, April 19, 1991, to September 30, 1991, (for Marathon Michigan
Fund), the operating expenses of the Funds may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Investment Adviser,
or both. Had such actions not been taken, net investment income per share and
the ratios would have been
as follows:
NET INVESTMENT INCOME PER SHARE $0.184 $0.229
====== ======
RATIOS (As a percentage of average
daily net assets):
Expenses(1) 1.52%+ 1.66%+
Net investment income 3.96%+ 4.75%+
+ Annualized.
++ For the period from the start of business, May 1, 1992, to September 30, 1992.
+++ The per share amount is not in accord with the net realized and unrealized gain (loss) for the period due to the
timing of the sales of Fund shares and the amount of per share realized and unrealized gains and losses at such
time.
* For the period from the start of business, April 19, 1991, to September 30, 1991.
*** For the ten month period ended July 31, 1994 (Note 8).
(1) Includes the Fund's share of its corresponding Portfolio's allocated expenses subsequent to February 1, 1993.
(2) PortfolioTurnover represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The portfolio turnover for the period since the Fund transferred substantially all of its
investable assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in
this report.
(3) Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the
net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Amount is computed on a nonannualized basis.
</TABLE>
See notes to financial statements
24
<PAGE> 25
<TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON MINNESOTA FUND MARATHON NEW JERSEY FUND
--------------------------------------------------- ------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, SEPTEMBER 30, JULY 31, SEPTEMBER 30,
--------------------- --------------------------- ---------------------- -----------------------------
1995 1994*** 1993 1992 1991* 1995 1994*** 1993 1992 1991++
----------- ------- ------- ------- ------- ----------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning
of year $10.040 $10.910 $10.310 $10.080 $10.000 $ 10.410 $ 11.350 $ 10.680 $ 10.380 $10.000
------- ------- ------- ------- ------ -------- -------- -------- -------- -------
INCOME (LOSS) FROM
OPERATIONS:
Net investment
income $ 0.470 $ 0.383 $ 0.473 $ 0.505 $ 0.051 $ 0.505 $ 0.421 $ 0.514 $ 0.516 $ 0.363
Net realized and
unrealized gain
(loss) on
investments (0.053) (0.788) 0.749 0.361 0.129+++ (0.009) (0.836) 0.841 0.452 0.487+++
------- ------- ------- ------- ------ -------- -------- -------- -------- -------
Total income
(loss)
from
operations $ 0.417 $(0.405) $ 1.222 $ 0.866 $ 0.180 $ 0.496 $ (0.415) $ 1.355 $ 0.968 $ 0.850
------- ------- ------- ------- ------ -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net
investment
income $(0.470) $(0.383) $(0.473) $(0.505) $(0.051) $ (0.505) $ (0.421) $ (0.514) $ (0.516) $(0.363)
In excess of net
investment
income (0.037) (0.073) (0.125) (0.131) (0.049) (0.035) (0.075) (0.112) (0.124) (0.107)
From net realized
gain on
investment
transactions -- (0.009) -- -- -- -- (0.029) (0.059) (0.028) --
In excess of net
realized gain
on investment
transactions -- -- (0.024) -- -- (0.006) -- -- -- --
------- ------- ------- ------- ------ -------- -------- -------- -------- -------
Total
distributions $(0.507) $(0.465) $(0.622) $(0.636) $(0.100) $ (0.546) $ (0.525) $ (0.685) $ (0.668) $(0.470)
------- ------- ------- ------- ------ -------- -------- -------- -------- -------
NET ASSET VALUE,
end of year $ 9.950 $10.040 $10.910 $10.310 $10.080 $ 10.360 $ 10.410 $ 11.350 $ 10.680 $10.380
======= ======= ======= ======= ====== ======== ======== ======== ======== =======
TOTAL RETURN (3) 4.41% (3.81)% 12.28% 8.82% 1.56% 5.04% (3.77)% 13.15% 9.64% 8.47%
RATIOS/SUPPLEMENTAL
DATA**:
Net assets, end
of period (000
omitted) $78,970 $79,223 $68,004 $26,670 $ 2,467 $ 404,861 $420,117 $395,421 $235,324 $99,590
Ratio of net
expenses
to average
daily net
assets (1) 1.52% 1.54%+ 1.59% 1.42% 1.71%+ 1.53% 1.48%+ 1.56% 1.63% 1.78%+
Ratio of net
investment
income to
average daily
net assets 4.80% 4.38%+ 4.38% 4.74% 2.59%+ 4.97% 4.64%+ 4.66% 4.83% 4.82%+
PORTFOLIO TURNOVER
(2) -- -- 16% 25% 3% -- -- 20% 74% 68%
<FN>
** For the period from the start of business, July 29, 1991 to September 30, 1991, and for the years ended September 30,
1992 and 1993 (for Marathon Minnesota Fund), the operating expenses of the Fund and the Portfolio may reflect a
reduction of the investment adviser fee, an allocation of expenses to the Investment Adviser, or both. Had such
actions not been taken, net investment income per share and the ratios would have been as follows:
NET INVESTMENT INCOME PER
SHARE $0.472 $0.438 $0.031
====== ====== ======
RATIOS (As a percentage of average
daily net assets):
Expenses(1) 1.61% 2.05% 2.72%+
Net investment
income 4.37% 4.11% 1.58%+
+ Annualized.
++ For the period from the start of business, January 8, 1991, to September 30, 1991.
+++ The per share amount is not in accord with the net realized and unrealized gain (loss) for the period due to the
timing of the sales of Fund shares and the amount of per share realized and unrealized gains and losses at such
time.
* For the period from the start of business, July 29, 1991, to September 30, 1991.
*** For the ten months ended July 31, 1994 (Note 8).
(1) Includes the Fund's share of its corresponding Portfolio's allocated expenses subsequent to February 1, 1993.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The portfolio turnover for the period since the Fund transferred substantially all of its
investable assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in
this report.
(3) Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the
net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Amount is computed on a nonannualized basis.
</TABLE>
See notes to financial statements
25
<PAGE> 26
<TABLE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<CAPTION>
MARATHON PENNSYLVANIA FUND MARATHON TEXAS FUND
------------------------------------------------------ -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, SEPTEMBER 30, JULY 31, SEPTEMBER 30,
--------------------- ------------------------------ ----------------- -----------------
1995 1994*** 1993 1992 1991* 1995 1994*** 1993 1992++
-------- -------- -------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of
year $ 10.340 $ 11.310 $ 10.650 $ 10.350 $ 10.000 $10.210 $11.110 $10.450 $10.000
-------- -------- -------- -------- -------- ------- ------- ------- ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.507 $ 0.422 $ 0.520 $ 0.531 $ 0.378 $ 0.532 $ 0.436 $ 0.515 $ 0.255
Net realized and unrealized
gain
(loss) on investments 0.004+++ (0.841) 0.794 0.430 0.466+++ 0.084 (0.824) 0.787 0.516
-------- -------- -------- -------- -------- ------- ------- ------- ------
Total income (loss) from
operations $ 0.511 $ (0.419) $ 1.314 $ 0.961 $ 0.844 $ 0.616 $(0.388) $ 1.302 $ 0.771
-------- -------- -------- -------- -------- ------- ------- ------- ------
LESS DISTRIBUTIONS:
From net investment income $ (0.507) $ (0.422) $ (0.520) $ (0.531) $ (0.378) $(0.532) $(0.436) $(0.515) $(0.255)
In excess of net investment
income (0.024) (0.069) (0.115) (0.130) (0.116) (0.014) (0.076) (0.106) (0.066)
From net realized gain on
investment transactions -- (0.042) (0.019) -- -- -- -- -- --
In excess of net realized gain
on investment transactions -- (0.018) -- -- -- -- -- (0.021) --
-------- -------- -------- -------- -------- ------- ------- ------- ------
Total distributions $ (0.531) $ (0.551) $ (0.654) $ (0.661) $ (0.494) $(0.546) $(0.512) $(0.642) $(0.321)
-------- -------- -------- -------- -------- ------- ------- ------- ------
NET ASSET VALUE, end of year $ 10.320 $ 10.340 $ 11.310 $ 10.650 $ 10.350 $10.280 $10.210 $11.110 $10.450
======== ======== ======== ======== ======== ======= ======= ======= ======
TOTAL RETURN (3) 5.24% (3.84)% 12.76% 9.56% 8.37% 6.36% (3.65)% 12.90% 7.51%
RATIOS/SUPPLEMENTAL DATA:*
Net assets, end of period
(000 omitted) $495,856 $530,115 $499,601 $280,193 $100,211 $27,762 $26,677 $16,338 $ 4,020
Ratio of net expenses to
average
daily net assets (1) 1.51% 1.46%+ 1.56% 1.64% 1.56%+ 0.99% 0.82%+ 1.06% 1.00%+
Ratio of net investment income
to average daily net assets 5.04% 4.68%+ 4.70% 4.92% 4.93%+ 5.29% 4.81%+ 4.67% 4.61%+
PORTFOLIO TURNOVER (2) -- -- 6% 15% 2% -- -- 7% 11%
<FN>
** For the period from the start of business, January 8, 1991, to September 30, 1991, (for Marathon Pennsylvania Fund),
and for the period from the start of business, March 24, 1992, to September 30, 1992, for the year ended September
30, 1993, for the ten months ended July 31, 1994, and for the year ended July 31, 1995 (for Marathon Texas Fund), the
operating expenses of the Funds and the Portfolios may reflect a reduction of expenses by the Administrator or
Investment Adviser. Had such actions not been taken, net investment income per share and the ratios would have been
as follows:
NET INVESTMENT INCOME PER SHARE $0.375 $0.487 $0.359 $0.350 $0.180
====== ====== ====== ====== ======
RATIOS (As a percentage of
average daily net
assets):
Expenses(1) 1.60%+ 1.44% 1.67%+ 2.55% 2.35%+
Net investment income 4.89%+ 4.84% 3.96%+ 3.18% 3.26%+
+ Annualized.
++ For the period from the start of business, March 24, 1992, to September 30, 1992.
+++ The per share amount is not in accord with the net realized and unrealized gain (loss) for the period due to the
timing of the sales of Fund shares and the amount of per share realized and unrealized gains and losses at such
time.
* For the period from the start of business, January 8, 1991, to September 30, 1991.
*** For the ten months ended July 31, 1994 (Note 8).
(1) Includes the Fund's share of its corresponding Portfolio's allocated expenses subsequent to February 1, 1993.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The portfolio turnover for the period since the Fund transferred substantially all of its
investable assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in
this report.
(3) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset
value on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at
the net asset value on the payable date. Amount is computed on a nonannualized basis.
</TABLE>
See notes to financial statements
26
<PAGE> 27
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Eaton Vance Municipals Trust (the Trust) is an entity of the type commonly known
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 Trust
presently consists of sixty-three Funds, eight of which are included in these
financial statements. They include EV Marathon Arizona Tax Free Fund ("Marathon
Arizona Fund"), EV Marathon Colorado Tax Free Fund ("Marathon Colorado Fund"),
EV Marathon Connecticut Tax Free Fund ("Marathon Connecticut Fund"), EV Marathon
Michigan Tax Free Fund ("Marathon Michigan Fund"), EV Marathon Minnesota Tax
Free Fund ("Marathon Minnesota Fund"), EV Marathon New Jersey Tax Free Fund
("Marathon New Jersey Fund"), EV Marathon Pennsylvania Tax Free Fund ("Marathon
Pennsylvania Fund"), and EV Marathon Texas Tax Free Fund ("Marathon Texas
Fund"). Each Fund invests all of its investable assets in interests in a
separate corresponding open-end management investment company (a Portfolio), a
New York Trust, having the same investment objective as its corresponding Fund.
The Marathon Arizona Fund invests its assets in the Arizona Tax Free Portfolio,
the Marathon Colorado Fund invests its assets in the Colorado Tax Free
Portfolio, the Marathon Connecticut Fund invests its assets in the Connecticut
Tax Free Portfolio, the Marathon Michigan Fund invests its assets in the
Michigan Tax Free Portfolio, the Marathon Minnesota Fund invests its assets in
the Minnesota Tax Free Portfolio, the Marathon New Jersey Fund invests its
assets in the New Jersey Tax Free Portfolio, the Marathon Pennsylvania Fund
invests its assets in the Pennsylvania Tax Free Portfolio, and the Marathon
Texas Fund invests its assets in the Texas Tax Free Portfolio. The value of each
Fund's investment in its corresponding Portfolio reflects the Fund's
proportionate interest in the net assets of that Portfolio (98.3%, 95.8%, 97.1%,
97.6%, 95.6%, 98.8%, 99.2% and 98.4% at July 31, 1995 for the Marathon Arizona
Fund, Marathon Colorado Fund, Marathon Connecticut Fund, Marathon Michigan Fund,
Marathon Minnesota Fund, Marathon New Jersey Fund, Marathon Pennsylvania Fund,
and Marathon Texas Fund, respectively). The performance of each Fund is directly
affected by the performance of its corresponding Portfolio. The financial
statements of each Portfolio, including the portfolio of investments, are
included elsewhere in this report and should be read in conjunction with each
Fund's financial statements. The following is a summary of significant
accounting policies consistently followed by the Trust in the preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles.
A. INVESTMENT VALUATION--Valuation of securities by the Portfolios is discussed
in Note 1 of the Portfolios' Notes to Financial Statements which are included
elsewhere in this report.
B. INCOME--Each Fund's net investment income consists of the Fund's pro rata
share of the net investment income of its corresponding Portfolio, less all
actual and accrued expenses of each Fund determined in accordance with generally
accepted accounting principles.
<TABLE>
C. 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 each year all of its taxable and tax-exempt income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is necessary. At July 31, 1995, the Funds, for
federal income tax purposes had capital loss carryovers which will reduce
taxable income arising from future net realized gain on investments, 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 Funds of any liability for federal income or excise tax. The
amounts and expiration dates of the capital loss carryovers are as follows:
<CAPTION>
FUND AMOUNT EXPIRES
- ------------------------------ ---------- -------------
<S> <C> <C>
Marathon Arizona Fund $ 419,196 July 31, 2003
2,053 July 31, 2002
Marathon Colorado Fund 428,826 July 31, 2003
32,308 July 31, 2002
Marathon Connecticut Fund 248,898 July 31, 2003
Marathon Michigan Fund 1,242,775 July 31, 2003
662,307 July 31, 2002
Marathon Minnesota Fund 802,699 July 31, 2003
11,959 July 31, 2002
Marathon New Jersey Fund 25,638 July 31, 2003
Marathon Pennsylvania Fund 4,209,137 July 31, 2003
439,448 July 31, 2002
Marathon Texas Fund 184,976 July 31, 2003
68,395 July 31, 2002
</TABLE>
Additionally, at July 31, 1995, net capital losses of $5,344,462, $2,165,312,
$4,791,636, $4,548,995, $3,971,887, $16,512,658, $17,121,578 and $924,936 for
the Marathon Arizona Fund, Marathon Colorado Fund, Marathon Connecticut Fund,
Marathon Michigan Fund, Marathon Minnesota Fund, Marathon New Jersey Fund,
Marathon Pennsylvania Fund and Marathon Texas Fund, respectively, attributable
to security transactions incurred after October 31, 1994, are treated as arising
on the first day of the Fund's next taxable year. Dividends paid by each Fund
from net interest on tax-exempt municipal bonds allocated from its corresponding
Portfolio are not includable by shareholders as gross income for federal income
tax purposes because each Fund and Portfolio intend to meet certain requirements
of the Internal Revenue Code applicable to regulated investment companies which
will enable the Funds to pay exempt-interest dividends. The portion of such
interest, if any, earned on private activity bonds issued after August 7, 1986,
may be considered a tax preference item to shareholders.
D. DEFERRED ORGANIZATION EXPENSES--Cost incurred by each Fund in connection with
its organization, including registration costs, are being amortized on the
straight-line basis over five years beginning on the date each Fund commenced
operations.
E. DISTRIBUTION COSTS--For book purposes, commissions paid on the sale of Fund
shares and other distribution costs are charged to operations. As a result of a
recent Internal Revenue Service ruling, the Funds changed their tax accounting
for commissions paid from charging the expenses to paid-in capital to charging
the expense to operations. The change had no effect on either the Funds current
yield or total return (Notes 2 and 5).
F. OTHER--Investment transactions are accounted for on a trade date basis.
27
<PAGE> 28
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(2) DISTRIBUTIONS TO SHAREHOLDERS
The net income of each Fund is determined daily and substantially all of the net
income so determined is declared as a dividend to shareholders of record at the
time of declaration. In addition, each Fund declares each day an amount equal to
the excess of tax basis net income over book basis net income, which amount is
reported for financial statement purposes as a distribution in excess of net
investment income. Distributions are paid monthly. Distributions of allocated
realized capital gains, if any, are made at least annually. Shareholders may
reinvest capital gain distributions in additional shares of a Fund at the net
asset value as of the ex-dividend date. Distributions are paid in the form of
additional shares or, at the election of the shareholders, in cash. The Funds
distinguish between distributions on a tax basis and a financial reporting
basis. Generally accepted accounting principles require that only distributions
in excess of tax basis earnings and profits be reported in the financial
statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result in temporary over distributions for financial statements
purposes are classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital.
<TABLE>
During the year ended July 31, 1995, the following reclassifications were made
due to permanent differences between book and tax accounting for distribution
costs, and certain distributions related to capital gains:
<CAPTION>
MARATHON MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN MINNESOTA
INCREASE/(DECREASE) FUND FUND FUND FUND FUND
- ------------------------------------------------------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Accumulated net realized loss on investment and
financial futures transactions $ (35,548) $ -- $ (1,707) $ 23,685 $ (72,804)
Accumulated distributions in excess of net investment
income (684,840) (216,642) (914,124) (960,399) (386,592)
Paid-in capital (720,388) (216,642) (915,831) (936,714) (459,396)
</TABLE>
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON
NEW JERSEY PENNSYLVANIA TEXAS
INCREASE/(DECREASE) FUND FUND FUND
- ---------------------------------------------------------------------- ----------- ------------ ---------
<S> <C> <C> <C>
Accumulated net realized loss on investment and financial futures
transactions $ 7,702 $ 41,590 $ (446)
Accumulated distributions in excess of net investment income (2,016,089) (2,546,422) (138,962)
Paid-in capital (2,008,387) (2,504,832) (139,408)
</TABLE>
Net investment income, net realized gains and net assets were not affected by
these reclassifications.
28
<PAGE> 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Funds' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
MARATHON ARIZONA FUND MARATHON COLORADO FUND
----------------------------------------- -----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, SEPTEMBER 30, JULY 31, JULY 31, SEPTEMBER 30,
1995 1994* 1993 1995 1994* 1993
------------ ---------- ------------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sales 1,784,912 3,822,299 6,163,745 917,328 2,022,340 2,033,936
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 287,027 383,042 213,457 119,919 77,286 28,266
Redemptions (3,129,557) (1,396,565) (502,865) (859,856) (163,785) (40,475)
----------- ---------- --------- -------- --------- ---------
Net increase
(decrease) (1,057,618) 2,808,776 5,874,337 177,391 1,935,841 2,021,727
========== ========== ========= ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
MARATHON CONNECTICUT FUND MARATHON MICHIGAN FUND
----------------------------------------- -----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, SEPTEMBER 30, JULY 31, JULY 31, SEPTEMBER 30,
1995 1994* 1993 1995 1994* 1993
------------ ---------- ------------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sales 2,193,967 4,636,572 9,844,909 1,245,087 3,144,803 7,133,341
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 567,064 457,760 311,593 494,913 463,590 448,973
Redemptions (2,564,353) (927,753) (445,090) (2,869,226) (1,243,377) (765,384)
---------- --------- ---------- ---------- ---------- ---------
Net increase
(decrease) 196,678 4,166,579 9,711,412 (1,129,226) 2,365,016 6,816,930
========== ========= ========= ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
MARATHON MINNESOTA FUND MARATHON NEW JERSEY FUND
----------------------------------------- -----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, SEPTEMBER 30, JULY 31, JULY 31, SEPTEMBER 30,
1995 1994* 1993 1995 1994* 1993
------------ ---------- ------------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sales 970,983 2,031,340 3,738,639 3,794,186 8,068,513 13,755,956
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 231,662 173,859 140,731 1,123,599 978,660 915,881
Redemptions (1,157,611) (548,193) (231,044) (6,182,637) (3,546,588) (1,857,554)
---------- --------- --------- ---------- ---------- ----------
Net increase
(decrease) 45,034 1,657,006 3,648,326 (1,264,852) 5,500,585 12,814,283
========== ========= ========= ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MARATHON PENNSYLVANIA FUND MARATHON TEXAS FUND
----------------------------------------- -----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, SEPTEMBER 30, JULY 31, JULY 31, SEPTEMBER 30,
1995 1994* 1993 1995 1994* 1993
------------ ---------- ------------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sales 3,455,743 9,286,690 18,534,378 428,563 1,206,045 1,126,791
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 1,241,799 1,202,782 1,011,468 51,552 38,689 16,101
Redemptions (7,922,783) (3,368,657) (1,674,161) (392,169) (101,806) (56,597)
---------- ---------- ---------- -------- --------- ---------
Net increase
(decrease) (3,225,241) 7,120,815 17,871,685 87,946 1,142,928 1,086,295
========== ========= ========== ======== ========= =========
<FN>
* For the ten months ended July 31, 1994 (Note 8).
</TABLE>
29
<PAGE> 30
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(4) TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves as the administrator of each Fund, but
receives no compensation. The portfolios have engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services. See
Note 2 of the Portfolios' Notes to Financial Statements which are included
elsewhere in this report. To enhance the net income of the Marathon Texas Fund,
$46,683 of expenses related to the operation of the Marathon Texas Fund was
allocated to EVM. Except as to Trustees of the Funds and the Portfolios who are
not members of EVM's or BMR's organization, officers and Trustees receive
remuneration for their services to each Fund out of such investment adviser fee.
Investors Bank & Trust Company (IBT), an affiliate of EVM, serves as custodian
to the Funds and the Portfolios. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based on
the average cash balances the Funds or the Portfolios maintain with IBT. Certain
of the officers and Trustees of the Funds and Portfolios are officers and
directors/trustees of the above organizations (Note 5).
- --------------------------------------------------------------------------------
(5) DISTRIBUTION PLAN
Each Fund has adopted a distribution plan (the Plans) pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plans require the Funds to pay
the principal underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal
to 1/365 of 0.75% of each Fund's daily net assets, for providing ongoing
distribution services and facilities to the respective Fund. A Fund will
automatically discontinue payments to EVD during any period in which there are
no outstanding Uncovered Distribution Charges, which are equivalent to the sum
of (i) 5% of the aggregate amount received by the Fund for shares sold plus
(ii) distribution fees calculated by applying the rate of 1% over the
prevailing prime rate to the outstanding balance of Uncovered Distribution
Charges of EVD, reduced by the aggregate amount of contingent deferred sales
charges (Note 6) and daily amounts theretofore paid to EVD. The amount payable
to EVD with respect to each day is accrued on such day as a liability of each
Fund and, accordingly, reduces the Fund's net assets. For the year ended July
31, 1995, Marathon Arizona Fund, Marathon Colorado Fund, Marathon Connecticut
Fund, Marathon Michigan Fund, Marathon Minnesota Fund, Marathon New Jersey
Fund, Marathon Pennsylvania Fund, and Marathon Texas Fund, paid or accrued
$1,086,172, $330,051, $1,395,069, $1,413,428, $588,748, $3,055,813, $3,771,247,
and $198,956, respectively, to or payable to EVD, representing 0.75%
(annualized) of average daily net assets. At July 31, 1995, the amount of
Uncovered Distribution Charges of EVD calculated under the Plans for Marathon
Arizona Fund, Marathon Colorado Fund, Marathon Connecticut Fund, Marathon
Michigan Fund, Marathon Minnesota Fund, Marathon New Jersey Fund, Marathon
Pennsylvania Fund, and Marathon Texas Fund were approximately $5,271,000,
$1,925,000, $7,583,000, $6,378,000, $3,041,000, $13,741,000, $17,253,000 and
$1,033,000, respectively.
In addition, the Plans authorize the Funds to make payments of service fees to
the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of each Fund's average daily net assets for any fiscal year. The
Trustees have initially implemented the Plans by authorizing the Funds to make
quarterly service fee payments to the Principal Underwriter and Authorized Firms
in amounts not expected to exceed 0.20% per annum of each Fund's average daily
net assets based on the value of Fund shares sold by such persons and remaining
outstanding for at least one year. For the year ended July 31, 1995, Marathon
Arizona Fund, Marathon Colorado Fund, Marathon Connecticut Fund, Marathon
Michigan Fund, Marathon Minnesota Fund, Marathon New Jersey Fund, Marathon
Pennsylvania Fund, and Marathon Texas Fund paid or accrued service fees to or
payable to EVD in the amount of $180,888, $39,637, $240,408, $275,395, $103,585,
$570,317, $768,980 and $29,572, respectively. Service fee payments are made for
personal services and/or maintenance of shareholder accounts. Service fees paid
to EVD and Authorized Firms are separate and distinct from the sales commissions
and distribution fees payable by each Fund to EVD, and as such are not subject
to automatic discontinuance when there are no outstanding Uncovered Distribution
Charges of EVD.
Certain officers and Trustees of the Fund are officers or directors of EVD.
30
<PAGE> 31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(6) CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally the CDSC is based upon the
lower of the net asset value at date of redemption or date of purchase. No
charge is levied on Fund shares acquired by reinvestment of dividends or capital
gains distributions. The CDSC is imposed at declining rates that begin at 5% in
the case of redemptions in the first and second year after purchase declining
one percentage point each subsequent year. No CDSC is levied on shares which
have been sold to EVD or its affiliates or to their respective employees or
clients. CDSC charges are paid to EVD to reduce the amount of Uncovered
Distribution Charges calculated under the Fund's Distribution Plan. CDSC charges
received when no Uncovered Distribution Charges exist will be credited to the
Fund. EVD received approximately $862,000, $235,000, $621,000, $704,000,
$351,000, $1,772,000, $2,034,000 and $57,000, respectively, of CDSC paid by
shareholders of Marathon Arizona Fund, Marathon Colorado Fund, Marathon
Connecticut Fund, Marathon Michigan Fund, Marathon Minnesota Fund, Marathon New
Jersey Fund, Marathon Pennsylvania Fund, and Marathon Texas Fund, respectively,
for the year ended July 31, 1995.
- --------------------------------------------------------------------------------
<TABLE>
(7) INVESTMENT TRANSACTIONS
Increases and decreases in each Fund's investment in its corresponding Portfolio
for the year ended July 31, 1995 were as follows:
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increases $18,673,712 $9,111,084 $22,566,610 $13,743,618
Decreases 37,903,241 10,062,715 31,591,691 36,391,363
</TABLE>
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increases $ 9,632,988 $40,828,515 $36,366,527 $ 4,582,917
Decreases 13,801,433 78,051,576 99,305,243 5,159,759
</TABLE>
- --------------------------------------------------------------------------------
(8) CHANGE IN FISCAL YEAR
The Funds changed their fiscal year end from September 30, to July 31, effective
July 31, 1994.
31
<PAGE> 32
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
TO THE TRUSTEES AND SHAREHOLDERS OF
EATON VANCE MUNICIPALS TRUST:
We have audited the accompanying statements of assets and liabilities of EV
Marathon Arizona Tax Free Fund, EV Marathon Colorado Tax Free Fund, EV Marathon
Connecticut Tax Free Fund, EV Marathon Michigan Tax Free Fund, EV Marathon
Minnesota Tax Free Fund, EV Marathon New Jersey Tax Free Fund, EV Marathon
Pennsylvania Tax Free Fund and EV Marathon Texas Tax Free Fund (the Funds)
(certain of the series constituting Eaton Vance Municipals Trust) as of July 31,
1995, the related statements of operations for the year then ended, the
statements of changes in net assets for the year ended July 31, 1995, the ten
months ended July 31, 1994 and the year ended September 30, 1993, and the
financial highlights for each of the years in the five-year period ended July
31, 1995. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
aforementioned funds of Eaton Vance Municipals Trust at July 31, 1995, the
results of their operations, the changes in their net assets and their financial
highlights for the respective stated periods in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
AUGUST 25, 1995
32
<PAGE> 33
<TABLE>
- --------------------------------------------------------------------------------
Arizona Tax Free Portfolio
Portfolio of Investments - July 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 4.8%
A1 AA $1,000 Arizona Board of Regents,
Arizona State University,
5.90%, 7/01/09 $ 1,015,710
NR AAA 1,000 City of Glendale,
Thunderbird Graduate
School, CLEE, 7.125%,
7/01/20 1,099,650
A1 AA 1,250 Arizona Board of Regents,
University of Arizona,
6.25%, 6/01/11 1,283,100
NR NR 2,000 Arizona Educational Loan
Marketing Corporation,
(AMT) 6.30%, 12/01/08 1,921,460
A NR 1,500 Student Loan Acquisition
Authority of Arizona,
(AMT) 7.625%, 5/01/10 1,630,230
------------
$ 6,950,150
------------
ESCROWED - 6.2%
Aaa AA $2,500 Arizona Transportation
Board Highway, 6.50%,
7/01/11 $ 2,797,850
Aaa AAA 7,500 Maricopa County, Single
Family Mortgage, 0%,
2/01/16 2,145,825
NR AA 2,500 City of Phoenix, Street &
Highway User, 6.25%,
7/01/11 2,696,950
Baa1 AAA 630 Puerto Rico Electric Power
Authority, 7.125%, 7/01/14 705,039
NR NR 500 City of Scottsdale,
Westminster Village,
Multifamily Housing,
10.00%, 6/01/17 565,310
------------
$ 8,910,974
------------
GENERAL OBLIGATION - 7.9%
Aa AA+ $1,500 City of Phoenix, 6.375%,
7/01/13 $ 1,556,085
Aa AA+ 1,000 City of Phoenix, 5.55%,
7/01/09 1,001,860
Aa AA+ 3,000 City of Phoenix, 5.10%,
7/01/13 2,774,070
Aa1 AA+ 1,000 City of Scottsdale, 5.50%,
7/01/12 957,500
NR A 2,000 City of Phoenix, Tatum
Ranch Community, 6.875%,
7/01/16 2,106,600
Aa AA+ 1,000 City of Tempe, 5.25%,
7/01/15 925,490
Aa AA 1,300 Scottsdale Unified School
District No. 48 of
Maricopa County, 4.60%,
7/01/11 1,146,665
Baa1 A 1,000 Commonwealth of Puerto
Rico, 5.75%, 7/01/16 953,220
------------
$ 11,421,490
------------
HOSPITALS - 3.2%
NR BBB $1,130 Arizona Health Facilities
Authority, Phoenix
Memorial Hospital, 8.125%,
6/01/12 $ 1,202,376
NR BBB 1,250 Arizona Health Facilities
Authority, Phoenix
Memorial Hospital, 8.20%,
6/01/21 (2) 1,331,413
Baa BB+ 1,000 Maricopa County, Sun
Health Corporation,
8.125%, 4/01/12 1,065,980
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR NR 915 City of Winslow, Winslow
Memorial Hospital Project,
9.50%, 6/01/22 1,003,535
------------
$ 4,603,304
------------
HOUSING - 5.7%
NR A $2,000 Maricopa County, Laguna
Point Apartments,
Multifamily Housing,
6.75%, 7/01/09 $ 1,990,440
NR AAA 2,775 City of Phoenix, Chris
Ridge Village Project, FHA
Insured Mortgage Loan,
6.80%, 11/01/25 2,812,546
NR AA 1,000 City of Phoenix, Woodstone
and Silver Springs
Apartments, Multifamily
Housing, (Asset Guaranty),
6.25%, 4/01/23 989,500
Aaa NR 1,500 City of Phoenix, Meadow
Glen Apartments,
Multifamily Housing, (GNMA
Collateralized) 5.80%,
8/20/28 1,367,325
NR AAA 1,000 City of Tempe, Multifamily
Housing, Quadrangle
Village Apartments, FHA
Insured Mortgage Loan,
6.25%, 6/01/26 982,450
------------
$ 8,142,261
------------
INDUSTRIAL DEVELOPMENT
REVENUE / IDB - 3.7%
A1 NR $1,000 City of Casa Grande,
Pollution Control,
Frito-Lay Inc., 6.60%,
12/01/10 $ 1,059,800
A2 A 4,500 Greenlee County, Pollution
Control, Phelps Dodge
Corporation, 5.45%,
6/01/09 4,318,155
------------
$ 5,377,955
------------
INSURED GENERAL OBLIGATION - 8.6%
Aaa AAA $1,000 Peoria Unified School
District No. 11 of
Maricopa County, (MBIA)
6.40%, 7/01/10 $ 1,051,570
Aaa AAA 1,300 Alhambra Elementary School
District No. 68 of
Maricopa County, (AMBAC)
5.50%, 7/01/07 1,322,776
Aaa AAA 1,000 Alhambra Elementary School
District No. 68 of
Maricopa County, (AMBAC)
5.625%, 7/01/13 997,140
Aaa AAA 1,000 Alhambra Elementary School
District No. 68 of
Maricopa County, (AMBAC)
5.125%, 7/01/13 921,170
Aaa AAA 1,000 Paradise Valley Unified
School District No. 69 of
Maricopa County, (AMBAC),
5.00%, 7/01/09 929,690
</TABLE>
33
<PAGE> 34
<TABLE>
- --------------------------------------------------------------------------------
ARIZONA TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED GENERAL OBLIGATION -
(CONTINUED)
Aaa AAA 1,000 Chandler Unified School
District No. 80 of
Maricopa County, (FGIC)
6.40%, 7/01/10 1,047,450
Aaa AAA 1,000 Pima County, School
District No. 1, Tucson
Project, (FGIC) 5.40%,
7/01/13 949,340
Aaa AAA 1,750 Pima County, School
District No. 1, Tucson
Project, (FGIC) 5.875%,
7/01/14 1,742,965
Aaa AAA 1,000 Commonwealth of Puerto
Rico, (FSA) 7/01/20 (1) 963,790
Aaa AAA 1,500 Commonwealth of Puerto
Rico, (AMBAC) 7/01/15 (1) 1,492,485
Aaa AAA 1,000 Commonwealth of Puerto
Rico, (FSA) 7/01/22 (1) 1,003,110
------------
$ 12,421,486
------------
INSURED HOSPITALS - 13.1%
Aaa AAA $2,000 Maricopa County, Hospital
District No.1, (FGIC)
6.125%, 6/01/15 (2) $ 2,021,080
Aaa AAA 3,500 Maricopa County, Catholic
Healthcare West, (MBIA)
5.625%, 7/01/23 3,336,655
Aaa AAA 2,000 Maricopa County, Samaritan
Health, (MBIA) 7.00%,
12/01/16 2,280,640
Aaa AAA 2,000 Mohave County, Hospital
District No.1, Kingman
Regional Medical Center,
(FGIC) 6.50%, 6/01/15 2,084,440
Aaa AAA 1,500 Pima County, Tucson
Medical Center, (MBIA)
6.375%, 4/01/12 1,550,700
Aaa AAA 3,500 Pima County, Tucson
Medical Center, (MBIA)
5.00%, 4/01/15 3,098,795
Aaa AAA 1,000 Pima County, Carondelet
Health Care Corporation,
(MBIA) 5.25%, 7/01/11 938,350
Aaa AAA 1,000 Pima County, Carondelet
Health Care Corporation,
(MBIA) 5.25%, 7/01/12 930,980
Aaa AAA 2,000 University of Arizona
Medical Center
Corporation, (MBIA) 5.00%,
7/01/13 1,802,480
Aaa AAA 1,000 University of Arizona
Medical Center
Corporation, (MBIA) 5.00%,
7/01/21 869,300
------------
$ 18,913,420
------------
INSURED HOUSING - 1.3%
Aaa AAA $1,975 City of Sierra Vista,
Mountain View Apartments,
FHA Insured Mortgage,
(MBIA) 5.75%, 1/01/24 $ 1,849,331
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED UTILITIES - 5.9%
Aaa AAA $4,000 Navajo County, Pollution
Control, Arizona Public
Service Co., (AMBAC)
5.50%, 8/15/28 $ 3,687,000
Aaa AAA 3,500 Pima County, Irvington
Power Project, (FSA)
7.25%, 7/15/10 (2) 3,842,300
Aaa AAA 1,000 Arizona State Power
Authority, Hoover Uprating
Project, (MBIA) 5.25%,
10/01/17 909,770
------------
$ 8,439,070
------------
INSURED MISCELLANEOUS - 0.7%
Aaa AAA $1,000 Maricopa County Stadium
District, (MBIA) 5.50%,
7/01/13 $ 956,070
------------
INSURED SPECIAL TAX - 1.3%
Aaa AAA $1,750 City of Phoenix, Civic
Improvement Excise Tax,
(MBIA) 6.60%, 7/01/08 $ 1,895,793
------------
INSURED TRANSPORTATION - 0.7%
Aaa AAA $1,000 City of Tucson, Junior
Lien Street and Highway,
(MBIA) 5.50%, 7/01/12 $ 952,370
------------
INSURED WATER & SEWER - 1.4%
Aaa AAA $1,000 City of Chandler, Water
and Sewer, (FGIC) 6.25%,
7/01/13 $ 1,024,610
Aaa AAA 1,200 City of Phoenix, Civic
Improvement Wastewater
Systems, (MBIA) 5.00%,
7/01/18 1,058,340
------------
$ 2,082,950
------------
TRANSPORTATION - 6.7%
Aa AA $1,000 State of Arizona,
Transportation Board &
Highway, 5.00%, 7/01/10 $ 928,360
Aa AA 2,000 State of Arizona,
Transportation Board &
Highway, 5.10%, 7/01/11 1,851,780
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/01/20 881,340
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/01/21 879,370
</TABLE>
34
<PAGE> 35
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION - (CONTINUED)
A1 A+ 2,250 City of Tucson, Arizona,
Senior Lien Street and
Highway, 5.50%, 7/01/09 2,173,523
NR BBB 3,000 Guam Airport Authority,
(AMT) 6.70%, 10/01/23 2,999,610
------------
$ 9,713,983
------------
UTILITIES - 20.3%
Baa2 BBB $1,500 Coconino County, Pollution
Control, Nevada Power Co.,
7.125%, 10/01/06 $ 1,502,730
Ba2 BB 2,500 Maricopa County, Pollution
Control, Public Service
Company of New Mexico,
Palo Verde Project,
6.375%, 8/15/23 2,376,600
Baa1 BBB 5,300 Navajo County, Pollution
Control, Arizona Public
Service Co., 5.875%,
8/15/28 4,932,975
NR AAA 1,000 Mohave County, Citizens
Utilities Company Project,
(AMT) 5.80%, 11/15/28 958,740
A A+ 1,000 Puerto Rico Telephone
Authority, 1/01/20 (1) 1,009,540
A1 AA- 1,000 Central Arizona Water
Conservation District,
Central Arizona Project,
5.50%, 11/01/09 989,209
NR BBB 1,200 Guam Power Authority,
6.30%, 10/01/12 1,193,652
NR BBB 1,250 Guam Power Authority,
6.30%, 10/01/22 1,218,162
Baa1 A- 1,500 Puerto Rico Electric Power
Authority, 7.00%, 7/01/07 1,603,410
Baa1 A- 5,000 Puerto Rico Electric Power
Authority, 5.00%, 7/01/12 4,429,250
Baa1 A- 370 Puerto Rico Electric Power
Authority, 7.125%, 7/01/14 401,210
Aa AA 1,750 Salt River Project
Agricultural Improvement
and Power District, Salt
River Project Electric
System, 5.50%, 1/01/28 1,600,008
Aa AA 3,500 Salt River Project
Agricultural Improvement
and Power District, Salt
River Project Electric
System, 5.50%, 1/01/25 3,227,735
Aa AA 1,000 Salt River Project
Agricultural Improvement
and Power District, Salt
River Project Electric
System, 6.25%, 1/01/27 1,012,300
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa AA 1,000 Salt River Project
Agricultural Improvement
and Power District, Salt
River Project Electric
System, 5.25%, 1/01/13 917,570
Aa AA 2,000 Salt River Project
Agricultural Improvement
and Power District, Salt
River Project Electric
System, 5.25%, 1/01/19 1,796,320
------------
$ 29,169,411
------------
WATER & SEWER - 8.5%
Aa AA+ $2,000 State of Arizona,
Wastewater Management
Authority, 6.80%, 7/01/11
(2) $ 2,163,140
A1 A 1,100 City of Phoenix, Water
System, 5.00%, 7/01/18 966,405
A1 A 5,000 City of Phoenix, Water
System, 4.75%, 7/01/23 4,140,550
A1 AA- 1,000 City of Phoenix, Water
System, 5.40%, 7/01/14 942,330
A1 A+ 1,000 City of Tucson, Water
System, 6.50%, 7/01/16 1,046,420
A1 A+ 1,000 City of Tucson, Water
System, 5.50%, 7/01/08 1,019,410
A1 A+ 1,000 City of Tucson, Water
System, 5.50%, 7/01/09 989,410
A1 A+ 1,000 City of Tucson, Water
System, 5.50%, 7/01/10 979,050
------------
$ 12,246,715
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $140,218,111) $144,046,733
============
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) Security has been segregated to cover margin requirements for open financial
futures contracts.
</TABLE>
The Portfolio invests primarily in debt securities issued by Arizona
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at July 31, 1995, 36.6% of the securities in the portfolio of
investments are backed by bond insurance of various financial guaranty assurance
agencies. The aggregate percentage by financial institution ranges from 0.9% to
16.3% of total investments.
See notes to financial statements
35
<PAGE> 36
<TABLE>
- --------------------------------------------------------------------------------
Colorado Tax Free Portfolio
Portfolio of Investments - July 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 2.0%
A1 A+ $1,000 City of Colorado Springs,
Colorado College Project,
5.125%, 6/01/16 $ 902,140
-----------
ESCROWED - 1.6%
Aaa AAA $4,000 Colorado Health Facilities
Authority, Liberty Heights
Project, (FSA) 0%, 7/15/24 $ 538,160
NR AAA 150 Puerto Rico Highway and
Transportation Authority,
6.50%, 7/01/22 169,296
-----------
$ 707,456
-----------
GENERAL OBLIGATION - 9.4%
A NR $ 500 City of Aspen, 5.625%,
4/15/14 $ 467,330
Aa AA 1,000 City and County of Denver,
5.10%, 9/01/09 938,710
Aa AA 1,000 Boulder and Gilpin
Counties, Boulder Valley
School District, 6.30%,
12/01/13 1,032,600
NR A 750 Larimer, Weld & Boulder
Counties, Thompson School
District, 6.05%, 12/15/08 770,422
Baa1 A 1,000 Commonwealth of Puerto
Rico, 5.75%, 7/01/15 959,900
NR NR 100 Virgin Islands Public
Finance Authority, 7.25%,
10/01/18 103,155
-----------
$ 4,272,117
-----------
HOSPITALS - 10.4%
Baa1 BBB+ $1,250 Boulder County, Longmont
United Hospital, 5.875%,
12/01/20 $ 1,160,750
Baa BBB 2,050 Colorado Health Facilities
Authority, Rocky Mountain
Adventist Healthcare,
6.625%, 2/01/13 1,999,304
A NR 250 Colorado Health Facilities
Authority, Craig Hospital,
5.375%, 12/01/13 228,340
A NR 500 Colorado Health Facilities
Authority, Craig Hospital,
5.50%, 12/01/21 449,450
Baa1 BBB+ 250 Colorado Health Facilities
Authority, Swedish Medical
Center, 6.80%, 1/01/23 252,050
NR BBB- 650 Colorado Health Facilities
Authority, National Jewish
Center, 6.875%, 2/15/12 628,524
-----------
$ 4,718,418
-----------
HOUSING - 11.6%
NR NR $ 350 Lake Creek Affordable
Housing Corporation,
Multifamily Housing, 8.00%,
12/01/23 $ 352,786
NR AAA 1,000 City of Lakewood, Multi
Family Housing FHA Insured
Mortgage Loan, (AMT) 6.65%,
10/01/25 1,004,010
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa NR 1,975 Colorado Housing and
Finance Authority, Single
Family Access Program,
7.90%, 12/01/24 2,163,810
Aa NR 990 Colorado Housing and
Finance Authority, Single
Family Access Program,
8.00%, 12/01/24 (3) 1,093,682
Aa NR 600 Colorado Housing and
Finance Authority, Single
Family Housing, (AMT)
7.65%, 12/01/25 (2) 651,786
-----------
$ 5,266,074
-----------
INDUSTRIAL DEVELOPMENT
REVENUE - 3.4%
A2 NR $1,750 Puerto Rico Pollution
Control, American Home
Products Corporation,
5.10%, 12/01/18 $ 1,541,488
-----------
INSURED EDUCATION - 2.1%
Aaa AAA $1,000 Board of Trustees of the
State Colleges in Colorado,
Adams State College of
Colorado Project, (MBIA)
5.70%, 5/15/14 $ 976,260
-----------
INSURED GENERAL OBLIGATION - 11.4%
Aaa AAA $ 500 City and County of Denver
School District #1, (MBIA)
5.125%, 12/01/12 $ 455,225
Aaa AAA 1,000 Douglas and Elbert
Counties, Douglas County
School District, (MBIA)
6.40%, 12/15/11 1,050,140
Aaa AAA 1,750 Eagle, Garfield & Routt
Counties, School District
No. RE 50J, (FGIC) 6.30%,
12/01/12 1,827,648
Aaa AAA 1,000 Poudre School District R-1
of Larimer County, (MBIA)
6.50%, 12/15/11 1,060,090
Aaa AAA 750 Pueblo County School
District No.70, Pueblo
Rural, (AMBAC) 6.40%,
12/01/14 778,703
-----------
$ 5,171,806
-----------
INSURED HOSPITALS - 15.0%
Aaa AAA $2,500 Colorado Health Facilities
Authority, Sisters of
Charity, (MBIA) 5.25%,
5/15/14 $ 2,292,825
Aaa AAA 2,000 Colorado Health Facilities
Authority, Boulder
Community Hospital, (MBIA)
5.875%, 10/01/23 1,942,220
Aaa AAA 1,000 Colorado Springs Hospital,
(MBIA) 6.00%, 12/15/24 980,970
Aaa AAA 500 City and County of Denver,
Childrens Hospital, (FGIC)
6.00%, 10/01/15 504,490
</TABLE>
36
<PAGE> 37
<PAGE> 38
<TABLE>
- --------------------------------------------------------------------------------
Connecticut Tax Free Portfolio
Portfolio of Investments - July 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 10.8%
Baa BBB $1,000 Connecticut HEFA,
University of Hartford,
6.75%, 7/01/12 $ 975,350
Baa BBB 5,500 Connecticut HEFA,
University of Hartford,
6.80%, 7/01/22 5,302,660
NR BBB- 6,175 Connecticut HEFA,
Quinnipiac College, 6.00%,
7/01/23 5,497,294
NR BBB- 1,000 Connecticut HEFA, Sacred
Heart University, 6.80%,
7/01/12 1,045,400
NR A- 1,000 Connecticut HEFA, Sacred
Heart University, 5.80%,
7/01/23 842,940
NR A 1,125 Connecticut HEFA, Taft
School, 5.40%, 7/01/20 1,011,476
Aaa AAA 6,000 Connecticut HEFA, Yale
University, 5.929%,
6/10/30 5,929,680
------------
$ 20,604,800
------------
ESCROWED TO MATURITY - 2.4%
NR AA- $ 650 State of Connecticut
Government Obligations
Bonds, 6.875%, 7/15/10 $ 729,775
NR AAA 800 Connecticut Special Tax
Obligation Bonds,
Transportation
Infrastructure Purposes,
6.75%, 6/01/11 906,304
A1 AA- 645 Connecticut Special Tax
Obligation Bonds,
Transportation
Infrastructure Purposes,
6.50%, 7/01/09 706,475
A1 AA- 300 Amity RSD No. 5 Bonds,
6.80%, 6/15/08 326,166
Baa BBB 1,630 City of Stratford,
Government Obligations
Bonds, 7.30%, 3/01/12 1,869,561
------------
$ 4,538,281
------------
GENERAL OBLIGATION - 6.1%
Aa1 NR $ 350 City of Avon, 4.60%,
1/15/07 $ 327,159
Aa NR 525 Town of Guilford, 4.75%,
11/15/10 476,017
Aa NR 525 Town of Guilford, 4.75%,
11/15/11 471,466
A AA- 2,000 City of Bridgeport,
6.125%, 3/01/05 2,073,380
Aa AA- 1,750 State of Connecticut,
Capital Appreciation
Bonds, 0%, 11/01/09 781,515
AA AA- 1,000 State of Connecticut,
5.50%, 3/15/10 983,190
AA AA- 500 State of Connecticut,
5.50%, 3/15/11 491,235
Aa AA 1,270 City of Danbury, 4.50%,
2/01/14 1,062,634
Aa1 NR 650 City of Farmington, 5.70%,
1/15/11 657,306
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR BBB 500 Government of Guam, 5.40%,
11/15/18 431,735
Aa1 AA+ 925 City of Norwalk Maritime
Center Project Bonds,
6.05%, 2/01/09 952,574
Baa1 A 2,000 Puerto Rico PBA Bonds,
5.50%, 7/01/21 1,832,480
NR NR 1,000 Virgin Islands PFA Revenue
Bonds, 7.25%, 10/01/18 1,031,550
------------
$ 11,572,241
------------
HEALTH CARE (NON-HOSPITAL) - 12.5%
A1 AA- $ 600 Connecticut HEFA, Nursing
Home Program NHP (Noble
Horizons), 6.00%, 11/01/22 $ 586,554
A1 AA- 1,000 Connecticut HEFA, NHP
(Jewish Home-Fairfield),
6.25%, 11/01/20 1,008,720
A1 AA- 655 Connecticut HEFA, NHP (St.
Camillus), 6.25%, 11/01/18 661,766
A1 AA- 3,250 Connecticut HEFA, NHP (St.
Joseph's Manor) 6.25%,
11/01/16 3,283,573
A1 AA- 1,365 Connecticut HEFA, NHP
(Sharon Healthcare) 6.25%,
11/01/14 1,385,762
Aa3 NR 9,000 Connecticut Development
Authority Health Care
Bonds (Duncaster), 6.75%,
9/01/15 9,301,230
A1 AA- 720 Connecticut HEFA, NHP
(Highland View), 7.00%,
11/01/07 787,975
A1 AA- 335 Connecticut HEFA, NHP
(Wadsworth Glen), 7.00%,
11/01/07 366,627
A1 AA- 2,000 Connecticut HEFA, NHP
(Wadsworth Glen), 7.50%,
11/01/16 2,210,800
A1 AA- 3,000 Connecticut HEFA, NHP
(Windsor), 7.125%,
11/01/14 3,254,820
NR A- 1,000 Puerto Rico I. M. E. (Dr.
Pila Hospital), (FHA)
7.85%, 8/01/28 1,078,190
------------
$ 23,926,017
------------
HOSPITALS - 6.0%
NR A- $3,770 Connecticut HEFA, William
W. Backus Hospital,
6.375%, 7/01/22 $ 3,748,096
Baa1 NR 9,150 Connecticut HEFA, Griffin
Hospital, 5.75%, 7/01/23 7,814,009
------------
$ 11,562,105
------------
HOUSING - 8.2%
Aa AA $ 100 Connecticut HFA Mortgage
Revenue Bonds (MRB),
7.40%, 11/15/99 $ 102,965
</TABLE>
38
<PAGE> 39
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - (CONTINUED)
Aa AA 1,400 Connecticut HFA, MRB,
7.20%, 11/15/01 1,473,556
Aa AA 200 Connecticut HFA, MRB,
7.00%, 11/15/09 207,336
Aa AA 6,200 Connecticut HFA, MRB,
6.70%, 11/15/12 6,336,524
Aa AA 250 Connecticut HFA, MRB,
6.55%, 11/15/13 252,910
Aa AA 1,000 Connecticut HFA, MRB,
5.85%, 11/15/16 955,420
Aa AA 120 Connecticut HFA, MRB,
7.625%, 11/15/17 123,988
Aa AA 1,700 Connecticut HFA, MRB,
6.35%, 5/15/17 1,674,177
Aa AA 2,500 Connecticut HFA, MRB,
6.60%, 11/15/23 2,511,700
Aa AA 2,000 Connecticut HFA, MRB,
6.75%, 11/15/23 2,030,000
------------
$ 15,668,576
------------
INDUSTRIAL DEVELOPMENT/POLLUTION
CONTROL REVENUES - 3.0%
Aaa AAA $1,000 Connecticut Development
Authority (Pfizer Inc.),
6.55%, 2/15/13 $ 1,071,700
Aa AA- 2,000 Connecticut Development
Authority (Economic
Development Projects),
Revenue Bonds, 6.00%,
11/15/08 2,066,960
A1 A+ 2,000 Connecticut Development
Authority (New England
Power Company Project),
7.25%, 10/15/15 2,142,580
Baa1 A 500 Puerto Rico Port Authority
(American Airlines),
6.30%, 6/01/23 485,275
------------
$ 5,766,515
------------
INSURED AIRPORTS - 4.9%
Aaa AAA $8,200 State of Connecticut
Airport Revenue Bonds,
Bradley International
Airport, (FGIC), 7.65%,
10/01/12 $ 9,315,364
------------
INSURED COLLEGE AND UNIVERSITY - 3.9%
Aaa AAA $ 725 Connecticut HEFA,
Fairfield University
(MBIA), 5.00%, 7/01/18 $ 636,129
Aaa AAA 1,200 Connecticut HEFA,
Connecticut College
(MBIA), 6.625%, 7/01/11 1,272,948
Aaa AAA 2,000 Connecticut HEFA, Trinity
College (MBIA), 6.00%,
7/01/22 2,003,960
Aaa AAA 1,555 Connecticut HEFA, Choate
Rosemary College (MBIA),
6.80%, 7/01/15 (1) 1,683,661
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 750 Connecticut HEFA, Loomis
Chafee (MBIA), 6.00%,
7/01/15 760,793
Aaa AAA 1,000 Connecticut HEFA, Loomis
Chafee (MBIA), 6.00%,
7/01/25 1,005,850
------------
$ 7,363,341
------------
INSURED MISCELLANEOUS - 0.8%
Aaa AAA $1,750 Connecticut Municipal
Electric Energy
Cooperative Bonds (MBIA),
5.00%, 1/01/18 $ 1,549,520
------------
INSURED GOVERNMENT OBLIGATIONS - 4.3%
Aaa AAA $1,220 Town of Bethel, (MBIA),
6.50%, 2/15/09 $ 1,340,243
Aaa AAA 2,000 City of Waterbury, Tax
Revenue Bonds (FGIC),
5.375%, 4/15/08 1,984,380
Aaa AAA 740 Town of Stratford, (MBIA),
6.60%, 3/01/11 800,924
Aaa AAA 1,000 City of New Britain,
(MBIA), 6.00%, 3/01/12 1,026,430
Aaa AAA 1,000 Town of Plainfield,
(MBIA), 6.375%, 8/01/11 1,045,430
Aaa AAA 2,120 Puerto Rico Public
Improvement Bonds (MBIA),
5.25%, 7/01/18 1,955,446
------------
$ 8,152,853
------------
INSURED HEALTHCARE - 1.3%
A1 AA- $1,735 Connecticut HEFA, NHP (St.
Joseph's Living Center),
(AMBAC), 5.10%, 11/01/19 $ 1,528,604
A1 AA- 1,030 Connecticut HEFA, NHP (St.
Joseph's Learning Center)
(AMBAC), 5.00%, 11/01/09 951,699
------------
$ 2,480,303
------------
INSURED HOSPITAL - 10.0%
Aaa AAA $1,000 Connecticut HEFA,
Bridgeport Hospital
(MBIA), 6.625%, 7/01/18 $ 1,051,740
Aaa AAA 6,750 Connecticut HEFA, St.
Francis Hospital (FGIC),
5.00%, 7/01/23 5,808,172
Aaa AAA 1,500 Connecticut HEFA, Lawrence
and Memorial Hospital
(MBIA), 5.00%, 7/01/13 1,345,740
Aaa AAA 5,750 Connecticut HEFA, Lawrence
and Memorial Hospital
(MBIA), 5.00%, 7/01/22 4,959,203
Aaa AAA 1,000 Connecticut HEFA, Hospital
of St. Raphael (AMBAC),
6.50%, 7/01/11 1,080,700
Aaa AAA 1,500 Connecticut HEFA, Hospital
of St. Raphael (AMBAC),
6.625%, 7/01/14 1,575,585
</TABLE>
39
<PAGE> 40
<TABLE>
- --------------------------------------------------------------------------------
CONNECTICUT TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED HOSPITAL - (CONTINUED)
Aaa AAA 2,000 Connecticut HEFA, Yale-New
Haven Hospital (MBIA),
6.50%, 7/01/12 2,093,380
Aaa AAA 1,200 Connecticut HEFA, Yale-New
Haven Hospital (MBIA),
7.10%, 7/01/25 1,297,800
------------
$ 19,212,320
------------
INSURED SOLID WASTE - 0.7%
Aaa AAA $1,275 Connecticut Resources
Recovery Authority Mid-
Connecticut System Bonds
(MBIA), 7.30%, 10/15/12 $ 1,343,161
------------
INSURED SPECIAL TAX - 0.7%
State of Connecticut
Special Tax Obligation
Bonds (FGIC), 5.00%,
10/01/13 $ 1,342,950
AAA $1,500
------------
INSURED WATER AND SEWER - 3.3%
Aaa AAA $1,750 Connecticut Development
Authority Water Facilities
Bonds, Connecticut Water
Company (AMBAC), (AMT),
5.875%, 9/01/22 $ 1,689,048
Aaa AAA 1,150 Connecticut Development
Authority Water Facilities
Bonds, Connecticut Water
Company (AMBAC), (AMT),
5.75%, 7/01/28 1,086,853
Aaa AAA 3,460 South Central Connecticut,
Regional Water Authority
Bonds (FGIC), 5.75%,
8/01/12 3,445,122
------------
$ 6,221,023
------------
SOLID WASTE - 8.1%
A NR $2,500 Bristol Resource Recovery
Facility Operating
Committee, (Ogden Martin
Systems), 6.50%, 7/01/14 $ 2,570,800
A2 A+ 1,000 Connecticut Resources
Recovery Authority
(American REF-FUEL
Company), (AMT), 8.10%,
11/15/15 1,104,660
A2 A+ 450 Connecticut Resources
Recovery Authority
(American REF-FUEL
Company), (AMT), 8.00%,
11/15/15 495,760
A2 A+ 4,250 Connecticut Resources
Recovery Authority
(American REF-FUEL
Company), (AMT), 6.45%,
11/15/22 4,252,805
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR A 7,970 Eastern Connecticut
Resource Recovery
Authority, (Wheelabrator
Lisbon), 5.50%, 1/01/20 7,000,609
------------
$ 15,424,634
------------
SPECIAL TAX - 2.7%
A1 AA- $1,000 State of Connecticut STOB,
4.40%, 10/01/04 $ 948,510
A1 AA- 1,000 State of Connecticut STOB,
5.40%, 9/01/10 968,880
A1 AA- 3,180 State of Connecticut STOB,
6.125%, 9/01/12 3,273,460
------------
Aaa $ 5,190,850
------------
STUDENT LOANS - 1.4%
A1 NR $ 455 Connecticut Higher
Education Supplemental
Loan Authority Revenue
Bonds (CHESLA) (AMT),
7.375%, 11/15/05 $ 477,313
A1 NR 1,350 CHESLA Revenue Bonds
(AMT), 6.20%, 11/15/09 1,355,279
A1 NR 910 CHESLA Revenue Bonds
(AMT), 7.50%, 11/15/10 960,141
------------
$ 2,792,733
------------
TRANSPORTATION - 2.4%
Baa1 A $4,465 Puerto Rico Highway and
Transportation Authority
Bonds, 5.50%, 7/01/15 $ 4,172,900
Baa1 A 500 Puerto Rico Highway and
Transportation Authority
Bonds, 5.50%, 7/01/15 467,290
------------
$ 4,640,190
------------
UTILITY - 4.3%
NR BBB $1,100 Guam Power Authority
Revenue Bonds, 6.625%,
10/01/14 $ 1,115,015
NR BBB 3,625 Guam Power Authority
Revenue Bonds, 6.30%,
10/01/22 3,532,671
NR NR 3,500 Virgin Islands Water and
Power Authority, Electric
Revenue System Bonds,
7.40%, 7/01/11 3,646,055
------------
$ 8,293,741
------------
WATER & SEWER REVENUE - 2.2%
Aa AA $1,250 State of Connecticut Clean
Water Fund Revenue Bonds,
6.00%, 10/01/12 $ 1,286,438
Aa AA 1,000 State of Connecticut Clean
Water Fund Revenue Bonds,
5.80%, 6/01/16 996,310
</TABLE>
40
<PAGE> 41
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
WATER & SEWER REVENUE - (CONTINUED)
NR A+ 2,225 Connecticut Development
Authority Water Facilities
(Stamford Water Company),
5.30%, 9/01/28 2,010,243
------------
$ 4,292,991
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $192,808,845) $191,254,509
============
<FN>
(1) Security has been segregated to cover margin requirements for open financial
futures contracts.
</TABLE>
The Portfolio primarily invests in debt securities issued by Connecticut
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at July 31, 1995, 30.4% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.6% to 14.2% of total investments.
See notes to financial statements
41
<PAGE> 42
<TABLE>
- --------------------------------------------------------------------------------
Michigan Tax Free Portfolio
Portfolio of Investments - July 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 1.1%
NR BBB- $2,000 Puerto Rico Polytechnic
University, 6.50%, 8/01/24 $ 1,999,980
------------
ELECTRIC UTILITIES - 2.6%
NR BBB $1,000 Guam Power Authority,
6.625%, 10/01/14 $ 1,013,650
Baa1 BBB+ 500 Michigan South Central
Power Agency Supply
System, 6.75%, 11/01/10 517,475
Baa1 BBB 1,790 Monroe County, Michigan
PCR Detroit Edison
Project, 7.75%, 12/01/19 1,946,320
Baa1 A- 1,000 Puerto Rico Electric Power
Authority, 5.00%, 7/01/12 885,850
Baa1 A- 365 Puerto Rico Electric Power
Authority, 7.125%, 7/01/14 395,788
------------
$ 4,759,083
------------
ESCROWED - 6.2%
NR AA $ 940 Detroit City School
District, Michigan School
Building and Site, 7.15%,
5/01/11 $ 1,074,185
Aaa AAA 1,000 Lake Orion, Michigan
School District U.T.G.O.,
7.00%, (AMBAC) 5/01/20 1,171,550
Aaa AAA 750 Michigan HFA, Oakwood
Hospital (FGIC), 7.20%,
11/01/15 855,308
Aaa AAA 3,500 Monroe County, Michigan
EDC Mercy Memorial
Hospital (MBIA), 7.00%,
9/01/21 4,003,930
NR AA 955 Okemos Public Schools,
Michigan School Building
and Site, 6.90%, 5/01/11 1,079,398
Baa1 AAA 635 Puerto Rico Electric Power
Authority, 7.125%, 7/01/14 710,635
NR NR 2,400 Wyandotte School District,
Michigan School Building
and Site, 6.90%, 5/01/16 2,712,624
------------
$ 11,607,630
------------
GENERAL OBLIGATIONS - 5.2%
Aa AA $ 500 Avondale School District,
Michigan School Building
and Site, 6.75%, 5/01/14 $ 524,220
Aa AA 2,550 Clintondale Community
Schools, Michigan 6.75%,
5/01/24 2,686,093
Ba1 BBB 500 Detroit City, Michigan,
8.00%, 4/01/11 543,185
Ba1 BBB 2,925 Detroit City, Michigan,
6.35%, 4/01/14 2,877,615
A AA 500 East Lancing Building
Authority, Michigan,
7.00%, 10/01/16 527,070
Aa AA 1,350 Martin Public Schools,
Michigan School Building
and Site, 6.60%, 5/01/20 1,400,450
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa AA 1,000 Mattawan Consolidated
Schools, Michigan, 6.40%,
5/01/09 1,044,760
------------
$ 9,603,393
------------
HOSPITAL - 12.9%
A A $ 450 Michigan HFA Detroit
Medical Center Obligated
Group, 7.50%, 8/15/11 $ 487,651
A A 4,550 Michigan HFA Detroit
Medical Center Obligated
Group, 5.50%, 8/15/23 3,898,941
A A 5,500 Michigan HFA Detroit
Medical Center Obligated
Group, 6.25%, 8/15/13 5,309,810
A A 1,000 Michigan HFA Detroit
Medical Center Obligated
Group, 6.50%, 8/15/18 978,950
Aa AA 250 Michigan HFA Henry Ford
Continuing Care
Corporation, 6.75%,
7/01/11 264,555
A1 NR 2,970 Michigan HFA McLaren
Obligated Group, 5.375%,
10/15/13 2,659,843
A1 NR 6,000 Michigan HFA McLaren
Obligated Group, 4.50%,
10/15/21 4,456,559
A A 4,130 Michigan HFA MidMichigan
Obligated Group, 6.625%,
6/01/10 4,215,574
Aa AA 1,750 Royal Oak, Michigan
William Beaumont Hospital,
6.75%, 1/01/20 1,815,818
------------
$ 24,087,701
------------
HOUSING - 1.9%
NR A+ $1,500 Michigan HDA Rental
Housing (AMT), 7.15%,
4/01/10 $ 1,587,150
NR A+ 1,000 Michigan HDA Rental
Housing, 7.10%, 4/01/21 1,038,320
NR AA+ 895 Michigan HDA Single Family
Mortgage, 6.95%, 12/01/20 920,472
------------
$ 3,545,942
------------
INDUSTRIAL DEVELOPMENT REVENUE/
POLLUTION CONTROL REVENUE - 6.1%
Baa1 BBB $3,970 Dickinson, MI PCR-Champion
International, 5.85%,
10/01/18 $ 3,753,436
Baa1 BBB 3,000 Michigan Job Development
Authority PCR-General
Motors, 5.55%, 10/01/09
(1) 2,877,750
A3 BBB+ 3,750 Michigan Strategic Fund-
General Motors, 6.20%,
9/01/20 3,702,788
NR BBB+ 500 Michigan Strategic
Fund-KMart Corporation,
6.80%, 6/15/07 513,520
</TABLE>
42
<PAGE> 43
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDUSTRIAL DEVELOPMENT REVENUE/
POLLUTION CONTROL REVENUE - (CONTINUED)
NR BBB 530 Richmond, Michigan EDC
KMart Corporation, 6.625%,
1/01/07 541,305
------------
$ 11,388,799
------------
INSURED EDUCATION - 2.6%
Aaa AAA $ 500 Michigan Higher Education
Student Loan (AMBAC),
6.875%, 10/01/07 $ 525,110
Aaa AAA 2,000 Northern Michigan
University, Michigan
General Revenue (AMBAC),
6.55%, 12/01/14 2,093,840
Aaa AAA 1,250 Oakland University,
Michigan General Revenue
(MBIA), 5.75%, 5/15/26 1,194,425
Aaa AAA 500 University of Puerto Rico
(MBIA), 5.25%, 6/01/25 456,545
Aaa AAA 500 Western Michigan
University (AMBAC), 6.50%,
7/15/21 517,195
------------
$ 4,787,115
------------
INSURED ELECTRIC UTILITIES - 6.3%
Aaa AAA $1,510 Grand Haven City, Michigan
Electric System (MBIA),
5.25%, 7/01/13 $ 1,380,442
Aaa AAA 300 Michigan Strategic Fund,
Detroit Edison Company
(FGIC), 6.95%, 5/01/11 335,595
Aaa AAA 4,000 Michigan Strategic Fund,
Detroit Edison Company
(FGIC), 6.95%, 9/01/21 4,272,040
Aaa AAA 550 Monroe County, Michigan
PCR Detroit Edison Company
(FGIC) (AMT), 7.65%,
9/01/20 607,508
Aaa AAA 5,000 Monroe County, Michigan
PCR Detroit Edison Company
(MBIA) (AMT), 6.55%,
9/01/24 5,133,100
------------
$ 11,728,685
------------
INSURED GENERAL - 2.1%
Aaa AAA $4,500 Livonia, Michigan School
District U.T.G.O. (FGIC),
5.125%, 5/01/22 $ 3,956,670
------------
INSURED GENERAL OBLIGATION - 12.8%
Aaa AAA $ 250 Byron Center, Michigan
Public Schools U.T.G.O.
(MBIA), 5.875%, 5/01/24 $ 243,050
Aaa AAA 1,000 Chelsea, Michigan School
District U.T.G.O. (FGIC),
5.875%, 5/01/25 (2) 969,170
Aaa AAA 1,500 Dearborn, Michigan School
District U.T.G.O. (MBIA),
5.00%, 5/01/10 1,373,655
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 2,000 Grand Ledge, Michigan
School District U.T.G.O.
(MBIA), 7.875%, 5/01/11 2,344,760
Aaa AAA 1,000 Greenville, Michigan
Public Schools U.T.G.O.
(MBIA) 964,510
Aaa AAA 2,000 Holland City, Michigan
School District U.T.G.O.
(AMBAC), 5.25%, 7/01/13 530,180
Aaa AAA 5,020 Huron Valley, Michigan
School District U.T.G.O.
(FGIC), 5/01/20 1,108,014
Aaa AAA 2,000 Lowell Schools, Michigan
U.T.G.O. (FGIC), 5/01/16 569,260
Aaa AAA 2,000 Napoleon, Michigan School
District U.T.G.O. (FGIC)
5.50%, 5/01/20 1,861,980
Aaa AAA 1,000 Napoleon, Michigan School
District U.T.G.O. (FGIC)
5.50%, 5/01/24 920,280
Aaa AAA 2,610 Okemos, Michigan Public
Schools U.T.G.O. (MBIA),
5/01/16 745,860
Aaa AAA 500 Pellston, Michigan Public
Schools U.T.G.O. (MBIA),
6.625%, 5/01/12 529,325
Aaa AAA 2,000 Portage Lake, Michigan
Water & Sewer G.O.
(AMBAC), 6.20%, 10/01/20 2,032,240
Aaa AAA 4,000 Riverview Community School
District, Michigan
U.T.G.O. (AMBAC), 5.25%,
5/01/21 3,565,600
Aaa AAA 2,000 Riverview Community School
District, Michigan
U.T.G.O. (AMBAC), 5.25%,
5/01/14 1,823,940
Aaa AAA 1,400 Vicksburg Community
Schools, Michigan U.T.G.O.
(MBIA), 5/01/16 392,112
Aaa AAA 1,000 Vicksburg Community
Schools, Michigan U.T.G.O.
(MBIA), 5/01/17 263,410
Aaa AAA 2,500 Warren, Michigan School
District U.T.G.O. (MBIA),
5.50%, 5/01/14 2,370,950
Aaa AAA 1,390 Warren, Michigan School
District U.T.G.O. (MBIA),
5.25%, 5/01/21 1,252,362
------------
$ 23,860,658
------------
INSURED HEALTHCARE - 1.0%
Aaa AAA $2,000 Farmington Hills, Michigan
EDC-Botsford Continuing
Care (MBIA), 5.75%,
2/15/25 $ 1,907,260
------------
INSURED HOSPITAL - 12.4%
Aaa AAA $3,000 Dearborn City, Michigan
EDC Oakwood Obligated
Group (MBIA), 5.25%,
8/15/14 $ 2,711,940
</TABLE>
43
<PAGE> 44
<TABLE>
- --------------------------------------------------------------------------------
MICHIGAN TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED HOSPITAL - (CONTINUED)
Aaa AAA 1,000 Dearborn City, Michigan
EDC Oakwood Obligated
Group (MBIA), 5.25%,
8/15/21 882,690
Aaa AAA 3,500 Jackson County, Michigan
HFA W.A. Foote Memorial
(FGIC), 4.75%, 6/01/15 2,992,745
Aaa AAA 5,735 Kalamazoo City, Michigan
HFA Borgess Medical Center
(FGIC), 5.25%, 6/01/17 5,221,316
Aaa AAA 1,750 Kent City, Michigan HFA
Butterworth Hospital
(MBIA), 5.375%, 1/15/19 1,592,762
Aaa AAA 1,015 Michigan HFA Mercy
Memorial Hospital (MBIA),
5.25%, 6/01/13 936,429
Aaa AAA 2,715 Michigan HFA Mercy
Memorial Hospital (MBIA),
5.25%, 6/01/21 2,429,491
Aaa AAA 1,000 Michigan HFA Oakwood
Hospital Obligated Group
(FGIC), 5.625%, 11/01/18 954,410
Aaa AAA 1,500 Michigan HFA Sisters of
Mercy Health Corporation
(MBIA), 5.25%, 8/15/21 1,332,885
Aaa AAA 3,200 Michigan HFA Linked Bulls
& Bears (FSA), 6.10%,
8/15/22 3,221,504
Aaa AAA 1,000 St. Joseph City, Michigan
HFA Mercy Memorial Medical
Center (AMBAC), 5.25%,
1/01/16 910,150
------------
$ 23,186,322
------------
INSURED HOUSING - 1.7%
Aaa AAA $ 500 Michigan HDA Parkway
Meadows Projects (FSA),
6.85%, 10/15/18 $ 518,495
Aaa AAA 2,780 Michigan HDA Mercy
Bellbrook Project (MBIA),
5.375%, 4/01/10 2,617,036
------------
$ 3,135,531
------------
INSURED SPECIAL TAX - 0.2%
Aaa AAA $ 400 Grand Rapids, Michigan
Downtown Development
Authority Tax Increment
(MBIA), 6.875%, 6/01/24 $ 429,840
------------
INSURED TRANSPORTATION - 1.9%
Aaa AAA $1,000 Wayne County, Michigan
Airport (MBIA), 5.25%,
12/01/13 $ 921,380
Aaa AAA 1,000 Wayne County, Michigan
Airport (MBIA), 5.40%,
12/01/16 909,250
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 2,000 Wayne County, Michigan
Airport (MBIA), 5.25%,
12/01/21 1,788,000
------------
$ 3,618,630
------------
INSURED WATER & SEWER - 7.5%
Aaa AAA $ 300 Clinton Township, Michigan
Water and Sewage System
(AMBAC), 4.75%, 7/01/09 $ 272,325
Aaa AAA 400 Clinton Township, Michigan
Water and Sewage System
(AMBAC), 4.75%, 7/01/10 359,544
Aaa AAA 400 Clinton Township, Michigan
Water and Sewage System
(AMBAC), 4.75%, 7/01/11 357,872
Aaa AAA 400 Clinton Township, Michigan
Water and Sewage System
(AMBAC), 4.75%, 7/01/12 356,288
Aaa AAA 4,425 Detroit City, Michigan
Water Supply System
(FGIC), 6.25%, 7/01/12 4,549,343
Aaa AAA 9,680 Detroit City, Michigan
Water Supply System
(FGIC), 4.75%, 7/01/19 8,078,250
------------
$ 13,973,622
------------
MISCELLANEOUS - 3.4%
A1 AA $ 590 Michigan Municipal Bond
Authority Local Government
Loan, 6.90%, 5/01/21 $ 648,404
A1 AA 2,550 Michigan Municipal Bond
Authority Local Government
Loan-Qualified School,
6.50%, 5/01/07 2,768,356
A1 AA 760 Michigan Municipal Bond
Authority Local Government
Loan, 6.50%, 5/01/08 822,685
NR A- 2,000 Michigan Strategic
Environmental Research
Institute, 6.375%, 8/15/12 2,041,880
------------
$ 6,281,325
------------
SOLID WASTE - 4.5%
NR BBB- $4,220 Greater Detroit, Michigan
Resource Recovery
Authority, 9.25%, 12/13/08 $ 4,391,712
NR BBB- 1,000 Greater Detroit, Michigan
Resource Recovery
Authority, 9.25%, 12/13/08 1,040,690
NR BBB- 1,915 Greater Detroit, Michigan
Resource Recovery
Authority, 9.25%, 12/13/08 1,992,921
NR BBB- 1,000 Greater Detroit, Michigan
Resource Recovery
Authority, 9.25%, 12/13/08 1,040,690
------------
$ 8,466,013
------------
</TABLE>
44
<PAGE> 45
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
SPECIAL TAX REVENUE - 5.6%
NR BBB+ $ 250 Battle Creek, Michigan
Downtown Development
Authority Tax Increment,
7.60%, 5/01/16 $ 272,698
NR BBB+ 1,315 Battle Creek, Michigan
Downtown Development
Authority Tax Increment,
7.65%, 5/01/22 1,438,742
NR A 7,650 Detroit City Convention
Facility, Michigan Cobo
Hall Expansion Project,
5.25%, 9/30/12 (3) 6,843,690
NR A 1,825 Michigan Muni Bond
Authority Local Government
Loan Project, 6.75%,
5/01/12 1,944,811
------------
$ 10,499,941
------------
TRANSPORTATION - 1.1%
Baa1 A $2,175 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/01/19 $ 1,988,842
------------
WATER & SEWER - 0.9%
Aa AA $1,895 Lansing City, Michigan
Water and Electric Utility
System, 4.90%, 7/01/10 $ 1,713,914
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $182,066,681) $186,526,896
============
<FN>
(1) Security has been segregated to cover margin requirements for open financial
futures contracts.
(2) When-issued security.
(3) Security has been segregated to cover when-issued securities.
</TABLE>
The Portfolio invests primarily in debt securities issued by Michigan
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at July 31, 1995, 51.8% of the securities in the portfolio of
investments are backed by bond insurance of various financial guaranty assurance
agencies. The aggregate percentage by financial institution ranges from 2.0% to
22.0% of total investments.
See notes to financial statements
45
<PAGE> 46
<TABLE>
- --------------------------------------------------------------------------------
Minnesota Tax Free Portfolio
Portfolio of Investments - July 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 3.2%
A NR $ 100 Minnesota Higher Education
Facilities Authority, St.
Olaf College, 6.25%,
4/01/10 $ 100,034
Baa NR 1,000 Minnesota Higher Education
Facilities Authority, St.
Mary's College, 6.15%,
10/01/23 968,720
A NR 1,500 Northfield Minnesota, St.
Olaf College, 6.40%,
10/01/21 1,543,785
-----------
$ 2,612,539
-----------
ESCROWED - 5.4%
Aa AA+ $1,700 State of Minnesota "RIBS",
Variable, 8/01/11 (1) $ 2,016,625
A1 AAA 400 Southern Minnesota
Municipal Power Agency,
7.00%, 1/01/16 413,272
Aaa AAA 1,840 Western Minnesota Municipal
Power Agency, 6.375%,
1/01/16 1,956,380
-----------
$ 4,386,277
-----------
GENERAL OBLIGATIONS - 11.2%
Aa NR $ 500 Brainerd, Independent
School District, 5.50%,
2/01/15 $ 476,455
Aaa AAA 700 City of Minneapolis, 6.25%,
4/01/12 727,902
Aaa AAA 1,000 City of Minneapolis, 5.20%,
3/01/23 943,830
Aa1 AA+ 2,000 State of Minnesota, 5.40%,
8/01/13 1,913,500
Aa1 AA+ 1,000 State of Minnesota, Duluth
Airport, 6.25%, 8/01/14 1,019,330
Aa1 AA+ 1,000 State of Minnesota, Duluth
Airport, 6.25%, 8/01/14 1,019,330
Aa AA 1,250 Regents of the University
of Minnesota, "INFLOS",
Variable, 8/15/03 (1) 1,181,412
A AA- 200 City of Saint Cloud,
"Inverse Floaters",
Variable, 8/01/13 (1) 205,000
Aa NR 1,595 White Bear Lake,
Independent School
District, 6.00%, 2/01/14 1,596,037
-----------
$ 9,082,796
-----------
HEALTHCARE (NON-HOSPITAL) - 5.7%
A A- $1,250 Minneapolis and St. Paul
Housing and Redevelopment
Authority, Group Health
Plan, Inc., 6.75%, 12/01/13 $ 1,298,000
A A- 250 Minneapolis and St. Paul
Housing and Redevelopment
Authority, Group Health
Plan, Inc., 6.90%, 10/15/22 262,768
NR NR 1,000 St. Paul Housing and
Redevelopment Authority,
Highland Park, 8.75%,
11/01/24 997,670
NR BBB+ 2,120 City of Red Wing, Minnesota
Health Care Facilities
Revenue, River Region
Obligated Group, 6.50%,
9/01/22 2,054,322
-----------
$ 4,612,760
-----------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOSPITALS - 6.9%
NR AA+ $1,400 City of Rochester,
Minnesota Health Care
Facilities (MHCF) Mayo
Foundation/Medical Center,
6.026%, 11/15/15 $ 1,374,142
NR AA+ 500 City of Rochester, MHCF
Mayo Foundation/Medical
Center, "Inverse Floaters",
Variable 11/15/15 (1) 500,000
NR AA+ 1,700 City of Rochester, MHCF
Mayo Foundation/Medical
Center, 5.75%, 11/15/21 1,668,193
Baa BBB- 1,000 St. Paul Housing and
Redevelopment Authority,
Healtheast Project, 6.625%,
11/01/17 969,920
A A+ 1,000 St. Paul Housing and
Redevelopment Authority,
Childrens Hospital, 7.00%,
12/01/19 1,080,420
-----------
$ 5,592,675
-----------
HOUSING - 13.6%
NR AAA $ 300 City of Coon Rapids, Multi-
Family Housing (MFH) Browns
Meadow Manor, (FHA), (AMT),
6.85%, 7/01/33 $ 300,570
NR AAA 1,395 County of Dakota, Housing
and Redevelopment
Authority, (GNMA), 7.375%,
12/01/29 (2) 1,473,259
Aa NR 1,200 City of Maplewood MFH,
Beaver Creek Apartments,
(FHA), 6.50%, 9/01/24 1,182,960
NR AAA 90 Minneapolis and St. Paul
Housing Finance Board,
(GNMA), (AMT), 7.30%,
8/01/31 94,035
Aa AA 420 Minnesota Housing Finance
Agency, Single-Family
Mortgage, (SFM), 7.70%,
7/01/14 450,114
Aa AA 380 Minnesota Housing Finance
Agency, SFM, 7.05%, 7/01/22 390,085
Aa AA 1,095 Minnesota Housing Finance
Agency, SFM, (AMT), 5.80%,
7/01/25 1,007,860
Aa AA+ 465 Minnesota Housing Finance
Agency, SFM, 6.95%, 7/01/16 481,094
Aa AA+ 1,000 Minnesota Housing Finance
Agency, SFM, (AMT), 6.75%,
7/01/12 1,019,330
Aa AA+ 1,235 Minnesota Housing Finance
Agency, SFM, (AMT), 6.85%,
1/01/24 1,254,612
Aa AA+ 1,700 Minnesota Housing Finance
Agency, SFM, (AMT), 6.50%,
1/01/26 1,686,502
</TABLE>
46
<PAGE> 47
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - (CONTINUED)
Aa AA+ 710 Minnesota Housing Finance
Agency, SFM, (AMT), 6.75%,
1/01/26 714,352
Aa AA+ 430 Minnesota Housing Finance
Agency, SFM, (AMT), 6.15%,
1/01/26 410,121
NR AAA 230 St. Paul, Minnesota Housing
and Redevelopment
Authority, (FNMA), 6.95%,
12/01/31 236,845
NR AAA 360 St. Paul, Minnesota Housing
and Redevelopment
Authority, (FNMA), 6.90%,
12/01/21 370,735
-----------
$11,072,474
-----------
INDUSTRIAL DEVELOPMENT/POLLUTION
CONTROL - 8.8%
NR AA- $ 300 City of Minneapolis,
Minnesota Community
Development Agency, 6.40%,
12/01/04 $ 315,618
NR BBB+ 100 City of Minneapolis,
Minnesota Community
Development Agency, 7.35%,
12/01/09 104,342
NR BBB+ 1,605 City of Minneapolis,
Minnesota Community
Development Agency, 6.80%,
12/01/24 1,574,810
Aa3 AA- 3,000 Seaway Port Authority of
Duluth, Cargill, Inc.,
6.80%, 5/01/12 3,203,130
Aa3 NR 2,000 Seaway Port Authority of
Duluth, Cargill, Inc.,
5.75%, 12/01/16 1,961,300
-----------
$ 7,159,200
-----------
INSURED GENERAL OBLIGATION - 3.6%
Aaa AAA $ 500 Cass Lake, Independent
School District, (AMBAC),
6.625%, 2/01/12 $ 537,370
Aaa AAA 1,000 Roseville, Independent
School District, (FGIC),
6.00%, 2/01/23 998,650
Aaa AAA 1,330 St. Francis, Independent
School District No. 15,
(CGIC), 6.35%, 2/01/12 1,391,153
-----------
$ 2,927,173
-----------
INSURED HOSPITAL - 19.7%
Aaa AAA $ 750 Duluth Economic Development
Authority, The Duluth
Clinic, (AMBAC), 6.20%,
11/01/12 $ 771,690
Aaa AAA 100 Minneapolis and St. Paul
Health Care Systems, Health
One Obligated Group,
(MBIA), 7.40%, 8/15/11 108,990
Aaa AAA 5,845 Minneapolis and St. Paul
Health Care Systems,
Healthspan, (AMBAC), 4.75%,
11/15/18 4,895,655
Aaa AAA 250 City of Minneapolis,
Hospital Revenue, Fairview
Hospital and Healthcare,
(MBIA), 6.50%, 1/01/11 262,517
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 750 Plymouth, Health
Facilities, Westhealth
Project (CGIC), 6.25%,
6/01/16 768,293
Aaa AAA 1,000 City of Saint Cloud,
Hospital Facilities, The
Saint Cloud Hospital,
(AMBAC), 6.75%, 7/01/15 1,063,430
Aaa AAA 3,650 City of St. Louis Park,
Health Care Facilities
Health System Minnesota
Obligated Group, (AMBAC),
5.20%, 7/01/23 3,234,119
Aaa AAA 5,150 St. Paul Housing and
Redevelopment Authority,
St. Paul-Ramsey Medical
Center Project, (AMBAC),
5.55%, 5/15/23 4,891,213
-----------
$15,995,907
-----------
INSURED HOUSING - 1.9%
Aaa AAA $1,500 SCA Tax Exempt Trust,
Burnsville, Minnesota
Multi-Family Housing,
(FSA), 7.10%, 1/01/30 $ 1,538,775
-----------
INSURED SPECIAL TAX - 3.5%
Aaa AAA $3,000 St. Paul Housing and
Redevelopment Authority,
Civic Center Project,
(MBIA), 5.45%, 11/01/13 $ 2,840,460
-----------
INSURED UTILITIES - 3.9%
Aaa AAA $ 300 Northern Municipal Power
Agency, (AMBAC), 6.00%,
1/01/19 $ 300,528
Aaa AAA 750 Southern Minnesota
Municipal Power Agency,
(MBIA), 5.00%, 1/01/12 688,477
Aaa AAA 300 Southern Minnesota
Municipal Power Agency,
"Yield Curve Notes",
(MBIA), Variable, 1/01/18
(1) 283,512
Aaa AAA 6,950 Southern Minnesota
Municipal Power Agency,
(MBIA), 0%, 10/01/21 1,494,737
Aaa AAA 510 Western Minnesota Municipal
Power Agency, (MBIA),
5.50%, 1/01/15 489,416
-----------
$ 3,256,670
-----------
LEASE/CERTIFICATE OF
PARTICIPATION - 2.7%
Baa1 NR $ 350 City of Cambridge, Economic
Development Authority,
6.25%, 2/01/14 $ 347,722
</TABLE>
47
<PAGE> 48
<TABLE>
- --------------------------------------------------------------------------------
MINNESOTA TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
LEASE/CERTIFICATE OF PARTICIPATION -
(CONTINUED)
Aa AA 1,770 Hennepin County, Lease
Revenue Certificates of
Participation, 6.80%,
5/01/17(2) 1,856,199
-----------
$ 2,203,921
-----------
MISCELLANEOUS - 0.9%
A A $ 750 Metropolitan Council,
Minneapolis-St. Paul
Metropolitan Area Sports
Facilities, Hubert H.
Humphrey Metrodome, 6.00%,
10/01/09 $ 757,815
-----------
TRANSPORTATION - 0.6%
Aaa AAA $ 200 Minneapolis and St. Paul,
Minnesota Metropolitan
Airports Commission, (AMT),
6.60%, 1/01/09 $ 211,186
Aaa AAA 300 Minneapolis and St. Paul,
Minnesota Metropolitan
Airports Commission, (AMT),
6.60%, 1/01/10 316,779
-----------
$ 527,965
-----------
UTILITY - 5.1%
Aa3 A- $1,200 Bass Brook, Pollution
Control Revenue, Minnesota
Power & Light Company,
6.00%, 7/01/22 $ 1,173,300
A A 1,500 Northern Municipal Power
Agency, Minnesota Electric,
7.25%, 1/01/16 1,624,965
A1 A+ 1,000 Southern Minnesota
Municipal Power Agency,
5.00%, 1/01/12 902,250
A A 450 Western Minnesota Municipal
Power Agency, 7.00%,
1/01/13 468,599
-----------
$ 4,169,114
-----------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
WATER AND SEWER - 3.3%
Aa3 A $ 450 Anoka County, Minnesota
Solid Waste Disposal
Revenue Natural Rural
Utilities, 6.95%, 12/01/08 $ 483,421
Aa AAA 100 Minnesota Public Facilities
Authority Water Pollution
Control, 7.00%, 3/01/09 107,398
Aa AAA 150 Minnesota Public Facilities
Authority Water Pollution
Control, 6.70%, 3/01/13 160,380
Aa AAA 1,835 Minnesota Public Facilities
Authority Water Pollution
Control, 6.50%, 3/01/14 1,933,393
-----------
$ 2,684,592
-----------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $78,851,048) $81,421,113
===========
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) Security has been segregated to cover margin requirements for open financial
futures contracts.
</TABLE>
The Portfolio primarily invests in debt securities issued by Minnesota
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at July 31, 1995, 34.7% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.4% to 19.3% of total investments.
See notes to financial statements
48
<PAGE> 49
<TABLE>
- --------------------------------------------------------------------------------
New Jersey Tax Free Portfolio
Portfolio of Investments - July 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
COGENERATION - 5.0%
NR NR $15,750 New Jersey Economic
Development Authority,
Vineland Cogeneration
Limited Partnership,
(AMT), 7.875%, 6/01/19 $ 16,904,475
NR BB+ 3,370 New Jersey Economic
Development Authority,
Trigen-Trenton Project,
(AMT), 6.10%, 12/01/04 3,346,039
------------
$ 20,250,514
------------
EDUCATION - 3.5%
Baa1 BBB $ 2,480 New Jersey Educational
Facilities Authority,
Seton Hall University,
7.00%, 7/01/21 $ 2,618,235
Aa1 AA+ 1,000 New Jersey Educational
Facilities Authority,
Princeton Theological
Seminary, 6.375%, 7/01/22 1,034,580
NR NR 8,800 New Jersey State Higher
Education Assistance
Authority, (AMT), 0%,
7/01/20 3,042,952
NR BBB- 1,760 Puerto Rico Industrial,
Tourist, Educational,
Medical and Environmental
Authority, Polytechnic
University, 5.70%, 8/01/13 1,620,626
NR BBB- 1,310 Puerto Rico Industrial,
Tourist, Educational,
Medical and Environmental
Authority, Polytechnic
University, 5.50%, 8/01/24 1,139,988
NR BBB- 1,000 Puerto Rico Industrial,
Tourist, Educational,
Medical and Environmental
Authority, Polytechnic
University, 6.50%, 8/01/24 999,990
A1 AA 2,500 Rutgers, The State
University of New Jersey,
6.85%, 5/01/21 2,658,400
A AA 1,000 University of Medicine and
Dentistry of New Jersey,
7.20%, 12/01/19 1,089,280
------------
$ 14,204,051
------------
ESCROWED - 0.8%
Aaa AAA $ 870 The City of Newark, New
Jersey (AMBAC), 7.375%,
10/01/07 $ 985,440
NR NR 2,000 County of Passaic, New
Jersey, 6.70%, 9/01/13 2,207,360
------------
$ 3,192,800
------------
GENERAL OBLIGATIONS - 13.3%
NR BBB $ 9,745 Government of Guam, 5.40%,
11/15/18 $ 8,414,515
NR A+ 5,000 The Hudson County
Improvement Authority,
6.625%, 8/01/25 5,235,950
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa1 NR 3,000 Mercer County Improvement
Authority Solid Waste, 0%,
4/01/10 1,299,240
Baa1 A 1,990 Commonwealth of Puerto
Rico, 6.45%, 7/01/17 2,083,530
Baa1 A 5,000 Commonwealth of Puerto
Rico, 6.50%, 7/01/23 5,234,400
Baa BBB 5,645 The Commonwealth of Puerto
Rico Aqueduct and Sewer
Authority, 7.875%, 7/01/17 6,253,305
Baa1 A 3,250 Puerto Rico Public
Buildings Authority,
Public Education and
Health Facilities, 5.75%,
7/01/15 3,119,675
Baa1 A 5,125 Puerto Rico Public
Buildings Authority,
Public Education and
Health Facilities, 5.50%,
7/01/21 4,695,730
Baa1 A 2,075 Puerto Rico Public
Buildings Authority,
Public Education and
Health Facilities, 5.75%,
7/01/16 1,977,932
NR NR 14,850 Virgin Islands Public
Finance Authority, 7.25%,
10/01/18 15,318,517
------------
$ 53,632,794
------------
HEALTHCARE (NON-HOSPITAL) - 3.0%
NR BBB $ 615 New Jersey Economic
Development Authority
Cadbury Corporation,
7.50%, 7/01/21 $ 593,875
NR BBB 300 New Jersey Economic
Development Authority
Cadbury Corporation,
8.70%, 7/01/07 319,896
NR NR 1,400 New Jersey Economic
Development Authority,
Claremont Health System,
9.10%, 9/01/22 1,465,632
NR NR 2,500 New Jersey Economic
Development Authority,
Victoria Health
Corporation, 7.65%,
1/01/14 2,372,700
NR NR 4,000 New Jersey Economic
Development Authority,
Keswick Pines Project,
8.75%, 1/01/24 3,991,120
NR NR 3,630 New Jersey Economic
Development Authority,
Forsgate Project, 8.625%,
6/01/25 3,410,857
------------
$ 12,154,080
------------
HOSPITALS - 6.6%
Aa AAA $10,790 New Jersey Health Care
Facilities Financing
Authority, Barnert
Hospital, (FHA), 6.80%,
8/01/19 $ 11,298,209
</TABLE>
49
<PAGE> 50
<TABLE>
- --------------------------------------------------------------------------------
NEW JERSEY TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOSPITALS - (CONTINUED)
A A- 2,300 New Jersey Health Care
Facilities Financing
Authority, Atlantic City
Medical Center, 6.80%,
7/01/11 2,417,300
Baa1 NR 3,100 New Jersey Health Care
Facilities Financing
Authority, Deborah Heart
and Lung Center, 6.30%,
7/01/23 3,047,796
Baa NR 2,000 New Jersey Health Care
Facilities Financing
Authority, Southern Ocean
County Hospital, 6.25%,
7/01/23 1,842,100
A A- 9,650 New Jersey Health Care
Facilities Financing
Authority, Chilton
Memorial Hospital, 5.00%,
7/01/13 8,175,866
------------
$ 26,781,271
------------
HOUSING - 4.4%
Aa AA $ 1,250 New Jersey Building
Authority, 7.20%, 6/15/13 $ 1,357,438
Aa AA- 2,591 New Jersey Building
Authority, Garden State
Savings, 0%, 6/15/10 1,105,813
NR AAA 3,700 New Jersey Housing and
Mortgage Finance Agency,
Presidential Plaza, (FHA),
7.00%, 5/01/30 3,832,793
NR AAA 2,000 New Jersey Housing and
Mortgage Finance Agency,
Presidential Plaza, (FHA),
6.95%, 5/01/13 2,084,940
NR AA+ 1,000 New Jersey Housing and
Mortgage Finance Agency,
Section 8, 7.10%, 11/01/12 1,040,920
NR AA+ 1,975 New Jersey Housing and
Mortgage Finance Agency,
Section 8, 7.10%, 11/01/11 2,055,817
NR AA+ 1,250 New Jersey Housing and
Mortgage Finance Agency,
Rental Housing, (AMT),
7.25%, 11/01/22 1,287,025
NR A+ 1,000 New Jersey Housing and
Mortgage Finance Agency,
Rental Housing, (AMT),
7.10%, 5/01/22 1,029,330
NR A+ 3,715 New Jersey Housing and
Mortgage Finance Agency,
6.60%, 11/01/14 3,773,511
Aaa AAA 300 Puerto Rico Housing
Finance Corporation
Mortgage Revenue (GNMA),
6.85%, 10/15/23 310,209
------------
$ 17,877,796
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDUSTRIAL DEVELOPMENT/POLLUTION
CONTROL - 5.0%
NR NR $ 2,000 Middlesex County Pollution
Control Financing
Authority, Amerada Hess
Corporation, 7.875%,
6/01/22 $ 2,238,020
NR NR 4,000 Middlesex County Pollution
Control Financing
Authority, Amerada Hess
Corporation, 6.875%,
12/01/22 4,168,480
Aa1 NR 3,000 New Jersey Economic
Development Authority,
Garden State Paper
Company, (AMT), 7.125%,
4/01/22 3,124,320
NR NR 2,000 New Jersey Economic
Development Authority, The
Seeing Eye, Inc., 7.30%,
4/01/11 2,123,560
NR BBB 1,160 New Jersey Economic
Development Authority,
National Association of
Accountants, Inc., 7.65%,
7/01/09 1,241,583
NR AA- 3,300 New Jersey Economic
Development Authority, Oak
Grove Associates, 6.125%,
12/01/06 3,401,937
Baa1 A- 2,135 New Jersey Economic
Development Authority,
GATX Terminals
Corporation, 7.30%,
9/01/19 2,349,098
Aa3 AA- 1,300 Puerto Rico Industrial,
Medical and Environmental
Pollution Control
Authority, Motorola, Inc.,
6.75%, 1/01/14 1,375,712
------------
$ 20,022,710
------------
INSURED EDUCATION - 0.5%
Aaa AAA $ 2,000 New Jersey State
Educational Facilities
Authority, Seton Hall
University, (BIGI), 6.85%,
7/01/19 $ 2,106,540
------------
INSURED HOSPITALS - 1.4%
Aaa AAA $ 1,310 New Jersey Health Care
Facilities Financing
Authority, Hackensack
Medical Center, (FGIC),
6.625%, 7/01/17 $ 1,372,631
Aaa AAA 2,000 New Jersey Health Care
Facilities Financing
Authority, Hackensack
Medical Center, (FGIC),
6.25%, 7/01/21 2,033,380
Aa AA- 480 New Jersey Health Care
Facilities Financing
Authority, Cathedral
Health Services (MBIA),
7.25%, 2/15/10 522,144
</TABLE>
50
<PAGE> 51
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED HOSPITALS - (CONTINUED)
Aa AA- 1,570 New Jersey Health Care
Facilities Financing
Authority, Cathedral
Health Services, (MBIA)
7.25%, 2/15/21 1,700,059
------------
$ 5,628,214
------------
INSURED HOUSING - 1.3%
Aaa AAA $ 1,410 New Jersey Housing and
Mortgage Finance Agency,
(MBIA), 7.375%, 10/01/17 $ 1,468,007
Aaa AAA 1,760 New Jersey Housing and
Mortgage Finance Agency,
(AMT), (MBIA), 7.70%,
10/01/29 1,847,402
Aaa AAA 1,745 Pennsauken Township
Housing Finance
Corporation, (MBIA),
8.00%, 4/01/11 1,836,665
------------
$ 5,152,074
------------
INSURED LEASE REVENUE - 5.8%
Aaa AAA $ 3,900 County of Atlantic, Public
Facilities Lease
Agreement, (FGIC), 6.00%,
3/01/13 $ 4,011,072
Aaa AAA 1,750 County of Hudson, New
Jersey Correctional
Facility, (MBIA), 6.50%,
12/01/11 1,842,925
Aaa AAA 6,240 County of Hudson, New
Jersey Correctional
Facility, (MBIA), 6.60%,
12/01/21 6,537,648
Aaa AAA 2,500 County of Hudson, New
Jersey Improvement
Authority, Secondary Yield
Curve Notes, (FGIC),
Variable, 12/01/25 (1) 2,507,900
Aaa AAA 1,800 County of Middlesex,
Certificates of
Participation, (MBIA),
6.125%, 2/15/19 1,835,622
Aaa AAA 5,000 New Jersey Builders
(AMBAC), 5%, 6/15/13 4,506,800
Aaa AAA 2,225 University of Medicine and
Dentistry Certificates of
Participation, (MBIA),
6.75%, 12/01/09 2,359,590
------------
$ 23,601,557
------------
INSURED SOLID WASTE - 0.5%
Aaa AAA $ 2,000 The Mercer County
Improvement Authority,
Solid Waste Revenue,
(AMT), (FGIC), 6.70%,
4/01/13 $ 2,118,200
------------
INSURED SPECIAL TAX - 0.8%
Aaa AAA $ 3,375 New Jersey Economic
Development Authority,
Market Transition
Facility, (MBIA), 5.875%,
7/01/11 $ 3,386,914
------------
INSURED TRANSPORTATION - 4.1%
Aaa AAA $ 2,000 The Delaware River and Bay
Authority, (MBIA), 4.75%,
1/01/24 $ 1,660,900
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 5,000 New Jersey Turnpike
Authority "RITES", (MBIA),
Variable, 1/01/16 (1) 5,744,000
Aaa AAA 8,450 New Jersey Turnpike
Authority, (MBIA), 6.50%,
1/01/16 9,162,335
------------
$ 16,567,235
------------
INSURED UTILITIES - 3.9%
Aaa AAA $ 2,750 New Jersey Economic
Development Authority, New
Jersey American Water Co.,
(AMT), (FGIC), 6.875%,
11/01/34 $ 2,912,058
Aaa AAA 13,500 Salem County, Public
Service Electric and Gas,
(MBIA), 5.55%, 11/01/33 12,629,790
------------
$ 15,541,848
------------
INSURED WATER & SEWER - 5.0%
Aaa AAA $ 6,500 Landis New Jersey Sewerage
Authority, Linked "CARS"
(FGIC), 5.65%, 9/19/19 $ 6,248,970
Aaa AAA 2,500 Middlesex County Utilities
Authority, Sewer Revenue,
(MBIA), Variable, 8/15/10
(1) 2,645,425
Aaa AAA 2,000 Township of Monroe, New
Jersey Municipal Utilities
Authority, (MBIA), 5.50%,
2/01/17 1,882,380
Aaa AAA 1,250 New Jersey Economic
Development Authority,
Middlesex Water Company,
(AMBAC), 5.20%, 10/01/22 1,107,550
Aaa AAA 1,650 New Jersey Economic
Development Authority,
Hackensack Water Company,
(MBIA), 5.80%, 3/01/24 1,607,248
Aaa AAA 1,270 Passaic Valley Water
Commissioners, (FGIC),
5.00%, 12/15/22 1,100,214
Aaa AAA 6,130 West New York, New Jersey
Municipal Utilities
Authority, (FGIC), 5.125%,
12/15/17 5,480,772
------------
$ 20,072,559
------------
LEASE/CERTIFICATE OF
PARTICIPATION - 3.7%
Baa1 A- $ 720 County of Atlantic, New
Jersey Public Facilities
Lease Agreement, 8.875%,
1/15/14 $ 929,902
Baa1 A- 785 County of Atlantic, New
Jersey Public Facilities
Lease Agreement, 8.875%,
1/15/15 1,015,043
A1 NR 1,000 Township of Bedminster,
Board of Education,
7.125%, 9/01/10 1,092,370
</TABLE>
51
<PAGE> 52
<TABLE>
- --------------------------------------------------------------------------------
NEW JERSEY TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
LEASE/CERTIFICATE OF PARTICIPATION -
(CONTINUED)
Aa AA- 1,000 Mercer County Improvement
Authority, Richard J.
Hughes Justice Complex,
6.05%, 1/01/14 1,000,510
Aa AA- 2,000 Mercer County Improvement
Authority, Richard J.
Hughes Justice Complex,
6.05%, 1/01/15 2,001,020
Aa AA- 1,500 Mercer County Improvement
Authority, Richard J.
Hughes Justice Complex,
6.05%, 1/01/16 1,500,465
Aa AA- 1,500 Mercer County Improvement
Authority, Richard J.
Hughes Justice Complex,
6.05%, 1/01/17 1,500,465
Aa AA- 5,420 New Jersey Building
Authority, 5.00%, 6/15/16 4,785,210
NR A+ 1,000 New Jersey Economic
Development Authority,
Performing Arts Center
Site Acquisition, 6.75%,
6/15/12 1,049,580
------------
$ 14,874,565
------------
MISCELLANEOUS - 4.0%
A1 A+ $ 1,650 New Jersey Economic
Development Authority,
Economic Recovery Fund,
0%, 9/15/09 $ 727,089
A1 A+ 5,500 New Jersey Economic
Development Authority,
Economic Recovery Fund,
0%, 3/15/13 1,911,525
NR NR 7,600 New Jersey Sports and
Exposition Authority,
Monmouth Park, 8.00%,
1/01/25 8,251,167
Aa NR 6,000 New Jersey Sports and
Exposition Authority,
5.20%, 1/01/20 5,318,580
------------
$ 16,208,361
------------
SOLID WASTE - 6.8%
Ba NR $ 3,655 The Atlantic County
Utilities Authority, Solid
Waste Revenue, 7.125%,
3/01/16 $ 3,641,001
Ba BBB+ 6,125 Pollution Control
Financing Authority of
Camden County, (AMT),
7.50%, 12/01/09 6,237,639
Ba NR 5,975 Mercer County Improvement
Authority, Solid Waste
System Revenue, (AMT), 0%,
4/01/14 1,548,003
Ba NR 6,000 Mercer County Improvement
Authority, Solid Waste
System Revenue, (AMT), 0%,
4/01/15 1,445,940
Ba NR 3,000 Mercer County Improvement
Authority, Solid Waste
System Revenue, (AMT), 0%,
4/01/16 672,510
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ba NR 1,500 Passaic County Utilities
Authority Solid Waste
System Revenue, 7.00%,
11/15/07 1,485,795
NR A- 11,930 Union County, New Jersey
Utilities Authority, Solid
Waste Revenue, (AMT),
7.20%, 6/15/14 12,411,376
------------
$ 27,442,264
------------
SPECIAL TAX - 0.2%
Baa1 BBB+ $ 550 Puerto Rico Infrastructure
Financing Authority,
7.90%, 7/01/07 $ 607,574
------------
TRANSPORTATION - 15.1%
NR BBB $ 1,250 Guam Airport Authority,
(AMT), 6.60%, 10/01/10 $ 1,263,675
NR BBB 1,400 Guam Airport Authority,
6.50%, 10/01/23 1,390,886
NR BBB 2,000 Guam Airport Authority,
(AMT), 6.70%, 10/01/23 1,999,740
A1 AA- 3,705 The Port Authority of New
York and New Jersey,
5.25%, 7/15/14 3,396,706
A1 AA- 9,500 The Port Authority of New
York and New Jersey,
7.35%, 10/01/27 (2) 10,438,315
A1 AA- 2,645 The Port Authority of New
York and New Jersey,
6.75%, 8/01/26 2,792,194
A1 AA- 5,000 The Port Authority of New
York and New Jersey,
(AMT), 6.25%, 1/15/27 4,999,750
A1 AA- 9,000 The Port Authority of New
York and New Jersey,
6.125%, 6/01/94 8,962,560
A1 AA- 5,000 The Port Authority of New
York and New Jersey,
5.375%, 3/01/28 4,561,400
Baa1 BB 5,100 The Port Authority of New
York and New Jersey, Delta
Air Lines Inc., 6.95%,
6/01/08 5,356,428
Baa1 A 2,135 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/01/12 2,216,963
Baa1 A 3,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/01/21 2,638,110
Baa1 A 4,100 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/01/18 4,243,131
Baa3 BB+ 5,550 Puerto Rico Port
Authority, American
Airlines, (AMT), 6.30%,
6/01/23 5,386,553
</TABLE>
52
<PAGE> 53
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION - (CONTINUED)
NR A+ 1,115 South Jersey Port
Corporation, New Jersey
Marine Terminal, 6.875%,
1/01/20 1,147,224
------------
$ 60,793,635
------------
UTILITY - 2.8%
NR BBB $ 100 Guam Power Authority,
5.25%, 10/01/13 $ 88,727
NR BBB 1,500 Guam Power Authority,
5.25%, 10/01/23 1,267,485
NR BBB 2,000 Guam Power Authority,
6.75%, 10/01/24 2,031,080
A3 BBB+ 625 New Jersey Economic
Development Authority,
Elizabethtown Gas Co.,
(AMT), 6.75%, 10/01/21 632,337
A2 A 1,455 New Jersey Economic
Development Authority,
Natural Gas Facilities,
(AMT), 7.05%, 3/01/16 1,542,387
Baa1 A- 460 Puerto Rico Electric Power
Authority, 7.125%, 7/01/14 498,801
NR NR 5,105 Virgin Islands Water and
Power Authority, Electric
System Revenue, 7.40%,
7/01/11 5,318,032
------------
$ 11,378,849
------------
WATER & SEWER - 2.5%
A1 AA- $ 2,000 Gloucester County
Utilities Authority,
6.50%, 1/01/21 $ 2,062,600
A3 A 3,250 New Jersey Economic
Development Authority,
Elizabethtown Water
Revenue, (AMT), 6.70%,
8/01/21 3,394,853
Aa AA 1,400 New Jersey Wastewater
Treatment Trust, 7.25%,
5/15/08 1,511,230
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa AA 1,000 New Jersey Wastewater
Treatment Trust, 6.875%,
6/15/09 1,090,310
Aa AA 250 New Jersey Wastewater
Treatment Trust, 7.00%,
6/15/10 273,342
Aa AA 1,000 New Jersey Wastewater
Treatment Trust, 6.00%,
7/01/10 1,022,020
A1 AA 500 The Somerset Raritan
Valley Sewerage Authority,
6.75%, 7/01/10 534,655
------------
$ 9,889,010
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $389,842,758) $403,485,415
============
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) Security has been segregated to cover margin requirements for open financial
futures contracts.
</TABLE>
The Portfolio primarily invests in debt securities issued by New Jersey
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at July 31, 1995, 27.9% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.1% to 14.5% of total investments.
See notes to financial statements
53
<PAGE> 54
<TABLE>
- --------------------------------------------------------------------------------
Pennsylvania Tax Free Portfolio
Portfolio of Investments - July 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
COGENERATION - 5.3%
NR NR $12,000 Pennsylvania Economic
Development Authority,
Northampton Generating
Project, (AMT), 6.50%,
1/01/13 $ 11,599,320
NR BBB- 9,000 Pennsylvania Economic
Development Authority,
Colver Project, (AMT),
7.125%, 12/01/15 9,437,490
NR BBB- 5,000 Pennsylvania Economic
Development Authority,
Colver Project, (AMT),
7.15%, 12/01/18 5,212,250
------------
$ 26,249,060
------------
EDUCATION - 5.3%
NR BBB $ 4,865 Erie Higher Education
Building Authority,
Mercyhurst College, 5.75%,
3/15/20 $ 4,370,132
Baa1 NR 1,500 Latrobe, Saint Vincent
College, 6.75%, 5/01/24 1,535,460
NR AAA 2,000 Lehigh County, Allentown
College of St. Francis,
6.75%, 12/15/12 2,129,440
Aa AA 3,700 Pennsylvania, University
of Pennsylvania, 6.625%,
1/01/17 3,733,041
NR A- 4,225 Scranton-Lackawanna,
Pennsylvania University,
University of Scranton,
6.40%, 3/01/07 4,368,185
NR AA 9,700 Swarthmore Borough,
Swarthmore College, 6.00%,
9/15/20 9,649,366
------------
$ 25,785,624
------------
ESCROWED - 6.5%
Aaa AAA $ 5,600 Berks County, GO, (FGIC),
Variable, 11/15/20 (1) $ 6,412,000
Aaa A- 1,750 Chester County, HEFA, Bryn
Mar Hospitals, 6.75%,
7/01/14 1,990,468
Aaa AAA 3,195 Derry Township School
District, GO, (AMBAC),
6.20%, 9/01/08 3,430,951
Aaa AAA 2,000 Doylestown Hospital
Authority, Doylestown
Hospital, (AMBAC), 6.90%,
7/01/19 2,219,120
Aaa AAA 1,405 Lycoming County, GO,
(FGIC), 6.40%, 8/15/11 1,540,765
Aaa AAA 945 Lycoming County, GO,
(FGIC), 6.40%, 8/15/11 1,036,315
NR A- 1,000 Pennsylvania, HEFA,
Elizabeth College, 7.25%,
6/15/11 1,150,140
NR A- 6,900 Pennsylvania IDA, Economic
Development, 7.00%,
1/01/11 7,853,649
NR A- 5,155 Philadelphia, Hospital and
Higher Education Facility
Authority, Presbyterian
Medical Center, 6.50%,
12/01/11 5,646,684
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 500 York County Hospital
Authority, York Hospital,
(AMBAC), 7.00%, 7/01/21 565,985
------------
$ 31,846,077
------------
GENERAL OBLIGATIONS - 4.8%
NR A $ 4,725 Chester Upland School
District, 6.375%, 9/01/12 $ 4,828,383
NR A 3,000 Chester Upland School
District, 6.375%, 9/01/21 3,038,070
A1 AA- 465 Commonwealth of
Pennsylvania, 6.75%,
1/01/07 498,182
A1 AA- 500 Commonwealth of
Pennsylvania, 6.75%,
1/01/08 534,465
A1 AA- 5,435 Commonwealth of
Pennsylvania, 6.50%,
11/01/09 5,729,251
A1 AA- 2,000 Commonwealth of
Pennsylvania, 6.375%,
9/15/12 2,074,740
NR A 3,000 Dauphin County, 6.90%,
6/02/26 3,166,320
A1 A+ 2,050 Lower Providence Township
Sewer Authority
Guaranteed, 6.75%, 5/01/22 2,142,066
NR A 1,950 McKeesport Area School
District, 5.00%, 4/01/13 1,741,194
------------
$ 23,752,671
------------
HOSPITALS - 22.6%
NR AAA $ 2,470 Allegheny County, IDA,
Presbyterian Medical
Center, 6.75%, 2/01/26 $ 2,548,842
NR A- 4,000 Butler County IDA,
Sherwood Oaks, 5.75%,
6/01/16 3,588,520
NR AA- 12,000 Chester County, HEFA,
(Main Line Health System),
5.50%, 5/15/15 11,139,000
Baa BBB 2,000 Dauphin County Hospital
Authority, Community
General Osteopathic
Hospital, 7.375%, 6/01/16 2,085,880
NR A- 10,250 Delaware County, Riddle
Memorial Hospital, 6.50%,
1/01/22 9,813,863
NR NR 4,755 Hazelton Luzerne County,
Saint Joseph Medical
Center, 8.375%, 7/01/12 4,892,895
Baa1 NR 2,670 Indiana County Hospital
Authority, Indiana
Hospital, 7.125%, 7/01/23 2,689,838
NR BBB+ 3,500 Lebanon County, Good
Samaritan Hospital, 6.00%,
11/15/18 3,148,285
Baa1 A 3,250 Lehigh County, Muhlenberg
Hospital, 6.60%, 7/15/22 3,233,620
NR BBB- 5,405 McKean County Hospital
Authority, Bradford
Hospital, 6.10%, 10/01/20 4,591,115
</TABLE>
54
<PAGE> 55
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOSPITALS - (CONTINUED)
NR BBB+ 2,615 Montgomery County,
Pottstown Medical Center,
6.875%, 11/15/20 2,597,558
A1 A+ 500 PA Hospital and Higher
Education Facility
Authority, Allegheny
General Hospital, 7.25%,
9/01/17 536,535
A BBB+ 8,500 PA Hospital and Higher
Education Facility
Authority, Albert Einstein
Medical Center, 7.625%,
4/01/11 9,054,965
Baa1 BBB+ 12,800 PA Hospital and Higher
Education Facility
Authority, Graduate Health
System, 6.625%, 7/01/21 12,228,480
Aa AA 4,500 PA Hospital and Higher
Education Facility
Authority, Children's
Hospital, 5.50%, 2/15/22 4,125,060
Baa1 A- 10,515 PA Hospital and Higher
Education Facility
Authority, Temple
University Hospital,
6.625%, 11/15/23 10,517,418
Aa AA 10,200 PA Hospital and Higher
Education Facility
Authority, Children's
Hospital, 5.00%, 2/15/21 8,745,276
Aa NR 4,750 Pottsville, Hospital
Authority, Daughters of
Charity, 5.00%, 8/15/12 4,238,093
Baa NR 4,115 Somerset County, Hospital
Authority, Somerset
County, Somerset Community
Hospital Project, 6.750%,
3/01/11 3,950,359
A NR 7,000 Washington County,
Hospital Authority,
Monongahela Valley
Hospital, 6.75%, 12/01/08 7,324,310
------------
$111,049,912
------------
HOUSING - 12.3%
NR AAA $ 1,000 Bucks County, Mortgage
Revenue Bonds, Warminster
Heights Project, Section
8-A, 6.80%, 8/01/12 $ 1,029,520
NR NR 2,680 Chester County, IDA,
8.05%, 1/01/24 2,688,120
A1 A+ 3,000 Pennsylvania HFA MF,
7.60%, 7/01/13 3,210,330
Aaa NR 3,000 Philadelphia Redevelopment
Authority, MF, 6.95%,
5/15/24 3,102,450
Aaa NR 2,175 Allegheny County
Residential Finance
Authority, SFMR, (GNMA),
7.15%, 6/01/17 2,212,410
Aa AA 5,700 Pennsylvania HFA SFMR,
(AMT), 6.75%, 4/01/16 5,816,451
Aa AA 3,730 Pennsylvania HFA SFMR,
6.90%, 4/01/17 3,834,627
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa AA 4,000 Pennsylvania HFA SFMR,
6.85%, 4/01/16 4,099,080
Aa AA 300 Pennsylvania HFA SFMR,
7.40%, 10/01/09 313,026
Aa AA 770 Pennsylvania HFA SFMR,
7.20%, 10/01/11 809,124
Aa AA 695 Pennsylvania HFA SFMR,
7.375%, 10/01/16 720,048
Aa AA 1,000 Pennsylvania HFA SFMR,
(AMT), Variable, 10/01/23
(1) 1,059,990
Aa AA 5,500 Pennsylvania HFA SFMR,
(AMT), 6.85%, 4/01/25 5,637,280
Aa AA 8,350 Pennsylvania HFA SFMR,
(AMT), 7.50%, 10/01/25 8,868,034
Aa AA 10,000 Pennsylvania HFA SFMR,
(AMT), 6.65%, 10/01/21 10,177,400
A1 A 4,235 Urban Redevelopment
Authority of Pittsburgh
Mortgage Revenue Bonds,
(AMT), 7.10%, 4/01/24 4,259,563
A1 A 265 Urban Redevelopment
Authority of Pittsburgh,
7.45%, 4/01/10 278,663
A1 A 1,000 Urban Redevelopment
Authority of Pittsburgh
Mortgage Revenue Bonds,
7.125%, 4/01/15 1,040,790
A1 A 1,055 Urban Redevelopment
Authority of Pittsburgh
Mortgage Revenue Bonds,
(AMT), 7.40%, 4/01/24 1,096,630
------------
$ 60,253,536
------------
INDUSTRIAL DEVELOPMENT
AUTHORITY - 8.7%
A3 A $ 6,950 Butler County IDA,
Witco Corporation Project,
5.85%, 12/01/23 $ 6,573,449
NR BBB 1,005 Clearfield County IDA,
Kmart Corporation,
6.80%, 5/15/07 1,030,095
NR A+ 4,000 Franklin County IDA,
Corning Incorporated,
6.25%, 8/01/05 4,206,280
NR AAA 8,750 Mercer County IDA,
Hillcrest Nursing Center,
0%, 1/15/13 2,475,375
A2 A 12,000 New Morgan IDA, New Morgan
Landfill, (AMT), 6.50%,
4/01/19 12,155,040
Baa2 BBB- 5,000 Pennsylvania, IDA,
Macmilliam Project, (AMT),
7.60%, 12/01/20 5,385,950
Baa1 BBB+ 4,450 Pennsylvania, IDA, Sun
Company Project, (AMT),
7.60%, 12/01/24 4,807,868
A2 A 6,025 Washington County IDA,
West Penn Power, 6.05%,
4/01/14 5,964,630
------------
$ 42,598,687
------------
</TABLE>
55
<PAGE> 56
<TABLE>
- --------------------------------------------------------------------------------
PENNSYLVANIA TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED AIRPORTS - 1.2%
Aaa AAA $ 6,000 Philadelphia Airport,
(AMBAC), (AMT), 6.00%,
6/15/15 $ 5,903,760
------------
INSURED EDUCATION - 1.1%
Aaa AAA $ 2,500 Pennsylvania Higher
Education Assistance
Agency Student Loan
Revenue Bonds, (AMBAC),
(AMT), 7.15%, 9/01/21 $ 2,639,200
Aaa AAA 1,500 Pennsylvania Higher
Education Assistance
Agency Student Loan
Revenue Bonds, (AMBAC),
(AMT), Variable, 3/01/22
(1) 1,441,965
Aaa AAA 700 Pennsylvania Higher
Education Assistance
Agency Student Loan
Revenue Bonds, (AMBAC),
(AMT), Variable, 9/01/26
(1) 744,744
Aaa AAA 800 Pennsylvania Higher
Education Assistance
Agency Student Loan
Revenue Bonds, (AMBAC),
(AMT), 6.40%, 3/01/22 808,712
------------
$ 5,634,621
------------
INSURED GENERAL OBLIGATION - 3.0%
Aaa AAA $ 1,750 Deer Lakes School
District, (MBIA), 6.45%,
1/15/19 $ 1,792,210
Aaa AAA 2,170 Elizabeth Forward School
District, (MBIA), 0%,
9/01/20 454,701
Aaa AAA 2,170 Elizabeth Forward School
District, (MBIA), 0%,
9/01/21 427,230
Aaa AAA 2,170 Elizabeth Forward School
District, (MBIA), 0%,
9/01/22 401,407
Aaa AAA 2,170 Elizabeth Forward School
District, (MBIA), 0%,
9/01/23 377,168
Aaa AAA 4,345 Elizabeth Forward School
District, (MBIA), 0%,
9/01/24 709,582
Aaa AAA 1,460 Haverford School District,
(FGIC), 6.125%, 6/01/14 1,477,199
Aaa AAA 4,500 Keystone Oaks School
District, (AMBAC),
Variable,
9/01/16 (1) 4,348,170
Aaa AAA 1,430 Mars Area School District,
(MBIA), 0%, 3/01/14 474,245
Aaa AAA 655 Rochester Area School
District, (AMBAC), 0%,
5/01/10 278,703
Aaa AAA 2,795 Venango County, (AMBAC),
6.30%, 12/01/19 2,850,453
Aaa AAA 1,000 West Allegheny County
School District, (AMBAC),
6.60%, 2/01/09 1,034,210
------------
$ 14,625,278
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED HOSPITAL - 7.1%
Aaa AAA $ 1,170 Allegheny County,
Children's Hospital of
Pittsburgh, (MBIA), 6.75%,
7/01/08 $ 1,234,175
Aaa AAA 3,750 Allegheny County, Magee-
Womens Hospital, (FGIC),
0%, 10/01/15 1,114,425
Aaa AAA 1,400 Armstrong County Saint
Francis Health Care,
(AMBAC), 6.25%, 6/01/13 1,430,296
Aaa AAA 2,500 Armstrong County Saint
Francis Health Care,
(AMBAC), 6.00%, 8/15/08 2,557,425
Aaa AAA 4,400 Bucks County, IDA, Grand
View Hospital, (AMBAC),
5.25%, 7/01/21 3,889,864
Aaa AAA 775 Carbon County, Gnaden
Memorial Hospital,
(AMBAC), 7.00%, 11/15/14 825,243
Aaa AAA 750 Erie County Hospital
Authority, Harlot Medical
Center, (AMBAC), 7.10%,
2/15/10 811,313
Aaa AAA 230 Lehigh County Health East,
Incorporated, (MBIA),
7.00%, 7/01/15 244,801
Aaa AAA 5,000 Lehigh County, St. Luke's
Hospital, (AMBAC), 6.25%,
7/01/22 5,091,850
Aaa AAA 1,000 Montgomery County,
Abington Memorial
Hospital, (AMBAC),
Variable,
6/01/11 (1) 1,111,250
Aaa AAA 5,000 Philadelphia Hospital and
Higher Education,
Pennsylvania Hospital,
(FGIC), Variable, 2/15/12
(1) 4,368,500
Aaa AAA 3,500 Sayre Health Care
Facilities Authority,
Guthrie Healthcare System,
(AMBAC), 6.00%, 3/01/21 3,490,690
Aaa AAA 1,500 Scranton-Lackawanna, Mercy
Health Systems, (MBIA),
6.90%, 1/01/23 1,577,370
Aaa AAA 7,500 Washington County,
Shadyside Hospital,
(AMBAC), 5.75%, 12/15/14 7,277,924
------------
$ 35,025,126
------------
INSURED LEASE - 4.1%
Aaa AAA $ 4,595 Harrisburg Authority,
Dauphin County, Lease
Revenue, (CGIC), 6.25%,
6/01/10 $ 4,904,335
Aaa AAA 3,000 Northumberland County,
Lease Revenue, (MBIA), 0%,
10/15/12 1,109,040
Aaa AAA 5,600 Philadelphia Muni
Authority, Lease Revenue,
(FGIC), 5.625%, 11/15/18 5,317,592
</TABLE>
56
<PAGE> 57
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED LEASE - (CONTINUED)
Aaa AAA 10,000 Commonwealth of
Pennsylvania, Lease
Revenue, (AMBAC), 5.00%,
7/01/15 8,751,600
------------
$ 20,082,567
------------
INSURED UTILITIES - 3.9%
Aaa AAA $ 4,000 Beaver County IDA, Ohio
Edison Company, (FGIC),
7.00%, 6/01/21 $ 4,270,880
Aaa AAA 10,000 Beaver County IDA, Ohio
Edison Company, (FGIC),
7.05%, 10/01/20 10,708,500
Aaa AAA 3,800 Puerto Rico Electric Power
Authority, (FSA),
Variable, 7/01/02 (1) 4,116,578
------------
$ 19,095,958
------------
INSURED WATER & SEWER - 6.2%
Aaa AAA $ 2,750 Allegheny County, Sewer
Revenue, (FGIC), 0%,
12/01/08 $ 1,296,845
Aaa AAA 9,000 Bethlehem Authority,
Northampton and Lehigh
Counties, Water Revenue
Bonds, (MBIA), 4.875%,
11/15/14 7,805,070
Aaa AAA 2,500 City of Philadelphia,
Water and Wastewater,
(FGIC), Variable, 6/15/12
(1) 2,350,000
Aaa AAA 9,000 City of Philadelphia,
Water and Wastewater,
(CGIC), 5.50%, 6/15/15 8,441,280
Aaa AAA 2,460 City of Philadelphia,
Water and Wastewater,
(CGIC), 5.00%, 6/15/16 2,145,440
Aaa AAA 8,920 City of Philadelphia,
Water and Wastewater,
(MBIA), 5.60%, 8/01/18 8,435,555
------------
$ 30,474,190
------------
MISCELLANEOUS - 3.8%
NR AA $ 870 Pennsylvania
Infrastructure Investment
Authority, Pennvest,
6.80%, 9/01/10 $ 922,487
NR A 16,950 Pennsylvania Finance
Authority, Beaver County,
6.60%, 11/01/09 17,744,277
------------
$ 18,666,764
------------
NURSING HOMES - 1.3%
NR NR $ 3,500 Montgomery County IDA,
Geriatric Health Care
Institute, 8.375%, 7/01/23 $ 3,493,910
NR NR 1,460 Westmoreland County IDA,
Highland Health System,
9.25%, 6/01/22 1,517,860
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR NR 1,190 Philadelphia Hospital and
Higher Education
Facilities Authority,
Philadelphia Protestant,
8.625%, 7/01/21 1,200,995
------------
$ 6,212,765
------------
SPECIAL TAX REVENUE - 0.1%
Baa1 BBB+ $ 500 Puerto Rico Special Tax
Revenue, 7.50%, 7/01/09 $ 535,485
------------
TRANSPORTATION - 0.3%
Baa1 A $ 1,500 Puerto Rico Commonwealth
Highway, 5.50%, 7/01/13 $ 1,415,115
------------
UTILITIES - 2.2%
Baa3 BB+ $ 500 Beaver County, IDA, Ohio
Edison Company, 7.75%,
9/01/24 $ 524,550
Baa1 BBB+ 3,250 Delaware County, IDA,
Philadelphia Electric
Company, 7.375%, 4/01/21 3,462,745
Baa1 BBB+ 4,070 Montgomery County, IDA,
Philadelphia Electric
Company, (AMT), 7.60%,
4/01/21 4,337,358
Baa1 A- 3,370 Puerto Rico Electric Power
Authority Power Revenue,
0%, 7/01/17 863,866
NR NR 1,500 Virgin Islands Water and
Power Authority, 7.40%,
7/01/11 1,562,595
------------
$ 10,751,114
------------
WATER & SEWER REVENUE - 0.2%
Baa1 A $ 1,000 Puerto Rico Aqueduct and
Sewer Authority, 7.90%,
7/01/07 $ 1,109,020
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $477,086,127) $491,067,330
============
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
</TABLE>
The Portfolio primarily invests in debt securities issued by Pennsylvania
municipalities. The ability of the issuers of debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at July 31, 1995, 28.3% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.4% to 11.5% of total investments.
See notes to financial statements
57
<PAGE> 58
<TABLE>
- --------------------------------------------------------------------------------
Texas Tax Free Portfolio
Portfolio of Investments - July 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 3.7%
A NR $ 700 Brazos Higher Education
Authority, Texas Student
Loan Subordinate, 6.50%,
6/01/04 $ 727,524
Aa1 AA 250 University of Texas, 6.75%,
8/15/13 (1) 267,055
-----------
$ 994,579
-----------
ELECTRIC UTILITIES - 1.6%
NR BBB $ 500 Guam Power Authority,
5.25%, 10/01/23 $ 422,495
-----------
ESCROWED - 3.6%
Baa1 BBB $ 200 Bexar County, Texas, St.
Luke's Lutheran Hospital,
7.00%, 5/01/21 $ 227,466
Aaa NR 1,000 Central Texas Housing
Corporation Single Family,
0%, 9/01/16 270,510
Aaa AAA 85 Harris County Texas Toll
Road Unlimited Tax and
Subordinate Lien (AMBAC),
6.625%, 8/15/17 90,796
Aaa AAA 200 Montgomery County, Texas
Hospital District (FSA),
6.625%, 4/01/17 224,720
Aaa AAA 150 Texas National Research Lab
Super Collider, 6.95%,
12/01/12 167,802
-----------
$ 981,294
-----------
GENERAL OBLIGATIONS - 16.8%
Aaa AAA $1,000 Bastrop, Texas Independent
School District U.T.G.O.
(PSF), 0.00%, 2/15/13 $ 349,880
Aaa NR 500 Crandall, Texas Independent
School District U.T.G.O.
(PSF), 6.00%, 2/15/24 495,935
Aaa AAA 1,000 Cypress-Fairbanks, Texas
Independent School District
U.T.G.O. (PSF), 5.25%,
2/15/19 904,900
Aaa AAA 550 Grand Prairie, Texas
Independent School District
U.T.G.O. (PSF), 0%, 2/15/12 202,680
Aaa AA+ 350 Irving, Texas L.T.G.O.
4.875%, 9/15/14 (1) 309,544
Aaa AAA 1,000 Round Rock, Texas
Independent School District
U.T.G.O. (PSF), 5.50%,
8/01/15 948,900
Aa AA 250 Texas Veterans' Housing
Assistance U.T.G.O. (AMT),
6.45%, 6/01/23 247,420
Aa AA 690 Texas Veterans' Housing
Assistance U.T.G.O. (AMT),
6.70%, 12/01/24 697,321
Aa AA 395 Texas Veterans' Housing
Assistance U.T.G.O. (AMT),
6.80%, 12/01/23 401,980
-----------
$ 4,558,560
-----------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTH CARE - 1.9%
NR NR $ 500 Bell County, Texas HFC
Elder Care Facilities,
9.00%, 11/01/24 $ 523,725
-----------
HOSPITALS - 11.1%
NR BBB $ 500 Denison, Texas, Texoma
Medical Center, 7.10%,
8/15/24 $ 502,255
A A- 100 Ector County, Texas
Hospital District, 7.30%,
4/15/12 105,170
A A- 100 Harris County, Texas
Hospital District, 7.125%,
6/01/15 104,750
A A- 1,100 Harris County, Texas
Hospital District, Memorial
Hospital System, 6.625%,
6/01/24 1,114,696
Aa AA 250 McAllen Health Facilities,
Texas, Sisters of Mercy,
5.00%, 6/01/15 220,160
A1 NR 1,000 Tarrant County, Texas,
Methodist Health System,
6.00%, 9/01/24 971,830
-----------
$ 3,018,861
-----------
HOUSING - 4.2%
Aa NR $ 400 Kaufman, Texas HDC
Multifamily (FHA) Section
8, 6.00%, 2/01/22 $ 377,764
NR A 750 Travis County, Texas HFC
Multifamily Travis Station
Apartments, 6.75%, 4/01/19 762,435
-----------
$ 1,140,199
-----------
INDUSTRIAL DEVELOPMENT REVENUE/
POLLUTION CONTROL REVENUE - 7.0%
Baa1 BBB $ 450 Gulf Coast, Texas Waste
Disposal Authority,
Champion International
(AMT), 7.25%, 4/01/17 $ 481,401
A2 A+ 1,000 Port Corpus Christi, Texas,
Hoechst Celanese
Corporation, 6.875%,
4/01/17 1,048,690
Baa2 BBB 400 West Side Calhoun County
Navigation District, Texas,
Union Carbide (AMT), 6.40%,
5/01/23 380,572
-----------
$ 1,910,663
-----------
INSURED EDUCATION - 0.4%
Aaa AAA $ 100 Southwest, Texas, Southern
Methodist University
(FGIC), 6.375%, 10/01/13 $ 104,393
-----------
INSURED ELECTRIC UTILITIES - 14.5%
Aaa AAA $1,000 Austin, Texas Utility
System (FGIC), 6.25%,
5/15/16 $ 1,020,160
Aaa AAA 250 Brazos River Authority,
Texas, Houston Lighting and
Power Company (FGIC),
7.20%, 12/01/18 267,497
</TABLE>
58
<PAGE> 59
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED ELECTRIC UTILITIES -
(CONTINUED)
Aaa AAA 75 Brazos River Authority,
Texas, Houston Light and
Power (AMBAC), 6.70%,
3/01/17 78,424
Aaa AAA 1,050 Corpus Christi, Texas
Utility System (MBIA),
5.20%, 7/15/13 960,561
Aaa AAA 500 Lower Colorado River
Authority Junior Lien,
Texas (FGIC), 0%, 1/01/12 183,855
Aaa AAA 605 Montgomery County, Texas
MUD #47 Water & Sewer
(AMBAC), 6.125%, 10/01/20 607,432
Aaa AAA 100 Sabine River Authority,
Texas, Utilities Electric
Company (FGIC), 6.55%,
10/01/22 103,182
Aaa AAA 1,395 Texas Municipal Power
Agency (MBIA), 0%, 9/01/13 463,405
Aaa AAA 1,000 Texas Municipal Power
Agency (MBIA), 0%, 9/01/17 254,790
-----------
$ 3,939,306
-----------
INSURED GENERAL OBLIGATION - 1.9%
Aaa AAA $ 100 Brownsville, Texas
Navigation District
(AMBAC), 6.25%, 3/01/14 $ 102,245
Aaa AAA 500 Ector County, Texas G.O.
(AMBAC), 4.25%, 2/15/10 426,335
-----------
$ 528,580
-----------
INSURED HOSPITAL - 6.6%
Aaa AAA $ 250 Coastal Bend, Texas HFC
Incarnate Word Health
Services (AMBAC), 6.30%,
1/01/17 $ 254,058
Aaa AAA 500 Harris County, Texas HFC
Hermann Hospital (MBIA),
6.375%, 10/01/24 (1) 507,320
Aaa AAA 1,000 Tyler County, Texas HFC
Mother Frances Hospital
(FGIC), 6.50%, 7/01/22 1,029,190
-----------
$ 1,790,568
-----------
INSURED LEASE/COP - 1.7%
Aaa AAA $ 500 East Texas Jails, Angelina
County Project (MBIA),
5.25%, 5/01/14 $ 459,665
-----------
INSURED TRANSPORTATION - 12.0%
Aaa AAA $ 500 Dallas-Fort Worth
International Airport,
Texas (MBIA), 6.00%,
11/01/12 $ 504,175
Aaa AAA 500 Dallas-Fort Worth
International Airport,
Texas (FGIC), 5.625%,
11/01/15 475,890
Aaa AAA 500 Harris County, Texas Toll
Road Senior Lien (AMBAC),
5.30%, 8/15/13 465,385
Aaa AAA 2,000 Harris County, Texas Toll
Road Subordinate Lien
(FGIC), 5.375%, 8/15/20 1,819,820
-----------
$ 3,265,270
-----------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED WATER & SEWER - 1.7%
Aaa AAA $ 520 Tarrant County, Texas Water
and Improvement District
Number One (AMBAC), 4.75%,
3/01/12 $ 450,819
-----------
LEASE/COP - 0.9%
NR BBB- $ 250 Rio Grande, Texas
Independent School District
Lease, 6.75%, 7/15/10 $ 241,558
-----------
MISCELLANEOUS - 5.9%
Baa2 BB+ $ 505 Alliance Airport Authority,
Texas, American Airlines,
7.50%, 12/01/29 $ 524,180
Aaa AAA 1,000 Austin, Texas Hotel
Occupancy Tax Revenue,
5.125% (AMBAC), 11/15/19 882,970
NR NR 250 Retama Development, Texas,
Retama Racetrack, 8.75%,
12/15/18 200,000
-----------
$ 1,607,150
-----------
TRANSPORTATION - 3.7%
Ba1 BB $ 235 Dallas-Fort Worth Texas
Airport, Delta Airlines
(AMT), 7.125%, 11/01/26 $ 239,872
Baa2 BB+ 225 Dallas-Fort Worth Texas
Airport, Delta Airlines
(AMT), 7.50%, 11/01/25 233,986
NR BBB 255 Guam Airport Authority
(AMT), 6.70%, 10/01/23 254,967
Aa AA 25 Harris County, Texas Toll
Road, Subordinate Lien,
6.75%, 8/01/14 26,726
Baa3 BB+ 250 Puerto Rico Ports
Authority, American
Airlines (AMT), 6.30%,
6/01/23 242,637
-----------
$ 998,188
-----------
WATER & SEWER REVENUE - 0.8%
Aa AA $ 250 Dallas, Texas Water and
Sewer, 5.00%, 4/01/09 $ 236,018
-----------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $26,750,393) $27,171,891
===========
<FN>
(1) Security has been segregated to cover margin requirements for open financial
futures contracts.
</TABLE>
The Portfolio invests primarily in debt securities issued by Texas
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at July 31, 1995, 55.3% of the securities in the portfolio of
investments are backed by bond insurance of various financial guaranty assurance
agencies. The aggregate percentage by financial institution ranges from 0.8% to
18.4% of total investments.
See notes to financial statements
59
<PAGE> 60
- --------------------------------------------------------------------------------
Tax Free Portfolios
Financial Statements
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $140,218,111 $44,277,269 $192,808,845 $182,066,681
Unrealized appreciation (depreciation) 3,828,622 1,159,426 (1,554,336) 4,460,215
------------ ----------- ------------ ------------
Total investments, at value (Note 1A) $144,046,733 $45,436,695 $191,254,509 $186,526,896
Cash 426 687,824 1,592,566 2,048,393
Receivable for investments sold -- 35,463 -- 800,000
Interest receivable 1,411,599 596,740 2,509,768 2,949,373
Deferred organization expenses (Note 1D) 4,476 1,464 6,823 6,501
------------ ----------- ------------ ------------
Total assets $145,463,234 $46,758,186 $195,363,666 $192,331,163
------------ ----------- ------------ ------------
LIABILITIES:
Payable for when issued securities (Note 1F) $ -- $ 658,200 $ -- $ 964,896
Payable for daily variation margin on open financial
futures contracts (Note 1E) 33,469 20,719 77,031 99,875
Demand note payable (Note 5) 903,000 -- -- --
Payable to affiliates --
Trustees' fees 669 135 919 889
Custodian fees 2,924 639 3,823 --
Accrued expenses 2,157 1,327 6,104 2,522
------------ ----------- ------------ ------------
Total liabilities $ 942,219 $ 681,020 $ 87,877 $ 1,068,182
------------ ----------- ------------ ------------
Net Assets applicable to investors' interest in
Portfolio $144,521,015 $46,077,166 $195,275,789 $191,262,981
============ =========== ============ ============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $140,643,966 $44,887,762 $196,718,666 $186,667,067
Unrealized appreciation (depreciation) of investments
and financial futures contracts (computed on the
basis ofidentified cost) 3,877,049 1,189,404 (1,442,877) 4,595,914
------------ ----------- ------------ ------------
Total $144,521,015 $46,077,166 $195,275,789 $191,262,981
============ =========== ============ ============
</TABLE>
See notes to financial statements
60
<PAGE> 61
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $78,851,048 $389,842,758 $477,086,127 $26,750,393
Unrealized appreciation 2,570,065 13,642,657 13,981,203 421,498
----------- ------------ ------------ -----------
Total investments, at value (Note 1A) $81,421,113 $403,485,415 $491,067,330 $27,171,891
Cash 400,411 1,075,446 4,181,885 1,058,371
Receivable for investments sold -- 3,861,470 30,000 --
Interest receivable 1,168,552 5,337,412 6,962,611 472,632
Receivable from the Investment Adviser (Note 2) -- -- -- 18,606
Deferred organization expenses (Note 1D) 2,508 11,270 13,558 1,415
----------- ------------ ------------ -----------
Total assets $82,992,584 $413,771,013 $502,255,384 $28,722,915
----------- ------------ ------------ -----------
LIABILITIES:
Payable for investments purchased $ -- $ 2,654,715 $ -- $ 479,270
Payable for daily variation margin on open financial
futures contracts (Note 1E) 21,250 66,406 -- 14,875
Payable to affiliates --
Trustees' fees 540 1,406 1,713 137
Custodian fees 1,572 5,883 -- 211
Accrued expenses 1,526 4,181 3,367 1,401
----------- ------------ ------------ -----------
Total liabilities $ 24,888 $ 2,732,591 $ 5,080 $ 495,894
----------- ------------ ------------ -----------
Net Assets applicable to investors' interest in
Portfolio $82,967,696 $411,038,422 $502,250,304 $28,227,021
=========== ============ ============ ===========
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $80,383,134 $397,350,461 $488,269,101 $27,771,750
Unrealized appreciation of investments and financial
futures contracts (computed on the basis of
identified cost) 2,584,562 13,687,961 13,981,203 455,271
----------- ------------ ------------ -----------
Total $82,967,696 $411,038,422 $502,250,304 $28,227,021
=========== ============ ============ ===========
</TABLE>
See notes to financial statements
61
<PAGE> 62
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
<TABLE>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income $ 9,380,468 $ 2,916,273 $12,024,017 $12,313,929
----------- ----------- ----------- -----------
Expenses --
Investment adviser fee (Note 2) $ 629,148 $ 128,496 $ 835,605 $ 856,258
Compensation of Trustees not members of the Investment
Adviser's organization (Note 2) 9,186 1,335 17,185 11,255
Custodian fees (Note 2) 65,302 16,604 48,135 1,944
Interest expense (Note 5) 24,478 7,980 55,056 19,364
Legal and accounting services 23,018 20,942 27,771 26,172
Bond pricing 11,371 7,911 15,577 14,364
Amortization of organization expenses (Note 1D) 1,793 637 2,620 2,493
Printing and postage 200 -- 552 --
Registration costs 125 125 125 125
Miscellaneous 4,266 1,133 15,780 4,161
----------- ----------- ----------- -----------
Total expenses $ 768,887 $ 185,163 $ 1,018,406 $ 936,136
Deduct reduction of investment adviser fee (Note 2) -- 69,064 -- --
----------- ----------- ----------- -----------
Net expenses $ 768,887 $ 116,099 $ 1,018,406 $ 936,136
----------- ----------- ----------- -----------
Net investment income $ 8,611,581 $ 2,800,174 $11,005,611 $11,377,793
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss --
Investment transactions (identified cost basis) $(4,877,347) $(1,800,477) $(2,556,284) $(3,817,102)
Financial futures contracts (995,149) (721,504) (2,778,750) (2,415,234)
----------- ----------- ----------- -----------
Net realized loss on investments $(5,872,496) $(2,521,981) $(5,335,034) $(6,232,336)
----------- ----------- ----------- -----------
Change in unrealized appreciation --
Investments $ 7,691,430 $ 2,725,487 $ 3,995,907 $ 6,667,070
Financial futures contracts 166,028 98,064 537,717 280,007
----------- ----------- ----------- -----------
Net unrealized appreciation of investments $ 7,857,458 $ 2,823,551 $ 4,533,624 $ 6,947,077
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments $ 1,984,962 $ 301,570 $ (801,410) $ 714,741
----------- ----------- ----------- -----------
Net increase in net assets from operations $10,596,543 $ 3,101,744 $10,204,201 $12,092,534
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
62
<PAGE> 63
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income $ 5,259,766 $ 26,778,322 $ 33,140,571 $ 1,711,252
----------- ------------ ------------ -----------
Expenses --
Investment adviser fee (Note 2) $ 310,489 $ 1,944,340 $ 2,416,419 $ 56,319
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 5,240 14,740 20,013 1,753
Custodian fees (Note 2) 20,399 91,170 -- 7,834
Interest expense (Note 5) 18,478 38,870 11,820 3,559
Legal and accounting services 23,039 35,317 38,577 16,838
Bond pricing 11,391 18,054 15,974 8,533
Amortization of organization expenses (Note 1D) 1,018 4,464 5,278 605
Registration costs -- 125 125 125
Miscellaneous 2,379 8,434 8,815 208
----------- ------------ ------------ -----------
Total expenses $ 392,433 $ 2,155,514 $ 2,517,021 $ 95,774
----------- ------------ ------------ -----------
Deduct --
Reduction of investment adviser fee (Note 2) $ -- $ -- $ -- $ 56,319
Allocation of expenses to the Investment Adviser
(Note 2) -- -- -- 18,606
----------- ------------ ------------ -----------
Total $ -- $ -- $ -- $ 74,925
----------- ------------ ------------ -----------
Net expenses $ 392,433 $ 2,155,514 $ 2,517,021 $ 20,849
----------- ------------ ------------ -----------
Net investment income $ 4,867,333 $ 24,622,808 $ 30,623,550 $ 1,690,403
----------- ------------ ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss --
Investment transactions (identified cost basis) $(3,665,826) $(13,015,045) $(13,832,451) $ (610,466)
Financial futures contracts (1,549,418) (4,759,465) (6,462,533) (393,285)
----------- ------------ ------------ -----------
Net realized loss on investments $(5,215,244) $(17,774,510) $(20,294,984) $(1,003,751)
----------- ------------ ------------ -----------
Change in unrealized appreciation --
Investments $ 4,573,005 $ 15,570,319 $ 16,678,284 $ 1,169,634
Financial futures contracts 195,669 1,061,635 2,323,941 50,424
----------- ------------ ------------ -----------
Net unrealized appreciation of investments $ 4,768,674 $ 16,631,954 $ 19,002,225 $ 1,220,058
----------- ------------ ------------ -----------
Net realized and unrealized gain (loss) on
investments $ (446,570) $ (1,142,556) $ (1,292,759) $ 216,307
----------- ------------ ------------ -----------
Net increase in net assets from operations $ 4,420,763 $ 23,480,252 $ 29,330,791 $ 1,906,710
=========== ============ ============ ===========
</TABLE>
See notes to financial statements
63
<PAGE> 64
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 8,611,581 $ 2,800,174 $ 11,005,611 $ 11,377,793
Net realized loss on investment transactions (5,872,496) (2,521,981) (5,335,034) (6,232,336)
Change in unrealized appreciation of investments 7,857,458 2,823,551 4,533,624 6,947,077
------------ ------------ ------------ ------------
Net increase in net assets from operations $ 10,596,543 $ 3,101,744 $ 10,204,201 $ 12,092,534
------------ ------------ ------------ ------------
Capital transactions --
Contributions $ 21,272,707 $ 10,355,365 $ 25,911,862 $ 14,779,804
Withdrawals (41,416,595) (11,778,902) (32,878,239) (39,641,020)
------------ ------------ ------------ ------------
Decrease in net assets resulting from capital
transactions $(20,143,888) $ (1,423,537) $ (6,966,377) $(24,861,216)
------------ ------------ ------------ ------------
Total increase (decrease) in net assets $ (9,547,345) $ 1,678,207 $ 3,237,824 $(12,768,682)
NET ASSETS:
At beginning of year 154,068,360 44,398,959 192,037,965 204,031,663
------------ ------------ ------------ ------------
At end of year $144,521,015 $ 46,077,166 $195,275,789 $191,262,981
============ ============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 4,867,333 $ 24,622,808 $ 30,623,550 $ 1,690,403
Net realized loss on investment transactions (5,215,244) (17,774,510) (20,294,984) (1,003,751)
Change in unrealized appreciation of investments 4,768,674 16,631,954 19,002,225 1,220,058
------------ ------------ ------------ -----------
Net increase in net assets from operations $ 4,420,763 $ 23,480,252 $ 29,330,791 $ 1,906,710
------------ ------------ ------------ -----------
Capital transactions --
Contributions $ 11,350,380 $ 43,487,001 $ 38,709,755 $ 4,736,724
Withdrawals (16,808,817) (79,782,847) (102,576,381) (6,005,420)
------------ ------------ ------------ -----------
Decrease in net assets resulting from capital
transactions $ (5,458,437) $(36,295,846) $(63,866,626) $(1,268,696)
------------ ------------ ------------ -----------
Total increase (decrease) in net assets $ (1,037,674) $(12,815,594) $(34,535,835) $ 638,014
NET ASSETS:
At beginning of year 84,005,370 423,854,016 536,786,139 27,589,007
------------ ------------ ------------ -----------
At end of year $ 82,967,696 $411,038,422 $502,250,304 $28,227,021
============ ============ ============ ===========
</TABLE>
See notes to financial statements
64
<PAGE> 65
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended July 31, 1994*
- --------------------------------------------------------------------------------
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 6,694,909 $ 1,681,554 $ 8,098,918 $ 9,191,618
Net realized gain (loss) on investment
transactions (79,923) (238,197) 610,531 459,500
Change in unrealized depreciation of investments (11,906,679) (2,832,041) (15,885,963) (15,894,224)
------------ ----------- ----------- ------------
Net decrease in net assets from operations $ (5,291,693) $(1,388,684) $ (7,176,514) $ (6,243,106)
------------ ----------- ----------- ------------
Capital transactions --
Contributions $ 49,588,326 $25,061,524 $ 55,286,988 $ 43,549,085
Withdrawals (23,767,597) (3,620,273) (15,920,869) (20,939,507)
------------ ----------- ----------- ------------
Increase in net assets resulting from capital
transactions $ 25,820,729 $21,441,251 $ 39,366,119 $ 22,609,578
------------ ----------- ----------- ------------
Total increase in net assets $ 20,529,036 $20,052,567 $ 32,189,605 $ 16,366,472
NET ASSETS:
At beginning of period 133,539,324 24,346,392 159,848,360 187,665,191
------------ ----------- ----------- ------------
At end of period $154,068,360 $44,398,959 $192,037,965 $204,031,663
============ =========== ============ ============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 3,534,268 $ 19,598,942 $ 25,052,308 $ 1,024,502
Net realized gain (loss) on investment transactions 361,104 1,931,832 (1,606,336) (193,762)
Change in unrealized depreciation of investments (6,315,849) (34,629,145) (41,094,537) (1,491,855)
----------- ------------ ------------ -----------
Net decrease in net assets from operations $(2,420,477) $(13,098,371) $(17,648,565) $ (661,115)
----------- ------------ ------------ -----------
Capital transactions --
Contributions $28,250,170 $ 95,610,275 $113,666,177 $14,312,043
Withdrawals (8,843,182) (52,334,675) (56,232,111) (2,091,287)
----------- ------------ ------------ -----------
Increase in net assets resulting from capital
transactions $19,406,988 $ 43,275,600 $ 57,434,066 $12,220,756
----------- ------------ ------------ -----------
Total increase in net assets $16,986,511 $ 30,177,229 $39,785,501 $11,559,641
NET ASSETS:
At beginning of period 67,018,859 393,676,787 497,000,638 16,029,366
----------- ------------ ------------ -----------
At end of period $84,005,370 $423,854,016 $536,786,139 $27,589,007
=========== ============ ============ ===========
<FN>
* For the ten months ended July 31, 1994 (Note 7).
</TABLE>
See notes to financial statements
65
<PAGE> 66
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended September 30, 1993*
- --------------------------------------------------------------------------------
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 3,814,722 $ 529,081 $ 4,491,010 $ 5,803,151
Net realized gain (loss) on investment
transactions 2,843,057 (42,421) (369,709) (383,574)
Change in unrealized appreciation (depreciation)
of investments 5,331,763 1,030,366 8,422,527 9,602,839
------------ ----------- ------------ ------------
Net increase in net assets from operations $ 11,989,542 $ 1,517,026 $ 12,543,828 $ 15,022,416
------------ ----------- ------------ ------------
Capital transactions --
Contributions $148,348,087 $23,748,943 $187,818,789 $184,212,796
Withdrawals (26,898,325) (1,019,597) (40,614,277) (11,670,041)
------------ ----------- ------------ ------------
Increase in net assets resulting from capital
transactions $121,449,762 $22,729,346 $147,204,512 $172,542,755
------------ ----------- ------------ ------------
Total increase in net assets $133,439,304 $24,246,372 $159,748,340 $187,565,171
NET ASSETS:
At beginning of period 100,020 100,020 100,020 100,020
------------ ----------- ------------ ------------
At end of period $133,539,324 $24,346,392 $159,848,360 $187,665,191
============ =========== ============ ============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,988,776 $ 12,599,045 $ 16,036,467 $ 333,755
Net realized gain (loss) on investment transactions (249,985) 108,306 2,426,891 (68,370)
Change in unrealized appreciation (depreciation)
of investments 3,295,330 20,473,018 21,996,791 606,518
----------- ------------ ------------ -----------
Net increase in net assets from operations $ 5,034,121 $ 33,180,369 $ 40,460,149 $ 871,903
----------- ------------ ------------ -----------
Capital transactions --
Contributions $75,312,856 $409,889,770 $536,041,409 $19,000,571
Withdrawals (13,428,138) (49,493,372) (79,600,940) (3,943,128)
----------- ------------ ----------- -----------
Increase in net assets resulting from capital
transactions $61,884,718 $360,396,398 $456,440,469 $15,057,443
----------- ------------ ------------ -----------
Total increase in net assets $66,918,839 $393,576,767 $496,900,618 $15,929,346
NET ASSETS:
At beginning of period 100,020 100,020 100,020 100,020
----------- ------------ ------------ -----------
At end of period $67,018,859 $393,676,787 $497,000,638 $16,029,366
=========== ============ ============ ===========
<FN>
* For the period from the start of business, February 1, 1993, to September 30, 1993.
</TABLE>
See notes to financial statements
66
<PAGE> 67
<TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<CAPTION>
ARIZONA PORTFOLIO COLORADO PORTFOLIO
------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
------------------------------- -------------------------------
JULY 31, JULY 31, SEPT. 30, JULY 31, JULY 31, SEPT. 30,
1995 1994* 1993** 1995 1994* 1993**
-------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
RATIOS (AS A PERCENTAGE OF AVERAGE
DAILY NET ASSETS)++:
Net expenses 0.52% 0.46%+ 0.42% + 0.25% 0.02% + 0.06%+
Net investment income 5.81% 5.43%+ 5.46% + 6.05% 5.73% + 5.60%+
PORTFOLIO TURNOVER 22% 23% 107% 52% 23% 10%
NET ASSETS, end of period (000 omitted) $144,521 $154,068 $133,539 $46,077 $44,399 $24,346
<FN>
++The operating expenses of the Portfolios may reflect a reduction of the
investment adviser fee and/or allocation of expenses to the Investment
Adviser. Had such actions not been taken, the ratios would have been as
follows:
RATIOS (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS):
Expenses 0.40% 0.35%+ 0.35%+
Net investment income 5.90% 5.40%+ 5.31%+
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONNECTICUT PORTFOLIO MICHIGAN PORTFOLIO
------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
------------------------------- -------------------------------
JULY 31, JULY 31, SEPT. 30, JULY 31, JULY 31, SEPT. 30,
1995 1994* 1993** 1995 1994* 1993**
-------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
RATIOS (AS A PERCENTAGE OF AVERAGE
DAILY NET ASSETS):
Net expenses 0.53% 0.47%+ 0.46% + 0.48% 0.47%+ 0.44% +
Net investment income 5.77% 5.40%+ 5.45% + 5.85% 5.48%+ 5.46% +
PORTFOLIO TURNOVER 29% 10% 10% 54% 45% 20%
NET ASSETS, end of period (000 omitted) $195,276 $192,038 $159,848 $191,263 $204,032 $187,665
<FN>
+ Annualized.
* For the ten months ended July 31, 1994 (Note 7).
** For the period from the start of business, February 1, 1993, to September 30, 1993.
</TABLE>
See notes to financial statements
67
<PAGE> 68
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
<TABLE>
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<CAPTION>
MINNESOTA PORTFOLIO NEW JERSEY PORTFOLIO
------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
------------------------------- -------------------------------
JULY 31, JULY 31, SEPT. 30, JULY 31, JULY 31, SEPT. 30,
1995 1994* 1993** 1995 1994* 1993**
-------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
RATIOS (AS A PERCENTAGE OF AVERAGE
DAILY NET ASSETS):
Net expenses 0.47% 0.45% + 0.40%+ 0.52% 0.50%+ 0.50% +
Net investment income 5.83% 5.50% + 5.58%+ 5.96% 5.62%+ 5.67% +
PORTFOLIO TURNOVER 76% 20% 10% 54% 25% 12%
NET ASSETS, end of period (000 omitted) $82,968 $84,005 $67,019 $411,038 $423,854 $393,677
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO TEXAS PORTFOLIO
------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
------------------------------- -------------------------------
JULY 31, JULY 31, SEPT. 30, JULY 31, JULY 31, SEPT. 30,
1995 1994* 1993** 1995 1994* 1993**
-------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
RATIOS (AS A PERCENTAGE OF AVERAGE
DAILY NET ASSETS)++ :
Net expenses 0.49% 0.48%+ 0.50% + 0.08% 0.00% + 0.03%+
Net investment income 6.02% 5.66%+ 5.71% + 6.20% 5.69% + 5.82%+
PORTFOLIO TURNOVER 44% 21% 17% 49% 27% 8%
NET ASSETS, end of period (000 omitted) $502,250 $536,786 $497,001 $28,227 $27,589 $16,029
<FN>
++The operating expenses of the Portfolios may reflect a reduction of the
investment adviser fee and/or allocation of expenses to the Investment
Adviser. Had such actions not been taken, the ratios would have been as
follows:
RATIOS (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS):
Expenses 0.35% 0.37%+ 0.42%+
Net investment income 5.93% 5.32%+ 5.43%+
+ Annualized.
* For the ten months ended July 31, 1994 (Note 7).
** For the period from the start of business, February 1, 1993, to September 30, 1993.
</TABLE>
See notes to financial statements
68
<PAGE> 69
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Arizona Tax Free Portfolio (Arizona Portfolio), Colorado Tax Free Portfolio
(Colorado Portfolio), Connecticut Tax Free Portfolio (Connecticut Portfolio),
Michigan Tax Free Portfolio (Michigan Portfolio), Minnesota Tax Free Portfolio
(Minnesota Portfolio), New Jersey Tax Free Portfolio (New Jersey Portfolio),
Pennsylvania Tax Free Portfolio (Pennsylvania Portfolio) and Texas Tax Free
Portfolio (Texas Portfolio), collectively the Portfolios, are registered under
the Investment Company Act of 1940 as non-diversified open-end management
investment companies which were organized as trusts under the laws of the State
of New York on May 1, 1992. The Declarations of Trust permit the Trustees to
issue interests in the Portfolios. The following is a summary of significant
accounting policies of the Portfolios. The policies are in conformity with
generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts listed on commodity
exchanges are valued at closing settlement prices. Short-term obligations,
maturing in sixty days or less, are valued at amortized cost, which approximates
value. Investments for which valuations or market quotations are unavailable are
valued at fair value using methods determined in good faith by or at the
direction of the Trustees.
B. INCOME -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes.
C. INCOME TAXES -- The Portfolios are treated as partnerships for Federal tax
purposes. No provision is made by the Portfolios for federal or state taxes on
any taxable income of the Portfolios because each investor in the Portfolios are
ultimately responsible for the payment of any taxes. Since some of the
Portfolios' investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolios, the Portfolios normally
must satisfy the applicable source of income and diversification requirements
(under the Internal Revenue Code) in order for their respective investors to
satisfy them. The Portfolios will allocate at least annually among their
respective investors each investor's distributive share of the Portfolios' net
taxable (if any) and tax-exempt investment income, net realized capital
gains, and any other items of income, gain, loss, deductions or credit. Interest
income received by the Portfolios on investments in municipal bonds, which is
excludable from gross income under the Internal Revenue Code, will retain its
status as income exempt from federal income tax when allocated to each
Portfolio's investors. The portion of such interest, if any, earned on private
activity bonds issued after August 7, 1986, may be considered a tax preference
item for investors.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by a Portfolio in connection
with its organization are being amortized on the straight-line basis over five
years beginning on the date each Portfolio commenced operations.
E. FINANCIAL FUTURES CONTRACTS -- Upon the entering of a financial futures
contract, a Portfolio is required to deposit ("initial margin") either in cash
or securities an amount equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by a Portfolio ("margin maintenance") each day, dependent on the daily
fluctuations in the value of the underlying security, and are recorded for book
purposes as unrealized gains or losses by a Portfolio. A Portfolio's investment
in financial futures contracts is designed only to hedge against anticipated
future changes in interest rates. Should interest rates move unexpectedly, the
Portfolio may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Portfolios may engage in
when-issued and delayed delivery transactions. The Portfolio records when-issued
securities on trade date and maintains security positions such that sufficient
liquid assets will be available to make payments for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are
marked-to-market daily and begin accruing interest on settlement date.
G. OTHER -- Investment transactions are accounted for on a trade date basis.
69
<PAGE> 70
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
<TABLE>
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to each Portfolio.
The fee is based upon a percentage of average daily net assets plus a percentage
of gross income (i.e., income other than gains from the sale of securities).
For the year ended July 31, 1995, each Portfolio paid advisory fees as follows:
<CAPTION>
AMOUNT EFFECTIVE RATE*
---------- ----------------
<S> <C> <C>
Arizona $ 629,148 0.42%
Colorado 128,496 0.28%
Connecticut 835,605 0.44%
Michigan 856,258 0.44%
Minnesota 310,489 0.37%
New Jersey 1,944,340 0.47%
Pennsylvania 2,416,419 0.48%
Texas 56,319 0.21%
</TABLE>
To enhance the net income of the Colorado Portfolio and the Texas Portfolio, BMR
made a reduction in its fee in the amount of $69,064 and $56,319, respectively,
and $18,606 of expenses related to the operation of the Texas Portfolio were
allocated to BMR.
Except as to Trustees of the Portfolios who are not members of EVM's or BMR's
organization, officers and Trustees receive remuneration for their services to
the Portfolios out of such investment adviser fee. Investors Bank & Trust
Company (IBT), an affiliate of EVM and BMR, serves as custodian of the
Portfolios. Pursuant to the custodian agreements, IBT receives a fee reduced by
credits which are determined based on the average daily cash balances each
Portfolio maintains with IBT. Certain of the officers and Trustees of the
Portfolios are officers and directors/trustees of the above organizations.
Trustees of the Portfolio that are not affiliated with the Investment Adviser
may elect to defer receipt of all or a percentage of their annual fees in
accordance with the terms of the Trustees Deferred Compensation Plan. For the
year ended July 31, 1995, no significant amounts have been deferred.
* Advisory fees paid as a percentage of average daily net assets.
<TABLE>
- --------------------------------------------------------------------------------
(3) INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, for the year ended July 31, 1995 were as follows:
<CAPTION>
ARIZONA PORTFOLIO COLORADO PORTFOLIO CONNECTICUT PORTFOLIO MICHIGAN PORTFOLIO
------------------- -------------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
Purchases $31,754,220 $ 23,720,614 $ 55,774,738 $101,893,489
Sales 42,996,767 25,026,530 58,525,219 116,259,363
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA PORTFOLIO NEW JERSEY PORTFOLIO PENNSYLVANIA PORTFOLIO TEXAS PORTFOLIO
------------------- -------------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
Purchases $62,647,201 $219,433,205 $220,102,046 $13,166,608
Sales 62,259,757 237,114,073 264,136,096 13,804,505
</TABLE>
70
<PAGE> 71
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned by each Portfolio at July 31, 1995, as computed on a federal income tax
basis, were as follows:
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Aggregate Cost $140,218,111 $ 44,277,269 $192,808,845 $182,066,681
------------ ------------ ------------ ------------
Gross unrealized appreciation $ 6,026,055 $ 1,602,238 $ 3,281,263 $ 6,693,457
Gross unrealized depreciation 2,197,433 442,812 4,835,599 2,233,242
------------ ------------ ------------ ------------
Net unrealized appreciation (depreciation) $ 3,828,622 $ 1,159,426 $(1,554,336) $ 4,460,215
============ ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Aggregate Cost $ 78,851,048 $389,842,758 $477,086,127 $ 26,750,393
------------ ------------ ------------ ------------
Gross unrealized appreciation $ 2,866,555 $ 15,128,046 $17,966,732 $ 777,979
Gross unrealized depreciation 296,490 1,485,389 3,985,529 356,481
------------ ------------ ------------ ------------
Net unrealized appreciation $ 2,570,065 $ 13,642,657 $13,981,203 $ 421,498
============ ============ =========== ============
</TABLE>
- --------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Portfolios participate with other portfolios and funds managed by BMR and
EVM in a $120 million unsecured line of credit agreement with a bank. The line
of credit consists of a $20 million committed facility and a $100 million
discretionary facility. Each Portfolio may temporarily borrow up to 5% of its
total assets to satisfy redemption requests or settle transactions. Interest is
charged to each portfolio or fund based on its borrowings at an amount above
either the bank's adjusted certificate of deposit rate, a variable adjusted
certificate of deposit rate, or a federal funds effective rate. In addition, a
fee computed at an annual rate of 1/4 of 1% on the $20 million committed
facility and on the daily unused portion of the $100 million discretionary
facility is allocated among the participating funds and portfolios at the end of
each quarter. The Portfolios did not have any significant borrowings or
allocated fees during the period. For the Connecticut Portfolio, the average
daily loan balance for the year ended July 31, 1995 was $1,583,254 and the
average interest rate was 7.27%. The maximum borrowings outstanding at any point
during the year were $6,997,000. At July 31, 1995, the Arizona Portfolio had a
$903,000 loan outstanding pursuant to this line of credit.
71
<PAGE> 72
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(6) FINANCIAL INSTRUMENTS
The Portfolios regularly trade in financial instruments with off-balance sheet
risk in the normal course of their investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options and futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment a Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
<TABLE>
A summary of obligations under these financial instruments at July 31, 1995 is
as follows:
<CAPTION>
FUTURES
CONTRACTS NET UNREALIZED
PORTFOLIO EXPIRATION DATE CONTRACTS POSITION APPRECIATION
- -------------- ---------------- ------------------------- -------- ---------------
<S> <C> <C> <C> <C>
Arizona 9/95 63 U.S. Treasury Bonds Short $ 48,427
Colorado 9/95 39 U.S. Treasury Bonds Short 29,978
Connecticut 9/95 145 U.S. Treasury Bonds Short 111,459
Michigan 9/95 188 U.S. Treasury Bonds Short 135,699
Minnesota 9/95 40 U.S. Treasury Bonds Short 14,497
New Jersey 9/95 125 U.S. Treasury Bonds Short 45,304
Texas 9/95 28 U.S. Treasury Bonds Short 33,773
</TABLE>
At July 31, 1995 each Portfolio had sufficient cash and/or securities to cover
margin requirements on open futures contracts.
The Pennsylvania Portfolio had no obligations outstanding at July 31, 1995.
- --------------------------------------------------------------------------------
(7) CHANGE IN FISCAL YEAR
The Portfolios changed their fiscal year end from September 30, to July 31,
effective July 31, 1994.
72
<PAGE> 73
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
TO THE TRUSTEES AND INVESTORS OF:
ARIZONA TAX FREE PORTFOLIO
COLORADO TAX FREE PORTFOLIO
CONNECTICUT TAX FREE PORTFOLIO
MICHIGAN TAX FREE PORTFOLIO
MINNESOTA TAX FREE PORTFOLIO
NEW JERSEY TAX FREE PORTFOLIO
PENNSYLVANIA TAX FREE PORTFOLIO
TEXAS TAX FREE PORTFOLIO
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Arizona Tax Free Portfolio, Colorado Tax Free
Portfolio, Connecticut Tax Free Portfolio, Michigan Tax Free Portfolio,
Minnesota Tax Free Portfolio, New Jersey Tax Free Portfolio, Pennsylvania Tax
Free Portfolio and Texas Tax Free Portfolio as of July 31, 1995 , and the
related statements of operations for the year then ended, and the statements of
changes in net assets and the supplementary data for the year ended July 31,
1995 and the ten months ended July 31, 1994 and for the period from the start of
business, February 1, 1993, to September 30, 1993. These financial statements
and supplementary data are the responsibility of the Trusts' management. Our
responsibility is to express an opinion on the financial statements and
supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at July 31,
1995, by correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other audit procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of Arizona Tax Free Portfolio,
Colorado Tax Free Portfolio, Connecticut Tax Free Portfolio, Michigan Tax Free
Portfolio, Minnesota Tax Free Portfolio, New Jersey Tax Free Portfolio,
Pennsylvania Tax Free Portfolio and Texas Tax Free Portfolio at July 31, 1995,
the results of their operations, the changes in their net assets and their
supplementary data for the respective stated periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
AUGUST 25, 1995
73
<PAGE> 74
- --------------------------------------------------------------------------------
Investment Management
- --------------------------------------------------------------------------------
FUNDS OFFICERS INDEPENDENT TRUSTEES
THOMAS J. FETTER DONALD R. DWIGHT
President President, Dwight Partners, Inc.
Chairman, Newspaper of New
JAMES B. HAWKES England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
ROBERT B. MACINTOSH Jacob H. Schiff Professor of
Vice President Investment Banking, Harvard
University Graduate School of
JAMES L. O'CONNOR Business Administration
Treasurer
NORTON H. REAMER
THOMAS OTIS President and Director,
Secretary United Asset Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
- --------------------------------------------------------------------------------
PORTFOLIOS OFFICERS JAMES L. O'CONNOR
THOMAS J. FETTER Treasurer
President
THOMAS OTIS
JAMES B. HAWKES Secretary
Vice President, Trustee
INDEPENDENT TRUSTEES
ROBERT B. MACINTOSH DONALD R. DWIGHT
Vice President of Arizona, President, Dwight Partners, Inc.
Colorado, Connecticut, Chairman, Newspaper of New
Michigan, Minnesota, England, Inc.
New Jersey, Pennsylvania
and Texas SAMUEL L. HAYES, III
Tax Free Portfolios Jacob H. Schiff Professor of
Portfolio Manager of Investment Banking, Harvard
Minnesota and New Jersey University Graduate
Tax Free Portfolios School of Business Administration
CYNTHIA J. CLEMSON NORTON H. REAMER
Vice President and President and Director,
Portfolio Manager of United Asset Management
Arizona and Colorado Tax Corporation
Free Portfolios
JOHN L. THORNDIKE
DAVID C. REILLY Director, Fiduciary Company
Vice President and Incorporated
Portfolio Manager of
Pennsylvania Tax Free JACK L. TREYNOR
Portfolio Investment Adviser and Consultant
NICOLE ANDERES
Vice President and
Portfolio Manager of
Connecticut Tax Free
Portfolio
TIMOTHY T. BROWSE
Vice President and
Portfolio Manager of
Michigan and Texas Tax
Free Portfolios
<PAGE> 75
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENT ADVISER
Boston Management and Research
24 Federal Street
Boston, MA 02110
FUND ADMINISTRATOR
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
75
<PAGE> 76
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Funds, including its distribution
plan, sales charges and expenses. Please read the prospectus carefully before
you invest or send money.
EATON VANCE
MUNICIPALS TRUST
24 FEDERAL STREET
BOSTON, MA 02110
M-TFCSRC
