<PAGE> 1
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EATON VANCE MUNICIPALS TRUST
FOR THE FUNDS:
* EV Marathon Alabama Tax Free Fund
* EV Marathon Arkansas Tax Free Fund
* EV Marathon Georgia Tax Free Fund
* EV Marathon Kentucky Tax Free Fund
* EV Marathon Louisiana Tax Free Fund
* EV Marathon Maryland Tax Free Fund
* EV Marathon Missouri Tax Free Fund
* EV Marathon North Carolina Tax Free Fund
* EV Marathon Oregon Tax Free Fund
* EV Marathon South Carolina Tax Free Fund
* EV Marathon Tennessee Tax Free Fund
* EV Marathon Virginia Tax Free Fund
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[LOGO]
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SEMI-ANNUAL SHAREHOLDER REPORT
FEBRUARY 28, 1995
<PAGE> 2
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
RESULTS FOR THE SIX MONTHS ENDING FEBRUARY 28, 1995.
<CAPTION>
The after-tax
Dividends paid NAV Fund's dist- If your combined equivalent
by Fund per share ribution rate Federal & state yield you would
(During period) at 2/28/95 at 2/28/95 tax rate is... need is...
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EV Marathon Alabama Tax Free Fund $0.257 $10.28 4.62% 39.20% 7.60% [STATE MAP]
EV Marathon Arkansas Tax Free Fund $0.252 $10.09 4.66% 40.48% 7.83% [STATE MAP]
EV Marathon Georgia Tax Free Fund $0.243 $ 9.70 4.69% 39.84% 7.80% [STATE MAP]
EV Marathon Kentucky Tax Free Fund $0.251 $ 9.83 4.78% 43.63% 7.47% [STATE MAP]
EV Marathon Louisiana Tax Free Fund $0.268 $ 9.96 4.99% 39.84% 8.29% [STATE MAP]
EV Marathon Maryland Tax Free Fund $0.253 $10.08 4.63% 41.76% 7.95% [STATE MAP]
EV Marathon Missouri Tax Free Fund $0.260 $10.27 4.68% 39.84% 7.78% [STATE MAP]
EV Marathon North Carolina Tax Free Fund $0.255 $ 9.93 4.78% 44.59% 7.47% [STATE MAP]
EV Marathon Oregon Tax Free Fund $0.250 $10.13 4.56% 41.76% 7.83% [STATE MAP]
EV Marathon South Carolina Tax Free Fund $0.248 $ 9.87 4.63% 40.48% 7.78% [STATE MAP]
EV Marathon Tennessee Tax Free Fund $0.257 $10.00 4.80% 39.84% 7.98% [STATE MAP]
EV Marathon Virginia Tax Free Fund $0.262 $10.12 4.80% 39.68% 7.96% [STATE MAP]
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</TABLE>
2
<PAGE> 3
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TO SHAREHOLDERS
During 1994 the economy remained stronger than economists and money managers
had anticipated at the start of the year. In response to this strength, and in
an attempt to keep inflation in check, the Federal Reserve raised short-term
interest rates six times in 1994 and once again in 1995. Long-term rates moved
upward as well and, as a result, the prices of municipal bonds dropped.
But the market slide was not the only concern in 1994. Many shareholders of
Eaton Vance tax-free mutual funds may have wondered whether the problems that
surfaced in Orange County,California, had in any way affected their investment
in our non-California tax-free funds. The answer is no. The market realized
that this was a local issue; other Eaton Vance portfolios have not been
impacted.
Despite the difficulties that beset the market in 1994, we feel optimistic
about prospects for 1995. The market now appears convinced that the Federal
Reserve is, in fact, keeping a tight watch on inflation. And, while it is
impossible to predict the outcomes of government initiatives, it appears that
proposals put forth by the new Congress to cut spending and taxes could
have an overall positive effect if enacted.
[Graph]
IF INTEREST RATES HAVE PEAKED, IT
WOULD BE GOOD NEWS FOR BONDS.
This is a line chart, whose title reads, "If interest rates have peaked, it
would be good news for bonds." The chart also contains the following
explanatory text: "End-of-month rates, 30-year treasuries."
The chart extends along the bottom from February, 1992 to February, 1995 and
delineated as follows: 2/92; 2/93; 2/94; 2/95.
Vertically, the chart shows interest rates. The vertical bar at the left is
marked in one-percent increments and labeled as follows: 4%; 5%; 6%; 7%; 8%.
The specific plot points are on the attached page, the represent end-of-month
rates for 30-year Treasuries in the period defined by the chart.
At the very bottom of the chart, the source, Barron's, is listed.
<TABLE>
<CAPTION>
END-OF-MONTH RATES,
LABEL 30-YEAR TREASURIES DATE
- ----- ------------------- ----
<S> <C> <C>
1 7.88 2/92
2 7.97 3/92
3 8.04 4.92
4 7.89 5/92
5 7.82 6/92
6 7.46 7/92
7 7.44 8/92
8 7.34 9/92
9 7.63 10/92
10 7.56 11/92
11 7.39 12/92
12 7.23 1/93
13 6.89 2/93
14 6.95 3/93
15 6.89 4/93
16 6.97 5/93
17 6.76 6/93
18 6.63 7/93
19 6.16 8/93
20 5.99 9/93
21 5.99 10/93
22 6.31 11/93
23 6.28 12/93
24 6.29 1/94
25 6.65 2/94
26 6.92 3/94
27 7.31 4/94
28 7.31 5/94
29 7.58 6/94
30 7.53 7/94
31 7.46 8/94
32 7.78 9/94
33 7.92 10/94
34 8.1 11/94
35 7.85 12/94
36 7.82 1/95
37 7.6 2/95
</TABLE>
This report features some changes which we hope will help you to better
understand how your investment's holdings help provide the means for the
Federal government, as well as state and local governments, to fund such
projects as roads, bridges, hospitals and schools. Each fund review contains
a Portfolio Overview, or snapshot, as well as comments from the portfolio
manager. In addition, we are profiling a specific bond holding of each Fund.
Regardless of what lies ahead for the economy, the goal of your Fund remains
the same: to provide you with a competitive distribution of tax-free income
from a portfolio of high-quality municipal bonds.
Sincerely,
[PHOTO] /s/ Thomas J. Fetter
Thomas J. Fetter
President
April 20, 1995
3
<PAGE> 4
EV MARATHON ALABAMA TAX-FREE FUND
The Alabama economy outpaced the national economy during the recession of the
early 1990s. But during the recovery, the state has lagged behind the nation.
While it continued to grow during 1994, the state's economy did so at a slower
rate than the economies of other states in its region.
Federal employment has been off sharply during the past several years. One
reason was defense cutbacks in the form of base closings. In addition, the
state has faced a slowdown in the aerospace industry which has a particularly
strong effect on the Huntsville area. Manufacturing of nondurable goods has
suffered as well, though durable goods production was up in 1994.
Retailing slowed during the year.
The presence of a Mercedes Benz automobile plant within the state also is
helping Alabama's economy, as is growth in the state's financial sector.
Tourism remains another of the state's strengths, despite increased
competition from nearby states, some of which are considering or already have
opened gambling facilities.
On the positive side, the population has been growing, a factor that has led
to increased housing permits and that should result in increased
construction activity. Unemployment has dropped and sales tax receipts have
been strong.
<TABLE>
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[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 73
Average quality............................. AA
Investment grade............................ 97.8%
Effective maturity.......................... 17.92 yrs.
Largest sectors:
Insured water and sewer..................... 18.0%*
Industrial development revenue.............. 9.3
Insured general obligation.................. 8.8*
General obligation.......................... 8.7
Insured hospital ........................... 8.3*
<FN>
* Private insurance does not remove the market risk associated with
this investment.
- --------------------------------------------------------------------------------
</TABLE>
The state is expected to grow at a rate that exceeds its pace during the
1980s but that is somewhat less than the national growth rate. The state could
well repeat its 1994 rate of growth during 1995.
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YOUR INVESTMENT AT WORK
WALKER REGIONAL
MEDICAL CENTER [MEDICAL LOGO]
HOSPITAL REVENUE BOND
Walker Regional Medical Center is located in Jasper, AL, 35 miles from
Birmingham. The hospital is a low-cost provider of medical care and, as the
only hospital in Walker County, has a 56 percent market share in its region.
This market strength makes the bond an attractive addition to the Portfolio
and is one of the factors the Portfolio manager consides when buying hospital
bonds. During the market sell-off in 1994, these bonds fell in price as much
as less desirable hospital bonds, and we were able to add them to the
Portfolio at very attractive yields.
This bond, maturing in 2018, was a refunding of debt originally issued in
1978.
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FROM THE PORTFOLIO MANAGER [PHOTO OF TIMOTHY T. BROWSE]
"A great proportion of Alabama bonds are insured. As a result, I am always
looking for opportunities to add yield and to diversify away from the insured
sector.+
"During the serious decline that affected the bond market during 1994, an
interesting phenomenon occurred: similarly-rated bonds tended to get lumped
together by the market. Despite their differing credit trends, this resulted in
a real opportunity for the buyer who was able to differentiate between the
various quality levels.
"In the Alabama Portfolio, we were able to buy lower rated bonds of good
quality whose price had fallen to disproportionately low levels. In other
words, we had a relatively rare chance to 'cherry pick' from among a number of
bonds that were rated the same, but whose quality varied significantly."
- Timothy T. Browse, Portfolio Manager
+ Private insurance does not remove the market risk associated with this
investment.
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4
<PAGE> 5
EV MARATHON ARKANSAS TAX FREE FUND
Arkansas experienced slow, steady economic growth during 1994. The state has
a low debt burden and is managed conservatively.
The state's economic base is well-diversified and is expected to show moderate
growth during the next few years. The leading sectors in terms of employment
are trade services and manufacturing, with nearly a quarter of the
state's jobs.
Four of the largest poultry processors in the nation are located in Arkansas,
including Tyson Foods Inc., whose employment levels exceed 20,000 in the
state. It is expected that there will be continuing demand for the processed
food that these companies produce, though this is not an industry that is
predicted to demonstrate strong growth patterns during the next few years.
Among the other major private sector employers is Wal-Mart Stores Inc., with
more than 25,000 employees in Arkansas.
The Arkansas Development Finance Authority has provided encouragement to
small businesses in the state and has helped the state's growth in
manufacturing jobs to remain above the national average.
<TABLE>
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[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 73
Average quality............................. A+
Investment grade............................ 94.8%
Effective maturity.......................... 18.13 yrs.
Largest sectors:
Hospitals................................... 14.9%
Electric utilities.......................... 12.6
Housing..................................... 10.7
Industrial development revenue.............. 8.6
General obligations......................... 7.5
- --------------------------------------------------------------------------------
</TABLE>
In 1995 and beyond, the service sector is expected to provide the stimulus for
economic growth in the state. In addition, the state is expected to experience
some growth in population which, in turn, should create opportunities for
the construction industry. In sum, employment is expected to grow slowly
during the rest of the decade.
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YOUR INVESTMENT AT WORK
JONESBORO, AR [GRADUATION CAP LOGO]
SCHOOL DISTRICT
Unlike most other states, local school districts in Arkansas issue voted debt
- -- local constituents have actually voted to be taxed and to pay debt service
on the bonds. This fact shows that there is strong support for the bonds
and that they are of high quality regardless of their stated rating.
As a result, these local bonds tend to be in high demand and trade very well,
offering lower yields. Often bonds of this nature do not offer a yield that
allows them to be held in quantity in the Portfolio.
However, the market downdraft of 1994, in which a variety of bonds were offered
at relatively low prices, allowed the Portfolio to add this name at an
attractive price.
This bond issue was used by Jonesboro to build new schools and to improve
existing school facilities.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF TIMOTHY T. BROWSE]
"Traditionally, Arkansas issues very little state general obligation debt.
This, combined with conservative financial management, results in a strong
credit rating for the state.
"This conservative management filters down throughout the state, resulting in
low supply of municipal bonds. Given the high taxes, and thus the high demand
for in-state municipal bonds, Arkansas bonds tend of offer significantly
lower yields than the yields available on a national level.
"One result of the dramatic market decline of 1994 is that in the rush to
raise cash, investors sold their higher quality bonds (Arkansas paper, among
others) first, causing the prices of these bonds to fall the farthest. However,
this increased supply provided an opportunity to further diversify the
Portfolio and, for anyone with the confidence that the market would ultimately
recover, to buy at much cheaper prices."
- Timothy T. Browse, Portfolio Manager
- --------------------------------------------------------------------------------
5
<PAGE> 6
EV MARATHON GEORGIA TAX FREE FUND
Georgia continues to be the economic leader of the Southeast, although its
rate of growth has slowed considerably from the boom period of the 1980s.
The state is counting on the 1996 Olympic Games to stimulate its economic
growth for at least the next two years. In fact, construction and other
development generated by preparation for the Olympics already is giving the
state a considerable boost.
The Games will provide the Atlanta area and the entire state with considerable
international publicity which is expected to generate investment in the
region.
In all, economic analysts expect economic growth after 1996 to slow somewhat.
However, it should still remain above the levels experienced by the nation as
a whole.
Economic indicators suggest that the state will see an increase in its revenues
during 1995, with employment growth projected at 4 percent for that year, down
from more than 5 percent in 1994.
In its state budgets, Georgia is continuing to emphasize spending on education.
The education component of Gov. Zell Miller's proposed 1996 budget has been
enhanced by the proceeds of the state's lottery, which was
<TABLE>
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[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 83
Average quality............................. Aa
Investment grade............................ 96.6%
Effective maturity.......................... 17.07 yrs.
Largest sectors:
Insured hospitals........................... 22.0%*
General obligations......................... 14.3
Utilities................................... 9.2
Housing..................................... 7.9
Hospitals................................... 7.7
<FN>
* Private insurance does not remove the market risk associated with
this investment.
- --------------------------------------------------------------------------------
</TABLE>
created exclusively to provide aid to education. In three years, it is expected
that the lottery will have enhanced state spending on education by more than
$1.1 billion.
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YOUR INVESTMENT AT WORK
FULTON-DEKALB HOSPITAL AUTHORITY
GRADY MEMORIAL HOSPITAL [MEDICAL LOGO]
Grady Memorial Hospital is located in the center of Atlanta and is a primary
provider of medical care to the city's residents. Prior to 1993, when these
bonds were issued, the hospital's physical plant was inadequate to provide
medical services to its target population.
The bond issue provided money for major renovations and construction designed
to create a hospital with adequate facilities to meet the needs of its clients.
The changes included a new service building, expansion of two nursing towers, a
new clinic-treatment building and major renovations to the existing hospital
building. The Portfolio holds $4.5 million of these bonds, which will mature
in 2012.
Renovations included installing new windows for conservation purposes,
replacing obsolete parts of the air conditioning system and removing asbestos.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF DAVID C. REILLY]
"We've made a number of strategic moves in the Georgia Portfolio, moves
that are continuing in 1995.
"When possible, we have purchased housing bonds which represent good value
and have attractive yields. In addition, we look for industrial development
bonds because they, too, offer a solid combination of yield and value.
"During 1994, we sold some of the lower-yielding bonds in the Portfolio and
replaced them with higher-yielding bonds that had become available in the
sell-off that occurred during the year. This strategy allowed us to establish
capital losses that we can use to offset shareholders' future capital gains."
- David C. Reilly, Portfolio Manager
- --------------------------------------------------------------------------------
6
<PAGE> 7
EV MARATHON KENTUCKY TAX FREE FUND
During the 1990s, the growth in Kentucky's economic base has exceeded that of
the nation as a whole. The state also improved its financial position during
the year, in part through fiscal reforms instituted by state government.
Most of the state's economic growth has occurred in the "Golden Triangle,"
whose points are Cincinnati on the north, Lexington on the east and Louisville
on the west. The dramatic growth in this region during the 1990s has been
fueled in part by the decision of Toyota Manufacturing USA to locate an
automobile plant in the area. The remainder of the commonwealth has not
kept pace, however.
In general, the state's economy is changing from one dominated by heavy
industry, coal, tobacco and the horse industry into one that relies on the
service sector and more modern manufacturing businesses.
Kentucky's economy grew moderately during 1994 as it capitalized on a strong
business recruitment program and attractive incentives to lure new business.
Kentucky's budget picture is brighter because the state imposed spending cuts
to help balance its budget in 1994. In addition, state government seems
to have hit
<TABLE>
- --------------------------------------------------------------------------------
[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 94
Average quality............................. AA-
Investment grade............................ 99.8%
Effective maturity.......................... 17.38 yrs.
Largest sectors:
Lease revenue............................... 21.7%
Insured hospital............................ 15.9*
Insured transportation...................... 9.1*
Insured water and sewer..................... 8.3*
Transportation.............................. 8.3
<FN>
* Private insurance does not remove the market risk associated with
this investment.
- --------------------------------------------------------------------------------
</TABLE>
upon a more realistic way of forecasting budget projections, which should
help make the budgeting process more predictable.
The commonwealth is not likely to see growth rates increase in the 1990s
beyond the level seen in the 1980s.
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
BOONE COUNTY, KY [GRADUATION CAP LOGO]
SCHOOL DISTRICT
Rather than issuing general obligation bonds, Kentucky usually finances
through lease arrangements. These lease revenue bonds are backed by an
intercept mechanism that assures payments to bondholders.
Should the issuer of the lease revenue bond run into financial difficulty, the
state will intercept revenue that it would ordinarily send to that school
district and will pay that money directly to the holders of the bonds.
The Boone County School District bond is one of a number of such lease revenue
bonds in the Portfolio. This bond, the proceeds of which helped to build a
new high school, and Kentucky lease revenue bonds in general, tend to trade
well and offer somewhat higher yields.
Management saw the opportunity to purchase this bond as a chance to add an
attractive bond with good yield at a very attractive price.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF TIMOTHY T. BROWSE]
"Management's view that inflation would stay under control in 1994 turns out
to have been correct. What management did not anticipate was the extreme
market overreaction to the fear of inflation. This fear led to the worst
bond market in roughly 70 years.
"Fortunately, we capitalized on the depressed market by further diversifying
the Portfolio, increasing the book yield. We also sold some low-yielding
bonds and purchased bonds having higher yields. We will use the capital losses
from these transactions to shield shareholders from future capital gains.
"We also avoided the temptation to shorten the Portfolio's duration after the
damage was done, choosing instead to maintain our commitment to the long end.
At the close of 1994, bonds were already above their lows as investors saw the
values available because of the wide swing in rates."
- Timothy T. Browse, Portfolio Manager
- --------------------------------------------------------------------------------
7
<PAGE> 8
EV MARATHON LOUISIANA TAX FREE FUND
Moderate job growth since 1990 has allowed Louisiana to reduce its reliance
on the energy sector, though this industry still remains an important part of
the state's economy.
Beginning in the 1980s, the state suffered through the effects of cutbacks in
domestic oil production and in the petrochemical industry. The population
declined between 1986 and 1990, though it has increased slowly during the
1990s.
With this reduction in the energy sector, services have become the leading
source of jobs in Louisiana. Service jobs are expected to increase during
1995.
Manufacturing in Louisiana is focused on chemicals, food products and
transportation equipment. Tourism also is a major source of revenues and jobs.
Diversification efforts have focused notably on legalized gambling. Increased
gaming has had a beneficial economic impact, but whether this can be sustained
over the long term remains to be seen. The state believes it can attract
patrons to its gambling establishments because of unique attractions, such as
New Orleans.
<TABLE>
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[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 46
Average quality............................. AA+
Investment grade............................ 100.0%
Effective maturity.......................... 19.85 yrs.
Largest sectors:
Insured special tax......................... 19.3%*
Insured hospitals........................... 16.9
Housing..................................... 16.7*
Insured colleges and universities........... 7.5*
Transportation.............................. 6.9
<FN>
* Private insurance does not remove the market risk associated with
this investment.
- --------------------------------------------------------------------------------
</TABLE>
Financial results are better, helped in part by revenues generated by gaming
establishments, and reflect the state's moderately improved economic footing.
However, future results remain vulnerable to economic cycles because the
state's economic base is generally cyclical in nature.
In addition, Louisiana, despite holding a Constitutional Convention, has been
unable to significantly reform its revenue and taxation system.
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
LOUISIANA HFA
ST. JOSEPH'S [HOUSE LOGO]
RETIREMENT CENTER
The proceeds of the bonds were used to finance a 60-bed retirement center
for the elderly in Thibodaux, LA.
The mortgage loan backing the bonds is collateralized with GNMA
securities. This has resulted in the bonds receiving an AAA rating from
Standard & Poor's, an independent rating service.
These are high-quality, low-risk bonds that provide the Portfolio with some
defensive features in uncertain times. In addition, the return on the bonds
is very attractive when their low risk is taken into account.
When issued, these AAA-rated bonds offered 100 basis points more in yield
than generic bonds of similar rating. The bonds mature in 2035.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF NICOLE ANDERES]
"The supply of available bonds in Louisiana dropped significantly during
1994. This phenomenon caused Louisiana paper to trade at higher levels relative
to the national market.
"This fact has helped the Portfolio outperform since November's market rally.
In the process, it has provided a refreshing change from the effects of the
dramatic bond market decline during the first 10 months of 1994.
"One strategy adopted during the year was to sell some of the Portfolio's
lower-yielding bonds and to replace them with bonds that produce higher yields.
This process produced capital losses that will be used to offset future capital
gain distributions."
- Nicole Anderes, Portfolio Manager
- --------------------------------------------------------------------------------
8
<PAGE> 9
EV MARATHON MARYLAND TAX FREE FUND
Maryland is a relatively wealthy state with an economy that derives its
strength from a variety of sources. It was hard hit by the recession of
the early 1990s, but is starting to recover.
Helping in both good times and bad is the conservative management of state
government. This conservative nature extends to estimating future revenues, a
fact that helps make the state's debt attractive to financial markets.
Maryland has a very diverse economy. The service sector is the state's largest,
accounting for more than 20 percent of the gross state product. The trade,
government and finance sectors each contribute more than 15 percent to the
gross state product. Many state residents are employed in high-paying
jobs in nearby Washington, D.C. Maryland ranks among the top states in per
capita personal income.
Maryland has been recovering from the recession at a slower pace than the
national economy, reflecting weaknesses in defense and federal employment.
Through the end of 1994, it is estimated that roughly half the jobs lost
during the recession had been regained.
A positive sign is the fact that during 1994, the economic recovery allowed
Maryland to replenish its Budget Reserve Fund, which had been drawn down
during previous years.
<TABLE>
- --------------------------------------------------------------------------------
[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 80
Average quality............................. AA-
Investment grade............................ 97.7%
Effective maturity.......................... 19.47 yrs.
Largest sectors:
Hospitals................................... 21.2%
Insured hospital............................ 16.9*
Electric utilities.......................... 9.1
Industrial development revenue.............. 8.2
Transportation.............................. 6.7
<FN>
* Private insurance does not remove the market risk associated with
this investment.
- --------------------------------------------------------------------------------
</TABLE>
The debt burden in Maryland is considered high relative to debt levels in many
other states. However, it is expected that the state's conservative financial
management policies will allow it to successfully manage current debt levels.
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
BETHLEHEM STEEL
INDUSTRIAL DEVELOPMENT [FACTORY LOGO]
REVENUE BOND
The proceeds of this 1994 bond sale are being used to install equipment for
air and water pollution abatement at Bethlehem Steel's Sparrow's Point division.
The equipment will clean up the operation of a steel blast furnace at Sparrow's
Point, which is located a short distance outside Baltimore. The plant produces
sheet steel, which is used extensively in automobile manuafcturing.
The Portfolio holds $1 million of the bonds.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF TIMOTHY T. BROWSE]
"The bond market was extremely difficult during 1994 because it overreacted
to fears of inflation. The fact is, inflation did not present a major problem
during the period.
"Our projection was correct in terms of the effect of inflation, but we
seriously underestimated the extent of the market sell-off during the year.
However, when faced with this event, we capitalized on it by increasing the
book yield of the Portfolio, taking tax losses and upgrading the quality.
Also,we tried to maintain the duration of the Portfolio because we sensed that
the market was overreacting.
"Once the market calmed down, we actually saw the beginnings of a rally in
late 1994 that extended into early 1995. The longer duration that hurt the
Portfolio during the down cycle has helped it tremendously during this rally."
- Timothy T. Browse, Portfolio Manager
- --------------------------------------------------------------------------------
9
<PAGE> 10
EV MARATHON MISSOURI TAX FREE FUND
Missouri's economic performance continued to improve in the past year, with
unemployment remaining relatively low and state finances rebounding.
Some of Missouri's recent success can be attributed to the state's economic
diversification. It has a considerable automotive industry, as well as a
significant aerospace industry, led by the strength of McDonald Douglas
Corp. In addition, the state's health care and tourism industries continue to
contribute significantly to the Missouri economy.
The state's recent strength is in sharp contrast to the past several years.
During the early 1990s, downturns in the transportation equipment and aerospace
industries - both heavy contributors to the state's economy - caused
widespread shortfalls which necessitated significant budget reductions.
However, strong financial management combined with a rebounding economy and
increased diversification have helped Missouri to improve its financial
picture.
<TABLE>
- --------------------------------------------------------------------------------
[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 86
Average quality............................. Aa
Investment grade............................ 98.4%
Effective maturity.......................... 16.99 yrs.
Largest sectors:
Insured hospitals........................... 18.1%*
Insured general obligation.................. 10.3*
Hospitals .................................. 9.9
Water and sewer............................. 8.5
Insured utilities........................... 6.3*
<FN>
* Private insurance does not remove the market risk associated with
this investment.
- --------------------------------------------------------------------------------
</TABLE>
Looking forward, the Missouri economy is expected to improve modestly. This
growth should be aided by the continued low-debt stance of the state's
leadership, which has demonstrated firm resistance to the thought of borrowing
heavily to meet the state's capital needs.
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
BJC HEALTH SYSTEM [MEDICAL LOGO]
The BJC Health System, located in St. Louis, is the product of the 1993 merger
of Barnes Hospital, Jewish Hospital and Christian Health Services. During 1994,
Missouri Baptist Medical Center and Children's Hospital also became part of
the system.
These bonds held in the Portfolio are part of a $180 million issue that has
been used to refund the debt of Missouri Baptist and Children's Hospital and
to provide for future capital expenditures for this new entity.
The BJC Health System was formed as a response to changes in the health care
system. By forming BJC Health System, participants created a regional health
care delivery organization which is able to compete in the highly competitive
regional market.
Since its formation, BJC Health Systems has demonstrated improved financial
performance and should continue to do so in the future.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF CYNTHIA J. CLEMSON]
"Bond investors experienced a very difficult year in 1994, with the market
reacting severely to the threat of higher inflation and to the ensuing interest
rate hikes instituted by the Federal Reserve. However, despite these worries,
inflation remained quite modest.
"Bond issuance in Missouri declined throughout the year. The resulting
shortage of bonds caused quality spreads - the difference in yields between
bonds of varying quality - to remain relatively narrow. Because of the narrow
spreads, the Portfolio focused on upgrading its overall quality, selling
several A-rated issues and purchasing AAA insured issues. Finally, because of
the severe market decline in 1994, the Portfolio was able to sell bonds that
had relatively low yields and replace them with bonds having higher yields.
This strategy enabled the Portfolio to establish capital losses that can be
used to offset future capital gains."
- Cynthia J. Clemson, Portfolio Manager
- --------------------------------------------------------------------------------
10
<PAGE> 11
EV MARATHON NORTH CAROLINA TAX FREE FUND
North Carolina's economy remained relatively strong during 1994, continuing a
pattern of growth that began in the 1980s. During that period, the state's
economy changed from dependence on textile, furniture and tobacco to a much
more diversified economic base.
North Carolina emerged from the 1991 recession in good condition compared to
other states, stimulated by growth in the state's high technology, service and
pharmaceutical sectors. The financial services industry also has strengthened
in recent years, with major banking facilities headquartered in Charlotte and
Raleigh.
During the last decade, the state experienced rapid growth. Nowhere was this
growth more apparent than in its major metropolitan areas - Charlotte,
Winston-Salem and the "Research Triangle."
In general, North Carolina is not expected during the remainder of the decade
to experience the remarkable growth rates seen during the 1980s. However, its
diverse economy gives it a solid foundation for continued growth at rates
above the national average despite an expected loss of jobs in the tobacco,
textile and apparel industries.Overall, analysts estimate that employment
growth in the nonmanufacturing sector could exceed 2.5 percent during the next
several years.
<TABLE>
- --------------------------------------------------------------------------------
[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 97
Average quality............................. Aa
Investment grade............................ 98.0%
Effective maturity.......................... 16.96 yrs.
Largest sectors:
Hospitals................................... 19.5%
Insured hospitals........................... 13.9*
Utilities................................... 10.9
Housing..................................... 8.8
Insured - lease revenue..................... 8.0*
<FN>
* Private insurance does not remove the market risks associated with
this investment.
- --------------------------------------------------------------------------------
</TABLE>
Growth in 1995 is likely to be helped by strength in the construction
industry, which has been boosted by residential construction as well as a
number of major public works projects.
Further helping the state's economic picture, the state's debt issuers tend
to be fiscally conservative and North Carolina itself is considered a low-debt
state.
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
STATE EDUCATIONAL FACILITIES
FINANCE AGENCY [GRADUATION CAP LOGO]
DUKE UNIVERSITY
Bonds were issued to provide money for major improvements at Duke University,
a major educational institution located in Durham.
The money raised by this bond issue was used to construct a new science
research building. The building included laboratory space as well as areas
for classrooms, offices and equipment.The construction was part of a project
called the Science Resource Initiative, which brought together faculty from
several schools of the university for interdisciplinary research.
Among those participating in the Scientific Resource Initiative were faculty
members from Arts and Sciences, Engineering, the University's new School
for the Environment and Basic Medical Sciences.
This bond was issued in 1991 and matures in 2021.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF DAVID C. REILLY]
"In general, we have added housing bonds to the Portfolio when possible because
of our belief that these housing bonds offer strong value considering
their attractive yield and quality.
"We've also tried to add industrial development bonds to the Portfolio when
such bonds become available, again because of the combination of yield
and value that they offer.
"In addition, when looking at utility bonds in this state, we have switched out
of Catawba bonds, issued by the power authority serving the western half of
the state, and moved into bonds issued by the North Carolina Municipal Power
Agency, which serves the eastern part of the state. This agency is under some
competitive pressure, but our analysts have studied its debt issues and
recommended purchase based on the overall quality and yield of the bonds."
- David C. Reilly, Portfolio Manager
- --------------------------------------------------------------------------------
11
<PAGE> 12
EV MARATHON OREGON TAX FREE FUND
The state of Oregon ended the year in good economic shape, having weathered
the national recession fairly well.Unemployment dropped to a 25-year low in
the fourth quarter of the year, and the state's high-tech and construction
industries continued to show significant growth.
The strength of the Oregon economy can be attributed to several factors.
First, the state's continuing efforts to diversify away from the lumber
industry has added needed resiliency to the economy.Second, the high-tech
industry, already a growth sector, continues to improve, with several companies
announcing plans for further expansion in 1995 and 1996. This planned
expansion, in addition to increasing exports and creating jobs, should
allow Oregon to remain above the national average in terms of growth.
Despite the positive economic growth to date, the state's financial position
remains under the cloud of Measure 5. This is a plan previously approved by the
state's voters that limits the use of local property taxes for school funding.
Without the support of local funding, the state will be required to provide for
an increasing proportion of educational funding.
<TABLE>
- --------------------------------------------------------------------------------
[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 80
Average quality............................. Aa-
Investment grade............................ 97.3%
Effective maturity.......................... 17.78 yrs.
Largest sectors:
General obligations......................... 21.5%
Utilities................................... 15.3
Insured general obligations................. 11.3*
Housing..................................... 7.8
Transportation.............................. 7.2
<FN>
* Private insurance does not remove the market risk associated with
this investment.
- --------------------------------------------------------------------------------
</TABLE>
While there is some uncertainty over the state's short-term economic outlook,
it is likely that in the longer term the state will prosper. The state's
income, population and employment growth are predicted to be higher
than the national average for the remainder of the decade, with population
expected to grow at nearly twice the national average.
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
EUGENE, OR ELECTRIC [ELECTRIC LOGO]
REVENUE BONDS
These bonds were issued by the Eugene Water and Electric Board, which serves
the City of Eugene, site of the University of Oregon.
The Eugene market has experienced steady growth in past years, both terms of
customers and in power needs.
The money raised by this bond issue was used to retire bond anticipation
notes, issued by the city of Eugene in 1994 to finance the acquisition of the
Stone Creek hydroelectric project, located 25 miles east of Portland. The
utility plans to incorporate the output of the project into its own system.
The Water and Electric Board's primary source of power is the Bonneville Power
Administration, but the utility has a goal of diversifying its power sources
so it can reduce its reliance on power from Bonneville.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF CYNTHIA J. CLEMSON]
"Bond investors experienced a very difficult year in 1994, with the market
reacting severely to the threat of higher inflation and the ensuing interest
rate hikes instituted by the Federal Reserve. However, despite these worries,
actual inflation for the past year remained quite modest.
"The Oregon market experienced greater than average volatility in the past
year. The various tax initiatives that were on the Novermber ballot caused
the market to trade off substantially prior to the election because of
supply flooding the market and the pervasive uncertainty over the possible
long-term credit implications of the tax initiatives.
"However, once the initiatives were defeated and supply diminished, the Oregon
market started to outperform the national market, a trend that continued into
1995."
- Cynthia J. Clemson, Portfolio Manager
- --------------------------------------------------------------------------------
12
<PAGE> 13
EV MARATHON SOUTH CAROLINA TAX FREE FUND
In 1994, the South Carolina economy continued to diversify and to participate
fully in the Southeast region's economic growth. During the last several
years,South Carolina has relied less on the sectors that brought it strength
in previous decades - textiles and industries related to agriculture. More
recently,, the state's economy has diversified, thanks to significant growth
in the service, trade and government sectors.
Industry continued to expand in 1994, in part because of the state's favorable
tax structure and relatively low cost of living. A growing tourism industry,
heavily focused on retirement living, also has helped to diversify the economy.
Recent military base closings will moderate the state's economic growth, but
should be largely offset by increased private-sector investment. For example,
construction continued during the year on a new manufacturing facility for
Bavarian Motor Works (BMW), an investment of more than $250 million that is
expected to add 4,000 direct and indirect jobs to the South Carolina economy.
South Carolina is expected to grow economically throughout the decade, with
the state's metropolitan areas - Charleston, Columbia and Greenville - expected
to be the centers of activity.
<TABLE>
- --------------------------------------------------------------------------------
[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 68
Average quality............................. Aa
Investment grade............................ 97.0%
Effective maturity.......................... 17.19 yrs.
Largest sectors:
Industrial development revenue.............. 17.5%
Utilities................................... 10.1
Housing..................................... 9.1
Insured hospitals........................... 8.9*
Insured lease revenue....................... 6.6*
<FN>
* Private insurance does not remove the market risks associated with
this investment.
- --------------------------------------------------------------------------------
</TABLE>
In terms of state finances, South Carolina remains a low-debt state. However,
it experienced operating deficits in the fiscal years 1989-1992. This prompted
the state to enact a number of fiscal reforms that are designed to provide
greater budgeting accuracy and to limit budget growth. Observers
believe these changes should provide a structure for more stable state
finances in the future.
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
SPARTANBURG,S.C.
BMW FACILITY [FACTORY LOGO]
IMPROVEMENTS
This 1994 bond issue totaling $23.5 million was sold to finance improvements
to a BMW automobile manufacturing plant that was under construction in
Spartanburg. Specifically, the money was to be used to construct solid waste
disposal and sewage disposal components of the factory.
Debt service on the bonds was unconditionally guaranteed by BMW, a producer
of automobiles based in Munich, Germany.
The money raised by the bond issue is bringing benefits to the Spartanburg
area in two ways: It has helped to complete the manufacturing facility that is
bringing employment to the region; and it has provided a significant
environmental benefit.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF DAVID C. REILLY]
"During 1994, we faced a period of sharp market declines. This was a very
active trading time for the Portfolio.
"In general, we looked for bonds that offered a combination of solid quality
and good yield. These were often not the top-rated bonds but were, instead,
relatively low-risk bonds that offered significant income.
"In South Carolina, we also looked for industrial development bonds because
they tend to offer both yield and value.
"During 1994, we sold lower yielding bonds and replaced them with bonds having
greater yield, many of which became less expensive during the 1994 sell-off.
This strategy offered us the opportunity to use the losses generated by these
sales to offset future capital gains"
- David C. Reilly, Portfolio Manager
- --------------------------------------------------------------------------------
13
<PAGE> 14
EV MARATHON TENNESSEE TAX FREE FUND
The Tennessee economy continued to be robust throughout 1994, led to some
extent by the continued expansion of some of its automotive manufacturing
facilities and the ensuing growth in employment. Tennessee's economic growth
has exceeded national levels for several years, led by growth in the state's
four largest metropolitan areas, Memphis, Nashville, Knoxville and Chattanooga.
Major contributors to growth in the manufacturing sector are expected to be
transportation equipment suppliers, especially companies supplying the
automobile industry, which are expected to proliferate.
Despite the state's economic strength in the past year, the rate of job
creation has decreased since its peak in the early 1980s. However, the new
manufacturing jobs that have been created have tended to pay well and have
contributed to the state's strong growth in personal wages.
Another program that should have a positive effect on the state's economic
welfare is the TennCare comprehensive health care program. The program is
expected to extend health care benefits to the uninsured and stresses
preventive medical care and a sharing of costs based on a patient's ability to
pay. Because the program
<TABLE>
- --------------------------------------------------------------------------------
[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 60
Average quality............................. Aa-
Investment grade............................ 100%
Effective maturity.......................... 19.93 yrs.
Largest sectors:
Insured hospitals........................... 23.2%*
Housing..................................... 16.6
Industrial development revenue.............. 15.6
Utilities................................... 6.9
Education................................... 5.8
<FN>
* Private insurance does not remove the market risk associated with
this investment.
- --------------------------------------------------------------------------------
</TABLE>
should achieve efficiencies in the way it delivers health care services, it
is expected to reduce the growth in Medicaid spending.
During the next several years, analysts expect Tennessee's unemployment rate
to decrease slightly, with employment growth led by growth in the service
sector. Tennessee is expected to retain its relatively low per capita burden
that benefits from conservative fiscal policies.
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
KIMBERLY-CLARK CORP. [FACTORY LOGO]
WASTE DISPOSAL FACILITY
Kimberly-Clark, the manufacturer of Kleenex, is one of the world's leading
manufacturers of paper-related consumer products. Its products are used in a
variety of markets including the home, personal care, business and health
care markets.
The company is using the proceeds of these bonds to construct a solid waste
paper disposal facility at its plant in Loudon, TN.
The facility will turn waste paper into pulp that will then be used to make
tissue paper and hand towels at the Loudon plant.
This facility is a key part of Kimberly-Clark's initiative to increase the
recycled content of its products.A total of $40 million in bonds were issued,
maturing in 2023.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF CYNTHIA J. CLEMSON]
"Bond investors experienced a very difficult year in 1994, with the market
reacting severely to the threat of inflation and to the ensuing interest rate
hikes instituted by the Federal Reserve. However, despite these worries,
inflation actually remained quite modest.
"Issuance within the state of Tennessee decreased significantly in 1994,
causing quality spreads - the difference in yields between bonds of varying
quality - to narrow somewhat, especially between AAA- and A-rated bonds. As a
result, the Portfolio was able to sell some A-rated bonds and buy AAA bonds
while giving up little or no yield.
"Because of the severe market decline in 1994, we were also able to sell bonds
which had relatively low yields and replace them with bonds having higher
yields. This strategy enabled the Portfolio to establish capital losses that
can be used to offset future capital gains."
- Cynthia J. Clemson, Portfolio Manager
- --------------------------------------------------------------------------------
14
<PAGE> 15
EV MARATHON VIRGINIA TAX FREE FUND
There is no doubt that Virginia felt the effect of the recession of the early
1990s, but the commonwealth's economy has remained relatively strong. The
keys to recovery have been a diverse economic base, greater-than-average
income levels among its residents and fairly low unemployment rates.
Even though the rate of job creation has slowed in recent years, Virginia has
maintained relatively low unemployment. The diversity of the commonwealth's
economy can be seen in its geographic regions.Northern Virginia benefits from
Washington, D.C. and its government-related jobs. The Tidewater region's jobs
revolve around the defense industry. The western part of the state, while
rural, has a manufacturing base as well.
Virginia's economy benefits from a system of management that recognizes the
need to make adjustments when economic times change. For example, state
government has created a fund that is designed to help government offset
future revenue shortfalls. This provision could help to bring an increased
level of predictability to the state budget process should the economy - and
tax and fee revenues - decline.
<TABLE>
- --------------------------------------------------------------------------------
[STATE MAP] PORTFOLIO OVERVIEW
Based on market value as of February 28, 1995
<S> <C>
Number of issues............................ 96
Average quality............................. Aa-
Investment grade............................ 98.0%
Effective maturity.......................... 21.17 yrs.
Largest sectors:
Hospitals................................... 19.5%
Housing..................................... 12.1
Lease/certificate of participation.......... 10.3
Education................................... 9.2
General obligations......................... 8.9
- --------------------------------------------------------------------------------
</TABLE>
During the 1990s, Virginia's is expected to see relatively slow economic
growth. The state expects to lose a total of 44,000 jobs because of Federal
defense budget cuts and military base closings, many of which already
have occurred. But the state is expected to emerge in relatively strong
condition, partly because of projected strong growth in the service sector.
Debt levels in Virginia are considered low, though the amount of debt financed
has increased in the last decade.
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
LOUDON COUNTY, VA
FALCON'S LANDING [HOUSE LOGO]
RETIREMENT CENTER
Falcon's Landing is a not-for-profit community for retired Air Force officers,
other retired veterans and their spouses being built in Loudon County. The
Portfolio owns $2 million of the $88 million in bonds issued for this project.
This facility is being built using the concept of continuing care, which
provides three levels of care to meet the needs of its residents.
At Falcon's Landing, there will be 320 independent living units for residents
able to care for themselves; 30 assisted care units for those in need of some
assistance; and a 60-bed nursing home for residents who need more intensive
levels of care.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER [PHOTO OF DAVID C. REILLY]
"While the 1994 bond market was the worst in history, we initiated a number
of strategies to improve the position of the Portfolio.
"During this period, we looked for bonds that would give the Portfolio a
combination of quality and yield. In some cases, these were industrial
development bonds, which tend to offer both yield and value.
"During the year, we adopted another strategy with a goal of increasing the
distributable yield of the Portfolio. We sold some of our lower yielding bonds
and replaced them with bonds providing a greater yield. This strategy also
allowed us to use the losses generated by these sales to offset future
capital gains."
- David C. Reilly, Portfolio Manager
- --------------------------------------------------------------------------------
15
<PAGE> 16
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
EV Marathon Tax Free Funds
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ALABAMA ARKANSAS GEORGIA KENTUCKY
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in Portfolio --
Identified cost $107,068,247 $83,507,436 $127,878,489 $145,692,609
Unrealized appreciation (depreciation) 410,461 (1,081,667) (1,062,806) (2,320,431)
------------ ----------- ------------ ------------
Total investment in Portfolio, at value (Note 1A) $107,478,708 $82,425,769 $126,815,683 $143,372,178
Receivable for Fund shares sold 249,639 240,276 25,950 187,849
Deferred organization expenses (Note 1D) 7,265 7,459 5,453 3,845
------------ ----------- ------------ ------------
Total assets $107,735,612 $82,673,504 $126,847,086 $143,563,872
------------ ----------- ------------ ------------
LIABILITIES:
Dividends payable $ 176,349 $ 136,389 $ 211,113 $ 243,541
Payable for Fund shares redeemed 13,173 53,283 373,224 273,944
Payable to affiliates --
Trustees' fees 531 285 531 531
Custodian fee -- 333 -- 80
Accrued expenses 38,624 30,348 46,944 51,422
------------ ----------- ------------ ------------
Total liabilities $ 228,677 $ 220,638 $ 631,812 $ 569,518
------------ ----------- ------------ ------------
NET ASSETS $107,506,935 $82,452,866 $126,215,274 $142,994,354
============ =========== ============ ============
SOURCES OF NET ASSETS:
Paid-in capital $110,079,672 $85,232,145 $132,911,256 $147,422,444
Accumulated undistributed net realized loss on
investment and financial futures transactions
(computed on the basis of identified cost) (2,886,857) (1,706,857) (5,479,099 (1,792,223)
Accumulated undistributed (distributions in excess
of) net investment income (96,341) 9,245 (154,077 (315,436)
Unrealized appreciation (depreciation) of investments
and financial futures contracts from Portfolio
(computed on the basis of identified cost) 410,461 (1,081,667) (1,062,806) (2,320,431)
------------ ----------- ------------ ------------
Total $107,506,935 $82,452,866 $126,215,274 $142,994,354
============ =========== ============ ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 10,459,462 8,168,447 13,008,648 14,544,229
============ =========== ============ ============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
(NOTE 6) PER SHARE (net assets / shares of beneficial
interest) $10.28 $10.09 $9.70 $9.83
====== ====== ===== =====
</TABLE>
See notes to financial statements
16
<PAGE> 17
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
FUND FUND FUND FUND
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in Portfolio --
Identified cost $31,530,895 $115,754,607 $89,957,080 $189,596,420
Unrealized appreciation (depreciation) (611,611) (1,993,740) 346,796 1,652,177
----------- ------------ ----------- ------------
Total investment in Portfolio, at value (Note 1A) $30,919,284 $113,760,867 $90,303,876 $191,248,597
Receivable for Fund shares sold 80,717 177,430 229,696 814,244
Deferred organization expenses (Note 1D) 6,910 4,868 6,586 9,178
----------- ------------ ----------- ------------
Total assets $31,006,911 $113,943,165 $90,540,158 $192,072,019
----------- ------------ ----------- ------------
LIABILITIES:
Dividends payable $ 54,776 $ 188,045 $ 150,077 $ 325,254
Payable for Fund shares redeemed 39,954 123,275 204,580 241,133
Payable to affiliates --
Trustees' fees -- 531 265 531
Custodian fee 125 -- 364 --
Accrued expenses 13,924 42,294 36,397 69,982
----------- ------------ ----------- ------------
Total liabilities $ 108,779 $ 354,145 $ 391,683 $ 636,900
----------- ------------ ----------- ------------
NET ASSETS $30,898,132 $113,589,020 $90,148,475 $191,435,119
=========== ============ =========== ============
SOURCES OF NET ASSETS:
Paid-in capital $32,568,041 $117,507,934 $92,583,399 $198,371,599
Accumulated undistributed net realized loss on
investment and financial futures transactions
(computed on the basis of identified cost) (1,032,914) (1,985,085) (2,574,778) (8,229,842)
Accumulated undistributed (distributions in excess
of) net investment income (25,384) 59,911 (206,942) (358,815)
Unrealized appreciation (depreciation) of
investments and financial futures contracts from
Portfolio (computed on the basis of identified
cost) (611,611) (1,993,740) 346,796 1,652,177
----------- ------------ ----------- ------------
Total $30,898,132 $113,589,020 $90,148,475 $191,435,119
=========== ============ =========== ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 3,101,546 11,273,895 8,776,882 19,276,461
=========== ============ =========== ============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
(NOTE 6) PER SHARE (net assets / shares of
beneficial interest) $9.96 $10.08 $10.27 $9.93
===== ====== ====== =====
</TABLE>
See notes to financial statements
17
<PAGE> 18
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
FUND FUND FUND FUND
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in Portfolio --
Identified cost $148,827,241 $ 59,860,303 $58,119,534 $191,279,174
Unrealized appreciation (depreciation) (1,430,664) 83,977 (1,160,002) 606,485
------------ -------------- ------------ ------------
Total investment in Portfolio, at value (Note 1A) $147,396,577 $ 59,944,280 $56,959,532 $191,885,659
Receivable for Fund shares sold 210,501 60,388 274,839 499,476
Deferred organization expenses (Note 1D) 4,828 7,862 7,604 7,761
------------ -------------- ------------ ------------
Total assets $147,611,906 $ 60,012,530 $57,241,975 $192,392,896
------------ -------------- ------------ ------------
LIABILITIES:
Dividends payable $ 239,014 $ 98,592 $ 97,193 $ 327,456
Payable for Fund shares redeemed 224,023 306,949 105,915 249,973
Payable to affiliates --
Trustees' fees 531 265 265 531
Custodian fee 549 242 228 --
Accrued expenses 53,487 24,355 22,243 67,556
------------ -------------- ------------ ------------
Total liabilities $ 517,604 $ 430,403 $ 225,844 $ 645,516
------------ -------------- ------------ ------------
NET ASSETS $147,094,302 $ 59,582,127 $57,016,131 $191,747,380
============ ============ =========== ============
SOURCES OF NET ASSETS:
Paid-in capital $151,532,389 $ 62,823,319 $59,180,672 $197,616,367
Accumulated undistributed net realized loss on
investment and financial futures transactions
(computed on the basis of identified cost) (2,783,741) (3,289,088) (994,889) (6,092,385)
Accumulated distributions in excess of net
investment income (223,682) (36,081) (9,650) (383,087)
Unrealized appreciation (depreciation) of
investments and financial futures contracts
from Portfolio (computed on the basis of
identified cost) (1,430,664) 83,977 (1,160,002) 606,485
------------ -------------- ------------ ------------
Total $147,094,302 $ 59,582,127 $57,016,131 $191,747,380
============ ============ =========== ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 14,520,538 6,035,407 5,699,384 18,942,448
============ ============ =========== ============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE (NOTE 6) PER SHARE (net assets / shares of
beneficial interest) $10.13 $9.87 $10.00 $10.12
====== ===== ====== ======
</TABLE>
See notes to financial statements
18
<PAGE> 19
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ALABAMA ARKANSAS GEORGIA KENTUCKY
FUND FUND FUND FUND
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 3,265,417 $ 2,490,991 $ 3,957,878 $4,357,403
Expenses allocated from Portfolio (240,431) (182,397) (292,885) (337,623)
----------- ----------- ----------- ----------
Net investment income from Portfolio $ 3,024,986 $ 2,308,594 $ 3,664,993 $4,019,780
----------- ----------- ----------- ----------
Expenses --
Compensation of Trustees not members of the
Administrator's organization $ 1,868 $ 790 $ 1,582 $ 1,582
Distribution costs (Note 5) 450,104 348,229 559,025 603,919
Custodian fee (Note 4) 473 1,041 -- 3,920
Transfer and dividend disbursing agent fees 42,429 28,278 46,209 49,051
Printing and postage 19,582 14,968 21,751 23,090
Legal and accounting services 5,329 10,831 12,917 12,240
Amortization of organization expense (Note 1D) 1,709 1,790 1,629 1,204
Registration costs 2,521 1,150 2,529 5,778
Miscellaneous 6,535 4,451 6,176 5,877
----------- ----------- ----------- ----------
Total expenses $ 530,550 $ 411,528 $ 651,818 $ 706,661
----------- ----------- ----------- ----------
Net investment income $ 2,494,436 $ 1,897,066 $ 3,013,175 $3,313,119
----------- ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from Portfolio --
Investment transactions (identified cost basis) $(1,562,410) $(1,399,491) $(3,346,275) $ (886,251)
Financial futures contracts 196,663 151,679 (386,854) 290,869
----------- ----------- ----------- ----------
Net realized loss on investments $(1,365,747) $(1,247,812) $(3,733,129) $ (595,382)
Change in unrealized appreciation of investments and
financial futures contracts 2,055,363 862,656 2,028,600 525,160
----------- ----------- ----------- ----------
Net realized and unrealized gain (loss) $ 689,616 $ (385,156) $(1,704,529) $ (70,222)
----------- ----------- ----------- ----------
Net increase in net assets from operations $ 3,184,052 $ 1,511,910 $ 1,308,646 $3,242,897
=========== =========== =========== ==========
</TABLE>
See notes to financial statements
19
<PAGE> 20
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
FUND FUND FUND FUND
--------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 916,937 $ 3,611,162 $ 2,797,375 $ 5,885,617
Expenses allocated from Portfolio (40,603) (266,150) (218,958) (443,165)
--------- ----------- ----------- ------------
Net investment income from Portfolio $ 876,334 $ 3,345,012 $ 2,578,417 $ 5,442,452
--------- ----------- ----------- ------------
Expenses --
Compensation of Trustees not members of the
Administrator's organization $ 210 $ 1,582 $ 504 $ 785
Distribution costs (Note 5) 122,551 490,209 390,128 826,336
Custodian fee (Note 4) 125 5,036 4,864 --
Transfer and dividend disbursing agent fees 11,605 41,490 30,607 60,876
Printing and postage 10,664 20,702 17,606 29,573
Legal and accounting services 10,176 11,254 11,114 12,013
Amortization of organization expense (Note 1D) 1,661 1,390 1,559 2,767
Registration costs 1,713 1,767 4,304 3,546
Miscellaneous 2,074 5,131 3,427 10,536
--------- ----------- ----------- ------------
Total expenses $ 160,779 $ 578,561 $ 464,113 $ 946,432
--------- ----------- ----------- ------------
Net investment income $ 715,555 $ 2,766,451 $ 2,114,304 $ 4,496,020
--------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from Portfolio --
Investment transactions (identified cost basis) $(575,516) $(1,319,476) $(2,191,451) $ (3,099,450)
Financial futures contracts (190,147) 205,069 73,965 (859,598)
--------- ----------- ----------- ------------
Net realized loss on investments $(765,663) $(1,114,407) $(2,117,486) $ (3,959,048)
Change in unrealized appreciation of investments and
financial futures contracts 725,865 968,476 2,372,532 3,214,567
--------- ----------- ----------- ------------
Net realized and unrealized gain (loss) $ (39,798) $ (145,931) $ 255,046 $ (744,481)
--------- ----------- ----------- ------------
Net increase in net assets from operations $ 675,757 $ 2,620,520 $ 2,369,350 $ 3,751,539
========= =========== =========== ============
</TABLE>
See notes to financial statements
20
<PAGE> 21
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
FUND FUND FUND FUND
----------- -------------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 4,486,570 $ 1,847,221 $1,714,933 $ 5,996,279
Expenses allocated from Portfolio (375,010) (135,340) (123,733) (451,382)
----------- ------------ ---------- -----------
Net investment income from Portfolio $ 4,111,560 $ 1,711,881 $1,591,200 $ 5,544,897
----------- ------------ ---------- -----------
Expenses --
Compensation of Trustees not members of the
Administrator's organization $ 1,582 $ 1,281 $ 1,048 $ 1,582
Distribution costs (Note 5) 631,607 256,296 231,677 819,723
Custodian fee (Note 4) 6,411 2,758 4,230 --
Transfer and dividend disbursing agent fees 51,670 21,888 19,281 67,343
Printing and postage 23,225 13,003 14,559 32,450
Legal and accounting services 12,629 11,667 11,249 12,017
Amortization of organization expense (Note 1D) 1,461 1,663 1,761 2,751
Registration costs 3,397 523 2,541 3,157
Miscellaneous 6,224 2,813 2,011 8,621
----------- ------------ ---------- -----------
Total expenses $ 738,206 $ 311,892 $ 288,357 $ 947,644
----------- ------------ ---------- -----------
Net investment income $ 3,373,354 $ 1,399,989 $1,302,843 $ 4,597,253
----------- ------------ ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from Portfolio --
Investment transactions (identified cost basis) $(2,907,012) $ (2,195,753) $(886,707) $(2,888,486)
Financial futures contracts 123,075 (178,207) 39,542 (602,919)
----------- ------------ ---------- -----------
Net realized loss on investments $(2,783,937) $ (2,373,960) $(847,165) $(3,491,405)
Change in unrealized appreciation of investments and
financial futures contracts 3,202,756 1,937,649 896,066 3,411,464
----------- ------------ ---------- -----------
Net realized and unrealized gain (loss) $ 418,819 $ (436,311) $ 48,901 $ (79,941)
----------- ------------ ---------- -----------
Net increase in net assets from operations $ 3,792,173 $ 963,678 $1,351,744 $ 4,517,312
=========== ============ ========== ===========
</TABLE>
See notes to financial statements
21
<PAGE> 22
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ALABAMA ARKANSAS GEORGIA KENTUCKY
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 2,494,436 $ 1,897,066 $ 3,013,175 $ 3,313,119
Net realized loss on investments (1,365,747) (1,247,812) (3,733,129) (595,382)
Change in unrealized appreciation of investments 2,055,363 862,656 2,028,600 525,160
------------ ----------- ----------- ------------
Net increase in net assets from operations $ 3,184,052 $ 1,511,910 $ 1,308,646 $ 3,242,897
------------ ----------- ----------- ------------
Distributions to shareholders (Note 2) --
From net investment income $ (2,494,436) $(1,897,066) $(3,013,175) $ (3,313,119)
In excess of net investment income (107,201) (112,737) (171,262) (222,026)
------------ ----------- ----------- ------------
Total distributions to shareholders $ (2,601,637) $(2,009,803) $(3,184,437) $ (3,535,145)
------------ ----------- ----------- ------------
Transactions in shares of beneficial interest (Note
3) --
Proceeds from sales of shares $ 8,055,808 $ 4,137,143 $ 7,270,999 $ 7,206,151
Net asset value of shares issued to shareholders
in payment of distributions declared 1,377,332 991,115 1,642,540 1,929,259
Cost of shares redeemed (8,061,233) (4,613,955) (15,303,908) (7,843,066)
------------ ----------- ----------- ------------
Increase (decrease) in net assets from Fund
share transactions $ 1,371,907 $ 514,303 $ (6,390,369) $ 1,292,344
------------ ----------- ----------- ------------
Net increase (decrease) in net assets $ 1,954,322 $ 16,410 $ (8,266,160) $ 1,000,096
NET ASSETS:
At beginning of period 105,552,613 82,436,456 134,481,434 141,994,258
------------ ----------- ------------ ------------
At end of period $107,506,935 $82,452,866 $126,215,274 $142,994,354
============ =========== ============ ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF)
NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT
END OF PERIOD $ (96,341) $ 9,245 $ (154,077) $ (315,436)
============ =========== ============ ============
</TABLE>
See notes to financial statements
22
<PAGE> 23
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
FUND FUND FUND FUND
----------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 715,555 $ 2,766,451 $ 2,114,304 $ 4,496,020
Net realized loss on investments (765,663) (1,114,407) (2,117,486) (3,959,048)
Change in unrealized appreciation of
investments 725,865 968,476 2,372,532 3,214,567
----------- ------------ ----------- ------------
Net increase in net assets from operations $ 675,757 $ 2,620,520 $ 2,369,350 $ 3,751,539
----------- ------------ ----------- ------------
Distributions to shareholders (Note 2) --
From net investment income $ (715,555) $ (2,766,451) $(2,114,304) $ (4,496,020)
In excess of net investment income (61,871) (74,263) (132,314) (291,386)
----------- ------------ ----------- ------------
Total distributions to shareholders $ (777,426) $ (2,840,714) $(2,246,618) $ (4,787,406)
----------- ------------ ----------- ------------
Transactions in shares of beneficial interest
(Note 3) --
Proceeds from sales of shares $ 3,549,776 $ 8,438,443 $ 4,344,274 $ 11,172,114
Net asset value of shares issued to
shareholders in payment of distributions
declared 397,755 1,537,678 1,170,786 2,448,140
Cost of shares redeemed (1,967,445) (12,887,781) (6,716,129) (13,816,581)
----------- ------------ ----------- ------------
Increase (decrease) in net assets from Fund
share transactions $ 1,980,086 $ (2,911,660) $(1,201,069) $ (196,327)
----------- ------------ ----------- ------------
Net increase (decrease) in net assets $ 1,878,417 $ (3,131,854) $(1,078,337) $ (1,232,194)
NET ASSETS:
At beginning of period 29,019,715 116,720,874 91,226,812 192,667,313
----------- ------------ ----------- ------------
At end of period $30,898,132 $113,589,020 $90,148,475 $191,435,119
=========== ============ =========== ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS
OF) NET INVESTMENT INCOME INCLUDED IN NET
ASSETS AT END OF PERIOD $ (25,384) $ 59,911 $ (206,942) $ (358,815)
=========== ============ =========== ============
</TABLE>
See notes to financial statements
23
<PAGE> 24
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
FUND FUND FUND FUND
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 3,373,354 $ 1,399,989 $ 1,302,843 $ 4,597,253
Net realized loss on investments (2,783,937) (2,373,960) (847,165) (3,491,405)
Change in unrealized appreciation of
investments 3,202,756 1,937,649 896,066 3,411,464
------------ ------------ ----------- ------------
Net increase in net assets from operations $ 3,792,173 $ 963,678 $ 1,351,744 $ 4,517,312
------------ ------------ ----------- ------------
Distributions to shareholders (Note 2) --
From net investment income $ (3,373,354) $ (1,399,989) $(1,302,843) $ (4,597,253)
In excess of net investment income (226,684) (82,981) (95,717) (254,605)
------------ ------------ ----------- ------------
Total distributions to shareholders $ (3,600,038) $ (1,482,970) $(1,398,560) $ (4,851,858)
------------ ------------ ----------- ------------
Transactions in shares of beneficial interest
(Note 3) --
Proceeds from sales of shares $ 7,152,674 $ 5,420,383 $ 4,868,430 $ 14,966,422
Net asset value of shares issued to
shareholders in payment of distributions
declared 2,098,746 697,372 730,993 2,616,441
Cost of shares redeemed (13,476,669) (5,894,758) (3,915,803) (18,921,188)
------------ ------------ ----------- ------------
Increase (decrease) in net assets from Fund
share transactions $ (4,225,249) $ 222,997 $ 1,683,620 $ (1,338,325)
------------ ------------ ----------- ------------
Net increase (decrease) in net assets $ (4,033,114) $ (296,295) $ 1,636,804 $ (1,672,871)
NET ASSETS:
At beginning of period 151,127,416 59,878,422 55,379,327 193,420,251
------------ ------------ ----------- ------------
At end of period $147,094,302 $ 59,582,127 $57,016,131 $191,747,380
============ ============ =========== ============
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET
INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF
PERIOD $ (223,682) $ (36,081) $ (9,650) $ (383,087)
============ ============ =========== ============
</TABLE>
See notes to financial statements
24
<PAGE> 25
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
Year Ended August 31, 1994*
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ALABAMA ARKANSAS GEORGIA KENTUCKY
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 3,973,251 $ 3,031,357 $ 5,319,982 $ 5,457,716
Net realized loss on investments (1,020,794) (217,984) (1,234,345) (41,605)
Change in unrealized appreciation (depreciation)
of investments (6,386,129) (4,775,385) (9,833,903) (10,787,706)
------------ ----------- ------------ ------------
Net decrease in net assets from operations $ (3,433,672) $(1,962,012) $ (5,748,266) $ (5,371,595)
------------ ----------- ------------ ------------
Distributions to shareholders (Note 2) --
From net investment income $ (3,973,251) $(3,031,357) $ (5,319,982) $ (5,457,716)
In excess of net investment income (759,137) (470,045) (846,315) (991,899)
In excess of net realized gain on investments -- -- (545,591) (544,782)
------------ ----------- ------------ ------------
Total distributions to shareholders $ (4,732,388) $(3,501,402) $ (6,711,868) $ (6,994,397)
------------ ----------- ------------ ------------
Transactions in shares of beneficial interest (Note
3) --
Proceeds from sales of shares $ 33,981,424 $29,557,948 $34,873,536 $ 37,758,866
Net asset value of shares issued to shareholders
in payment of distributions declared 2,464,848 1,687,208 3,491,399 3,795,320
Cost of shares redeemed (7,348,631) (2,550,292) (11,465,895) (7,287,220)
------------ ----------- ------------ ------------
Increase in net assets from Fund share
transactions $ 29,097,641 $28,694,864 $ 26,899,040 $ 34,266,966
------------ ----------- ------------ ------------
Net increase in net assets $ 20,931,581 $23,231,450 $ 14,438,886 $ 21,900,974
NET ASSETS:
At beginning of period 84,621,032 59,205,006 120,042,548 120,093,284
------------ ----------- ------------ ------------
At end of period $105,552,613 $82,436,456 $134,481,434 $141,994,258
============ =========== ============ ============
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME INCLUDED IN NET ASSETS AT END OF PERIOD $ (150,055) $ (3,596) $ (186,021) $ (307,810)
============ =========== ============ ============
<FN>
* For the eleven months ended August 31, 1994.
</TABLE>
See notes to financial statements
25
<PAGE> 26
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
Year Ended August 31, 1994*
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
FUND FUND FUND FUND
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,046,088 $ 4,445,120 $ 3,407,722 $ 7,610,249
Net realized gain (loss) on investments (219,967) (578,345) 8,518 (3,663,129)
Change in unrealized appreciation
(depreciation) of investments (2,018,901) (9,096,319) (7,263,958) (12,446,124)
----------- ------------ ----------- ------------
Net decrease in net assets from operations $(1,192,780) $ (5,229,544) $(3,847,718) $ (8,499,004)
----------- ------------ ----------- ------------
Distributions to shareholders (Note 2) --
From net investment income $(1,046,088) $ (4,445,120) $(3,407,722) $ (7,610,249)
In excess of net investment income (174,001) (722,020) (677,675) (1,353,355)
In excess of net realized gain on investments (209,543) (73,722) (198,267) --
----------- ------------ ----------- ------------
Total distributions to shareholders $(1,429,632) $ (5,240,862) $(4,283,664) $ (8,963,604)
----------- ------------ ----------- ------------
Transactions in shares of beneficial interest
(Note 3) --
Proceeds from sales of shares $14,084,991 $ 36,068,289 $24,584,041 $ 41,332,507
Net asset value of shares issued to
shareholders in payment of distributions
declared 796,301 2,887,858 2,256,403 4,448,467
Cost of shares redeemed (1,174,251) (6,991,117) (4,135,345) (9,479,160)
----------- ------------ ----------- ------------
Increase in net assets from Fund share
transactions $13,707,041 $ 31,965,030 $22,705,099 $ 36,301,814
----------- ------------ ----------- ------------
Net increase in net assets $11,084,629 $ 21,494,624 $14,573,717 $ 18,839,206
NET ASSETS:
At beginning of period 17,935,086 95,226,250 76,653,095 173,828,107
----------- ------------ ----------- ------------
At end of period $29,019,715 $116,720,874 $91,226,812 $192,667,313
=========== ============ =========== ============
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET
INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF
PERIOD $ (7,925) $ (45,524) $ (212,519) $ (359,695)
=========== ============ =========== ============
<FN>
* For the eleven months ended August 31, 1994.
</TABLE>
See notes to financial statements
26
<PAGE> 27
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
Year Ended August 31, 1994*
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
FUND FUND FUND FUND
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 5,601,370 $ 2,125,854 $ 1,964,404 $ 7,818,657
Net realized gain (loss) on investments 10,766 (870,255) (99,969) (2,341,234)
Change in unrealized appreciation
(depreciation) of investments (11,817,058) (3,747,871) (3,794,864) (13,242,737)
------------ ------------ ----------- ------------
Net increase (decrease) in net assets from
operations $ (6,204,922) $ (2,492,272) $(1,930,429) $ (7,765,314)
------------ ------------ ----------- ------------
Distributions to shareholders (Note 2) --
From net investment income $ (5,601,370) $ (2,125,854) $(1,964,404) $ (7,818,657)
In excess of net investment income (1,053,614) (419,749) (329,218) (1,350,463)
From net realized gain on investment
transactions (1,178,190) -- (378,309) --
In excess of net realized gain on investments -- -- (147,724) --
------------ ------------ ----------- ------------
Total distributions to shareholders $ (7,833,174) $ (2,545,603) $(2,819,655) $ (9,169,120)
------------ ------------ ----------- ------------
Transactions in shares of beneficial interest
(Note 3) --
Proceeds from sales of shares $ 42,363,996 $ 26,431,421 $20,476,860 $ 43,159,145
Net asset value of shares issued to
shareholders in payment of distributions
declared 4,677,522 1,259,771 1,565,343 4,865,937
Cost of shares redeemed (10,105,394) (5,944,394) (1,560,949) (13,096,612)
------------ ------------ ----------- ------------
Increase in net assets from Fund share
transactions $ 36,936,124 $ 21,746,798 $20,481,254 $ 34,928,470
------------ ------------ ----------- ------------
Net increase in net assets $ 22,898,028 $ 16,708,923 $15,731,170 $ 17,994,036
NET ASSETS:
At beginning of period 128,229,388 43,169,499 39,648,157 175,426,215
------------ ------------ ----------- ------------
At end of period $151,127,416 $ 59,878,422 $55,379,327 $193,420,251
============ ============ =========== ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS
OF) NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF PERIOD $ (224,826) $ (46,126) $ 2,096 $ (422,226)
============ ============ =========== ============
</TABLE>
* For the eleven months ended August 31, 1994
See notes to financial statements
27
<PAGE> 28
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON ALABAMA FUND MARATHON ARKANSAS FUND
--------------------------------------------- -----------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
FEBRUARY 28, YEAR ENDED SEPTEMBER 30, FEBRUARY 28, --------------------------
1995 AUGUST 31, ----------------- 1995 AUGUST 31, SEPTEMBER 30,
(UNAUDITED) 1994*** 1993 1992** (UNAUDITED) 1994*** 1993++
------------ ---------- ------- ------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year $ 10.210 $ 11.060 $10.340 $10.000 $ 10.140 $ 10.910 $10.000
-------- -------- ------- ------- -------- -------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.240 $ 0.425 $ 0.475 $ 0.208 $ 0.232 $ 0.431 $ 0.471
Net realized and unrealized gain
(loss) on investments 0.080 (0.769) 0.837 0.385+++ (0.036) (0.703) 1.025
-------- -------- ------- ------- -------- -------- -------
Total income (loss) from
operations $ 0.320 $ (0.344) $ 1.312 $ 0.593 $ 0.196 $ (0.272) $ 1.496
-------- -------- ------- ------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.240) $ (0.425) $(0.475) $(0.208) $ (0.232) $ (0.431) $(0.471)
In excess of net investment income (0.010) (0.081) (0.117) (0.045) (0.014) (0.067) (0.115)
-------- -------- ------- ------- -------- -------- -------
Total distributions $ (0.250) $ (0.506) $(0.592) $(0.253) $ (0.246) $ (0.498) $(0.586)
-------- -------- ------- ------- -------- -------- -------
NET ASSET VALUE, end of year $ 10.280 $ 10.210 $11.060 $10.340 $ 10.090 $ 10.140 $10.910
======== ======== ======= ======= ======== ======== =======
TOTAL RETURN (3) 3.35% (3.18)% 13.09% 5.71% 2.12% (2.53)% 15.00%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year (000
omitted) $107,507 $105,553 $84,621 $21,105 $ 82,453 $ 82,436 $59,205
Ratio of net expenses to average
daily net assets (1) 1.53%+ 1.43%+ 1.37% 1.01%+ 1.51%+ 1.17%+ 0.88%+
Ratio of net investment income to
average daily net assets 4.93%+ 4.35%+ 4.30% 4.49%+ 4.84%+ 4.47%+ 4.27%+
PORTFOLIO TURNOVER (2) -- -- 15% 13% -- 5% 13%
<FN>
* For the period from the start of business, May 1, 1992, to September 30, 1992, and for the year ended September 30, 1993 (for
Marathon Alabama Fund) and for the period from the start of business, October 2, 1992, to September 30, 1993, and for the
eleven months ended August 31, 1994, (for Marathon Arkansas 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, the ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $0.462 $0.185 $0.409 $0.411
====== ====== ====== ======
RATIOS (As a percentage of average
daily net assets):
Expenses(1) 1.49% 1.50%+ 1.40%+ 1.42%+
Net investment income 4.18% 4.00%+ 4.24%+ 3.73%+
<FN>
** For the period from the start of business, May 1, 1992, to September 30, 1992.
*** For the eleven months ended August 31, 1994.
+ Computed on an annualized basis.
++ For the period from the start of business, October 2, 1992, to September 30, 1993.
+++ The per share amount is not in accord with the net realized and unrealized gain 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.
(1) Includes each Fund's share of its corresponding Portfolio's allocated expenses.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Funds were making investments
directly in securities. The portfolio turnover rate for the period since the Funds transferred substantially all of
their investable assets to their respective Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
(3) Total investment 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.
</TABLE>
See notes to financial statements
28
<PAGE> 29
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON GEORGIA FUND MARATHON KENTUCKY FUND
---------------------------------------------- -----------------------------------------------
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED ------------------------------- ENDED --------------------------------
FEBRUARY 28, SEPTEMBER 30, FEBRUARY 28, SEPTEMBER 30,
1995 AUGUST 31, ------------------ 1995 AUGUST 31, -------------------
(UNAUDITED) 1994*** 1993 1992** (UNAUDITED) 1994*** 1993 1992**
------------ ---------- -------- ------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of
year $ 9.800 $ 10.750 $ 10.120 $10.000 $ 9.850 $ 10.780 $ 10.090 $ 10.000
-------- -------- -------- ------- -------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.224 $ 0.413 $ 0.459 $ 0.380 $ 0.229 $ 0.415 $ 0.462 $ 0.363
Net realized and unrealized
gain (loss) on investments (0.087) (0.841) 0.776 0.215 (0.004) (0.811) 0.820 0.192
-------- -------- -------- ------- -------- -------- -------- --------
Total income (loss) from
operations $ 0.137 $ (0.428) $ 1.235 $ 0.595 $ 0.225 $ (0.396) $ 1.282 $ 0.555
-------- -------- -------- ------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
From net investment income $ (0.224) $ (0.413) $ (0.459) $(0.380) $ (0.229) $ (0.415) $ (0.462) $ (0.363)
In excess of net investment
income (0.013) (0.065) (0.129) (0.095) (0.016) (0.075) (0.125) (0.102)
From net realized gain on
investment transactions -- (0.017) -- -- (0.005) --
In excess of net realized
gain on investment
transactions -- (0.044) -- -- (0.044) --
-------- -------- -------- ------- -------- -------- -------- --------
Total distributions $ (0.237) $ (0.522) $ (0.605) $(0.475) $ (0.245) $ (0.534) $ (0.592) $ (0.465)
-------- -------- -------- ------- -------- -------- -------- --------
NET ASSET VALUE, end of year $ 9.700 $ 9.800 $ 10.750 $10.120 $ 9.830 $ 9.850 $ 10.780 $ 10.090
======== ======== ======== ======= ======== ======== ======== ========
TOTAL RETURN (3) 1.57% (4.08)% 12.60% 5.85% 2.48% (3.78)% 13.05% 5.45%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year
(000 omitted) $126,215 $134,481 $120,043 $42,156 $142,994 $141,994 $120,093 $ 46,835
Ratio of net expenses to
average daily net assets
(1) 1.52%+ 1.41%+ 1.52% 1.13%+ 1.55%+ 1.44%+ 1.50% 1.44%+
Ratio of net investment
income to average daily
net assets 4.85%+ 4.39%+ 4.27% 4.72%+ 4.91%+ 4.39%+ 4.29% 4.56%+
PORTFOLIO TURNOVER (2) -- -- 20% 33% -- -- 21% 64%
<FN>
* For the period from the start of business, December 23, 1991, to September 30, 1992, (for Marathon Georgia Fund) and for the
period from the start of business, December 23, 1991, to September 30, 1992, (for Marathon Kentucky 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, the ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $0.341 $0.357
====== ======
RATIOS (As a percentage of average
daily net assets):
Expenses(1) 1.61%+ 1.52%+
Net investment income 4.24%+ 4.48%+
<FN>
** For the period from the start of business, December 23, 1991, to September 30, 1992.
*** For the eleven months ended August 31, 1994.
+ Computed on an annualized basis.
(1) Includes each Fund's share of its corresponding Portfolio's allocated expenses.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Funds were making investments
directly in securities. The portfolio turnover rate for the period since the Funds transferred substantially all of
their investable assets to their respective Portfolios is shown in the Portfolios' 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.
</TABLE>
See notes to financial statements
29
<PAGE> 30
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON LOUISIANA FUND MARATHON MARYLAND FUND
----------------------------------------- ---------------------------------------------------
SIX MONTHS SIX MONTHS YEAR ENDED
ENDED YEAR ENDED ENDED ------------------------------------
FEBRUARY 28, -------------------------- FEBRUARY 28, SEPTEMBER 30,
1995 AUGUST 31, SEPTEMBER 30, 1995 AUGUST 31, -----------------------
(UNAUDITED) 1994*** 1993** (UNAUDITED) 1994*** 1993 1992++
------------ ---------- ------------- ------------ ---------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of
year $ 10.010 $ 11.130 $10.000 $ 10.070 $ 11.070 $10.290 $10.000
-------- -------- ------- -------- -------- -------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.240 $ 0.447 $ 0.478 $ 0.239 $ 0.428 $ 0.466 $ 0.303
Net realized and unrealized
gain (loss) on investments (0.029) (0.937) 1.234 0.017 (0.922) 0.890 0.375+++
-------- -------- ------- -------- -------- -------- -------
Total income (loss) from
operations $ 0.211 $ (0.490) $ 1.712 $ 0.256 $ (0.494) $ 1.356 $ 0.678
-------- -------- ------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.240) $ (0.447) $(0.478) $ (0.239) $ (0.428) $(0.466) $(0.303)
In excess of net investment
income (0.021) (0.074) (0.104) (0.007) (0.070) (0.110) (0.085)
In excess of net realized
gain on investment
transactions -- (0.109) -- -- (0.008) -- --
-------- -------- ------- -------- -------- -------- -------
Total distributions $ (0.261) $ (0.630) $(0.582) $ (0.246) $ (0.506) $(0.576) $(0.388)
-------- -------- ------- -------- -------- -------- -------
NET ASSET VALUE, end of year $ 9.960 $ 10.010 $11.130 $ 10.080 $ 10.070 $11.070 $10.290
======== ======== ======= ======== ======== ======= =======
TOTAL RETURN (3) 2.32% (4.56)% 17.26% 2.76% (4.56)% 13.61% 6.65%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year (000
omitted) $ 30,898 $ 29,020 $17,935 $113,589 $116,721 $95,226 $29,180
Ratio of net expenses
to average daily
net assets (1) 1.42%+ 1.08%+ 1.07% 1.54%+ 1.43%+ 1.43% 1.30%+
Ratio of net investment
income to average daily
net assets 5.05%+ 4.62%+ 4.27% 5.03%+ 4.44%+ 4.28% 4.25%+
PORTFOLIO TURNOVER (2) -- 14% 86% -- -- 12% 3%
<FN>
* For the six months ended February 28, 1995, the year ended August 31, 1994 and the period from the start of business,
October 2, 1992 to September 30, 1993 (for Marathon Louisiana Fund), and for the year ended September 30, 1993 and for the
period from the start of business, February 3, 1992 to September 30, 1992 (for Marathon Maryland Funds), 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, the ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $0.235 $0.412 $0.401 $0.461 $0.280
====== ====== ====== ====== ======
RATIOS (As a percentage of
average
daily net assets):
Expenses(1) 1.53%+ 1.44%+ 1.76%+ 1.48% 1.62%+
Net investment income 4.94%+ 4.26%+ 3.58%+ 4.23% 3.93%+
<FN>
** For the period from the start of business, October 2, 1992, to September 30, 1993.
*** For the eleven months ended August 31, 1994.
+ Computed on an annualized basis.
++ For the period from the start of business, February 3, 1992, to September 30, 1992.
+++ The per share amount is not in accord with the net realized and unrealized gain 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.
(1) Includes each Fund's share of its corresponding Portfolio's allocated expenses.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Funds were making investments
directly in securities. The portfolio turnover rate for the period since the Funds transferred substantially all of
their investable assets to their respective Portfolios is shown in the Portfolios' 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.
</TABLE>
See notes to financial statements
30
<PAGE> 31
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON MISSOURI FUND MARATHON NORTH CAROLINA FUND
---------------------------------------------- ----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
FEBRUARY 28, YEAR ENDED SEPTEMBER 30, FEBRUARY 28, SEPTEMBER 30,
1995 AUGUST 31, ------------------ 1995 AUGUST 31, ------------------
(UNAUDITED) 1994*** 1993 1992** (UNAUDITED) 1994*** 1993 1992++
------------ ---------- -------- ------- ------------ ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of
year $ 10.240 $ 11.250 $ 10.400 $10.000 $ 9.970 $ 10.940 $ 10.300 $10.000
-------- -------- -------- ------- -------- -------- -------- -------
NCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.238 $ 0.423 $ 0.470 $ 0.200 $ 0.233 $ 0.423 $ 0.468 $ 0.456
Net realized and unrealized
gain (loss) on investments 0.045 (0.904) 1.005 0.455 (0.025) (0.895) 0.794 0.423+++
-------- -------- -------- ------- -------- -------- -------- -------
Total income (loss)
from operations $ 0.283 $ (0.481) $ 1.475 $ 0.655 $ 0.208 $ (0.472) $ 1.252 $ 0.879
-------- -------- -------- ------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.238) $ (0.423) $ (0.470) $(0.200) $ (0.233) $ (0.423) $ (0.468) $(0.456)
In excess of net investment
income (0.015) (0.084) (0.128) (0.055) (0.015) (0.075) (0.120) (0.123)
From net realized gain on
investment transactions -- (0.022) (0.027) -- -- -- -- --
In excess of net realized
gain on investment
transactions -- -- -- -- -- -- (0.034) --
-------- -------- -------- ------- -------- -------- -------- -------
Total distributions $ (0.253) $ (0.529) $ (0.625) $(0.255) $ (0.248) $ (0.498) $ (0.622) $(0.579)
-------- -------- -------- ------- -------- -------- -------- -------
NET ASSET VALUE, end of year $ 10.270 $ 10.240 $ 11.250 $10.400 $ 9.930 $ 9.970 $ 10.940 $10.300
======== ======== ======== ======= ======== ======== ======== =======
TOTAL RETURN (3) 2.98% (4.33)% 14.66% 6.33% 2.28% (4.40)% 12.69% 8.75%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year (000
omitted) $ 90,148 $ 91,227 $ 76,653 $25,225 $191,435 $192,667 $173,828 $71,733
Ratio of net expenses to
average daily net assets
(1) 1.59%+ 1.49%+ 1.52% 1.32%+ 1.52%+ 1.42%+ 1.52% 1.35%+
Ratio of net investment
income to average daily net
assets 4.91%+ 4.30%+ 4.23% 4.31%+ 4.93%+ 4.43%+ 4.34% 4.54%+
PORTFOLIO TURNOVER (2) -- -- 14% 21% -- -- 16% 52%
<FN>
* For the period from the start of business, May 1, 1992 to September 30, 1992, and for the year ended September 30, 1993, (for
Marathon Missouri Fund), and for the period from the start of business, October 23, 1991, to September 30, 1992, (for Marathon
North Carolina Fund), the operating expenses of the Funds and the Portfolios may reflect a reduction of the investment adviser
fee, on allocation of expenses to the Investment Adviser, or both. Had such actions not been taken, the ratios would have been as
follows:
NET INVESTMENT INCOME PER SHARE $0.467 $0.192 $0.434
====== ====== ======
RATIOS (As a percentage of
average daily net assets):
Expenses(1) 1.55% 1.49%+ 1.57%+
Net investment income 4.20% 4.14%+ 4.32%+
<FN>
** For the period from the start of business, May 1, 1992, to September 30, 1992.
*** For the eleven months ended August 31, 1994.
+ Computed on an annualized basis.
++ For the period from the start of business, October 23, 1991, to September 30, 1992.
+++ The per share amount is not in accord with the net realized and unrealized gain for the period because of the timing
of sales of the Fund shares and the amount of per share realized and unrealized gains and losses at such time.
(1) Includes each Fund's share of its corresponding Portfolio's allocated expenses.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Funds were making investments
directly in securities. The portfolio turnover rate for the period since the Funds transferred substantially all of
their investable assets to their respective Portfolios is shown in the Portfolios' 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.
</TABLE>
See notes to financial statements
31
<PAGE> 32
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON OREGON FUND MARATHON SOUTH CAROLINA FUND
----------------------------------------------- -----------------------------------------
SIX MONTHS YEAR ENDED SIX MONTHS
ENDED -------------------------------- ENDED YEAR ENDED
FEBRUARY 28, SEPTEMBER 30, FEBRUARY 28, --------------------------
1995 AUGUST 31, ------------------- 1995 AUGUST 31, SEPTEMBER 30,
(UNAUDITED) 1994*** 1993 1992** (UNAUDITED) 1994*** 1993++
------------ ---------- -------- -------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year $ 10.090 $ 11.130 $ 10.270 $ 10.000 $ 9.940 $ 10.890 $10.000
-------- -------- -------- -------- -------- -------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.228 $ 0.415 $ 0.459 $ 0.351 $ 0.227 $ 0.408 $ 0.461
Net realized and unrealized gain
(loss) on investments 0.055 (0.869) 0.983 0.368 (0.057) (0.870) 0.986
-------- -------- -------- -------- -------- -------- -------
Total income (loss)
from operations $ 0.283 $ (0.454) $ 1.442 $ 0.719 $ 0.170 $ (0.462) $ 1.447
-------- -------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.228) $ (0.415) $ (0.459) $ (0.351) $ (0.227) $ (0.408) $(0.461)
In excess of net investment
income (0.015) (0.078) (0.117) (0.098) (0.013) (0.080) (0.096)
From net realized gain on
investment transactions -- (0.093) (0.006) -- -- -- --
-------- -------- -------- -------- -------- -------- -------
Total distributions $ (0.243) $ (0.586) $ (0.582) $ (0.449) $ (0.240) $ (0.488) $(0.557)
-------- -------- -------- -------- -------- -------- -------
NET ASSET VALUE, end of year $ 10.130 $ 10.090 $ 11.130 $ 10.270 $ 9.870 $ 9.940 $10.890
======== ======== ======== ======== ======== ======== =======
TOTAL RETURN (3) 3.02% (4.21)% 14.47% 7.10% 1.90% (4.33)% 14.50%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year
(000 omitted) $147,094 $151,127 $128,229 $ 41,703 $ 59,582 $ 59,878 $43,169
Ratio of net expenses to average
daily net assets (1) 1.58%+ 1.43%+ 1.55% 1.47%+ 1.54%+ 1.36%+ 1.07%+
Ratio of net investment income
to average daily net assets 4.77%+ 4.28%+ 4.22% 4.27%+ 4.83%+ 4.27%+ 4.22%+
PORTFOLIO TURNOVER (2) -- -- 23% 44% -- 3% 13%
<FN>
* For the period from the start of business, December 24, 1991, to September 30, 1992, (for Marathon Oregon Fund), and for the
period from the start of business, October 2, 1992, to September 30, 1992, (for Marathon South Carolina Fund), the operating
expenses of the Funds and the Portfolios may reflect a reduction of the investment adviser fee, on allocation of expenses to the
Investment Adviser, or both. Had such actions not been taken, the ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $0.338 $0.421
====== ======
RATIOS (As a percentage of average
daily net assets):
Expenses(1) 1.63%+ 1.44%+
Net investment income 4.11%+ 3.85%+
<FN>
** For the period from the start of business, December 24, 1991, to September 30, 1992.
*** For the eleven months ended August 31, 1994.
+ Computed on an annualized basis.
++ For the period from the start of business, October 2, 1992, to September 30, 1993.
(1) Includes each Fund's share of its corresponding Portfolio's allocated expenses.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Funds were making investments
directly in securities. The portfolio turnover rate for the period since the Funds transferred substantially all of
their investable assets to their respective Portfolios is shown in the Portfolios' 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.
</TABLE>
See notes to financial statements
32
<PAGE> 33
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARATHON TENNESSEE FUND MARATHON VIRGINIA FUND
------------------------------------------------ ---------------------------------------------------------
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED --------------------------------- ENDED ------------------------------------------
FEBRUARY 28, SEPTEMBER 30, FEBRUARY 28, SEPTEMBER 30,
1995 AUGUST 31, ------------------- 1995 AUGUST 31, ----------------------------
(UNAUDITED) 1994*** 1993 1992** (UNAUDITED) 1994*** 1993 1992 1991++
------------ ----------- -------- -------- ------------ ----------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of
year $ 10.020 $ 11.070 $ 10.010 $ 10.000 $ 10.120 $ 11.060 $10.460 $ 10.200 $10.000
-------- --------- -------- -------- -------- --------- ------- -------- -------
INCOME (LOSS) FROM
OPERATIONS:
Net investment
income $ 0.234 $ 0.426 $ 4.66 $ 0.040 $ 0.242 $ 0.438 $ 0.483 $ 0.526 $ 0.87
Net realized and
unrealized
gain (loss) on
investments (0.003) (0.848) 1.158 0.027+++ 0.013 (0.864) 0.762 0.385 0.220+++
-------- --------- -------- -------- -------- --------- ------- -------- -------
Total income
(loss)
from
operations $ 0.231 $ (0.422) $ 1.624 $ 0.067 $ 0.255 $ (0.426) $ 1.245 $ 0.911 $ 0.307
-------- --------- -------- -------- -------- --------- ------- -------- -------
LESS
DISTRIBUTIONS:
From net
investment
income $ (0.234) $ (0.426) $ (0.466) $ (0.040) $ (0.242) $ (0.438) $(0.483) $ (0.526) $(0.087)
In excess of net
investment
income (0.017) (0.071) (0.098) (0.017) (0.013) (0.076) (0.130) (0.120) (0.020)
From net
realized gain
on investment
transactions -- (0.094) -- -- -- -- (0.022) (0.005) --
In excess of net
realized gain
on investment
transactions -- (0.037) -- -- -- -- (0.010) -- --
-------- --------- -------- -------- -------- --------- ------- -------- -------
Total
distributions $ (0.251) $ (0.628) (0.564) $ (0.057) $ (0.255) $ (0.514) $(0.645) $ (0.651) $(0.107)
-------- --------- -------- -------- -------- --------- ------- -------- -------
NET ASSET VALUE,
end of year $ 10.000 $ 10.020 $ 11.070 $ 10.010 $ 10.120 $ 10.120 $11.060 $ 10.460 $10.200
======== ========= ======== ======== ======== ========= ======= ======== =======
TOTAL RETURN (3) 2.52% (3.93)% 16.97% 0.10% 2.72% (3.95)% 12.33% 9.16% 2.82%
RATIOS/SUPPLEMENTAL
DATA:*
Net assets, end
of year
(000 omitted) $57,016 $55,379 $39,648 $3,475 $191,747 $193,420 $175,426 $72,629 $11,081
Ratio of net
expenses to
average daily
net assets (1) 1.56%+ 1.37%+ 1.30% 1.00%+ 1.53%+ 1.44%+ 1.52% 1.36% 1.27%+
Ratio of net
investment
income to
average daily
net assets 4.93%+ 4.44%+ 4.24% 2.91%+ 5.03%+ 4.51%+ 4.42% 4.86% 4.47%+
PORTFOLIO TURNOVER
(2) -- -- 28% 0% -- -- 27% 85% 10%
<FN>
* For the period from the start of business, August 25, 1992, to September 30, 1992, and for the year ended September 30, 1993
(for Marathon Tennessee Fund), and for the period from the start of business, July 26, 1991, to September 30, 1991, and for the
year ended September 30, 1992, (for Marathon Virginia 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 action
not been taken, the ratios would have been as follows:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT
INCOME PER SHARE $0.432 $0.025 $0.501 $0.079
====== ====== ====== ======
RATIOS (As a
percentage
of average
daily net
assets):
Expenses(1) 1.61% 2.10%+ 1.59% 1.68%+
Net investment income 3.93% 1.81%+ 4.63% 4.06%+
<FN>
** For the period from the start of business, August 25, 1992, to September 30, 1992.
*** For the eleven months ended August 31, 1994.
+ Computed on an annualized basis.
++ For the period from the start of business, July 26, 1991, to September 30, 1991.
+++ The per share amount is not in accord with the net realized and unrealized gain for the period because of the timing of sales
of the Fund shares and the amount of per share realized and unrealized gains and losses at such time.
(1) Includes each Fund's share of its corresponding Portfolio's allocated expenses.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Funds were making investments directly
in securities. The portfolio turnover rate for the period since the Funds transferred substantially all of their investable
assets to their respective Portfolios is shown in the Portfolios' 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.
</TABLE>
See notes to financial statements
33
<PAGE> 34
- --------------------------------------------------------------------------------
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(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, twelve of which are included in these
financial statements. They include EV Marathon Alabama Tax Free Fund ("Marathon
Alabama Fund"), EV Marathon Arkansas Tax Free Fund ("Marathon Arkansas Fund"),
EV Marathon Georgia Tax Free Fund ("Marathon Georgia Fund"), EV Marathon
Kentucky Tax Free Fund ("Marathon Kentucky Fund"), EV Marathon Louisiana Tax
Free Fund ("Marathon Louisiana Fund"), EV Marathon Maryland Tax Free Fund
("Marathon Maryland Fund"), EV Marathon Missouri Tax Free Fund ("Marathon
Missouri Fund"), EV Marathon North Carolina Tax Free Fund ("Marathon North
Carolina Fund"), EV Marathon Oregon Tax Free Fund ("Marathon Oregon Fund"), EV
Marathon South Carolina Tax Free Fund ("Marathon South Carolina Fund"), EV
Marathon Tennessee Tax Free Fund ("Marathon Tennessee Fund"), and EV Marathon
Virginia Tax Free Fund ("Marathon Virginia 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 Alabama Fund invests its
assets in the Alabama Tax Free Portfolio, the Marathon Arkansas Fund invests its
assets in the Arkansas Tax Free Portfolio, the Marathon Georgia Fund invests its
assets in the Georgia Tax Free Portfolio, the Marathon Kentucky Fund invests its
assets in the Kentucky Tax Free Portfolio, the Marathon Louisiana Fund invests
its assets in the Louisiana Tax Free Portfolio, the Marathon Maryland Fund
invests its assets in the Maryland Tax Free Portfolio, the Marathon Missouri
Fund invests its assets in the Missouri Tax Free Portfolio, the Marathon North
Carolina Fund invests its assets in the North Carolina Portfolio, the Marathon
Oregon Fund invests its assets in the Oregon Tax Free Portfolio, the Marathon
South Carolina Fund invests its assets in the South Carolina Tax Free Portfolio,
the Marathon Tennessee Fund invests its assets in the Tennessee Tax Free
Portfolio, and the Marathon Virginia Fund invests its assets in the Virginia 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 (91.2%, 99.3%, 98.1%, 98.8%, 92.4%, 99.3%, 96.5%, 96.4%, 99.2%, 98.4%,
98%, and 99.3%, at February 28, 1995 for the Marathon Alabama Fund, Marathon
Arkansas Fund, Marathon Georgia Fund, Marathon Kentucky Fund, Marathon Louisiana
Fund, Marathon Maryland Fund, Marathon Missouri Fund, Marathon North Carolina
Fund, Marathon Oregon Fund, Marathon South Carolina Fund, Marathon Tennessee
Fund, and Marathon Virginia 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.
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 August 31, 1994, the Marathon
Alabama Fund, Marathon Arkansas Fund, Marathon Georgia Fund, Marathon Louisiana
Fund, Marathon Missouri Fund, Marathon North Carolina Fund, and Marathon South
Carolina Fund for federal income tax purposes had capital loss carryovers of
$366,001, $241,061, $151,432, $44,637, $71,039, $514,860, and $74,009,
respectively, which 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. Such capital loss carryovers will expire on August
31, 2002 (Marathon Alabama Fund will expire September 30, 2000 ($1,050) and
August 31, 2002 ($364,951) and Marathon North Carolina will expire September 30,
2001 ($63,556) and August 31, 2002 ($451,304)). Additionally, at August 31,
1994, net capital losses of $1,198,801, $222,217, $1,707,755, $1,174,481,
$294,713, $890,096, $117,659, $3,788,931, $22,823, $894,637, $154,705, and
$2,714,375, for the Marathon Alabama Fund, Marathon Arkansas Fund, Marathon
Georgia Fund, Marathon Kentucky Fund, Marathon Louisiana Fund, Marathon Maryland
Fund, Marathon Missouri Fund, Marathon North Carolina Fund, Marathon Oregon
Fund, Marathon South Carolina Fund, Marathon Tennessee Fund, and Marathon
Virginia Fund, respectively, attributable to security transactions incurred
after October 31, 1993, are treated as arising on the first day of the Funds'
current taxable year. Dividends paid by each Fund from net interest on tax-
34
<PAGE> 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. For tax purposes,
commissions paid were charged to paid-in capital prior to November 16, 1994 and
subsequently charged to operations. The change in the tax accounting practice
was prompted by a recent Internal Revenue ruling and has no effect on either the
Funds current yield or total return (Note 2 and 5).
F. OTHER--Investment transactions are accounted for on a trade date basis.
G. RECLASSIFICATION--Certain prior year amounts have been reclassified to
conform to the current year presentation.
H. INTERIM FINANCIAL INFORMATION--The interim financial statements relating to
February 28, 1995, and for the period then ended have not been audited by
independent certified public accountants but, in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal, recurring
adjustments, necessary for the fair presentation of the financial statements.
- --------------------------------------------------------------------------------
(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. 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 are reclassified to paid-in capital. During the period from September
1, 1994, to November 15, 1994, $160,915, $125,578, $203,206, $214,400, $44,412,
$179,698, $137,891, $292,266, $227,828, $93,026, $83,971 and $293,744, was
reclassified from distributions in excess of net investment income to paid in
capital, due to permanent differences between book and tax accounting for
distribution costs for the Marathon Alabama Fund, Marathon Arkansas Fund,
Marathon Georgia fund, Marathon Kentucky fund, Marathon Louisiana Fund, Marathon
Maryland Fund and Marathon Missouri Fund, Marathon North Carolina Fund, Marathon
Oregon Fund, Marathon South Carolina Fund, Marathon Tennessee Fund and Marathon
Virginia Fund, respectively. Net investment income, net realized gains and net
assets were not affected by these reclassifications.
35
<PAGE> 36
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
<TABLE>
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:
<CAPTION>
MARATHON ALABAMA MARATHON ARKANSAS
FUND FUND
-------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
-------------------------------------- --------------------------------------
FEBRUARY 28, FEBRUARY 28,
1995 AUGUST 31, 1995 AUGUST 31,
(UNAUDITED)** 1994* (UNAUDITED)** 1994*
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Sales 813,409 3,167,514 425,430 2,786,569
Issued to shareholders electing to
receive payments of
distributions in
Fund shares 140,099 233,307 102,159 161,980
Redemptions (832,076) (711,097 ) (486,686) (245,910)
------- --------- -------- ---------
Net increase 121,432 2,689,724 40,903 2,702,639
======= ========= ======== =========
</TABLE>
<TABLE>
<CAPTION>
MARATHON GEORGIA MARATHON KENTUCKY
FUND FUND
-------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
-------------------------------------- --------------------------------------
FEBRUARY 28, FEBRUARY 28,
1995 AUGUST 31, 1995 AUGUST 31,
(UNAUDITED)** 1994* (UNAUDITED)** 1994*
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Sales 772,821 3,355,248 768,506 3,625,642
Issued to shareholders electing to
receive payments of
distributions in
Fund shares 174,986 340,835 204,517 369,461
Redemptions (1,657,831) (1,145,361) (844,266) (719,208)
---------- ---------- -------- ---------
Net increase (decrease) (710,024) 2,550,722 128,757 3,275,895
========== ========== ======== =========
<FN>
* For the eleven months ended August 31, 1994.
** For the six months ended February 28, 1995.
</TABLE>
36
<PAGE> 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON LOUISIANA MARATHON MARYLAND
FUND FUND
------------------------------------ ------------------------------------
PERIOD ENDED PERIOD ENDED
------------------------------------ ------------------------------------
FEBRUARY 28, FEBRUARY 28,
1995 AUGUST 31, 1995 AUGUST 31,
(UNAUDITED)** 1994* (UNAUDITED)** 1994*
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Sales 370,995 1,324,035 883,557 3,395,967
Issued to shareholders electing to
receive payments of distributions
in Fund shares 41,578 75,761 159,700 276,002
Redemptions (209,283) (112,890) (1,359,456) (681,305)
-------- --------- ---------- ---------
Net increase (decrease) 203,290 1,286,906 (316,199) 2,990,664
======== ========= ========== =========
</TABLE>
<TABLE>
<CAPTION>
MARATHON MISSOURI MARATHON NORTH CAROLINA
FUND FUND
------------------------------------ ------------------------------------
PERIOD ENDED PERIOD ENDED
------------------------------------ ------------------------------------
FEBRUARY 28, FEBRUARY 28,
1995 AUGUST 31, 1995 AUGUST 31,
(UNAUDITED)** 1994* (UNAUDITED)** 1994*
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Sales 444,192 2,271,136 1,169,521 3,912,532
Issued to shareholders electing to
receive payments of distributions
in Fund shares 119,326 211,893 255,890 428,741
Redemptions (694,601) (391,617) (1,468,015) (917,372)
-------- --------- ---------- ---------
Net increase (decrease) (131,083) 2,091,412 (42,604) 3,423,901
======== ======== ========== =========
</TABLE>
<TABLE>
<CAPTION>
MARATHON OREGON MARATHON SOUTH CAROLINA
FUND FUND
------------------------------------ ------------------------------------
PERIOD ENDED PERIOD ENDED
------------------------------------ ------------------------------------
FEBRUARY 28, FEBRUARY 28,
1995 AUGUST 31, 1995 AUGUST 31,
(UNAUDITED)** 1994* (UNAUDITED)** 1994*
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Sales 740,741 3,978,510 566,268 2,526,541
Issued to shareholders electing to
receive payments of distributions
in Fund shares 217,480 442,188 73,139 122,013
Redemptions (1,420,062) (963,856) (628,551) (588,630)
---------- --------- -------- ---------
Net increase (decrease) (461,841) 3,456,842 10,856 2,059,924
========== ========= ======== =========
</TABLE>
<TABLE>
<CAPTION>
MARATHON TENNESSEE MARATHON VIRGINIA
FUND FUND
------------------------------------ ------------------------------------
PERIOD ENDED PERIOD ENDED
------------------------------------ ------------------------------------
FEBRUARY 28, FEBRUARY 28,
1995 AUGUST 31, 1995 AUGUST 31,
(UNAUDITED)** 1994* (UNAUDITED)** 1994*
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Sales 507,747 1,947,543 1,546,615 4,034,241
Issued to shareholders electing to
receive payments of distributions
in Fund shares 76,467 149,324 268,551 461,655
Redemptions (414,370) (149,757) (1,977,449) (1,253,270)
-------- --------- ---------- ----------
Net increase (decrease) 169,844 1,947,110 (162,283) 3,242,626
======== ========= ========== ==========
<FN>
* For the eleven months ended August 31, 1994.
** For the six months ended February 28, 1995.
</TABLE>
37
<PAGE> 38
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(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. 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 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 six months ended February 28, 1995,
Marathon Alabama Fund, Marathon Arkansas Fund, Marathon Georgia Fund, Marathon
Kentucky Fund, Marathon Louisiana Fund, Marathon Maryland Fund, Marathon
Missouri Fund, Marathon North Carolina Fund, Marathon Oregon Fund, Marathon
South Carolina Fund, Marathon Tennessee Fund, and Marathon Virginia Fund, paid
or accrued $379,064, $294,159, $466,265, $505,603, $106,127, $412,397, $322,875,
$684,088, $530,011, $217,336, $198,316 and $685,430, respectively, to or payable
to EVD, representing 0.75% of average daily net assets. At February 28, 1995,
the amount of Uncovered Distribution Charges of EVD calculated under the Plans
for Marathon Alabama Fund, Marathon Arkansas Fund, Marathon Georgia Fund,
Marathon Kentucky Fund, Marathon Louisiana Fund, Marathon Maryland Fund,
Marathon Missouri Fund, Marathon North Carolina Fund, Marathon Oregon Fund,
Marathon South Carolina Fund, Marathon Tennessee Fund, and Marathon Virginia
Fund were approximately $4,491,000, $3,613,000, $5,160,000, $5,718,000,
$1,402,000, $4,777,000, $3,706,000, $7,664,000, $5,952,000, $2,636,000,
$2,472,000 and $7,539,000, respectively.
38
<PAGE> 39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 six months ended February 28, 1995,
Marathon Alabama Fund, Marathon Arkansas Fund, Marathon Georgia Fund, Marathon
Kentucky Fund, Marathon Louisiana Fund, Marathon Maryland Fund, Marathon
Missouri Fund, Marathon North Carolina Fund, Marathon Oregon Fund, Marathon
South Carolina Fund, Marathon Tennessee Fund and Marathon Virginia Fund paid or
accrued service fees to or payable to EVD in the amount of $71,040, $54,070,
$92,760, $98,316, $16,424, $77,812, $67,253, $142,248, $101,596, $38,960,
$33,361 and $134,293, respectively. Service fee payments are made for personal
services and/or maintenance of shareholder accounts. Service fees 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.
- --------------------------------------------------------------------------------
(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 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 (6% and 5%,
respectively, for shares purchased prior to August 1, 1994) 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 $132,000, $143,000, $449,000, $216,000, $45,000,
$266,000, $153,000, $322,000, $364,000, $212,000, $110,000 and $421,000,
respectively, of CDSC paid by shareholders of Marathon Alabama Fund, Marathon
Arkansas Fund, Marathon Georgia Fund, Marathon Kentucky Fund, Marathon Louisiana
Fund, Marathon Maryland Fund, Marathon Missouri Fund, Marathon North Carolina
Fund, Marathon Oregon Fund, Marathon South Carolina Fund, Marathon Tennessee
Fund and Marathon Virginia Fund, respectively, for the six months ended February
28, 1995.
39
<PAGE> 40
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(7) INVESTMENT TRANSACTIONS
Increases and decreases in each Fund's investment in its corresponding Portfolio
for the six months ended February 28, 1995 were as follows:
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ALABAMA ARKANSAS GEORGIA KENTUCKY
FUND FUND FUND FUND
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increases $ 8,555,299 $4,336,769 $ 7,882,267 $ 7,596,568
Decreases 10,343,670 6,137,509 17,789,237 10,321,039
</TABLE>
<TABLE>
<CAPTION>
MARATHON
MARATHON MARATHON MARATHON NORTH
LOUISIANA MARYLAND MISSOURI CAROLINA
FUND FUND FUND FUND
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increases $ 3,857,047 $8,935,015 $ 4,391,036 $11,246,290
Decreases 2,610,016 15,064,794 8,230,047 17,370,510
</TABLE>
<TABLE>
<CAPTION>
MARATHON
MARATHON SOUTH MARATHON MARATHON
OREGON CAROLINA TENNESSEE VIRGINIA
FUND FUND FUND FUND
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increases $ 7,512,816 $5,025,397 $ 4,839,962 $15,725,898
Decreases 15,932,309 6,246,026 4,912,193 22,533,093
</TABLE>
40
<PAGE> 41
<TABLE>
- --------------------------------------------------------------------------------
Alabama Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
ELECTRIC UTILITIES - 3.0%
NR BBB $ 500 Guam Power Authority,
6.625%, 10/1/14 $ 506,210
Baa1 A- 500 Puerto Rico Electric Power
Authority, 7.00%, 7/1/07 525,880
Baa1 A- 500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 505,765
Baa1 A- 935 Puerto Rico Electric Power
Authority, 6.00%, 7/1/16 915,103
Baa1 A- 1,000 Puerto Rico Electric Power
Authority, 6.00%, 7/1/10 980,290
------------
$ 3,433,248
------------
ESCROWED - 4.5%
NR AA $ 500 Birmingham City, Alabama
Improvement Warrants,
6.60%, 7/1/17 $ 543,730
Baa BBB 2,000 Gadsen City, Alabama
Medical Clinic Board
(Baptist Hospital), 7.80%,
11/1/21 2,311,300
Baa BBB 350 Gadsen City, Alabama
Medical Clinic Board
(Baptist Hospital), 7.60%,
11/1/08 400,593
Aaa AAA 250 Tuscaloosa City, Alabama
Limited Obligation-Capital
Outlay Warrants (AMBAC),
6.50%, 2/1/15 264,990
A1 AA 1,600 University of Alabama-
Birmingham Medical and
Educational Foundation
Student Housing, 7.00%,
12/1/19 1,747,920
------------
$ 5,268,533
------------
GENERAL OBLIGATION - 8.7%
A1 AA $3,500 Birmingham, Alabama
U.T.G.O., 5.75%, 4/1/19 $ 3,320,940
Aa AA 1,000 Huntsville, Alabama,
5.875%, 11/1/15 981,740
Baa1 A 2,000 Puerto Rico U.T.G.O.,
6.50%, 7/1/23 2,046,400
Baa1 A 1,980 Puerto Rico Public
Buildings Authority,
5.75%, 7/1/15 1,879,832
Baa1 A 2,090 Puerto Rico Public
Buildings Authority,
5.50%, 7/1/21 1,891,137
------------
$ 10,120,049
------------
HEALTH CARE - 2.4%
A1 A+ $2,000 DCH Healthcare, Alabama
5.75%, 6/1/23 $ 1,840,700
NR NR 325 Fairhope City, Alabama
Midtown Medical Clinic
Board (Beverly
Enterprises), 6.375%,
6/1/09 285,555
NR NR 670 Mobile City, Alabama
Second Medical Clinic
Board (Beverly
Enterprises), 7.00%,
4/1/07 627,528
------------
$ 2,753,783
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOSPITALS - 4.1%
Baa1 NR $3,550 Jasper City, Alabama
Medical Clinic Board
(Walker Regional Medical
Center), 6.375%, 7/1/18 $ 3,269,621
A A 1,000 Montgomery City, Alabama
Medical Clinic Board
(Jackson Hospital), 7.00%,
3/1/15 1,028,920
Baa BBB 430 Troy City, Alabama
Hospital Building
Authority, 7.375%, 5/1/12 446,430
------------
$ 4,744,971
------------
HOUSING - 2.6%
Aaa NR $3,000 Alabama HFA Single Family
Mortgage (GNMA/FNMA),
6.60%, 4/1/19 $ 3,023,220
------------
INDUSTRIAL DEVELOPMENT
REVENUE/POLLUTION CONTROL
REVENUE - 9.3%
Baa1 BBB $1,200 Courtland, Alabama
(Champion International
Corporation), 7.20%,
12/1/13 $ 1,267,236
Baa1 BBB 545 Courtland, Alabama
(Champion International
Corporation) (AMT),
6.375%, 3/1/29 507,657
Baa1 BBB 4,500 Courtland, Alabama
(Champion International
Corporation), 5.90%,
2/1/17 4,046,445
Baa1 NR 1,000 Jackson, Alabama (Boise
Cascade), 7.875%, 8/1/00 1,039,440
Aa2 AA 3,000 Mobile County, Alabama
(Mobile Oil), 6.00%,
12/1/14 (2) 2,979,090
A3 A- 1,000 Selma, Alabama
(International Paper Oil),
6.00%, 12/1/17 931,960
------------
$ 10,771,828
------------
INSURED EDUCATION - 3.9%
Aaa AAA $1,000 Alabama A&M University
(MBIA), 6.375%, 11/1/09 $ 1,042,940
Aaa AAA 4,000 University of Alabama
Student Housing (MBIA),
5.00%, 6/1/16 3,458,320
------------
$ 4,501,260
------------
INSURED ELECTRIC UTILITIES - 2.0%
Aaa AAA $ 250 Puerto Rico Electric Power
Authority (STRIPES) (FSA),
Variable, 7/1/03 (1) $ 257,500
Aaa AAA 2,000 Wilsonville, Alabama PCR
(MBIA), 6.75%, 2/1/15 2,094,400
------------
$ 2,351,900
------------
</TABLE>
41
<PAGE> 42
<TABLE>
- --------------------------------------------------------------------------------
ALABAMA 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 - 8.8%
Aaa AAA $2,885 Demopolis City, Alabama
U.T.G.O. (AMBAC), 5.25%,
6/1/16 $ 2,569,785
Aaa AAA 500 Fairfield City, Alabama
U.T.G.O. (AMBAC), 6.30%,
6/1/22 512,235
Aaa AAA 1,000 Fairfield City, Alabama
U.T.G.O. (AMBAC), 5.75%,
6/1/19 962,000
Aaa AAA 3,750 Madison City, Alabama
(MBIA), 6.00%, 2/1/24 3,709,125
Aaa AAA 1,000 Phoenix City, Alabama
(MBIA), 6.00%, 2/1/14 1,001,400
Aaa AAA 1,000 Puerto Rico U.T.G.O.
(FSA), 6.00%, 7/1/22 994,570
Aaa AAA 500 Troy City, Alabama (CAPG),
6.60%, 6/1/12 519,530
------------
$ 10,268,645
------------
INSURED HEALTH CARE - 1.8%
Aaa AAA $2,000 Huntsville, Alabama Health
Care Facilities (MBIA),
6.50%, 6/1/13 $ 2,055,920
------------
INSURED HOSPITALS - 8.3%
Aaa AAA $3,750 Birmingham, Alabama
Baptist Medical Center
(MBIA), 5.50% 8/15/13 $ 3,490,988
Aaa AAA 1,000 East Alabama Health Care
Facilities (MBIA), 5.25%,
9/1/23 871,280
Aaa AAA 3,000 Houston County, Southeast
Alabama Medical Center
(MBIA), 5.75%, 10/1/22 (2) 2,818,800
Aaa AAA 1,000 Houston County, Southeast
Alabama Medical Center
(MBIA), 5.50%, 10/1/19 916,940
Aaa AAA 1,000 Montgomery, Alabama
Baptist Medical Center
(FGIC), 5.75%, 1/1/22 941,430
Aaa AAA 750 Birmingham, Alabama
University Hospital
(MBIA), 5.00%, 10/1/14 656,452
------------
$ 9,695,890
------------
INSURED INDUSTRIAL
DEVELOPMENT REVENUE/
POLLUTION CONTROL REVENUE - 2.6%
Aaa AAA $3,000 Columbia, Alabama PCR (AL
Power Company) (AMBAC),
6.50%, 9/1/23 $ 3,071,460
------------
INSURED LEASE/CERTIFICATES
OF PARTICIPATION - 3.2%
Aaa AAA $4,000 Montgomery, Alabama
Downtown Redevelopment
Authority Mortgage (MBIA),
5.50%, 10/1/13 $ 3,760,640
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED
MISCELLANEOUS - 0.4%
Aaa AAA $2,250 Jefferson County, Alabama
Birmingham-Jefferson Civic
Center (MBIA), 0%, 9/1/18 $ 519,525
------------
INSURED SOLID WASTE - 4.0%
Aaa AAA $4,000 Huntsville, Alabama Solid
Waste Disposal (FGIC)
(AMT), 7.00%, 10/1/14 (2) $ 4,227,760
Aaa AAA 350 Huntsville, Alabama Solid
Waste Disposal (FGIC)
(AMT), 7.00%, 10/1/08 377,937
------------
$ 4,605,697
------------
INSURED TRANSPORTATION - 4.2%
Aaa AAA $3,475 Birmingham, Alabama
Airport Authority (AMBAC),
5.25%, 7/1/20 $ 3,079,927
Aaa AAA 2,000 Birmingham, Alabama
Airport Authority (AMBAC)
(AMT), 5.375%, 7/1/23 1,771,220
------------
$ 4,851,147
------------
INSURED WATER & SEWER - 18.0%
Aaa AAA $1,750 Alabama Water Pollution
Control Authority
(Jefferson County)
(AMBAC), 5.50%, 2/15/16 $ 1,626,695
Aaa AAA 2,500 Alabama Water Pollution
Control Authority (AMBAC),
5.00%, 8/15/15 2,194,325
Aaa AAA 1,000 Chilton, Alabama Water and
Fire Protection (AMBAC),
5.875%, 4/1/13 979,800
Aaa AAA 1,100 Gulf Shores, Alabama Water
and Sewer (AMBAC), 6.50%,
2/1/15 1,132,065
Aaa AAA 1,000 Guntersville City, Alabama
Water and Sewer (AMBAC),
5.70%, 8/1/23 938,580
Aaa AAA 2,860 Limestone County, Alabama
Water Authority (FGIC),
5.25%, 12/1/20 2,542,712
Aaa AAA 500 Northeast, Alabama Water,
Sewer and Fire Protection
(AMBAC), 5.70%, 5/1/23 469,380
Aaa AAA 3,075 Prichard City, Alabama
Water and Sewer (AMBAC),
6.125%, 11/15/14 3,080,996
Aaa AAA 6,000 Scottsboro, Alabama Water,
Sewer and Gas (AMBAC),
6.50%, 12/1/14 6,192,360
Aaa AAA 750 West Morgan-East Lawrence,
Alabama Water Authority
(FGIC), 6.00%, 5/1/22 735,165
</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>
INSURED WATER & SEWER - (CONTINUED)
Aaa AAA 1,000 West Morgan-East Lawrence,
Alabama Water Authority
(FSA), 6.85%, 8/15/25 1,056,840
------------
$ 20,948,918
------------
MISCELLANEOUS - 0.1%
A A $ 100 Tennessee Valley, Alabama
Exhibit Commission, 6.70%,
6/1/10 $ 106,078
------------
SPECIAL TAX REVENUE - 0.2%
NR NR $ 250 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 $ 258,155
------------
TRANSPORTATION - 6.7%
NR BBB $ 500 Guam Airport Authority,
6.50%, 10/1/23 $ 495,480
NR BBB 1,000 Guam Airport Authority,
(AMT), 6.70%, 10/1/23 997,410
Baa1 A 2,000 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/15 1,841,460
Baa1 A 2,500 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/22 2,098,550
Baa1 A 1,800 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/16 1,854,594
Baa3 BB+ 500 Puerto Rico Ports
Authority (American
Airlines) (AMT), 6.30%,
6/1/23 457,095
------------
$ 7,744,589
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
WATER AND SEWER - 1.2%
NR NR $1,500 Moulton City, Alabama
Water, 6.30%, 1/1/18 $ 1,382,775
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$115,875,675) $116,238,231
============
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) At February 28, 1995, the market value of securities segregated to cover
margin requirements for open financial futures contracts amounted to
$10,025,650.
</TABLE>
The Portfolio invests primarily in debt securities issued by Alabama
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 February 28, 1995, 57.3% 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 6.8% to 25.0% of total investments.
See notes to financial statements
43
<PAGE> 44
<TABLE>
- --------------------------------------------------------------------------------
Arkansas Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 3.1%
A NR $1,750 University of Arkansas
Board of Trustees, 7.20%,
12/1/10 $ 1,892,153
A NR 610 Arkansas State Student Loan
Authority, (AMT), 7.25%,
6/1/09 656,098
-----------
$ 2,548,250
-----------
ELECTRIC UTILITIES - 12.6%
A NR $1,750 Conway City, Arkansas
Electric, 5.70%, 8/1/09 $ 1,727,915
NR BBB 800 Guam Power Authority,
6.30%, 10/1/12 787,448
NR BBB 500 Guam Power Authority,
6.30%, 10/1/22 484,115
NR BBB 1,250 Guam Power Authority,
5.25%, 10/1/13 1,069,638
NR BBB 1,250 Guam Power Authority,
5.25%, 10/1/23 1,019,225
Baa2 BBB 1,500 Independence County,
Arkansas PCR (AR P & L),
6.25%, 1/1/21 1,462,335
Baa2 BBB- 1,000 Jefferson County, Arkansas
PCR (AR P & L), 6.125%,
10/1/07 999,940
Baa2 BBB 550 Jefferson County, Arkansas
PCR (AR P & L), 6.30%,
6/1/18 542,669
Baa2 BBB 500 Pope County, Arkansas PCR
(AR P & L), 6.30%, 12/1/16 489,520
Baa1 A- 500 Puerto Rico Electric Power
Authority, 0%, 7/1/17 122,570
Baa1 A- 870 Puerto Rico Electric Power
Authority, 5.00%, 7/1/12 764,225
Baa1 A- 1,000 Puerto Rico Electric Power
Authority, 6.00%, 7/1/16 978,720
-----------
$10,448,319
-----------
ESCROWED - 3.2%
Aaa AAA $ 500 Arkansas DFA Wastewater
System (MBIA), 7.00%,
6/1/14 $ 553,780
Aa AAA 650 Arkansas State Waste
Disposal and Pollution
Abatement U.T.G.O., 6.25%,
7/1/22 689,007
Aaa AAA 500 Harrison, Arkansas Single
Family Mortgage, 7.40%,
9/1/11 555,885
Baa1 A 750 Puerto Rico Public
Buildings Authority 6.875%,
7/1/21 843,053
-----------
$ 2,641,724
-----------
GENERAL OBLIGATIONS - 7.5%
Aa AA $ 750 Arkansas State College
Savings, 0%, 6/1/13 $ 256,133
Aa AA 2,750 Arkansas State College
Savings, 0%, 6/1/14 877,168
Baa1 A 1,000 Puerto Rico Public
Improvement, 5.25%, 7/1/18 876,890
Baa1 A 2,000 Puerto Rico Commonwealth
U.T.G.O., 5.50%, 7/1/13 1,866,440
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa1 A 2,000 Puerto Rico Public
Buildings Authority, 5.50%,
7/1/21 1,809,700
Baa1 A 500 Puerto Rico Public
Buildings Authority, 5.75%,
7/1/15 474,705
-----------
$ 6,161,035
-----------
HEALTH CARE - 0.6%
Aaa AAA $ 500 Saline County, Arkansas
Retirement Housing and
Healthcare, 6.00%, 6/1/18 $ 503,745
-----------
HOSPITALS - 14.9%
Aa AA $3,000 Arkansas DFA (Sisters of
Mercy), 5.00%, 6/1/19 $ 2,534,730
Baa NR 700 Baxter County, Arkansas
Hospital Improvement,
7.25%, 9/1/07 723,219
Baa NR 750 Baxter County, Arkansas
Hospital Improvement,
7.50%, 9/1/21 783,045
NR A+ 1,125 Little Rock City, Arkansas
(Baptist Medical Center),
6.80%, 11/1/05 1,206,866
NR A+ 750 Little Rock City, Arkansas
(Baptist Medical Center),
5.25%, 9/1/10 664,688
NR A+ 2,250 Little Rock City, Arkansas
(Baptist Medical Center),
5.50%, 9/1/15 (2) 2,004,165
NR A 1,000 Little Rock City, Arkansas
(Baptist Medical
Center-Parkway Village),
7.00%, 10/1/17 1,045,270
NR A- 2,250 Pulaski County, Arkansas
(Children's Hospital),
6.20%, 3/1/22 2,150,843
A1 AA 1,250 Sebastian County, Arkansas
(Sparks Regional Medical
Center), 5.60%, 4/1/06 1,230,725
-----------
$12,343,550
-----------
HOUSING - 10.7%
NR AAA $2,800 Arkansas DFA, SFMR (GNMA)
(AMT), 5.80%, 6/1/25 $ 2,579,752
NR AAA 740 Arkansas DFA, SFMR (GNMA)
(AMT), 7.85%, 12/1/21 785,369
NR AAA 1,250 Arkansas DFA, SFMR
(GNMA/FNMA) (AMT), 6.35%,
7/1/22 1,232,313
NR AAA 1,000 Arkansas DFA, SFMR
(GNMA/FNMA), 6.60%, 7/1/17 1,023,590
NR AAA 1,500 Arkansas DFA, SFMR
(GNMA/FNMA) (AMT), 6.80%,
1/1/22 1,534,995
NR AAA 740 Arkansas DFA, SFMR
(GNMA/FNMA), (AMT), 6.70%,
7/1/27 (3) 739,904
</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>
HOUSING - (CONTINUED)
A NR 3,000 Arkansas DFA Compound
Accretion, 0%, 12/1/11 941,010
-----------
$ 8,836,933
-----------
INDUSTRIAL DEVELOPMENT
REVENUE/POLLUTION CONTROL
REVENUE - 8.6%
Baa2 BBB $2,000 Baxter County, Arkansas
(Aeroquip Corporation),
5.80%, 10/1/13 (2)(4) $ 1,832,060
A1 AA- 2,500 Blythesville City, Arkansas
(Nucor Corporation), (AMT),
6.90%, 12/1/21 2,586,300
A3 A- 755 Gurdon, Arkansas
(International Paper),
5.75%, 2/1/08 719,923
A1 AA- 1,000 Jonesboro City, Arkansas
(Anheuser-Busch), 6.50%,
11/15/12 1,041,440
A3 A- 550 Pine Bluff City, Arkansas
(International Paper),
5.55%, 10/1/17 489,753
Aaa NR 500 Puerto Rico IME (American
Home Products), 5.10%,
12/1/18 431,510
-----------
$ 7,100,986
-----------
INSURED ELECTRIC UTILITIES - 7.2%
Aaa AAA $ 500 Independence County,
Arkansas PCR (AR P & L)
(FSA), 6.25%, 1/1/21 $ 509,455
Aaa AAA 250 North Little Rock City,
Arkansas Electric System
(MBIA), 6.50%, 7/1/10 265,220
Aaa AAA 3,390 North Little Rock City,
Arkansas Electric System
(MBIA), 6.50%, 7/1/15 (2) 3,611,909
Aaa AAA 450 Puerto Rico Electric Power
Authority (STRIPES) (FSA),
Variable, 7/1/03 (1) 463,500
1,000 West Memphis, Arkansas
Public Utilities (MBIA),
6.60%, 1/1/09 1,058,030
-----------
$ 5,908,114
-----------
INSURED GENERAL OBLIGATION - 6.7%
Aaa AAA $1,610 Jonesboro, Arkansas School
District (AMBAC), 6.125%,
2/1/15 $ 1,616,955
Aaa AAA 3,000 Springdale, Arkansas School
District (AMBAC), 5.125%,
6/1/16 2,686,890
Aaa AAA 680 White Hall, Arkansas School
District (AMBAC), 4.75%,
4/1/12 604,615
Aaa AAA 710 White Hall, Arkansas School
District (AMBAC), 4.75%,
4/1/13 628,641
-----------
$ 5,537,102
-----------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED TRANSPORTATION - 0.6%
Aaa AAA $ 500 Little Rock, Arkansas
Airport (MBIA), 6.00%,
11/1/14 $ 500,560
-----------
INSURED WATER & SEWER - 6.5%
Aaa AAA $1,670 Arkansas DFA Wastewater
System (MBIA), 5.40%,
12/1/15 $ 1,557,475
Aaa AAA 1,680 Arkansas DFA Wastewater
System (MBIA), 5.00%,
12/1/08 1,562,820
Aaa AAA 2,000 Arkansas DFA Wastewater
System (MBIA), 5.00%,
6/1/15 1,773,680
Aaa AAA 500 Jonesboro City, Arkansas
Water and Light (AMBAC),
5.25%, 12/1/13 466,080
-----------
$ 5,360,055
-----------
LEASE REVENUE/COP - 0.3%
NR A $ 250 Arkansas DFA (Capital Asset
Financing Program), 7.10%,
3/1/08 $ 267,943
-----------
MISCELLANEOUS - 2.8%
A NR $2,000 Little Rock City, Arkansas
Hotel and Restaurant Gross
Receipts Tax, 7.375%,
8/1/15 $ 2,315,740
-----------
SPECIAL TAX REVENUE - 0.9%
NR NR $ 750 Virgin Islands PFA General
Obligation/Matching, 7.25%,
10/1/18 $ 774,465
-----------
TRANSPORTATION - 6.9%
NR BBB $ 300 Guam Airport Authority,
6.50%, 10/1/23 $ 297,288
Baa1 A 3,500 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/22 2,937,970
Baa3 BB+ 2,740 Puerto Rico Port Authority
(American Airlines), 6.30%,
6/1/23 2,504,881
-----------
$ 5,740,139
-----------
WATER & SEWER REVENUE - 6.9%
A A- $ 300 Beaver, Arkansas Water
District, 5.85%, 11/15/08 $ 306,195
NR NR 800 Conway City, Arkansas
Water, 5.40%, 5/1/11 753,880
NR NR 1,250 Cross County, Arkansas
Rural Water, 5.75%, 4/1/18 1,220,013
A1 NR 2,000 Little Rock City, Arkansas
Sewer, 5.50%, 8/1/14 1,868,760
</TABLE>
45
<PAGE> 46
<TABLE>
- --------------------------------------------------------------------------------
ARKANSAS 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>
WATER & SEWER REVENUE -
(CONTINUED)
NR NR 1,500 South Sebastian County
Water, 6.15%, 6/1/23 1,510,215
-----------
$ 5,659,063
-----------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$83,558,685) $82,647,722
===========
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) At February 28, 1995, the market value of securities segregated to cover
margin requirements for open financial futures contracts amounted to
$6,703,134.
(3) When-issued security.
(4) At February 28, 1995, the market value of securities segregated to cover
open when issued securities amounted to $1,745,000.
</TABLE>
The Portfolio invests primarily in debt securities issued by Arkansas
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 February 28, 1995, 20.9% 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 0.7% to 13.2% of total investments.
See notes to financial statements
46
<PAGE> 47
<TABLE>
- --------------------------------------------------------------------------------
Georgia Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 5.8%
Aa AA- $ 310 Private Colleges and
Universities Authority,
Emory University, 6.40%,
10/1/23 $ 316,646
Aa1 AA- 3,000 Dekalb County Georgia,
Emory University, 6.00%,
10/1/14 2,972,580
Aa AA- 3,425 Private Colleges and
Universities Authority,
Agnes Scott College,
5.625%, 6/1/23 3,215,561
NR BBB- 1,000 Puerto Rico Industrial,
Tourist, Educational,
Medical and Environmental
Control Facilities
Authority, Polytechnic
University, 5.50%, 8/1/24 833,320
------------
$ 7,338,108
------------
ESCROWED - 3.2%
Aaa AAA $ 250 Cherokee County, Georgia,
Water and Sewer, (MBIA),
6.90%, 8/1/18 $ 275,425
Aa1 AA 1,480 Gwinnett County, Georgia,
Water and Sewerage, 6.50%,
8/1/06 1,501,208
A A+ 1,500 Municipal Electric
Authority of Georgia,
8.375%, 1/1/16 1,642,845
NR AAA 530 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/18 587,722
------------
$ 4,007,201
------------
GENERAL
OBLIGATIONS - 14.3%
A1 AA- $ 300 Alpaharetta, Georgia,
6.50%, 5/1/10 $ 319,077
Aa AA 3,350 Atlanta, Georgia, 6.10%,
12/1/19 3,355,159
Aa AA 3,000 Atlanta, Georgia, 6.125%,
12/1/23 2,997,630
Aa AA 3,000 Atlanta, Georgia, 6.25%,
10/1/12 3,045,090
Aa AA 1,650 Atlanta, Georgia, 6.25%,
10/1/16 1,668,827
A1 NR 150 Cherokee County School
District, 6.375%, 6/1/07 156,737
Aa AA- 250 Clayton County, Georgia,
Solid Waste, 6.50%, 2/1/12 259,900
Aa AA 1,000 Chatham, Georgia, 5.00%,
1/1/11 899,620
Aa AA 1,000 Fulton County School
District, 5.60%, 1/1/13 964,960
Aaa AA+ 500 Georgia, 6.30%, 3/1/08 (2) 532,930
A1 A+ 2,430 Marietta, Georgia, 5.70%,
1/1/11 2,341,548
A A 450 Paulding County School
District, 6.625%, 2/1/08 480,402
Baa1 A 1,000 Puerto Rico, 5.75%,
07/1/15 949,410
------------
$ 17,971,289
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOSPITALS - 7.7%
Baa1 NR $4,250 Fulco Hospital, Georgia
Baptist, 6.375%, 9/1/22 $ 3,692,273
A NR 5,040 Savannah, Georgia, St.
Josephs Hospital, 6.20%,
7/1/23 4,757,962
NR BBB 1,285 Toombs County, Dr. John M.
Meadows Memorial Hospital,
7.00%, 12/1/17 1,215,186
------------
$ 9,665,420
------------
HOUSING - 7.9%
Aa NR $1,450 Georgia HFA, (AMT),
6.875%, 12/1/20 $ 1,479,044
Aa AA+ 395 Georgia HFA, (FHA), 7.50%,
6/1/17 420,138
Aa AA 2,500 Georgia HFA, (FHA Insured
or VA Guaranteed), (AMT),
6.70%, 12/1/25 2,544,025
Aa AA+ 1,500 Georgia HFA, (AMT), 7.05%,
12/1/20 1,578,120
Aa AA+ 2,380 Georgia HFA, (AMT),
7.125%, 12/1/26 2,494,478
Baa BBB 1,490 Puerto Rico HFA, 5.10%,
12/1/03 1,372,081
------------
$ 9,887,886
------------
INDUSTRIAL DEVELOPMENT
AUTHORITY - 6.7%
A2 A $2,000 Burke County PCR, Georgia
Power Company, Vogtle
Project, 6.375%, 8/1/24 $ 1,988,000
A1 AA- 1,000 Cartersville, Georgia,
Anheuser-Busch, (AMT),
7.375%, 5/1/09 1,128,740
A2 NR 1,000 Puerto Rico IME, American
Home, 5.10%, 12/1/18 863,020
A1 A- 750 Savannah Union Camp
Corporation, 6.80%, 2/1/12 779,843
NR NR 1,250 Savannah Economic
Developement (AMT), 9.00%,
1/1/15 1,296,963
NR AA- 500 Savannah, IDB, Hershey
Foods, 6.60%, 6/1/12 517,030
NR AA- 2,000 Vienna, Cargill Project,
6.00%, 9/1/14 1,903,060
------------
$ 8,476,655
------------
INSURED GENERAL
OBLIGATIONS
(EDUCATION) - 3.3%
Aaa AAA $2,990 Houston County School
District, (MBIA), 5.375%,
3/1/11 $ 2,779,235
Aaa AAA 1,350 Jackson County School
District, (MBIA), 6.00%,
7/1/14 1,345,275
------------
$ 4,124,510
------------
</TABLE>
47
<PAGE> 48
<TABLE>
- --------------------------------------------------------------------------------
GEORGIA 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
OBLIGATIONS - 0.4%
Aaa AAA $ 500 Puerto Rico, Public
Improvement Bonds of 1992,
(AMBAC), Variable, 7/1/15
(1) $ 476,870
------------
INSURED HOSPITALS - 22.0%
Aaa AAA $6,500 Albany-Dougherty County,
Phoebe Putney Hospital,
(AMBAC), Variable, 9/1/13
(1) $ 6,286,540
Aaa AAA 675 Chatham County, Memorial
Medical Center, (MBIA),
7.00%, 1/1/21 714,818
Aaa AAA 305 Chatham County, Memorial
Medical Center, (MBIA),
6.85%, 1/1/21 322,315
Aaa AAA 1,300 Cobb County, Kennestone
Hospital, (MBIA), 5.00%,
4/1/24 1,103,284
Aaa AAA 4,000 Fulton County, Northside
Hospital, (MBIA), 5.375%,
10/1/12 3,669,640
Aaa AAA 4,500 Fulton-Dekalb Hospital,
(MBIA), 5.50%, 1/1/12 4,218,075
Aaa AAA 3,000 Gwinnett County, Gwinnett
Hospital, (AMBAC), 5.00%,
9/1/13 2,640,150
Aaa AAA 1,500 Gwinnett County, Gwinnett
Hospital, (AMBAC), 5.00%,
9/1/19 1,276,425
Aaa AAA 2,500 Macon-Bibb County Hospital
Authority, The Medical
Center of Central Georgia,
(FGIC), 5.00%, 8/1/14 2,210,300
Aaa AAA 2,000 Medical Center Hospital
Authority, Columbus
Regional Healthcare
System, (MBIA), 6.40%,
8/1/06 2,145,780
Aaa AAA 1,500 Medical Center Hospital
Authority, Columbus
Regional Healthcare
System, (MBIA), Variable,
8/1/10 (1) 1,604,505
Aaa AAA 1,375 Walker, Dade and Catoosa
Counties Hospital, (FGIC),
7.00%, 10/1/10 1,481,288
------------
$ 27,673,120
------------
INSURED HOUSING - 2.3%
Aaa AAA $1,000 East Point Building
Authority, (FGIC), 6.00%,
2/1/10 $ 1,003,890
Aaa AAA 2,000 Lagrange Housing
Authority, (FSA), 5.95%,
1/1/25 1,901,000
------------
$ 2,904,890
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED SPECIAL TAX - 3.8%
Aaa AAA $3,000 Metropolitan Atlanta Rapid
Transit Authority,
(AMBAC), 5.125%, 7/1/19 $ 2,673,150
Aaa AAA 1,000 Metropolitan Atlanta Rapid
Transit Authority,
(AMBAC), 6.25%, 7/1/11 1,040,510
Aaa AAA 1,000 Metropolitan Atlanta Rapid
Transit Authority,
(AMBAC), 6.25%, 7/1/20 1,030,900
------------
$ 4,744,560
------------
INSURED UTILITIES - 3.0%
Aaa AAA $1,480 Cordele Public Utility
Authority, (MBIA), 6.500%,
11/1/19 $ 1,522,476
Aaa AAA 750 Municipal Electric
Authority of Georgia,
(BIGI), 0%, 1/1/07 379,883
Aaa AAA 1,000 Municipal Electric
Authority of Georgia,
(FGIC), 5.00%, 1/1/12 935,350
Aaa AAA 900 Puerto Rico Electric Power
Authority, (FSA),
Variable, 7/1/03 (1) 927,000
------------
$ 3,764,709
------------
INSURED WATER & SEWER - 1.7%
Aaa AAA $1,975 Cherokee County, Water and
Sewerage, (MBIA), 6.875%,
8/1/13 $ 2,095,317
------------
LEASE/CERTIFICATES OF
PARTICIPATION - 0.9%
Aa AA $ 310 Fulton County, Lease
Revenue, 0%, 1/1/09 $ 135,870
Aa AA 2,300 Fulton County, Lease
Revenue, 0%, 1/1/10 942,839
------------
$ 1,078,709
------------
RESOURCE RECOVERY - 0.8%
A1 A+ $1,000 Savannah Energy Systems
Company Project, 6.30%,
12/1/06 $ 1,030,320
------------
SPECIAL TAX REVENUE - 1.1%
NR NR $1,400 Virgin Islands Special Tax
Revenue, 7.25%, 10/1/18 $ 1,445,668
------------
TRANSPORTATION - 1.9%
Baa1 A $ 500 Puerto Rico Commonwealth
Highway, 5.50%, 7/1/17 $ 458,510
Baa1 A 500 Puerto Rico Commonwealth
Highway, 5.00%, 7/1/22 419,710
Ba1 BB 1,500 Atlanta, Delta Airlines,
Inc., (AMT), 7.90%,
12/1/18 1,542,930
------------
$ 2,421,150
------------
UTILITIES - 9.2%
A A+ $2,000 Georgia Electric Power
Authority, 8.25%, 1/1/11 $ 2,416,060
</TABLE>
48
<PAGE> 49
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - (CONTINUED)
A A+ 1,000 Georgia Power Authority,
0%, 1/1/12 342,730
A AA- 1,500 Georgia Power Authority,
Variable, 1/1/23 (1) 1,221,915
A2 NR 1,000 Monroe County, PCR, Gulf
Power Company, 6.30%,
9/1/24 980,300
A3 A+ 2,000 Monroe County, PCR,
Ogelethorpe Power, 6.70%,
1/1/09 2,084,100
A3 A+ 4,000 Monroe County, PCR,
Ogelthorpe Power, 6.55%,
1/1/06 4,159,840
Baa1 A- 665 Puerto Rico Electrical
Power Authority, 0%,
7/1/17 163,018
Baa1 A- 250 Puerto Rico Electrical
Power Authority, 7.00%,
7/1/07 262,940
------------
$ 11,630,903
------------
WATER & SEWER REVENUE - 4.0%
A NR $ 150 Augusta, Water and Sewer
Authority, 6.50%, 5/1/11 $ 155,207
Aa AA 1,365 Dekalb County, Water and
Sewer Authority, 5.25%,
10/1/23 1,220,720
A NR 3,545 Henry County, Water and
Sewer Authority, 5.75%,
2/1/11 3,458,289
A NR 200 Richmond County, Water and
Sewer Authority, 6.50%,
10/1/21 204,062
------------
$ 5,038,277
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST
$126,921,951) $125,775,560
============
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) At February 28, 1995, the market value of securities segregated to cover
margin requirements for open financial futures contracts amounted to
$532,930.
</TABLE>
The Portfolio invests primarily in debt securities issued by Georgia
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 February 28, 1995, 36.4% 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 4.5% to 17.3% of total investments.
See notes to financial statements
49
<PAGE> 50
<TABLE>
- --------------------------------------------------------------------------------
Kentucky Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 6.5%
Aa1 NR $2,460 Berea City Educational
Development, 5.45%, 3/1/14 $ 2,284,208
A1 AA- 500 University of Kentucky
Consolidated Educational
Buildings, 6.40%, 5/1/09 520,130
A1 AA- 785 University of Kentucky
Consolidated Educational
Buildings, 6.40%, 5/1/11 811,211
A1 AA- 1,295 University of Louisville
Consolidated Educational
Buildings, 5.875%, 5/1/11 1,275,653
A1 AA- 1,500 University of Louisville
Consolidated Educational
Buildings, 5.40%, 5/1/08 1,443,870
A1 AA- 2,000 University of Louisville
Consolidated Educational
Buildings, 5.40%, 5/1/11 1,876,800
A A 1,000 University of Puerto Rico,
6.50%, 6/1/13 1,013,500
------------
$ 9,225,372
------------
ELECTRIC UTILITIES - 7.0%
Aa2 AA- $2,000 Carroll County PCR (KY
Utilities Company), 6.25%,
2/1/18 $ 2,012,040
NR BBB 430 Guam Power Authority,
6.30%, 10/1/22 416,339
NR BBB 400 Guam Power Authority,
5.25%, 10/1/23 326,152
Aa2 AA 1,000 Jefferson County PCR
(Louisville G& E Company),
5.625%, 8/15/19 940,010
Aa2 AA- 1,000 Muhlenburg County PCR (KY
Utilities Company), 6.25%,
2/1/18 1,002,620
NR A 2,315 Nicholasville City
Utilities 5.10%, 10/1/12 2,044,677
Baa1 A- 3,500 Puerto Rico Electric Power
Authority, 0%, 7/1/17 857,990
Baa1 A- 2,250 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 2,275,943
------------
$ 9,875,771
------------
ESCROWED - 0.4%
Aaa NR $ 510 Lexington-Fayette County
Government Public
Facilities, 6.40%, 4/1/12 $ 552,876
------------
GENERAL OBLIGATION- 2.5%
NR A- $1,030 KY League of Cities
Funding Trust Floating
Indebtedness Certificates
of Participation, 6.15%,
8/1/13 $ 1,013,221
NR A- 1,415 KY League of Cities
Funding Trust Floating
Indebtedness Certificates
of Participation, 5.90%,
8/1/16 1,333,057
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa1 A 1,255 Puerto Rico Public
Building Authority, 5.50%,
7/1/21 1,135,587
------------
$ 3,481,865
------------
HOSPITALS - 0.9%
NR A- $ 190 KY DFA St. Claire Medical
Center, 7.125%, 9/1/21 $ 210,416
Baa BBB- 975 Russell City Franciscan
Sisters of the Poor Health
System (Our Lay of
Bellefonte Hospital),
8.10%, 7/1/15 1,074,762
------------
$ 1,285,178
------------
HOUSING - 1.7%
NR AAA $1,510 Boone County Multi-Family
(Walnut Creek Apartments)
(FHA), 7.00%, 1/1/27 $ 1,550,695
Aa1 AAA 860 KY Housing (FHA) (AMT),
7.45%, 1/1/23 905,528
------------
$ 2,456,223
------------
INDUSTRIAL DEVELOPMENT
REVENUE/POLLUTION CONTROL
REVENUE - 7.7%
Baa1 BBB $ 855 Ashland Solid Waste
(Ashland Oil) (AMT),
7.20%, 10/1/20 $ 888,097
Baa1 NR 2,000 Ashland Solid Waste
(Ashland Oil) (AMT),
7.125%, 2/1/22 2,016,540
NR NR 3,075 Fulton County (H.I.S.-Chic
Jeans), (AMT), 7.50%,
2/1/10 3,052,891
Aa2 AA 1,000 Jefferson County (E.I. du
Pont de Nemours), 6.30%,
7/1/12 1,027,470
NR BBB 1,075 Johnson County (KMART
Corporation), 6.45%,
7/1/08 1,021,508
NR BBB 985 Owensboro City (KMART
Corporation), 6.80%,
12/1/07 965,999
NR BBB 915 Powderly City (KMART
Corporaton), 6.90%, 3/1/07 905,447
A2 NR 500 Puerto Rico IME (American
Home), 5.10%, 12/1/18 431,510
Ba2 NR 500 Winchester City (Kroger
Corporation), 6.90%,
7/1/99 517,980
------------
$ 10,827,442
------------
INSURED EDUCATION - 0.5%
Aaa AAA $ 700 Northern KY University
Educational Buildings
(AMBAC), 6.25%, 5/1/12 $ 720,314
------------
INSURED ELECTRIC UTILITIES - 2.6%
Aaa AAA $4,000 Boone County
Collateralized PCR (MBIA),
5.50%, 1/1/24 $ 3,605,960
------------
INSURED GENERAL OBLIGATION - 3.3%
Aaa AAA $1,000 Jefferson County School
District U.T.G.O. (MBIA),
4.875%, 1/1/13 $ 855,320
Aaa AAA 2,000 Puerto Rico U.T.G.O.
(AMBAC), 5.85%, 7/1/15 1,955,660
</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 GENERAL
OBLIGATION - (CONTINUED)
Aaa AAA 1,800 Puerto Rico U.T.G.O.
(FSA), 6.00%, 7/1/22 1,790,226
------------
$ 4,601,206
------------
INSURED HOSPITAL - 15.9%
Aaa AAA $1,000 Boyle County Hospital
(FGIC), 5.80%, 4/1/14 $ 959,880
Aaa AAA 2,500 Daviess County Hospital
(ODCH Inc.) (MBIA), 6.25%,
8/1/22 2,508,600
Aaa AAA 750 Daviess County Hospital
(Mercy Health) (MBIA),
5.875%, 1/1/15 726,480
Aaa AAA 2,000 Hopkins County Hospital
(Trover Clinic Foundation)
(MBIA), 6.625%, 11/15/11 2,090,340
Aaa AAA 2,500 Jefferson County Jewish
Hospital (AMBAC), 6.50%,
5/1/15 2,553,250
Aaa AAA 1,750 Jefferson County Jewish
Hospital (AMBAC), 6.55%,
5/1/22 1,787,188
Aaa AAA 4,000 KY EDA St. Luke's Hospital
(MBIA), 7.00%, 10/1/21 4,223,560
Aaa AAA 9,000 KY EDA Baptist Healthcare
(MBIA), 5.00%, 8/15/24 (1) 7,493,670
------------
$ 22,342,968
------------
INSURED LEASE/COP - 1.7%
Aaa AAA $2,000 Danville City Multi-City
Lease (MBIA), 5.875%,
9/1/10 $ 2,000,780
Aaa AAA 400 Lexington-Fayette County
Government Public
Facilities (FSA), 4.50%,
2/1/10 344,256
------------
$ 2,345,036
------------
INSURED TRANSPORTATION - 9.1%
Aaa AAA $1,000 Kenton County Airport
(Cincinnati/Northern KY)
(FSA) (AMT), 6.30%, 3/1/15 $ 999,980
Aaa AAA 4,500 Kenton County Airport
(Cincinnati/Northern KY)
(FSA), 5.75%, 3/1/15 4,196,655
Aaa AAA 1,000 KY EDA Turnpike
(Revitalization Project)
(FGIC), 0%, 1/1/10 411,120
Aaa AAA 3,400 KY EDA Turnpike
(Revitalization Project)
(AMBAC), 5.50%, 7/1/11 3,227,722
Aaa AAA 1,170 Louisville and Jefferson
County Kyregl Airport
(MBIA), 5.30%, 7/1/23 1,030,185
Aaa AAA 3,250 Louisville and Jefferson
County Kyregl Airport
(MBIA) (AMT), 5.50%,
7/1/23 2,908,230
------------
$ 12,773,892
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED WATER & SEWER - 8.3%
Aaa AAA $ 800 Kenton County Water
District (FGIC), 6.375%,
2/1/17 $ 824,416
Aaa AAA 2,000 Kenton County Water
District (FGIC), 6.00%,
2/1/17 1,964,020
Aaa AAA 500 Lexington-Fayette County
Government Sewer (MBIA),
6.375%, 7/1/12 520,125
Aaa AAA 1,000 Louisville and Jefferson
County Sewer District
(MBIA), 5.25%, 5/15/14 904,550
Aaa AAA 2,840 Louisville and Jefferson
County Sewer District
(MBIA), 5.40%, 5/15/19 2,556,937
Aaa AAA 2,000 Louisville and Jefferson
County Sewer District
(MBIA), 5.50%, 5/15/21 1,819,620
Aaa AAA 1,000 Louisville and Jefferson
County Sewer District
(AMBAC), 6.75%, 5/15/19 1,057,930
Aaa AAA 2,000 Louisville and Jefferson
County Sewer District
(AMBAC), 6.75%, 5/15/25 2,107,280
------------
$ 11,754,878
------------
LEASE REVENUE BONDS - 21.7%
NR A $1,300 Boone County School
District Finance, 6.75%,
9/1/11 $ 1,376,843
A NR 2,250 Boone County School
District Finance, 6.125%,
12/1/17 2,245,613
A NR 1,000 Boone County School
District Finance, 6.00%,
2/1/18 982,830
A NR 3,000 Boone County School
District Finance, 5.70%,
5/1/18 2,771,670
A NR 1,670 Campbell County School
District Finance, 5.10%,
2/1/12 1,479,169
A NR 700 Campbell County School
District Finance, 4.80%,
2/1/11 595,448
A NR 1,790 Campbell County School
District Finance, 4.875%,
2/1/14 1,493,039
A NR 820 Covington County
Independent School
District Finance, 5.20%,
6/1/13 740,214
A1 A+ 500 Jefferson County School
District Finance, 5.875%,
1/1/11 485,185
A1 A+ 905 Jefferson County School
District Finance, 4.875%,
1/1/11 790,934
A1 A+ 1,250 Jefferson County School
District Finance, 4.875%,
1/1/12 1,080,775
A1 A 4,990 Jefferson County Capital
Projects Corporation
Lease, 0%, 8/15/15 1,313,018
A NR 260 Johnson County School
District Finance, 5.00%,
6/1/11 230,766
</TABLE>
51
<PAGE> 52
<TABLE>
- --------------------------------------------------------------------------------
KENTUCKY 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 REVENUE BONDS - (CONTINUED)
A NR 300 Johnson County School
District Finance, 5.00%,
6/1/13 262,464
NR A 1,440 KY Infrastructure
Authority Governmental
Agencies Program, 5.75%,
8/1/18 1,335,341
A A+ 2,860 KY State Property and
Buildings, 5.00%, 9/1/13 2,454,508
A A+ 2,500 KY State Property and
Buildings, 6.00%, 9/1/14 2,454,925
A A- 1,000 Louisville City Public
Properties Corporation,
6.80%, 12/1/22 1,045,120
Aa NR 2,000 Mount Sterling City League
of Cities Trust Lease
Program, 6.15%, 3/1/13 1,940,780
Aa NR 4,500 Mount Sterling City League
of Cities Trust Lease
Program, 6.20%, 3/1/18 (1) 4,350,375
A NR 615 Pulaski County School
District Finance, 5.75%,
2/1/10 596,421
A NR 595 Pulaski County School
District Finance, 5.80%,
2/1/11 579,310
------------
$ 30,604,746
------------
SPECIAL TAX REVENUE - 0.3%
NR NR $ 500 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 $ 516,310
------------
TRANSPORTATION - 8.3%
NR BBB $1,000 Guam Airport Authority
(AMT), 6.70%, 10/1/23 $ 997,410
Ba1 BB 1,000 Kenton County Airport
(Delta Airlines) (AMT),
6.75%, 2/1/02 986,940
Ba1 BB 250 Kenton County Airport
(Delta Airlines) (AMT),
7.50%, 2/1/12 251,743
Ba1 BB 500 Kenton County Airport
(Delta Airlines) (AMT),
7.50%, 2/1/20 503,485
Ba1 BB 2,400 Kenton County Airport
(Delta Airlines) (AMT),
6.125%, 2/1/22 2,094,888
Baa1 A 750 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/22 629,565
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa1 A 5,655 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/18 5,826,516
Baa3 BB+ 500 Puerto Rico Ports
Authority (American
Airlines), (AMT), 6.30%,
6/1/23 457,095
------------
$ 11,747,642
------------
WATER & SEWER REVENUE - 1.6%
NR A $1,500 Cambell County Water
District, 6.60%, 12/1/11 $ 1,552,800
A NR 650 Hardin County Water
District, 6.50%, 9/1/12 673,439
------------
$ 2,226,239
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$143,176,194) $140,943,920
===============
<FN>
(1) At February 28, 1995, the market value of securities segregated to cover
margin requirements for open financial futures contracts amounted to
$11,844,045.
</TABLE>
The Portfolio invests primarily in debt securities issued by Kentucky
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 February 28, 1995, 41.3% of the securities in the portfolio of
investment are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 2.9% to 9.3% of total investments.
See notes to financial statements
52
<PAGE> 53
<TABLE>
- --------------------------------------------------------------------------------
Louisiana Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
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%
Aa NR $ 150 Louisiana PFA, Student Loan
Revenue Bonds, (AMT),
6.75%, 9/1/06 $ 154,008
Aa NR 100 Louisiana PFA, Student Loan
Revenue Bonds, (AMT),
6.75%, 9/1/06 104,431
NR BBB- 400 Puerto Rico ITEM&EC,
(Polytechnic University of
Puerto Rico), 5.70%, 8/1/13 354,932
NR BBB- 500 Puerto Rico ITEM&EC,
(Polytechnic University of
Puerto Rico), 5.50%, 8/1/24 416,660
-----------
$ 1,030,031
-----------
GENERAL OBLIGATION - 2.2%
NR BBB $ 250 Government of Guam, 5.375%,
11/15/13 $ 218,088
Baa A 500 Puerto Rico PBA, Public
Education and Health
Facilities, 5.75%, 7/1/15 474,705
-----------
$ 692,793
-----------
HEALTHCARE - 6.7%
NR AAA $2,000 Louisiana HFA, Mortgage
Revenue Bonds, (GNMA
Collateralized St. Joseph
Manor Retirement Center),
7.80%, 12/1/35 $ 2,153,640
-----------
HOUSING - 16.7%
Aa NR $1,000 East Baton Rouge Mortgage
Finance Authority SF,
7.00%, 4/1/32 $ 1,031,020
NR AAA 2,000 Parish of Jefferson, Home
Mortgage Authority (TEAMS),
7.35%, 12/1/16 2,196,100
Aaa NR 1,250 Louisiana HFA, Single
Family Mortgage Bonds,
8.00%, 3/1/25 1,347,175
A NR 350 Shreveport, Louisiana HFA,
Multifamily Mortgage Bonds
(U.S. Goodman Plaza-Section
8 Assisted), 6.10%, 8/1/19 335,843
NR AAA 500 Louisiana HFA, (Multifamily
Housing-Tall Timbers
Apartment), (FHA) (AMT),
5.90%, 12/1/18 474,890
-----------
$ 5,385,028
-----------
HOSPITALS - 3.3%
Aa AA $1,000 Louisiana Public Health
Facilities Bonds, (Sisters
of Mercy Health System),
5.00%, 6/1/19 (2) $ 826,540
NR A- 250 St. Tammany Parish Hospital
Service District No. 1,
Hospital Revenue Bonds,
6.50%, 7/1/22 233,400
-----------
$ 1,059,940
-----------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDUSTRIAL DEVELOPMENT
REVENUE - 0.5%
Baa1 A- $ 150 South Louisiana Port
Commission Terminal, (GATX
Terminals Corporation),
7.00%, 3/1/23 $ 151,067
-----------
INSURED COLLEGE &
UNIVERSITY - 7.5%
Aaa AAA $2,500 Louisiana State University
and Agricultural and
Mechanical College (FGIC),
5.75%, 7/1/14 $ 2,395,775
-----------
INSURED GENERAL OBLIGATION - 4.7%
Aaa AAA $ 150 City of Alexandria,
Utilities Bonds (FGIC),
6.00%, 5/1/06 $ 155,796
Aaa AAA 1,000 Parish of Jefferson,
Drainage Improvement
Refunding Bonds (FGIC),
5.00%, 8/1/10 905,000
Aaa AAA 500 St. Tammany Parishwide
School District No.12,
Louisiana GO Unlimited Tax
School Bonds (FGIC), 5.00%,
3/1/12 443,290
-----------
$ 1,504,086
-----------
INSURED GENERAL OBLIGATION
(LOCAL) - 1.2%
Aaa AAA $ 200 City of Kenner, Sales Tax
Refunding Bonds (FGIC),
5.75%, 6/1/11 $ 198,936
Aaa AAA 750 City of New Orleans,
(AMBAC), 0%, 9/1/18 174,368
-----------
$ 373,304
-----------
INSURED GENERAL OBLIGATION
(STATE) - 0.9%
Aaa AAA $ 300 State of Louisiana, (MBIA),
6.25%, 8/1/11 $ 291,384
-----------
INSURED GENERAL OBLIGATION
(TERRITORY) - 0.7%
Aaa AAA $ 250 Commonwealth of Puerto
Rico, Public Improvement
Bonds Residual Interest
Bonds (AMBAC), Variable,
7/1/15 (1) $ 238,435
-----------
INSURED HOSPITALS - 16.9%
Aaa AAA $ 500 Louisiana PFA Hospital
Revenue Bonds, (St. Francis
Medical Center) (FSA),
Variable, 7/1/18 (1) $ 334,190
Aaa AAA 500 Louisiana PFA Hospital
Revenue Bonds, (Women's
Hospital Foundation)
(FGIC), 5.75%, 10/1/09 484,175
Aaa AAA 100 Louisiana PFA Hospital
Revenue Bonds, (Our Lady of
the Lake Regional Medical
Center), Residual Interest
Bonds (MBIA), Variable,
12/1/24 (1) 101,534
</TABLE>
53
<PAGE> 54
<TABLE>
- --------------------------------------------------------------------------------
LOUISIANA 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 HOSPITALS - (CONTINUED)
Aaa AAA 1,275 Louisiana PFA Hospital
Revenue Bonds, (Mary Bird
Perkins Cancer Center)
(FSA), 6.20%, 1/1/19 1,276,976
Aaa AAA 1,750 Parish of Jefferson,
Hospital District No.1
(FGIC), 5.25%, 1/1/19 1,546,300
Aaa AAA 1,000 Parish of Jefferson,
Hospital District No. 1
(FGIC), 5.75%, 7/1/16 948,190
Aaa AAA 750 Parish of Tangipahoa,
Hospital District No. 1
(AMBAC), 6.25%, 2/1/24 750,525
-----------
$ 5,441,890
-----------
INSURED SPECIAL TAX - 19.3%
Aaa AAA $ 500 City of Lafayette, Public
Improvement Sales Tax
Refunding Bonds (FGIC),
5.00%, 3/1/15 $ 436,965
Aaa AAA 500 City of Lafayette, Public
Improvement Sales Tax
Refunding Bonds (FGIC),
5.00%, 3/1/16 435,380
Aaa AAA 1,000 City of Lafayette, Public
Improvement Sales Tax
Refunding Bonds (FGIC),
5.00%, 5/1/15 873,320
Aaa AAA 990 Parish of East Baton Rouge,
Public Improvement Sales
Tax Bonds (FGIC), 4.80%,
2/1/24 828,174
Aaa AAA 400 Parish of East Baton Rouge,
Public Improvement Sales
Tax Bonds (FGIC), 4.90%,
2/1/16 333,772
Aaa AAA 2,000 Lafayette Public Power
Authority, Electric Revenue
Bonds (AMBAC), 5.25%,
11/1/12 1,817,640
Aaa AAA 1,500 Louisiana Stadium and
Exposition District Hotel
Occupancy Tax Bonds (FGIC),
6.00%, 7/1/24 1,475,445
-----------
$ 6,200,696
-----------
INSURED WATER & SEWER - 5.3%
Aaa AAA $1,250 Parish of Livingston, Water
Works Revenue Bonds
(AMBAC), 5.70%, 4/1/19 $ 1,191,800
Aaa AAA 500 Terrebone Parish,
Louisiana, Water Works
Revenue Bonds (FGIC),
5.75%, 11/1/08 496,225
-----------
$ 1,688,025
-----------
TRANSPORTATION - 6.9%
A NR $ 450 Greater New Orleans
Expressway Commission
Refunding Revenue Bonds,
Series 1992, 6.00%, 11/1/16 $ 438,264
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
A A- 500 Mississippi River Bridge
Authority, Bridge Revenue
Bonds, State of Louisiana,
Series 1992, 6.75%, 11/1/12
(2) 520,430
Baa1 A 1,500 Puerto Rico Highway and
Transportation Authority,
Highway Revenue Refunding
Bonds, Series X, 5.00%,
7/1/22 1,259,130
-----------
$ 2,217,824
-----------
UTILITIES - 2.4%
Aa3 NR $ 150 Parish of DeSoto, Pollution
Control, Southwestern
Electric Power, Company
Project, 7.60%, 1/1/19 $ 165,384
Baa3 BBB- 150 Parish of Pointe Coupe,
Pollution Control Bonds,
Gulf States Utilities Co.,
6.70%, 3/1/13 147,083
Baa2 BBB+ 500 Parish of St. Charles,
Environmental Bonds,
Louisiana Power and Light
Company (AMT), 6.20%,
5/1/23 466,085
-----------
$ 778,552
-----------
WATER & SEWER - 1.6%
NR AA- $ 500 Louisiana PFA, Baton Rouge
Water Works Co. (AMT),
6.40%, 2/1/10 $ 511,175
-----------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST
$32,771,802) $32,113,645
===========
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) At February 28, 1995 the market value of securities segregated to cover
margin requirements for open financial futures contracts amounted to
$1,346,970.
</TABLE>
The Portfolio invests primarily in debt securities issued by Louisiana
municipalities. The ability of the issuer 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 February 28, 1995, 55.8% 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 4.2% to 34.3% of total investments.
See notes to financial statements.
54
<PAGE> 55
<TABLE>
- --------------------------------------------------------------------------------
Maryland Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 1.0%
Aa AA+ $1,000 University of MD Auxiliary
Facility and Tuition,
6.50%, 6/1/13 $ 1,030,620
A A 125 University of Puerto Rico,
6.50%, 6/1/13 126,688
------------
$ 1,157,308
------------
ELECTRIC UTILITY - 9.1%
A2 A $3,000 Calvert County PCR
(Baltimore Gas and
Electric Company), 5.55%,
7/15/14 $ 2,807,310
NR BBB 500 Guam Power Authority,
6.30%, 10/1/22 484,115
NR BBB 2,500 Guam Power Authority,
5.25%, 10/1/13 2,139,275
NR BBB 500 Guam Power Authority,
5.25%, 10/1/23 407,690
NR BBB 750 Guam Power Authority,
6.625%, 10/1/14 759,315
A1 A 1,000 Montgomery County PCR
(Potomac Electric),
5.375%, 2/15/24 878,720
A1 A+ 2,225 Prince George's County PCR
(Potomac Electric),
6.375%, 1/15/23 2,238,506
Baa1 A- 585 Puerto Rico Electric Power
Authority, 6.00%, 7/1/16 589,037
------------
$ 10,303,967
------------
ESCROWED - 5.2%
Aaa NR $1,125 Baltimore County SFMR
(Inner Harbor), 8.00%,
12/1/10 $ 1,313,989
Aaa AAA 500 MD Health and Higher
Education Facilities (MD
University Medical)
(FGIC), 6.50%, 7/1/21 537,350
NR AAA 1,000 Puerto Rico U.T.G.O.,
6.80%, 7/1/21 1,119,520
Aaa A 1,500 Puerto Rico Public
Buildings Authority,
6.875%, 7/1/21 1,686,105
NR AAA 1,000 University of MD System
Auxiliary Facility and
Tuition, 6.50%, 4/1/11 1,079,600
NR AAA 175 University of Maryland
System Auxiliary Facility
and Tuition, 6.50%, 4/1/12 192,024
------------
$ 5,928,588
------------
GENERAL OBLIGATION - 6.3%
Aa AA+ $1,000 Anne Arundel County,
5.30%, 4/15/16 $ 910,090
Aa AA- 1,500 Harford County U.T.G.O.,
4.90%, 12/1/10 1,356,030
Aa AA- 230 Prince George's County,
5.00%, 1/15/11 207,534
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa1 A 100 Puerto Rico Aqueduct and
Sewer Authority, 7.875%,
7/1/17 108,865
Baa1 A 1,150 Puerto Rico Aqueduct and
Sewer Authority, 7.00%,
7/1/19 1,189,411
Baa1 A 1,000 Puerto Rico U.T.G.O.,
6.50%, 7/1/23 1,023,200
Baa1 A 500 Puerto Rico Public
Buildings Authority,
5.75%, 7/1/15 474,705
Aa1 AA 250 Washington Suburban
Sanitary District
U.T.G.O., 6.40%, 1/1/15 257,778
Aa1 AA 500 Washington Suburban
Sanitary District
U.T.G.O., 6.20%, 6/1/11 510,860
Aa1 AA 600 Washington Suburban
Sanitary District
U.T.G.O., 5.00%, 6/1/10 541,134
Aa NR 500 Worcester County
Commissioners, 6.55%,
8/15/17 530,555
------------
$ 7,110,161
------------
HOSPITALS - 21.2%
NR NR $ 495 Berlin Hospital (Atlantic
General Hospital), 8.375%,
6/1/22 $ 514,706
A A 2,000 MD Health and Higher
Educational Facilities
(Good Samaritan Hospital),
5.75%, 7/1/19 1,845,180
A A- 1,500 MD Health and Higher
Educational Facilities
(Memorial Hospital),
6.50%, 7/1/17 1,510,215
A1 A 2,850 MD Health and Higher
Educational Facilities
(Suburban Hospital),
5.125%, 7/1/21 2,396,480
Baa NR 1,000 MD Health and Higher
Educational Facilities
(Union Hospital), 6.70%,
7/1/22 923,730
A A 1,200 MD Health and Higher
Educational Facilities
(Peninsula Regional
Medical Center) 5.00%,
7/1/23 960,396
Baa1 BBB 1,250 MD Health and Higher
Educational Facilities
(General Hospital), 5.50%,
7/1/25 990,563
A1 AA- 2,000 MD State Industrial
Development Finance (Holy
Cross Health System),
5.50%, 12/1/15 1,811,700
Baa NR 1,355 Prince George's County
(Greater SouthEast
Healthcare), 6.375%,
1/1/13 1,219,201
Baa NR 4,500 Prince George's County
(Greater SouthEast
Healthcare), 6.375%,
1/1/23 3,916,125
</TABLE>
55
<PAGE> 56
<TABLE>
- --------------------------------------------------------------------------------
MARYLAND 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 NR 1,000 Prince George's County
(Dimensions Health
Corporate), 5.375%, 7/1/14 856,540
A NR 8,750 Prince George's County
(Dimensions Health
Corporate), 5.30%, 7/1/24
(2) 7,081,288
------------
$ 24,026,122
------------
HOUSING - 6.5%
Aa NR $ 750 MD CDA Single Family,
6.80%, 4/1/24 $ 765,825
Aa NR 3,000 MD CDA Single Family,
6.75%, 4/1/26 3,044,160
Aa NR 1,810 MD CDA Multi Family (AMT),
6.70%, 5/15/27 1,845,802
Aa NR 250 MD CDA Single Family,
6.85%, 4/1/11 260,820
Aa NR 995 MD CDA Single Family
(AMT), 6.80%, 4/1/22 1,015,995
NR AAA 300 Prince George's County
Housing Mortgage
(Antoinette Gardens)
(FHA), 7.00%, 3/1/28 312,564
Aaa AAA 200 Puerto Rico Single Family
(Linked Bears and Bulls)
(GNMA), 6.60%, 8/1/14 204,010
------------
$ 7,449,175
------------
INDUSTRIAL DEVELOPMENT
REVENUE/POLLUTION CONTROL
REVENUE - 8.2%
A1 A $1,350 Allegany County (Westvaco
Corporation), 6.20%,
1/1/08 $ 1,372,910
NR NR 1,350 Baltimore County
(Bethlehem Steel
Corporation), 7.50%,
6/1/15 1,360,962
Baa1 BBB+ 1,000 Baltimore County (General
Motors), 5.35%, 4/1/08 926,270
Aa2 AA 2,000 Baltimore County Port
Facilities (Consolidated
Coal Sales Company),
6.50%, 12/1/10 2,076,960
Aa2 AA 2,000 Baltimore County Port
Facilities (Consolidated
Coal Sales Company),
6.50%, 10/1/11 2,073,100
NR AA- 1,425 Frederick County EDA
(Cargill, Incorporated),
6.30%, 11/1/09 1,471,398
------------
$ 9,281,600
------------
INSURED EDUCATION - 1.1%
Aaa AAA $1,200 Morgan State University
Academic and Auxiliary
Fees (MBIA), 6.10%, 7/1/20 $ 1,215,396
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED ELECTRIC UTILITIES - 0.2%
Aaa AAA $ 250 Puerto Rico EPA (STRIPES)
(FSA), Variable, 7/1/03
(1) $ 257,500
------------
INSURED GENERAL OBLIGATION - 0.9%
Aaa AAA $1,000 Puerto Rico U.T.G.O.
(AMBAC), 5.85%, 7/1/15 $ 977,830
------------
INSURED HOSPITAL - 16.9%
Aaa AAA $1,365 MD Health and Higher
Education Facilities
(Washington County
Hospital) (AMBAC), 6.375%,
7/1/22 $ 1,394,143
Aaa AAA 4,915 MD Health and Higher
Education Facilities (Anne
Arundel Medical) (AMBAC),
5.00%, 7/1/23 4,149,292
Aaa AAA 4,350 MD Health and Higher
Education Facilities
(Francis S. Key Medical)
(FGIC), 5.00%, 7/1/23 3,672,314
Aaa AAA 3,000 MD Health and Higher
Education Facilities (MD
University Medical)
(FGIC), 5.00%, 7/1/20 2,553,000
Aaa AAA 6,250 MD Health and Higher
Education Facilities
(Greater Baltimore
Medical) (FGIC), 5.00%,
7/1/19 5,369,688
Aaa AAA 500 MD Health and Higher
Education Facilities
(General Hospital) (MBIA),
6.20%, 7/1/24 501,150
Aaa AAA 1,500 MD State (Linked Savers
and Ribs) Bon Secours
Medical (FSA), 5.787%,
8/26/22 1,480,860
------------
$ 19,120,446
------------
INSURED HOUSING - 0.7%
Aaa AAA $ 235 MD CDA (AMBAC), 6.625%,
6/1/12 $ 239,926
Aaa AAA 500 Prince George County
Mortgage (New Keystone
Apartments) (MBIA), 6.80%,
7/1/25 509,880
------------
$ 749,806
------------
INSURED LEASE/CERTIFICATES
OF PARTICIPATION - 0.2%
Aaa AAA $ 800 Prince George County
(MBIA), 0%, 6/30/16 $ 219,984
------------
</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 TRANSPORTATION - 4.3%
Aaa AAA $1,000 MD State Airport
(Baltimore/Washington)
(FGIC), 6.25%, 7/1/14 $ 1,020,210
Aaa AAA 4,250 Washington Metropolitan
Area Transit Authority
(FGIC), 5.25%, 7/1/14 3,865,333
------------
$ 4,885,543
------------
INSURED WATER AND SEWER - 3.6%
Aaa AAA $2,000 Baltimore Wastewater
(MBIA), 5.65%, 7/1/20 $ 1,882,040
Aaa AAA 2,550 Baltimore Wastewater
(FGIC), 5.00%, 7/1/22 2,191,037
------------
$ 4,073,077
------------
MISCELLANEOUS - 0.8%
A NR $1,000 Baltimore County
Refunding, 5.375%, 7/1/18 $ 913,800
------------
SOLID WASTE - 5.1%
A NR $6,000 Northeast MD Waste
Disposal Authority (AMT),
6.30%, 7/1/16 (2) $ 5,774,940
------------
SPECIAL TAX REVENUE - 0.7%
NR NR $ 750 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 $ 774,465
------------
TRANSPORTATION - 6.7%
NR BBB $ 500 Guam Airport Authority
(AMT), 6.70%, 10/1/23 $ 498,705
Baa1 A 2,700 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/19 2,467,098
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/20 874,730
Baa1 A 1,225 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/17 1,123,350
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa1 A 1,500 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/21 1,309,110
Baa3 BB+ 1,500 Puerto Rico Port Authority
(American Airlines) (AMT),
6.30%, 6/1/23 1,371,285
------------
$ 7,644,278
------------
WATER AND SEWER - 1.3%
Aa AA $1,000 MD Water Quality Finance,
0%, 9/1/07 $ 496,990
Aa AA 1,000 MD Water Quality Finance,
6.55%, 9/1/14 1,045,320
------------
$ 1,542,310
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$115,223,998) $113,406,293
============
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) At February 28, 1995, the market value of securities segregated to cover
margin requirements for open financial futures contracts amounted to
$12,856,228.
</TABLE>
The Portfolio invests primarily in debt securities issued by Maryland
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
developments, at February 28, 1995, 27.8% of the securities in the portfolio
of investments are backed by bond insurance of various financial
institutions and financial guaranty agencies. The aggregate percentage by
financial institution ranged from 3.8% to 12.2% of total investments.
See notes to financial statements
57
<PAGE> 58
<TABLE>
- --------------------------------------------------------------------------------
Missouri Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
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 $2,750 Missouri Higher Education
Loan Authority, Student
Loan Revenue, (AMT), 5.45%,
2/15/09 $ 2,464,523
Aa AA+ 1,000 University of Missouri,
Systems Facilities, 5.50%,
11/1/23 926,760
-----------
$ 3,391,283
-----------
ESCROWED - 2.7%
Aaa AAA $ 240 Missouri Health & Education
Authority, St. Louis
Children's, 6.25%, 5/15/12 $ 258,185
Aaa AAA 410 Missouri Health & Education
Authority, St. Louis
Children's, 6.25%, 5/1/12 439,545
Aaa AAA 350 State of Missouri, Regional
Convention & Sports Complex
Authority, 6.80%, 8/15/11 387,846
Aaa AAA 425 Missouri Health & Education
Authority, Christian
Health, 6.875%, 2/15/21 469,519
Aaa AAA 250 St. Louis County, Regional
Convention & Sports Complex
Authority, 7.00%, 8/15/11 280,413
Aaa AAA 600 St. Louis County,
Pattonville School
District, 6.25%, 2/1/10 637,884
-----------
$ 2,473,392
-----------
GENERAL OBLIGATION - 5.1%
AI NR $ 750 City of St. Peters, 5.85%,
1/1/13 $ 749,100
Aa NR 850 Boone County, Columbia
School District, 5.70%,
3/1/13 825,800
Baa1 A 1,200 Puerto Rico, 5.00%, 7/1/21 999,324
Baa1 A 1,250 Puerto Rico, 5.75%, 7/1/15 1,186,763
Baa1 A 1,000 Puerto Rico, 5.50%, 7/1/21 904,850
-----------
$ 4,665,837
-----------
HEALTHCARE - 0.3%
Baa1 NR $ 300 Cass County, Fox Springs
Living Center, 7.375%,
10/1/22 $ 314,976
-----------
HOSPITALS - 9.9%
A NR $1,000 Boone County Hospital,
5.50%, 8/1/09 $ 915,190
Baa1 NR 2,000 Missouri Health & Education
Authority, Jefferson
Memorial Hospital, 6.00%,
8/15/23 1,649,160
Aa AA 1,000 Missouri Health & Education
Authority, Barnes Jewish
Christian Hospital, 5.10%,
5/15/09 907,630
Aa AA 2,000 Missouri Health & Education
Authority, Barnes Jewish
Christian Hospital, 5.25%,
5/15/14 1,802,820
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa AA 2,000 Missouri Health & Education
Authority, Barnes Jewish
Christian Hospital, 5.25%,
5/15/21 1,759,960
Aa AA 1,000 Missouri Health & Education
Authority, Sisters of Mercy
Hospital, 6.25%, 6/1/15 1,009,650
NR BBB+ 550 Moberly Industrial
Development Authority,
Moberly Regional Medical
Center, 8.75%, 3/1/16 605,314
NR AAA 500 Phelps County, Phelps
Regional Medical Center,
6.0%, 5/15/13 490,730
-----------
$ 9,140,454
-----------
HOUSING - 0.6%
NR AAA $ 540 Missouri Housing
Development, Single Family,
GNMA Mortgage Backed,
(AMT), 6.75%, 6/1/24 $ 554,467
-----------
INDUSTRIAL DEVELOPMENT
REVENUE - 2.7%
NR BBB $1,390 Jefferson County Industrial
Development Authority,
Kmart Corporation, 6.40%,
8/1/08 $ 1,314,662
A3 NR 1,200 Missouri Environmental
Improvement & Energy
Resources Authority,
American Cynamid Company,
5.80%, 9/1/09 1,158,972
-----------
$ 2,473,634
-----------
INSURED TRANSPORTATION - 1.6%
Aaa AAA $1,000 City of St. Louis, St.
Louis-Lambert International
Airport, (AMT) (FGIC),
6.125%, 7/1/12 $ 1,005,880
Aaa AAA 500 City of St. Louis, St.
Louis-Lambert International
Airport, (AMT) (FGIC),
6.125%, 7/1/15 501,175
-----------
$ 1,507,055
-----------
INSURED EDUCATION - 2.0%
Aaa AAA $1,000 Missouri Western State
College Housing System,
(MBIA), 5.25%, 10/1/11 $ 917,960
Aaa AAA 1,000 Southeast Missouri State
University Housing System,
(MBIA), 5.70%, 4/1/14 975,000
-----------
$ 1,892,960
-----------
INSURED GENERAL OBLIGATION - 10.3%
Aaa AAA $ 700 Jasper County, Joplin
School District, (FGIC),
5.625%, 3/1/13 $ 665,441
Aaa AAA 1,000 Kansas City School District
Capital Improv, (FGIC),
5.00%, 2/1/14 884,700
Aaa AAA 2,250 Kansas City School
District, (FGIC), 5.00%,
2/1/14 1,990,575
</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 GENERAL
OBLIGATION - (CONTINUED)
Aaa AAA 1,450 St. Louis County, Melville
School District, (MBIA),
6.00%, 2/15/13 1,462,876
Aaa AAA 500 St. Charles County, Francis
Howell School District,
(AMBAC), 5.75%, 3/1/11 490,780
Aaa AAA 1,000 St. Louis County, Parkway
School District, (MBIA),
5.00%, 2/1/12 898,560
Aaa AAA 1,500 City of St. Louis School
District, (FGIC), 5.75%,
4/1/12 1,479,090
Aaa AAA 620 City of St. Louis School
District, (FGIC), 6.00%,
4/1/12 626,671
Aaa AAA 500 Puerto Rico, variable
(FSA), 7/1/15 (1) 476,870
Aaa AAA 500 Puerto Rico, variable
(FSA), 7/1/22 (1) 493,125
-----------
$ 9,468,688
-----------
INSURED HOSPITALS - 18.1%
Aaa AAA $1,000 Jackson County, Carondelet
Health System, St. Mary's
Hospital, (MBIA), 5.75%,
7/1/24 $ 945,870
Aaa AAA 800 Jackson County, St.
Joseph's Health System,
(MBIA), 6.50%, 7/1/19 822,392
Aaa AAA 1,000 Jackson County, St.
Joseph's Health System,
(MBIA), 6.50%, 7/1/12 1,035,180
Aaa AAA 1,500 Missouri Health & Education
Authority, Health Midwest,
(MBIA), 6.25%, 2/15/22 1,512,165
Aaa AAA 500 Missouri Health & Education
Authority, Sisters of St.
Mary, (MBIA), 6.25%, 6/1/07 519,110
Aaa AAA 1,600 Missouri Health & Education
Authority, Sisters of St.
Mary, (MBIA), 6.25%, 6/1/16 1,618,816
Aaa AAA 1,500 Missouri Health & Education
Authority, Heartland Health
System, (AMBAC), 6.35%,
11/15/17 1,529,145
Aaa AAA 2,250 Missouri Health & Education
Authority, Children's Mercy
Hospital, (MBIA), 5.65%,
5/15/23 2,091,510
Aaa AAA 2,900 Missouri Health & Education
Authority, Lester Cox
Medical Center, (MBIA),
5.35%, 6/1/10 2,704,975
Aaa AAA 2,000 Missouri Health & Education
Authority, St. Luke's
Health System, (MBIA),
5.125%, 11/15/19 1,734,360
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 575 Missouri Health & Education
Authority, St. Louis
Children's Hospital,
(MBIA), 0%, 5/15/08 263,661
Aaa AAA 9,500 Missouri Health & Education
Authority, Lester Cox
Medical Center, (MBIA), 0%,
9/1/20 1,907,695
-----------
$16,684,879
-----------
INSURED HOUSING - 1.7%
Aaa AAA $1,500 City of Springfield, SCA
Realty Multifamily Mortgage
Receipts, (FSA), 7.10%,
1/1/30 $ 1,539,615
-----------
INSURED INDUSTRIAL
DEVELOPMENT REVENUE - 4.7%
Aaa AAA $5,000 Missouri Environmental
Improvement & Energy
Resources Authority, Union
Electric Project, (AMT),
(AMBAC), 5.45%, 10/1/28 $ 4,347,100
-----------
INSURED LEASE/CERTIFICATE
OF PARTICIPATION - 4.3%
Aaa AAA $1,250 Kansas City Municipal
Assistance Corporation,
Bartle Hall Convention,
(AMBAC), 6.625%, 4/15/15 $ 1,305,988
Aaa AAA 500 Kansas City Municipal
Assistance Corporation,
Bartle Hall Convention,
(AMBAC), 6.00%, 4/15/20 500,720
Aaa AAA 600 Kansas City School
District, Building
Corporation, (FGIC), 6.50%,
2/1/08 628,206
Aaa AAA 500 St. Charles County, Public
Facilities Authority,
(FGIC), 6.375%, 3/15/07 524,615
Aaa AAA 1,000 St. Louis County Municipal
Finance Corporation, Civil
Courts Building, (FGIC),
5.75%, 8/1/13 973,390
-----------
$ 3,932,919
-----------
INSURED UTILITIES - 6.3%
Aaa AAA $ 700 Puerto Rico Electric Power
Authority, variable (FSA),
7/1/03 (1) $ 721,000
Aaa AAA 5,000 City of Sikeston, Electric
System, (MBIA), 6.25%,
6/1/22 5,062,300
-----------
$ 5,783,300
-----------
INSURED WATER & SEWER - 0.5%
Aaa AAA $5,000 City of St. Louis, Water
Revenue Improvement Bonds,
(FGIC), 6.00%, 7/1/14 $ 502,395
-----------
</TABLE>
59
<PAGE> 60
<TABLE>
- --------------------------------------------------------------------------------
MISSOURI 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 - 3.5%
A1 A+ $ 500 State of Missouri, Regional
Convention & Sports Complex
Authority, 5.50%, 8/15/13 $ 455,700
A1 A+ 2,000 State of Missouri, Regional
Convention & Sports Complex
Authority, 5.50%, 8/15/21 1,767,200
Aa AA 1,000 Southeast Missouri
Correctional Facility,
5.75%, 10/15/16 968,700
-----------
$ 3,191,600
-----------
LIFECARE - 1.1%
NR NR $ 950 Kansas City Industrial
Development Authority,
Kingswood United Methodist
Manor, 9.00%, 11/15/13 $ 990,270
-----------
NURSING HOMES - 1.6%
NR NR $ 500 Missouri Health & Education
Authority, Bethesda Health
Group, 6.625%, 8/15/05 $ 489,855
NR NR 1,000 Missouri Health & Education
Authority, Bethesda Health
Group, 7.50%, 8/15/12 992,250
-----------
$ 1,482,105
-----------
SPECIAL TAX REVENUE - 0.5%
NR NR $ 450 Virgin Island Public
Finance Authority, 7.25%,
10/1/18 $ 464,679
-----------
TRANSPORTATION - 6.1%
Baa1 A $1,000 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/12 $ 1,030,330
Baa1 A 1,400 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/19 1,279,236
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/17 917,020
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/22 839,420
NR BBB 200 Guam Airport Authority,
6.375%, 10/1/10 199,110
NR BBB 500 Guam Airport Authority,
6.60%, (AMT), 10/1/10 501,095
NR BBB 900 Guam Airport Authority,
6.70%, (AMT), 10/1/23 897,669
-----------
$ 5,663,880
-----------
UTILITIES - 4.2%
A1 AA $ 500 City of Columbia, Water &
Electric, 6.125%, 10/1/12 $ 502,995
NR BBB 1,010 Guam Power Authority,
6.30%, 10/1/22 977,912
Baa1 A- 1,000 Puerto Rico Electric Power
Authority, 5.00%, 7/101/12 878,420
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa1 A- 1,500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 1,517,295
-----------
$ 3,876,622
-----------
WATER & SEWER - 8.5%
A1 AA- $ 760 City of Columbia, Sewerage
System, 6.25%, 10/1/15 $ 766,680
Aa NR 800 Missouri Environmental
Improvement & Energy
Resources Authority, Water
Pollution Control, 6.875%,
6/1/14 845,272
Aa NR 475 Missouri Environmental
Improvement & Energy
Resources Authority, Water
Pollution Control, 6.45%,
7/1/08 501,125
Aa NR 500 Missouri Environmental
Improvement & Energy
Resources Authority, Water
Pollution Control, 6.55%,
7/1/14 518,270
Aa NR 1,000 Missouri Environmental
Improvement & Energy
Resources Authority, Water
Pollution Control, 6.05%,
7/1/15 996,420
Aa NR 1,250 Missouri Environmental
Improvement & Energy
Resources Authority, Water
Pollution Control, 7.20%,
7/1/16 1,369,145
Aa A+ 3,000 City of Springfield,
Waterworks, 5.375%, 5/1/14 2,816,520
-----------
$ 7,813,432
-----------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST
$91,951,666) $92,155,542
===========
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
</TABLE>
The Portfolio primarily invests in debt securities issued by Missouri
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 February 28, 1995, 49.5% 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 9.4% to 27.3% of total investments.
See notes to financial statements
60
<PAGE> 61
<TABLE>
- --------------------------------------------------------------------------------
North Carolina Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
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%
Aa1 AA $1,000 Educational Facilities
Finance Agency, Duke
University, 6.75%, 10/1/27 $ 1,047,560
NR AAA 1,000 Educational Facilities
Finance Agency, Elon
College, 6.375%, 1/1/07 1,040,540
------------
$ 2,088,100
------------
ESCROWED - 1.4%
Aaa A $ 155 North Carolina Municipal
Power, Catawba Electric,
5.00%, 1/1/20 $ 136,927
Baa1 AAA 150 Puerto Rico General
Obligation, 7.30%, 7/1/20 168,975
Aaa A 1,500 Puerto Rico Public
Building Authority,
6.875%, 7/1/12 1,686,105
Baa1 AAA 635 Puerto Rico Electric Power
Authority, 7.125%, 7/1/14 698,341
------------
$ 2,690,348
------------
GENERAL OBLIGATIONS - 4.7%
A A- $ 175 Eden, Water and Sewer
Bonds (AMT), 6.75%, 6/1/08 $ 184,765
Baa1 A 1,000 Puerto Rico, 5.75%, 7/1/15 949,410
Aaa AAA 2,000 North Carolina Capital
Improvement, Variable,
2/1/06 (1) 1,682,720
Aaa AAA 4,000 North Carolina Capital
Improvement, 4.75%, 2/1/12 3,484,800
Aaa AAA 2,000 North Carolina Capital
Improvement, Variable,
2/1/10 (1) 1,483,700
NR BBB 1,700 Guam, 5.40%, 11/15/18 1,453,500
------------
$ 9,238,895
------------
HEALTH CARE - 3.2%
Aa AA $1,700 North Carolina Medical
Care Commission, Carolina
Medicorp, 6.00%, 5/1/21 $ 1,658,248
Aa AA 5,060 North Carolina Medical
Care Commission, Carolina
Medicorp, 5.50%, 5/1/15 4,638,856
------------
$ 6,297,104
------------
HOSPITALS - 19.5%
A1 AA- $2,380 University of North
Carolina at Chapel Hill,
6.00%, 2/15/24 $ 2,285,371
Aa AA 2,090 Charlotte-Mecklenburg
Hospital, 0%, 1/1/06 1,107,282
Aa AA 2,345 Charlotte-Mecklenburg
Hospital, 6.25%, 1/1/20 2,363,690
Aa AA 1,250 Charlotte-Mecklenburg
Hospital, 6.00%, 1/1/22 1,214,200
Aa AA- 2,450 Pitt County Memorial
Hospital, 6.90%, 12/1/21 2,547,265
Aa AA- 3,000 North Carolina Medical
Care Commission, North
Carolina Baptist Hospital,
6.00%, 6/1/22 2,944,410
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa1 NR 1,225 North Carolina Medical
Care Commission, Halifax
Memorial Hospital, 6.75%,
8/15/14 1,218,373
Aa AA 3,700 North Carolina Medical
Care Commission,
Presbyterian Health
Services, 6.00%, 10/1/24 3,590,295
Aa AA 4,000 North Carolina Medical
Care Commission,
Presbyterian Health
Services, 5.50%, 10/1/14 3,676,440
A1 A+ 5,000 North Carolina Medical
Care Commission, Rex
Hospital, 6.125%, 6/1/10 5,020,150
NR A- 5,500 North Carolina Medical
Care Commission, Mercy
Hospital, 6.50%, 8/1/08 5,553,405
NR BBB+ 2,500 North Carolina Medical
Care Commission, Roanake-
Chowan Hospital, 7.75%,
10/1/19 2,599,825
NR AA 4,465 North Carolina Medical
Care Commission, Scotland
Memorial Hospital, 5.375%,
10/1/11 (2) 4,043,817
------------
$ 38,164,522
------------
HOUSING - 8.8%
NR AAA $1,900 Charlotte Housing, Double
Oaks, (FHA), (FNMA),
7.35%, 5/15/26 $ 2,025,970
Aa AA 2,250 North Carolina HFA, MFMR,
6.70%, 1/1/27 2,305,305
Aa AA 4,395 North Carolina HFA, MFMR,
6.85%, 7/1/13 4,581,700
Aa A+ 870 North Carolina HFA, SFMR,
6.95%, 3/1/17 905,905
Aa A+ 890 North Carolina HFA, SFMR,
(AMT), 7.05%, 9/1/20 920,447
Aa A+ 4,000 North Carolina HFA, SFMR
(AMT), 6.70%, 9/1/26 4,049,520
Aa A+ 2,250 North Carolina HFA, MFMR
(AMT), 6.60%, 9/1/26 2,260,733
Aaa AAA 200 Puerto Rico HFC, SFMR,
6.85%, 10/15/23 207,068
------------
$ 17,256,647
------------
INDUSTRIAL DEVELOPMENT - 5.2%
Baa1 BBB $2,750 Haywood County, Champion
International Corporation
(AMT), 5.50%, 10/1/18 $ 2,364,423
Baa2 BBB 2,500 New Hanover County,
Occidental Petroleum
Corporation, 6.70%, 7/1/19 2,535,950
NR AA 850 Robeson County, Campbell
Soup Company, 6.40%,
12/1/06 883,329
</TABLE>
61
<PAGE> 62
<TABLE>
- --------------------------------------------------------------------------------
NORTH CAROLINA 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>
INDUSTRIAL DEVELOPMENT - (CONTINUED)
A2 A 4,250 Martin County, Weyerhauser
Company, 6.80%, 5/1/24 4,332,620
------------
$ 10,116,321
------------
INSURED GOVERNMENT
OBLIGATIONS - 2.2%
Aaa AAA $1,000 Puerto Rico, (AMBAC),
Variable, 7/1/15 (1) $ 953,740
Aaa AAA 3,500 Puerto Rico, (FSA),
Variable, 7/1/22 (1) 3,451,875
------------
$ 4,405,615
------------
INSURED HOSPITAL - 13.9%
Aaa AAA $2,000 Catawba County, Catawba
Memorial Hospital,
(AMBAC), 6.20%, 10/1/09 $ 2,033,040
Aaa AAA 4,000 Craven Regional Medical
Authority, North Carolina
Insured Health Care
Facilities, (MBIA),
5.625%, 10/1/17 3,796,720
Aaa AAA 500 Cumberland County
Hospital, (MBIA), 0%,
10/1/09 210,440
Aaa AAA 4,225 New Hanover Regional
Medical Center, (AMBAC),
4.75%, 10/1/23 3,457,782
Aaa AAA 1,750 North Carolina Medical
Care Commission, Moore
Regional Hospital, (FGIC),
5.20%, 10/1/13 1,567,388
Aaa AAA 3,750 North Carolina Medical
Care Commission, Moore
Regional Hospital, (FGIC),
5.00%, 10/1/18 3,175,688
Aaa AAA 2,000 North Carolina Medical
Care Commission, Wesley
Long Community Hospital,
(AMBAC), 5.25%, 10/1/13 1,812,540
Aaa AAA 2,500 North Carolina Medical
Care Commission, Wesley
Long Community Hospital,
(AMBAC), 5.25%, 10/1/17 2,227,275
Aaa AAA 935 North Carolina Medical
Care Commission, Memorial
Mission Hospital, (FSA),
0%, 10/1/06 478,832
Aaa AAA 5,000 North Carolina Medical
Care Commission, St.
Josephs Medical Center,
(AMBAC), 5.10%, 10/1/14 4,433,050
Aaa AAA 4,650 Wake County, North
Carolina Hospital System,
(MBIA), 5.125%, 10/1/26 3,932,738
------------
$ 27,125,492
------------
INSURED LEASE/CERTIFICATES
OF PARTICIPATION - 8.0%
Aaa AAA $ 900 Burke County, Detention
Facility/Landfill
Equipment, (MBIA), 6.30%,
4/1/08 $ 936,684
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 4,500 Charlotte, Convention
Facility, (AMBAC), 5.25%,
12/1/13 4,137,120
Aaa AAA 1,750 Duplin County, (FGIC),
5.25%, 8/1/14 1,582,035
Aaa AAA 1,575 Franklin, (FGIC), 6.625%,
6/1/14 1,641,339
Aaa AAA 5,000 Iredell County, Iredell-
Statesville Schools,
(FGIC), 6.125%, 6/1/07 5,164,850
Aaa AAA 1,000 Mooresville School
District, (AMBAC), 6.35%,
10/1/14 1,016,410
Aaa AAA 1,000 Rutherford County, (FGIC),
6.25%, 6/1/23 1,007,100
Aaa AAA 200 Scotland County, (CGIC),
6.75%, 3/1/11 211,080
------------
$ 15,696,618
------------
INSURED TRANSPORTATION - 1.7%
Aaa AAA $3,750 Piedmont Triad Airport
Authority, (MBIA), 5.125%,
7/1/12 $ 3,380,550
------------
INSURED UTILITIES - 3.8%
Aaa AAA $ 500 Concord, North Carolina
Utilities Systems, (MBIA),
5.75%, 12/1/17 $ 481,545
Aaa AAA 1,500 North Carolina Municipal
Power Authority, Catawba
Electric, (MBIA), 5.75%,
1/1/20 1,433,145
Aaa AAA 3,000 North Carolina Municipal
Power Authority, Catawba
Electric, (AMBAC), 5.75%,
1/1/15 2,846,880
Aaa AAA 1,500 North Carolina Eastern
Municipal Power Authority,
(FSA), Variable, 1/1/19
(1) 1,337,910
Aaa AAA 1,400 Puerto Rico Electric Power
Authority, Stripes, (FSA),
Variable, 7/1/02 (1) 1,433,194
------------
$ 7,532,674
------------
INSURED WATER & SEWER - 2.7%
Aaa AAA $1,500 Fayetteville Public Works
Commision, (FSA), 6.00%,
3/1/16 $ 1,482,345
Aaa AAA 750 Fayetteville Public Works
Commision, (FSA), 4.75%,
3/1/14 633,323
Aaa AAA 3,500 Fayetteville Public Works
Commision, (FSA), 5.125%,
3/1/10 3,183,915
------------
$ 5,299,583
------------
LEASE/CERTIFICATE OF
PARTICIPATION - 6.4%
A1 A- $2,065 Buncombe County, 6.625%,
12/1/10 $ 2,160,403
</TABLE>
62
<PAGE> 63
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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)
Aa1 AA 4,150 Charlotte County,
Charolette Mecklendberg
Law, 5.375%, 6/1/13 3,899,382
NR AA 825 Durham County, 6.10%,
7/15/07 848,595
Aa AA 985 Durham, 6.75%, 12/1/11 1,047,597
A1 AA 2,400 Greensboro, Greensboro
Coliseum Arena, 6.75%,
12/1/09 2,529,000
A NR 1,950 Rowan County, 6.25%,
12/1/07 1,975,409
------------
$ 12,460,385
------------
SPECIAL TAX REVENUE - 1.5%
Baa1 BBB+ $ 200 Puerto Rico Finance
Authority, 7.90%, 7/1/07 $ 217,054
NR NR 2,550 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 2,633,181
------------
$ 2,850,235
------------
TRANSPORTATION - 4.2%
Baa1 A $4,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/20 $ 3,498,920
Baa1 A 1,490 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/15 1,371,888
Baa3 BB+ 1,500 Raleigh-Durham Airport
Authority, American
Airlines Inc., 9.40%,
11/1/00 1,692,180
Baa1 A 2,000 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/22 1,678,840
------------
$ 8,241,828
------------
UTILITIES - 10.9%
A2 A $1,015 Chatham County Industrial
Facilities and Pollution,
Carolina Power & Light,
6.30%, 6/1/14 $ 1,021,638
NR BBB 2,500 Guam Power Authority,
5.25%, 10/1/23 2,038,450
A A 2,500 North Carolina Municipal
Power, Catawba Electric,
6.25%, 1/1/17 2,438,725
A A 550 North Carolina Municipal
Power, Catawba Electric,
7.00%, 1/1/16 561,600
A A- 5,000 North Carolina Municipal
Power, Eastern Power,
6.125%, 1/1/09 4,874,550
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
A A- 1,500 North Carolina Municipal
Power, Eastern Power,
6.40%, 1/1/21 1,436,040
A A- 3,200 North Carolina Municipal
Power, Eastern Power,
6.00%, 1/1/26 2,909,152
A A- 1,750 North Carolina Municipal
Power, Eastern Power,
7.00%, 1/1/13 1,813,158
Baa1 A- 2,000 Puerto Rico Electric Power
Authority, 6.00%, 7/1/16 1,957,440
Baa1 A- 1,000 Puerto Rico Electric Power
Authority, 7.00%, 7/1/21 1,064,610
Baa1 A- 2,000 Puerto Rico Electric Power
Authority, 0%, 7/1/17 490,280
Baa1 A- 365 Puerto Rico Electric Power
Authority, 7.125%, 7/1/14 383,188
NR NR 250 Virgin Islands Water and
Power Authority, 7.40%,
7/1/11 262,723
------------
$ 21,251,553
------------
WATER & SEWER - 0.8%
Aa AA $2,000 Orange County, Water &
Sewer, 5.20%, 7/1/16 $ 1,735,240
------------
TOTAL TAX-EXEMPT
INVESTMENTS,
(IDENTIFIED COST,
$194,221,184) $195,831,709
============
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) At February 28, 1995, the market value of securities segregated to cover
margin requirements for open financial futures contracts amounted to
$4,043,817.
</TABLE>
The Portfolio invests primarily in debt securities issued by North Carolina
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 February 28, 1995, 32.4% 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 7.2% to 11.7% of total investments.
See notes to financial statements
63
<PAGE> 64
<TABLE>
- --------------------------------------------------------------------------------
Oregon Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
COGENERATION - 1.4%
NR NR $2,000 Western Generation Agency,
Wauna Cogeneration
Project, 7.40%, (AMT),
1/1/16 $ 2,028,740
------------
EDUCATION - 1.6%
NR A+ $1,250 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority, Reed College
Project, 6.75%, 7/1/21 $ 1,303,888
A NR 1,000 City of Salem, Educational
Facilities, Willamette
University Project, 6.10%,
4/1/14 988,850
------------
$ 2,292,738
------------
ESCROWED - 1.6%
A1 AAA $2,000 City of Medford, Rogue
Valley Memorial Hospital
(ETM), 6.25%, 12/1/07 $ 2,102,120
NR AAA 200 Puerto Rico Highway &
Transportation Authority,
Pre-Refunded, 6.625%,
12/1/08 221,782
------------
$ 2,323,902
------------
GENERAL
OBLIGATIONS - 21.5%
A A+ $2,000 Clackamas County,
Clackamas Community
College District, 5.25%,
12/1/09 $ 1,899,420
Aa AA+ 2,500 Metropolitan Service
District, Oregon
Convention Center, 6.25%,
1/1/13 2,546,850
Aa AA+ 1,000 Tri County Metropolitan
Transportation District,
Light Rail Extention,
6.00%, 7/1/12 1,008,350
Aa NR 1,000 Clackamas & Multnomah
Counties, Lake Oswego
School District, 5.70%,
6/15/10 986,870
Aa NR 2,000 Lane County, City of
Eugene, School District,
5.375%, 7/1/13 1,885,320
A1 NR 1,500 Washington and Clackamas
Counties, Tigard-Tualatin
School District, 5.40%,
1/1/10 1,408,125
Aa AA- 3,000 Washington and Multnomah
Counties, City of
Beaverton, School
District, 5.00%, 9/1/12 2,680,800
Aa AA- 1,000 State of Oregon, Oregon
Veterans' Welfare Bonds,
9.00%, 4/1/04 1,261,930
Aa AA- 1,000 State of Oregon, Board of
Higher Education, 6.00%,
10/15/18 1,005,370
Aa AA- 1,250 State of Oregon, Elderly
and Disabled Housing,
6.375%, 8/1/24 1,276,013
Aa AA- 1,000 State of Oregon, Elderly
and Disabled Housing,
5.625%, (AMT), 8/1/18 945,900
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa AA- 4,210 State of Oregon,
Governmental Purpose,
5.625%, 6/1/13 4,188,192
Aa AA- 2,000 State of Oregon, Board of
Higher Education, 5.00%,
8/1/23 1,726,300
Aa AA- 6,110 State of Oregon, Elderly
and Disabled Housing,
5.65%, (AMT), 8/1/26 5,719,082
Baa1 A 2,000 Puerto Rico 5.75%, 7/1/15 1,898,820
Baa1 A 1,000 Puerto Rico 5.50%, 7/1/21 904,850
------------
$ 31,342,192
------------
HOSPITALS - 1.3%
NR A $1,000 Benton County, Good
Samaritan Hospital
Corvallis Project, 6.25%,
10/1/09 $ 972,960
Aa2 AA 1,000 Clackamas County, Kaiser
Permanente, 6.25%, 4/1/21 992,310
------------
$ 1,965,270
------------
HOUSING - 7.8%
A1 A+ $3,300 State of Oregon Housing
and Community Services
Department, MFMR, 5.75%,
7/1/12 $ 3,166,977
Aa NR 2,500 State of Oregon Housing
and Community Services
Department, MFMR, 6.875%,
7/1/28 2,585,600
Aa NR 1,055 State of Oregon Housing
and Community Services
Department, SFMR, 6.80%,
(AMT), 7/1/27 1,075,034
Aa1 NR 1,500 State of Oregon Housing
and Community Services
Department, SFMR, 5.375%,
7/1/17 1,361,430
Aa1 NR 3,500 State of Oregon, Housing
and Community Services
Department, SFMR, 5.45%,
7/1/24 3,151,295
------------
$ 11,340,336
------------
INDUSTRIAL DEVELOPMENT
REVENUE - 4.5%
NR BBB- $5,000 Port of Astoria, James
River Project, 6.55%,
2/1/15 $ 4,806,450
NR NR 750 Port of Portland, Ash
Grove Cement Co., 7.25%,
10/1/09 804,465
Baa1 A 1,000 Port of Portland, North
Portland Crown Zellerbach
Corporation, 6.125%,
5/15/08 975,630
------------
$ 6,586,545
------------
INSURED TRANSPORTATION - 3.6%
Aaa AAA $1,000 Port of Portland, Portland
International Airport,
(AMT), (AMBAC), 6.25%,
7/1/18 $ 1,004,380
</TABLE>
64
<PAGE> 65
<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 TRANSPORTATION -
(CONTINUED)
Aaa AAA 2,750 Port of Portland, Portland
International Airport,
(AMT), (FGIC), 6.00%,
7/1/23 2,720,163
Aaa AAA 1,500 State of Oregon,
Department of
Transportation, Westside
Project, (MBIA), 6.25%,
6/1/09 1,553,730
------------
$ 5,278,273
------------
INSURED EDUCATION - 1.7%
Aaa AAA $1,000 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority, Lewis and Clark
College, (MBIA), 6.00%,
10/1/13 $ 1,004,080
Aaa AAA 1,500 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority, Lewis and Clark
College, (MBIA), 6.125%,
10/1/24 1,502,985
------------
$ 2,507,065
------------
INSURED GENERAL
OBLIGATIONS - 11.3%
Aaa AAA $1,000 Lincoln County, (MBIA),
5.375%, 2/1/10 $ 959,840
Aaa AAA 1,850 Deschutes and Jefferson
Counties, Redmond School
District, (MBIA), 5.60%,
6/1/09 1,819,549
Aaa AAA 2,500 Deschutes County, City of
Sisters School District,
(MBIA), 5.40%, 12/1/10 2,392,500
Aaa AAA 2,750 Jefferson County, Madras
School District, (FSA),
5.50%, 6/15/13 2,648,525
Aaa AAA 1,000 Multnomah County, Parkrose
School District, (FGIC),
5.70%, 12/1/09 996,940
Aaa AAA 2,500 Marion and Polk Counties,
Salem-Keizer School
District, (FSA), 5.40%,
6/1/12 2,363,075
Aaa AAA 3,500 Yamhill, Clackamas &
Washington Counties,
Newberg School District,
(FSA), 5.50%, 6/1/10 3,380,650
Aaa AAA 2,000 Puerto Rico, Variable
(AMBAC), 7/1/15 (1) 1,907,480
------------
$ 16,468,559
------------
INSURED HOSPITALS - 2.1%
Aaa AAA $2,000 City of Portland, Legacy
Health System, (AMBAC),
6.70%, 5/1/21 $ 2,092,920
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 1,000 Western Lane Hospital
District Authority,
Sisters of St. Joseph of
Peace, (MBIA), 5.75%,
8/1/19 964,390
------------
$ 3,057,310
------------
INSURED LEASE/CERTIFICATES
OF PARTICIPATIONS - 1.9%
Aaa AAA $1,250 State of Oregon,
Department of General
Services, Real Property
Financing Program,
(AMBAC), 6.25%, 9/1/15 $ 1,272,325
Aaa AAA 1,500 State of Oregon,
Department of General
Services, Real Property
Financing Program, (MBIA),
6.25%, 11/1/19 1,532,520
------------
$ 2,804,845
------------
INSURED UTILITIES - 1.7%
Aaa AAA $2,000 Lane County, Emerald
People's Utility District,
Electric System, (AMBAC),
5.75%, 11/1/16 $ 984,100
Aaa AAA 1,000 City of Eugene, Electric
Utility Revenue, (MBIA),
5.80%, 8/1/22 982,430
Aaa AAA 500 Puerto Rico Electric Power
Authority, Variable (FSA),
7/1/03 (1) 515,000
------------
$ 2,481,530
------------
INSURED WATER & SEWER - 5.3%
Aaa AAA $1,000 City of Beaverton, Water
Revenue, (FSA), 6.125%,
6/1/14 $ 1,005,930
Aaa AAA 1,500 City of McMinnville,
Sewerage System, (FGIC),
5.00%, 2/1/14 1,325,505
Aaa AAA 1,500 City of Portland, Sewer
System, (FGIC), 6.00%,
10/1/12 1,520,610
Aaa AAA 1,000 South Fork Water Board,
First Lien Water Revenue,
(FSA), 6.00%, 2/1/14 993,230
Aaa AAA 1,375 Washington County, Unified
Sewerage Agency, (AMBAC),
6.125%, 10/1/12 1,402,321
Aaa AAA 1,500 Washington County, Unified
Sewerage Agency, (AMBAC),
6.125%, 10/1/12 1,529,805
------------
$ 7,777,401
------------
</TABLE>
65
<PAGE> 66
<TABLE>
- --------------------------------------------------------------------------------
OREGON 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 - 1.7%
Aa A $1,500 Multnomah COP, Juvenile
Justice Complex Project,
6.00%, 8/1/12 $ 1,512,675
Aa NR 1,000 Multnomah County, Health
System Facilities, 5.50%,
7/1/13 952,250
------------
$ 2,464,925
------------
MISCELLANEOUS - 3.7%
A A $3,000 Metropolitan Service
District, Metro
Headquarters Building
Project, 5.25%, 8/1/22 $ 2,584,200
A NR 1,600 State of Oregon, Oregon
Bond Bank Revenue, Special
Public Works Fund, 5.375%,
1/1/14 1,467,712
A1 NR 1,500 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority, Oregon Coast
Aquarium, 5.25%, 10/1/13 1,382,865
------------
$ 5,434,777
------------
SPECIAL TAX REVENUE - 2.7%
A NR $1,000 City of Portland, Downtown
Waterfront Project, 6.40%,
6/1/08 $ 1,044,520
A1 AA 3,000 Tri-County Metropolitan
Transportation District,
Limited Tax Pledge, 5.70%,
8/1/13 2,910,060
------------
$ 3,954,580
------------
TRANSPORTATION - 7.2%
NR BBB $2,000 Guam Airport Authority,
6.50%, 10/1/23 $ 1,981,920
NR BBB 1,500 Guam Airport Authority,
6.70%, (AMT), 10/1/23 1,496,115
Ba1 BB 1,500 Port of Portland, Delta
Air Lines, Inc. Project,
(AMT), 6.20%, 9/1/22 1,315,005
Baa1 A 1,500 Puerto Rico Highway and
Transportation Authority,
6.375%, 7/1/08 1,543,845
Baa1 A 1,720 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/20 1,504,536
Baa1 A 2000 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/17 1,834,040
Baa1 A 800 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/18 824,264
------------
$ 10,499,725
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - 15.3%
A1 AA $1,500 City of Eugene, Electric
Utility System, 6.00%,
8/1/11 $ 1,512,360
A1 AA 4,055 City of Eugene, Electric
Utility System, 5.75%,
8/1/16 3,905,086
Aa AA 4,000 City of Eugene, Trojan
Nuclear Project, 5.90%,
9/1/09 3,988,360
NR BBB 2,000 Guam Power Authority,
6.30%, 10/1/22 1,936,460
Aa AA 3,000 Northern Wasco County,
People's Utility District,
McNary Dam Fishway
Hydroelectric Project,
Bonneville Power
Administration, 5.20%,
12/1/24 3,478,840
Baa1 A- 8,000 Puerto Rico Electric Power
Authority, 5.00%, 7/1/12 7,027,360
A A+ 500 Puerto Rico Telephone
Authority, variable 1/1/20
(1) 500,910
------------
$ 22,349,376
------------
WATER & SEWER - 2.1%
NR A+ $2,000 Clackamus County, Water
Revenue, 6.375%, 10/1/14 $ 2,058,420
A A+ 1,000 City of Gresham, Water
Revenue, 5.30%, 11/1/15 934,250
------------
$ 2,992,670
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$147,514,934) $145,950,759
============
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
</TABLE>
The Portfolio invests primarily in debt securities issued by Oregon
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 February 28, 1995, 27.6% 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 4.5% to 8.7% of total investments.
See notes to financial statements
66
<PAGE> 67
<TABLE>
- --------------------------------------------------------------------------------
South Carolina Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 5.5%
NR BBB- $1,000 Puerto Rico ITEME,
Polytechnic University of
Puerto Rico, 5.50%, 8/1/24 $ 833,320
NR A 1,000 South Carolina State
Education Assistance
Authority, 5.55%, 9/1/08 929,080
NR A 1,500 South Carolina State
Education Assistance
Authority (AMT), 6.30%,
9/1/08 1,494,585
-----------
$ 3,256,985
-----------
ESCROWED - 2.9%
Aaa AA $ 500 Columbia, South Carolina
Waterworks and Sewer
System, 7.10%, 2/1/12 $ 557,795
Aaa AAA 500 Greenville, South Carolina
Hospital System, Board of
Trustees, (FGIC), 7.80%,
5/1/15 550,385
NR AAA 200 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/18 221,782
Aaa A+ 350 South Carolina Public
Service Authority, Santee
Cooper, 6.625%, 7/1/31 385,931
-----------
$ 1,715,893
-----------
GENERAL OBLIGATIONS - 5.6%
A AA- $ 500 North Charleston, 5.875%,
8/1/09 $ 495,895
Baa1 A 1,000 Puerto Rico, 5.25%, 7/1/18 876,890
Baa1 A 1,000 Puerto Rico, 5.750%, 7/1/16 948,190
Baa1 A 500 Puerto Rico, 6.50%, 7/1/23 511,600
A A 500 Spartanburg Sanitary Sewer
District, 5.40%, 3/1/10 467,800
-----------
$ 3,300,375
-----------
HOSPITALS - 5.2%
NR AA- $ 725 Greenville Hospital System
Board of Trustees, 7.00%,
5/1/17 $ 745,800
NR AA- 1,000 Greenville Hospital System
Board of Trustees, 5.50%,
5/1/16 881,650
Baa1 NR 1,500 Horry County, Conway
Hospital, 6.75%, 7/1/12 1,483,215
-----------
$ 3,110,665
-----------
HOUSING - 9.1%
NR AA $1,485 South Carolina HFA, MFMR,
Westbury Place, 6.05%,
7/1/27 $ 1,408,419
Aa AA 1,500 South Carolina HFA, SFMR,
6.375%, 7/1/16 1,478,340
Aa NR 1,500 South Carolina HFA, SFMR,
6.45%, 7/1/17 1,491,045
Aa NR 1,000 South Carolina HFA, SFMR
(AMT), 6.75%, 7/1/26 1,003,790
-----------
$ 5,381,594
-----------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDUSTRIAL DEVELOPMENT - 17.5%
Baa2 BBB $1,250 Aiken County, Beliot
Corporation, 6.00%, 12/1/11 $ 1,180,575
NR BBB+ 1,500 Chester County, 7.35%,
2/1/14 1,567,485
A1 AA- 1,500 Darlington County, Nucor
Corporation (AMT), 5.75%,
8/1/23 1,342,515
Aa2 AA 500 Florence County, Pollution
Control, E.I. du Pont de
Nemours & Co., 6.35%,
7/1/22 506,515
A1 A- 2,665 Richland County, Pollution
Control, Union Camp
Corporation (AMT), 6.75%,
5/1/22 2,704,602
NR NR 1,500 Spartanburg County, BMW
(AMT), 7.55%, 11/1/24 1,565,505
A2 AA- 1,750 York County, Hoechst
Celanese Corporation (AMT),
5.70%, 1/1/24 1,554,035
-----------
$10,421,232
-----------
INSURED EDUCATION - 0.4%
Aaa AAA $ 250 College of Charleston,
Housing and Auxiliary
Facilities, (MBIA), 6.00%,
10/1/07 $ 252,558
-----------
INSURED GENERAL OBLIGATION - 6.4%
Aaa AAA $1,000 Berkley County School
District, (AMBAC), 6.30%,
2/1/26 $ 1,019,660
Aaa AAA 1,000 Horry County, School
District, (FSA), 5.20%,
4/1/08 949,900
Aaa AAA 550 Lancaster County, (MBIA),
6.55%, 7/1/09 574,079
Aaa AAA 1,250 South Carolina Public
Service Authority, (AMBAC),
6.375%, 7/1/21 1,267,813
-----------
$ 3,811,452
-----------
INSURED HOSPITAL - 8.9%
Aaa AAA $1,000 Florence County, McLeod
Medical Center, (FGIC),
5.25%, 11/1/09 $ 926,570
Aaa AAA 750 Greenwood County, Self
Memorial Hospital, (FGIC),
5.875%, 10/1/17 (2) 722,318
Aaa AAA 300 Lexington County Health
Services District, Inc.,
(FSA), 6.75%, 10/1/18 312,842
Aaa AAA 1,780 Richland County, Providence
Hospital, (CGIC), 5.25%,
10/1/08 1,672,915
Aaa AAA 750 South Carolina
Jobs-Economic Development,
Mary Black Memorial
Hospital, (AMBAC), 5.50%,
10/1/08 730,403
</TABLE>
67
<PAGE> 68
<TABLE>
- --------------------------------------------------------------------------------
SOUTH CAROLINA 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 South Carolina
Jobs-Economic Development,
South Carolina Baptist
Hospital, (AMBAC),
Variable, 8/1/15 (1) 922,130
-----------
$ 5,287,178
-----------
INSURED LEASE/CERTIFICATE
OF PARTICIPATION - 6.6%
Aaa AAA $ 500 Charleston County, (MBIA),
6.10%, 6/1/11 $ 503,175
Aaa AAA 1,000 Charleston County, (MBIA),
7.00%, 6/1/19 1,059,750
Aaa AAA 1,000 Florence County, Law
Center, (AMBAC), 6.00%,
3/1/14 975,670
Aaa AAA 1,400 North Charleston, Coliseum
Capital Improvements,
(FGIC), 6.00%, 1/1/11 1,398,432
-----------
$ 3,937,027
-----------
INSURED RESOURCE RECOVERY - 0.8%
Aaa AAA $ 500 Charleston County, (MBIA),
6.00%, 1/1/14 $ 497,160
-----------
INSURED TRANSPORTATION - 1.6%
Aaa AAA $1,105 Charleston County Airport,
(MBIA), 4.75%, 7/1/15 $ 926,830
-----------
INSURED UTILITIES - 6.1%
Aaa AAA $ 300 Piedmont Municipal Power
Agency, (MBIA), 6.25%,
1/1/09 $ 315,306
Aaa AAA 1,000 Piedmont Municipal Power
Agency, (MBIA), 6.30%,
1/1/14 1,021,160
Aaa AAA 400 Puerto Rico Electric Power
Authority, (STRIPES),
(FSA), Variable, 7/1/02 (1) 409,484
Aaa AAA 150 Rock Hill, Downtown
Redevelopment, (AMBAC),
5.375%, 1/1/14 137,912
Aaa AAA 1,000 South Carolina Public
Service Authority, Santee
Cooper, (AMBAC), 5.00%,
1/1/14 875,760
Aaa AAA 1,000 South Carolina Public
Service Authority, Santee
Cooper, (MBIA), 5.125%,
1/1/32 836,100
-----------
$ 3,595,722
-----------
INSURED WATER & SEWER - 5.4%
Aaa AAA $1,000 Berkeley County, South
Carolina Water and Sewer
System, (MBIA), 5.55%,
6/1/15 $ 925,530
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 2,000 Cayce, South Carolina Water
and Sewer System, (AMBAC),
5.25%, 7/1/15 1,792,620
Aaa AAA 500 Mount Pleasant, Waterworks
and Sewer System, (AMBAC),
6.00%, 12/1/20 493,490
-----------
$ 3,211,640
-----------
LEASE/CERTIFICATE OF
PARTICIPATION - 1.3%
Baa NR $ 750 Lexington School District,
COP, 6.90%, 7/1/08 $ 759,293
-----------
MISCELLANEOUS - 0.5%
NR A+ $ 300 South Carolina Resource
Authority, 7.00%, 4/1/13 $ 309,033
-----------
SPECIAL TAX REVENUE - 0.4%
NR NR $ 200 Virgin Islands Public
Finance Authority, General
Obligation, 7.25%, 10/1/18 $ 206,524
-----------
TRANSPORTATION - 1.6%
Baa1 A $ 500 Puerto Rico Highway and
Transportation Authority,
5.75%, 7/1/18 $ 470,055
Baa3 BB+ 500 Puerto Rico Port Authority,
American Airlines Inc.
(AMT), 6.30%, 6/1/23 457,095
-----------
$ 827,150
-----------
UTILITIES - 10.1%
A2 A- $1,650 Berkeley County, South
Carolina Electric & Gas
Company, 6.50%, 10/1/14 $ 1,681,201
A2 A 1,500 Darlington County, Carolina
Power & Light Company,
6.60%, 11/1/10 1,541,325
NR BBB 500 Guam Power Authority,
5.25%, 10/1/23 407,690
A A- 500 Piedmont Municipal Power
Agency, 5.75%, 1/1/24 454,995
Baa1 A- 500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 505,765
A1 A+ 1,500 South Carolina Public
Service Authority, Santee
Cooper, 6.00%, 7/1/31 1,425,690
-----------
$ 6,016,666
-----------
</TABLE>
68
<PAGE> 69
<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 - 4.1%
A1 AA- $1,000 Charleston, Waterworks and
Sewer System, 5.00%, 1/1/16 $ 883,880
Aa AA 1,500 Columbia, Waterworks and
Sewer System, 5.375%,
2/1/12 1,401,180
A1 AA- 150 Spartanburg, Water System,
6.25%, 6/1/12 152,292
-----------
$ 2,437,352
-----------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$59,334,342) $59,362,329
===========
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) At February 28, 1995, the market value of securities segregated to cover
margin requirements for open financial futures contracts amounted to
$722,318.
</TABLE>
The Portfolio invests primarily in debt securities issued by South Carolina
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 February 28, 1995, 36.3% 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 5.7% to 13.6% of total investments.
See notes to financial statements
69
<PAGE> 70
<TABLE>
- --------------------------------------------------------------------------------
Tennessee Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 5.8%
Aa AA $1,600 Nashville and Davidson
County, Health and
Educational Facilities
Board, The Vanderbilt
University, 5.20%, 7/1/18 $ 1,407,504
Aa AA 1,000 Nashville and Davidson
County, Health and
Educational Facilities
Board, The Vanderbilt
University, 5.125%, 7/1/13 895,270
Baa NR 1,000 Nashville and Davidson
County, Health and
Educational Facilities
Board, The Belmont
University, 6.40%, 12/1/19 969,730
-----------
$ 3,272,504
-----------
GENERAL OBLIGATION - 2.4%
Aa AA+ $1,000 Shelby County, 5.125%,
3/1/16 $ 885,450
Aa NR 500 Williamson County, Rural
School Bonds, 5.80%, 3/1/12 487,875
-----------
$ 1,373,325
-----------
HOSPITAL - 3.9%
Baa1 NR $ 500 City of Clarksville,
Clarksville Memorial
Hospital, 6.25%, 7/1/08 $ 477,780
Baa1 NR 500 City of Clarksville,
Clarksville Memorial
Hospital, 6.375%, 7/1/18 466,980
Baa1 BBB+ 250 County of Knox, East
Tennessee Children's
Hospital, 6.50%, 10/1/12 239,893
NR A- 1,000 Sumner County, Sumner
Regional Health Systems,
7.50%, 11/1/14 1,055,570
-----------
$ 2,240,223
-----------
HOUSING - 16.6%
NR AAA $ 500 Knoxville Community
Development Corporation,
MFMR, Morningside Gardens
Project, GNMA Mortgaged
Backed, 6.10%, 7/20/20 $ 483,075
NR A 750 Knoxville Community
Development Corporation,
MFMR, Clinton Towers
Project, 6.65%, 10/15/10 757,343
NR A 1,645 Nashville and Davidson
County, Multifamily Housing
Revenue, The Park at
Hermitage Project, 5.90%,
2/1/19 1,525,935
NR A 800 Murfreesboro Housing
Authority, Multifamily
Housing Revenue, Westbrooks
Towers Project, 5.875%,
1/15/10 780,216
Aa A+ 500 Tennessee Housing
Development Agency,
Homeownership Program,
6.80%, 7/1/17 508,900
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
A1 A+ 2,000 Tennessee Housing
Development Agency,
Mortgage Finance Program,
5.85%, 7/1/13 1,925,900
A1 A+ 2,000 Tennessee Housing
Development Agency,
Mortgage Finance Program,
5.95%, 7/1/28 1,866,020
Aa AA 1,750 Tennessee Housing
Development Agency,
Homeownership Program,
(AMT), 5.75%, 7/1/24 1,558,007
-----------
$ 9,405,396
-----------
INDUSTRIAL DEVELOPMENT
REVENUE - 15.6%
Aa2 AA $1,000 City of Chattanooga, E.I.
du Pont de Nemours and
Company Project, 6.35%,
7/1/22 $ 1,013,030
Aa2 AA 1,000 Humphreys County, E.I. du
Pont de Nemours and Company
Project, (AMT), 6.70%,
5/1/24 1,022,740
NR A 500 City of Jackson, BICC
Cables Corporation Project,
(AMT), 7.125%, 5/1/01 521,220
Aa2 AA 1,400 Loudon County,
Kimberly-Clark Corporation
Project, (AMT), 6.20%,
2/1/23 1,379,798
Baa1 BBB 1,750 Maury County, Saturn
Corporation Project, 6.50%,
9/1/24 1,698,655
Baa1 BBB 250 McMinn County, Calhoun
Newsprint Company, Bowater
Incorporated Obligor,
(AMT), 7.40%, 12/1/22 257,110
Baa3 BBB 1,500 Memphis-Shelby County
Airport Authority, Federal
Express Corporation, 6.75%,
9/1/12 1,519,860
Baa3 BBB 1,000 Memphis-Shelby County
Airport Authority, Federal
Express Corporation, (AMT),
6.20%, 7/1/14 955,510
NR BBB+ 500 Nashville and Davidson
County, Osco Treatment
Systems, (AMT), 6.00%,
5/1/03 483,095
-----------
$ 8,851,018
-----------
INSURED GENERAL
OBLIGATION - 0.5%
Aaa AAA $ 300 Puerto Rico, (AMBAC),
Variable, 7/1/15 (1) $ 286,122
-----------
INSURED HOUSING - 1.8%
Aaa AAA $1,000 Knox County, SCA Realty
Multifamily Mortgage
Reciepts, (FSA), 7.125%,
1/1/30 $ 1,026,370
-----------
INSURED HOSPITALS - 23.2%
Aaa AAA $ 500 City of Bristol, Bristol
Memorial Hospital, (FGIC),
6.75%, 9/1/10 $ 540,625
</TABLE>
70
<PAGE> 71
<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)
Aaa AAA 2,000 City of Bristol, Bristol
Memorial Hospital, (FGIC),
5.125%, 9/1/03 1,787,620
Aaa AAA 1,500 Chattanooga-Hamilton County
Hospital Authority,
Erlanger Medical Center,
(FSA), 5.625%, 10/1/08 1,393,800
Aaa AAA 250 City of Chattanooga,
Memorial Hospital Project,
(MBIA), 6.625%, 9/1/09 267,483
Aaa AAA 1,000 City of Johnson, Johnson
City Medical Center,
(MBIA), 5.00%, 7/1/13 879,570
Aaa AAA 1,500 City of Johnson, Johnson
City Medical Center,
(MBIA), 5.25%, 7/1/16 1,340,700
Aaa AAA 1,000 Knox County, Mercy Health
System, (AMBAC), 6.00%,
9/1/19 981,130
Aaa AAA 1,000 Knox County, Fort Sanders
Alliance Obligated Group,
(MBIA), 5.25%, 1/1/23 1,737,560
Aaa AAA 1,500 Shelby County, LeBonheur
Children's Medical Center,
Inc., (MBIA), 5.50%,
8/15/12 1,398,030
Aaa AAA 2,000 Sullivan County, Holston
Valley Health Care Inc.,
(MBIA), 5.75%, 2/15/13 1,924,200
Aaa AAA 1,000 Sullivan County, Holston
Valley Health Care Inc.,
(MBIA), 5.75%, 2/15/20 943,200
-----------
$13,193,918
-----------
INSURED SPECIAL TAX - 1.8%
Aaa AAA $1,000 City of Johnson, School
Sales Tax Revenue, (AMBAC),
6.70%, 5/1/21 $ 1,049,570
-----------
INSURED TRANSPORTATION - 4.3%
Aaa AAA $1,500 Memphis-Shelby County
Airport Authority, (MBIA),
5.65%, 9/1/15 $ 1,421,640
Aaa AAA 1,000 Memphis-Shelby County
Airport Authority, (MBIA),
(AMT), 6.50%, 2/15/09 1,041,920
-----------
$ 2,463,560
-----------
INSURED UTILITIES - 0.7%
Aaa AAA $ 400 Puerto Rico Electric Power
Authority, (FSA), Variable,
7/1/03 (1) $ 412,000
-----------
INSURED WATER & SEWER - 4.8%
Aaa AAA $ 500 Roane and Morgan Counties,
Cumberland Utility
District, Waterworks
Revenue, (MBIA), 5.90%,
1/1/23 $ 482,100
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 1,000 Nashville and Davidson
Counties, Water and Sewer
Revenue, (AMBAC), 5.75%,
1/1/12 959,960
Aaa AAA 300 Nashville and Davidson
Counties, Water and Sewer
Revenue, (AMBAC), Variable,
1/1/22, (1) 347,043
Aaa AAA 1,000 Nashville and Davidson
Counties, Water and Sewer
Revenue, (FGIC), 5.20%,
1/1/13 913,080
-----------
$ 2,702,183
-----------
LEASE/CERTIFICATE OF
PARTICIPATION - 0.9%
A NR $ 500 Wilson County Educational
Facilities Corporation,
6.125%, 6/30/10 $ 496,755
-----------
MISCELLANEOUS - 7.3%
A AA- $ 700 Tennessee Local Development
Authority, State Loan
Program, 5.00%, 3/1/15 $ 627,375
A AA- 2,350 Tennessee Local Development
Authority, State Loan
Program, 5.75%, 3/1/11 2,304,292
NR A- 1,200 Tennessee Local Development
Authority, Community
Provider Pooled Loan
Program, 6.55%, 10/1/23 1,201,848
-----------
$ 4,133,515
-----------
NURSING HOMES - 1.7%
NR A+ $1,000 Tennessee State Veterans'
Homes Board, Humboldt
Project, 6.65%, 2/1/14 $ 991,420
-----------
TRANSPORTATION - 1.8%
NR BBB $1,000 Guam Airport Authority,
(AMT), 6.70%, 10/1/23 $ 997,410
-----------
UTILITIES - 6.9%
Baa NR $1,000 Scott and Morgan Counties,
Citizens Gas Utility
District, 6.00%, 1/1/13 $ 934,590
NR BBB+ 250 Hamilton County, Eastside
Utility District, 6.50%,
11/1/05 257,125
NR BBB+ 250 Hamilton County, Eastside
Utility District, 6.75%,
11/1/11 257,000
A1 A 750 Davidson and Williamson
Counties, Harpeth Valley
Utility District, 6.75%,
11/1/11 708,075
Aa AA 1,000 Nashville and Davidson
Counties, Electric System
Revenue, 6.00%, 5/15/17 995,040
</TABLE>
71
<PAGE> 72
<TABLE>
- --------------------------------------------------------------------------------
TENNESSEE 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>
UTILITIES - (CONTINUED)
Baa1 A- 750 Puerto Rico Electric Power
Authority, 5.00%, 7/1/12 658,815
Baa1 A- 100 Puerto Rico Electric Power
Authority, 7.00%, 7/1/21 106,460
-----------
$ 3,917,105
-----------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$58,031,420) $56,812,394
===========
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
</TABLE>
The Portfolio invests primarily in debt securities issued by Tennessee
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 February 28, 1995, 37.1% 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 5.7% to 20.1% of total investments.
See notes to financial statements
72
<PAGE> 73
<TABLE>
- --------------------------------------------------------------------------------
Virginia Tax Free Portfolio
Portfolio of Investments - February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 9.2%
NR A- $1,570 Virginia College Building
Authority, Hampden-Sydney
College, 6.60%, 9/1/16 $ 1,608,842
NR A+ 400 Virginia College Building
Authority, Hampton
University, 6.50%, 4/1/08 416,360
NR BBB- 1,150 Virginia College Building
Authority, Marymount
University, 7.00%, 7/1/12 1,186,317
NR BBB- 2,200 Virginia College Building
Authority, Marymount
University, 7.00%, 7/1/22 2,254,076
NR A 2,000 Lynchburgh, IDA, Randolph-
Macon Woman's College,
5.875%, 9/1/23 1,883,060
Baa1 NR 2,220 Rockingham County, IDA,
Bridgewater College,
6.00%, 10/1/23 2,064,467
Aa AA 1,400 Virginia College Building
Authority, Washington and
Lee University, 5.80%,
1/1/24 1,312,612
A NR 1,350 Virginia Education Loan
Authority, (AMT), 6.15%,
9/1/09 1,343,587
Aaa NR 5,650 Virginia Education Loan
Authority, (AMT), 5.55%,
9/1/10 5,314,447
------------
$ 17,383,768
------------
ESCROWED - 2.8%
Aaa NR $1,000 Arlington, IDA, Arlington
Hospital, 7.125%, 9/1/21 $ 1,125,010
A NR 2,000 Augusta, IDA, Augusta
Hospital, 7.00%, 9/1/21 2,224,640
NR A+ 1,700 Virginia Beach, Virginia
Water and Sewer System,
6.625%, 2/1/17 1,857,505
------------
$ 5,207,155
------------
GENERAL OBLIGATIONS - 8.9%
Aaa AAA $1,000 Fairfax County, 5.625%,
6/1/14 $ 973,000
A1 AA 500 Richmond, 5.50%, 7/15/23 453,495
A1 AA 2,000 Richmond, 6.25%, 1/15/21 2,005,940
Baa1 A 350 Puerto Rico, 0%, 7/1/04 205,646
Aa AAA 1,000 Roanoke County, 5.00%,
6/1/21 855,690
Aa AA 1,500 Virginia Public School
Authority, 6.50%, 8/1/12 1,554,810
NR BBB 2,600 Guam, 5.40%, 11/15/18 2,223,000
Aaa AAA 4,300 State of Virginia, 4.90%,
6/1/04 4,105,769
Aaa AAA 4,700 State of Virginia, 5.00%,
7/1/05 4,477,314
------------
$ 16,854,664
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTH CARE - 0.3%
NR NR $ 410 Covington-Allegheny
County, IDA, Beverly
Enterprises, 9.375%,
9/1/01 $ 457,790
------------
HOSPITALS - 19.5%
A NR $1,600 Albermarle County, IDA,
Martha Jefferson Hospital,
5.50%, 10/1/15 $ 1,414,847
A NR 3,800 Albermarle County, IDA,
Martha Jefferson Hospital,
5.50%, 10/1/20 3,274,346
A1 NR 2,500 Arlington, IDA, The
Arlington Hospital, 5.00%,
9/1/21 2,007,725
A1 NR 2,500 Arlington, IDA, The
Arlington Hospital,
5.125%, 9/1/08 2,254,650
A1 NR 1,500 Arlington, IDA, The
Arlington Hospital, 5.30%,
9/1/15 1,300,800
A NR 430 Chesapeake Hospital
Authority, Chesapeake
General Hospital, 7.60%,
7/1/00 465,742
Aa AA- 2,500 Fairfax, IDA, Inova Health
System Hospitals, 5.00%,
8/15/12 2,125,950
Aa AA- 2,000 Fairfax, IDA, Inova Health
System Hospitals, 5.00%,
8/15/15 1,649,480
A A 1,250 Martinsville, IDA,
Memorial Hospital of
Martinsville and Henry
County, 7.00%, 7/1/06 1,293,750
NR A- 2,000 Medical College of Hampton
Roads, GO, 6.875%,
11/15/11 2,089,380
Aa AA 1,000 Norfolk, IDA, Sentara
Health System, 5.50%,
11/1/17 898,530
Aa AA 3,000 Norfolk, IDA, Sentara
Health System, 5.00%,
11/1/20 2,483,700
Aa AA 2,250 Norfolk, IDA, Sentara
Health System, 6.50%,
11/1/13 2,307,038
Aa AA- 3,500 Peninsula Ports Authority
of Virginia, Riverside
Health System, 6.625%,
7/1/10 3,588,725
A NR 1,200 Prince William County,
IDA, Prince William
Hospital, 5.25%, 4/1/19 1,007,184
A NR 2,400 Prince William County,
IDA, Potomac Hospital,
6.85%, 10/1/25 2,473,296
Baa1 BBB- 450 Richmond, IDA, Retreat
Hospital, 6.90%, 7/1/05 463,694
Baa1 BBB- 600 Richmond, IDA, Retreat
Hospital, 7.35%, 7/1/21 612,978
Aa AA 4,000 Virginia Beach Development
Authority, Sentara Bayside
Hospital, 6.60%, 11/1/09 4,108,120
A NR 1,060 Washington County, IDA,
Johnston Memorial
Hospital, 7.00%, 7/1/22 1,096,464
------------
$ 36,916,399
------------
</TABLE>
73
<PAGE> 74
<TABLE>
- --------------------------------------------------------------------------------
VIRGINIA 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>
HOUSING - 12.1%
NR AAA $1,250 Fairfax County
Redevelopment and Housing
Authority, MFMR, (FHA),
7.00%, 5/1/26 $ 1,305,975
NR AAA 200 Harrisonburg Redevelopment
and Housing Authority,
MFMR, (GNMA), Loan-Battery
Heights, 7.375%, 11/20/28 210,556
Aa AA+ 3,500 Virginia HDA, MFMR, 7.05%,
5/1/18 3,660,230
Aa1 NR 2,500 Virginia HDA, SFMR, 6.85%,
1/1/15 2,576,275
Aa1 A+ 2,350 Virginia HDA, SFMR, 7.10%,
1/1/17 2,451,191
Aa1 A+ 3,000 Virginia HDA, SFMR, 7.10%,
1/1/22 3,118,950
Aa1 AA+ 5,000 Virginia HDA, MFMR, (AMT),
6.75%, 7/1/21 5,052,200
Aa NR 1,900 Virginia HDA, SFMR,
Variable, 7/1/04 (1) 1,752,522
Baa BBB 3,000 Puerto Rico Housing Bank
and Finance Agency, 5.10%,
12/1/03 2,762,580
------------
$ 22,890,479
------------
INDUSTRIAL DEVELOPMENT
AUTHORITY - 7.0%
Aa NR $2,190 Chesapeake, Cargill Inc.,
5.875%, 3/1/13 $ 2,127,300
A2 AA- 1,000 Giles City, Hoechst
Celanese Corporation
(AMT), 6.625%, 12/1/22 1,005,910
A1 A- 4,000 Isle of Wright County,
Union Camp Corporation
(AMT), 6.55%, 4/1/24 4,005,960
Baa3 BBB 4,000 West Point, Chesapeake
Corporation (AMT), 6.375%,
3/1/19 3,791,160
Baa3 BBB 2,500 West Point, Chesapeake
Corporation, 6.25%, 3/1/19 2,375,150
------------
$ 13,305,480
------------
INSURED HOSPITALS - 6.5%
Aaa AAA $5,000 Augusta County, IDA,
Augusta Hospital
Corporation, (AMBAC),
5.125%, 9/1/21 $ 4,334,100
Aaa AAA 3,000 Chesapeake Hospital
Authority, Chesapeake
General Hospital, (MBIA),
5.25%, 7/1/18 2,722,710
Aaa AAA 1,000 Norfolk, IDA, Children's
Hospital of the King's
Daughters Obligated Group,
(AMBAC), 5.50%, 6/1/20 900,610
Aaa AAA 1,000 Roanoke, IDA, Franklin
Memorial Hospital and St.
Albans Psychiatric
Hospital, (MBIA), 5.25%,
7/1/25 870,740
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 2,250 Virginia Beach, IDA,
Virginia Beach Memorial
Hospital, (AMBAC), 5.125%,
2/15/18 1,980,900
Aaa AAA 1,700 Winchester, IDA,
Winchester Medical Center,
(AMBAC), Variable, 1/1/08
(1) 1,529,949
------------
$ 12,339,009
------------
INSURED TRANSPORTATION - 5.2%
Aaa AAA $6,500 Metropolitan Washington
Airports Authority,
(MBIA), (AMT), 5.75%,
10/1/20 $ 6,040,580
Aaa AAA 3,000 Northern Virginia
Transportation District
Commission, (CGIC), 5.25%,
7/1/10 2,804,850
Aaa AAA 1,000 Richmond Metropolitan
Authority Expressway,
(FGIC), 6.375%, 7/15/16 1,019,280
------------
$ 9,864,710
------------
INSURED WATER & SEWER - 3.6%
Aaa AAA $2,000 Loudon County Sanitation
Authority, (MBIA), 5.25%,
1/1/25 $ 1,747,860
Aaa AAA 2,000 Loudon County Sanitation
Authority, (MBIA), 5.25%,
1/1/30 1,722,360
Aaa AAA 1,000 Norfolk Water, (AMBAC),
5.25%, 11/1/13 901,880
Aaa AAA 1,000 Roanoke County, Water and
Sewer, (FGIC), 5.00%,
7/1/21 856,670
Aaa AAA 1,750 Upper Occoquan Sewage
Authority, (FGIC), 5.00%,
7/1/15 1,531,040
------------
$ 6,759,810
------------
LEASE/CERTIFICATES OF
PARTICIPATION - 10.3%
A NR $3,000 Harrisonburg Redevelopment
and Housing Authority,
Lease, Rockingham County
and Harrisonburg, 6.50%,
9/1/14 $ 3,052,200
NR NR 1,250 King George County, Lease,
7.00%, 12/15/12 1,260,350
NR A 600 Prince William County,
IDA, Virginia Commuter
Parking Facilities Lease,
7.25%, 3/1/11 642,432
NR A- 2,500 Hampton, Museum Revenue,
5.25%, 1/1/09 2,325,325
Aa AA 3,250 Fairfax County Economic
Development Authority,
Lease, Government Center
Properties, 5.50%, 5/15/18 3,005,567
Aa AA 1,750 Fairfax County Economic
Development Authority,
Lease, Government Center
Properties, 5.25%,
11/15/18 1,552,723
</TABLE>
74
<PAGE> 75
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
LEASE/CERTIFICATES OF
PARTICIPATION - (CONTINUED)
Aa AA 3,200 Fairfax County Economic
Development Authority,
Lease, Government Center
Properties, 5.50%, 5/15/14 2,998,016
Aa AA 2,000 Henrico County, IDA,
Lease, 7.00%, 8/1/13 2,169,360
Aa AA 2,250 Henrico County, IDA,
Lease, 7.125%, 8/1/21 2,444,310
------------
$ 19,450,283
------------
LIFE CARE - 1.0%
NR NR $2,000 Loudon County, IDA,
Falcons Landing, 8.75%,
11/1/24 $ 1,984,940
------------
RESOURCE RECOVERY - 1.2%
Aa A+ $ 915 Fairfax County Economic
Development Authority,
Ogden Martin Systems of
Fairfax Incorporated,
(AMT), 7.75%, 2/1/11 $ 1,002,071
A A- 1,250 Southeastern Public
Service Authority, Solid
Waste Systems (AMT),
6.00%, 7/1/13 1,200,275
------------
$ 2,202,346
------------
SPECIAL TAX REVENUE - 4.1%
Aa AA $1,000 Commonwealth
Transportation Board,
Route 28, Variable, 4/1/18
(1) $ 1,068,990
Aa AA 2,800 Virginia State
Transportation Board
Revenue, US Route 28,
5.25%, 5/15/19 2,504,012
Aa AA 4,000 Commonwealth
Transportation Board,
Route 28, 6.50%, 4/1/18 4,140,880
------------
$ 7,713,882
------------
TRANSPORTATION - 0.9%
Baa1 A $1,000 Puerto Rico Highway &
Transportation Authority,
5.25%, 7/1/20 $ 874,730
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa1 A 1,000 Puerto Rico Highway &
Transportation Authority,
5.00%, 7/1/22 839,420
------------
$ 1,714,150
------------
UTILITIES - 3.1%
Baa1 A- $3,000 Puerto Rico Electric
Authority Power, 0%,
7/1/17 $ 735,420
NR NR 1,000 Virgin Islands Water and
Power Authority, 7.40%,
7/1/11 1,050,890
A2 A 4,700 Louisa, IDA, Virginia
Electric and Power
Company, 5.45%, 1/1/24 (2) 4,065,876
------------
$ 5,852,186
------------
WATER & SEWER REVENUE - 4.3%
Aa AA- $2,250 Fairfax County Virginia
Water Authority, 5.75%,
4/1/29 $ 2,152,957
Aa AA- 1,000 Fairfax County Virginia
Water Authority, Variable,
4/1/29 874,570
Aa AA- 4,095 Fairfax County Virginia
Water Authority, 5.00%,
4/1/16 3,547,130
NR AA 1,880 Virginia State Resource
Authority, Campbell
Utilities, 5.125%, 10/1/19 1,614,018
------------
$ 8,188,675
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$188,460,960) $189,085,726
============
<FN>
(1) The above designated securities have been issued as inverse floater bonds.
(2) At February 28, 1995, the market value of securities segregated to cover
margin requirements for open financial future contracts amounted to
$4,065,876.
</TABLE>
The Portfolio invests primarily in debt securities issued by Virginia
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 February 28, 1995, 15.3% of the securities in the portfolio of
investments are backed by bond issuance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institutions ranged from 1.8% to 6.9% of total investments.
See notes to financial statements
75
<PAGE> 76
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
Tax Free Portfolios
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
ALABAMA ARKANSAS GEORGIA KENTUCKY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $115,875,675 $83,558,685 $126,921,951 $143,176,194
Unrealized appreciation (depreciation) 362,556 (910,963) (1,146,391) (2,232,274)
------------ ----------- ------------ ------------
Total investments, at value (Note 1A) $116,238,231 $82,647,722 $125,775,560 $140,943,920
Cash 2,471,741 961 1,273,288 465
Receivable for investments sold 1,574,782 -- -- 2,744,850
Interest receivable 1,835,438 1,349,133 2,324,554 2,222,185
Deferred organization expenses (Note 1D) 4,550 5,935 6,618 3,823
------------ ----------- ------------ ------------
Total assets $122,124,742 $84,003,751 $129,380,020 $145,915,243
------------ ----------- ------------ ------------
LIABILITIES:
Demand note payable (Note 5) $ 4,240,503 $ 191,000 $ -- $ 696,000
Payable for when-issued securities (Note 1F) -- 744,132 -- --
Payable for daily variation margin on open financial
futures contracts (Note 1E) 33,431 23,879 49,217 41,789
Payable to affiliates --
Trustees' fee 1,356 1,037 1,356 1,356
Custodian fee -- 1,193 -- 281
Accrued expenses 5,177 5,141 5,443 5,617
------------ ----------- ------------ ------------
Total liabilities $ 4,280,467 $ 966,382 $ 56,016 $ 745,043
------------ ----------- ------------ ------------
NET ASSETS applicable to investors' interest in
Portfolio $117,844,275 $83,037,369 $129,324,004 $145,170,200
============ =========== ============ ============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $117,745,626 $84,136,838 $130,525,754 $147,732,358
Unrealized appreciation (depreciation) of
investments and financial futures contracts
(computed on the basis of identified cost) 98,649 (1,099,469) (1,201,750) (2,562,158)
------------ ----------- ------------ ------------
Total $117,844,275 $83,037,369 $129,324,004 $145,170,200
============ =========== ============ ============
</TABLE>
See notes to financial statements
76
<PAGE> 77
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $32,771,802 $115,223,998 $91,951,666 $194,221,184
Unrealized appreciation (depreciation) (658,157) (1,817,705) 203,876 1,610,525
----------- ------------ ----------- ------------
Total investments, at value (Note 1A) $32,113,645 $113,406,293 $92,155,542 $195,831,709
Cash 885,340 945 93,347 574,270
Receivable for investments sold -- 952,179 915,467 481,031
Interest receivable 484,585 1,521,709 1,314,076 3,322,654
Deferred organization expenses (Note 1D) 5,380 4,630 4,071 10,019
----------- ------------ ----------- ------------
Total assets $33,488,950 $115,885,756 $94,482,503 $200,219,683
----------- ------------ ----------- ------------
LIABILITIES:
Demand note payable (Note 5) $ -- $ 1,269,000 $ -- $ --
Payable for investments purchased -- -- 892,274 1,820,640
Payable for daily variation margin on open
financial futures contracts (Note 1E) 12,790 33,431 -- 100,035
Payable to affiliates --
Trustees' fees 265 1,356 1,037 1,781
Custodian fees 736 -- 1,063 --
Accrued expenses 4,642 5,507 5,292 5,404
----------- ------------ ----------- ------------
Total liabilities $ 18,433 $ 1,309,294 $ 899,666 $ 1,927,860
----------- ------------ ----------- ------------
NET ASSETS applicable to investors' interest in
Portfolio $33,470,517 $114,576,462 $93,582,837 $198,291,823
=========== ============ =========== ============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions
and withdrawals $34,143,112 $116,634,450 $93,378,961 $196,793,816
Unrealized appreciation (depreciation) of
investments and financial futures (computed
on the basis of identified cost) (672,595) (2,057,988) 203,876 1,498,007
----------- ------------ ----------- ------------
Total $33,470,517 $114,576,462 $93,582,837 $198,291,823
=========== ============ =========== ============
</TABLE>
See notes to financial statements
77
<PAGE> 78
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $147,514,934 $ 59,334,342 $58,031,420 $188,460,960
Unrealized appreciation (depreciation) (1,564,175) 27,987 (1,219,026) 624,766
------------ ------------ ----------- ------------
Total investments, at value (Note 1A) $145,950,759 $ 59,362,329 $56,812,394 $189,085,726
Cash 612,038 678,321 388,533 1,164,190
Interest receivable 2,028,832 905,457 916,489 3,537,729
Deferred organization expenses (Note 1D) 6,091 5,705 6,995 8,184
------------ ------------ ----------- ------------
Total assets $148,597,720 $ 60,951,812 $58,124,411 $193,795,829
------------ ------------ ----------- ------------
LIABILITIES:
Payable for investments purchased $ -- $ -- $ -- $ 521,957
Payable for daily variation margin on open
financial futures contracts (Note 1E) -- 23,254 -- 66,023
Payable to affiliates --
Trustees' fee 1,356 1,037 1,037 1,781
Custodian fee 2,829 885 893 --
Accrued expenses 5,243 5,075 4,073 5,410
------------ ------------ ----------- ------------
Total liabilities $ 9,428 $ 30,251 $ 6,003 $ 595,171
------------ ------------ ----------- ------------
NET ASSETS applicable to investors' interest in
Portfolio $148,588,292 $ 60,921,561 $58,118,408 $193,200,658
============ ============ =========== ============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $150,152,467 $ 60,919,824 $59,337,434 $192,650,154
Unrealized appreciation (depreciation) of
investments and financial futures contracts
(computed on the basis of
identified cost) (1,564,175) 1,737 (1,219,026) 550,504
------------ ------------ ----------- ------------
Total $148,588,292 $ 60,921,561 $58,118,408 $193,200,658
============ ============ =========== ============
</TABLE>
See notes to financial statements
78
<PAGE> 79
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
ALABAMA ARKANSAS GEORGIA KENTUCKY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income (Note 1B) $ 3,599,983 $ 2,509,651 $ 4,039,226 $4,426,129
----------- ----------- ----------- ----------
Expenses --
Investment adviser fee (Note 2) $ 226,371 $ 145,355 $ 263,495 $ 289,476
Compensation of Trustees not members of the
Investment Adviser's organization 5,118 3,105 4,054 4,832
Custodian fee (Note 2) 357 4,061 -- 10,682
Legal and accounting services 20,321 18,321 20,326 20,328
Bond pricing 5,341 5,113 5,688 6,833
Interest expense (Note 5) 4,608 5,143 883 6,736
Printing 1,400 1,400 1,400 1,400
Amortization of organization expenses (Note 1D) 778 746 1,087 666
Miscellaneous 830 520 1,978 1,987
----------- ----------- ----------- ----------
Total expenses $ 265,124 $ 183,764 $ 298,911 $ 342,940
----------- ----------- ----------- ----------
Net investment income $ 3,334,859 $ 2,325,887 $ 3,740,315 $4,083,189
----------- ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) --
Investment transactions (identified cost basis) $(1,727,724) $(1,410,180) $(3,413,541) $ (899,439)
Financial futures contracts 219,022 152,544 (393,294) 298,122
----------- ----------- ----------- ----------
Net realized loss on investments $(1,508,702) $(1,257,636) $(3,806,835) $ (601,317)
----------- ----------- ----------- ----------
Change in unrealized appreciation (depreciation) --
Investments $ 2,405,610 $ 1,029,075 $ 1,978,926 $ 734,841
Financial futures contracts (229,138) (164,039) 69,602 (283,525)
----------- ----------- ----------- ----------
Net unrealized appreciation $ 2,176,472 $ 865,036 $ 2,048,528 $ 451,316
----------- ----------- ----------- ----------
Net realized and unrealized gain (loss) on
investments $ 667,770 $ (392,600) $(1,758,307) $ (150,001)
----------- ----------- ----------- ----------
Net increase in net assets from operations $ 4,002,629 $ 1,933,287 $ 1,982,008 $3,933,188
============ =========== =========== ==========
</TABLE>
See notes to financial statements
79
<PAGE> 80
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income (Note 1B) $1,005,510 $ 3,643,336 $ 2,903,930 $ 6,104,918
---------- ----------- ----------- ------------
Expenses --
Investment adviser fee (Note 2) $ 34,609 $ 226,627 $ 172,342 $ 418,488
Compensation of Trustees not members of the
Investment Adviser's organization 790 4,054 2,602 5,320
Custodian fee (Note 2) 736 3,328 16,418 --
Legal and accounting services 14,702 20,321 18,315 24,998
Interest expense (Note 5) 4,712 5,519 8,811 --
Bond pricing 3,422 5,585 5,990 6,480
Printing 1,400 1,400 1,400 1,400
Amortization of organization expense (Note 1D) 672 753 698 1,669
Miscellaneous 200 953 687 1,308
---------- ----------- ----------- ------------
Total expenses $ 61,243 $ 268,540 $ 227,263 $ 459,663
---------- ----------- ----------- ------------
Deduct preliminary reduction of investment adviser
fee (Note 2) $ 16,683 $ -- $ -- $ --
---------- ----------- ----------- ------------
Net expenses $ 44,560 $ 268,540 $ 227,263 $ 459,663
---------- ----------- ----------- ------------
Net investment income $ 960,950 $ 3,374,796 $ 2,676,667 $ 5,645,255
---------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (627,625) $(1,330,853) $(2,269,100) $ (3,215,321)
Financial futures contracts (207,309) 207,497 77,046 (873,144)
---------- ----------- ----------- ------------
Net realized loss on investments $ (834,934) $(1,123,356) $(2,192,054) $ (4,088,465)
---------- ----------- ----------- ------------
Change in unrealized appreciation (depreciation) --
Investments $ 725,302 $ 1,149,939 $ 2,378,547 $ 3,212,969
Financial futures contracts 20,689 (204,226) 21,133 63,897
---------- ----------- ----------- ------------
Net unrealized appreciation $ 745,991 $ 945,713 $ 2,399,680 $ 3,276,866
---------- ----------- ----------- ------------
Net realized and unrealized gain (loss)
on investments $ (88,943) $ (177,643) $ 207,626 $ (811,599)
---------- ----------- ----------- ------------
Net increase in net assets from
operations $ 872,007 $ 3,197,153 $ 2,884,293 $ 4,833,656
========== =========== =========== ============
</TABLE>
See notes to financial statements
80
<PAGE> 81
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- -------------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income (Note 1B) $ 4,533,274 $ 1,907,445 $1,750,730 $ 6,037,898
----------- ------------ ---------- -----------
Expenses --
Investment adviser fee (Note 2) $ 302,073 $ 98,511 $ 84,506 $ 408,381
Compensation of Trustees not members of the
Investment Adviser's organization 4,055 3,105 3,825 5,320
Custodian fee (Note 2) 27,278 6,569 10,452 --
Legal and accounting services 20,331 18,313 18,305 25,781
Interest expense 16,165 5,723 2,218 5,323
Bond pricing 5,624 5,085 3,420 6,443
Printing 1,400 1,400 1,400 1,400
Amortization of organization expenses (Note 1D) 1,037 715 1,170 1,370
Miscellaneous 940 395 1,037 498
----------- ------------ ---------- -----------
Total expenses $ 378,903 $ 139,816 $ 126,333 $ 454,516
----------- ------------ ---------- -----------
Net investment income $ 4,154,371 $ 1,767,629 $1,624,397 $ 5,583,382
----------- ------------ ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) --
Investment transactions (identified cost basis) $(2,936,941) $ (2,273,512) $ (905,644) $(2,908,697)
Financial futures contracts 123,944 (177,635) 40,198 (607,191)
----------- ------------ ---------- -----------
Net realized loss on investments $(2,812,997) $ (2,451,147) $ (865,446) $(3,515,888)
----------- ------------ ---------- -----------
Change in unrealized appreciation
(depreciation) --
Investments $ 3,163,277 $ 1,897,242 $ 902,648 $ 3,334,787
Financial futures contracts 33,997 27,042 11,026 101,235
----------- ------------ ---------- -----------
Net unrealized appreciation $ 3,197,274 $ 1,924,284 $ 913,674 $ 3,436,022
----------- ------------ ---------- -----------
Net realized and unrealized gain (loss)
on investments $ 384,277 $ (526,863) $ 48,228 $ (79,866)
----------- ------------ ---------- -----------
Net increase in net assets from
operations $ 4,538,648 $ 1,240,766 $1,672,625 $ 5,503,516
=========== ============ ========== ===========
</TABLE>
See notes to financial statements
81
<PAGE> 82
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
ALABAMA ARKANSAS GEORGIA KENTUCKY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 3,334,859 $ 2,325,887 $ 3,740,315 $ 4,083,189
Net realized loss on investment transactions (1,508,702) (1,257,636) (3,806,835) (601,317)
Change in unrealized appreciation of investments 2,176,472 865,036 2,048,528 451,316
------------ ----------- ------------ ------------
Net increase in net assets from operations $ 4,002,629 $ 1,933,287 $ 1,982,008 $ 3,933,188
------------ ----------- ------------ ------------
Capital transactions --
Contributions $ 9,582,941 $ 4,742,391 $ 8,452,626 $ 7,801,540
Withdrawals (12,904,686) (6,555,044) (18,834,427) (11,774,464)
------------ ----------- ------------ ------------
Increase (decrease) in net assets resulting
from capital transactions $ (3,321,745) $(1,812,653) $(10,381,801) $ (3,972,924)
------------ ----------- ------------ ------------
Total increase (decrease) in net assets $ 680,884 $ 120,634 $ (8,399,793) $ (39,736)
NET ASSETS:
At beginning of period 117,163,391 82,916,735 137,723,797 145,209,936
------------ ----------- ------------ ------------
At end of period $117,844,275 $83,037,369 $129,324,004 $145,170,200
============ =========== ============ ============
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 960,950 $ 3,374,796 $ 2,676,667 $ 5,645,255
Net realized loss on investment transactions (834,934) (1,123,356) (2,192,054) (4,088,465)
Change in unrealized appreciation of
investments 745,991 945,713 2,399,680 3,276,866
----------- ------------ ----------- ------------
Net increase in net assets from operations $ 872,007 $ 3,197,153 $ 2,884,293 $ 4,833,656
----------- ------------ ----------- ------------
Capital transactions --
Contributions $ 4,717,472 $ 9,162,212 $ 5,018,632 $ 12,412,838
Withdrawals (3,542,297) (15,638,620) (9,487,521) (18,727,024)
----------- ------------ ----------- ------------
Increase (decrease) in net assets resulting
from capital transactions $ 1,175,175 $ (6,476,408) $(4,468,889) $ (6,314,186)
----------- ------------ ----------- ------------
Total increase (decrease) in net
assets $ 2,047,182 $ (3,279,255) $(1,584,596) $ (1,480,530)
NET ASSETS:
At beginning of period 31,423,335 117,855,717 95,167,433 199,772,353
----------- ------------ ----------- ------------
At end of period $33,470,517 $114,576,462 $93,582,837 $198,291,823
=========== ============ =========== ============
</TABLE>
See notes to financial statements
82
<PAGE> 83
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 4,154,371 $ 1,767,629 $ 1,624,397 $ 5,583,382
Net realized loss on investment transactions (2,812,997) (2,451,147) (865,446) (3,515,888)
Change in unrealized appreciation of
investments 3,197,274 1,924,284 913,674 3,436,022
------------ -------------- ----------- ------------
Net increase in net assets from operations $ 4,538,648 $ 1,240,766 $ 1,672,625 $ 5,503,516
------------ -------------- ----------- ------------
Capital transactions --
Contributions $ 7,920,905 $ 6,058,878 $ 5,095,782 $ 15,883,866
Withdrawals (16,990,482) (8,642,772) (5,145,682) (22,705,912)
------------ -------------- ----------- ------------
Decrease in net assets resulting from capital
transactions $ (9,069,577) $ (2,583,894) $ (49,900) $ (6,822,046)
------------ -------------- ----------- ------------
Total increase (decrease) in net assets $ (4,530,929) $ (1,343,128) $ 1,622,725 $ (1,318,530)
NET ASSETS:
At beginning of period $153,119,221 $ 62,264,689 $56,495,683 $194,519,188
------------ -------------- ----------- ------------
At end of period $148,588,292 $ 60,921,561 $58,118,408 $193,200,658
============ ============ =========== ============
</TABLE>
See notes to financial statements
83
<PAGE> 84
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
Year Ended August 31, 1994
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
ALABAMA ARKANSAS GEORGIA KENTUCKY
PORTFOLIO* PORTFOLIO** PORTFOLIO* PORTFOLIO*
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 5,213,587 $ 2,555,613 $ 6,604,249 $ 6,772,813
Net realized loss on investment transactions (1,159,958) (349,879) (1,311,944) (59,807)
Change in unrealized depreciation of investments (6,819,050) (5,522,249) (9,992,777) (10,955,591)
------------ ----------- ------------ ------------
Net decrease in net assets from operations $ (2,765,421) $(3,316,515) $ (4,700,472) $ (4,242,585)
------------ ----------- ------------ ------------
Capital transactions --
Contributions $ 48,883,547 $90,005,753 $ 42,445,028 $ 44,883,326
Withdrawals (12,582,537) (3,872,523) (19,332,141) (13,367,045)
------------ ----------- ------------ ------------
Increase in net assets resulting from capital
transactions $ 36,301,010 $86,133,230 $ 23,112,887 $ 31,516,281
------------ ----------- ------------ ------------
Total increase in net assets $ 33,535,589 $82,816,715 $ 18,412,415 $ 27,273,696
NET ASSETS:
At beginning of period 83,627,802 100,020 119,311,382 117,936,240
------------ ----------- ------------ ------------
At end of period $117,163,391 $82,916,735 $137,723,797 $145,209,936
============ =========== ============ ============
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
PORTFOLIO** PORTFOLIO* PORTFOLIO* PORTFOLIO*
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 976,696 $ 5,460,165 $ 4,337,756 $ 9,444,440
Net realized loss on investment transactions (259,364) (590,974) (14,916) (3,785,407)
Change in unrealized depreciation of
investments (2,361,484) (9,137,805) (7,434,028) (12,662,593)
----------- ------------ ----------- ------------
Net decrease in net assets from operations $(1,644,152) $ (4,268,614) $(3,111,188) $ (7,003,560)
----------- ------------ ----------- ------------
Capital transactions --
Contributions $34,683,852 $ 38,617,526 $30,851,018 $ 52,654,042
Withdrawals (1,716,385) (10,706,479) (7,845,180) (18,412,361)
----------- ------------ ----------- ------------
Increase in net assets resulting from
capital transactions $32,967,467 $ 27,911,047 $23,005,838 $ 34,241,681
----------- ------------ ----------- ------------
Total increase in net assets $31,323,315 $ 23,642,433 $19,894,650 $ 27,238,121
NET ASSETS:
At beginning of period 100,020 94,213,284 75,272,783 172,534,232
----------- ------------ ----------- ------------
At end of period $31,423,335 $117,855,717 $95,167,433 $199,772,353
=========== ============ =========== ============
<FN>
* For the eleven months ended August 31, 1994.
** For the seven months ended August 31, 1994.
</TABLE>
See notes to financial statements
84
<PAGE> 85
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
Year Ended August 31, 1994
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
PORTFOLIO* PORTFOLIO** PORTFOLIO* PORTFOLIO*
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 6,932,765 $ 1,863,481 $ 2,453,518 $ 9,556,570
Net realized gain (loss) on investment
transactions 4,146 (984,439) (105,080) (2,385,959)
Change in unrealized depreciation of
investments (11,945,088) (4,190,757) (3,871,496) (13,323,277)
------------ ------------ ----------- ------------
Net decrease in net assets from operations $ (5,008,177) $ (3,311,715) $(1,523,058) $ (6,152,666)
------------ ------------ ----------- ------------
Capital transactions --
Contributions $ 47,210,240 $ 72,540,601 $22,707,167 $ 47,023,229
Withdrawals (16,579,534) (7,064,217) (3,954,097) (20,611,874)
------------ ------------ ----------- ------------
Increase in net assets resulting from capital
transactions $ 30,630,706 $ 65,476,384 $18,753,070 $ 26,411,355
------------ ------------ ----------- ------------
Total increase in net assets $ 25,622,529 $ 62,164,669 $17,230,012 $ 20,258,689
NET ASSETS:
At beginning of period 127,496,692 100,020 39,265,671 174,260,499
------------ ------------ ----------- ------------
At end of period $153,119,221 $ 62,264,689 $56,495,683 $194,519,188
============ ============ =========== ============
<FN>
* For the eleven months ended August 31, 1994.
** For the seven months ended August 31, 1994.
</TABLE>
See notes to financial statements
85
<PAGE> 86
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
ALABAMA PORTFOLIO ARKANSAS PORTFOLIO
------------------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED
FEBRUARY 28, ---------------------- FEBRUARY 28, YEAR ENDED
1995 AUGUST 31, SEPT. 30, 1995 AUGUST 31,
(UNAUDITED) 1994* 1993** (UNAUDITED) 1994***
------------ ---------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
RATIOS (As a percentage of average
daily net assets)++:
Net expenses 0.47%+ 0.44%+ 0.25%+ 0.46%+ 0.24%+
Net investment income 5.97%+ 5.37%+ 5.52%+ 5.87%+ 5.60%+
Portfolio Turnover 29% 26% 10% 18% 16%
</TABLE>
++ The operating expenses of the Portfolios may reflect a reduction of the
investment adviser fee and an allocation of expenses to the Investment
Adviser. Had such actions not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C> <C> <C> <C>
RATIOS (As a percentage of average daily net assets):
Expenses 0.35%+ 0.43%+
Net investment income 5.42%+ 5.41%+
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
GEORGIA PORTFOLIO KENTUCKY PORTFOLIO
------------------------------------- -------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
FEBRUARY 28, ---------------------- FEBRUARY 28, ----------------------
1995 AUGUST 31, SEPT. 30, 1995 AUGUST 31, SEPT. 30,
(UNAUDITED) 1994* 1993** (UNAUDITED) 1994* 1993**
------------ ---------- --------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
RATIOS (As a percentage of
average daily net assets):
Net expenses 0.47%+ 0.44%+ 0.40%+ 0.50%+ 0.46%+ 0.40%+
Net investment income 5.87%+ 5.37%+ 5.37%+ 5.95%+ 5.39%+ 5.40%+
Portfolio Turnover 22% 45% 35% 20% 21% 11%
<FN>
+ Computed on an annualized basis.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September 30, 1993.
*** For the seven months ended August 31, 1994.
</TABLE>
See notes to financial statements
86
<PAGE> 87
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
LOUISIANA PORTFOLIO MARYLAND PORTFOLIO
------------------------- -------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR ENDED
FEBRUARY 28, YEAR ENDED FEBRUARY 28, ----------------------
1995 AUGUST 31, 1995 AUGUST 31, SEPT. 30,
(UNAUDITED) 1994*** (UNAUDITED) 1994* 1993**
------------ ---------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C>
RATIOS (As a percentage of average
daily net assets)++:
Net expenses 0.29%+ 0.14%+ 0.48%+ 0.44%+ 0.36%+
Net investment income 6.20%+ 5.86%+ 6.07%+ 5.44%+ 5.41%+
Portfolio Turnover 14% 21% 22% 41% 34%
<FN>
++ The operating expenses of the Portfolio may reflect a reduction of the investment adviser fee and an 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 net
<S> <C> <C> <C> <C> <C>
assets):
Expenses 0.39%+ 0.33%+ -- -- 0.38%+
Net investment income 6.10%+ 5.67%+ -- -- 5.39%+
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
MISSOURI PORTFOLIO NORTH CAROLINA PORTFOLIO
------------------------------------- -------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
FEBRUARY 28, ---------------------- FEBRUARY 28, ----------------------
1995 AUGUST 31, SEPT. 30, 1995 AUGUST 31, SEPT. 30,
(UNAUDITED) 1994* 1993** (UNAUDITED) 1994* 1993**
------------ ---------- --------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
RATIOS (As a percentage of
average daily net assets):
Net expenses 0.51%+ 0.45%+ 0.40%+ 0.48%+ 0.46%+ 0.43%+
Net investment income 5.97%+ 5.36%+ 5.36%+ 5.95%+ 5.40%+ 5.43%+
Portfolio Turnover 20% 28% 6% 20% 37% 21%
<FN>
+ Computed on an annualized basis.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September 30, 1993.
*** For the seven months ended August 31, 1994.
</TABLE>
See notes to financial statements
87
<PAGE> 88
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
OREGON PORTFOLIO SOUTH CAROLINA PORTFOLIO
------------------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED
FEBRUARY 28, ---------------------- FEBRUARY 28, YEAR ENDED
1995 AUGUST 31, SEPT. 30, 1995 AUGUST 31,
(UNAUDITED) 1994* 1993** (UNAUDITED) 1994***
------------ ---------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
RATIOS (As a percentage of average
daily net assets):
Net expenses 0.53%+ 0.46%+ 0.43%+ 0.47%+ 0.37%+
Net investment income 5.80%+ 5.26%+ 5.30%+ 5.89%+ 5.47%+
Portfolio Turnover 18% 15% 32% 37% 23%
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
TENNESSEE PORTFOLIO VIRGINIA PORTFOLIO
------------------------------------- -------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
FEBRUARY 28, ---------------------- FEBRUARY 28, ----------------------
1995 AUGUST 31, SEPT. 30, 1995 AUGUST 31, SEPT. 30,
(UNAUDITED) 1994* 1993** (UNAUDITED) 1994* 1993**
------------ ---------- --------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
RATIOS (As a percentage of
average daily net assets)++:
Net expenses 0.47%+ 0.36%+ 0.08%+ 0.49%+ 0.46%+ 0.43%+
Net investment income 6.01%+ 5.49%+ 5.60%+ 6.05%+ 5.49%+ 5.49%+
Portfolio Turnover 14% 10% 69% 22% 48% 29%
<FN>
++ The operating expenses of the Portfolios may reflect a reduction of the investment adviser fee and an 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 0.31%+
Net investment income 5.37%+
<FN>
+ Computed on an annualized basis.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September 30, 1993.
*** For the seven months ended August 31, 1994.
</TABLE>
See notes to financial statements
88
<PAGE> 89
- --------------------------------------------------------------------------------
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Alabama Tax Free Portfolio (Alabama Portfolio), Arkansas Tax Free Portfolio
(Arkansas Portfolio), Georgia Tax Free Portfolio (Georgia Portfolio), Kentucky
Tax Free Portfolio (Kentucky Portfolio), Louisiana Tax Free Portfolio (Louisiana
Portfolio), Maryland Tax Free Portfolio (Maryland Portfolio), Missouri Tax Free
Portfolio (Missouri Portfolio), North Carolina Tax Free Portfolio (North
Carolina Portfolio), Oregon Tax Free Portfolio (Oregon Portfolio), South
Carolina Tax Free Portfolio (South Carolina Portfolio), Tennessee Tax Free
Portfolio (Tennessee Portfolio) and Virginia Tax Free Portfolio (Virginia
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 Portfolio is
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, a
Portfolio may not achieve the anticipated benefits of the financial futures
contract and may realize a loss.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Portfolios may engage in
when-issued or delayed delivery transactions. The Portfolios record when-issued
securities on trade date and maintain security positions such that sufficient
liquid assets will be available to make payment 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.
H. INTERIM FINANCIAL INFORMATION--The interim financial statements relating to
February 28, 1995 and for the period then ended have not been audited by
independent certified public accountants, but in the opinion of the Portfolios'
management, reflect all adjustments necessary for the fair presentation of the
financial statements.
89
<PAGE> 90
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(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).
<TABLE>
For the six months ended February 28, 1995, each Portfolio paid advisory fees as follows:
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1995
(UNAUDITED)
---------------------------
PORTFOLIO AMOUNT EFFECTIVE RATE*
---------------------------------- -------- ---------------
<S> <C> <C>
Alabama $226,371 0.41%
Arkansas $145,355 0.37%
Georgia $263,495 0.41%
Kentucky $289,476 0.42%
Louisiana $ 34,609 0.22%
Maryland $226,627 0.41%
Missouri $172,342 0.38%
North Carolina $418,488 0.44%
Oregon $302,073 0.42%
South Carolina $ 98,511 0.33%
Tennessee $ 84,506 0.31%
Virginia $408,381 0.44%
<FN>
* Advisory fees paid as a percentage of average daily net assets (annualized).
</TABLE>
To enhance the net income of the Louisiana Portfolio, BMR made a preliminary
reduction in its fee in the amount of $16,683 for the six months ended February
28, 1995.
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 Portfolios that are not affiliated with the Investment Adviser
may elect to defer receipt of all or a portion of their annual fees in
accordance with the terms of the Trustees Deferred Compensation Plan. For the
period from the start of business of each Portfolio to February 28, 1995, no
significant amounts have been deferred.
- --------------------------------------------------------------------------------
(3) INVESTMENTS
<TABLE>
Purchases and sales of investments, other than U.S. Government securities and short-term obligations, for the six months
ended February 28, 1995 were as follows:
<CAPTION>
ALABAMA PORTFOLIO ARKANSAS PORTFOLIO GEORGIA PORTFOLIO KENTUCKY PORTFOLIO
------------------- --------------------- ------------------- ------------------------
<S> <C> <C> <C> <C>
Purchases $31,875,787 $16,216,001 $28,042,955 $ 27,739,149
Sales 32,465,620 14,277,242 33,572,957 30,833,542
</TABLE>
<TABLE>
<CAPTION>
LOUISIANA PORTFOLIO MARYLAND PORTFOLIO MISSOURI PORTFOLIO NORTH CAROLINA PORTFOLIO
------------------- --------------------- ------------------- ------------------------
<S> <C> <C> <C> <C>
Purchases $4,323,623 $24,008,866 $17,512,547 $ 39,581,531
Sales 4,547,320 26,914,891 18,427,184 36,775,717
</TABLE>
<TABLE>
<CAPTION>
OREGON PORTFOLIO S. CAROLINA PORTFOLIO TENNESSEE PORTFOLIO VIRGINIA PORTFOLIO
------------------- --------------------- ------------------- ------------------------
<S> <C> <C> <C> <C>
Purchases $21,419,523 $22,473,508 $9,756,392 $ 40,619,528
Sales 26,001,238 23,767,281 7,697,842 39,914,070
</TABLE>
90
<PAGE> 91
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
<TABLE>
The cost and unrealized depreciation/appreciation in value of the investments owned by each Portfolio at February 28, 1995,
as computed on a federal income tax basis, are as follows:
<CAPTION>
ALABAMA ARKANSAS GEORGIA KENTUCKY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Aggregate Cost $115,875,675 $ 83,558,685 $126,921,951 $143,176,194
------------ ------------ ------------ ------------
Gross unrealized
depreciation $ 2,312,917 $ 2,023,981 $ 3,204,810 $ 4,089,468
Gross unrealized
appreciation 2,675,473 1,113,018 2,058,419 1,857,194
------------ ------------ ------------ ------------
Net unrealized
appreciation
(depreciation) $ 362,556 $ (910,963) $ (1,146,391) $ (2,232,274)
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Aggregate Cost $ 32,771,802 $115,223,998 $ 91,951,666 $194,221,184
------------ ------------ ------------ ------------
Gross unrealized
depreciation $ 1,122,900 $ 4,077,698 $ 1,671,993 $ 3,235,432
Gross unrealized
appreciation 464,743 2,259,993 1,875,869 4,845,957
------------ ------------ ------------ ------------
Net unrealized
appreciation
(depreciation) $ (658,157) $ (1,817,705) $ 203,876 $ 1,610,525
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Aggregate Cost $147,514,934 $ 59,334,342 $ 58,031,420 $188,460,960
------------ ------------ ------------ ------------
Gross unrealized
depreciation $ 3,861,240 $ 1,309,281 $ 1,781,054 $ 4,205,594
Gross unrealized
appreciation 2,297,065 1,337,268 562,028 4,830,360
------------ ------------ ------------ ------------
Net unrealized
appreciation
(depreciation) $ (1,564,175) $ 27,987 $ (1,219,026) $ 624,766
============ ============ ============ ============
</TABLE>
91
<PAGE> 92
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(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. Borrowings will be made by the Portfolios solely to
facilitate the handling of unusual and/or unanticipated short-term cash
requirements. 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. At February 28, 1995, the Alabama
Portfolio, Arkansas Portfolio, Kentucky Portfolio and Maryland Portfolio had
balances outstanding pursuant to this line of credit of, $4,240,503, $191,000,
$696,000, and $1,269,000, respectively. For the Louisiana Portfolio the average
daily loan balance for the six months ended February 28, 1995 was $142,354 and
the average daily interest rate was 7.06%. The maximum borrowings outstanding at
any month end during the six months ended February 28, 1995 was $685,000. The
Portfolios, exclusive of the Louisiana Portfolio, did not have any significant
borrowings or allocated fees during the six months ended February 28, 1995.
- --------------------------------------------------------------------------------
(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 February 28, 1995 is as follows:
<CAPTION>
FUTURES CONTRACTS NET UNREALIZED
PORTFOLIO EXPIRATION DATE CONTRACTS POSITION DEPRECIATION
--------- ----------------- --------- -------- --------------
<S> <C> <C> <C> <C>
Alabama 3/95 56 US Treasury Bonds Short $241,328
6/95 56 US Treasury Bonds Short 22,579
--------
$263,907
========
Arkansas 6/95 40 US Treasury Bonds Short $ 16,128
3/95 40 US Treasury Bonds Short 172,378
--------
$188,506
========
Georgia 6/95 123 US Treasury Bonds Short $ 55,359
========
Kentucky 3/95 70 US Treasury Bonds Short $301,660
6/95 70 US Treasury Bonds Short 28,224
--------
$329,884
========
Louisiana 6/95 33 US Treasury Bonds Short $ 14,438
========
Maryland 3/95 56 US Treasury Bonds Short $217,704
6/95 56 US Treasury Bonds Short 22,579
--------
$240,283
========
Missouri -- -- -- --
North Carolina 6/95 250 US Treasury Bonds Short $112,518
========
Oregon -- -- -- --
South Carolina 6/95 60 US Treasury Bonds Short $ 26,250
========
Tennessee -- -- -- --
Virginia 6/95 165 US Treasury Bonds Short $ 74,262
========
</TABLE>
At February 28, 1995 each Portfolio had sufficient cash and/or securities to
cover margin requirements on open futures contracts.
92
<PAGE> 93
- --------------------------------------------------------------------------------
Investment Management
- --------------------------------------------------------------------------------
FUNDS OFFICERS INDEPENDENT TRUSTEES
THOMAS J. FETTER DONALD R. DWIGHT
President President, Dwight Partners, Inc.
JAMES B. HAWKES Chairman, Newspaper of New
Vice President, Trustee England, Inc.
ROBERT MACINTOSH SAMUEL L. HAYES, III
Vice President Jacob H. Schiff Professor of
THOMAS OTIS Investment Banking, Harvard
Secretary University Graduate School of
JAMES L. O'CONNOR Business Administration
Treasurer NORTON H. REAMER
BARBARA E. CAMPBELL President and Director,
Assistant Treasurer United Asset Management
DOUGLAS C. MILLER Corporation
Assistant Treasurer JOHN L. THORNDIKE
JANET E. SANDERS Director, Fiduciary Company
Assistant Treasurer and Incorporated
Assistant Secretary JACK L. TREYNOR
Investment Adviser and Consultant
- --------------------------------------------------------------------------------
PORTFOLIOS OFFICERS TIMOTHY T. BROWSE -- Alabama,
THOMAS J. FETTER Arkansas, Kentucky and Maryland
President Tax Free Portfolios
JAMES B. HAWKES CYNTHIA J. CLEMSON -- Missouri,
Vice President, Trustee Oregon and Tennessee Tax Free
ROBERT MACINTOSH Portfolios
Vice President DAVID C. REILLY -- Georgia, North
THOMAS OTIS Carolina, South Carolina and
Secretary Virginia Tax Free Portfolios
JAMES L. O'CONNOR
Treasurer INDEPENDENT TRUSTEES
BARBARA E. CAMPBELL DONALD R. DWIGHT
Assistant Treasurer -- President, Dwight Partners, Inc.
Alabama, Arkansas, Chairman, Newspaper of New
Georgia, Kentucky, England, Inc.
Maryland, North SAMUEL L. HAYES, III
Carolina, South Carolina Jacob H. Schiff Professor of
and Virginia Tax Investment Banking, Harvard
Free Portfolios University Graduate School of
DOUGLAS C. MILLER Business Administration
Assistant Treasurer -- NORTON H. REAMER
Louisiana, Missouri, President and Director,
Oregon and Tennessee Tax United Asset Management
Free Portfolios Corporation
JANET E. SANDERS JOHN L. THORNDIKE
Assistant Treasurer and Director, Fiduciary Compnay
Assistant Secretary Incorporated
JACK L. TREYNOR
PORTFOLIO MANAGERS Investment Adviser and Consultant
NICOLE ANDERES --
Louisiana Tax Free
Portfolio
93
<PAGE> 94
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
94
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[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 96
- --------------------------------------------------------------------------------
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
24 FEDERAL STREET
BOSTON, MA 02110
M-12CSRC
