<PAGE> 1
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
================================================================================
[EATON VANCE LOGO]
================================================================================
ANNUAL SHAREHOLDER REPORT
AUGUST 31, 1995
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
ITEM PAGE
<S> <C>
President's letter to shareholders ...................................... 3
Year-end results, listed by state ....................................... 4
Management Reports:
EV Marathon Alabama Tax Free Fund ............................... 5
EV Marathon Arkansas Tax Free Fund .............................. 6
EV Marathon Georgia Tax Free Fund ............................... 7
EV Marathon Kentucky Tax Free Fund .............................. 8
EV Marathon Louisiana Tax Free Fund ............................. 9
EV Marathon Maryland Tax Free Fund .............................. 10
EV Marathon Missouri Tax Free Fund .............................. 11
EV Marathon North Carolina Tax Free Fund ........................ 12
EV Marathon Oregon Tax Free Fund ................................ 13
EV Marathon South Carolina Tax Free Fund ........................ 14
EV Marathon Tennessee Tax Free Fund ............................. 15
EV Marathon Virginia Tax Free Fund .............................. 16
Financial Results ............................................... 17
</TABLE>
2
<PAGE> 3
To Shareholders
The global economy continues to demonstrate a pattern of slow growth with low
inflation. The U.S. economy is no exception, as Gross Domestic Product should
grow only modestly during 1995 at between 2% and 3%, with inflation of less than
3%. These characteristics bode well for all capital markets and particularly
fixed income markets, including municipal bonds.
Indeed, municipal bonds performed well during the first half of 1995 by
realizing strong capital appreciation as a result of this favorable investment
environment. However, during this period the municipal market underperformed the
taxable market because of concern about the potential passage of major tax
reform (e.g., flat tax, value added tax or consumption tax) legislation.
Were major tax reform to become law, municipal bonds would probably be
underperformers relative to taxable bonds because the current tax-advantaged
status of municipal bonds likely would be eliminated.
However, we at Eaton Vance believe there is little chance of major tax reform
legislation being enacted. Many factors have led us to this conclusion. For
example, the inherent regressivity of the various flat tax proposals will
provoke much opposition, as will proposals to eliminate such tax breaks as
deductions for mortgage interest and state and local taxes. Also, such proposals
could seriously depress entire sectors of the U.S. economy.
Accordingly, we view this recent underperformance by municipal bonds (because of
fears of tax reform) as a potential buying opportunity. Municipal bonds could
represent an attractive asset class at these current relative trading
relationships, with the potential for future outperformance for those investors
willing to adopt a patient, long-term investment horizon.
In addition, proposals are now circulating in both Congress and the White House
to reduce the nation's budget deficit by severely cutting expenditures over the
next decade. If enacted, such a concept would drastically reduce the federal
government's borrowing needs and, as a result, would exert a meaningful downward
influence on interest rates across the entire yield curve. All fixed-income
instruments, including municipal bonds, would benefit.
We will continue to monitor changes in economic and political conditions and to
pursue the goal of your Fund: to provide you with a competitive distribution of
tax-free income from a portfolio of quality municipal bonds.+
[PHOTO OF THOMAS J. FETTER]
Sincerely,
/s/ Thomas J. Fetter
- --------------------
Thomas J. Fetter
President
October 3, 1995
+ A portion of the Portfolios' income could be subject to Federal alternative
minimum tax.
3
<PAGE> 4
INFORMATION ABOUT YOUR MUTUAL FUND INVESTMENT
<TABLE>
<CAPTION>
RESULTS FOR THE YEAR ENDED AUGUST 31, 1995
-----------------------------------------------------------------------------------------------------
FINANCIAL DATA: TAX DATA:
------------------------------------ ----------------------------------------------
DIVIDENDS FUND'S NAV FUND'S IF YOUR THE AFTER-TAX
PAID BY PER SHARE DISTRIBUTION COMBINED EQUIVALENT FEDERAL
FUND DURING AT RATE AT FEDERAL & STATE YIELD YOU WOULD INCOME TAX
PERIOD 8/31/95 8/31/95 TAX RATE IS NEED IS INFORMATION*
----------- ---------- ------------ --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
EV Marathon ALABAMA [GRAPHIC OF
Tax Free Fund $0.495 $10.44 4.65% ALABAMA] 39.20% 7.62% 99.38
EV Marathon AKANSAS [GRAPHIC OF
Tax Free Fund $0.488 $10.25 4.68% ARKANSAS] 40.48% 7.85% 99.43
EV Marathon GEORGIA [GRAPHIC OF
Tax Free Fund $0.469 $ 9.79 4.65% GEORGIA] 39.84% 7.71% 99.59
EV Marathon KENTUCKY [GRAPHIC OF
Tax Free Fund $0.484 $ 9.99 4.65% KENTUCKY] 39.40% 7.67% 99.61
EV Marathon LOUISIANA [GRAPHIC OF
Tax Free Fund $0.514 $ 9.98 4.93% LOUISIANA] 39.84% 8.18% 99.60
EV Marathon MARYLAND [GRAPHIC OF
Tax Free Fund $0.487 $10.23 4.76% MARYLAND] 41.12% 8.05% 99.09
EV Marathon MISSOURI [GRAPHIC OF
Tax Free Fund $0.498 $10.51 4.58% MISSOURI] 39.84% 7.58% 99.17
EV Marathon NORTH CAROLINA [GRAPHIC OF
Tax Free Fund $0.490 $ 9.96 4.72% NORTH CAROLINA] 40.96% 7.95% 98.73
EV Marathon OREGON [GRAPHIC OF
Tax Free Fund $0.479 $10.31 4.48% OREGON] 41.76% 7.68% 99.61
EV Marathon SOUTH CAROLINA [GRAPHIC OF
Tax Free Fund $0.477 $10.00 4.67% SOUTH CAROLINA] 40.48% 7.82% 99.19
EV Marathon TENNESSEE [GRAPHIC OF
Tax Free Fund $0.495 $10.11 4.75% TENNESSEE] 39.84% 7.88% 99.51
EV Marathon VIRGINIA [GRAPHIC OF
Tax Free Fund $0.503 $10.26 4.69% VIRGINIA] 39.68% 7.74% 99.08
</TABLE>
*Percentages represent the amounts of the total dividends paid by the Funds from
net investment income during the year ended August 31, 1995, that have been
designated as exempt-interest dividends. Tax legislation eliminated the
exception to market discount rules applicable to tax-exempt obligations. As a
result, certain tax-exempt obligations acquired by the Portfolio subsequent to
April 30, 1993, at market discounts may generate a small amount of ordinary
taxable income.
- --------------------------------------------------------------------------------
Included on the pages that follow are performance charts that compare your
Fund's total return with that of a broad-based securities market index. The
lines on the chart represent the total returns of $10,000 hypothetical
investments in your Fund and the unmanaged Lehman Brothers Municipal Bond Index.
The solid line on the chart represents the Fund's performance. The Fund's total
return figure reflects fund expenses and portfolio transaction costs, and
assumes the reinvestment of income dividends and capital gain distributions. The
dotted line represents the performance of the Lehman Brothers Municipal Bond
Index, a broad-based, widely recognized unmanaged index of municipal bonds.
Whereas the Fund's portfolio is comprised principally of bonds solely from your
individual state, the Index is composed of bonds from all 50 states and many
jurisdictions. The Index's total return does not reflect any commissions or
expenses that would be incurred if an investor individually purchased or sold
the securities represented in the Index.
- --------------------------------------------------------------------------------
4
<PAGE> 5
EV MARATHON ALABAMA TAX FREE FUND
YOUR INVESTMENT AT WORK
City of Scottsboro
Water, Sewer and Gas Bonds
These bonds were used to allow the City of Scottsboro to extend and improve its
natural gas distribution system and to improve its sanitary sewer system.
The improvements included collection and transmission mains that allow the sewer
system to serve additional customers. Similarly, improvements to the natural gas
distribution system give it the capacity to accommodate new customers. The bond
issue also provided funds to purchase related equipment and to expand the office
operated by the city's Waterworks, Sewer and Gas Board.
The bonds, totaling $6 million, were issued in 1994.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF ALABAMA]
<TABLE>
<S> <C>
Number of issues ............................................. 73
Average quality .............................................. AA
Investment grade ............................................. 97.7
Effective maturity ........................................... 16.79 yrs.
Largest sectors:
Insured water and sewer ................................... 17.2%*
Industrial development/pollution
control revenue ...................................... 12.7
Insured education ......................................... 8.5*
General obligations ....................................... 6.5
Insured hospitals ......................................... 6.4*
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: Alabama
Alabama's state government has put a great deal of effort into diversifying the
state's economy in recent years. Those efforts have met with some success, led
by the development of the high technology sector, primarily in the Huntsville
area. In terms of employment, manufacturing continues to be the largest sector,
with the service sector experiencing some growth in urban areas.
Since adoption of the state's economic development plan in 1993, more than 50
companies have invested a total of more than $2.2 billion in Alabama. The
largest project to date is the Mercedes Benz manufacturing facility that will
build the company's sport utility vehicle. The assembly plant is located in
Vance, in Tuscaloosa County, and is expected to open in 1997.
Employment levels, which traditionally were higher than the national average,
have been approximately equal to the national average during the last three
years.
The economic forecast for Alabama is for only moderate growth. The state's
conservative economic policies have kept its budgets in balance.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON ALABAMA TAX
FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
From May 31, 1992, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 2.4% 6.0% $12,017
Without CDSC 7.4% 6.7% $12,317
</TABLE>
<TABLE>
<CAPTION>
DATE M. ALABAMA LEHMAN BROS.
- ---- ---------- ------------
<S> <C> <C>
5/92+ 10000 10000
6/92 10225 10168
7/92 10685 10473
8/92 10438 10371
9/92 10476 10438
10/92 10231 10336
11/92 10571 10521
12/92 10702 10628
1/93 10806 10752
2/93 11255 11141
3/93 11094 11023
4/93 11229 11134
5/93 11294 11197
6/93 11469 11384
7/93 11466 11399
8/93 11722 11636
9/93 11847 11769
10/93 11875 11791
11/93 11733 11687
12/93 12032 11934
1/94 12152 12070
2/94 11807 11758
3/94 11150 11279
4/94 11223 11375
5/94 11330 11473
6/94 11212 11406
7/94 11474 11612
8/94 11470 11652
9/94 11263 11481
10/94 10977 11278
11/94 10709 11073
12/94 11061 11317
1/95 11476 11641
2/95 11854 11979
3/95 11954 12117
4/95 11945 12131
5/95 12301 12518
6/95 12092 12409
7/95 12176 12526
8/95 12317 12685
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 5/1/92. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF TIMOTHY T. BROWSE]
"The bond market has had a nice upward run during late 1994 and through the
middle of 1995. As a result, we're shifting our emphasis from capital
appreciation to more of a balanced approach because we believe the good total
return will come from a mixture of coupon income and price appreciation.
"We believe that over the long term, the outlook for municipal bonds is
positive. While concerns over dramatic tax reform have depressed the market, it
is hard to imagine an approved reform package that will be as extreme as the
plans now being discussed.
"As part of our efforts to provide a diverse selection of bonds in the Alabama
Portfolio, we have diversified away from a large representation in the hospital
sector."
- Timothy T. Browse
5
<PAGE> 6
EV MARATHON ARKANSAS TAX FREE FUND
YOUR INVESTMENT AT WORK
Baxter County
Aeroquip Corp. Project [Graphic]
This $7.2 million bond issue was used to finance the costs of building and
equipping a rubber mixing facility, an expansion of the Aeroquip Corp.'s
business in Arkansas.
The plant is located in the community of Mountain Home. Aeroquip Corp.
manufactures and sells engineered component systems for industrial, aerospace
and defense and automotive markets. It is a wholly-owned subsidiary of Trinova
Corporation, which has backed payment of the bonds.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF ARKANSAS]
<TABLE>
<S> <C>
Number of issues .................................................. 66
Average quality ................................................... A+
Investment grade .................................................. 94.6%
Effective maturity ................................................ 16.96 yrs.
Largest sectors:
Hospitals ...................................................... 14.8%
Industrial development/pollution control revenue ............... 13.2
Housing ........................................................ 11.7
Electric utilities ............................................. 9.2
General obligations ............................................ 8.2
</TABLE>
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: Arkansas
The Arkansas economy is relatively diverse and is led by the manufacturing,
service and trade sectors. Manufacturing is the largest of the three, employing
25% of the state's workforce. Unemployment, however, has remained above the
national average.
The state's food processing industry has given a boost to the state's economic
performance. Four of the nation's biggest poultry processors are located in
Arkansas, including Tyson Foods, Inc., which has more than 18,000 employees in
the state and is expanding a poultry processing center.
The state's main revenue sources -- sales and use, individual income, and
corporate income taxes, all have been raised in recent years. Another factor in
the state's fiscal stability has been its revenue stabilization law. This law,
enacted in 1973, prohibits expenditures from exceeding revenues during any
fiscal year. Arkansas also is considered to have a very low public debt burden.
In the near future, the construction industry, stimulated by population growth,
is likely to provide additional job growth and strength to the state's economy.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON ARKANSAS
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From October 31, 1992, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 1.2% 4.9% $11,779
Without CDSC 6.2% 6.1% $12,179
</TABLE>
<TABLE>
<CAPTION>
DATE M. ARKANSAS LEHMAN BROS.
- ---- ----------- ------------
<S> <C> <C>
10/92+ 10000 10000
11/92 10331 10179
12/92 10482 10283
1/93 10648 10403
2/93 11130 10779
3/93 11008 10665
4/93 11124 10773
5/93 11199 10833
6/93 11387 11014
7/93 11396 11028
8/93 11633 11258
9/93 11770 11386
10/93 11766 11408
11/93 11645 11308
12/93 11925 11546
1/94 12078 11678
2/94 11730 11376
3/94 11035 10913
4/94 11162 11005
5/94 11291 11100
6/94 11181 11036
7/94 11433 11235
8/94 11472 11274
9/94 11262 11108
10/94 10950 10911
11/94 10610 10714
12/94 10930 10950
1/95 11324 11263
2/95 11716 11590
3/95 11816 11723
4/95 11806 11737
5/95 12141 12112
6/95 11942 12006
7/95 12038 12119
8/95 12179 12273
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
*Investment operations commenced 10/2/92. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF TIMOTHY T. BROWSE]
"The supply of Arkansas bonds is limited. We take advantage of the ebbs and
flows of supply and demand by buying larger blocks of bonds in the new issue
market, when they are relatively attractive and more readily available and, over
time, reselling them in smaller pieces as the supply dries up.
"We remain optimistic about the future of the municipal bond market. While
worries about the possibility of dramatic tax reform have depressed the market,
it is difficult to conceive of an approved tax reform package that will be as
extreme as the plans now being discussed. The lessening of these fears, coupled
with the ever-decreasing supply of bonds, should produce a positive picture for
municipals bonds in the future."
- Timothy T. Browse
6
<PAGE> 7
EV MARATHON GEORGIA TAX FREE FUND
YOUR INVESTMENT AT WORK
Savannah Resource Recovery
Development Authority [Graphic]
These bonds were issued in 1992 to refund a 1984 bond issue that financed a
steam-generating waste-to-energy plant in Savannah.
The facility is set up to convert solid waste to steam for commercial sale.
Since it began operation, the plant has produced amounts of steam exceeding the
required minimum for commercial sale.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF GEORGIA]
<TABLE>
<S> <C>
Number of issues ........................................... 76
Average quality ............................................ Aa
Investment grade ........................................... 96.4%
Effective maturity ......................................... 14.92 yrs.
Largest sectors:
Utilities ............................................... 15.5%
General obligations ..................................... 15.0
Housing ................................................. 13.9
Insured hospitals ....................................... 13.2*
Hospitals ............................................... 10.5
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: Georgia
Georgia recovered quickly from the recession of the early 1990s and is
demonstrating strong economic growth as the decade continues.
As a regional center, Atlanta has led the state's growth. According to the Selig
Center for Economic Growth at the University of Georgia, Atlanta accounts for
half the state's employment base, but creates seven out of ten of the state's
new jobs. The Atlanta area is also benefiting from the current construction boom
in preparation for the 1996 Summer Olympic Games, as well as economic activity
generated by the Games themselves.
State population is growing at about twice the national average. Employment
trends also have been positive and the state's unemployment rate stands
significantly below the national rate. The Selig Center estimates that
employment will rise 3.5% in 1995 and 3.2% in 1996. Many of the jobs will be in
the service, wholesale and retail sectors. No sector is expected to lose jobs.
The Georgia state budget for the 1995 fiscal year is balanced. Although state
debt has grown in recent years, the state's debt position is considered good.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON GEORGIA TAX
FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
From December 31, 1991, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC -0.1% 4.4% $11,699
Without CDSC 4.9% 5.1% $11,993
</TABLE>
<TABLE>
<CAPTION>
DATE M. GEORGIA LEHMAN BROS.
- ---- ---------- ------------
<S> <C> <C>
12/91+ 10000 10000
1/92 9880 10023
2/92 9908 10026
3/92 9886 10030
4/92 9968 10119
5/92 10154 10238
6/92 10374 10410
7/92 10799 10722
8/92 10587 10617
9/92 10585 10687
10/92 10281 10582
11/92 10622 10771
12/92 10751 10881
1/93 10859 11008
2/93 11366 11406
3/93 11155 11286
4/93 11306 11399
5/93 11361 11463
6/93 11553 11655
7/93 11505 11670
8/93 11780 11913
9/93 11919 12049
10/93 11913 12072
11/93 11786 11965
12/93 12054 12218
1/94 12187 12358
2/94 11837 12038
3/94 11198 11547
4/94 11259 11645
5/94 11309 11746
6/94 11194 11678
7/94 11417 11889
8/94 11433 11930
9/94 11237 11755
10/94 10937 11546
11/94 10608 11337
12/94 10901 11587
1/95 11269 11918
2/95 11612 12264
3/95 11726 12405
4/95 11703 12420
5/95 11998 12816
6/95 11802 12704
7/95 11838 12825
8/95 11993 12987
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
*Investment operations commenced 12/23/91. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF DAVID D. REILLY]
"The Olympics will help the economic base of the Atlanta area, which should, in
turn, support the credit quality of local borrowers.
"We continue to watch the hospital sector as the health care industry continues
to consolidate. Our goal is to avoid bonds issued by hospitals that are left out
of the consolidation and affiliation process.
"We continue to believe that over the long term, the outlook for municipal bonds
is favorable. Tax reform of the type that would impair or eliminate the
franchise of municipal bonds is unlikely."
- David C.Reilly
7
<PAGE> 8
EV MARATHON KENTUCKY TAX FREE FUND
YOUR INVESTMENT AT WORK
Fulton County
H.I.S. Kentucky, Inc.
The proceeds of these industrial development bonds were used to allow H.I.S.
Kentucky, Inc., to build a plant in Fulton County. The facility was designed to
stone-wash blue jeans and other clothing manufactured by the company.
H.I.S. Kentucky, Inc. is the holding company for Henry I. Siegel Company, a
designer and manufacturer of moderately priced blue jeans and similar products
under the Chic and H.I.S. labels. The company is a major seller of women's jeans
in Europe.
A total of $9.5 million of the bonds were issued in 1995.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF KENTUCKY]
<TABLE>
<S> <C>
Number of issues .................................................. 89
Average quality ................................................... AA-
Investment grade .................................................. 98.8%
Effective maturity ................................................ 15.91 yrs.
Largest sectors:
Lease revenue bonds ............................................ 21.4%
Insured hospital ............................................... 14.8*
Industrial development/pollution control revenue ............... 11.4
Insured water and sewer ........................................ 9.5*
Electric utilities ............................................. 6.8
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: Kentucky
Kentucky has aggressively pursued economic growth during the 1990s. As a result,
the commonwealth has become more attractive as a location for businesses because
of legislation passed in 1990 that expanded the commonwealth's General Fund to
finance education reform. This tends to give employers confidence that they will
have access to a well-trained workforce in the future.
Kentucky has seen a fairly rapid rate of growth in its service sector in recent
years, with both the service and trade sectors contributing larger shares to its
economy than manufacturing or coal mining.
Among the major recent projects are the Delta Airlines Inc. expansion of its
facilities at the Cincinnati Airport. Delta has spent $300 million to establish
a hub at the airport.
Another area of strength has been the automotive industry. Toyota Motor Corp.
added 1,500 jobs through an expansion of its manufacturing facility near
Georgetown. Ford Motor Co. has committed to a $650 million expansion of its
truck plant in Louisville.
It is expected that growth in the state's economy will slow somewhat during the
remainder of the decade. Still, that growth should continue at a rate higher
than the national average.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON KENTUCKY
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From December 31, 1991, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 1.6% 4.9% $11,929
Without CDSC 6.6% 5.6% $12,229
</TABLE>
<TABLE>
<CAPTION>
DATE M. KENTUCKY LEHMAN BROS.
- ---- ----------- ------------
<S> <C> <C>
12/91+ 10000 10000
1/92 9840 10023
2/92 9919 10026
3/92 9863 10030
4/92 9976 10119
5/92 10160 10238
6/92 10359 10410
7/92 10761 10722
8/92 10527 10617
9/92 10545 10687
10/92 10261 10582
11/92 10611 10771
12/92 10726 10881
1/93 10843 11008
2/93 11328 11406
3/93 11150 11286
4/93 11300 11399
5/93 11377 11463
6/93 11589 11655
7/93 11563 11670
8/93 11782 11913
9/93 11921 12049
10/93 11938 12072
11/93 11802 11965
12/93 12080 12218
1/94 12203 12358
2/94 11832 12038
3/94 11172 11547
4/94 11246 11645
5/94 11343 11746
6/94 11207 11678
7/94 11454 11889
8/94 11471 11930
9/94 11231 11755
10/94 10921 11546
11/94 10641 11337
12/94 10958 11587
1/95 11387 11918
2/95 11755 12264
3/95 11858 12405
4/95 11849 12420
5/95 12218 12816
6/95 11999 12704
7/95 12073 12825
8/95 12229 12987
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 12/23/91. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF TIMOTHY T. BROWSE]
"In managing the Portfolio, we are shifting our emphasis more toward adding
yield throughout all sectors because we believe the total return will come from
a balance of coupon income and price appreciation.
"Although quality spreads are tight for higher-grade bonds, we feel there are
opportunities in the nonrated and private placement sectors. These are extremely
research-intensive investments and are a way that we look to add value to the
Portfolio."
"This value-added research plus what we feel is an undervalued municipal bond
market because of tax reform concerns give us confidence in the Portfolio's
prospects going forward."
- Timothy T. Browse
8
<PAGE> 9
EV MARATHON LOUISIANA TAX FREE FUND
YOUR INVESTMENT AT WORK
Bastrop City Industrial
Development Board
International Paper Co.
The proceeds from these bonds were used to finance solid waste disposal
facilities, including a landfill cell, for International Paper's Louisiana mill,
located inBastrop.
These are tax-exempt bonds backed by a corporate guarantor, International Paper.
Because they carry the company's guarantee, the bonds are rated A3/A-.
One aspect of this purchase that we particularly liked is that these bonds add
geographic diversity to a single-state Portfolio because International Paper
runs facilities throughout the country.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF LOUISIANA]
<TABLE>
<S> <C>
Number of issues .................................................. 47
Average quality ................................................... AA+
Investment grade .................................................. 97.3%
Effective maturity ................................................ 18.48 yrs.
Largest sectors:
Housing ........................................................ 26.5%
Insured general obligations local .............................. 17.6*
Insured colleges and universities .............................. 10.3*
Health care .................................................... 8.1
Industrial development/pollution control revenue ............... 6.4
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: Louisiana
Louisiana has suffered a recent spate of bad news; the good news is that none of
it directly affects the Louisiana Portfolio. This summer, Standard & Poor's
downgraded the state's general obligation rating from A to A-. Given both the
state's checkered past with the rating agencies and the fact that Louisiana has
been on a negative Creditwatch for almost 6 months, the downgrade was
essentially a non-event in the credit market.
The rating agency cited concerns with the state's structural budgetary balance
for the 1996 fiscal year and beyond, pivoting on the potential for significant
cuts in Federal Medicaid funds to the state. Bonds in the Portfolio are largely
insulated from the state's budget problems.
On top of the aforementioned difficulties, the Wall Street Journal recently
published an article questioning the gaming industry's ability to be an economic
savior for so many states. At the time this was written, Louisiana's gaming
industry revenues were running below expectations in 1995. Again, bonds in the
Louisiana Portfolio are not directly dependent on gaming revenues. While credit
concerns swirl around the state, we remain confident of the credit quality of
our Louisiana tax-exempt holdings.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON LOUISIANA
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From October 31, 1992, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 0.1% 4.5% $11,685
Without CDSC 5.1% 5.7% $12,085
</TABLE>
<TABLE>
<CAPTION>
DATE M. LOUISIANA LEHMAN BROS.
- ---- ------------ ------------
<S> <C> <C>
10/92+ 10000 10000
11/92 10439 10179
12/92 10601 10283
1/93 10778 10403
2/93 11303 10779
3/93 11160 10665
4/93 11307 10773
5/93 11382 10833
6/93 11613 11014
7/93 11578 11028
8/93 11881 11258
9/93 12051 11386
10/93 12047 11408
11/93 11905 11308
12/93 12219 11546
1/94 12364 11678
2/94 11912 11376
3/94 11165 10913
4/94 11264 11005
5/94 11409 11100
6/94 11267 11036
7/94 11514 11235
8/94 11501 11274
9/94 11268 11108
10/94 10954 10911
11/94 10647 10714
12/94 10963 10950
1/95 11378 11263
2/95 11767 11590
3/95 11848 11723
4/95 11817 11737
5/95 12065 12112
6/95 11864 12006
7/95 11952 12119
8/95 12085 12273
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 10/2/92. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF NICOLE ANDERES]
"The secondary bond market has provided opportunities to diversify the
Portfolio's structure and to add yield through higher coupon housing bonds.
"New issuance in Louisiana continues to be sporadic, and proposals to reform the
country's tax system, especially flat tax proposals, are having a dampening
effect on the municipal market.
"We remain convinced that any tax changes that are enacted will not be as
radical as the plans that are being talked about now. Despite this uncertainty,
1995 has given us an opportunity to recoup losses suffered in 1994."
- Nicole Anderes
9
<PAGE> 10
EV MARATHON MARYLAND TAX FREE FUND
YOUR INVESTMENT AT WORK
Health & Higher Educational
Facilities Authority
Suburban Hospital
This $63 million bond issue was used to refund in advance the bonds the hospital
issued in 1988 and 1992 to improve its facilities.
Suburban Hospital is a 380-bed acute care facility located in Bethesda, MD.
Among the services it offers are orthopedics, cardiology, oncology and
neurosurgery.
The hospital also runs a 23-bed comprehensive care unit, which provides skilled
nursing services, and a 26-bed Addiction Treatment Center. Among its outpatient
services is the largest ambulatory surgical service in Montgomery County.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF MARYLAND]
<TABLE>
<S> <C>
Number of issues .................................................. 74
Average quality ................................................... AA-
Investment grade .................................................. 97.6%
Effective maturity ................................................ 18.41 yrs.
Largest sectors:
Hospital revenue ............................................... 20.7%
Insured hospital ............................................... 17.9*
Industrial development/pollution control revenue ............... 10.2
Electric utilities ............................................. 7.7
Housing ........................................................ 7.2
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: Maryland
In terms of finances, Maryland remains one of the strongest states in the
nation. State officials are proud of its "AAA" rating and have demonstrated
their inclination to do whatever it takes to protect that rating during
difficult times.
During the 1994 fiscal year, the state's general fund revenues exceeded
estimates, a positive factor when compared to the period from 1990-1992, when
there was a revenue shortfall.
Maryland is one of the nation's most affluent states, based on median household
income. The population is concentrated in the metropolitan Washington, D.C. area
and in and around Baltimore.
The state's largest employment sector is services, at more than 30%, followed by
trade and government. Manufacturing employment has declined steadily during the
last few years. Despite an increase in unemployment during the recession of the
early 1990s, Maryland's unemployment has remained below national levels. Its
rate in 1994 was 5.4%, compared to the national rate of 6.1%.
It is estimated that the state's population will continue to grow slightly and
that its economy will grow at a slow, but steady, rate.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON MARYLAND
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From February 29, 1992, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 1.7% 5.3% $12,052
Without CDSC 6.7% 6.1% $12,352
</TABLE>
<TABLE>
<CAPTION>
DATE M. MARYLAND LEHMAN BROS.
- ---- ----------- ------------
<S> <C> <C>
2/92+ 10000 10000
3/92 9999 10004
4/92 10098 10093
5/92 10238 10212
6/92 10432 10383
7/92 10871 10694
8/92 10648 10590
9/92 10675 10659
10/92 10320 10554
11/92 10665 10744
12/92 10830 10853
1/93 11040 10980
2/93 11487 11377
3/93 11405 11256
4/93 11521 11370
5/93 11597 11434
6/93 11721 11625
7/93 11674 11640
8/93 11946 11882
9/93 12128 12018
10/93 12134 12041
11/93 11966 11934
12/93 12258 12186
1/94 12402 12326
2/94 12003 12006
3/94 11252 11517
4/94 11281 11615
5/94 11401 11716
6/94 11279 11648
7/94 11535 11858
8/94 11576 11899
9/94 11328 11724
10/94 11011 11516
11/94 10678 11308
12/94 11049 11557
1/95 11449 11887
2/95 11894 12233
3/95 12007 12373
4/95 11974 12388
5/95 12361 12783
6/95 12087 12671
7/95 12184 12791
8/95 12352 12954
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 2/3/92. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
"The Maryland Portfolio shows a heavy representation of hospital bonds. The
state's strong hospital infrastructure makes us more comfortable with holding a
large portion of the Portfolio in this sector. Over time, our goal of Portfolio
diversification may cause us to trim these hospital holdings.
" We continue to be optimistic about the municipal bond market. The market has
been depressed by worries about possible dramatic tax reform, but it's hard to
imagine an approved tax reform package as extreme as the plans now being
discussed. The lessening of these fears, coupled with the ever-decreasing supply
of bonds, should produce a positive future for municipal bonds."
- Timothy T. Browse
10
<PAGE> 11
EV MARATHON MISSOURI TAX FREE FUND
YOUR INVESTMENT AT WORK
Environmental and Energy
Resource Authority
Water Pollution Control Bonds
[Graphic]
The Revolving Fund, controlled by the state Department of Natural Resources and
Clean Water Commission, was established in 1987 to finance construction of
wastewater treatment facilities.
The proceeds of these bonds, issued in 1994, are used to finance the improvement
and extension of sewerage systems in a variety of communities around the state.
The participating communities comprise a diverse group, with no one city
dominating. After the offering, Duckett Creek Sewer District was expected to
have nearly 20% of the bonds outstanding. Each city's bonds have been approved
by voters.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF MISSOURI]
<TABLE>
<S> <C>
Number of issues ............................................ 80
Average quality ............................................. Aa
Investment grade ............................................ 98.4%
Effective maturity .......................................... 15.23 yrs.
Largest sectors:
Insured hospitals ........................................ 18.4%*
Insured utilities ........................................ 11.4*
Hospitals ................................................ 10.5
Insured general obligations .............................. 9.3*
Water & sewer ............................................ 9.1*
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: Missouri
Missouri has a strong and diverse economy, with a greater-than-average
dependence on manufacturing jobs. The largest sectors are transportation
equipment, machinery and chemicals.
The largest creator of jobs and income in the state is currently the service
sector, which is responsible for one quarter of all jobs. Manufacturing accounts
for slightly less than one-fifth.
The state has continued to grow during the past 12 months, buoyed by growth in
the area of transportation equipment.
One segment of Missouri's economy that has grown significantly is tourism, led
by the city of Branson's development as a destination resort for music and
entertainment. While adding one attraction after another, this rural city has
quickly developed into one of the nation's major tourist attractions.
Missouri is expected to demonstrate continued growth in the near future.
However, it is somewhat vulnerable to any defense cutbacks, as McDonnell Douglas
Corp. is the state's largest employer.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON MISSOURI
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From May 31, 1992, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 3.8% 6.3% $12,151
Without CDSC 7.8% 7.1% $12,451
</TABLE>
<TABLE>
<CAPTION>
DATE M. MISSOURI LEHMAN BROS.
- ---- ----------- ------------
<S> <C> <C>
5/92+ 10000 10000
6/92 10245 10168
7/92 10635 10473
8/92 10480 10371
9/92 10528 10438
10/92 10192 10336
11/92 10593 10521
12/92 10722 10628
1/93 10857 10752
2/93 11379 11141
3/93 11259 11023
4/93 11395 11134
5/93 11481 11197
6/93 11679 11384
7/93 11645 11399
8/93 11913 11636
9/93 12071 11769
10/93 12057 11791
11/93 11894 11687
12/93 12175 11934
1/94 12317 12070
2/94 11938 11758
3/94 11236 11279
4/94 11276 11375
5/94 11395 11473
6/94 11310 11406
7/94 11540 11612
8/94 11548 11652
9/94 11307 11481
10/94 10997 11278
11/94 10683 11073
12/94 11037 11317
1/95 11477 11641
2/95 11892 11979
3/95 11981 12117
4/95 11996 12131
5/95 12425 12518
6/95 12226 12409
7/95 12275 12526
8/95 12451 12685
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
*Investment operations commenced 5/1/92. +Index information is available only at
month-end, therefore, the line comparison begins at the next month-end following
the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF CYNTHIA J. CLEMSON]
"We continue to be selective when looking at hospital bonds because of the
uncertainty of the health care market throughout the U.S. This is one area in
which the contributions of our Research Department are especially important.
However, we do feel that hospital bonds can add value and diversification to the
overall Portfolio.
"The Missouri bond market continued to be characterized by low issuance. This
factor, combined with narrow quality spreads between AA-rated and insured bonds,
caused us to focus on slightly upgrading the Portfolio quality. We also balanced
a large weighting in high-quality bonds with positions in higher yielding issues
to boost the Fund's income."
-Cynthia J. Clemson
11
<PAGE> 12
EV MARATHON NORTH CAROLINA TAX FREE FUND
YOUR INVESTMENT AT WORK
University of North Carolina [Graphic]
University Hospital, Chapel Hill
These bonds were issued to pay for providing new facilities at the University of
North Carolina Hospital at Chapel Hill.
UNC Hospital provides comprehensive health care services including general acute
care, specialized care, outpatient services, psychiatric and rehabilitative
services. In addition, the hospital supports the university's teaching and
research needs.
The bond issue, totaling nearly $60 million, was issued in 1992.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF NORTH CAROLINA]
<TABLE>
<S> <C>
Number of issues ........................................... 90
Average quality ............................................ Aa
Investment grade ........................................... 98.6%
Effective maturity ......................................... 15.33 yrs.
Largest sectors:
Hospitals ............................................... 18.8%
Utilities ............................................... 12.3
Insured hospital ........................................ 10.6*
Housing ................................................. 9.1
General obligations ..................................... 8.7
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: North Carolina
Having recovered well from the recession of the early 1990s, North Carolina has
continued to see significant growth throughout the decade. The state's economy
continues to be led by the manufacturing sector -- principally machinery,
textiles and furniture. However, high technology and financial services continue
to grow, rapidly with Charlotte and Raleigh developing as regional banking
centers.
In its attempts to attract new business, the state is assisted by its low wages,
the low cost of housing and what is viewed as an attractive quality of life.
North Carolina is not expected to maintain its rapid growth rate, but should
continue to grow at a rate higher than the national average.
North Carolina's conservative style of fiscal management and its low debt levels
provide long-term, fundamental credit support.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON NORTH
CAROLINA TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX
From October 31, 1991, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 0.0% 4.9% $11,970
Without CDSC 5.0% 5.5% $12,268
</TABLE>
<TABLE>
<CAPTION>
DATE M. N. CAROLINA LEHMAN BROS.
- ---- -------------- ------------
<S> <C> <C>
10/91+ 10000 10000
11/91 9920 10028
12/91 10226 10243
1/92 10208 10266
2/92 10217 10270
3/92 10214 10273
4/92 10307 10365
5/92 10474 10487
6/92 10695 10663
7/92 11111 10983
8/92 10845 10876
9/92 10843 10947
10/92 10525 10839
11/92 10899 11033
12/92 11052 11146
1/93 11171 11276
2/93 11606 11683
3/93 11426 11560
4/93 11567 11676
5/93 11634 11742
6/93 11827 11938
7/93 11790 11954
8/93 12089 12203
9/93 12219 12342
10/93 12192 12366
11/93 12043 12256
12/93 12320 12515
1/94 12468 12658
2/94 12107 12330
3/94 11445 11828
4/94 11497 11929
5/94 11573 12032
6/94 11449 11962
7/94 11651 12178
8/94 11681 12220
9/94 11488 12040
10/94 11188 11827
11/94 10849 11613
12/94 11180 11868
1/95 11577 12208
2/95 11947 12563
3/95 12064 12707
4/95 12042 12722
5/95 12341 13128
6/95 12122 13013
7/95 12160 13136
8/95 12268 13303
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 10/23/91. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF DAVID C. REILLY]
"We have kept a close watch on North Carolina utility bonds during the year. We
switched out of Catawba bonds, which are issued by the power authority serving
the western half of the state, and into bonds issued by the North Carolina
Eastern Municipal Power Authority. This strategy has resulted in additional
yield and total return performance for the Portfolio.
"We expect North Carolina bonds to hold their value, largely because new debt
issuance in the state is quite low. In fact, debt issued in the state from
January through June, 1995 is 60% lower than that of the equivalent period in
1994."
- David C. Reilly
12
<PAGE> 13
EV MARATHON OREGON TAX FREE FUND
YOUR INVESTMENT AT WORK
Oregon Housing, Educational
& Cultural Facilities Authority
Reed College
The greatest portion of the proceeds of these bonds, allowed Reed College to
renovate student housing facilities. The funds also were used to acquire land,
improve the college library, construct campus parking facilities and add a
pedestrian bridge over a lake located on college property. The bonds were issued
in 1991.
Reed College, founded in 1909, is a private school located near downtown
Portland. Its student body numbers about 1,100.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF OREGON]
<TABLE>
<S> <C>
Number of issues ............................................. 80
Average quality .............................................. Aa
Investment grade ............................................. 97.3%
Effective maturity ........................................... 15.35 yrs.
Largest sectors:
General obligations ....................................... 17.7%
Utilities ................................................. 14.3
Insured general obligations ............................... 11.6*
Housing ................................................... 8.8
Special tax revenue ....................................... 6.8
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: Oregon
Oregon continues to benefit from strong economic growth. The state's levels of
payroll employment have continued to increase through May.
While most employment gains have been in the service and trade sectors, the
construction sector also has been busy. Continued population growth and
relatively low office vacancy rates have caused significant residential and
commercial building activity.
In the second half of 1995, the economy is expected to be further helped by
Hyundai's plans to build a $1.3 billion computer chip plant near Eugene. When
completed, the facility is expected to employ about 900 workers.
Oregon has aggressively pursued high technology manufacturers. However, the
Yamhill County Commissioners recently rejected a proposal to grant property tax
relief for a new silicon wafer plant. It was the first rejection of such a
proposal under the state's Strategic Investment Program and demonstrates the
state's commitment to achieving balanced growth. The state's income, population
and employment growth all are expected to exceed the national average through
the remainder of the decade, though future job growth will be limited by tight
labor markets.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON OREGON TAX
FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
From December 31, 1991, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 2.2% 5.8% $12,291
Without CDSC 7.2% 6.4% $12,591
</TABLE>
<TABLE>
<CAPTION>
DATE M. OREGON LEHMAN BROS.
- ---- --------- ------------
<S> <C> <C>
12/91+ 10000 10000
1/92 9990 10023
2/92 10054 10026
3/92 10028 10030
4/92 10148 10119
5/92 10331 10238
6/92 10506 10410
7/92 10866 10722
8/92 10682 10617
9/92 10710 10687
10/92 10404 10582
11/92 10772 10771
12/92 10943 10881
1/93 11102 11008
2/93 11551 11406
3/93 11469 11286
4/93 11586 11399
5/93 11662 11463
6/93 11874 11655
7/93 11903 11670
8/93 12165 11913
9/93 12259 12049
10/93 12254 12072
11/93 12128 11965
12/93 12405 12218
1/94 12562 12358
2/94 12192 12038
3/94 11488 11547
4/94 11539 11645
5/94 11625 11746
6/94 11502 11678
7/94 11714 11889
8/94 11743 11930
9/94 11481 11755
10/94 11171 11546
11/94 10857 11337
12/94 11232 11587
1/95 11660 11918
2/95 12098 12264
3/95 12176 12405
4/95 12166 12420
5/95 12558 12816
6/95 12351 12704
7/95 12412 12825
8/95 12591 12987
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 12/24/91. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF CYNTHIA J. CLEMSON]
"The Oregon bond market is characterized by low issuance, with issuance down
over 50% year-to-date, compared to 22% nationally. This larger-than-average
decline in issuance is a result of greater-than-average issuance prior to the
1994 tax initiative ballots.
"We are continually looking for bonds that will allow us to increase the overall
call protection of the Portfolio. In part because of the lack of new issues,
this is a slow process."
- Cynthia J. Clemson
13
<PAGE> 14
EV MARATHON SOUTH CAROLINA TAX FREE FUND
YOUR INVESTMENT AT WORK
Chester County [Graphic]
Springs Industries, Inc.
These industrial development bonds were issued in 1992 to refund bonds issued in
1968. The 1968 bonds allowed the company to build a new textile manufacturing
facility in Chester County. It was completed in 1969.
Springs Industries, Inc. is a major manufacturer and marketer of home
furnishings, finished fabrics and industrial products. The company's
headquarters are in Fort Mill, S.C.
The company operates 45 manufacturing facilities in 10 states, Belgium and
England. Among its home furnishings are products sold under the Springmaid and
Wamsutta brands.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF SOUTH CAROLINA]
<TABLE>
<S> <C>
Number of issues ................................................. 65
Average quality .................................................. Aa
Investment grade ................................................. 97.1%
Effective maturity ............................................... 15.9 yrs.
Largest sectors:
Industrial development ........................................ 18.0%
Utilities ..................................................... 13.5
Insured utilities ............................................. 12.5*
Housing ....................................................... 9.5
Insured lease/certificate of participation .................... 7.3*
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: So. Carolina
South Carolina's strong growth continued during the past year, leading to a more
diverse economy that relies less on agriculture and textiles and more on the
service sector and on higher-skilled manufacturing jobs.
Business views the state as a favorable location because of its tax structure
and low cost of living. A major contributor to the state's economic growth has
been the Bavarian Motor Works manufacturing plant in Spartanburg County, which
is now operational and is expected to be running at full capacity in 1996. It is
estimated that this facility will add 4,000 direct and indirect jobs to the
state.
Future growth is likely to be focused in metropolitan areas -- Charlestown,
Columbia and Greenville. In addition, tourism in South Carolina continues to
grow.
The state still wrestles with alternatives for dealing with local property tax
burdens. One plan would gradually relieve property taxes until all such taxes
are eliminated. Another would allow voters to approve a one-cent sales tax
increase to eliminate the property tax all at once.
South Carolina benefits from conservative fiscal management and relatively low
debt. During the last year, the state has put into effect several changes to
help balance its budget and make budgeting more predictable.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON SOUTH
CAROLINA TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX
From October 31, 1992, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 0.6% 3.9% $11,420
Without CDSC 5.6% 5.1% $11,820
</TABLE>
<TABLE>
<CAPTION>
DATE M. S. CAROLINA LEHMAN BROS.
- ---- -------------- ------------
<S> <C> <C>
10/92+ 10000 10000
11/92 10286 10179
12/92 10434 10283
1/93 10577 10403
2/93 11065 10779
3/93 10941 10665
4/93 11064 10773
5/93 11115 10833
6/93 11268 11014
7/93 11264 11028
8/93 11540 11258
9/93 11696 11386
10/93 11680 11408
11/93 11536 11308
12/93 11834 11546
1/94 11941 11678
2/94 11571 11376
3/94 10912 10913
4/94 10983 11005
5/94 11055 11100
6/94 10957 11036
7/94 11162 11235
8/94 11189 11274
9/94 11003 11108
10/94 10714 10911
11/94 10409 10714
12/94 10692 10950
1/95 11059 11263
2/95 11402 11590
3/95 11535 11723
4/95 11501 11737
5/95 11810 12112
6/95 11634 12006
7/95 11670 12119
8/95 11820 12273
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 10/2/92. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF DAVID C. REILLY]
"We have remained cautious in acquiring utility bonds, a strategy that paid off
when Piedmont Municipal Power Agency was downgraded from A- to BBB in late July.
Because the Portfolio held only one Piedmont bond, we avoided most of the pain
associated with this downgrade.
"New bond issuance in South Carolina has decreased dramatically in the last
year, with the number of new issues from January through June 1995, almost 75%
less than new issuance during the previous period. This is one reason why we are
optimistic about the performance of South Carolina debt."
- David C. Reilly
14
<PAGE> 15
EV MARATHON TENNESSEE TAX FREE FUND
YOUR INVESTMENT AT WORK
Maury County Industrial
Development Board
Saturn Corp.
[Graphic]
The bonds were issued in 1994 to refund bonds that were originally used to
finance equipment at the Saturn facility in Spring Hill. The Saturn plant was
part of a multi-billion-dollar project created by General Motors, with a goal of
developing a state-of-the-art automobile manufacturing facility.
The proceeds of the original bonds were used to purchase and install air and
water pollution control equipment and solid waste disposal facilities at the
Saturn plant. The bonds are the obligations of the Saturn Corp. and also are
backed by General Motors.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF TENNESEE]
<TABLE>
<S> <C>
Number of issues ............................................. 59
Average quality .............................................. Aa-
Investment grade ............................................. 98.3%
Effective maturity ........................................... 16.87 yrs.
Largest sectors:
Insured hospitals ......................................... 21.9%*
Housing ................................................... 16.2
Industrial development revenue ............................ 16.0
Pooled loans .............................................. 6.7
Insured water & sewer ..................................... 4.8*
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: Tennessee
Tennessee's economy still relies on manufacturing, but is diversifying as the
services sector grows in size and importance. Growth has been steady during the
past several years.
The state's efforts to develop its economy continue to be rewarded. In 1992 and
1993, for example, economic development projects, including both new projects
and the expansion of existing facilities, totaled more than $2 billion annually.
Within the manufacturing sector, apparel manufacturing is the largest segment,
with automobile equipment only slightly smaller.
The state's TennCare comprehensive health care program, which relies on managed
care to reduce costs, is expected to benefit the state's economic condition in
the long run. However, initial TennCare expenses exceeded estimates and required
some budget-balancing actions during the past year.
State fiscal operations benefit from a conservative management style and
continued relatively low debt levels.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON TENNESEE
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From August 31, 1992, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 1.1% 5.2% $11,489
Without CDSC 6.1% 6.0% $11,889
</TABLE>
<TABLE>
<CAPTION>
DATE M. TENESSEE LEHMAN BROS.
- ---- ----------- ------------
<S> <C> <C>
8/92+ 10000 10000
9/92 9970 10066
10/92 9709 9966
11/92 10110 10145
12/92 10276 10249
1/93 10437 10368
2/93 10865 10743
3/93 10733 10629
4/93 10906 10736
5/93 11008 10797
6/93 11242 10977
7/93 11238 10991
8/93 11520 11220
9/93 11662 11348
10/93 11657 11370
11/93 11505 11270
12/93 11767 11508
1/94 11917 11639
2/94 11551 11338
3/94 10876 10876
4/94 10904 10968
5/94 11021 11063
6/94 10914 10999
7/94 11174 11197
8/94 11203 11236
9/94 10963 11071
10/94 10633 10875
11/94 10309 10678
12/94 10637 10913
1/95 11073 11225
2/95 11485 11551
3/95 11550 11684
4/95 11518 11698
5/95 11862 12071
6/95 11642 11966
7/95 11714 12079
8/95 11889 12232
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 8/25/92. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF CYNTHIA J. CLEMSON]
"We like to buy industrial development bonds whenever possible because they
offer an attractive combination of yield and security. Over the past year, we
have added to our positions in industrial development bonds used to finance
facilities for both Saturn and DuPont.
"Quality spreads for medium-grade bonds are very tight. As a result, we have
focused on adding both higher quality bonds and on purchasing higher yielding
bonds of slightly lower quality."
- Cynthia J.Clemson
15
<PAGE> 16
EV MARATHON VIRGINIA TAX FREE FUND
YOUR INVESTMENT AT WORK
Prince William County
Potomac Hospital
[Graphic]
The proceeds from this issue are being used to pay for construction and
renovation of the Potomac Hospital, located in Prince William County.
Additionally, funds are being used to acquire a medical office building in
Stafford County, refund outstanding bonds and refinance the hospital's 1991
lease of cardiac catheterization equipment.
A total of $22 million of these bonds were issued in 1995 by the Prince William
County Industrial Development Authority.
PORTFOLIO OVERVIEW
Based on market value as of August 31, 1995
[GRAPHIC OF VIRGINIA]
<TABLE>
<S> <C>
Number of issues ............................................... 94
Average quality ................................................ Aa-
Investment grade ............................................... 95.8%
Effective maturity ............................................. 16.24 yrs.
Largest sectors:
Hospitals ................................................... 16.7%
Lease/certificates of participation ......................... 11.2
Housing ..................................................... 10.9
Education ................................................... 10.1
Insured hospital ............................................ 7.6*
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
THE STATE OF THE STATE: Virginia
The Virginia economy remains diversified and relatively strong. This vitality is
demonstrated by the fact that economic growth was stronger in the first quarter
of 1995 than in the last quarter of 1994.
Employment figures set new records, and employment gains were seen in all the
state's eight metropolitan areas. Military and civilian defense employment in
the state declined nearly 3% in 1994, though Virginia remained the
second-ranking state in terms of military payrolls. It is expected that the
commonwealth will continue to lose some military and military-related jobs, but
it is expected to add more than enough jobs in other areas to offset the loss.
The service sector is Virginia's largest source of employment and is expected to
be the fastest growing segment of the economy in the next few years. High
technology industries have grown considerably in the northern part of the state
in recent years. The manufacturing, tourism and technology segments are expected
to lead the state's growth in the near future.
Virginia's economic picture is aided by its conservative fiscal management and
low debt burden.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV MARATHON VIRGINIA
TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From July 31, 1991, through August 31, 1995
<TABLE>
<CAPTION>
AVERAGE ANNUAL 1 Life Value of
TOTAL RETURN Year of Fund* Investment at 8/31
- -------------- ---- -------- ------------------
<S> <C> <C> <C>
With CDSC 1.6% 6.0% $12,685
Without CDSC 6.6% 6.4% $12,885
</TABLE>
<TABLE>
<CAPTION>
DATE M. VIRGINIA LEHMAN BROS.
- ---- ----------- ------------
<S> <C> <C>
7/91+ 10000 10000
8/91 10080 10132
9/91 10262 10264
10/91 10374 10356
11/91 10369 10385
12/91 10655 10608
1/92 10607 10632
2/92 10618 10635
3/92 10564 10639
4/92 10681 10734
5/92 10831 10860
6/92 11036 11043
7/92 11440 11374
8/92 11224 11263
9/92 11202 11337
10/92 10892 11225
11/92 11285 11426
12/92 11415 11543
1/93 11539 11677
2/93 11995 12099
3/93 11837 11972
4/93 11972 12092
5/93 12009 12160
6/93 12198 12363
7/93 12186 12379
8/93 12437 12637
9/93 12583 12781
10/93 12579 12806
11/93 12428 12693
12/93 12735 12961
1/94 12875 13109
2/94 12508 12769
3/94 11905 12249
4/94 11949 12353
5/94 11993 12460
6/94 11856 12388
7/94 12041 12611
8/94 12085 12655
9/94 11914 12469
10/94 11611 12248
11/94 11291 12026
12/94 11606 12291
1/95 12011 12642
2/95 12414 13010
3/95 12546 13159
4/95 12525 13175
5/95 12918 13595
6/95 12683 13477
7/95 12723 13604
8/95 12885 13777
</TABLE>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced 7/26/91. +Index information is available only
at month-end, therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations.
FROM THE PORTFOLIO MANAGER:
[PHOTO OF DAVID C. REILLY]
"The health care industry continues to go through a consolidation, with
hospitals forming alliances with health maintenance organizations or merging
with other institutions.
"We feel that the hospitals that are left out of this consolidation may face a
shaky future, and as a result we continue to watch the hospital sector closely.
"We believe that the long-term future of municipal, bonds is strong. On a simple
supply-and-demand basis, their value should be enhanced by the fact that fewer
new bonds are being issued now than previously."
- David C. Reilly
16
<PAGE> 17
- --------------------------------------------------------------------------------
EV Marathon Tax Free Funds
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ALABAMA ARKANSAS GEORGIA KENTUCKY
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $105,315,734 $79,522,089 $117,028,843 $141,413,157
Unrealized appreciation 3,673,460 1,499,857 3,451,722 2,064,330
------------ ----------- ------------ ------------
Total investment in Portfolio, at value (Note 1A) $108,989,194 $81,021,946 $120,480,565 $143,477,487
Receivable for Fund shares sold 75,091 20,531 76,722 127,268
Deferred organization expenses (Note 1D) 5,529 5,640 3,797 2,622
------------ ----------- ------------ ------------
Total assets $109,069,814 $81,048,117 $120,561,084 $143,607,377
------------ ----------- ------------ ------------
LIABILITIES:
Dividends payable $ 221,646 $ 165,900 $ 245,375 $ 292,541
Payable for Fund shares redeemed 167,697 31,181 128,610 157,050
Payable to affiliates --
Trustees' fees 549 275 549 549
Custodian fee 941 864 500 1,048
Accrued expenses 36,777 27,047 43,277 50,397
------------ ----------- ------------ ------------
Total liabilities $ 427,610 $ 225,267 $ 418,311 $ 501,585
------------ ----------- ------------ ------------
NET ASSETS $108,642,204 $80,822,850 $120,142,773 $143,105,792
============ =========== ============ ============
SOURCES OF NET ASSETS:
Paid-in capital $109,276,324 $82,119,440 $125,429,464 $144,914,688
Accumulated net realized loss on investment and
financial futures transactions (computed on the
basis of identified cost) (4,462,224) (2,957,469) (8,882,642) (3,829,975)
Accumulated undistributed (distributions in excess
of) net investment income 154,644 161,022 144,229 (43,251)
Unrealized appreciation of investments and financial
futures contracts from Portfolio (computed on the
basis of identified cost) 3,673,460 1,499,857 3,451,722 2,064,330
------------ ----------- ------------ ------------
Total $108,642,204 $80,822,850 $120,142,773 $143,105,792
============ =========== ============ ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 10,409,805 7,885,726 12,277,627 14,331,031
============ =========== =========== ============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 6) (net assets / shares of beneficial
interest) $10.44 $10.25 $9.79 $9.99
====== ====== ===== =====
</TABLE>
See notes to financial statements
17
<PAGE> 18
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
FUND FUND FUND FUND
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $31,654,417 $112,152,042 $86,735,524 $181,851,233
Unrealized appreciation 233,937 1,937,136 3,297,972 7,221,492
----------- ------------ ----------- ------------
Total investment in Portfolio, at value (Note 1A) $31,888,354 $114,089,178 $90,033,496 $189,072,725
Receivable for Fund shares sold 46,370 107,576 12,603 109,786
Deferred organization expenses (Note 1D) 5,221 3,455 5,002 6,365
----------- ------------ ----------- ------------
Total assets $31,939,945 $114,200,209 $90,051,101 $189,188,876
----------- ------------ ----------- ------------
LIABILITIES:
Dividends payable $ 68,634 $ 238,042 $ 180,553 $ 390,445
Payable for Fund shares redeemed 24,197 94,315 25,238 277,999
Payable to affiliates --
Trustees' fees 549 549 275 549
Custodian fee 130 957 373 500
Accrued expenses 10,597 40,396 33,946 69,451
----------- ------------ ----------- ------------
Total liabilities $ 104,107 $ 374,259 $ 240,385 $ 738,944
----------- ------------ ----------- ------------
NET ASSETS $31,835,838 $113,825,950 $89,810,716 $188,449,932
=========== ============ =========== ============
SOURCES OF NET ASSETS:
Paid-in capital $33,361,530 $115,700,944 $89,890,491 $194,255,650
Accumulated net realized loss on investment and
financial futures transactions (computed on the
basis of identified cost) (1,801,689) (4,148,936) (3,377,651) (13,063,780)
Accumulated undistributed (distributions in excess
of) net investment income 42,060 336,806 (96) 36,570
Unrealized appreciation of investments and
financial futures contracts from Portfolio
(computed on the basis of identified cost) 233,937 1,937,136 3,297,972 7,221,492
----------- ------------ ----------- ------------
Total $31,835,838 $113,825,950 $89,810,716 $188,449,932
=========== ============ =========== ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 3,188,692 11,126,977 8,542,216 18,916,880
=========== ============ =========== ============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 6) (net assets / shares of
beneficial interest) $9.98 $10.23 $10.51 $9.96
===== ====== ====== =====
</TABLE>
See notes to financial statements
18
<PAGE> 19
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
FUND FUND FUND FUND
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $142,723,426 $57,845,450 $57,095,210 $182,925,184
Unrealized appreciation 2,694,145 2,343,891 514,102 7,357,491
------------ ----------- ----------- ------------
Total investment in Portfolio, at value (Note 1A) $145,417,571 $60,189,341 $57,609,312 $190,282,675
Receivable for Fund shares sold 42,093 32,230 38,286 85,917
Deferred organization expenses (Note 1D) 3,343 6,171 5,814 4,964
------------ ----------- ----------- ------------
Total assets $145,463,007 $60,227,742 $57,653,412 $190,373,556
------------ ----------- ----------- ------------
LIABILITIES:
Dividends payable $ 285,626 $ 122,894 $ 119,680 $ 390,126
Payable for Fund shares redeemed 68,859 128,149 30,781 379,531
Payable to affiliates --
Trustees' fees 549 275 275 549
Custodian fee 554 747 80 500
Accrued expenses 51,659 20,418 18,824 67,628
------------ ----------- ----------- ------------
Total liabilities $ 407,247 $ 272,483 $ 169,640 $ 838,334
------------ ----------- ----------- ------------
NET ASSETS $145,055,760 $59,955,259 $57,483,772 $189,535,222
============ =========== =========== ============
SOURCES OF NET ASSETS:
Paid-in capital $146,572,702 $62,263,418 $58,887,500 $192,311,843
Accumulated net realized loss on investment and
financial futures transactions (computed on
the basis of identified cost) (4,297,567) (4,796,875) (2,011,853) (10,114,562)
Accumulated undistributed (distributions in
excess of) net investment income 86,480 144,825 94,023 (19,550)
Unrealized appreciation of investments and
financial futures contracts from Portfolio
(computed on the basis of identified cost) 2,694,145 2,343,891 514,102 7,357,491
------------ ----------- ----------- ------------
Total $145,055,760 $59,955,259 $57,483,772 $189,535,222
============ =========== =========== ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 14,075,191 5,996,252 5,685,300 18,471,568
============ =========== =========== ============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE (NOTE 6) (net assets / shares of
beneficial interest) $10.31 $10.00 $10.11 $10.26
====== ====== ====== ======
</TABLE>
See notes to financial statements
19
<PAGE> 20
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 6,577,272 $ 4,952,476 $ 7,715,705 $ 8,750,352
Expenses allocated from Portfolio (493,634) (369,497) (569,574) (685,011)
----------- ----------- ----------- -----------
Net investment income from Portfolio $ 6,083,638 $ 4,582,979 $ 7,146,131 $ 8,065,341
----------- ----------- ----------- -----------
Expenses --
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 3,116 $ 1,618 $ 10,271 $ 3,236
Distribution costs (Note 5) 936,481 711,366 1,110,715 1,249,884
Custodian fee (Note 4) 5,850 6,162 500 10,430
Transfer and dividend disbursing agent fees 87,575 58,396 89,109 101,348
Printing and postage 35,434 27,199 38,451 42,450
Legal and accounting services 6,700 12,123 14,517 13,355
Registration costs 4,013 3,536 3,832 5,578
Amortization of organization expenses (Note 1D) 3,446 3,610 3,285 2,427
Miscellaneous 10,943 9,464 10,687 13,645
----------- ----------- ----------- -----------
Total expenses $ 1,093,558 $ 833,474 $ 1,281,367 $ 1,442,353
----------- ----------- ----------- -----------
Net investment income $ 4,990,080 $ 3,749,505 $ 5,864,764 $ 6,622,988
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from Portfolio --
Investment transactions (identified cost basis) $(1,579,920) $(1,441,509) $(4,498,202) $ (822,930)
Financial futures contracts (1,361,194) (1,056,915) (2,644,018) (1,810,204)
----------- ----------- ----------- -----------
Net realized loss on investments $(2,941,114) $(2,498,424) $(7,142,220) $(2,633,134)
Change in unrealized appreciation of investments 5,318,362 3,444,180 6,543,128 4,909,921
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss) $ 2,377,248 $ 945,756 $ (599,092) $ 2,276,787
----------- ----------- ----------- -----------
Net increase in net assets from operations $ 7,367,328 $ 4,695,261 $ 5,265,672 $ 8,899,775
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
20
<PAGE> 21
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 1,881,319 $ 7,134,380 $ 5,563,593 $11,765,901
Expenses allocated from Portfolio (65,213) (528,960) (428,103) (897,625)
----------- ----------- ----------- -----------
Net investment income from Portfolio $ 1,816,106 $ 6,605,420 $ 5,135,490 $10,868,276
----------- ----------- ----------- -----------
Expenses --
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 683 $ 3,236 $ 1,332 $ 2,439
Distribution costs (Note 5) 260,552 999,400 798,438 1,690,627
Custodian fee (Note 4) 1,016 10,410 9,929 500
Transfer and dividend disbursing agent fees 25,477 83,594 63,397 128,712
Printing and postage 17,212 38,976 29,093 55,176
Legal and accounting services 10,991 12,982 13,772 13,741
Registration costs 2,328 1,767 5,677 4,780
Amortization of organization expenses (Note 1D) 3,350 2,803 3,143 5,581
Miscellaneous 4,499 12,447 11,769 20,200
----------- ----------- ----------- -----------
Total expenses $ 326,108 $ 1,165,615 $ 936,550 $ 1,921,756
----------- ----------- ----------- -----------
Net investment income $ 1,489,998 $ 5,439,805 $ 4,198,940 $ 8,946,520
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from Portfolio --
Investment transactions (identified cost basis) $ (646,056) $(1,820,743) $(2,463,912) $(3,933,351)
Financial futures contracts (891,029) (1,461,816) (457,750) (4,843,373)
----------- ----------- ----------- -----------
Net realized loss on investments $(1,537,085) $(3,282,559) $(2,921,662) $(8,776,724)
Change in unrealized appreciation of investments 1,571,413 4,899,352 5,323,708 8,767,620
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss) $ 34,328 $ 1,616,793 $ 2,402,046 $ (9,104)
----------- ----------- ----------- -----------
Net increase in net assets from operations $ 1,524,326 $ 7,056,598 $ 6,600,986 $ 8,937,416
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
21
<PAGE> 22
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 8,843,734 $ 3,698,894 $ 3,448,024 $11,902,247
Expenses allocated from Portfolio (727,156) (258,859) (229,433) (899,910)
----------- ----------- ----------- -----------
Net investment income from Portfolio $ 8,116,578 $ 3,440,035 $ 3,218,591 $11,002,337
----------- ----------- ----------- -----------
Expenses --
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 3,236 $ 1,962 $ 1,711 $ 3,236
Distribution costs (Note 5) 1,283,429 521,649 482,493 1,687,717
Custodian fee (Note 4) 13,668 6,749 6,467 500
Transfer and dividend disbursing agent fees 103,149 42,820 39,488 138,532
Printing and postage 44,682 23,399 24,824 61,809
Legal and accounting services 13,953 15,425 12,481 13,742
Registration costs 3,647 1,173 2,683 7,835
Amortization of organization expenses (Note 1D) 2,946 3,354 3,551 5,548
Miscellaneous 18,264 6,455 7,235 12,860
----------- ----------- ----------- -----------
Total expenses $ 1,486,974 $ 622,986 $ 580,933 $ 1,931,779
----------- ----------- ----------- -----------
Net investment income $ 6,629,604 $ 2,817,049 $ 2,637,658 $ 9,070,558
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from Portfolio --
Investment transactions (identified cost basis) $(3,279,566) $(2,816,017) $(1,018,995) $(3,853,961)
Financial futures contracts (1,028,767) (1,065,730) (848,958) (3,659,621)
----------- ----------- ----------- -----------
Net realized loss on investments $(4,308,333) $(3,881,747) $(1,867,953) $(7,513,582)
Change in unrealized appreciation of investments 7,327,565 4,197,563 2,570,170 10,162,470
----------- ----------- ----------- -----------
Net realized and unrealized gain $ 3,019,232 $ 315,816 $ 702,217 $ 2,648,888
----------- ----------- ----------- ------------
Net increase in net assets from operations $ 9,648,836 $ 3,132,865 $ 3,339,875 $11,719,446
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
22
<PAGE> 23
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 4,990,080 $ 3,749,505 $ 5,864,764 $ 6,622,988
Net realized loss on investments (2,941,114) (2,498,424) (7,142,220) (2,633,134)
Change in unrealized appreciation of investments 5,318,362 3,444,180 6,543,128 4,909,921
------------ ------------ ------------ ------------
Net increase in net assets from operations $ 7,367,328 $ 4,695,261 $ 5,265,672 $ 8,899,775
------------ ------------ ------------ ------------
Distributions to shareholders (Note 2) --
From net investment income $ (4,990,080) $ (3,749,505) $ (5,864,764) $ (6,622,988)
In excess of net investment income (143,078) (182,195) (216,692) (337,010)
------------ ------------ ------------ ------------
Total distributions to shareholders $ (5,133,158) $ (3,931,700) $ (6,081,456) $ (6,959,998)
------------ ------------ ------------ ------------
Transactions in shares of beneficial interest (Note
3) --
Proceeds from sales of shares $ 12,491,127 $ 6,780,492 $ 10,649,881 $ 12,444,086
Net asset value of shares issued to shareholders
in payment of distributions declared 2,652,717 1,884,209 3,052,159 3,708,544
Cost of shares redeemed (14,288,423) (11,041,868) (27,224,917) (16,980,873)
------------ ------------ ------------ ------------
Increase (decrease) in net assets from Fund
share transactions $ 855,421 $ (2,377,167) $(13,522,877) $ (828,243)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets $ 3,089,591 $ (1,613,606) $(14,338,661) $ 1,111,534
NET ASSETS:
At beginning of year 105,552,613 82,436,456 134,481,434 141,994,258
------------ ------------ ------------ ------------
At end of year $108,642,204 $ 80,822,850 $120,142,773 $143,105,792
============ ============ ============ ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF )
NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT
END OF YEAR $ 154,644 $ 161,022 $ 144,229 $ (43,251)
============ ============ ============ ============
</TABLE>
See notes to financial statements
23
<PAGE> 24
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 1,489,998 $ 5,439,805 $ 4,198,940 $ 8,946,520
Net realized loss on investments (1,537,085) (3,282,559) (2,921,662) (8,776,724)
Change in unrealized appreciation of
investments 1,571,413 4,899,352 5,323,708 8,767,620
----------- ------------ ------------ ------------
Net increase in net assets from operations $ 1,524,326 $ 7,056,598 $ 6,600,986 $ 8,937,416
----------- ------------ ------------ ------------
Distributions to shareholders (Note 2) --
From net investment income $(1,489,998) $ (5,439,805) $ (4,198,940) $ (8,946,520)
In excess of net investment income (73,180) (98,476) (166,866) (410,010)
----------- ------------ ------------ ------------
Total distributions to shareholders $(1,563,178) $ (5,538,281) $ (4,365,806) $ (9,356,530)
----------- ------------ ------------ ------------
Transactions in shares of beneficial interest
(Note 3) --
Proceeds from sales of shares $ 5,214,512 $ 13,615,276 $ 7,129,437 $ 16,332,648
Net asset value of shares issued to
shareholders in payment of distributions
declared 783,732 2,952,321 2,213,888 4,685,433
Cost of shares redeemed (3,143,269) (20,980,838) (12,994,601) (24,816,348)
----------- ------------ ------------ ------------
Increase (decrease) in net assets from Fund
share transactions $ 2,854,975 $ (4,413,241) $ (3,651,276) $ (3,798,267)
----------- ------------ ------------ ------------
Net increase (decrease) in net assets $ 2,816,123 $ (2,894,924) $ (1,416,096) $ (4,217,381)
NET ASSETS:
At beginning of year 29,019,715 116,720,874 91,226,812 192,667,313
----------- ------------ ------------ ------------
At end of year $31,835,838 $113,825,950 $ 89,810,716 $188,449,932
=========== ============ ============ ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS
OF) NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF YEAR $ 42,060 $ 336,806 $ (96) $ 36,570
=========== ============ ============ ============
</TABLE>
See notes to financial statements
24
<PAGE> 25
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 6,629,604 $ 2,817,049 $ 2,637,658 $ 9,070,558
Net realized loss on investments (4,308,333) (3,881,747) (1,867,953) (7,513,582)
Change in unrealized appreciation of
investments 7,327,565 4,197,563 2,570,170 10,162,470
------------ ------------ ----------- ------------
Net increase in net assets from operations $ 9,648,836 $ 3,132,865 $ 3,339,875 $ 11,719,446
------------ ------------ ----------- ------------
Distributions to shareholders (Note 2) --
From net investment income $ (6,629,604) $ (2,817,049) $(2,637,658) $ (9,070,558)
In excess of net investment income (308,106) (64,469) (138,918) (405,313)
------------ ------------ ----------- ------------
Total distributions to shareholders $ (6,937,710) $ (2,881,518) $(2,776,576) $ (9,475,871)
------------ ------------ ----------- ------------
Transactions in shares of beneficial interest
(Note 3) --
Proceeds from sales of shares $ 11,143,966 $ 8,594,993 $ 7,348,950 $ 22,209,690
Net asset value of shares issued to
shareholders in payment of distributions
declared 3,945,866 1,307,677 1,419,234 4,998,528
Cost of shares redeemed (23,872,614) (10,077,180) (7,227,038) (33,336,822)
------------ ------------ ----------- ------------
Increase (decrease) in net assets from Fund
share transactions $ (8,782,782) $ (174,510) $ 1,541,146 $ (6,128,604)
------------ ------------ ----------- ------------
Net increase (decrease) in net assets $ (6,071,656) $ 76,837 $ 2,104,445 $ (3,885,029)
NET ASSETS:
At beginning of year 151,127,416 59,878,422 55,379,327 193,420,251
------------ ------------ ----------- ------------
At end of year $145,055,760 $ 59,955,259 $57,483,772 $189,535,222
============ ============ =========== ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS
OF) NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF YEAR $ 86,480 $ 144,825 $ 94,023 $ (19,550)
============ ============ =========== =============
</TABLE>
See notes to financial statements
25
<PAGE> 26
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<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 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) $ (6,711,888) $ (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)
============ =========== ============ ===========
</TABLE>
* For the eleven months ended August 31, 1994 (Note 8).
See notes to financial statements
26
<PAGE> 27
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<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 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)
=========== ============ =========== ============
</TABLE>
* For the eleven months ended August 31, 1994 (Note 8).
See notes to financial statements
27
<PAGE> 28
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<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 depreciation of
investments (11,817,058) (3,747,871) (3,794,864) (13,242,737)
------------ ------------ ----------- ------------
Net 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 (Note 8).
See notes to financial statements
28
<PAGE> 29
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended September 30, 1993
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 2,135,181 $ 1,099,682 $ 3,403,589 $ 3,421,228
Net realized gain (loss) on investments (484,681) (241,061) 140,825 (413,257)
Change in unrealized appreciation of investments 4,569,419 2,831,062 6,277,782 7,096,313
----------- ----------- ------------ ------------
Net increase in net assets from operations $ 6,219,919 $ 3,689,683 $ 9,822,196 $ 10,104,284
----------- ----------- ------------ ------------
Distributions to shareholders (Note 2) --
From net investment income $(2,136,150) $(1,099,682) $ (3,403,589) $ (3,421,228)
In excess of net investment income (525,308) (269,054) (957,136) (923,973)
From net realized gain on investments -- -- (97,686) (39,000)
----------- ----------- ------------ ------------
Total distributions to shareholders $(2,661,458) $(1,368,736) $ (4,458,411) $ (4,384,201)
----------- ----------- ------------ ------------
Transactions in shares of beneficial interest (Note 3)
--
Proceeds from sales of shares $60,007,886 $57,146,145 $ 75,238,539 $ 69,654,556
Net asset value of shares issued to shareholders in
payment of distributions declared 1,379,193 642,945 2,353,661 2,272,127
Cost of shares redeemed (1,429,589) (905,031) (5,069,670) (4,388,610)
----------- ----------- ------------ ------------
Increase in net assets from Fund share
transactions $59,957,490 $56,884,059 $ 72,522,530 $ 67,538,073
----------- ----------- ------------ ------------
Net increase in net assets $63,515,951 $59,205,006 $ 77,886,315 $ 73,258,156
NET ASSETS:
At beginning of period 21,105,081 -- 42,156,233 46,835,128
----------- ----------- ------------ ------------
At end of period $84,621,032 $59,205,006 $120,042,548 $120,093,284
=========== =========== ============ ============
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME INCLUDED IN NET ASSETS AT END OF PERIOD $ (74,909) $ (42,193) $ (249,003) $ (247,891)
=========== =========== ============ ============
</TABLE>
* For the period from the start of business, October 2, 1992, to September 30,
1993.
See notes to financial statements
29
<PAGE> 30
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended September 30, 1993
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 302,938 $ 2,530,051 $ 2,033,636 $ 5,302,615
Net realized gain (loss) on investments 162,259 (198,615) (196,609) (316,081)
Change in unrealized appreciation of investments 681,425 5,792,466 4,850,867 10,119,454
----------- ----------- ----------- ------------
Net increase in net assets from operations $ 1,146,622 $ 8,123,902 $ 6,687,894 $ 15,105,988
----------- ----------- ----------- ------------
Distributions to shareholders (Note 2) --
From net investment income $ (302,938) $(2,530,051) $(2,033,636) $ (5,302,615)
In excess of net investment income (65,860) (599,682) (554,820) (1,356,733)
In excess of net realized gain on investments -- -- (82,695) (303,922)
----------- ----------- ----------- ------------
Total distributions to shareholders $ (368,798) $(3,129,733) $(2,671,151) $ (6,963,270)
----------- ----------- ----------- ------------
Transactions in shares of beneficial interest (Note
3) --
Proceeds from sales of shares $17,227,814 $61,739,775 $47,220,507 $ 96,169,085
Net asset value of shares issued to shareholders
in payment of distributions declared 191,480 1,700,104 1,344,195 3,529,662
Cost of shares redeemed (262,032) (2,388,004) (1,153,661) (5,746,256)
----------- ----------- ----------- ------------
Increase in net assets from Fund share
transactions $17,157,262 $61,051,875 $47,411,041 $ 93,952,491
----------- ----------- ----------- ------------
Net increase in net assets $17,935,086 $66,046,044 $51,427,784 $102,095,209
NET ASSETS:
At beginning of period -- 29,180,206 25,225,311 71,732,898
----------- ----------- ----------- ------------
At end of period $17,935,086 $95,226,250 $76,653,095 $173,828,107
=========== =========== =========== ============
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME INCLUDED IN NET ASSETS AT END OF PERIOD $ (3,615) $ (74,643) $ (128,350) $ (294,478)
=========== =========== =========== ============
</TABLE>
* For the period from the start of business, October 2, 1992, to September 30,
1993.
See notes to financial statements
30
<PAGE> 31
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended September 30, 1993
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 3,492,356 $ 779,209 $ 820,041 $ 5,422,016
Net realized gain (loss) on investments 1,168,085 (44,873) 478,278 183,066
Change in unrealized appreciation of investments 6,698,327 1,894,199 1,749,389 9,038,871
------------ ----------- ----------- ------------
Net increase in net assets from operations $ 11,358,768 $ 2,628,535 $ 3,047,708 $ 14,643,953
------------ ----------- ----------- ------------
Distributions to shareholders (Note 2) --
From net investment income $ (3,492,356) $ (779,209) $ (819,639) $ (5,422,016)
In excess of net investment income (891,306) (162,316) (172,849) (1,458,494)
From net realized gain on investment
transactions (31,525) -- -- (183,066)
In excess of net realized gain on investments -- -- -- (87,866)
------------ ----------- ----------- ------------
Total distributions to shareholders $ (4,415,187) $ (941,525) $ (992,488) $ (7,151,442)
------------ ----------- ----------- ------------
Transactions in shares of beneficial interest (Note
3) --
Proceeds from sales of shares $ 82,847,326 $42,504,519 $34,140,154 $ 98,158,075
Net asset value of shares issued to shareholders
in payment of distributions declared 2,491,170 464,965 518,421 3,780,899
Cost of shares redeemed (5,755,734) (1,486,995) (541,127) (6,634,722)
------------ ----------- ----------- ------------
Increase in net assets from Fund share
transactions $ 79,582,762 $41,482,489 $34,117,448 $ 95,304,252
------------ ----------- ----------- ------------
Net increase in net assets $ 86,526,343 $43,169,499 $36,172,668 $102,796,763
NET ASSETS:
At beginning of period 41,703,045 -- 3,475,489 72,629,452
------------ ----------- ----------- ------------
At end of period $128,229,388 $43,169,499 $39,648,157 $175,426,215
============ =========== =========== ============
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME INCLUDED IN NET ASSETS AT END OF PERIOD $ (153,431) $ -- $ -- $ (370,953)
============ =========== =========== ============
</TABLE>
* For the period from the start of business, October 2, 1992, to September 30,
1993.
See notes to financial statements
31
<PAGE> 32
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON ALABAMA FUND MARATHON ARKANSAS FUND
--------------------------------------------- -------------------------------------
YEAR ENDED YEAR ENDED
--------------------------------------------- -------------------------------------
AUGUST 31, SEPTEMBER 30, AUGUST 31, SEPTEMBER 30,
--------------------- ------------------- ------------------- -------------
1995 1994*** 1993 1992** 1995 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 $ 0.479 $ 0.425 $ 0.475 $ 0.208 $ 0.460 $ 0.431 $ 0.471
Net realized and unrealized
gain (loss) on investments 0.244 (0.769) 0.837 0.385+++ 0.132 (0.703) 1.025
-------- -------- ------- ------- ------- ------- -------
Total income (loss) from
operations $ 0.723 $ (0.344) $ 1.312 $ 0.593 $ 0.592 $(0.272) $ 1.496
-------- -------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.479) $ (0.425) $(0.475) $(0.208) $(0.460) $(0.431) $(0.471)
In excess of net investment income (0.014) (0.081) (0.117) (0.045) (0.022) (0.067) (0.115)
-------- -------- ------- ------- ------- ------- -------
Total distributions $ (0.493) $ (0.506) $(0.592) $(0.253) $(0.482) $(0.498) $(0.586)
-------- -------- ------- ------- ------- ------- -------
NET ASSET VALUE, end of year $ 10.440 $ 10.210 $11.060 $10.340 $10.250 $10.140 $10.910
======== ======== ======= ======= ======= ======= =======
TOTAL RETURN (3) 7.38% (3.18)% 13.09% 5.71% 6.15% (2.53)% 15.00%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year (000
omitted) $108,642 $105,553 $84,621 $21,105 $80,823 $82,436 $59,205
Ratio of net expenses to average
daily net assets (1) 1.51% 1.43%+ 1.37% 1.01%+ 1.50% 1.17%+ 0.88%+
Ratio of net investment income to
average daily net assets 4.74% 4.35%+ 4.30% 4.49%+ 4.67% 4.47%+ 4.27%+
PORTFOLIO TURNOVER (2) -- -- 15% 13% -- 5% 13%
</TABLE>
* For the year ended September 30, 1993 and for the period from the start of
business, May 1, 1992, to September 30, 1992 (for Marathon Alabama Fund) and
for the eleven months ended August 31, 1994 and for the period from the start
of business, October 2, 1992, to September 30, 1993 (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, net investment
income per share and the ratios would have been as follows:
<TABLE>
<S> <C> <C> <C> <C>
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%+
</TABLE>
** For the period from the start of business, May 1, 1992, to September 30,
1992.
*** For the eleven months ended August 31, 1994 (Note 8).
+ Annualized.
++ 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 (loss) for the period because of the timing of sales of Fund shares
and the amount of the per share realized and unrealized gains and losses
at such time.
(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 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. Total return is
computed on a nonannualized basis.
See notes to financial statements
32
<PAGE> 33
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON GEORGIA FUND MARATHON KENTUCKY FUND
------------------------------------------- -------------------------------------------
YEAR ENDED YEAR ENDED
------------------------------------------- -------------------------------------------
AUGUST 31, SEPTEMBER 30, AUGUST 31, SEPTEMBER 30,
-------------------- ------------------- -------------------- -------------------
1995 1994*** 1993 1992** 1995 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 $ 0.450 $ 0.413 $ 0.459 $ 0.380 $ 0.458 $ 0.415 $ 0.462 $ 0.363
Net realized and unrealized
gain (loss) on investments 0.007++ (0.841) 0.776 0.215 0.163 (0.811) 0.820 0.192
-------- -------- -------- ------- -------- -------- -------- -------
Total income (loss) from
operations $ 0.457 $ (0.428) $ 1.235 $ 0.595 $ 0.621 $ (0.396) $ 1.282 $ 0.555
-------- -------- -------- ------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.450) $ (0.413) $ (0.459) $(0.380) $ (0.458) $ (0.415) $ (0.462) $(0.363)
In excess of net investment income (0.017) (0.065) (0.129) (0.095) (0.023) (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 $ (0.467) $ (0.522) $ (0.605) $(0.475) $ (0.481) $ (0.534) $ (0.592) $(0.465)
-------- -------- -------- ------- -------- -------- -------- -------
NET ASSET VALUE, end of year $ 9.790 $ 9.800 $ 10.750 $10.120 $ 9.990 $ 9.850 $ 10.780 $10.090
======== ======== ======== ======= ======== ======== ======== =======
TOTAL RETURN (3) 4.90% (4.08)% 12.60% 5.85% 6.61% (3.78)% 13.05% 5.45%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year
(000 omitted) $120,143 $134,481 $120,043 $42,156 $143,106 $141,994 $120,093 $46,835
Ratio of net expenses to average
daily net assets (1) 1.49% 1.41%+ 1.52% 1.13%+ 1.52% 1.44%+ 1.50% 1.44%+
Ratio of net investment income to
average daily net assets 4.72% 4.39%+ 4.27% 4.72%+ 4.74% 4.39%+ 4.29% 4.56%+
PORTFOLIO TURNOVER (2) -- -- 20% 33% -- -- 21% 64%
</TABLE>
* 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, net investment
income per share and the ratios would have been as follows:
<TABLE>
<S> <C> <C>
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%+
</TABLE>
** For the period from the start of business, December 23, 1991, to
September 30, 1992.
*** For the eleven months ended August 31, 1994 (Note 8).
+ Annualized.
++ The per share amount is not in accord with the net realized and
unrealized gain (loss) for the period because of the timing of sales of
Fund shares and the amount of the per share realized and unrealized gains
and losses at such time.
(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.
Total return is computed on a nonannualized basis.
See notes to financial statements
33
<PAGE> 34
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON LOUISIANA FUND MARATHON MARYLAND FUND
------------------------------------ ---------------------------------------------
YEAR ENDED YEAR ENDED
------------------------------------ ---------------------------------------------
AUGUST 31, SEPTEMBER 30, AUGUST 31, SEPTEMBER 30,
-------------------- ------------- --------------------- -------------------
1995 1994*** 1993** 1995 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 $ 0.487 $ 0.447 $ 0.478 $ 0.476 $ 0.428 $ 0.466 $ 0.303
Net realized and unrealized
gain (loss) on investments (0.006)+++ (0.937) 1.234 0.169 (0.922) 0.890 0.375+++
------- ------- ------- -------- -------- ------- -------
Total income (loss) from
operations $ 0.481 $(0.490) $ 1.712 $ 0.645 $ (0.494) $ 1.356 $ 0.678
------- ------- ------- -------- -------- ------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.487) $(0.447) $(0.478) $ (0.476) $ (0.428) $(0.466) $(0.303)
In excess of net investment income (0.024) (0.074) (0.104) (0.009) (0.070) (0.110) (0.085)
In excess of net realized gain on
investment transactions -- (0.109) -- -- (0.008) -- --
------- ------- ------- -------- -------- ------- -------
Total distributions $(0.511) $(0.630) $(0.582) $ (0.485) $ (0.506) $(0.576) $(0.388)
------- ------- ------- -------- -------- ------- -------
NET ASSET VALUE, end of year $ 9.980 $10.010 $11.130 $ 10.230 $ 10.070 $11.070 $10.290
======= ======= ======= ======== ======== ======= =======
TOTAL RETURN (3) 5.08% (4.56)% 17.26% 6.71% (4.56)% 13.61% 6.65%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year (000 omitted) $31,836 $29,020 $17,935 $113,826 $116,721 $95,226 $29,180
Ratio of net expenses to average
daily net assets (1) 1.31% 1.08%+ 1.07%+ 1.50% 1.43%+ 1.43% 1.30%+
Ratio of net investment income to
average daily net assets 4.97% 4.62%+ 4.27%+ 4.82% 4.44%+ 4.28% 4.25%+
PORTFOLIO TURNOVER (2) -- 14% 86% -- -- 12% 3%
</TABLE>
* For the year ended August 31, 1995, the eleven months ended August 31, 1994
and for 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 Fund), the operating expenses of the
Funds and the Portfolios may reflect a reduction of the investment adviser
fee, an allocation of expenses to the Investment Adviser, or both. Had such
actions not been taken, net investment income per share and the ratios would
have been as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME PER SHARE $0.476 $0.412 $0.401 $0.461 $0.280
====== ====== ====== ====== ======
RATIOS (As a percentage of average
daily net assets):
Expenses(1) 1.42% 1.44%+ 1.76%+ 1.48% 1.62%+
Net investment income 4.86% 4.26%+ 3.58%+ 4.23% 3.93%+
</TABLE>
** For the period from the start of business, October 2, 1992, to September
30, 1993.
*** For the eleven months ended August 31, 1994 (Note 8).
+ Annualized.
++ 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 (loss) for the period because of the timing of sales of
Fund shares and the amount of the per share realized and unrealized gains
and losses at suchtime.
(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 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. Total return is
computed on a nonannualized basis.
See notes to financial statements
34
<PAGE> 35
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MISSOURI FUND MARATHON NORTH CAROLINA FUND
---------------------------------------- ---------------------------------------------
YEAR ENDED YEAR ENDED
---------------------------------------- ---------------------------------------------
AUGUST 31, SEPTEMBER 30, AUGUST 31, SEPTEMBER 30,
------------------ ------------------ ---------------------- -------------------
1995 1994*** 1993 1992** 1995 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
------- ------- ------- ------- -------- -------- -------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.477 $ 0.423 $ 0.470 $ 0.200 $ 0.466 $ 0.423 $ 0.468 $ 0.456
Net realized and unrealized
gain (loss) on investments 0.289 (0.904) 1.005 0.455 0.011+++ (0.895) 0.794 0.423+++
------- ------- ------- ------- -------- -------- -------- -------
Total income (loss) from
operations $ 0.766 $(0.481) $ 1.475 $ 0.655 $ 0.477 $ (0.472) $ 1.262 $ 0.879
------- ------- ------- ------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.477) $(0.423) $(0.470) $(0.200) $ (0.466) $ (0.423) $ (0.468) $(0.456)
In excess of net investment income (0.019) (0.084) (0.128) (0.055) (0.021) (0.075) (0.120) (0.123)
In excess of net realized gain on
investment transactions -- (0.022) (0.027) -- -- -- (0.034) --
------- ------- ------- ------- -------- -------- -------- -------
Total distributions $(0.496) $(0.529) $(0.625) $(0.255) $ (0.487) $ (0.498) $ (0.622) $(0.579)
------- ------- ------- ------- -------- -------- -------- -------
NET ASSET VALUE, end of year $10.510 $10.240 $11.250 $10.400 $ 9.960 $ 9.970 $ 10.940 $10.300
======= ======= ======= ======= ======== ======== ======== =======
TOTAL RETURN (3) 7.82% (4.33)% 14.66% 6.33% 5.03% (4.40)% 12.69% 8.75%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year (000
omitted) $89,811 $91,227 $76,653 $25,225 $188,450 $192,667 $173,828 $71,733
Ratio of net expenses to average
daily net assets (1) 1.53% 1.49%+ 1.52% 1.32%+ 1.51% 1.42%+ 1.52% 1.35%+
Ratio of net investment income to
average daily net assets 4.72% 4.30%+ 4.23% 4.31%+ 4.78% 4.43%+ 4.34% 4.54%+
PORTFOLIO TURNOVER (2) -- -- 14% 21% -- -- 16% 52%
</TABLE>
* For the year ended September 30, 1993 and for the period from the start of
business, May 1, 1992, to September 30, 1992 (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, an
allocation of expenses to the Investment Adviser, or both. Had such actions
not been taken, net investment income per share and the ratios would have been
as follows:
<TABLE>
<S> <C> <C> <C>
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%+
</TABLE>
** For the period from the start of business, May 1, 1992, to September 30,
1992.
*** For the eleven months ended August 31, 1994 (Note 8).
+ Annualized.
++ 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 (loss) for the period because of the timing of sales of
Fund shares and the amount of the per share realized and unrealized gains
and losses at such time.
(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 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. Total return is
computed on a nonannualized basis.
See notes to financial statements
35
<PAGE> 36
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON OREGON FUND MARATHON SOUTH CAROLINA FUND
------------------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED
------------------------------------------- -----------------------------------
AUGUST 31, SEPTEMBER 30, AUGUST 31, SEPTEMBER 30,
-------------------- ------------------- ------------------ -------------
1995 1994*** 1993 1992** 1995 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 $ 0.455 $ 0.415 $ 0.459 $ 0.351 $ 0.460 $ 0.408 $ 0.461
Net realized and unrealized
gain (loss) on investments 0.241 (0.869) 0.983 0.368 0.071 (0.870) 0.986
-------- -------- -------- ------- ------- ------- -------
Total income (loss) from
operations $ 0.696 $ (0.454) $ 1.442 $ 0.719 $ 0.531 $(0.462) $ 1.447
-------- -------- -------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.455) $ (0.415) $ (0.459) $(0.351) $(0.460) $(0.408) $(0.461)
In excess of net investment income (0.021) (0.078) (0.117) (0.098) (0.011) (0.080) (0.096)
From net realized gain on
investment transactions -- (0.093) (0.006) -- -- -- --
-------- -------- -------- ------- ------- ------- -------
Total distributions $ (0.476) $ (0.586) $ (0.582) $(0.449) $(0.471) $(0.488) $(0.557)
-------- -------- -------- ------- ------- ------- -------
NET ASSET VALUE, end of year $ 10.310 $ 10.090 $ 11.130 $10.270 $10.000 $ 9.940 $10.890
======== ======== ======== ======= ======= ======= =======
TOTAL RETURN (3) 7.22% (4.21)% 14.47% 7.10% 5.64% (4.33)% 14.50%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year (000 omitted) $145,056 $151,127 $128,229 $41,703 $59,955 $59,878 $43,169
Ratio of net expenses to average
daily net assets (1) 1.53% 1.43%+ 1.55% 1.47%+ 1.49% 1.36%+ 1.07%+
Ratio of net investment income to
average daily net assets 4.59% 4.28%+ 4.22% 4.27%+ 4.77% 4.27%+ 4.22%+
PORTFOLIO TURNOVER (2) -- -- 23% 44% -- 3% 13%
</TABLE>
* 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, 1993 (for Marathon South Carolina
Fund), the operating expenses of the Funds and the Portfolios may reflect a
reduction of the investment adviser fee, an allocation of expenses to the
Investment Adviser, or both. Had such actions not been taken, net investment
income per share and the ratios would have been as follows:
<TABLE>
<S> <C> <C>
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%+
</TABLE>
** For the period from the start of business, December 24, 1991, to
September 30, 1992.
*** For the eleven months ended August 31, 1994 (Note 8).
+ Annualized.
++ 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 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. Total return is
computed on a nonannualized basis.
See notes to financial statements
36
<PAGE> 37
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON TENNESSEE FUND MARATHON VIRGINIA FUND
------------------------------------- --------------------------------------------------
YEAR ENDED YEAR ENDED
------------------------------------- --------------------------------------------------
AUGUST 31, SEPTEMBER 30, AUGUST 31, SEPTEMBER 30,
----------------- ----------------- ------------------- ----------------------------
1995 1994*** 1993 1992** 1995 1994*** 1993 1992 1991++
------- ------- ------- ------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year $10.020 $11.070 $10.010 $10.000 $ 10.120 $ 11.060 $ 10.460 $10.200 $10.000
------- ------- ------- ------- ------- -------- -------- ------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.468 $ 0.426 $ 0.466 $ 0.040 $ 0.479 $ 0.438 $ 0.483 $ 0.526 $ 0.087
Net realized and unrealized
gain (loss) on investments 0.115 (0.848) 1.158 0.027+++ 0.161 (0.864) 0.762 0.385 0.220+++
------- ------- ------- ------- ------- -------- -------- ------- -------
Total income (loss) from
operations $ 0.583 $(0.422) $ 1.624 $ 0.067 $ 0.640 $ (0.426) $ 1.245 $ 0.911 $ 0.307
------- ------- ------- ------- ------- -------- -------- ------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.468) $(0.426) $(0.466) $(0.040) $ (0.479) $ (0.438) $ (0.483) $(0.526) $(0.087)
In excess of net investment
income (0.025) (0.071) (0.098) (0.017) (0.021) (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 $(0.493) $(0.628) $(0.564) $(0.057) $ (0.500) $ (0.514) $ (0.645) $(0.651) $(0.107)
------- ------- ------- ------- ------- -------- -------- ------- -------
NET ASSET VALUE, end of year $10.110 $10.020 $11.070 $10.010 $ 10.260 $ 10.120 $ 11.060 $10.460 $10.200
======= ======= ======= ======= ======= ======== ======== ======= =======
TOTAL RETURN (3) 6.12% (3.93)% 16.97% 0.01% 6.62% (3.95)% 12.33% 9.16% 2.82%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year (000
omitted) $57,484 $55,379 $39,648 $ 3,475 $189,535 $193,420 $175,426 $72,629 $11,081
Ratio of net expenses to average
daily net assets (1) 1.47% 1.37%+ 1.30% 1.00%+ 1.50% 1.44%+ 1.52% 1.36% 1.27%+
Ratio of net investment income to
average daily net assets 4.77% 4.44%+ 4.24% 2.91%+ 4.81% 4.51%+ 4.42% 4.86% 4.47%+
PORTFOLIO TURNOVER (2) -- -- 28% 0% -- -- 27% 85% 10%
</TABLE>
* For the year ended September 30, 1993 and for the period from the start of
business, August 25, 1992, to September 30, 1992 (for Marathon Tennessee
Fund), and for the year ended September 30, 1992 and for the period from the
start of business, July 26, 1991, to September 30, 1991 (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 actions not been taken, net investment
income per share and the ratios would have been as follows:
<TABLE>
<S> <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%+
</TABLE>
** For the period from the start of business, August 25, 1992, to
September 30, 1992.
*** For the eleven months ended August 31, 1994 (Note 8).
+ Annualized.
++ 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 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 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. Total return
is computed on a nonannualized basis.
See notes to financial statements
37
<PAGE> 38
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Eaton Vance Municipals Trust (the Trust) is an entity of the type commonly known
as a Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The Trust
presently consists of sixty-three Funds, twelve of the non-diversified funds 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 (92.0%, 99.4%, 98.0%,
98.8%, 92.9%, 99.2%, 96.6%, 96.9%, 99.3%, 98.0%, 98.2%, and 99.2%, at August 31,
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, 1995, the Funds, for
federal income tax purposes had capital loss carryovers which will reduce
taxable income arising from future net realized gain on investments, if any, to
the extent permitted by the Internal Revenue Code, and thus will reduce the
amount of the distributions to shareholders which would otherwise be necessary
to relieve the Funds of any liability for federal income or excise tax.
38
<PAGE> 39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The amounts and expiration dates of the capital loss carryovers are as follows:
<TABLE>
<CAPTION>
FUND AMOUNT EXPIRES
- ----------------------------- ---------- ------------------
<S> <C> <C>
Marathon Alabama Fund $1,877,237 August 31, 2003
362,951 August 31, 2002
1,050 September 30, 2000
Marathon Arkansas Fund 561,676 August 31, 2003
241,061 August 31, 2002
Marathon Georgia Fund 1,196,186 August 31, 2003
151,432 August 31, 2002
Marathon Kentucky Fund 1,058,247 August 31, 2003
Marathon Louisiana Fund 278,670 August 31, 2003
Marathon Maryland Fund 1,208,914 August 31, 2003
Marathon Missouri Fund 435,519 August 31, 2003
Marathon North Carolina Fund 4,995,953 August 31, 2003
451,305 August 31, 2002
63,556 September 30, 2001
Marathon Oregon Fund 4,339,899 August 31, 2003
Marathon South Carolina Fund 1,317,687 August 31, 2003
74,010 August 31, 2002
Marathon Tennessee Fund 195,240 August 31, 2003
Marathon Virginia Fund 2,423,779 August 31, 2003
</TABLE>
Additionally, at August 31, 1995, net capital losses of $2,346,219, $2,200,443,
$7,532,174, $2,762,731, $1,537,797, $2,993,588, $2,917,460, $7,411,597,
$3,871,018, $3,414,356, $1,850,895 and $7,632,832, 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, 1994, are
treated as arising on the first day of the Funds' next taxable year. Dividends
paid by each Fund from net interest on tax-exempt municipal bonds allocated from
its corresponding Portfolio are not includable by shareholders as gross income
for federal income tax purposes because each Fund and Portfolio intend to meet
certain requirements of the Internal Revenue Code applicable to regulated
investment companies which will enable the Funds to pay exempt-interest
dividends. The portion of such interest, if any, earned on private activity
bonds issued after August 7, 1986, may be considered a tax preference item to
shareholders.
D. DEFERRED ORGANIZATION EXPENSES--Costs incurred by each Fund in connection
with its organization, including registration costs, are being amortized on the
straight-line basis over five years beginning on the date each Fund commenced
operations.
E. DISTRIBUTION COSTS--For book purposes, commissions paid on the sale of Fund
shares and other distribution costs are charged to operations. As a result of a
recent Internal Revenue Service ruling, the Funds changed their tax accounting
for commissions paid from charging the expense to paid-in capital to charging
the expense to operations. The change had no effect on either the Fund's current
yield or total return (Notes 2 and 5).
F. RECLASSIFICATION--Certain prior year amounts have been reclassified to
conform to the current year presentation.
G. OTHER--Investment transactions are accounted for on a trade date basis.
- --------------------------------------------------------------------------------
(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
39
<PAGE> 40
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
are classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital.
During the year ended August 31, 1995, the following reclassifications were made
due to permanent differences between book and tax accounting for distribution
costs and certain distributions related to capital gains:
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ALABAMA ARKANSAS GEORGIA KENTUCKY
INCREASE/(DECREASE) FUND FUND FUND FUND
- -------------------------------- --------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Accumulated net realized loss on
investment and financial
futures transactions $ -- $ -- $ (5,548) $ --
Accumulated undistributed net
investment income 447,777 346,813 546,942 601,569
Paid-in capital (447,777) (346,813) (552,490) (601,569)
</TABLE>
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
INCREASE/(DECREASE) FUND FUND FUND FUND
- -------------------------------- --------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Accumulated net realized loss on
investment and financial
futures transactions $ (2,647) $ (4,301) $ (1,303) $ --
Accumulated undistributed net
investment income 123,165 480,806 379,289 806,275
Paid-in capital (125,812) (485,107) (380,592) (806,275)
</TABLE>
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
INCREASE/(DECREASE) FUND FUND FUND FUND
- -------------------------------- --------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Accumulated net realized loss on
investment and financial
futures transactions $(10,570) $ -- $ (3,824) $ --
Accumulated undistributed net
investment income 619,412 255,420 230,845 807,989
Paid-in capital (629,982) (255,420) (234,669) (807,989)
</TABLE>
Net investment income, net realized gains and net assets were not affected by
these reclassifications.
40
<PAGE> 41
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Funds' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
MARATHON ALABAMA MARATHON ARKANSAS
FUND FUND
------------------------------------------ ------------------------------------------
YEAR ENDED YEAR ENDED
------------------------------------------ ------------------------------------------
AUGUST 31, AUGUST 31, SEPTEMBER 30, AUGUST 31, AUGUST 31, SEPTEMBER 30,
1995 1994* 1993 1995 1994* 1993**
----------- ----------- -------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales 1,241,529 3,167,514 5,603,885 685,186 2,786,569 5,450,147
Issued to shareholders electing
to
receive payments of
distributions in
Fund shares 262,695 233,307 132,023 189,639 161,980 60,441
Redemptions (1,432,449) (711,097) (128,454) (1,116,643) (245,910) (85,683)
---------- --------- --------- ---------- --------- ----------
Net increase (decrease) 71,775 2,689,724 5,607,454 (241,818) 2,702,639 5,424,905
========== ========= ========= ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
MARATHON GEORGIA MARATHON KENTUCKY
FUND FUND
------------------------------------------ ------------------------------------------
YEAR ENDED YEAR ENDED
------------------------------------------ ------------------------------------------
AUGUST 31, AUGUST 31, SEPTEMBER 30, AUGUST 31, AUGUST 31, SEPTEMBER 30,
1995 1994* 1993 1995 1994* 1993
----------- ----------- -------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales 1,118,366 3,355,248 7,259,216 1,296,010 3,625,642 6,698,642
Issued to shareholders electing
to
receive payments of
distributions in
Fund shares 319,177 340,835 226,214 383,359 369,461 217,995
Redemptions (2,878,588) (1,145,361) (484,606) (1,763,810) (719,208) (418,949)
---------- ---------- --------- ---------- --------- ---------
Net increase (decrease) (1,441,045) 2,550,722 7,000,824 (84,441) 3,275,895 6,497,688
========== ========= ========= ========== ========= =========
</TABLE>
* For the eleven months ended August 31, 1994 (Note 8).
** For the period from the start of business, October 2, 1992, to September 30,
1993.
41
<PAGE> 42
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON LOUISIANA MARATHON MARYLAND
FUND FUND
------------------------------------------ ------------------------------------------
YEAR ENDED YEAR ENDED
------------------------------------------ ------------------------------------------
AUGUST 31, AUGUST 31, SEPTEMBER 30, AUGUST 31, AUGUST 31, SEPTEMBER 30,
1995 1994* 1993** 1995 1994* 1993
----------- ----------- -------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales 537,770 1,324,035 1,618,021 1,391,822 3,395,967 5,828,592
Issued to shareholders electing
to receive payments of
distributions in Fund shares 80,245 75,761 17,753 298,558 276,002 159,603
Redemptions (327,579) (112,890) (24,424) (2,153,497) (681,305) (224,314)
-------- --------- --------- ---------- --------- ---------
Net increase (decrease) 290,436 1,286,906 1,611,350 (463,117) 2,990,664 5,763,881
======== ========= ========= ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
MARATHON MISSOURI MARATHON NORTH CAROLINA
FUND FUND
------------------------------------------ ------------------------------------------
YEAR ENDED YEAR ENDED
------------------------------------------ ------------------------------------------
AUGUST 31, AUGUST 31, SEPTEMBER 30, AUGUST 31, AUGUST 31, SEPTEMBER 30,
1995 1994* 1993 1995 1994* 1993
----------- ----------- -------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales 712,633 2,271,136 4,373,612 1,686,102 3,912,532 9,134,617
Issued to shareholders electing
to receive payments of
distributions in Fund shares 219,344 211,893 124,344 479,532 428,741 334,227
Redemptions (1,297,726) (391,617) (105,923) (2,567,819) (917,372) (540,210)
---------- --------- --------- ---------- --------- ---------
Net increase (decrease) (365,749) 2,091,412 4,392,033 (402,185) 3,423,901 8,928,634
========== ========= ========= ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
MARATHON OREGON MARATHON SOUTH CAROLINA
FUND FUND
------------------------------------------ ------------------------------------------
YEAR ENDED YEAR ENDED
------------------------------------------ ------------------------------------------
AUGUST 31, AUGUST 31, SEPTEMBER 30, AUGUST 31, AUGUST 31, SEPTEMBER 30,
1995 1994* 1993 1995 1994* 1993**
----------- ----------- -------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales 1,131,231 3,978,510 7,767,637 884,786 2,526,541 4,062,612
Issued to shareholders electing
to receive payments of
distributions in Fund shares 397,878 442,188 231,883 134,341 122,013 43,798
Redemptions (2,436,297) (963,856) (533,913) (1,047,426) (588,630) (141,783)
---------- --------- --------- ---------- --------- ---------
Net increase (decrease) (907,188) 3,456,842 7,465,607 (28,299) 2,059,924 3,964,627
========== ========= ========= ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
MARATHON TENNESSEE MARATHON VIRGINIA
FUND FUND
------------------------------------------ ------------------------------------------
YEAR ENDED YEAR ENDED
------------------------------------------ ------------------------------------------
AUGUST 31, AUGUST 31, SEPTEMBER 30, AUGUST 31, AUGUST 31, SEPTEMBER 30,
1995 1994* 1993 1995 1994* 1993
----------- ----------- -------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales 754,435 1,947,543 3,237,571 2,254,165 4,034,241 9,185,856
Issued to shareholders electing
to receive payments of
distributions in Fund shares 144,886 149,324 48,577 501,177 461,655 352,806
Redemptions (743,561) (149,757) (50,969) (3,388,505) (1,253,270) (616,966)
-------- --------- --------- ---------- ---------- ---------
Net increase (decrease) 155,760 1,947,110 3,235,179 (633,163) 3,242,626 8,921,696
======== ========= ========= ========== ========= =========
</TABLE>
* For the eleven months ended August 31, 1994 (Note 8).
** For the period from the start of business, October 2, 1992, to September 30,
1993.
42
<PAGE> 43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(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 year ended August 31, 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
$788,932, $602,799, $931,910, $1,048,842, $224,688, $845,760, $667,042,
$1,405,043, $1,083,821, $442,983, $414,636 and $1,415,731, respectively, to or
payable to EVD, representing 0.75% (annualized) of average daily net assets. At
August 31, 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 $4,287,000, $3,364,000, $4,634,000, $5,401,000,
$1,388,000, $4,520,000, $3,461,000, $7,188,000, $5,529,000, $2,527,000,
$2,357,000 and $7,026,000, respectively.
In addition, the Plans authorize the Funds to make payments of service fees to
the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of each Fund's average daily net assets for any fiscal year. The
Trustees' have initially implemented the Plans by authorizing the Funds to make
quarterly service fee payments to the Principal Underwriter and Authorized Firms
in amounts not expected to exceed 0.20% per annum of each Fund's average daily
net assets based on the value of Fund shares sold by such persons and remaining
outstanding for at least one year. For the year ended August 31, 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 $147,549, $108,567, $178,805,
$201,042, $35,864, $153,640, $131,396, $285,584, $199,608, $78,666, $67,857 and
$271,986, respectively. Service fee payments are made for personal services
and/or maintenance of shareholder accounts. Service fees paid to EVD and
authorized firms are separate and distinct from the sales commissions and
distribution fees payable by each Fund to EVD, and as such are not subject to
automatic discontinuance when there are no outstanding Uncovered Distribution
Charges of EVD.
Certain officers and Trustees of the Fund are officers or directors of EVD.
43
<PAGE> 44
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(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 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 $328,000, $312,000, $827,000, $466,000,
$78,000, $511,000, $279,000, $575,000, $666,000, $359,000, $235,000 and
$104,000, 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 year ended
August 31, 1995.
- --------------------------------------------------------------------------------
(7) INVESTMENT TRANSACTIONS
Increases and decreases in each Fund's investment in its corresponding Portfolio
for the year ended August 31, 1995 were as follows:
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ALABAMA ARKANSAS GEORGIA KENTUCKY
FUND FUND FUND FUND
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increases $13,574,937 $7,277,215 $11,478,624 $13,139,345
Decreases 18,599,105 14,087,076 32,307,290 22,151,078
</TABLE>
<TABLE>
<CAPTION>
MARATHON
MARATHON MARATHON MARATHON NORTH
LOUISIANA MARYLAND MISSOURI CAROLINA
FUND FUND FUND FUND
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increases $ 5,691,144 $14,392,351 $ 7,450,617 $17,365,009
Decreases 4,488,942 25,216,950 16,264,082 31,826,299
</TABLE>
<TABLE>
<CAPTION>
MARATHON
MARATHON SOUTH MARATHON MARATHON
OREGON CAROLINA TENNESSEE VIRGINIA
FUND FUND FUND FUND
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increases $11,799,848 $8,880,034 $ 7,637,686 $23,694,620
Decreases 28,803,778 12,416,179 9,340,844 40,291,072
</TABLE>
- --------------------------------------------------------------------------------
(8) CHANGE IN FISCAL YEAR
The Funds changed their fiscal year end from September 30, to August 31,
effective August 31, 1994.
44
<PAGE> 45
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
TO THE TRUSTEES AND SHAREHOLDERS OF
EATON VANCE MUNICIPALS TRUST:
We have audited the accompanying statements of assets and liabilities of EV
Marathon 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 and EV Marathon Virginia Tax Free Fund (the Funds) (certain of the series
of Eaton Vance Municipals Trust) as of August 31, 1995, and the related
statements of operations for the year then ended, the statements of changes in
net assets for the years ended August 31, 1995 and 1994 and the year ended
September 30, 1993, and the financial highlights for each of the years in the
five-year period ended August 31, 1995. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
aforementioned funds of Eaton Vance Municipals Trust at August 31, 1995, the
results of their operations, the changes in their net assets and their financial
highlights for the respective stated periods in conformity with generally
accepted accounting principles.
DELOITTE
& TOUCHE LLP
BOSTON, MASSACHUSETTS
SEPTEMBER 29, 1995
45
<PAGE> 46
- --------------------------------------------------------------------------------
Alabama Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 511,180
Baa1 A- 500 Puerto Rico Electric Power
Authority, 7.00%, 7/1/07 537,105
Baa1 A- 500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 508,735
Baa1 A- 935 Puerto Rico Electric Power
Authority, 6.00%, 7/1/16 929,409
Baa1 A- 1,000 Puerto Rico Electric Power
Authority, 6.00%, 7/1/10 1,008,360
------------
$ 3,494,789
------------
ESCROWED - 4.6%
NR AA $ 500 Birmingham City, Alabama
Improvement Warrants,
6.60%, 7/1/17 $ 560,295
NR BBB 2,000 Gadsden City, Alabama
Medical Clinic Board
(Baptist Hospital), 7.80%,
11/1/21 2,375,560
NR BBB 350 Gadsden City, Alabama
Medical Clinic Board
(Baptist Hospital), 7.60%,
11/1/08 412,006
Aaa AAA 250 Tuscaloosa County, Alabama
Limited Obligation-Capital
Outlay Warrants (AMBAC),
6.50%, 2/1/15 270,793
Aa NR 1,600 University of Alabama-
Birmingham Medical &
Educational Foundation
Housing, 7.00%, 12/1/19 1,788,944
------------
$ 5,407,598
------------
GENERAL OBLIGATIONS - 6.5%
A1 AA $1,500 Birmingham, Alabama
U.T.G.O., 5.75%, 4/1/19 $ 1,452,930
A1 AA 1,000 Birmingham, Alabama
U.T.G.O., 5.75%, 6/1/16 982,080
Baa1 A 2,000 Puerto Rico U.T.G.O.,
6.50%, 7/1/23 2,059,260
Baa1 A 1,980 Puerto Rico Public
Buildings Authority,
5.75%, 7/1/15 1,907,314
Baa1 A 1,000 Puerto Rico Public
Buildings Authority,
5.50%, 7/1/21 919,960
NR NR 250 Virgin Islands, Public
Finance Authority, 7.25%,
10/1/18 262,505
------------
$ 7,584,049
------------
HEALTH CARE - 4.2%
A1 A+ $2,000 DCH Healthcare, Alabama
5.75%, 6/1/23 $ 1,888,860
NR NR 325 Fairhope City, Alabama
Midtown Medical Clinic
Board (Beverly
Enterprises), 6.375%,
6/1/09 301,542
Baa BBB 2,000 Marshall County, Alabama
Health Care, 7.00%, 1/1/20 1,997,400
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
NR NR 670 Mobile City, Alabama
Second Medical Clinic
Board (Beverly
Enterprises), 7.00%,
4/1/07 651,883
------------
$ 4,839,685
------------
HOSPITALS - 5.1%
Baa NR $1,000 Cullman, Alabama Medical
Clinic Board (Cullman
Regional Medical Center),
6.50%, 2/15/23 $ 947,460
Baa1 NR 3,550 Jasper City, Alabama
Medical Clinic Board
(Walker Regional Medical
Center), 6.375%, 7/1/18
(2) 3,530,582
A A 1,000 Montgomery City, Alabama
Medical Clinic Board
(Jackson Hospital), 7.00%,
3/1/15 1,044,270
Baa BBB 430 Troy City, Alabama
Hospital Building
Authority, 7.375%, 5/1/12 450,192
------------
$ 5,972,504
------------
HOUSING - 2.6%
Aaa NR $3,000 Alabama HFA Single Family
Mortgage (GNMA/FNMA),
6.60%, 4/1/19 $ 3,036,180
------------
INDUSTRIAL DEVELOPMENT
REVENUE/POLLUTION CONTROL
REVENUE - 12.7%
Baa1 BBB $1,200 Courtland, Alabama
(Champion International
Corporation), 7.20%,
12/1/13 $ 1,298,760
Baa1 BBB 5,500 Courtland, Alabama
(Champion International
Corporation), 5.90%,
2/1/17 5,311,790
Baa3 NR 1,000 Jackson, Alabama (Boise
Cascade), 7.875%, 8/1/00 1,037,310
Baa3 BBB- 2,000 Mobile, Alabama Industrial
Development Board (Solid
Waste), 6.95%, 1/1/20 2,045,340
Aa2 AA 3,000 Mobile County, Alabama
Pollution Control, 6.00%,
12/1/14 3,048,690
Baa3 BB+ 1,000 Puerto Rico Port Authority
(American Airlines),
(AMT), 6.30%, 6/1/23 992,100
A3 A- 1,000 Selma, Alabama, Industrial
Development Board (Solid
Waste), International
Paper Co., 6.00%, 12/1/17 997,450
------------
$ 14,731,440
------------
INSURED EDUCATION - 8.5%
Aaa AAA $1,000 Alabama A&M University
(MBIA), 6.375%, 11/1/09 $ 1,059,150
Aaa AAA 1,770 Alabama A&M University
(MBIA), 5.75%, 11/1/14 1,755,645
</TABLE>
46
<PAGE> 47
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED EDUCATION - (CONTINUED)
Aaa AAA 3,750 Alabama A&M University
(MBIA), 5.50%, 11/1/20 3,559,013
Aaa AAA 4,000 University of Alabama
(MBIA), 5.00%, 6/1/16 3,554,680
------------
$ 9,928,488
------------
INSURED ELECTRIC UTILITIES - 2.1%
Aaa AAA $ 250 Puerto Rico Electric Power
Authority (STRIPES) (FSA),
Variable, 7/1/03 (1) $ 279,153
Aaa AAA 2,000 Wilsonville, Alabama
Industrial Development
Board (MBIA), 6.75%,
2/1/15 2,122,760
------------
$ 2,401,913
------------
INSURED GENERAL OBLIGATION - 3.7%
Aaa AAA $ 500 Fairfield City, Alabama
U.T.G.O. (AMBAC), 6.30%,
6/1/22 $ 518,975
Aaa AAA 3,250 Madison City, Alabama
(MBIA), 6.00%, 2/1/24 3,269,760
Aaa AAA 500 Troy City, Alabama (CAPG),
6.60%, 6/1/12 526,725
------------
$ 4,315,460
------------
INSURED HEALTH CARE - 1.8%
Aaa AAA $2,000 Huntsville, Alabama Health
Care Facilities (MBIA),
6.50%, 6/1/13 $ 2,097,440
------------
INSURED HOSPITAL - 6.4%
Aaa AAA $2,500 Birmingham, Alabama
Baptist Medical Center
(MBIA), 5.875%, 11/15/20 $ 2,459,400
Aaa AAA 2,500 Birmingham, Alabama
Baptist Medical Center
(MBIA), 6.00%, 11/15/24 2,482,700
Aaa AAA 1,000 East Alabama Health Care
Facilities (MBIA), 5.25%,
9/1/23 906,400
Aaa AAA 1,000 Houston County, Southeast
Alabama Medical Center
(MBIA), 5.75%, 10/1/22 974,520
Aaa AAA 750 University of Alabama
Revenue (MBIA), 5.00%,
10/1/14 674,100
------------
$ 7,497,120
------------
INSURED INDUSTRIAL
DEVELOPMENT REVENUE/
POLLUTION CONTROL REVENUE - 4.4%
Aaa AAA $3,000 Columbia, Alabama (AL
Power Company) (AMBAC),
6.50%, 9/1/23 $ 3,107,940
Aaa AAA 2,000 West Jefferson, Alabama
Industrial Development
(MBIA), 6.05%, 5/1/23 2,004,620
------------
$ 5,112,560
------------
INSURED LEASE/CERTIFICATE
OF PARTICIPATION - 3.9%
Aaa AAA $4,700 Montgomery, Alabama
Downtown Redevelopment
Authority Mortgage (MBIA),
5.50%, 10/1/13 $ 4,497,571
------------
INSURED
MISCELLANEOUS - 0.4%
Aaa AAA $1,950 Jefferson County, Alabama
Birmingham-Jefferson Civic
Center (MBIA), 0%, 9/1/18 $ 492,180
------------
INSURED SOLID WASTE - 4.0%
Aaa AAA $4,000 Huntsville, Alabama Solid
Waste Disposal (FGIC)
(AMT), 7.00%, 10/1/14 $ 4,271,480
Aaa AAA 350 Huntsville, Alabama Solid
Waste Disposal (FGIC)
(AMT), 7.00%, 10/1/08 382,316
------------
$ 4,653,796
------------
INSURED TRANSPORTATION - 4.3%
Aaa AAA $3,475 Birmingham, Alabama
Airport Authority (AMBAC),
5.25%, 7/1/20 $ 3,186,471
Aaa AAA 2,000 Birmingham, Alabama
Airport Authority (AMBAC)
(AMT), 5.375%, 7/1/23 1,821,660
------------
$ 5,008,131
------------
INSURED WATER & SEWER - 17.2%
Aaa AAA $2,750 Alabama Water Pollution
Control Authority
(Jefferson County)
(AMBAC), 5.50%, 2/15/16 $ 2,623,363
Aaa AAA 2,500 Alabama Water Pollution
Control Authority (AMBAC),
5.00%, 8/15/15 2,254,400
Aaa AAA 1,100 Gulf Shores, Alabama Water
and Sewer (AMBAC), 6.50%,
2/1/15 1,156,001
Aaa AAA 2,360 Limestone County, Alabama
Water Authority (FGIC),
5.25%, 12/1/20 2,159,707
Aaa AAA 500 Northeast, Alabama Water,
Sewer and Fire Protection
(AMBAC), 5.70%, 5/1/23 487,065
Aaa AAA 3,075 Prichard City, Alabama
Water and Sewer (AMBAC),
6.125%, 11/15/14 3,148,460
Aaa AAA 6,000 Scottsboro, Alabama Water,
Sewer and Gas (AMBAC),
6.50%, 12/1/14 6,361,020
</TABLE>
47
<PAGE> 48
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<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 750 West Morgan-East Lawrence,
Alabama Water Authority
(FGIC), 6.00%, 5/1/22 754,200
Aaa AAA 1,000 West Morgan-East Lawrence,
Alabama Water Authority
(FSA), 6.85%, 8/15/25 1,077,410
------------
$ 20,021,626
------------
MISCELLANEOUS - 0.1%
A A $ 100 Tennessee Valley, Alabama
Exhibit Commission, 6.70%,
6/1/10 $ 107,061
------------
SPECIAL TAX REVENUE - 2.4%
Baa1 A $1,000 Puerto Rico Highway and
Transportation, 5.50%,
7/1/15 $ 950,160
Baa1 A 1,800 Puerto Rico Highway and
Transportation, 6.625%,
7/1/18 1,878,480
------------
$ 2,828,640
------------
TRANSPORTATION - 0.9%
NR BBB $1,000 Guam Airport Authority,
6.70%, 10/1/23 $ 1,007,200
------------
WATER AND SEWER - 1.2%
NR NR $1,500 Moulton City, Alabama
Water, 6.30%, 1/1/18 $ 1,444,425
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$112,610,415) $116,479,856
============
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
(2) Security has been segregated to cover margin requirements for open financial
futures contracts.
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 August 31, 1995, 56.7% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.5% to 27.3% of total investments.
See notes to financial statements
48
<PAGE> 49
- --------------------------------------------------------------------------------
Arkansas Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 3.2%
A1 NR $1,750 University of Arkansas
Board of Trustees, 7.20%,
12/1/10 (2) $ 1,923,338
A NR 610 Arkansas State Student Loan
Authority, 7.25%, 6/1/09 666,193
-----------
$ 2,589,531
-----------
ELECTRIC UTILITIES - 9.2%
A NR $1,750 Conway, Arkansas Electric,
5.70%, 8/1/09 $ 1,764,368
NR BBB 1,250 Guam Power Authority,
5.25%, 10/1/13 1,123,200
NR BBB 1,250 Guam Power Authority,
5.25%, 10/1/23 1,072,300
Baa2 BBB 1,500 Independence, Arkansas PCR
(AR Power & Light), 6.25%,
1/1/21 1,507,470
Baa2 BBB- 750 Jefferson, Arkansas PCR (AR
Power & Light), 6.125%,
10/1/07 750,225
Baa2 BBB 550 Jefferson, Arkansas PCR (AR
Power & Light), 6.30%,
6/1/18 564,174
Baa2 BBB 500 Pope, Arkansas PCR (AR
Power & Light), 6.30%,
12/1/16 510,100
Baa1 A- 500 Puerto Rico Electric Power
Authority, 0%, 7/1/17 132,214
-----------
$ 7,424,051
-----------
ESCROWED - 3.4%
Aaa AAA $ 500 Arkansas DFA Wastewater
System (MBIA), 7.00%,
6/1/14 $ 567,760
Aaa NR 650 Arkansas State Waste
Disposal and Pollution
Abatement U.T.G.O., 6.25%,
7/1/22 714,110
Aaa AAA 500 Harrison, Arkansas Single
Family Mortgage (FGIC),
7.40%, 9/1/11 574,114
Aaa AAA 750 Puerto Rico Public
Buildings Authority 6.875%,
7/1/21 861,848
-----------
$ 2,717,832
-----------
GENERAL OBLIGATIONS - 8.2%
Aa AA $ 750 Arkansas State College
Savings, 0%, 6/1/13 $ 273,465
Aa AA 2,750 Arkansas State College
Savings, 0%, 6/1/14 938,658
Baa1 A 1,000 Puerto Rico Public
Improvement, 5.25%, 7/1/18 901,610
Baa1 A 2,000 Puerto Rico Commonwealth
Unlimited Tax 5.50%, 7/1/13 1,901,760
Baa1 A 2,000 Puerto Rico Public
Buildings Authority, 5.50%,
7/1/21 1,839,920
NR NR 750 Virgin Island, Public
Finance Authority, 7.25%,
10/1/18 787,515
-----------
$ 6,642,928
-----------
HOSPITALS - 14.8%
Aa AA $3,000 Arkansas DFA (Sisters of
Mercy), 5.00%, 6/1/19 $ 2,664,180
Baa NR 700 Baxter, Arkansas Hospital
Improvement, 7.25%, 9/1/07 744,611
Baa NR 750 Baxter, Arkansas Hospital
Improvement, 7.50%, 9/1/21 800,970
NR A+ 1,125 Little Rock, Arkansas
(Baptist Medical Center),
6.80%, 11/1/05 1,256,108
NR A+ 2,250 Little Rock, Arkansas
(Baptist Medical Center),
5.50%, 9/1/15 2,137,545
NR A 1,000 Little Rock, Arkansas
(Baptist Medical
Center-Parkway Village),
7.00%, 10/1/17 1,064,340
NR A- 2,250 Pulaski, Arkansas
(Children's Hospital),
6.20%, 3/1/22 2,253,150
A1 AA 1,000 Sebastian, Arkansas (Sparks
Regional Medical Center),
5.60%, 4/1/06 1,026,020
-----------
$11,946,924
-----------
HOUSING - 11.7%
NR AAA $2,400 Arkansas DFA Single Family
Mortgage (GNMA, AMT),
5.80%, 6/1/25 $ 2,230,272
NR AAA 765 Arkansas DFA Single Family
Mortgage (GNMA, AMT),
7.85%, 12/1/21 809,592
NR AAA 1,000 Arkansas DFA Single Family
Mortgage (GNMA/FNMA, AMT),
6.35%, 7/1/22 999,880
NR AAA 1,000 Arkansas DFA Single Family
Mortgage (GNMA/FNMA),
6.60%, 7/1/17 1,032,200
NR AAA 1,500 Arkansas DFA Single Family
Mortgage (GNMA/FNMA, AMT),
6.80%, 1/1/22 1,547,790
NR AAA 740 Arkansas DFA Single Family
Mortgage (GNMA/FNMA),
6.70%, 7/1/27 746,519
NR AAA 1,000 Arkansas DFA Single Family
Mortgage (GNMA, AMT),
7.45%, 1/1/27 1,077,470
A NR 3,000 Arkansas DFA Compound
Accretion, 0%, 12/1/11 974,010
-----------
$ 9,417,733
-----------
INDUSTRIAL DEVELOPMENT
REVENUE/POLLUTION CONTROL
REVENUE - 13.2%
Baa2 BBB $2,350 Baxter, Arkansas (Aeroquip
Corporation), 5.80%,
10/1/13 $ 2,280,816
A1 AA- 2,500 Blythesville, Arkansas
(Nucor Corporation), (AMT),
6.90%, 12/1/21 2,653,825
A3 A- 755 Gurdon, Arkansas
(International Paper),
5.75%, 2/1/08 755,627
A1 AA- 1,000 Jonesboro, Arkansas
(Anheuser-Busch), 6.50%,
11/15/12 1,074,290
</TABLE>
49
<PAGE> 50
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDUSTRIAL DEVELOPMENT REVENUE/
POLLUTION CONTROL REVENUE - (CONTINUED)
NR A- 550 Pine Bluff, Arkansas
(International Paper),
(AMT), 5.55%, 10/1/17 517,347
A2 NR 750 Puerto Rico IME (American
Home Products), 5.10%,
12/1/18 670,215
Baa3 BB+ 2,740 Puerto Rico Ports Authority
(American Airlines) (AMT),
6.30%, 6/1/23 2,718,353
-----------
$10,670,473
-----------
INSURED ELECTRIC UTILITIES - 7.5%
Aaa AAA $ 500 Independence, Arkansas PCR
(AR Power & Light) (FSA),
6.25%, 1/1/21 $ 519,265
Aaa AAA 250 North Little Rock, Arkansas
Electric System (MBIA),
6.50%, 7/1/10 271,900
Aaa AAA 3,390 North Little Rock, Arkansas
Electric System (MBIA),
6.50%, 7/1/15 3,722,016
Aaa AAA 450 Puerto Rico Electric Power
Authority (STRIPES) (FSA),
Variable, 7/1/03 (1) 502,475
Aaa AAA 1,000 West Memphis, Arkansas
Public Utilities (MBIA),
6.60%, 1/1/09 1,073,250
-----------
$ 6,088,906
-----------
INSURED GENERAL OBLIGATIONS - 7.0%
Aaa AAA $1,610 Jonesboro, Arkansas School
District (AMBAC), 6.125%,
2/1/15 $ 1,629,352
Aaa AAA 3,000 Springdale, Arkansas School
District (AMBAC), 5.125%,
6/1/16 2,760,630
Aaa AAA 680 White Hall, Arkansas School
District (AMBAC), 4.75%,
4/1/12 620,140
Aaa AAA 710 White Hall, Arkansas School
District (AMBAC), 4.75%,
4/1/13 645,248
-----------
$ 5,655,370
-----------
INSURED HEALTH CARE - 1.1%
Aaa AAA $ 400 Saline, Arkansas Healthcare
(Evan Lutheran Good
Samaritan) (AMBAC), 5.80%,
5/1/11 $ 394,280
Aaa AAA 500 Saline, Arkansas Healthcare
(Evan Lutheran Good
Samaritan) (AMBAC), 6.00%,
6/1/18 513,665
-----------
$ 907,945
-----------
INSURED TRANSPORTATION - 0.6%
Aaa AAA $ 500 Little Rock, Arkansas
Airport (MBIA), 6.00%,
11/1/14 $ 508,370
-----------
INSURED WATER & SEWER - 7.2%
Aaa AAA $1,670 Arkansas DFA Wastewater
System (MBIA), 5.40%,
12/1/15 $ 1,598,541
Aaa AAA 1,680 Arkansas DFA Wastewater
System (MBIA), 5.00%,
12/1/08 1,621,502
Aaa AAA 2,000 Arkansas DFA Wastewater
System (MBIA), 5.00%,
6/1/15 1,821,960
Aaa AAA 300 Beaver, Arkansas Water
District (MBIA), 5.85%,
11/15/08 312,741
Aaa AAA 500 Jonesboro, Arkansas Water
and Light (AMBAC), 5.25%,
12/1/13 477,915
-----------
$ 5,832,659
-----------
MISCELLANEOUS - 2.9%
A NR $2,000 Little Rock, Arkansas Hotel
and Restaurant Gross
Receipts Tax, 7.375%,
8/1/15 $ 2,329,700
-----------
SPECIAL TAX REVENUE - 3.2%
Baa1 A $3,000 Puerto Rico Highway and
Transportation, 5.00%,
7/1/22 $ 2,591,430
-----------
WATER & SEWER REVENUE - 6.8%
NR NR $ 800 Conway, Arkansas Water,
5.40%, 5/1/11 $ 772,880
NR NR 1,250 Cross, Arkansas Rural
Water, 5.75%, 4/1/18 1,254,574
A1 NR 2,000 Little Rock, Arkansas
Sewer, 5.50%, 8/1/14 1,933,740
NR NR 1,500 South Sebastian, Arkansas
Water, 6.15%, 6/1/23 1,534,815
-----------
$ 5,496,009
-----------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$79,275,204) $80,819,861
===========
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
(2) Security has been segregated to cover margin requirements for open financial
futures contracts.
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 August 31, 1995, 23.4% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.7% to 6.1% of total investments.
See notes to financial statements
50
<PAGE> 51
- --------------------------------------------------------------------------------
Georgia Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 5.6%
Aa1 AA- $3,000 Dekalb County Georgia,
Emory University, 6.00%,
10/1/14 $ 3,058,170
Aa AA- 3,425 Private Colleges and
Universities Authority,
Agnes Scott College,
5.625%, 6/1/23 3,324,100
Aa1 AA- 310 Private Colleges and
Universities Authority,
Emory University, 6.40%,
10/1/23 321,628
------------
$ 6,703,898
------------
ESCROWED - 0.2%
Aaa AAA $ 250 Cherokee County, Georgia,
Water and Sewer, (MBIA),
6.90%, 8/1/18 $ 279,650
------------
GENERAL
OBLIGATIONS - 15.0%
Aa AA- $ 300 Alpharetta, Georgia,
6.50%, 5/1/10 $ 331,482
Aa AA 3,350 Atlanta, Georgia, 6.10%,
12/1/19 3,398,575
Aa AA 2,000 Atlanta, Georgia, 6.125%,
12/1/23 2,024,880
Aa AA 3,000 Atlanta, 6.25%, 10/1/12 3,111,120
Aa AA 1,650 Atlanta, 6.25%, 10/1/16 1,699,351
A1 NR 150 Cherokee County School
District, 6.375%, 6/1/7 160,494
Aa AA 1,000 Downtown Savannah
Authority Georgia Revenue,
5.00%, 1/1/11 931,930
Aa AA- 250 Clayton County, Georgia,
Solid Waste, 6.50%, 2/1/12 264,043
Aa AA 1,000 Fulton County School
District, 5.60%, 1/1/13 983,590
Aaa AA+ 500 Georgia, 6.30%, 3/1/08 553,930
Aa1 AA+ 1,480 Gwinnett County, Georgia,
Water and Sewerage, 6.50%,
8/1/06 1,491,618
A A 450 Paulding County School
District, 6.625%, 2/1/08 495,477
Baa1 A 1,000 Puerto Rico, 5.75%, 7/1/15 963,290
NR NR 1,400 Virgin Island, 7.25%,
10/1/18 1,470,028
------------
$ 17,879,808
------------
HOSPITALS - 10.5%
Baa1 NR $4,250 Fulco Hospital, Georgia
Baptist, 6.375%, 9/1/22 $ 3,973,495
A NR 5,040 Savannah, Georgia, St.
Joseph's Hospital, 6.20%,
7/1/23 4,877,460
NR BBB 1,285 Toombs County, Dr. John M.
Meadows Memorial Hospital,
7.00%, 12/1/17 1,262,088
NR BBB+ 2,750 Tri City Hospital, 6.375%,
7/1/16 2,449,947
------------
$ 12,562,990
------------
HOUSING - 13.9%
NR AAA $4,000 Fulton County, HFA, (AMT),
6.64%, 3/1/28 $ 4,031,960
Aa NR 1,450 Georgia HFA, (AMT),
6.875%, 12/1/20 1,495,342
Aa AA+ 395 Georgia Resource
Authority, SFMR, (FHA),
7.50%, 6/1/17 419,569
Aa AA 2,500 Georgia HFA, (FHA Insured
or VA Guaranteed), (AMT),
6.70%, 12/1/25 2,558,500
Aa AA+ 1,500 Georgia HFA, (AMT), 7.05%,
12/1/20 1,567,290
Aa AA+ 2,380 Georgia HFA, (AMT),
7.125%, 12/1/26 2,491,169
Aa AA+ 4,000 Georgia HFA, (AMT), 6.55%,
12/1/27 4,006,320
------------
$ 16,570,150
------------
INDUSTRIAL DEVELOPMENT
AUTHORITY - 5.6%
A1 AA- $1,000 Cartersville, Georgia,
Anheuser-Busch, (AMT),
7.375%, 5/1/09 $ 1,157,340
A2 NR 1,000 Puerto Rico IME, American
Home, 5.10%, 12/1/18 893,620
A1 A- 750 Savannah Union Camp
Corporation, 6.80%, 2/1/12 806,258
NR NR 1,250 Savannah Economic
Development, (AMT), 9.00%,
1/1/15 1,332,375
NR AA- 500 Savannah, Hershey Foods,
6.60%, 6/1/12 532,700
NR AA- 2,000 Vienna, Cargill Project,
6.00%, 9/1/14 2,002,940
------------
$ 6,725,233
------------
INSURED GENERAL
OBLIGATIONS - 4.0%
Aaa AAA $2,990 Houston County School
District, (MBIA), 5.375%,
3/1/11 $ 2,858,291
Aaa AAA 1,350 Jackson County School
District, (MBIA), 6.00%,
7/1/14 1,369,170
Aaa AAA 500 Puerto Rico, Public
Improvement Bonds of 1992,
(AMBAC), Variable, 7/1/15
(1) 505,850
------------
$ 4,733,311
------------
INSURED HOSPITAL - 13.2%
Aaa AAA $ 675 Chatham County, Memorial
Medical Center, (MBIA),
7.00%, 1/1/21 $ 723,424
Aaa AAA 305 Chatham County, Memorial
Medical Center, (MBIA),
6.85%, 1/1/21 325,972
Aaa AAA 1,300 Cobb County, Kennestone
Hospital, (MBIA), 5.00%,
4/1/24 1,137,682
</TABLE>
51
<PAGE> 52
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED HOSPITAL - (CONTINUED)
Aaa AAA 3,225 Gainsville and Hall
County, NE Healthcare,
(MBIA), 6.00%, 10/1/25 3,235,804
Aaa AAA 3,000 Gwinnett County, Gwinnett
Hospital, (AMBAC), 5.00%,
9/1/13 2,709,300
Aaa AAA 2,500 Macon-Bibb County Hospital
Authority, The Medical
Center of Central Georgia,
(FGIC), 5.00%, 8/1/14 2,269,375
Aaa AAA 2,000 Medical Center Hospital
Authority, Columbus
Regional Healthcare
System, (MBIA), 6.40%,
8/1/06 2,165,640
Aaa AAA 1,500 Medical Center Hospital
Authority, Columbus
Regional Healthcare
System, (MBIA), Variable,
8/1/10 (1) 1,664,775
Aaa AAA 1,375 Walker, Dade and Catoosa
Counties Hospital, (FGIC),
7.00%, 10/1/10 1,518,688
------------
$ 15,750,660
------------
INSURED HOUSING - 0.9%
Aaa AAA $1,000 East Point Building
Authority, (FGIC), 6.00%,
2/1/10 $ 1,024,810
------------
INSURED SPECIAL TAX - 1.8%
Aaa AAA $1,000 Metropolitan Atlanta Rapid
Transit Authority,
(AMBAC), 6.25%, 7/1/11 $ 1,062,100
Aaa AAA 1,000 Metropolitan Atlanta Rapid
Transit Authority,
(AMBAC), 6.25%, 7/1/20 1,065,560
------------
$ 2,127,660
------------
INSURED TRANSPORTATION - 0.8%
Aaa AAA $1,000 Atlanta Airport Facility
Revenue, (AMBAC), (AMT),
6.00%, 1/1/21 $ 994,740
------------
INSURED UTILITIES - 3.3%
Aaa AAA $1,480 Cordele Public Utility
Authority, (MBIA), 6.50%,
11/1/19 $ 1,554,133
Aaa AAA 750 Municipal Electric
Authority of Georgia,
(MBIA), 0%, 1/1/07 409,410
Aaa AAA 1,000 Municipal Electric
Authority of Georgia,
(FGIC), 5.50%, 1/1/12 973,670
Aaa AAA 900 Puerto Rico Electric Power
Authority, (FSA),
Variable, 7/1/03 (1) 1,004,949
------------
$ 3,942,162
------------
INSURED WATER & SEWER - 3.8%
Aaa AAA $2,700 Atlanta, Water and Sewer,
(FGIC), 5.00%, 1/1/15 $ 2,424,708
Aaa AAA 1,975 Cherokee County, Water and
Sewerage, (MBIA), 6.875%,
8/1/13 2,121,012
------------
$ 4,545,720
------------
LEASE/CERTIFICATES OF
PARTICIPATION - 1.0%
Aa AA $ 310 Fulton County, Lease
Revenue, 0%, 1/1/09 $ 146,828
Aa AA 2,300 Fulton County, Lease
Revenue, 0%, 1/1/10 1,022,787
------------
$ 1,169,615
------------
LIFE CARE - 1.2%
NR NR $1,500 Dekalb Private Hospital,
Assisted Living, Atlanta
Inc, 8.50%, 3/1/25 $ 1,463,625
------------
SOLID WASTE - 0.9%
A1 A+ $1,000 Savannah Energy Systems
Company Project, 6.30%,
12/1/06 $ 1,049,330
------------
SPECIAL TAX REVENUE - 0.4%
Baa1 A $ 500 Puerto Rico Commonwealth
Highway, 5.50%, 7/1/17 $ 468,025
------------
TRANSPORTATION - 1.3%
Ba3 BB $1,500 Atlanta Special Purpose
Facilities, Delta
Airlines, (AMT), 7.90%,
12/1/18 $ 1,592,475
------------
UTILITIES - 15.5%
A1 A $2,000 Burke County, PCR, Georgia
Power, 6.375%, 8/1/24 $ 2,023,820
A A 1,000 Georgia Muni Electric
Power Authority, 0%,
1/1/12 368,600
A A 3,000 Georgia Muni Electric
Power Authority, 5.50%,
1/1/20 2,744,730
A A 3,000 Georgia Muni Electric
Power Authority, 5.70%,
1/1/23 2,795,940
A A 2,000 Georgia Muni Electric
Power Authority, 8.25%,
1/1/11 2,455,640
A1 A+ 1,000 Monroe County, PCR, Gulf
Power, 6.30%, 9/1/24 1,013,890
A3 A+ 4,000 Monroe County, PCR,
Ogelthorpe Power, 6.55%,
1/1/06 4,383,200
A3 A+ 2,000 Monroe County, PCR,
Ogelthorpe Power, 6.70%,
1/1/09 2,198,480
Baa1 A- 665 Puerto Rico Electrical
Power Authority, 0%,
7/1/17 175,846
Baa1 A- 250 Puerto Rico Electrical
Power Authority, 7.00%,
7/1/07 268,552
------------
$ 18,428,698
------------
</TABLE>
52
<PAGE> 53
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WATER & SEWER REVENUE - 1.1%
A NR $ 150 Augusta, Water and Sewer
Authority, 6.50%, 5/1/11 $ 157,886
A A+ 1,000 Columbus, Water and Sewer
Authority, 5.70%, 5/1/20 965,280
A NR 200 Richmond County, Water and
Sewer Authority, 6.50%,
10/1/21 207,606
------------
$ 1,330,772
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$115,913,957) $119,343,332
============
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
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 August 31, 1995, 27.8% 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 0.8% to 15.0% of total investments.
See notes to financial statements
53
<PAGE> 54
- --------------------------------------------------------------------------------
Kentucky Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 5.5%
Aa1 NR $2,460 Berea, Kentucky
Educational Development,
5.45%, 3/1/14 $ 2,363,101
A1 AA- 500 University of Kentucky
Consolidated Educational
Buildings, 6.40%, 5/1/09 528,865
A1 AA- 785 University of Kentucky
Consolidated Educational
Buildings, 6.40%, 5/1/11 825,059
A1 AA- 1,295 University of Louisville
Consolidated Educational
Buildings, 5.875%, 5/1/11 1,322,350
A1 AA- 1,000 University of Louisville
Consolidated Educational
Buildings, 5.40%, 5/1/08 999,920
A1 AA- 2,000 University of Louisville
Consolidated Educational
Buildings, 5.40%, 5/1/11 1,958,500
------------
$ 7,997,795
------------
ELECTRIC UTILITIES - 6.8%
Aa2 AA- $2,000 Carroll, Kentucky PCR (KY
Utilities Company), 6.25%,
2/1/18 $ 2,069,820
NR BBB 400 Guam Power Authority,
5.25%, 10/1/23 343,135
Aa2 AA 1,000 Jefferson, Kentucky PCR
(Louisville G&E Company),
5.625%, 8/15/19 967,410
Aa2 AA- 1,000 Muhlenburg, Kentucky PCR
(KY Utilities Company),
6.25%, 2/1/18 1,031,540
NR A 2,315 Nicholasville, Kentucky
Utilities 5.10%, 10/1/12 2,089,635
Baa1 A- 3,500 Puerto Rico Electric Power
Authority, 0%, 7/1/17 925,505
Baa1 A- 2,250 Puerto Rico Electric Power
Authority, 6.375%, 7/1/2 2,289,308
------------
$ 9,716,353
------------
ESCROWED - 1.3%
NR NR $ 190 KY DFA St. Claire Medical
Center, 7.125%, 9/1/21 $ 216,674
Aaa NR 510 Lexington-Fayette,
Kentucky Government Public
Facilities, 6.40%, 4/1/12 569,084
Aaa A 1,000 University of Puerto Rico,
6.50%, 6/1/13 1,062,770
------------
$ 1,848,528
------------
GENERAL OBLIGATIONS - 2.9%
NR A+ $1,030 KY League of Cities
Funding Trust Floating
Indebtedness Certificates
of Participation, 6.15%,
8/1/13 $ 1,041,959
NR A 1,415 KY League of Cities
Funding Trust Floating
Indebtedness Certificates
of Participation, 5.90%,
8/1/16 1,376,837
Baa1 A 1,255 Puerto Rico Public
Building Authority, 5.50%,
7/1/21 1,154,550
NR NR 500 Virgin Islands, 7.25%,
10/1/18 525,010
------------
$ 4,098,356
------------
HOSPITALS - 0.8%
Baa1 BBB $ 975 Russell, Kentucky
Franciscan Sisters of the
Poor Health System, 8.10%,
7/1/15 $ 1,102,052
------------
HOUSING - 1.7%
NR AAA $1,500 Boone, Kentucky
Multi-Family (Walnut Creek
Apartments) (FHA), 7.00%,
1/1/27 $ 1,544,520
Aa1 AAA 840 KY Housing (FHA) (AMT),
7.45%, 1/1/23 869,492
------------
$ 2,414,012
------------
INDUSTRIAL DEVELOPMENT
REVENUE/POLLUTION CONTROL
REVENUE - 11.4%
Baa1 BBB $3,355 Ashland, Kentucky Solid
Waste (Ashland Oil) (AMT),
7.20%, 10/1/20 $ 3,515,470
Baa1 NR 2,425 Ashland, Kentucky Solid
Waste (Ashland Oil) (AMT),
7.125%, 2/1/22 2,537,569
NR NR 1,000 Elsmere, Kentucky
(Courtaulds Package
Corporation), 6.75%,
4/1/10 1,020,860
NR NR 3,075 Fulton, Kentucky
(H.I.S.-Chic Jeans),
(AMT), 7.50%, 2/1/10 3,125,123
Aa3 AA 1,000 Jefferson, Kentucky (E.I.
du Pont de Nemours),
6.30%,
7/1/12 1,067,180
Baa2 BBB 1,075 Johnson, Kentucky (KMart
Corporation), 6.45%,
7/1/08 1,073,011
NR BBB 985 Owensboro, Kentucky (KMart
Corporation), 6.80%,
12/1/07 1,005,232
NR BBB 915 Powderly, Kentucky (KMart
Corporation), 6.90%,
3/1/07 939,293
A2 NR 1,190 Puerto Rico IM&E (American
Home), 5.10%, 12/1/18 1,063,407
Baa3 BB+ 500 Puerto Rico Port Authority
(American Airlines),
(AMT), 6.30%, 6/1/23 496,050
Ba2 NR 500 Winchester, Kentucky
(Kroger Corporation),
6.90%, 7/1/99 524,640
------------
$ 16,367,835
------------
INSURED EDUCATION - 0.5%
Aaa AAA $ 700 Northern KY University
Educational Buildings
(AMBAC), 6.25%, 5/1/12 $ 733,817
------------
INSURED ELECTRIC UTILITIES - 4.1%
Aaa AAA $6,280 Boone, Kentucky
Collateralized PCR (MBIA),
5.50%, 1/1/24 $ 5,862,254
------------
</TABLE>
54
<PAGE> 55
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED GENERAL OBLIGATION - 0.6%
Aaa AAA $1,000 Jefferson, Kentucky School
District U.T.G.O. (MBIA),
4.875%, 1/1/13 $ 892,640
------------
INSURED HOSPITALS - 14.8%
Aaa AAA $2,500 Daviess, Kentucky Hospital
(ODCH Inc.) (MBIA), 6.25%,
8/1/22 $ 2,554,525
Aaa AAA 2,000 Hopkins, Kentucky Hospital
(Trover Clinic Foundation)
(MBIA), 6.625%, 11/15/11 2,122,200
Aaa AAA 2,500 Jefferson, Kentucky Jewish
Hospital (AMBAC), 6.50%,
5/1/15 2,610,575
Aaa AAA 1,750 Jefferson, Kentucky Jewish
Hospital (AMBAC), 6.55%,
5/1/22 1,833,283
Aaa AAA 4,000 KY DFA St. Luke's Hospital
(MBIA), 7.00%, 10/1/21 4,322,440
Aaa AAA 9,000 KY EDA Baptist Healthcare
(MBIA), 5.00%, 8/15/24 7,814,880
------------
$ 21,257,903
------------
INSURED LEASE/COP - 1.7%
Aaa AAA $2,000 Danville, Kentucky
Multi-City Lease (MBIA),
5.875%, 9/1/10 $ 2,044,640
Aaa AAA 400 Lexington-Fayette,Kentucky
Government Public
Facilities (FSA), 4.50%,
2/1/10 350,380
------------
$ 2,395,020
------------
INSURED TRANSPORTATION - 4.5%
Aaa AAA $1,000 Kenton, Kentucky Airport
(Cincinnati/Northern KY)
(FSA) (AMT), 6.30%, 3/1/15 $ 1,019,710
Aaa AAA 1,000 KY EDA Turnpike
(Revitalization Project)
(FGIC), 0%, 1/1/10 440,380
Aaa AAA 1,000 KY EDA Turnpike
(Revitalization Project)
(AMBAC), 5.50%, 7/1/11 981,280
Aaa AAA 1,170 Louisville & Jefferson,
Kentucky KY Regl. Airport
(MBIA), 5.30%, 7/1/23 1,077,500
Aaa AAA 3,250 Louisville & Jefferson,
Kentucky KY Regl. Airport
(MBIA) (AMT), 5.50%,
7/1/23 2,998,222
------------
$ 6,517,092
------------
INSURED WATER AND SEWER - 9.5%
Aaa AAA $1,000 Hardin, Kentucky Water
System (MBIA), 5.90%,
1/1/25 $ 1,001,620
Aaa AAA 800 Kenton, Kentucky Water
District (FGIC), 6.375%,
2/1/17 839,576
Aaa AAA 2,000 Kenton, Kentucky Water
District (FGIC), 6.00%,
2/1/17 2,027,020
Aaa AAA 500 Lexington-Fayette,
Kentucky Government Sewer
(MBIA), 6.375%, 7/1/12 527,360
Aaa AAA 1,000 Louisville & Jefferson,
Kentucky Sewer District
(MBIA), 5.25%, 5/15/14 938,730
Aaa AAA 2,840 Louisville & Jefferson,
Kentucky Sewer District
(MBIA), 5.40%, 5/15/19 2,680,477
Aaa AAA 2,000 Louisville & Jefferson,
Kentucky Sewer District
(MBIA), 5.50%, 5/15/21 1,909,900
Aaa AAA 500 Louisville & Jefferson,
Kentucky Sewer District
(MBIA), 5.50%, 5/15/23 474,130
Aaa AAA 1,000 Louisville & Jefferson,
Kentucky Sewer District
(AMBAC), 6.75%, 5/15/19 1,079,010
Aaa AAA 2,000 Louisville & Jefferson,
Kentucky Sewer District
(AMBAC), 6.75%, 5/15/25 2,149,480
------------
$ 13,627,303
------------
LEASE REVENUE BONDS - 21.4%
A A $1,300 Boone, Kentucky School
District Finance, 6.75%,
9/1/11 $ 1,390,077
A NR 2,250 Boone, Kentucky School
District Finance, 6.125%,
12/1/17 (1) 2,293,718
A NR 3,000 Boone, Kentucky School
District Finance, 5.70%,
5/1/18 2,921,610
A NR 1,670 Campbell, Kentucky School
District Finance, 5.10%,
2/1/12 1,533,995
A NR 700 Campbell, Kentucky School
District Finance, 4.80%,
2/1/11 617,568
A NR 1,790 Campbell, Kentucky School
District Finance, 4.875%,
2/1/14 1,544,054
A NR 820 Covington, Kentucky
Independent School
District Finance, 5.20%,
6/1/13 759,017
A1 A+ 905 Jefferson, Kentucky School
District Finance, 4.875%,
1/1/11 823,269
A1 A+ 1,250 Jefferson, Kentucky School
District Finance, 4.875%,
1/1/12 1,126,513
A1 A 4,990 Jefferson, Kentucky
Capital Projects
Corporation, 0%, 8/15/15 1,517,259
A NR 260 Johnson, Kentucky School
District Finance, 5.00%,
6/1/11 239,203
A NR 300 Johnson, Kentucky School
District Finance, 5.00%,
6/1/13 271,137
A A+ 2,860 KY State Property and
Buildings, 5.00%, 9/1/13 2,582,866
A A+ 2,500 KY State Property and
Buildings, 6.00%, 9/1/14 2,513,950
</TABLE>
55
<PAGE> 56
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LEASE REVENUE BONDS -
(CONTINUED)
A A- 1,000 Louisville, Kentucky
Public Properties
Corporation, 6.80%,
12/1/22 1,057,500
Aa NR 2,000 Mount Sterling, Kentucky
League of Cities Trust,
6.15%, 3/1/13 1,964,300
Aa NR 4,500 Mount Sterling, Kentucky
League of Cities Trust,
6.20%, 3/1/18 4,382,955
A NR 2,000 Owensboro, Kentucky
Airport, 5.875%, 6/1/15 1,913,200
A NR 615 Pulaski, Kentucky School
District Finance, 5.75%,
2/1/10 615,978
A NR 595 Pulaski, Kentucky School
District Finance, 5.80%,
2/1/11 593,161
------------
$ 30,661,330
------------
SOLID WASTE - 2.2%
Baa2 BBB- $3,000 Henderson, Kentucky
(MacMillan Blodel Project)
(AMT), 7.00%, 3/1/25 $ 3,083,370
------------
SPECIAL TAX REVENUE - 4.4%
Baa1 A $ 415 Puerto Rico Highway &
Transportation Authority,
5.25%, 7/1/21 $ 366,939
Baa1 A 5,655 Puerto Rico Highway &
Transportation Authority,
6.625%, 7/1/18 5,901,558
------------
$ 6,268,497
------------
TRANSPORTATION - 4.3%
NR BBB $2,000 Guam Airport Authority,
6.70%, 10/1/23 $ 2,014,400
Ba1 BB 1,000 Kenton, Kentucky Airport
(Delta Airlines) (AMT),
6.75%, 2/1/02 1,044,720
Ba1 BB 250 Kenton, Kentucky Airport
(Delta Airlines) (AMT),
7.50%, 2/1/12 263,820
Ba1 BB 500 Kenton, Kentucky Airport
(Delta Airlines) (AMT),
7.50%, 2/1/20 527,640
Ba1 BB 2,400 Kenton, Kentucky Airport
(Delta Airlines) (AMT),
6.125%, 2/1/22 2,258,183
------------
$ 6,108,763
------------
WATER AND SEWER REVENUE - 1.6%
NR A $1,500 Campbell, Kentucky Water
District, 6.60%, 12/1/11 $ 1,572,360
A NR 650 Hardin, Kentucky Water
District, 6.50%, 9/1/12 679,965
------------
$ 2,252,325
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$141,197,528) $143,205,245
============
</TABLE>
(1) Security has been segregated to cover margin requirements for open financial
futures contracts.
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 August 31, 1995, 35.8% 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 1.0% to 26.0% of total investments.
See notes to financial statements
56
<PAGE> 57
- --------------------------------------------------------------------------------
Louisiana Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 162,170
Aa NR 100 Louisiana PFA, Student Loan
Revenue Bonds, (AMT),
7.00%, 9/1/06 104,676
NR BBB- 400 Puerto Rico ITEM&EC,
(Polytechnic University of
Puerto Rico), 5.70%, 8/1/13 370,384
NR BBB- 500 Puerto Rico ITEM&EC,
(Polytechnic University of
Puerto Rico), 5.50%, 8/1/24 438,075
-----------
$ 1,075,305
-----------
GENERAL OBLIGATION - 2.8%
NR BBB $ 250 Government of Guam, 5.375%,
11/15/13 $ 222,418
Baa1 A 750 Puerto Rico PBA, Public
Education and Health
Facilities, 5.75%, 7/1/15 722,468
-----------
$ 944,886
-----------
HEALTH CARE - 8.1%
NR AAA $2,000 Louisiana HFA, Mortgage
Revenue Bonds, (GNMA
Collateralized) St. Joseph
Manor Retirement Center,
7.80%, 12/1/35 $ 2,215,260
NR AAA 500 Louisiana HFA, (GNMA
Collateralized), St.
Dominic Assisted
Care - Facility, 6.85%,
9/1/25 510,345
-----------
$ 2,725,605
-----------
HOUSING - 26.5%
Aaa NR $ 935 East Baton Rouge Mortgage
Finance Authority SF,
7.00%, 4/1/32 $ 966,528
Aaa NR 155 East Baton Rouge Mortgage
Finance Authority SF,
7.10%, 10/1/24 158,243
NR AAA 2,000 Parish of Jefferson, Home
Mortgage Authority (TEAMS),
7.35%, 12/1/16 2,208,760
NR AAA 620 Louisiana HFA, MFMB,
(FHA),6.95%, 7/1/16 631,916
Aaa NR 1,240 Louisiana HFA, SFMB, 8.00%,
3/1/25 1,349,318
Aaa NR 1,635 Louisiana HFA, SFMB, 6.55%,
12/1/26 1,621,887
NR AAA 500 Louisiana HFA, (Multifamily
Housing - Tall Timbers
Apartment), (FHA) (AMT),
5.90%, 12/1/18 475,705
NR AAA 150 Louisiana HFA, (Multifamily
Housing - Westview
Apartment II), (FHA),
7.95%,
1/1/32 159,129
NR AAA 1,000 Louisiana PFA, (FNMA
Collaterallized,
Multifamily
Housing - Edgewood
Apartments), 5.70%, 6/1/05 1,003,990
A NR 350 Shreveport, Louisiana HFA,
(Multifamily Mortgage
Bonds - U.S. Goodman
Plaza - Section 8
Assisted), 6.10%, 8/1/19 336,791
-----------
$ 8,912,267
-----------
HOSPITALS - 3.3%
Aa AA $1,000 Louisiana Public Health
Facilities Bonds, (Sisters
of Mercy Health System),
5.00%, 6/1/19 (2) $ 868,510
NR A- 250 St. Tammany Parish Hospital
Service District No. 1,
Hospital Revenue Bonds,
6.50%, 7/1/22 250,135
-----------
$ 1,118,645
-----------
INDUSTRIAL DEVELOPMENT/
POLLUTION CONTROL - 6.4%
A3 A- $1,750 Bastrop IDB, Louisiana,
(International Paper),
6.60%, 3/1/19 $ 1,824,428
Aa3 NR 150 Parish of DeSoto, Pollution
Control (Southwestern
Electric Power), Company
Project, 7.60%, 1/1/19 171,657
Baa1 A- 150 South Louisiana Port
Commission Terminal, (GATX
Terminals Corporation),
7.00%, 3/1/23 155,570
-----------
$ 2,151,655
-----------
INSURED COLLEGE &
UNIVERSITY - 10.3%
Aaa AAA $2,500 Louisiana State University
and Agricultural and
Mechanical College (FGIC),
5.75%, 7/1/14 $ 2,457,475
Aaa AAA 1,100 University of Puerto Rico
(MBIA), 5.25%, 6/1/25 1,008,821
-----------
$ 3,466,296
-----------
INSURED GENERAL
OBLIGATIONS LOCAL - 17.6%
Aaa AAA $ 500 Caddo Parish, Louisiana
(MBIA), 5.25%, 2/1/07 $ 500,705
Aaa AAA 1,000 Caddo Parish, Louisiana
(MBIA), 5.25%, 2/1/08 992,750
Aaa AAA 500 City of Lafayette, Public
Improvement Sales Tax
Refunding Bonds (FGIC),
5.00%, 3/1/15 446,690
Aaa AAA 500 City of Lafayette, Public
Improvement Sales Tax
Refunding Bonds (FGIC),
5.00%, 3/1/16 445,265
</TABLE>
57
<PAGE> 58
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED GENERAL OBLIGATIONS
LOCAL - (CONTINUED)
Aaa AAA 1,000 City of Lafayette, Public
Improvement Sales Tax
Refunding Bonds (FGIC),
5.00%, 5/1/15 892,820
Aaa AAA 1,000 Louisiana PFA, Parish of
Jefferson, Drainage
Improvement Refunding Bonds
(FGIC), 5.00%, 8/1/10 919,900
Aaa AAA 500 Parish of East Baton Rouge,
Public Improvement Sales
Tax Bonds (FGIC), 5.90%,
2/1/17 494,575
Aaa AAA 990 Parish of East Baton Rouge,
Public Improvement Sales
Tax Bonds (FGIC), 4.80%,
2/1/14 864,646
Aaa AAA 400 Parish of East Baton Rouge,
Public Improvement Sales
Tax Bonds (FGIC), 4.90%,
2/1/16 349,020
-----------
$ 5,906,371
-----------
INSURED GENERAL OBLIGATIONS
SCHOOL DISTRICT - 1.4%
Aaa AAA $ 500 St. Tammany Parishwide
School District No.12,
Louisiana Unlimited Tax
School Bonds (FGIC), 5.00%,
3/1/12 $ 454,435
-----------
INSURED GENERAL OBLIGATIONS
STATE - 1.6%
Aaa AAA $ 300 State of Louisiana, (MBIA),
5.625%, 8/1/11 $ 299,511
Aaa AAA 250 Commonwealth of Puerto
Rico, Public Improvement
Bonds Residual Interest
Bonds (AMBAC), Variable,
7/1/15 (1) 252,925
-----------
$ 552,436
-----------
INSURED HOSPITAL - 3.0%
Aaa AAA $1,000 Parish of Jefferson,
Hospital District No.1
(FGIC), 5.25%, 1/1/19 $ 908,730
Aaa AAA 100 Louisiana PFA Hospital
Revenue Bonds, (Our Lady of
the Lake Regional Medical
Center), Residual Interest
Bonds (MBIA), Variable,
12/1/14 (1) 104,247
-----------
$ 1,012,977
-----------
INSURED MUNICIPAL ELECTRIC - 5.6%
Aaa AAA $2,000 Lafayette Public Power
Authority, Electric Revenue
Bonds (AMBAC), 5.25%,
11/1/12 $ 1,875,100
-----------
INSURED UTILITIES - 0.5%
Aaa AAA $ 150 City of Alexandria,
Utilities Bonds (FGIC),
6.00%, 5/1/06 $ 159,144
-----------
INSURED WATER & SEWER - 1.5%
Aaa AAA $ 500 Terrebone Parish,
Louisiana, Water Works
Revenue Bonds (FGIC),
5.75%, 11/1/08 $ 512,715
-----------
LIFE CARE - 2.3%
NR NR $ 500 Louisiana HFA, Assisted
Living Facility (HCC
Assisted Living Group I,
Inc.), 9.00%, 3/1/25 $ 484,475
NR NR 300 St. Tammany PFA (Christwood
Project), 9.00%, 11/15/25 287,667
-----------
$ 772,142
-----------
SPECIAL TAX - 3.9%
Baa1 A $1,500 Puerto Rico Highway and
Transportation Authority,
Highway Revenue Refunding
Bonds, Series X, 5.00%,
7/1/22 $ 1,295,715
-----------
TRANSPORTATION - 1.6%
A A- $ 500 Mississippi River Bridge
Authority, Bridge Revenue
Bonds, State of Louisiana,
Series 1992, 6.75%, 11/1/12
(2) $ 525,703
-----------
UTILITIES - 0.4%
Baa3 BBB- $ 150 Parish of Pointe Coupe, PCB
(Gulf States Utilities
Co.), 6.70%, 3/1/13 $ 149,387
-----------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$33,349,873) $33,610,784
===========
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
(2) Security has been segregated to cover margin requirements for open financial
futures contracts.
The Portfolio invests primarily in debt securities issued by Louisiana
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 August 31, 1995, 54.8% 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 3.8% to 26.5% of total investments.
See notes to financial statements.
58
<PAGE> 59
- --------------------------------------------------------------------------------
Maryland Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 0.9%
Aa AA+ $1,000 University of Maryland
Auxiliary Facilities &
Tuition, 6.30%, 2/1/10 $ 1,052,390
------------
ELECTRIC UTILITIES - 7.7%
A2 A $2,000 Calvert, Maryland PCR
(Baltimore Gas & Electric
Company), 5.55%, 7/15/14 $ 1,925,200
NR BBB 2,500 Guam Power Authority,
5.25%, 10/1/13 2,246,400
NR BBB 500 Guam Power Authority,
5.25%, 10/1/23 428,920
NR BBB 750 Guam Power Authority,
6.625%, 10/1/14 766,770
A1 A 500 Montgomery, Maryland PCR
(Potomac Electric Power
Company), 5.375%, 2/15/24 451,930
A1 A 2,225 Prince Georges, Maryland
PCR (Potomac Electric),
6.375%, 1/15/23 2,326,015
Baa1 A- 585 Puerto Rico Electric Power
Authority, 6.25%, 7/1/17 590,850
------------
$ 8,736,085
------------
ESCROWED - 5.3%
Aaa NR $1,125 Baltimore, Maryland Single
Family Mortgage (Inner
Harbor), 8.00%, 12/1/10 $ 1,359,543
Aaa AAA 500 Maryland Health & Higher
Educational (University of
Maryland) (FGIC), 6.50%,
7/1/21 552,000
NR AAA 1,000 Commonwealth of Puerto
Rico Public Improvement,
6.80%, 7/1/21 1,144,770
Aaa AAA 1,500 Puerto Rico Public
Buildings Authority,
6.875%, 7/1/21 1,723,695
NR AAA 1,000 University of Maryland
System Auxiliary Facility
and Tuition, 6.50%, 4/1/11 1,104,610
NR AAA 175 University of Maryland
System Auxiliary Facility
and Tuition, 6.50%, 4/1/2 197,971
------------
$ 6,082,589
------------
GENERAL OBLIGATIONS - 6.4%
Aa AA+ $1,000 Anne Arundel, Maryland,
5.30%, 4/15/16 $ 934,560
Aa AA- 1,500 Hartford, Maryland, 4.90%,
12/1/10 1,399,020
A AA- 230 Prince Georges, Maryland,
5.00%, 1/15/11 214,767
Baa1 A 1,000 Commonwealth of Puerto
Rico Public Improvement,
6.50%, 7/1/23 1,029,630
Baa1 A 100 Puerto Rico Aqueduct and
Sewer Authority, 7.875%,
7/1/17 111,057
Baa1 A 1,150 Puerto Rico Aqueduct and
Sewer Authority, 7.00%,
7/1/19 1,222,220
NR NR 750 Virgin Islands Public
Finance Authority, 7.25%
10/1/18 787,515
Aa1 AA 500 Washington, Maryland
Suburban Sanitary
District, 6.20%, 6/1/11 523,260
Aaa1 AA 600 Washington, Maryland
Suburban Sanitary
District, 5.00%, 6/1/10 577,542
Aa NR 500 Worcester, Maryland
Sanitary District, 6.55%,
8/15/17 539,210
------------
$ 7,338,781
------------
HOSPITALS - 20.7%
NR NR $ 490 Berlin, Maryland (Atlantic
General Hospital), 8.375%,
6/1/22 $ 516,382
A A 2,000 MD Health & Higher
Educational (Good
Samaritan Hospital),
5.75%, 7/1/19 1,881,420
A A 1,500 MD Health & Higher
Educational (Memorial
Hospital of Cumberland),
6.50%, 7/1/17 1,547,520
A1 A 4,050 MD Health & Higher
Educational (Suburban
Hospital), 5.125%, 7/1/21 3,563,271
Baa1 NR 1,000 MD Health & Higher
Educational (Union
Hospital of Cecil), 6.70%,
7/1/22 951,050
A A 1,200 MD Health & Higher
Educational (Peninsula
Regional Medical Center),
5.00%, 7/1/23 1,011,503
Baa1 BBB 1,250 MD Health & Higher
Educational (Howard County
General Hospital), 5.50%,
7/1/25 1,039,300
Aa AA- 2,000 MD State IDA (Holy Cross
Health System), 5.50%,
12/1/15 1,894,700
Baa NR 1,355 Prince Georges, Maryland
(Greater SouthEast
Healthcare System),
6.375%, 1/1/13 1,257,779
Baa NR 4,500 Prince Georges, Maryland
(Greater SouthEast
Healthcare System),
6.375%, 1/1/23 4,058,415
A NR 7,000 Prince Georges, Maryland
(Dimensions Health),
5.30%, 7/1/24 5,887,630
------------
$ 23,608,970
------------
HOUSING - 7.2%
Aa NR $3,000 Maryland CDA Single Family
(AMT), 6.75%, 4/1/26 $ 3,049,620
Aa NR 250 Maryland CDA Single
Family. 6.85%, 4/1/11 260,758
</TABLE>
59
<PAGE> 60
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - (CONTINUED)
Aa NR 985 Maryland CDA Single Family
(AMT), 6.80%, 4/1/22 1,001,538
Aa NR 750 Maryland CDA Single Family
(AMT), 6.80%, 4/1/24 762,592
Aa NR 1,810 Maryland CDA Multi Family
(FHA), 6.70%, 5/15/27 1,844,336
Aa NR 1,000 Maryland CDA Multi Family
(FHA) (AMT), 6.70%,
5/15/36 1,011,180
NR AAA 300 Prince Georges, Maryland
(Antoinette Gardens
Apartments) (FHA), 7.00%,
3/1/28 313,239
------------
$ 8,243,263
------------
INDUSTRIAL DEVELOPMENT
REVENUE/POLLUTION CONTROL
REVENUE - 10.2%
A1 A $1,350 Allegany County, Maryland
(Westvaco Corporation
Project), 6.20%, 1/1/08 $ 1,426,167
NR NR 1,350 Baltimore, Maryland
(Bethlehem Steel
Corporation Project),
7.50%, 6/1/15 1,387,827
A3 BBB+ 1,000 Baltimore, Maryland
(General Motors), 5.35%,
4/1/08 971,460
Aa2 AA- 2,000 Baltimore, Maryland
(Consolidated Coal Sales
Company-E.I. Dupont),
6.50%, 12/1/10 2,145,900
Aa3 AA 2,000 Baltimore, Maryland
(Consolidated Coal Sales
Company-E.I. Dupont),
6.50%, 12/1/11 2,141,040
NR AA- 1,425 Frederick, Maryland EDA
(Cargill, Inc. Project),
6.30%, 11/1/09 (2) 1,518,067
A2 NR 600 Puerto Rico IM&E (American
Home), 5.10%, 12/1/18 536,171
Baa3 BB+ 1,500 Puerto Rico Port Authority
(American Airlines) (AMT),
6.30%, 6/1/23 1,488,150
------------
$ 11,614,782
------------
INSURED EDUCATION - 1.1%
Aaa AAA $1,200 Morgan State University,
Maryland Academic and
Facilities (MBIA), 6.10%,
7/1/20 $ 1,259,928
------------
INSURED ELECTRIC UTILITIES - 0.2%
Aaa AAA $ 250 Puerto Rico Electric Power
Authority (STRIPES) (FSA),
Variable, 7/1/03 (1) $ 279,153
------------
INSURED HOSPITALS - 17.9%
Aaa AAA $1,365 MD Health & Higher
Educational (Washington
Community Hospital)
(AMBAC), 6.375%, 7/1/22 $ 1,419,394
Aaa AAA 5,000 MD Health & Higher
Educational (Anne Arundel
Hospital) (AMBAC), 5.00%,
7/1/23 4,388,150
Aaa AAA 4,350 MD Health & Higher
Educational (Francis Scott
Key Hospital) (FGIC),
5.00%, 7/1/23 3,759,357
Aaa AAA 3,000 MD Health & Higher
Educational (University
Medical Center) (FGIC),
5.00%, 7/1/20 2,632,500
Aaa AAA 6,250 MD Health & Higher
Educational (Greater
Baltimore Medical Center)
(FGIC), 5.00%, 7/1/19 5,534,688
Aaa AAA 500 MD Health & Higher
Educational (General
Hospital) (MBIA), 6.20%,
7/1/24 512,220
Aaa AAA 2,150 Puerto Rico IM&E Hospital
(MBIA), 6.25%, 7/1/24 2,213,060
------------
$ 20,459,369
------------
INSURED HOUSING - 0.7%
Aaa AAA $ 235 MD CDA Housing and
Community Development
(AMBAC), 6.625%, 6/1/12 $ 240,675
Aaa AAA 500 Prince Georges, Maryland
(Keystone Apartments)
(FHA) (MBIA), 6.80%,
7/1/25 511,395
------------
$ 752,070
------------
INSURED INDUSTRIAL
DEVELOPMENT REVENUE/
POLLUTION CONTROL REVENUE - 0.8%
Aaa AAA $1,000 Prince Georges, Maryland
Solid Waste (FSA), 5.25%,
6/15/13 $ 931,010
------------
INSURED TRANSPORTATION - 6.1%
Aaa AAA $2,000 Baltimore, Maryland
International Airport
(AMT) (FGIC), 6.25%,
7/1/14 $ 2,066,500
Aaa AAA 5,250 Washington, D.C. Metro
Area Transportation
(FGIC), 5.25%, 7/1/14 4,881,660
------------
$ 6,948,160
------------
</TABLE>
60
<PAGE> 61
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED WATER & SEWER - 3.7%
Aaa AAA $2,000 Baltimore, Maryland
Wastewater (MBIA), 5.65%,
7/1/20 $ 1,942,420
Aaa AAA 2,550 Baltimore, Maryland
Wastewater (FGIC), 5.00%,
7/1/22 2,261,315
------------
$ 4,203,735
------------
MISCELLANEOUS - 0.8%
A NR $1,000 Baltimore, Maryland
Revenue Authority, 5.375%,
7/1/18 $ 921,600
------------
SOLID WASTE - 5.3%
A NR $6,000 North East Maryland Solid
Waste Disposal (AMT),
6.30%, 7/1/16 $ 6,016,680
------------
SPECIAL TAX REVENUE - 3.0%
Baa1 A $1,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/20 $ 900,160
Baa1 A 1,225 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/17 1,146,661
Baa1 A 1,500 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/21 1,347,675
------------
$ 3,394,496
------------
TRANSPORTATION - 0.6%
NR BBB $ 700 Guam Airport Authority
(AMT), 6.70%, 10/1/23 $ 705,040
------------
WATER AND SEWER - 1.4%
Aa AA $1,000 Maryland Water Quality
Financing Administration
Revolving Loan Fund, 0%,
9/1/07 $ 534,740
Aa AA 1,000 Maryland Water Quality
Financing Administration
Revolving Loan Fund,
6.55%, 9/1/14 1,068,880
------------
$ 1,603,620
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$112,178,823) $114,151,721
============
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
(2) Security has been segregated to cover margin requirements for open financial
futures contracts.
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 economic
developments, at August 31, 1995, 30.5% 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 1.1% to 19.0% of total investments.
See notes to financial statements
61
<PAGE> 62
- --------------------------------------------------------------------------------
Missouri Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 2.7%
A NR $2,750 Missouri Higher Education
Loan Authority, Student
Loan, (AMT), 5.45%, 2/15/09 $ 2,514,380
-----------
ESCROWED - 2.8%
Aaa AAA $ 240 Missouri Health & Education
Authority, St. Louis
Children's, (MBIA), 6.25%,
5/15/12 $ 266,258
Aaa AAA 410 Missouri Health & Education
Authority, St. Louis
Children's, (MBIA), 6.25%,
5/15/12 453,341
Aaa AAA 350 State of Missouri, Regional
Convention & Sports Complex
Authority, 6.80%, 8/15/11 399,480
Aaa AAA 425 Missouri Health & Education
Authority, Christian
Health, 6.875%, (FGIC),
2/15/21 480,998
Aaa AAA 250 St. Louis County, Regional
Convention & Sports Complex
Authority, 7.00%, 8/15/11 288,630
Aaa AAA 600 St. Louis County,
Pattonville School
District, 6.25%, (FGIC),
2/1/10 656,070
-----------
$ 2,544,777
-----------
GENERAL OBLIGATION - 4.3%
A1 NR $ 750 City of St. Peters, 5.85%,
1/1/13 $ 759,773
Baa1 A 700 Puerto Rico, 5.00%, 7/1/21 600,460
Baa1 A 1,250 Puerto Rico, 5.75%, 7/1/15 1,204,112
Baa1 A 1,000 Puerto Rico, 5.50%, 7/1/21 919,960
NR NR 450 Virgin Island Public
Finance Authority, 7.25%,
10/1/18 472,509
-----------
$ 3,956,814
-----------
HEALTHCARE - 0.4%
Baa1 NR $ 300 Cass County, Fox Springs
Living Center, 7.375%,
10/1/22 $ 317,127
-----------
HOSPITALS - 10.5%
A NR $1,000 Boone County Hospital,
5.50%, 8/1/09 $ 951,420
Baa1 NR 2,000 Missouri Health & Education
Authority, Jefferson
Memorial Hospital, 6.00%,
8/15/23 1,831,100
Aa AA 1,000 Missouri Health & Education
Authority, Barnes Jewish
Christian Hospital, 5.10%,
5/15/09 944,310
Aa AA 2,000 Missouri Health & Education
Authority, Barnes Jewish
Christian Hospital, 5.25%,
5/15/14 1,886,160
Aa AA 2,000 Missouri Health & Education
Authority, Barnes Jewish
Christian Hospital, 5.25%,
5/15/21 1,851,300
Aa AA 1,000 Missouri Health & Education
Authority, Sisters of Mercy
Hospital, 6.25%, 6/1/15 1,034,550
NR BBB+ 550 Moberly Industrial
Development Authority,
Moberly Regional Medical
Center, 8.75%, 3/1/16 603,471
NR AAA 500 Phelps County, Phelps
Regional Medical Center,
(CLEE), 6.00%, 5/15/13 503,000
-----------
$ 9,605,311
-----------
HOUSING - 0.6%
NR AAA $ 535 Missouri Housing
Development Authority SFMR,
(AMT), (GNMA), 6.75%,
6/1/24 $ 550,916
-----------
INDUSTRIAL DEVELOPMENT
REVENUE - 2.8%
NR BBB $1,390 Jefferson County Industrial
Development Authority,
Kmart Corporation, 6.40%,
8/1/08 $ 1,381,452
A3 NR 1,200 Missouri Environmental
Improvement & Energy
Resources Authority,
American Cynamid Company,
5.80%, 9/1/09 1,212,600
-----------
$ 2,594,052
-----------
INSURED - TRANSPORTATION - 1.7%
Aaa AAA $1,000 City of St. Louis, St.
Louis-Lambert International
Airport, (AMT), (FGIC),
6.125%, 7/1/12 $ 1,024,170
Aaa AAA 500 City of St. Louis, St.
Louis-Lambert International
Airport, (AMT), (FGIC),
6.125%, 7/1/15 510,350
-----------
$ 1,534,520
-----------
INSURED - EDUCATION - 2.1%
Aaa AAA $1,000 Missouri Western State
College Housing System,
(MBIA), 5.25%, 10/1/11 $ 947,960
Aaa AAA 1,000 Southeast Missouri State
University Housing System,
(MBIA), 5.70%, 4/1/14 1,003,600
-----------
$ 1,951,560
-----------
INSURED - GENERAL
OBLIGATION - 9.3%
Aaa AAA $1,000 Kansas City School
District, (FGIC), 5.00%,
2/1/14 $ 908,070
Aaa AAA 2,250 Kansas City School
District, (FGIC), 5.00%,
2/1/14 2,043,158
Aaa AAA 1,450 St. Louis County, Mehlville
School District, (MBIA),
6.00%, 2/15/13 1,484,554
Aaa AAA 1,000 St. Louis County, Parkway
School District, (MBIA),
5.00%, 2/1/12 931,020
</TABLE>
62
<PAGE> 63
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<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 1,500 City of St. Louis School
District, (FGIC), 5.75%,
4/1/12 1,508,340
Aaa AAA 620 City of St. Louis School
District, (FGIC), 6.00%,
4/1/12 634,333
Aaa AAA 500 Puerto Rico, (AMBAC),
Variable, 7/1/15 (1) 505,850
Aaa AAA 500 Puerto Rico, (FSA),
Variable, 7/1/22 (1) 513,080
-----------
$ 8,528,405
-----------
INSURED - HOSPITAL - 18.4%
Aaa AAA $1,000 Jackson County, Carondelet
Health System, St. Mary's
Hospital, (MBIA), 5.75%,
7/1/24 $ 981,950
Aaa AAA 800 Jackson County, St.
Joseph's Health System,
(MBIA), 6.50%, 7/1/19 836,464
Aaa AAA 1,000 Jackson County, St.
Joseph's Health System,
(MBIA), 6.50%, 7/1/12 1,052,620
Aaa AAA 1,500 Missouri Health & Education
Authority, Health Midwest,
(MBIA), 6.25%, 2/15/22 1,533,435
Aaa AAA 500 Missouri Health & Education
Authority, Sisters of St.
Mary, (MBIA), 6.25%, 6/1/07 535,710
Aaa AAA 1,600 Missouri Health & Education
Authority, Sisters of St.
Mary, (MBIA), 6.25%, 6/1/16 1,642,000
Aaa AAA 1,500 Missouri Health & Education
Authority, Heartland Health
System, (AMBAC), 6.35%,
11/15/17 1,554,735
Aaa AAA 2,900 Missouri Health & Education
Authority, Lester Cox
Medical Center, (MBIA),
5.35%, 6/1/10 2,813,493
Aaa AAA 1,865 Missouri Health & Education
Authority, St. Luke's
Health System, (MBIA),
5.10%, 11/15/13 1,719,287
Aaa AAA 2,000 Missouri Health & Education
Authority, St. Luke's
Health System, (MBIA),
5.125%, 11/15/19 1,801,460
Aaa AAA 575 Missouri Health & Education
Authority, St. Louis
Children's Hospital,
(MBIA), 0%, 5/15/08 287,023
Aaa AAA 9,500 Missouri Health & Education
Authority, Lester Cox
Medical Center, (MBIA), 0%,
9/1/20 2,101,400
-----------
$16,859,577
-----------
INSURED - HOUSING - 1.8%
Aaa AAA $1,500 City of Springfield, SCA
Realty Multifamily Mortgage
Receipts, (FSA), 7.15%,
1/1/30 $ 1,607,220
-----------
INSURED - LEASE/CERTIFICATE
OF PARTICIPATION - 4.4%
Aaa AAA $1,250 Kansas City Municipal
Assistance Corporation,
Bartle Hall Convention,
(AMBAC), 6.625%, 4/15/15 $ 1,336,050
Aaa AAA 500 Kansas City Municipal
Assistance Corporation,
Bartle Hall Convention,
(AMBAC), 6.00%, 4/15/20 507,075
Aaa AAA 600 Kansas City School
District, Building
Corporation, (FGIC), 6.50%,
2/1/08 641,280
Aaa AAA 500 St. Charles County, Public
Facilities Authority,
(FGIC), 6.375%, 3/15/07 536,420
Aaa AAA 1,000 St. Louis County Municipal
Finance Corporation, Civil
Courts Building, (FGIC),
5.75%, 8/1/13 1,002,340
-----------
$ 4,023,165
-----------
INSURED - UTILITIES - 11.4%
Aaa AAA $5,000 Missouri Environmental
Improvement & Energy
Resources Authority, Union
Electric Project, (AMT),
(AMBAC), 5.45%, 10/1/28 $ 4,540,000
Aaa AAA 700 Puerto Rico Electric Power
Authority, (FSA), Variable,
7/1/03 (1) 781,627
Aaa AAA 5,000 City of Sikeston, Electric
System, (MBIA), 6.25%,
6/1/22 5,138,150
-----------
$10,459,777
-----------
INSURED - WATER & SEWER - 1.7%
Aaa AAA $1,500 City of St. Louis, Water
Revenue Improvement Bonds,
(FGIC), 6.00%, 7/1/14 $ 1,539,480
-----------
LEASE/CERTIFICATE OF
PARTICIPATION - 5.1%
A1 A+ $2,000 State of Missouri, Regional
Convention & Sports Complex
Authority, 5.50%, 8/15/21 $ 1,844,580
A BBB+ 2,000 St. Louis County, Regional
Convention & Sports Complex
Authority, 5.50%, 8/15/13 1,861,880
Aa AA 1,000 Southeast Missouri
Correctional Facility,
5.75%, 8/15/16 995,090
-----------
$ 4,701,550
-----------
</TABLE>
63
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIFECARE - 1.1%
NR NR $ 950 Kansas City Industrial
Development Authority,
Kingswood United Methodist
Manor, 9.00%, 11/15/13 $ 1,018,457
-----------
NURSING HOMES - 1.7%
NR NR $ 500 Missouri Health & Education
Authority, Bethesda Health
Group, 6.625%, 8/15/05 $ 498,710
NR NR 1,000 Missouri Health & Education
Authority, Bethesda Health
Group, 7.50%, 8/15/12 1,011,820
-----------
$ 1,510,530
-----------
SPECIAL TAX REVENUE - 3.6%
Baa1 A $1,000 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/12 $ 1,050,590
Baa1 A 1,400 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/19 1,306,704
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/17 936,050
-----------
$ 3,293,344
-----------
TRANSPORTATION - 0.2%
NR BBB $ 200 Guam Airport Authority,
6.375%, 10/1/10 $ 202,580
-----------
UTILITIES - 4.3%
A1 AA $ 500 City of Columbia, Water &
Electric, 6.125%, 10/1/12 $ 513,080
NR BBB 1,010 Guam Power Authority,
6.30%, 10/1/22 998,304
Baa1 A- 1,000 Puerto Rico Electric Power
Authority, 5.00%, 7/1/12 905,730
Baa1 A- 1,500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 1,526,205
-----------
$ 3,943,319
-----------
WATER & SEWER - 9.1%
A1 AA- $ 760 City of Columbia, Sewerage
System, 6.25%, 10/1/15 $ 784,472
Aa NR 800 Missouri Environmental
Improvement & Energy
Resources Authority, Water
Pollution Control, 6.875%,
6/1/14 872,288
Aa NR 475 Missouri Environmental
Improvement & Energy
Resources Authority, Water
Pollution Control, 6.45%,
7/1/08 513,385
Aa NR 500 Missouri Environmental
Improvement & Energy
Resources Authority, Water
Pollution Control, 6.55%,
7/1/14 532,300
Aa NR 1,000 Missouri Environmental
Improvement & Energy
Resources Authority, Water
Pollution Control, 6.05%,
7/1/15 1,033,590
Aa NR 1,250 Missouri Environmental
Improvement & Energy
Resources Authority, Water
Pollution Control, 7.20%,
7/1/16 1,419,863
Aa NR 1,000 Missouri Environmental
Improvement & Energy
Resources Authority, Cape
Giradeau Project, 0%,
1/1/14 329,020
Aa A+ 3,000 City of Springfield,
Waterworks, 5.375%, 5/1/14 2,888,640
-----------
$ 8,373,558
-----------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$88,354,959) $91,630,419
===========
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
The Portfolio invests primarily 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 August 31, 1995, 53.4% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.6% to 27.9% of total investments.
See notes to financial statements
64
<PAGE> 65
- --------------------------------------------------------------------------------
North Carolina Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<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%,
10/01/21 $ 1,061,130
NR AAA 1,000 Educational Facilities
Finance Agency, Elon
College, 6.375%, 1/1/07 1,063,860
------------
$ 2,124,990
------------
ESCROWED - 1.4%
Aaa A- $ 155 North Carolina Municipal
Power, Catawba Electric,
5.00%, 1/1/20 $ 141,755
NR AAA 150 Puerto Rico GO, 7.30%,
7/1/20 171,831
Aaa AAA 1,500 Puerto Rico Public
Building Authority,
6.875%, 7/1/12 1,723,695
Baa1 AAA 635 Puerto Rico Electric Power
Authority, 7.125%, 7/1/14 707,987
------------
$ 2,745,268
------------
GENERAL OBLIGATIONS - 8.7%
A A- $ 175 Eden, Water and Sewer
Bonds, (AMT), 6.75%,
6/1/08 $ 188,249
NR BBB 1,700 Guam, 5.40%, 11/15/18 1,484,729
Aaa AAA 4,000 North Carolina Capital
Improvement, 4.70%, 2/1/06 3,897,040
Aaa AAA 3,000 North Carolina Capital
Improvement, 4.70%, 2/1/10 2,768,850
Aaa AAA 4,000 North Carolina Capital
Improvement, 4.75%, 2/1/12 3,606,200
Baa1 A 1,000 Puerto Rico, 6.50%, 7/1/23 1,029,630
Baa1 A 1,000 Puerto Rico, 5.75%, 7/1/15 963,290
NR NR 2,550 Virgin Island, 7.25%,
10/1/18 2,677,551
------------
$ 16,615,539
------------
HEALTH CARE - 3.4%
Aa AA $1,700 North Carolina Medical
Care Commission, Carolina
Medicorp, 6.00%, 5/1/21 $ 1,669,281
Aa AA 5,060 North Carolina Medical
Care Commission, Carolina
Medicorp, 5.50%, 5/1/15 4,742,080
------------
$ 6,411,361
------------
HOSPITALS - 18.8%
Aa AA $2,090 Charlotte-Mecklenberg
Hospital, 0%, 1/1/06 $ 1,193,745
Aa AA 2,345 Charlotte-Mecklenberg
Hospital, 6.25%, 1/1/20 2,385,780
NR A 5,500 North Carolina Medical
Care Commission, Mercy
Hospital, 6.50%, 8/1/08 5,725,665
Aa AA- 3,000 North Carolina Medical
Care Commission, North
Carolina Baptist Hospital,
6.00%, 6/1/22 2,944,830
Aa AA 4,000 North Carolina Medical
Care Commission,
Presbyterian Health
Services, 5.50%, 10/1/14 3,778,720
Aa AA 3,700 North Carolina Medical
Care Commission,
Presbyterian Health
Services, 6.00%, 10/1/24 3,610,386
A1 A+ 5,000 North Carolina Medical
Care Commission, Rex
Hospital, 6.125%, 6/1/10 5,030,350
NR BBB+ 2,500 North Carolina Medical
Care Commission, Roanake-
Chowan Hospital, 7.75%,
10/1/19 2,638,475
NR AA 3,700 North Carolina Medical
Care Commission, Scotland
Memorial Hospital, 5.375%,
10/1/11 3,463,459
Aa AA- 2,450 Pitt County Memorial
Hospital, 6.90%, 12/1/21 2,602,807
A1 AA- 2,380 University of North
Carolina at Chapel Hill,
6.00%, 2/15/24 2,390,828
------------
$ 35,765,045
------------
HOUSING - 9.1%
NR AAA $1,900 Charlotte Housing, Double
Oaks, (FHA), (FNMA),
7.35%, 5/15/26 $ 2,032,639
Aa AA 2,250 North Carolina HFA, MFMR,
6.60%, 9/1/26 2,286,855
Aa AA 4,395 North Carolina HFA, MFMR,
6.85%, 7/1/13 4,619,848
Aa A+ 870 North Carolina HFA, SFMR,
6.95%, 3/1/17 910,220
Aa A+ 890 North Carolina HFA, SFMR,
(AMT), 7.05%, 9/1/20 925,066
Aa A+ 4,000 North Carolina HFA, SFMR,
(AMT), 6.70%, 9/1/26 4,093,680
Aa A+ 2,250 North Carolina HFA, MFMR,
(AMT), 6.70%, 1/1/26 2,321,348
Aaa AAA 200 Puerto Rico HFC, SFMR,
6.85%, 10/15/23 207,526
------------
$ 17,397,182
------------
INDUSTRIAL DEVELOPMENT - 5.5%
Baa1 BBB $2,750 Haywood County, Champion
International Corporation,
(AMT), 5.50%, 10/1/18 $ 2,518,395
Baa2 BBB 2,500 New Hanover County,
Occidental Petroleum
Corporation, 6.70%, 7/1/19 2,609,550
NR AA 850 Robeson County, Campbell
Soup Company, 6.40%,
12/1/06 917,847
</TABLE>
65
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<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, (AMT), 6.80%,
5/1/24 4,399,303
------------
$ 10,445,095
------------
INSURED GOVERNMENT
OBLIGATIONS - 2.4%
Aaa AAA $1,000 Puerto Rico, (AMBAC),
Variable, 7/1/15 (1) $ 1,011,700
Aaa AAA 3,500 Puerto Rico, (FSA),
Variable, 7/1/22 (1) 3,591,560
------------
$ 4,603,260
------------
INSURED HOSPITAL - 10.6%
Aaa AAA $2,000 Catawba County, Catawba
Memorial Hospital,
(AMBAC), 6.20%, 10/1/12 $ 2,065,660
Aaa AAA 500 Cumberland County
Hospital, (MBIA), 0%,
10/1/09 226,440
Aaa AAA 4,225 New Hanover Regional
Medical Center, (AMBAC),
4.75%, 10/1/23 3,567,378
Aaa AAA 1,750 North Carolina Medical
Care Commission, Moore
Regional Hospital, (FGIC),
5.20%, 10/1/13 1,616,720
Aaa AAA 3,750 North Carolina Medical
Care Commission, Moore
Regional Hospital, (FGIC),
5.00%, 10/1/18 3,288,863
Aaa AAA 2,000 North Carolina Medical
Care Commission, Wesley
Long Community Hospital,
(AMBAC), 5.25%, 10/1/13 1,858,720
Aaa AAA 2,500 North Carolina Medical
Care Commission, Wesley
Long Community Hospital,
(AMBAC), 5.25%, 10/1/17 2,260,825
Aaa AAA 935 North Carolina Medical
Care Commission, Memorial
Mission Hospital, (FSA),
0%, 10/1/06 518,944
Aaa AAA 5,000 North Carolina Medical
Care Commission, St.
Joseph's Medical Center,
(AMBAC), 5.10%, 10/1/14 4,524,250
Aaa AAA 250 Wake County, North
Carolina Hospital System,
(MBIA), 5.125%, 10/1/26 219,655
------------
$ 20,147,455
------------
INSURED LEASE/CERTIFICATE
OF PARTICIPATION - 8.4%
Aaa AAA $ 900 Burke County, COP,
Detention
Facility/Landfill
Equipment, (MBIA), 6.30%,
4/1/08 $ 960,561
Aaa AAA 4,500 Charlotte, COP, Convention
Facility, (AMBAC), 5.25%,
12/1/13 4,242,600
Aaa AAA 1,750 Duplin County, COP,
(FGIC), 5.25%, 8/1/14 1,623,195
Aaa AAA 1,575 Franklin, COP, (FGIC),
6.625%, 6/1/14 1,673,690
Aaa AAA 5,000 Iredell County, COP,
Iredell-Statesville
Schools, (FGIC), 6.125%,
6/1/07 5,288,550
Aaa AAA 1,000 Mooresville School
District, (AMBAC), COP,
6.35%, 10/1/14 1,034,750
Aaa AAA 1,000 Rutherford County, COP,
(FGIC), 6.25%, 6/1/23 1,022,640
Aaa AAA 200 Scotland County, COP,
(CGIC), 6.75%, 3/1/11 213,198
------------
$ 16,059,184
------------
INSURED TRANSPORTATION - 1.8%
Aaa AAA $3,750 Piedmont Triad Airport
Authority, (MBIA), 5.125%,
7/1/12 $ 3,464,888
------------
INSURED UTILITIES - 3.1%
Aaa AAA $3,000 North Carolina Municipal
Power Authority, Catawba
Electric, (AMBAC), 5.75%,
1/1/15 $ 2,917,920
Aaa AAA 1,500 North Carolina Eastern
Municipal Power Authority,
(FSA), Variable, 1/1/19
(1) 1,411,365
Aaa AAA 1,400 Puerto Rico Electric Power
Authority, Stripes, (FSA),
Variable, 7/1/02 (1) 1,546,062
------------
$ 5,875,347
------------
INSURED WATER & SEWER - 2.0%
Aaa AAA $ 750 Fayetteville Public Works
Commission, (FGIC), 4.75%,
3/1/14 $ 650,655
Aaa AAA 3,500 Fayetteville Public Works
Commission, (FGIC),
5.125%, 3/1/10 3,257,555
------------
$ 3,908,210
------------
LEASE/CERTIFICATE OF
PARTICIPATION - 6.7%
A1 A- $2,065 Buncombe County, COP,
6.625%, 12/1/10 $ 2,205,026
Aa1 AA 4,150 Charlotte County, COP,
Charolette Mecklendberg
Law, 5.375%, 6/1/13 4,022,803
NR AA 825 Durham County, COP, 6.10%,
7/15/07 872,900
Aa AA 985 Durham County, COP, 6.75%,
12/1/11 1,062,648
</TABLE>
66
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
LEASE/CERTIFICATE OF
PARTICIPATION - (CONTINUED)
A1 AA 2,400 Greensboro, COP,
Greensboro Coliseum Arena,
6.75%, 12/1/09 2,581,272
A NR 1,950 Rowan County, COP, 6.25%,
12/1/07 2,095,002
------------
$ 12,839,651
------------
SPECIAL TAX REVENUE - 2.8%
Baa1 BBB+ $ 200 Puerto Rico Finance
Authority, 7.90%, 7/1/07 $ 220,820
Baa1 A 4,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/20 3,600,640
Baa1 A 1,490 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/15 1,415,738
------------
$ 5,237,198
------------
TRANSPORTATION - 0.9%
Baa3 BB+ $1,500 Raleigh-Durham Airport
Authority, American
Airlines Inc., 9.40%,
11/1/00 $ 1,713,810
------------
UTILITIES - 12.3%
A2 A $1,015 Chatham County Industrial
Facilities and Pollution,
Carolina Power & Light,
6.30%, 6/1/14 $ 1,074,804
NR BBB 1,750 Guam Power Authority,
5.25%, 10/1/23 1,501,220
A A- 2,875 North Carolina Municipal
Power, Catawba Electric,
5.00%, 1/1/15 2,426,414
A A- 2,500 North Carolina Municipal
Power, Catawba Electric,
5.75%, 1/1/15 2,328,850
A A- 550 North Carolina Municipal
Power, Catawba Electric,
7.00%, 1/1/16 566,803
A BBB+ 5,000 North Carolina Municipal
Power, Eastern Power,
6.125%, 1/1/09 4,965,750
A BBB+ 1,500 North Carolina Municipal
Power, Eastern Power,
6.40%, 1/1/21 1,481,310
A BBB+ 3,200 North Carolina Municipal
Power, Eastern Power,
6.00%, 1/1/26 3,008,960
A BBB+ 1,750 North Carolina Municipal
Power, Eastern Power,
7.00%, 1/1/13 1,858,727
Baa1 A- 2,000 Puerto Rico Electric Power
Authority, 0%, 7/1/17 528,860
Baa1 A- 1,000 Puerto Rico Electric Power
Authority, 7.00%, 7/1/21 1,105,180
Baa1 A- 2,000 Puerto Rico Electric Power
Authority, 6.00%, 7/1/16 1,988,040
Baa1 A- 365 Puerto Rico Electric Power
Authority, 7.125%, 7/1/14 398,427
NR NR 250 Virgin Islands Water and
Power Authority, 7.40%,
7/1/11 261,877
------------
$ 23,495,222
------------
WATER & SEWER - 1.0%
Aa AA $2,000 Orange County, Water &
Sewer, 5.20%, 7/1/16 $ 1,815,440
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$183,328,988) $190,664,145
============
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
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 August 31, 1995, 28.3% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.1% to 12.3% of total investments.
See notes to financial statements
67
<PAGE> 68
- --------------------------------------------------------------------------------
Oregon Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 $ 1,320,450
A NR 1,000 City of Salem, Educational
Facilities, Willamette
University Project, 6.10%,
4/1/14 1,010,800
------------
$ 2,331,250
------------
ESCROWED - 1.7%
A1 AAA $2,000 City of Medford, Rogue
Valley Memorial Hospital
(ETM), 6.25%, 12/1/07 $ 2,182,460
NR AAA 200 Puerto Rico Highway &
Transportation Authority,
Pre-Refunded, 6.625%,
7/1/18 226,918
------------
$ 2,409,378
------------
GENERAL
OBLIGATIONS - 17.7%
A A+ $2,000 Clackamas County,
Clackamas Community
College District, 5.25%,
12/1/09 $ 1,964,440
Aa AA+ 1,000 Tri County Metropolitan
Transportation District,
Light Rail Extention,
6.00%, 7/1/12 1,021,140
Aa NR 1,000 Clackamas & Multnomah
Counties, Lake Oswego
School District, 5.70%,
6/15/10 1,012,290
Aa NR 2,000 Lane County, City of
Eugene, School District,
5.375%, 7/1/13 1,932,000
Aa AA- 1,500 Washington and Multnomah
Counties, City of
Beaverton, School
District, 5.00%, 9/1/12 1,405,290
Aa AA- 1,000 State of Oregon, Oregon
Veterans' Welfare Bonds,
9.00%, 4/1/04 1,291,370
Aa AA- 1,000 State of Oregon, Board of
Higher Education, 6.00%,
10/15/18 1,013,760
Aa AA- 6,110 State of Oregon, Elderly
and Disabled Housing,
(AMT), 5.65%, 8/1/26 5,885,213
Aa AA- 1,250 State of Oregon, Elderly
and Disabled Housing,
6.375%, 8/1/24 1,294,063
Aa AA- 1,000 State of Oregon, Elderly
and Disabled Housing,
(AMT), 5.625%, 8/1/18 976,670
Aa AA- 3,505 State of Oregon,
Governmental Purpose,
5.625%, 6/1/13 (2) 3,491,015
Aa AA- 2,000 State of Oregon, Board of
Higher Education, 5.00%,
8/1/23 1,764,940
Baa1 A 2,000 Puerto Rico, 5.75%, 7/1/15 1,926,580
Baa1 A 1,000 Puerto Rico, 5.50%, 7/1/21 919,960
------------
$ 25,898,731
------------
HOSPITALS - 1.4%
NR A $1,000 Benton County, Good
Samaritan Hospital
Corvallis, 6.25%, 10/1/09 $ 1,006,810
Aa3 AA 1,000 Clackamas County, Kaiser
Permanente, 6.25%, 4/1/21 1,006,520
------------
$ 2,013,330
------------
HOUSING - 8.8%
Aa NR $2,500 State of Oregon Housing
and Community Services
Department, MFMR, 6.875%,
7/1/28 $ 2,623,425
Aa NR 1,055 State of Oregon Housing
and Community Services
Department, SFMR, (AMT),
6.80%, 7/1/27 1,097,105
Aa NR 1,500 State of Oregon Housing
and Community Services
Department, SFMR, 5.375%,
7/1/17 1,388,325
Aa NR 3,500 State of Oregon, Housing
and Community Services
Department, SFMR, 5.45%,
7/1/24 3,205,965
Aa NR 2,500 State of Oregon, Housing
and Community Services
Department, SFMR, (AMT),
6.45%, 7/1/26 2,579,025
Aa NR 2,000 State of Oregon, Housing
and Community Services
Department, SFMR, (AMT),
6.40%, 7/1/26 2,029,580
------------
$ 12,923,425
------------
INDUSTRIAL DEVELOPMENT
REVENUE - 4.7%
NR BBB- $5,000 Port of Astoria, PCR,
James River Project,
6.55%, 2/1/15 (2) $ 5,030,900
NR NR 750 Port of Portland, Ash
Grove Cement Co., 7.25%,
10/1/09 821,640
Baa1 A 1,000 Port of Portland, North
Portland Crown Zellerbach
Corporation, 6.125%,
5/15/08 1,000,200
------------
$ 6,852,740
------------
COGENERATION - 1.4%
NR NR $2,000 Western Generation Agency,
Wauna Cogeneration
Project, (AMT), 7.40%,
1/1/16 $ 2,084,360
------------
</TABLE>
68
<PAGE> 69
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED TRANSPORTATION - 4.6%
Aaa AAA $1,000 Port of Portland, Portland
International Airport,
(AMT), (AMBAC), 6.25%,
7/1/18 $ 1,050,930
Aaa AAA 2,750 Port of Portland, Portland
International Airport,
(AMT), (FGIC), 6.00%,
7/1/23 2,829,118
Aaa AAA 1,250 Port of Portland, Portland
International Airport,
(AMT), (FGIC), 5.75%,
7/1/25 1,213,475
Aaa AAA 1,500 Oregon Department of
Transportation, Westside
Light Rail, (MBIA), 6.25%,
6/1/09 1,585,155
------------
$ 6,678,678
------------
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 $ 1,025,980
Aaa AAA 1,500 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority, Lewis and Clark
College, (MBIA), 6.125%,
10/1/24 1,535,640
------------
$ 2,561,620
------------
INSURED GENERAL
OBLIGATIONS - 11.6%
Aaa AAA $1,850 Deschutes and Jefferson
Counties, Redmond School
District, (MBIA), 5.60%,
6/1/09 $ 1,865,984
Aaa AAA 2,500 Deschutes County, City of
Sisters School District,
(MBIA), 5.40%, 12/1/10 2,459,000
Aaa AAA 2,750 Jefferson County, Madras
School District, (FSA),
5.50%, 6/15/13 2,712,930
Aaa AAA 1,000 Multnomah County, Parkrose
School District, (FGIC),
5.70%, 12/1/09 1,027,770
Aaa AAA 1,000 Multnomah County, Parkrose
School District, (FGIC),
5.50%, 12/1/10 1,005,770
Aaa AAA 2,500 Marion and Polk Counties,
Salem-Keizer School
District, (FSA), 5.40%,
6/1/12 2,409,100
Aaa AAA 3,500 Yamhill, Clackamas &
Washington Counties,
Newberg School Dist.,
(FSA), 5.50%, 6/1/10 3,471,755
Aaa AAA 2,000 Puerto Rico, (AMBAC),
Variable, 7/1/15 (1) 2,023,400
------------
$ 16,975,709
------------
INSURED HOSPITALS - 2.2%
Aaa AAA $2,000 City of Portland, Hospital
Facilities Authority,
Legacy Health System,
(AMBAC), 6.70%, 5/1/21 $ 2,146,520
Aaa AAA 1,000 Western Lane Hospital
District Authority,
Sisters of St. Joseph of
Peace, (MBIA), 5.75%,
8/1/19 1,003,150
------------
$ 3,149,670
------------
INSURED - CERTIFICATES OF
PARTICIPATIONS - 2.0%
Aaa AAA $1,250 State of Oregon,
Department of General
Services, Real Property
Financing Program,
(AMBAC), 6.25%, 9/1/15 $ 1,295,138
Aaa AAA 1,500 State of Oregon,
Department of General
Services, Real Property
Financing Program, (MBIA),
6.25%, 11/1/19 (2) 1,559,595
------------
$ 2,854,733
------------
INSURED UTILITIES - 1.7%
Aaa AAA $1,000 Lane County, Emerald
People's Utility District,
Electric System, (AMBAC),
5.75%, 11/1/16 $ 1,000,610
Aaa AAA 1,000 City of Eugene, Electric
Utility Revenue, (MBIA),
5.80%, 8/1/22 1,011,210
Aaa AAA 500 Puerto Rico Electric Power
Authority, (FSA),
Variable, 7/1/03 (1) 558,305
------------
$ 2,570,125
------------
INSURED WATER
& SEWER - 4.5%
Aaa AAA $1,000 City of Beaverton,
Washington County, Water
Revenue, (FSA), 6.125%,
6/1/14 $ 1,027,200
Aaa AAA 1,500 City of Portland, Sewer
System, (FGIC), 6.00%,
10/1/12 1,542,135
Aaa AAA 1,000 South Fork Water Board,
First Lien Water Revenue,
(FSA), 6.00%, 2/1/19 1,024,020
Aaa AAA 1,375 Washington County, Unified
Sewerage Agency, Senior
Lien, (AMBAC), 6.125%,
10/1/12 1,427,690
Aaa AAA 1,500 Washington County, Unified
Sewerage Agency, (AMBAC),
6.125%, 10/1/12 1,557,480
------------
$ 6,578,525
------------
</TABLE>
69
<PAGE> 70
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
CERTIFICATES OF
PARTICIPATION - 1.7%
Aa A $1,500 Multnomah County, Juvenile
Justice Complex, 6.00%,
8/1/12 $ 1,535,865
Aa NR 1,000 Multnomah County, Health
System Facilities, 5.50%,
7/1/13 979,900
------------
$ 2,515,765
------------
MISCELLANEOUS - 3.9%
A A $3,000 Metropolitan Service
District, Metro
Headquarters Building
Project, 5.25%, 8/1/22 $ 2,682,930
A NR 1,600 State of Oregon, Oregon
Bond Bank, Special Public
Works Fund, 5.375%, 1/1/14 1,523,744
A1 NR 1,500 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority, Oregon Coast
Aquarium, 5.25%, 10/1/13 1,427,640
------------
$ 5,634,314
------------
SPECIAL TAX REVENUE - 6.8%
A NR $1,000 City of Portland, Urban
Renewal and Redevelopment
Bonds, Downtown Waterfront
Project, 6.40%, 6/1/08 $ 1,066,770
Baa1 A 1,500 Puerto Rico Highway and
Transportation Authority,
6.375%, 7/1/08 1,586,550
Baa1 A 1,720 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/20 1,548,275
Baa1 A 2000 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/17 1,872,100
Baa1 A 800 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/18 834,880
A1 AA 3,000 Tri-County Metropolitan
Transportation District,
Limited Tax Pledge, 5.70%,
8/1/13 2,993,130
------------
$ 9,901,705
------------
TRANSPORTATION - 3.4%
Ba1 BB $1,500 Port of Portland, Special
Obligation Revenue Bonds,
Delta Air Lines, Inc.
Project, (AMT), 6.20%,
9/1/22 $ 1,435,725
NR BBB 2,000 Guam Airport Authority,
6.50%, 10/1/23 2,007,180
NR BBB 1,500 Guam Airport Authority,
(AMT), 6.70%, 10/1/23 1,510,800
------------
$ 4,953,705
------------
UTILITIES - 14.3%
A1 AA $1,500 City of Eugene, Electric
Utility System, 6.00%,
8/1/11 $ 1,533,000
A1 AA 4,055 City of Eugene, Electric
Utility System, 5.75%,
8/1/16 4,025,480
Aa AA 4,000 City of Eugene, Trojan
Nuclear Power Project,
5.90%, 9/1/09 (2) 3,999,920
Aa AA 4,000 Northern Wasco County,
People's Utility District,
McNary Dam Fishway
Hydroelectric Project,
Bonneville Power
Administration, 5.20%,
12/1/24 3,571,040
Baa1 A- 8,000 Puerto Rico Electric Power
Authority, 5.00%, 7/1/12 7,245,840
A A+ 500 Puerto Rico Telephone
Authority, Variable,
1/1/20 (1) 510,830
------------
$ 20,886,110
------------
WATER & SEWER - 4.3%
NR A+ $2,000 Clackamus County, Water
Revenue, 6.375%, 10/1/14 $ 2,097,880
A A+ 1,500 City of Gresham, Water
Revenue, 5.20%, 11/1/10 1,470,615
A A+ 1,000 City of Gresham, Water
Revenue, 5.30%, 11/1/15 965,110
Aa A+ 1,800 City of Portland, Water
Systems, 5.25%, 8/1/13 1,711,673
------------
$ 6,245,278
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$143,369,782) $146,019,151
============
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
(2) Security has been segregated to cover margin requirements for open financial
futures contracts.
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 August 31, 1995, 35.3% 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 5.2% to 8.2% of total investments.
See notes to financial statements
70
<PAGE> 71
- --------------------------------------------------------------------------------
South Carolina Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 3.8%
NR BBB- $1,000 Puerto Rico ITEME,
Polytechnic University of
Puerto Rico, 5.50%, 8/1/24 $ 876,150
NR A 1,500 SC Education Authority,
Student Loan, (AMT), 6.30%,
9/1/08 1,516,575
-----------
$ 2,392,725
-----------
ESCROWED - 1.5%
Aaa AA $ 500 Columbia, South Carolina
Waterworks and Sewer
System, 7.10%, 2/1/12 $ 570,865
Aaa AAA 350 South Carolina Public
Service Authority, Santee
Cooper, 6.625%, 7/1/31 397,292
-----------
$ 968,157
-----------
GENERAL OBLIGATIONS - 5.7%
NR BBB $1,025 Guam, 5.40%, 11/15/18 $ 895,204
Baa1 A 1,000 Puerto Rico Public
Building, 5.75%, 7/1/16 956,670
Baa1 A 1,000 Puerto Rico, 6.50%, 7/1/23 1,029,630
A A 500 Spartanburg Sanitary Sewer
District, 5.40%, 3/1/10 481,520
NR NR 200 Virgin Islands, 7.25%,
10/1/18 210,004
-----------
$ 3,573,028
-----------
HOSPITALS - 6.0%
NR AA- $ 725 Greenville Hospital System
Board of Trustees, 7.00%,
5/1/17 $ 759,365
Baa1 NR 1,500 Horry County, Conway
Hospital, 6.75%, 7/1/12 1,527,705
NR AAA 1,500 SC Jobs Economic
Development, Oconee
Memorial Hospital, 6.15%,
3/1/25 1,499,970
-----------
$ 3,787,040
-----------
HOUSING - 9.5%
NR AA $ 995 South Carolina HFA, MFMR,
Westbury Place, 6.05%,
7/1/27 $ 951,698
NR BBB+ 1,000 South Carolina HDA, MFMR,
Hunting Ridge, (AMT),
6.75%, 6/1/25 983,480
Aa AA 1,500 South Carolina HFA, SFMR,
6.375%, 7/1/16 1,501,560
Aa NR 1,500 South Carolina HFA, SFMR,
6.45%, 7/1/17 1,510,260
Aa NR 1,000 South Carolina HFA, SFMR,
(AMT), 6.75%, 7/1/26 1,010,570
-----------
$ 5,957,568
-----------
INDUSTRIAL DEVELOPMENT - 18.0%
Baa2 BBB $1,000 Aiken County, Beliot
Corporation, 6.00%, 12/1/11 $ 991,700
NR BBB+ 1,500 Chester County, 7.35%,
2/1/14 1,609,395
A1 AA- 1,500 Darlington County, Nucor
Corporation, (AMT), 5.75%,
8/1/23 (3) 1,405,185
A2 A+ 500 Darlington County, Sonoco
Products, (AMT), 6.125%,
6/1/25 498,920
Aa3 AA 500 Florence County, Pollution
Control, E.I. du Pont de
Nemours & Co., 6.35%,
7/1/22 520,050
A1 A- 2,665 Richland County, Pollution
Control, Union Camp
Corporation, (AMT), 6.75%,
11/1/22 2,812,854
NR NR 1,500 Spartanburg County, Solid
Waste, Bavarian Motor Works
Corporation, (AMT), 7.55%,
11/1/24 1,618,440
A2 A+ 2,000 York County, Hoechst
Celanese Corporation,
(AMT), 5.70%, 1/1/24 1,869,640
-----------
$11,326,184
-----------
INSURED EDUCATION - 0.4%
Aaa AAA $ 250 College of Charleston,
Housing and Auxiliary
Facilities, (MBIA), 6.00%,
10/1/07 $ 257,818
-----------
INSURED GENERAL OBLIGATION - 1.7%
Aaa AAA $1,000 Berkeley County School
District, (AMBAC), 6.30%,
2/1/16 $ 1,039,360
-----------
INSURED HOSPITAL - 5.9%
Aaa AAA $1,000 Florence County, McLeod
Medical Center, (FGIC),
5.25%, 11/1/09 $ 947,310
Aaa AAA 1,500 Greenwood County, Self
Memorial Hospital, (FGIC),
5.875%, 10/1/17 1,493,490
Aaa AAA 300 Lexington County Health
Services District, Inc.,
(FSA), 6.75%, 10/1/18 317,547
Aaa AAA 1,000 South Carolina
Jobs-Economic Development,
South Carolina Baptist
Hospital, (AMBAC), 5.45%,
8/1/15 934,330
-----------
$ 3,692,677
-----------
INSURED LEASE/CERTIFICATE
OF PARTICIPATION - 7.3%
Aaa AAA $ 500 Charleston County, COP,
(MBIA), 6.10%, 6/1/11 $ 513,820
Aaa AAA 1,000 Charleston County, COP,
(MBIA), 7.00%, 6/1/19 1,079,830
Aaa AAA 1,060 Chesterfield County School
District, COP, (MBIA),
6.00%, 7/1/15 1,058,664
Aaa AAA 1,000 Florence County, COP, Law
Center, (AMBAC), 6.00%,
3/1/14 1,003,570
Aaa AAA 900 North Charleston, COP,
Coliseum Capital
Improvements, (FGIC),
6.00%, 1/1/11 915,318
-----------
$ 4,571,202
-----------
</TABLE>
71
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED SOLID WASTE - 0.8%
Aaa AAA $ 500 Charleston County, (FGIC),
6.00%, 1/1/14 $ 508,995
-----------
INSURED TRANSPORTATION - 1.5%
Aaa AAA $1,105 Charleston County Airport,
(MBIA), 4.75%, 7/1/15 $ 952,919
-----------
INSURED UTILITIES - 12.5%
Aaa AAA $ 300 Piedmont Municipal Power
Agency, (MBIA), 6.25%,
1/1/09 $ 322,785
Aaa AAA 1,000 Piedmont Municipal Power
Agency, (MBIA), 6.30%,
1/1/14 1,039,880
Aaa AAA 400 Puerto Rico Electric Power
Authority, (STRIPES),
(FSA), Variable, 7/1/02 (1) 441,732
Aaa AAA 150 Rock Hill, Downtown
Redevelopment, (AMBAC),
5.375%, 1/1/24 141,399
Aaa AAA 1,000 South Carolina Public
Service Authority, Santee
Cooper, (AMBAC), 5.00%,
1/1/14 907,230
Aaa AAA 1,000 South Carolina Public
Service Authority, Santee
Cooper, (MBIA), 5.125%,
1/1/32 867,170
Aaa AAA 1,500 South Carolina Public
Service Authority, (MBIA),
5.75%, 1/1/10 (2) 1,478,295
Aaa AAA 1,500 South Carolina Public
Service Authority, (MBIA),
5.75%, 1/1/22 (2) 1,422,090
Aaa AAA 1,250 South Carolina Public
Service Authority, (AMBAC),
6.375%, 7/1/21 1,279,025
-----------
$ 7,899,606
-----------
INSURED WATER & SEWER - 5.2%
Aaa AAA $1,000 Berkeley County, South
Carolina Water and Sewer
System, (MBIA), 5.55%,
6/1/15 $ 954,920
Aaa AAA 2,000 Cayce, South Carolina Water
and Sewer System, (AMBAC),
5.25%, 7/1/15 (3) 1,840,320
Aaa AAA 500 Mount Pleasant, Waterworks
and Sewer System, (AMBAC),
6.00%, 12/1/20 505,950
-----------
$ 3,301,190
-----------
LEASE/CERTIFICATE OF
PARTICIPATION - 4.1%
Baa NR $ 750 Lexington School District,
COP, 6.90%, 7/1/08 $ 784,223
Baa1 BBB+ 1,750 Myrtle Beach Convention
Center, COP, 6.875%, 7/1/17 1,802,762
-----------
$ 2,586,985
-----------
MISCELLANEOUS - 0.5%
NR A+ $ 300 South Carolina Resource
Authority, 7.00%, 4/1/13 $ 311,634
-----------
SPECIAL TAX - 1.1%
Baa1 A $ 750 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/19 $ 700,020
-----------
UTILITIES - 13.5%
A2 A- $1,650 Berkeley County, South
Carolina Electric & Gas
Company, 6.50%, 10/1/14 $ 1,746,195
A2 A 1,500 Darlington County, Carolina
Power & Light Company,
6.60%, 11/1/10 1,596,915
NR BBB 500 Guam Power Authority,
5.25%, 10/1/23 428,920
Aa2 AA- 1,000 Oconee County, PCR, Duke
Power, 5.80%, 4/1/14 990,970
A BBB 500 Piedmont Municipal Power
Agency, 5.75%, 1/1/24 458,910
Baa1 A- 1,400 Puerto Rico Electric Power
Authority, 6.250%, 7/1/17 1,414,000
Baa1 A- 500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 508,735
A1 A+ 500 South Carolina Public
Service Authority, Santee
Cooper, 6.00%, 7/1/31 488,435
A1 A+ 1,000 South Carolina Public
Service Authority, 5.125%,
1/1/32 849,170
-----------
$ 8,482,250
-----------
WATER & SEWER REVENUE - 1.0%
Aa AA $ 500 Columbia, Waterworks and
Sewer System, 5.375%,
2/1/12 $ 483,830
A1 AA- 150 Spartanburg, Water System,
6.25%, 6/1/12 155,079
-----------
$ 638,909
-----------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$60,604,156) $62,948,267
===========
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
(2) When-issued security.
(3) Security has been segregated to cover when-issued securities.
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 August 31, 1995, 35.3% 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 1.2% to 15.8% of total investments.
See notes to financial statements
72
<PAGE> 73
- --------------------------------------------------------------------------------
Tennessee Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 4.3%
Aa AA $1,600 Nashville and Davidson
County, The Vanderbilt
University, 5.20%, 7/1/18 $ 1,462,256
Baa NR 1,000 Nashville and Davidson
County, The Belmont
University, 6.40%, 12/1/19 998,650
-----------
$ 2,460,906
-----------
GENERAL OBLIGATION - 4.1%
Aa AA+ $1,000 Shelby County, 5.625%,
4/1/14 $ 973,560
Aa AA+ 1,000 Shelby County, 5.125%,
3/1/16 907,440
Aa NR 500 Williamson County, Rural
School Bonds, 5.80%, 3/1/12 504,710
-----------
$ 2,385,710
-----------
HOSPITAL - 4.0%
Baa1 NR $ 500 City of Clarksville,
Clarksville Memorial
Hospital, 6.25%, 7/1/08 $ 497,765
Baa1 NR 500 City of Clarksville,
Clarksville Memorial
Hospital, 6.375%, 7/1/08 487,915
Baa1 BBB+ 250 County of Knox, East
Tennessee Children's
Hospital, 6.50%, 10/1/12 249,728
NR A- 1,000 Sumner County, Sumner
Regional Health Systems,
7.50%, 11/1/14 1,084,970
-----------
$ 2,320,378
-----------
HOUSING - 16.2%
NR AAA $ 500 Knoxville Community
Development Corporation,
MFMR, Morningside Gardens,
(GNMA) 6.10%, 7/20/20 $ 486,860
NR A 750 Knoxville Community
Development Corporation,
MFMR, Clinton Towers,
6.65%, 10/15/10 760,140
NR A 1,645 Nashville and Davidson
County, MFMR, The Park at
Hermitage, 5.90%, 2/1/19 1,494,054
NR A 800 Murfreesboro Housing
Authority, MFMR, Westbrooks
Towers Project, 5.875%,
7/15/10 755,120
Aa A+ 500 TN HDA, Homeownership
Program, 6.80%, 7/1/17 510,560
A1 A+ 2,000 TN HDA, Mortgage Finance
Program, 5.85%, 7/1/13 1,973,680
A1 A+ 2,000 TN HDA, Mortgage Finance
Program, 5.95%, 7/1/28 1,938,180
Aa AA 1,500 TN HDA, Homeownership
Program, (AMT), 5.75%,
7/1/24 1,394,550
-----------
$ 9,313,144
-----------
INDUSTRIAL DEVELOPMENT
REVENUE - 16.0%
Aa2 AA $1,000 City of Chattanooga, E.I.
du Pont de Nemours and
Company Project, 6.35%,
7/1/22 $ 1,040,100
Aa2 AA 1,000 Humphreys County, E.I. du
Pont de Nemours and Company
Project, 6.70%, 5/1/24 1,056,030
Aa2 AA 2,000 Loudon County,
Kimberly-Clark Corporation
Project, (AMT), 6.20%,
2/1/23 (2) 2,006,900
Baa1 BBB 1,750 Maury County, Saturn
Corporation Project, 6.50%,
9/1/24 1,796,970
Baa1 BBB 250 McMinn County, Calhoun
Newsprint Company, Bowater
Incorporated Obligor,
(AMT), 7.40%, 12/1/22 264,340
Baa3 BBB 1,500 Memphis-Shelby County
Airport Authority, Federal
Express Corporation, 6.75%,
9/1/12 1,562,475
Baa3 BBB 1,000 Memphis-Shelby County
Airport Authority, Federal
Express Corporation, (AMT),
6.20%, 7/1/14 1,005,000
NR BBB+ 500 Nashville and Davidson
County, Osco Treatment
Systems, (AMT), 6.00%,
5/1/03 499,040
-----------
$ 9,230,855
-----------
INSURED GENERAL OBLIGATION - 0.5%
Aaa AAA $ 300 Puerto Rico, (AMBAC),
Variable, 7/1/15 (1) $ 303,510
-----------
INSURED HOUSING - 1.8%
Aaa AAA $1,000 Knox County, SCA Realty
Multifamily Mortgage
Receipts, (FSA), 7.125%,
1/1/30 (2) $ 1,069,290
-----------
INSURED HOSPITAL - 21.9%
Aaa AAA $ 500 City of Bristol, Bristol
Memorial Hospital, (FGIC),
6.75%, 9/1/10 $ 552,955
Aaa AAA 2,000 City of Bristol, Bristol
Memorial Hospital, (FGIC),
5.125%, 9/1/13 1,839,980
Aaa AAA 1,500 Chattanooga-Hamilton
County, Erlanger Medical
Center, (FSA), 5.625%,
10/1/18 1,442,805
Aaa AAA 250 City of Chattanooga,
Memorial Hospital Project,
(MBIA), 6.625%, 9/1/09 276,158
Aaa AAA 1,000 City of Johnson, Johnson
City Medical Center,
(MBIA), 5.00%, 7/1/13 906,620
Aaa AAA 1,500 City of Johnson, Johnson
City Medical Center,
(MBIA), 5.25%, 7/1/16 1,377,135
Aaa AAA 1,000 Knox County, Mercy Health
System, (AMBAC), 6.00%,
9/1/19 (2) 1,004,450
Aaa AAA 2,000 Knox County, Fort Sanders
Alliance Obligated Group,
(MBIA), 5.25%, 1/1/23 1,802,000
</TABLE>
73
<PAGE> 74
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED HOSPITAL - (CONTINUED)
Aaa AAA 1,500 Shelby County, LeBonheur
Children's Medical Center,
Inc., (MBIA), 5.50%,
8/15/12 1,436,204
Aaa AAA 2,000 Sullivan County, Holston
Valley Health Care Inc.,
(MBIA), 5.75%, 2/15/13 (2) 1,980,380
-----------
$12,618,687
-----------
INSURED SPECIAL TAX - 1.9%
Aaa AAA $1,000 City of Johnson, School
Sales Tax Revenue, (AMBAC),
6.70%, 5/1/21 $ 1,070,690
-----------
INSURED TRANSPORTATION - 4.4%
Aaa AAA $1,500 Memphis-Shelby County
Airport Authority, (MBIA),
5.65%, 9/1/15 $ 1,468,350
Aaa AAA 1,000 Memphis-Shelby County
Airport Authority, (MBIA),
(AMT), 6.50%, 2/15/09 1,080,230
-----------
$ 2,548,580
-----------
INSURED UTILITIES - 2.4%
Aaa AAA $1,000 Madison County Suburban
Utility District, (MBIA),
5.00%, 2/1/19 $ 905,310
Aaa AAA 400 Puerto Rico Electric Power
Authority, (FSA), Variable,
7/1/03 (1) 446,644
-----------
$ 1,351,954
-----------
INSURED WATER & SEWER - 4.8%
Aaa AAA $ 500 Roane and Morgan Counties,
Cumberland Utility
District, Waterworks
Revenue, (MBIA), 5.90%,
1/1/23 $ 499,950
Aaa AAA 1,000 Nashville and Davidson
Counties, Water and Sewer
Revenue, (AMBAC), 5.75%,
1/1/15 989,560
Aaa AAA 350 Nashville and Davidson
Counties, Water and Sewer
Revenue, (AMBAC), Variable,
1/1/22 (1) 358,740
Aaa AAA 1,000 Nashville and Davidson
Counties, Water and Sewer
Revenue, (FGIC), 5.20%,
1/1/13 935,930
-----------
$ 2,784,180
-----------
CERTIFICATE OF
PARTICIPATION - 0.9%
A NR $ 500 Wilson County Educational
Facilities Corporation,
6.125%, 6/30/10 $ 508,050
-----------
POOLED LOANS - 6.7%
A AA- $ 700 Tennessee Local Development
Authority, State Loan
Program, 5.00%, 3/1/15 $ 637,406
A AA- 2,000 Tennessee Local Development
Authority, State Loan
Program, 5.75%, 3/1/11 2,004,320
NR A- 1,200 Tennessee Local Development
Authority, Community
Provider Pooled Loan
Program, 6.55%, 10/1/23 1,227,420
-----------
$ 3,869,146
-----------
NURSING HOMES - 1.8%
NR A+ $1,000 Tennessee State Veterans'
Homes Board, Humboldt
Project, 6.65%, 2/1/14 $ 1,025,410
-----------
TRANSPORTATION - 1.7%
NR BBB $1,000 Guam Airport Authority,
6.70%, 10/1/23 $ 1,007,200
-----------
UTILITIES - 4.4%
NR NR $1,000 Scott and Morgan Counties,
Citizens Gas Utility
District, 6.00%, 1/1/13 $ 959,390
Aa AA 1,000 Nashville and Davidson
Counties, Electric System
Revenue, 6.00%, 5/15/17 1,013,400
Baa1 A- 500 Puerto Rico Electric Power
Authority, 5.00%, 7/1/12 452,865
Baa1 A- 100 Puerto Rico Electric Power
Authority, 7.00%, 7/1/21 110,518
-----------
$ 2,536,173
-----------
WATER & SEWER - 2.2%
NR BBB+ $ 250 Hamilton County, Eastside
Utility District, 6.50%,
11/1/05 $ 263,208
NR BBB+ 250 Hamilton County, Eastside
Utility District, 6.75%,
11/1/11 260,455
A1 A 750 Davidson and Williamson
Counties, Harpeth Valley
Utility District, 5.50,
9/1/11 722,212
-----------
$ 1,245,875
-----------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$57,120,750) $57,649,738
===========
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
(2) Security has been segregated to cover margin requirements for open financial
futures contracts.
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 August 31, 1995, 37.7% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.8% to 20.3% of total investments.
See notes to financial statements
74
<PAGE> 75
- --------------------------------------------------------------------------------
Virginia Tax Free Portfolio
Portfolio of Investments - August 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 10.1%
NR A $2,000 Lynchburgh, IDA, Randolph-
Macon Woman's College,
5.875%, 9/1/23 $ 1,945,140
Baa1 NR 2,220 Rockingham County, IDA,
Bridgewater College,
5.95%, 10/1/13 2,120,633
NR A- 1,570 Virginia College Building
Authority, Hampden-Sydney
College, 6.60%, 9/1/16 1,631,073
NR A+ 400 Virginia College Building
Authority, Hampton
University, 6.50%, 4/1/08 421,988
NR A+ 1,000 Virginia College Building
Authority, Hampton
University, 5.75%, 4/1/14 962,440
NR BBB- 1,150 Virginia College Building
Authority, Marymount
University, 7.00%, 7/1/12 1,203,694
NR BBB- 2,200 Virginia College Building
Authority, Marymount
University, 7.00%, 7/1/22 2,287,626
Aa AA 1,500 Virginia College Building
Authority, Washington and
Lee University, 5.80%,
1/1/24 1,491,585
A NR 1,350 Virginia Education Loan
Authority, (AMT), 6.15%,
9/1/09 1,336,271
Aaa NR 5,650 Virginia Education Loan
Authority, (AMT), 5.55%,
9/1/10 5,422,417
------------
$ 18,822,867
------------
ESCROWED - 1.9%
Aaa NR $1,000 Arlington, IDA, Arlington
Hospital, 7.125%, 9/1/21 $ 1,154,580
A NR 500 Augusta, IDA, Augusta
Hospital, 7.00%, 9/1/21 572,615
NR A+ 1,700 Virginia Beach, Virginia
Water and Sewer System,
6.625%, 2/01/17 1,914,353
------------
$ 3,641,548
------------
GENERAL OBLIGATIONS - 5.6%
Aaa AAA $1,000 Fairfax County, 5.625%,
6/1/14 $ 985,670
Baa1 A 350 Puerto Rico, 0.00%, 7/1/04 218,953
A1 AA 500 Richmond, 6.25%, 1/5/18 509,085
A1 AA 2,000 Richmond, 6.25%, 1/15/21 2,024,460
Aa AA 1,000 Roanoke County, 5.00%,
6/01/21 881,520
Aa AA 1,500 Virginia Public School
Authority, 6.50%, 8/1/12 1,571,505
NR NR 4,000 Virgin Island, 7.25%,
10/1/18 4,200,080
------------
$ 10,391,273
------------
HEALTH CARE - 0.2%
NR NR $ 365 Covington-Allegheny
County, IDA, Beverly
Enterprises, 9.375%,
9/1/01 $ 412,304
------------
HOSPITALS - 16.7%
A NR $1,100 Albermarle County, IDA,
Martha Jefferson Hospital,
5.50%, 10/1/15 $ 1,024,133
A NR 3,800 Albermarle County, IDA,
Martha Jefferson Hospital,
5.50%, 10/1/20 3,463,586
A NR 380 Chesapeake Hospital,
Chesapeake General
Hospital, 7.60%, 7/1/00 417,057
Aa AA- 2,910 Fairfax, IDA, Inova Health
System Hospitals, 5.00%,
8/15/14 2,580,122
Aa AA- 2,000 Fairfax, IDA, Inova Health
System Hospitals, 5.00%,
8/15/15 1,756,440
A A 1,250 Martinsville, IDA,
Memorial Hospital of
Martinsville and Henry
County, 7.00%, 1/1/06 1,317,113
NR A- 2,000 Medical College of Hampton
Roads, GO, 6.875%,
11/15/11 2,117,000
Aa AA 1,000 Norfolk, IDA, Sentara
Health System, 5.50%,
11/01/17 941,400
Aa AA 3,000 Norfolk, IDA, Sentara
Health System, 5.00%,
11/1/20 2,612,760
Aa AA 2,250 Norfolk, IDA, Sentara
Health System, 6.50%,
11/1/13 2,377,823
Aa AA- 3,500 Peninsula Ports Authority
of Virginia, Riverside
Health System, 6.625%,
7/1/10 3,679,550
A NR 1,200 Prince William County,
IDA, Prince William
Hospital, 5.25%, 4/1/19 1,030,548
A NR 2,400 Prince William County,
IDA, Potomac Hospital,
6.85%, 10/1/25 2,545,728
Aa AA 4,000 Virginia Beach Development
Authority, Sentara Bayside
Hospital, 6.60%, 11/1/09 4,205,200
A NR 1,060 Washington County, IDA,
Johnston Memorial
Hospital, 7.00%, 7/1/22 1,121,989
------------
$ 31,190,449
------------
HOUSING - 10.9%
NR AAA $1,250 Fairfax County
Redevelopment and Housing
Authority, MFMR, (FHA),
7.00%, 5/1/26 $ 1,309,138
NR AAA 200 Harrisonburg Redevelopment
and Housing Authority,
MFMR, (GNMA), 7.375%,
11/20/28 210,291
Aa1 AA+ 5,000 Virginia HDA, MFMR, 6.75%,
7/1/21 5,065,950
</TABLE>
75
<PAGE> 76
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - (CONTINUED)
Aa AA+ 3,500 Virginia HDA, MFMR, 7.05%,
5/1/18 3,663,170
Aa1 A+ 2,350 Virginia HDA, SFMR, 7.10%,
1/1/17 2,463,811
Aa1 NR 2,500 Virginia HDA, SFMR, 6.85%,
1/1/15 2,589,325
Aa1 A+ 3,000 Virginia HDA, SFMR, 7.10%,
1/1/22 3,135,450
Aa NR 1,900 Virginia HDA, SFMR,
Variable, 7/1/04 (1) 1,916,359
------------
$ 20,353,494
------------
INDUSTRIAL DEVELOPMENT
AUTHORITY - 7.5%
Aa NR $2,190 Chesapeake, IDA, Cargill
Inc., 5.875%, 3/1/13 $ 2,200,643
A2 A+ 1,000 Giles City, IDA, Hoechst
Celanese Corporation,
(AMT), 6.625%, 12/1/22 1,035,820
A1 A- 4,000 Isle of Wright County,
IDA, Union Camp
Corporation, (AMT), 6.55%,
4/1/24 4,192,480
Baa3 BBB 5,520 West Point, IDA,
Chesapeake Corporation,
(AMT), 6.375%, 3/1/19 5,516,578
Baa3 BBB 980 West Point, IDA,
Chesapeake Corporation,
6.25%, 3/1/19 981,480
------------
$ 13,927,001
------------
INSURED GENERAL
OBLIGATION - 0.9%
Aaa AAA $2,000 Loudon County, (MBIA),
5.25%, 1/1/30 $ 1,785,320
------------
INSURED HEALTH CARE - 1.0%
Aaa AAA $2,000 Hanover County, Bonsecour
Health System, (MBIA),
5.50%, 8/15/25 $ 1,853,800
------------
INSURED HOSPITALS - 7.6%
Aaa AAA $1,665 Arlington, IDA, The
Arlington Hospital,
(AMBAC), 5.00%, 9/1/21 $ 1,421,960
Aaa AAA 5,000 Augusta County, IDA,
Augusta Hospital
Corporation, (AMBAC),
5.125%, 9/1/21 4,543,500
Aaa AAA 3,000 Chesapeake Hospital
Authority, Chesapeake
General Hospital, (MBIA),
5.25%, 7/1/18 2,739,390
Aaa AAA 1,000 Norfolk, IDA, Children's
Hospital of the King's
Daughters Obligated Group,
(AMBAC), 5.50%, 6/1/20 934,650
Aaa AAA 1,000 Roanoke, IDA, Franklin
Memorial Hospital and St.
Albans Psychiatric
Hospital (MBIA), 5.25%,
7/1/25 896,350
Aaa AAA 2,250 Virginia Beach, IDA,
Virginia Beach Memorial
Hospital, (AMBAC), 5.125%,
2/15/18 2,034,495
Aaa AAA 1,700 Winchester, IDA,
Winchester Medical Center,
(AMBAC), Variable, 1/1/08
(1) 1,667,836
------------
$ 14,238,181
------------
INSURED LEASE - 0.5%
Aaa AAA $1,000 Riverside Regional Jail
Authority, (MBIA), 6.00%,
7/1/25 $ 999,890
------------
INSURED TRANSPORTATION - 5.4%
Aaa AAA $6,500 Metropolitan Washington
Airports Authority,
(MBIA), (AMT), 5.75%,
10/1/20 $ 6,233,500
Aaa AAA 3,000 Northern Virginia
Transportation District
Commission, (CGIC), 5.25%,
7/1/10 2,868,750
Aaa AAA 1,000 Richmond Metropolitan
Authority Expressway,
(FGIC), 6.375%, 7/15/16 1,035,800
------------
$ 10,138,050
------------
INSURED WATER & SEWER - 2.8%
Aaa AAA $2,000 Loudon County Sanitation
Authority, (MBIA), 5.25%,
1/1/25 $ 1,809,240
Aaa AAA 1,000 Norfolk Water, (AMBAC),
5.25%, 11/1/13 937,610
Aaa AAA 1,000 Roanoke County, Water and
Sewer, (FGIC), 5.00%,
7/1/21 881,360
Aaa AAA 1,750 Upper Occoquan Sewage
Authority, (FGIC), 5.00%,
7/1/15 1,578,570
------------
$ 5,206,780
------------
LEASE/CERTIFICATES OF
PARTICIPATION - 11.2%
Aa AA $4,250 Fairfax County Economic
Development Authority,
Lease, Government Center
Properties, 5.50%, 5/15/18 $ 4,033,378
Aa AA 1,750 Fairfax County Economic
Development Authority,
Lease, Government Center
Properties 5.25%, 11/15/18 1,605,030
Aa AA 3,200 Fairfax County Economic
Development Authority,
Lease, Government Center
Properties 5.50%, 5/15/14 3,073,407
NR A- 2,500 Hampton, Museum Revenue,
5.25%, 1/1/09 2,389,025
A NR 3,000 Harrisonburg Redevelopment
and Housing Authority,
Lease, Rockingham County
and Harrisonburg, 6.50%,
9/1/14 3,089,640
</TABLE>
76
<PAGE> 77
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<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 2,000 Henrico County, IDA,
Lease, 7.00%, 8/1/13 2,251,580
Aa AA 2,250 Henrico County, IDA,
Lease, 7.125%, 8/1/21 2,545,043
NR NR 1,250 King George County, Lease,
7.00%, 12/15/12 1,299,025
NR A 600 Prince William County,
IDA, Virginia Commuter
Parking Facilities Lease,
7.25%, 3/1/11 677,484
------------
$ 20,963,612
------------
LIFE CARE - 1.1%
NR NR $2,000 Loudon County, IDA,
Falcons Landing, 8.75%,
11/01/24 $ 2,032,500
------------
SOLID WASTE - 1.2%
A1 A+ $ 915 Fairfax County Economic
Development Authority,
Ogden Martin Systems of
Fairfax Incorporated,
(AMT), 7.75%, 2/1/11 $ 1,002,694
Baa1 A- 1,250 Southeastern Public
Service Authority, Solid
Waste Systems, 6.00%,
7/1/13 1,208,750
------------
$ 2,211,444
------------
SPECIAL TAX REVENUE - 6.9%
Baa1 A $1,375 Puerto Rico Highway &
Transportation Authority,
5.50%, 7/1/19 $ 1,283,370
Baa1 A 2,200 Puerto Rico Highway &
Transportation Authority,
5.25%, 7/1/20 1,980,352
Baa1 A 1,000 Puerto Rico Highway &
Transportation Authority,
5.00%, 7/1/22 863,810
Baa1 A 1,000 Puerto Rico Highway &
Transportation Authority,
5.50%, 7/1/15 950,160
Aa AA 1,000 Virginia State
Transportation Board
Revenue, Route 28,
Variable, 4/1/18 (1) 1,092,590
Aa AA 2,800 Virginia State
Transportation Board
Revenue, US Route 28,
5.25%, 5/15/19 2,565,724
Aa AA 4,000 Virginia State
Transportation Board
Revenue, Route 28, 6.50%,
4/1/18 4,156,640
------------
$ 12,892,646
------------
UTILITIES - 2.9%
Baa1 A- $3,000 Puerto Rico Electric
Authority Power, 0.00%,
7/1/17 $ 793,290
Baa1 A- 1,000 Puerto Rico Electric
Authority Power, 6.00%,
7/1/14 994,320
NR NR 1,000 Virgin Islands Water and
Power Authority, 7.40%,
7/1/11 1,047,510
A2 A 2,700 Louisa, IDA, Virginia
Electric and Power
Company, 5.45%, 1/1/24 2,488,320
------------
$ 5,323,440
------------
WATER & SEWER REVENUE - 5.6%
Aa AA- $2,250 Fairfax County Virginia
Water Authority, 5.75%,
4/1/29 $ 2,194,380
Aa AA- 1,000 Fairfax County Virginia
Water Authority, Variable,
4/1/29 (1) 934,120
Aa AA- 4,095 Fairfax County Virginia
Water Authority, 5.00%,
4/1/16 3,650,037
NR AA 2,000 Virginia Resource
Authority, Hopewell Waste
Water, (AMT), 6.00%,
10/1/25 1,950,960
NR AA 1,880 Virginia Resource
Authority, Campbell
Utilities, 5.125%, 10/1/19 1,663,085
------------
$ 10,392,582
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(IDENTIFIED COST,
$179,383,019) $186,777,181
============
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
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 August 31, 1995, 18.3% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.7% to 8.7% of total investments.
See notes to financial statements
77
<PAGE> 78
- --------------------------------------------------------------------------------
Tax Free Portfolios
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALABAMA ARKANSAS GEORGIA KENTUCKY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $112,610,415 $79,275,204 $115,913,957 $141,197,528
Unrealized appreciation 3,869,441 1,544,657 3,429,375 2,007,717
------------ ----------- ------------ ------------
Total investments, at value (Note 1A) $116,479,856 $80,819,861 $119,343,332 $143,205,245
Cash 479 631 1,575,423 291,390
Receivable for investments sold 1,953,475 -- -- --
Interest receivable 1,842,994 1,202,749 2,030,938 2,222,506
Deferred organization expenses (Note 1D) 3,759 5,177 5,511 3,157
------------ ----------- ------------ ------------
Total assets $120,280,563 $82,028,418 $122,955,204 $145,722,298
------------ ----------- ------------ ------------
LIABILITIES:
Demand note payable (Note 5) $ 103,000 $ 444,000 $ -- $ --
Payable for investments purchased 1,625,182 -- -- 370,873
Payable for daily variation margin on open financial
futures contracts (Note 1E) 59,704 42,646 -- 74,630
Payable to affiliates --
Trustees' fees 1,339 1,009 1,339 1,339
Custodian fees 1,824 2,436 1,500 2,783
Accrued expenses 3,461 3,325 3,698 4,047
------------ ----------- ------------ ------------
Total liabilities $ 1,794,510 $ 493,416 $ 6,537 $ 453,672
------------ ----------- ------------ ------------
NET ASSETS applicable to investors' interest in
Portfolio $118,486,053 $81,535,002 $122,948,667 $145,268,626
============ =========== ============ ============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $114,679,646 $80,035,368 $119,519,292 $143,339,700
Unrealized appreciation of investments and financial
futures contracts (computed on the basis of
identified cost) 3,806,407 1,499,634 3,429,375 1,928,926
------------ ----------- ------------ ------------
Total $118,486,053 $81,535,002 $122,948,667 $145,268,626
============ =========== ============ ============
</TABLE>
See notes to financial statements
78
<PAGE> 79
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $33,349,873 $112,178,823 $88,354,959 $183,382,988
Unrealized appreciation 260,911 1,972,898 3,275,460 7,281,157
----------- ------------ ----------- ------------
Total investments, at value (Note 1A) $33,610,784 $114,151,721 $91,630,419 $190,664,145
Cash 47,590 732 358 1,453,646
Receivable for investments sold -- -- 866,873 --
Interest receivable 659,890 1,517,519 1,190,249 3,059,961
Deferred organization expenses (Note 1D) 4,697 3,865 3,364 8,323
----------- ------------ ----------- ------------
Total assets $34,322,961 $115,673,837 $93,691,263 $195,186,075
----------- ------------ ----------- ------------
LIABILITIES:
Demand note payable (Note 5) $ -- $ 603,000 $ 524,000 $ --
Payable for daily variation margin on open
financial futures contracts (Note 1E) 11,875 59,704 -- --
Payable to affiliates --
Trustees' fees 275 1,339 1,009 1,779
Custodian fees 500 1,974 1,978 1,500
Accrued expenses 1,632 3,644 2,173 4,072
----------- ------------ ----------- ------------
Total liabilities $ 14,282 $ 669,661 $ 529,160 $ 7,351
----------- ------------ ----------- ------------
NET ASSETS applicable to investors' interest in
Portfolio $34,308,679 $115,004,176 $93,162,103 $195,178,724
=========== ============ =========== ============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $34,063,019 $113,094,311 $89,886,643 $187,897,567
Unrealized appreciation of investments and
financial futures contracts (computed
on the basis of identified cost) 245,660 1,909,865 3,275,460 7,281,157
----------- ------------ ----------- ------------
Total $34,308,679 $115,004,176 $93,162,103 $195,178,724
=========== ============ =========== ============
</TABLE>
See notes to financial statements
79
<PAGE> 80
- -------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
August 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $143,369,782 $ 60,604,156 $57,120,750 $179,383,019
Unrealized appreciation 2,649,369 2,344,111 528,988 7,394,162
------------ ------------- ----------- ------------
Total investments, at value (Note 1A) $146,019,151 $ 62,948,267 $57,649,738 $186,777,181
Cash 414,837 922,554 611 644
Receivable for investments sold -- 250,069 349,174 3,747,425
Interest receivable 2,002,597 901,959 930,255 3,441,666
Deferred organization expenses (Note 1D) 5,037 4,978 5,807 6,791
------------ ------------- ----------- ------------
Total assets $148,441,622 $ 65,027,827 $58,935,585 $193,973,707
------------ ------------- ----------- ------------
LIABILITIES:
Due to Bank $ -- $ -- $ 230,000 $ --
Demand note payable (Note 5) -- -- -- 795,000
Payable for investments purchased 2,012,175 737,459 -- 1,423,116
Payable for when issued securities (Note 1F) -- 2,872,768 -- --
Payable for daily variation margin on open
financial futures contracts (Note 1E) 32,063 -- 28,500 --
Payable to affiliates --
Trustees' fees 1,339 1,009 1,009 1,779
Custodian fees 3,011 1,770 1,000 1,500
Accrued expenses 2,113 3,153 1,773 4,390
------------ ------------ ----------- ------------
Total liabilities $ 2,050,701 $ 3,616,159 $ 262,282 $ 2,225,785
------------ ------------ ----------- ------------
NET ASSETS applicable to investors' interest in
Portfolio $146,390,921 $ 61,411,668 $58,673,303 $191,747,922
============ ============ =========== ============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $143,780,409 $ 59,067,557 $58,178,854 $184,353,760
Unrealized appreciation of investments and
financial futures contracts (computed on the
basis of identified cost) 2,610,512 2,344,111 494,449 7,394,162
------------ ------------ ----------- ------------
Total $146,390,921 $ 61,411,668 $58,673,303 $191,747,922
============ ============ =========== ============
</TABLE>
See notes to financial statements
80
<PAGE> 81
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALABAMA ARKANSAS GEORGIA KENTUCKY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income (Note 1B) $ 7,218,221 $ 4,986,371 $ 7,872,386 $ 8,874,638
----------- ----------- ----------- -----------
Expenses --
Investment adviser fee (Note 2) $ 466,320 $ 296,231 $ 521,159 $ 595,483
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 9,218 6,366 8,154 8,932
Custodian fee (Note 2) 16,491 23,999 1,500 35,132
Legal and accounting services 21,471 19,471 21,476 21,478
Amortization of organization expenses (Note 1D) 1,569 1,504 2,194 1,332
Miscellaneous 26,725 24,449 26,661 32,366
----------- ----------- ----------- -----------
Total expenses $ 541,794 $ 372,020 $ 581,144 $ 694,723
----------- ----------- ----------- -----------
Net investment income $ 6,676,427 $ 4,614,351 $ 7,291,242 $ 8,179,915
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss --
Investment transactions (identified cost basis) $(1,890,084) $(1,454,374) $(4,616,970) $ (885,272)
Financial futures contracts (1,483,364) (1,063,446) (2,695,409) (1,829,860)
----------- ----------- ----------- -----------
Net realized loss on investments $(3,373,448) $(2,517,820) $(7,312,379) $(2,715,132)
----------- ----------- ----------- -----------
Change in unrealized appreciation (depreciation) --
Investments $ 5,912,494 $ 3,484,695 $ 6,554,692 $ 4,974,832
Financial futures contracts (28,264) (20,556) 124,961 (32,432)
----------- ----------- ----------- -----------
Net unrealized appreciation $ 5,884,230 $ 3,464,139 $ 6,679,653 $ 4,942,400
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments $ 2,510,782 $ 946,319 $ (632,726) $ 2,227,268
----------- ----------- ----------- -----------
Net increase in net assets from operations $ 9,187,209 $ 5,560,670 $ 6,658,516 $10,407,183
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
81
<PAGE> 82
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income (Note 1B) $ 2,046,922 $ 7,192,618 $ 5,770,761 $12,179,577
----------- ----------- ----------- -----------
Expenses --
Investment adviser fee (Note 2) $ 73,471 $ 459,907 $ 353,176 $ 851,448
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 1,618 8,154 5,709 10,743
Custodian fee (Note 2) 975 16,357 35,917 1,500
Interest expense (Note 5) 6,263 -- 13,828 --
Legal and accounting services 15,814 21,471 19,565 26,148
Bond pricing 6,060 -- -- --
Amortization of organization expenses (Note 1D) 1,355 1,518 1,405 3,365
Miscellaneous 1,842 25,883 14,442 35,974
----------- ----------- ----------- -----------
Total expenses $ 107,398 $ 533,290 $ 444,042 $ 929,178
Deduct reduction of investment adviser fee
(Note 2) 36,188 -- -- --
----------- ----------- ----------- -----------
Net expenses $ 71,210 $ 533,290 $ 444,042 $ 929,178
----------- ----------- ----------- -----------
Net investment income $ 1,975,712 $ 6,659,328 $ 5,326,719 $11,250,399
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss --
Investment transactions (identified cost basis) $ (705,098) $(1,843,753) $(2,564,654) $(4,108,823)
Financial futures contracts (964,523) (1,471,264) (474,286) (4,996,239)
----------- ----------- ----------- -----------
Net realized loss on investments $(1,669,621) $(3,315,017) $(3,038,940) $(9,105,062)
----------- ----------- ----------- -----------
Change in unrealized appreciation (depreciation) --
Investments $ 1,644,370 $ 4,940,542 $ 5,450,131 $ 8,883,601
Financial futures contracts 19,876 (26,976) 21,133 176,415
----------- ----------- ----------- -----------
Net unrealized appreciation $ 1,664,246 $ 4,913,566 $ 5,471,264 $ 9,060,016
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments $ (5,375) $ 1,598,549 $ 2,432,324 $ (45,046)
----------- ----------- ----------- -----------
Net increase in net assets from
operations $ 1,970,337 $ 8,257,877 $ 7,759,043 $11,205,353
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
82
<PAGE> 83
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income (Note 1B) $ 8,920,231 $ 3,791,815 $ 3,518,306 $11,988,135
----------- ----------- ----------- -----------
Expenses --
Investment adviser fee (Note 2) $ 609,837 $ 198,498 $ 177,788 $ 834,074
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 8,155 6,212 7,096 10,743
Custodian fee (Note 2) 56,584 16,809 13,033 1,500
Legal and accounting services 21,580 19,464 19,554 26,931
Amortization of organization expenses
(Note 1D) 2,091 1,442 2,358 2,763
Miscellaneous 35,210 23,093 14,329 30,392
----------- ----------- ----------- -----------
Total expenses $ 733,457 $ 265,518 $ 234,158 $ 906,403
----------- ----------- ----------- -----------
Net investment income $ 8,186,774 $ 3,526,297 $ 3,284,148 $11,081,732
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss --
Investment transactions (identified cost
basis) $(3,335,521) $(2,946,871) $(1,045,028) $(3,901,492)
Financial futures contracts (1,035,171) (1,080,892) (866,769) (3,709,160)
----------- ----------- ----------- -----------
Net realized loss on investments $(4,370,692) $(4,027,763) $(1,911,797) $(7,610,652)
----------- ----------- ----------- -----------
Change in unrealized appreciation (depreciation) --
Investments $ 7,376,821 $ 4,213,366 $ 2,650,662 $10,104,183
Financial futures contracts (4,860) 53,292 (23,513) 175,497
----------- ----------- ----------- -----------
Net unrealized appreciation $ 7,371,961 $ 4,266,658 $ 2,627,149 $10,279,680
----------- ----------- ----------- -----------
Net realized and unrealized gain on
investments $ 3,001,269 $ 238,895 $ 715,352 $ 2,669,028
----------- ----------- ----------- -----------
Net increase in net assets from
operations $11,188,043 $ 3,765,192 $ 3,999,500 $13,750,760
=========== =========== =========== ============
</TABLE>
See notes to financial statements
83
<PAGE> 84
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALABAMA ARKANSAS GEORGIA KENTUCKY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 6,676,427 $ 4,614,351 $ 7,291,242 $ 8,179,915
Net realized loss on investment transactions (3,373,448) (2,517,820) (7,312,379) (2,715,132)
Change in unrealized appreciation of investments 5,884,230 3,464,139 6,679,653 4,942,400
------------ ------------ ------------ ------------
Net increase in net assets from operations $ 9,187,209 $ 5,560,670 $ 6,658,516 $ 10,407,183
------------ ------------ ------------ ------------
Capital transactions --
Contributions $ 15,271,028 $ 7,773,910 $ 12,224,959 $ 13,579,954
Withdrawals (23,135,575) (14,716,313) (33,658,605) (23,928,447)
------------ ------------ ------------ ------------
Decrease in net assets resulting from
capital transactions $ (7,864,547) (6,942,403) $(21,433,646) $(10,348,493)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets $ 1,322,662 $ (1,381,733) $(14,775,130) $ 58,690
NET ASSETS:
At beginning of year 117,163,391 82,916,735 137,723,797 145,209,936
------------ ------------ ------------ ------------
At end of year $118,486,053 $ 81,535,002 $122,948,667 $145,268,626
============ ============ ============ ============
</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 $ 1,975,712 $ 6,659,328 $ 5,326,719 $ 11,250,399
Net realized loss on investment transactions (1,669,621) (3,315,017) (3,038,940) (9,105,062)
Change in unrealized appreciation of
investments 1,664,246 4,913,566 5,471,264 9,060,016
----------- ------------ ----------- ------------
Net increase in net assets from operations $ 1,970,337 $ 8,257,877 $ 7,759,043 $ 11,205,353
----------- ------------ ----------- ------------
Capital transactions --
Contributions $ 6,817,148 $ 14,770,279 $ 8,450,749 $ 18,834,488
Withdrawals (5,902,141) (25,879,697) (18,215,122) (34,633,470)
----------- ------------ ----------- ------------
Increase (decrease) in net assets resulting
from capital transactions $ 915,007 $(11,109,418) $(9,764,373) $(15,798,982)
----------- ------------ ----------- ------------
Net increase (decrease) in net assets $ 2,885,344 $ (2,851,541) $(2,005,330) $ (4,593,629)
NET ASSETS:
At beginning of year 31,423,335 117,855,717 95,167,433 199,772,353
----------- ------------ ----------- ------------
At end of year $34,308,679 $115,004,176 $93,162,103 $195,178,724
=========== ============ =========== =============
</TABLE>
See notes to financial statements
84
<PAGE> 85
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 8,186,774 $ 3,526,297 $ 3,284,148 $ 11,081,732
Net realized loss on investment transactions (4,370,692) (4,027,763) (1,911,797) (7,610,652)
Change in unrealized appreciation of
investments 7,371,961 4,266,658 2,627,149 10,279,680
------------ ------------- ----------- ------------
Net increase in net assets from operations $ 11,188,043 $ 3,765,192 $ 3,999,500 $ 13,750,760
------------ ------------ ----------- ------------
Capital transactions --
Contributions $ 12,298,876 $ 9,608,721 $ 7,946,656 $ 24,173,920
Withdrawals (30,215,219) (14,226,934) (9,768,536) (40,695,946)
------------ ------------ ----------- ------------
Decrease in net assets resulting from capital
transactions $(17,916,343) $ (4,618,213) $(1,821,880) $(16,522,026)
------------ ------------ ----------- ------------
Net increase (decrease) in net assets $ (6,728,300) $ (853,021) $ 2,177,620 $ (2,771,266)
NET ASSETS:
At beginning of year 153,119,221 62,264,689 56,495,683 194,519,188
------------ ------------ ----------- ------------
At end of year $146,390,921 $ 61,411,668 $58,673,303 $191,747,922
============ ============ =========== ============
</TABLE>
See notes to financial statements
85
<PAGE> 86
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<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
------------ ----------- ------------ ------------
Net 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>
* For the eleven months ended August 31, 1994 (Note 7).
** For the seven months ended August 31, 1994.
See notes to financial statements
86
<PAGE> 87
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 1994
- --------------------------------------------------------------------------------
<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
----------- ------------ ----------- -------------
Net 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
=========== ============ =========== ============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<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
------------ ----------- ----------- ------------
Net 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
============ =========== =========== ============
</TABLE>
* For the eleven months ended August 31, 1994 (Note 7).
** For the seven months ended August 31, 1994.
See notes to financial statements
87
<PAGE> 88
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended September 30, 1993*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALABAMA GEORGIA KENTUCKY MARYLAND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 2,179,903 $ 3,313,669 $ 3,277,040 $ 2,481,633
Net realized gain (loss) on investment
transactions (464,133) 73,591 (535,372) (224,803)
Change in unrealized appreciation of investments 3,994,097 5,637,256 6,325,963 5,066,445
------------ ------------ ------------ ------------
Net increase in net assets from operations $ 5,709,867 $ 9,024,516 $ 9,067,631 $ 7,323,275
------------ ------------ ------------ ------------
Capital transactions --
Contributions $ 81,040,375 $116,822,592 $115,630,800 $ 94,448,256
Withdrawals (3,222,460) (6,635,746) (6,862,211) (7,658,267)
------------ ------------ ------------ ------------
Increase in net assets resulting from capital
transactions $ 77,817,915 $110,186,846 $108,768,589 $ 86,789,989
------------ ------------ ------------ ------------
Net increase in net assets $ 83,527,782 $119,211,362 $117,836,220 $ 94,113,264
NET ASSETS:
At beginning of period 100,020 100,020 100,020 100,020
------------ ------------ ------------ ------------
At end of period $ 83,627,802 $119,311,382 $117,936,240 $ 94,213,284
============ ============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MISSOURI NORTH CAROLINA OREGON TENNESSEE VIRGINIA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,996,871 $ 4,992,912 $ 3,445,924 $ 926,224 $ 5,091,661
Net realized gain (loss) on
investment transactions (201,650) (495,879) 1,139,513 454,397 (192,625)
Change in unrealized
appreciation of investments 4,258,226 8,668,236 5,331,993 1,499,177 7,938,495
----------- ------------ ------------ ------------ ------------
Net increase in net assets
from operations $ 6,053,447 $ 13,165,269 $ 9,917,430 $ 2,879,798 $ 12,837,531
----------- ------------- ------------ ------------ ------------
Capital transactions --
Contributions $71,730,941 $177,359,369 $142,413,151 $ 41,826,943 $170,140,465
Withdrawals (2,611,625) (18,090,426) (24,933,909) (5,541,090) (8,817,517)
----------- ------------- ------------ ------------ ------------
Increase in net assets
resulting from capital
transactions $69,119,316 $159,268,943 $117,479,242 $ 36,285,853 $161,322,948
----------- ------------ ------------ ------------ ------------
Net increase in net
assets $75,172,763 $172,434,212 $127,396,672 $ 39,165,651 $174,160,479
NET ASSETS:
At beginning of period 100,020 100,020 100,020 100,020 100,020
----------- ------------ ------------ ------------ ------------
At end of period $75,272,783 $172,534,232 $127,496,692 $ 39,265,671 $174,260,499
=========== ============ ============ ============ ============
</TABLE>
* For the period from the start of business, February 1, 1993, to September 30,
1993.
See notes to financial statements
88
<PAGE> 89
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALABAMA PORTFOLIO ARKANSAS PORTFOLIO
----------------------------------- -----------------------
YEAR ENDED YEAR ENDED
----------------------------------- -----------------------
AUGUST 31, AUGUST 31, SEPT. 30, AUGUST 31, AUGUST 31,
1995 1994* 1993** 1995 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 5.77% 5.37%+ 5.52%+ 5.69% 5.60%+
Portfolio Turnover 51% 26% 10% 23% 16%
NET ASSETS, end of period (000 omitted) $118,486 $117,163 $83,628 $ 81,535 $ 82,917
</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>
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
----------------------------------- ------------------------------------
YEAR ENDED YEAR ENDED
----------------------------------- ------------------------------------
AUGUST 31, AUGUST 31, SEPT. 30, AUGUST 31, AUGUST 31, SEPT. 30,
1995 1994* 1993** 1995 1994* 1993**
---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
RATIOS (As a percentage of average
daily net assets):
Net expenses 0.46% 0.44%+ 0.40%+ 0.49% 0.46%+ 0.40%+
Net investment income 5.73% 5.37%+ 5.37%+ 5.75% 5.39%+ 5.40%+
Portfolio Turnover 48% 45% 35% 30% 21% 11%
NET ASSETS, end of period (000
omitted) $122,949 $137,724 $119,311 $145,269 $145,210 $117,936
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994 (Note 7).
** For the period from the start of business, February 1, 1993, to September
30, 1993.
*** For the seven months ended August 31, 1994.
See notes to financial statements
89
<PAGE> 90
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOUISIANA PORTFOLIO MARYLAND PORTFOLIO
----------------------- -----------------------------------
YEAR ENDED YEAR ENDED
----------------------- -----------------------------------
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, SEPT. 30,
1995 1994*** 1995 1994* 1993**
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
RATIOS (As a percentage of average
daily net assets)++:
Net expenses 0.22% 0.14%+ 0.47% 0.44%+ 0.36%+
Net investment income 6.06% 5.86%+ 5.79% 5.44%+ 5.41%+
Portfolio Turnover 46% 21% 30% 41% 34%
NET ASSETS, end of period (000 omitted) $34,309 $31,423 $115,004 $117,856 $94,213
</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>
RATIOS (As a percentage of average net assets):
Expenses 0.33% 0.33%+ 0.38%+
Net investment income 5.95% 5.67%+ 5.39%+
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MISSOURI PORTFOLIO NORTH CAROLINA PORTFOLIO
----------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED
----------------------------------- -----------------------------------
AUGUST 31, AUGUST 31, SEPT. 30, AUGUST 31, AUGUST 31, SEPT. 30,
1995 1994* 1993** 1995 1994* 1993**
---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
RATIOS (As a percentage of average
daily net assets):
Net expenses 0.48% 0.45%+ 0.40%+ 0.48% 0.46%+ 0.43%+
Net investment income 5.76% 5.36%+ 5.36%+ 5.78% 5.40%+ 5.43%+
Portfolio Turnover 24% 28% 6% 33% 37% 21%
NET ASSETS, end of period (000
omitted) $93,162 $95,167 $75,273 $195,179 $199,772 $172,534
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994 (Note 7).
** For the period from the start of business, February 1, 1993, to September
30, 1993.
*** For the seven months ended August 31, 1994.
See notes to financial statements
90
<PAGE> 91
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SOUTH CAROLINA
OREGON PORTFOLIO PORTFOLIO
----------------------------------- -----------------------
YEAR ENDED YEAR ENDED
----------------------------------- -----------------------
AUGUST 31, AUGUST 31, SEPT. 30, AUGUST 31, AUGUST 31,
1995 1994* 1993** 1995 1994***
---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
RATIOS (As a percentage of average
daily net assets):
Net expenses 0.50% 0.46%+ 0.43%+ 0.44% 0.37%+
Net investment income 5.60% 5.26%+ 5.30%+ 5.81% 5.47%+
Portfolio Turnover 22% 15% 32% 75% 23%
NET ASSETS, end of period (000 omitted) $146,391 $153,119 $127,497 $61,412 $62,265
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TENNESSEE PORTFOLIO VIRGINIA PORTFOLIO
----------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED
----------------------------------- -----------------------------------
AUGUST 31, AUGUST 31, SEPT. 30, AUGUST 31, AUGUST 31, SEPT. 30,
1995 1994* 1993** 1995 1994* 1993**
---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
RATIOS (As a percentage of average
daily net assets)++:
Net expenses 0.41% 0.36%+ 0.08%+ 0.48% 0.46%+ 0.43%+
Net investment income 5.81% 5.49%+ 5.60%+ 5.81% 5.49%+ 5.49%+
Portfolio Turnover 20% 10% 69% 38% 48% 29%
NET ASSETS, end of period (000
omitted) $58,673 $56,496 $39,266 $191,748 $194,519 $174,260
</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>
RATIOS (As a percentage of average daily net assets):
Expenses 0.31%+
Net investment income 5.37%+
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994 (Note 7).
** For the period from the start of business, February 1, 1993, to September
30, 1993.
*** For the seven months ended August 31, 1994.
See notes to financial statements
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<PAGE> 92
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Notes to Financial Statements
- --------------------------------------------------------------------------------
(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.
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<PAGE> 93
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- --------------------------------------------------------------------------------
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to each Portfolio.
The fee is based upon a percentage of average daily net assets plus a percentage
of gross income (i.e., income other than gains from the sale of securities).
For the year ended August 31, 1995, each Portfolio paid advisory fees as
follows:
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT EFFECTIVE RATE*
--------------------------------- -------- ---------------
<S> <C> <C>
Alabama $466,320 0.40%
Arkansas 296,231 0.37%
Georgia 521,159 0.41%
Kentucky 595,483 0.42%
Louisiana 73,471 0.23%
Maryland 459,907 0.40%
Missouri 353,176 0.38%
North Carolina 851,448 0.44%
Oregon 609,837 0.42%
South Carolina 198,498 0.33%
Tennessee 177,788 0.31%
Virginia 834,074 0.44%
</TABLE>
* Advisory fees paid as a percentage of average daily net assets.
To enhance the net income of the Louisiana Portfolio, BMR made a partial
reduction in its fee in the amount of $36,188 for the year ended August 31,
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 percentage of their annual fees in
accordance with the terms of the Trustees Deferred Compensation Plan. For the
year ended August 31, 1995, no significant amounts have been deferred.
- --------------------------------------------------------------------------------
(3) INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, for the year ended August 31, 1995 were as follows:
<TABLE>
<CAPTION>
ALABAMA PORTFOLIO ARKANSAS PORTFOLIO GEORGIA PORTFOLIO KENTUCKY PORTFOLIO
------------------- ------------------------ ------------------- ------------------------
<S> <C> <C> <C> <C>
Purchases $57,406,180 $18,763,229 $59,548,573 $42,276,757
Sales 61,142,289 21,156,422 74,913,164 47,472,754
</TABLE>
<TABLE>
<CAPTION>
LOUISIANA PORTFOLIO MARYLAND PORTFOLIO MISSOURI PORTFOLIO NORTH CAROLINA PORTFOLIO
------------------- ------------------------ ------------------- ------------------------
<S> <C> <C> <C> <C>
Purchases $15,588,103 $33,410,454 $22,283,879 $63,087,915
Sales 15,182,545 38,920,632 26,604,957 70,378,217
</TABLE>
<TABLE>
<CAPTION>
OREGON PORTFOLIO SOUTH CAROLINA PORTFOLIO TENNESSEE PORTFOLIO VIRGINIA PORTFOLIO
------------------- ------------------------ ------------------- ------------------------
<S> <C> <C> <C> <C>
Purchases $31,234,927 $45,794,201 $12,215,128 $66,007,726
Sales 39,597,788 45,177,886 10,940,645 73,486,977
</TABLE>
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<PAGE> 94
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- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in value of the investments
owned by each Portfolio at August 31, 1995, as computed on a federal income tax
basis, are as follows:
<TABLE>
<CAPTION>
ALABAMA ARKANSAS GEORGIA KENTUCKY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Aggregate Cost $112,610,415 $79,275,204 $115,913,957 $141,197,528
------------ ------------ ------------ ------------
Gross unrealized
appreciation $ 4,365,636 $ 2,221,739 $ 3,989,210 $ 4,126,437
Gross unrealized
depreciation 496,195 677,082 559,835 2,118,720
------------ ------------ ------------ ------------
Net unrealized
appreciation $ 3,869,441 $ 1,544,657 $ 3,429,375 $ 2,007,717
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
LOUISIANA MARYLAND MISSOURI NORTH CAROLINA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Aggregate Cost $33,349,873 $112,178,823 $88,354,959 $183,382,988
----------- ------------ ----------- ------------
Gross unrealized
appreciation $ 705,823 $ 3,928,104 $ 3,711,528 $ 8,278,474
Gross unrealized
depreciation 444,912 1,955,206 436,068 997,317
----------- ------------ ----------- ------------
Net unrealized
appreciation $ 260,911 $ 1,972,898 $ 3,275,460 $ 7,281,157
=========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
OREGON SOUTH CAROLINA TENNESSEE VIRGINIA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
Aggregate Cost $143,369,782 $60,604,156 $57,120,750 $179,383,019
------------ ----------- ----------- ------------
Gross unrealized
appreciation $ 4,380,388 $ 2,552,611 $ 1,185,756 $ 8,251,752
Gross unrealized
depreciation 1,731,019 208,500 656,768 857,590
------------ ----------- ----------- ------------
Net unrealized
appreciation $ 2,649,369 $ 2,344,111 $ 528,988 $ 7,394,162
============ =========== =========== ============
</TABLE>
94
<PAGE> 95
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- --------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Portfolios participate with other portfolios and funds managed by BMR and
EVM in a $120 million unsecured line of credit agreement with a bank. The line
of credit consists of a $20 million committed facility and a $100 million
discretionary facility. Each Portfolio may temporarily borrow up to 5% of its
total assets to satisfy redemption requests or settle transactions. Interest is
charged to each portfolio or fund based on its borrowings at an amount above
either the bank's adjusted certificate of deposit rate, a variable adjusted
certificate of deposit rate, or a federal funds effective rate. In addition, a
fee computed at an annual rate of 1/4 of 1% on the $20 million committed
facility and on the daily unused portion of the $100 million discretionary
facility is allocated among the participating funds and portfolios at the end of
each quarter. At August 31, 1995, the Alabama Portfolio, Arkansas Portfolio,
Maryland Portfolio, Missouri Portfolio and Virginia Portfolio had balances
outstanding pursuant to this line of credit of $103,000, $444,000, $603,000,
$524,000 and $795,000, respectively. For the Louisiana Portfolio the average
daily loan balance for the year ended August 31, 1995 was $526,873 and the
average daily interest rate was 7.17%. The maximum borrowings during the year
ended August 31, 1995 was $1,803,000. The Portfolios, exclusive of the Louisiana
Portfolio, did not have any significant borrowings or allocated fees during the
year ended August 31, 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.
A summary of obligations under these financial instruments at August 31, 1995 is
as follows:
<TABLE>
<CAPTION>
FUTURES CONTRACTS NET UNREALIZED
PORTFOLIO EXPIRATION DATE CONTRACTS POSITION DEPRECIATION
- ---------------- ----------------- ------------------------ -------- --------------
<S> <C> <C> <C> <C>
Alabama 12/95 112 U.S. Treasury Bonds Short $ 63,034
Arkansas 12/95 120 U.S. Treasury Bonds Short 45,023
Kentucky 12/95 140 U.S. Treasury Bonds Short 78,791
Louisiana 12/95 20 U.S. Treasury Bonds Short 15,251
Maryland 12/95 112 U.S. Treasury Bonds Short 63,033
Oregon 12/95 54 U.S. Treasury Bonds Short 38,857
Tennessee 12/95 48 U.S. Treasury Bonds Short 34,539
</TABLE>
At August 31, 1995 each Portfolio had sufficient cash and/or securities to cover
margin requirements on open futures contracts.
The Georgia Portfolio, Missouri Portfolio, North Carolina Portfolio, South
Carolina Portfolio and Virginia Portfolio had no obligations outstanding at
August 31, 1995.
- --------------------------------------------------------------------------------
(7) CHANGE IN FISCAL YEAR
The Portfolios changed their fiscal year end from September 30, to August 31,
effective August 31, 1994.
95
<PAGE> 96
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
TO THE TRUSTEES AND INVESTORS OF:
ALABAMA TAX FREE PORTFOLIO
ARKANSAS TAX FREE PORTFOLIO
GEORGIA TAX FREE PORTFOLIO
KENTUCKY TAX FREE PORTFOLIO
LOUISIANA TAX FREE PORTFOLIO
MARYLAND TAX FREE PORTFOLIO
MISSOURI TAX FREE PORTFOLIO
NORTH CAROLINA TAX FREE PORTFOLIO
OREGON TAX FREE PORTFOLIO
SOUTH CAROLINA TAX FREE PORTFOLIO
TENNESSEE TAX FREE PORTFOLIO
VIRGINIA TAX FREE PORTFOLIO
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Alabama Tax Free Portfolio, Arkansas Tax Free
Portfolio, Georgia Tax Free Portfolio, Kentucky Tax Free Portfolio, Louisiana
Tax Free Portfolio, Maryland Tax Free Portfolio, Missouri Tax Free Portfolio,
North Carolina Tax Free Portfolio, Oregon Tax Free Portfolio, South Carolina Tax
Free Portfolio, Tennessee Tax Free Portfolio and Virginia Tax Free Portfolio as
of August 31, 1995, and the related statements of operations for the year then
ended, the statements of changes in net assets and the supplementary data for
the years ended August 31, 1995 and 1994 and the year ended September 30, 1993.
These financial statements and supplementary data are the responsibility of the
Trusts' management. Our responsibility is to express an opinion on the financial
statements and supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at August
31, 1995, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other audit procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of Alabama Tax Free Portfolio,
Arkansas Tax Free Portfolio, Georgia Tax Free Portfolio, Kentucky Tax Free
Portfolio, Louisiana Tax Free Portfolio, Maryland Tax Free Portfolio, Missouri
Tax Free Portfolio, North Carolina Tax Free Portfolio, Oregon Tax Free
Portfolio, South Carolina Tax Free Portfolio, Tennessee Tax Free Portfolio and
Virginia Tax Free Portfolio at August 31, 1995, the results of their operations,
the changes in their net assets and their supplementary data for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
SEPTEMBER 29, 1995
96
<PAGE> 97
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Investment Management
- --------------------------------------------------------------------------------
FUNDS OFFICERS INDEPENDENT TRUSTEES
THOMAS J. FETTER DONALD R. DWIGHT
President President, Dwight Partners, Inc.
Chairman, Newspapers of New
JAMES B. HAWKES England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
ROBERT B. MACINTOSH Jacob H. Schiff Professor of
Vice President Investment Banking,
Harvard University Graduate
JAMES L. O'CONNOR School of Business
Treasurer Administration
THOMAS OTIS NORTON H. REAMER
Secretary President and Director, United
Asset Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
- --------------------------------------------------------------------------------
PORTFOLIOS OFFICERS INDEPENDENT TRUSTEES
THOMAS J. FETTER DONALD R. DWIGHT
President President, Dwight Partners, Inc.
Chairman, Newspapers of New
JAMES B. HAWKES England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
ROBERT B. MACINTOSH Jacob H. Schiff Professor of
Vice President of Alabama, Investment Banking, Harvard
Arkansas, Georgia, Kentucky, University Graduate School of
Louisiana, Maryland, Missouri, Business Administration
North Carolina, Oregon, South
Carolina, Tennessee and NORTON H. REAMER
Virginia Tax Free Portfolios President and Director, United
Asset Management Corporation
NICOLE ANDERES
Vice President and Portfolio JOHN L. THORNDIKE
Manager of Louisiana Tax Director, Fiduciary Company
Free Portfolios Incorporated
TIMOTHY T. BROWSE JACK L. TREYNOR
Vice President and Portfolio Investment Adviser and
Manager of Alabama, Arkansas, Consultant
Kentucky and Maryland
Tax Free Portfolios
CYNTHIA J. CLEMSON
Vice President and Portfolio
Manager of Missouri, Oregon
and Tennessee Tax Free
Portfolios
DAVID C. REILLY
Vice President and Portfolio
Manager of Georgia, North
Carolina, South Carolina and
Virginia Tax Free Portfolios
97
<PAGE> 98
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- --------------------------------------------------------------------------------
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
98
<PAGE> 99
The Eaton Vance Municipals Trust
For the Portfolios:
Alabama Tax Free Fund
Arkansas Tax Free Fund
Georgia Tax Free Fund
Kentucky Tax Free Fund
Louisiana Tax Free Fund
Maryland Tax Free Fund
Missouri Tax Free Fund
North Carolina Tax Free Fund
Oregon Tax Free Fund
South Carolina Tax Free Fund
Tennessee Tax Free Fund
Virginia Tax Free Fund
[LOGO]
Annual Shareholder Report
August 31, 1995
Portfolio Investment Adviser
Boston Management and Research
24 Federal Street
Boston, MA 02110
Fund Administrator
Eaton Vance Management
24 Federal Street
Boston, MA 02110
(617) 482-8260
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
