<PAGE> 1
EATON VANCE MUNICIPALS TRUST
FOR THE FUNDS:
- EV Marathon Arizona Municipals Fund
- EV Marathon Colorado Municipals Fund
- EV Marathon Connecticut Municipals Fund
- EV Marathon Michigan Municipals Fund
- EV Marathon Minnesota Municipals Fund
- EV Marathon New Jersey Municipals Fund
- EV Marathon Pennsylvania Municipals Fund
- EV Marathon Texas Municipals Fund
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[EATON VANCE LOGO]
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Semi-Annual Shareholder Report
January 31, 1996
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
ITEM PAGE
<S> <C>
One-year results ..................................................... 2
President's letter to shareholders ................................... 3
Management Reports:
EV Marathon Arizona Municipals Fund .......................... 4
EV Marathon Colorado Municipals Fund ......................... 5
EV Marathon Connecticut Municipals Fund ...................... 6
EV Marathon Michigan Municipals Fund ......................... 7
EV Marathon Minnesota Municipals Fund ........................ 8
EV Marathon New Jersey Municipals Fund ....................... 9
EV Marathon Pennsylvania Municipals Fund ..................... 10
EV Marathon Texas Municipals Fund ............................ 11
Financial Results ............................................ 12
</TABLE>
RESULTS FOR THE SIX MONTHS ENDING JANUARY 31, 1996
<TABLE>
<CAPTION>
Fund's If your The after-
Total Return Dividends NAV distribution combined tax equivalent
(Six months paid by Fund per share rate at Federal & state yield you
ended 1/31/96) (During period) at 1/31/96 1/31/96 tax rate is... would need is...
-------------- --------------- ---------- ------------ --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
EV Marathon ARIZONA 8.0% $0.247 $11.11 4.46% 40.42% 7.43%
Municipals Fund
EV Marathon COLORADO 8.0% $0.246 $10.57 4.66% 39.20% 7.63%
Municipal Funds
EV Marathon CONNECTICUT 7.3% $0.237 $10.45 4.53% 38.88% 7.39%
Municipals
EV Marathon MICHIGAN 8.2% $0.247 $10.83 4.57% 41.44% 7.76%
Municipals Fund
EV Marathon MINNESOTA 7.4% $0.237 $10.44 4.52% 41.44% 7.68%
Municipals Fund
EV Marathon NEW JERSEY 7.0% $0.255 $10.82 4.71% 40.21% 7.86%
Municipals Fund
EV Marathon PENNSYLVANIA 7.1% $0.254 $10.79 4.73% 37.79% 7.59%
Municipals Fund
EV Marathon TEXAS 7.4% $0.256 $10.78 4.74% 36.00% 7.39%
Municipals
</TABLE>
2
<PAGE> 3
TO SHAREHOLDERS:
The municipal bond market rallied strongly throughout 1995, gaining back most of
the losses of the previous year. Twice during the year, the Federal Reserve
lowered short-term interest rates, further buoying the market.
Realistically, it may be difficult for the market to match last year's gains.
Still, there are many reasons to be optimistic about the municipal bond market
in 1996 and to believe that an investment in municipal bonds represents very
good value and should be a part of a wise investor's fixed-income portfolio. *
The U.S. economy continues in its favorable pattern of slow growth and low
inflation, which are especially good signs for the municipal bond market.
Another plus for the market is the fact that if the Fed decides to make further
moves during 1996, it is more likely to lower rates than raise them.
During 1995 the municipal market underperformed the taxable market because of
concern about the possible passage of major tax reform legislation. Such
concerns are likely to persist this year, but we at Eaton Vance continue to
believe there is little chance that significant tax reform legislation, in the
form of a flat tax or value-added tax, will be enacted during the year.
While flat tax and other reform proposals will be debated, especially during the
Presidential campaigns, they are so controversial and sweeping that we believe
the process needed to secure agreement and subsequent passage of a plan is years
away.
At the same time, the Presidential campaigns will provide significant impetus to
proposals that should prove favorable to the bond market. There is no doubt that
the campaigns will focus attention on proposals to balance the budget and to
reduce the nation's structural deficit by cutting expenses. Any positive results
in these areas are likely to provide additional impetus to the bond market.
These factors have combined to produce a significant opportunity for municipal
bond investors. To the extent that fears about tax reform depress prices,
investors can enter the market at a discount. To the extent that budget reform
measures improve the economy, investors may be expected to reap the rewards
through a strengthening bond market.
As always, achieving investment rewards depends on an investor's willingness to
adopt a long-term investment horizon. That's why we at Eaton Vance believe
patience is a key to successful investing.
[Photo of Thomas J. Fetter]
Sincerely,
/s/Thomas J. Fetter
Thomas J. Fetter
President
March 20, 1996
* A portion of the Portfolios' income may be subject to
Federal alternative minimum tax.
3
<PAGE> 4
EV MARATHON ARIZONA MUNICIPALS FUND
Arizona's economy has mirrored that of the U.S. in the past year. While the rate
of expansion has moderated, the state's economy continues to post respectable,
non-inflationary growth, with unemployment remaining below the national average.
Arizona has enjoyed employment gains in recent months, with total employment
growing at a 4% annual rate in the final quarter of 1995. The Phoenix-Mesa area
continued to generate the strongest growth in the state. For the full year,
Arizona posted 5% job growth, slower than the robust 6.8% pace set in 1994, but
strong enough to rank the state third in the nation. More than one-half of the
new jobs were created in the services sector. However, economically-sensitive
cyclical industries were under pressure, exemplified by a slower retail sales
environment and a decline in commercial and residential contruction.
Arizona's population growth, which has fueled much of the state's recent
expansion, is expected to decline in coming years. But Arizona appears
well-positioned for the future, with an economy that is increasingly diversified
from its traditional mainstays of mining and agriculture. Having cut taxes, the
state could face a series of challenges if the national economy slows
dramatically in the coming year. However, Arizona's conservative financial
practices, as exemplified by the cost cuts of recent years and the state's solid
general fund balance should provide the comfort margin to keep the state on firm
financial footing.
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PORTFOLIO OVERVIEW
Based on market value as of January 31, 1996
<TABLE>
<S> <C>
Number of issues............................. 83
Average quality.............................. Aa-
Investment grade............................. 92.3%
Effective maturity........................... 12.05 yrs.
Largest sectors:
Utilities ............................................. 19.7%
Insured hospitals ..................................... 13.2*
General obligations ................................... 9.1
Insured general obligations ........................... 9.0*
Water & sewer ......................................... 7.0
</TABLE>
* Private insurance does not remove the market risk associated with
this investment.
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[Photo of Cynthia J. Clemson]
"With the economy slowing in recent months - GDP registered growth of only 0.9%
in the fourth quarter - I've pursued a barbell approach within the Portfolio. At
one end of the barbell are premium bonds, which increase the income to the
Portfolio while providing some defensive characteristics in the event of a rate
reversal. At the other end of the spectrum are low coupon bonds, which are more
sensitive to interest rate movements and should increase the potential for
capital appreciation if rates decline further.
"I've continued to avoid current coupon bonds, which typically have limited
upside potential. Given the continued limited supply of Arizona bonds, I've
added some non-rated bonds to the Portfolio. Non-rated issues often provide good
opportunities in terms of income and as strong credits. I've also focused on
improving the Portfolio's call protection, an increasingly important criterion
in today's market."
Cynthia J. Clemson - Portfolio Manager
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK:
Glendale, AZ Industrial
Development Authority
Thunderbird Graduate School
The American Graduate School of International Management ("Thunderbird"),
located in Glendale, northwest of Phoenix, is the world's oldest school
dedicated to the training of graduate students for international careers. The
school, which offers instruction in ten foreign languages as part of its
curriculum, enjoys a strong reputation overseas. Approximately 28% of its
student body and 20% of its faculty come from outside the U.S. A portion of the
proceeds of this bond, issued in 1994, was used to finance the renovation of
existing office space and the construction of a new dormitory and dining
facility. The remaining portion was used to refund a previous bond issue. The
bonds, non-rated by Moody's and rated AAA by S&P, have an attractive coupon of
7.125% and are an example of the Portfolio's increasing efforts to seek
opportunities in smaller, less widely followed issues.
4
<PAGE> 5
EV MARATHON COLORADO MUNICIPALS FUND
Colorado's economy managed to outperform the national economy again in 1995. The
state's unemployment rate has consistently remained below national averages. The
expansion in Colorado has accelerated, in part due to rapid growth in
population, which has risen more than 12% since 1990. Net migration to the state
has been positive in each of the past six years, reversing the outflow of
residents that characterized the energy-related downturn of the late 1980s. In
1995, 50,000 people moved into the state, which helped fuel a strong housing
market. The housing boom has added to construction employment, helping to offset
losses suffered since the completion of the massive Denver Airport project.
Personal income for Colorado rose 6.6% in 1995, significantly higher than the
national income levels.
Colorado's finances remain strong. The state has enjoyed solid revenue increases
over the past several years, paced by strong income tax and sales tax growth.
While revenues will likely fall short of those levels in coming years, they are
nonetheless expected to grow at a respectable 5%-to-6% pace. Meanwhile, the
state continues to benefit from its strict adherence to a 6% spending cap. It
appears that revenue growth in 1996 should, therefore, be more than sufficient
to offset increases in appropriated expenditures for education and health care
programs, and to maintain reserves at a comfortable level.
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PORTFOLIO OVERVIEW
Based on market value as of January 31, 1996
<TABLE>
<S> <C>
Number of issues ................................ 43
Average quality ................................. Aa-
Investment grade ................................ 99.0%
Effective maturity .............................. 13.98 yrs.
Largest sectors:
Insured general obligations ............................... 13.8%*
Insured hospitals ......................................... 13.8*
Housing ................................................... 13.3
Hospitals ................................................. 12.3
General obligations ....................................... 9.3
</TABLE>
* Private insurance does not remove the market risk associated with
this investment.
================================================================================
[Photo of David C. Reilly]
"I've essentially followed a dual approach to the market in recent months.
First, I've attempted to improve the structure of the Portfolio by increasing
call protection. The spate of supply that entered the market in 1993 now has
call protection of only seven years, which tends to constrain performance in
market rallies. I've focused on trading out of those issues in favor of bonds
with nine-to-ten year calls. This is a long-term process, but will fundamentally
improve the Fund's performance characteristics in the long run.
"My second major focus is on relative value. I've taken advantage of periods of
market strength to acquire selected current coupon bonds for the purpose of
adding incrementally to the Fund's yield. The Fund's relatively long duration
was a major advantage in that respect. I've been able to trade some discount
issues in favor of current coupons without significantly sacrificing the Fund's
upside potential in the event the market rallies at some point."
David C. Reilly - Portfolio Manager
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
City and County
of Denver, CO
Colorado Airport System
These bonds were issued by the City and County in 1994 to partially finance the
construction of the new Denver International Airport (DIA). While initially
plagued by delays due to problems with its automated baggage handling system,
the facility is now fully operational. Denver has become an increasingly busy
air travel market, ranking sixth in the U.S. in recent years. The bonds are
rated Baa/BBB by Moody's and S&P, respectively, and are secured by a pledge of
net revenues from the airport system. United Airlines, the nation's largest
airline and the new airport's major carrier, has indicated plans to increase its
daily departures from DIA. As traffic increases in coming years, credit quality
should improve. The bonds are a good example of the Portfolio's research-driven
investments in large infrastructure projects.
5
<PAGE> 6
EV MARATHON CONNECTICUT MUNICIPALS FUND
Connecticut has not yet fully recovered from the last recession and,
accordingly, continues to experience economic duress in several of its key
economic sectors. Employment growth remains moderate and is not expected to
reach pre-recession levels until the end of the decade, according to Standard &
Poor's. Construction activity and the trade and service sectors have generated
some job growth, but the state's manufacturing sector continues to decline.
Connecticut's defense industry, which ranked sixth in the nation in defense
contracts in 1989, declined to twelfth place in 1995. Finally, the insurance
sector, long an important segment in the state's financial industry, experienced
further downsizing. The industry restructured to meet the chal-lenges of
increasing competition and the likely prospect of health care reforms in coming
years. Tourism remains an area of growth. Southeastern Connecticut maintains
good momentum due to increased tourism and a jump in the number of visitors to
Foxwoods Casino.
Despite its slow recovery, Connecticut enjoys very high wealth levels and
maintains generally satisfactory financial results. In the state's 1996-97
biennial budget, the administration and legislature are attempting to control
the costs of social services, which have risen sharply in recent years. The
budget provides structural changes that should lead to long-term savings.
Meanwhile, while ongoing budgetary pressures remain, fiscal 1996 revenues should
receive a boost from the recent tax amnesty on income, sales, and corporate
taxes.
================================================================================
PORTFOLIO OVERVIEW
Based on market value as of January 31, 1996
<TABLE>
<S> <C>
Number of issues ................... 98
Average quality .................... AA-
Investment grade ................... 99.5%
Effective maturity ................. 21.4 yrs.
Largest sectors:
Healthcare (non-hospital) ............................. 12.3%
Insured hospitals 11.2*
Housing ............................................... 10.5
Education ............................................. 9.1
Solid waste ........................................... 8.1
</TABLE>
* Private insurance does not remove the market risk associated with
this investment.
================================================================================
- --------------------------------------------------------------------------------
[Photo of Nicole Anderes]
"Recent trades in this Portfolio have focused on adding value by capitalizing on
our excellent, in-house research capabilities. Devoting ourselves to in-depth
credit reviews, we have been able to invest in higher-yielding securities
without compromising our strict credit standards.
"Adding value through special situation offerings is time- intensive and, upon
close scrutiny, many situations fail to meet our criteria. However, one of the
hallmarks of professional management is providing shareholders the benefit of
more sophistocated opportunities than the generic insured municipal market may
offer. Such research-driven investments have been a special focus of the our
strategy in recent months."
Nicole Anderes - Portfolio Manager
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
Connecticut Higher
Education Facilities Authority
Bridgeport Hospital
The Connecticut Higher Education Facilities Authority issued these bonds for
Bridgeport Hospital. Despite the guarantee of a second tier insurer, these bonds
have modestly outperformed the market since their issuance in early December,
1995. Initially priced at a 45 basis point premium to the high-grade market, the
bonds recently have commanded bids in the secondary market at only a 35 basis
point premium. When investing in issues insured by second tier insurers, we
typically review the underlying credit as if the bonds were not insured. After a
comprehensive review, we felt comfortable with the Hospital's own credit, given
its dominant presence in the City, its pending affiliation with Yale-New Haven
Hospital, its recent profitability, and its strong foundation-based financial
support.
6
<PAGE> 7
EV MARATHON MICHIGAN MUNICIPALS FUND
After benefiting from a strong recovery in the auto and durable goods industries
in 1994, which fueled the state's large manufacturing sector, the Michigan
economy slowed somewhat in 1995. Nonetheless, the state's job growth exceeded
that of the nation in 1995. Michigan's unemployment rate, which last year fell
below the national average for the first time since 1966, was 5.3% at
year-end.The manufacturing boom was accompanied by a surge in service jobs,
including such areas as finance and outsourcing, which helped to boost total
employment. While Michigan has enjoyed a strong resurgence, the state remains
heavily reliant on national economic trends and, naturally, recent anecdotal
signs of weakness at the national level are troubling.
On the fiscal front, 1994-95 marked the third consecutive year of
stronger-than-expected revenue growth, resulting in sizable balances for both
the General Fund and School Aid Fund, and leaving the state in a very positive
financial position. A slower economy will likely mean lower revenue growth in
1996, although the state's financial condition should remain sound due to
budgetary restraints and cost-containment measures enacted in 1991. The state
has managed to replenish its financial reserves to the highest level in state
history. That should provide Michigan with an extra measure of safety and
stability as it faces significantly higher costs for education in coming years.
================================================================================
PORTFOLIO OVERVIEW
Based on market value as of January 31, 1996
<TABLE>
<S> <C>
Number of issues ................................. 98
Average quality .................................. AA-
Investment grade ................................. 96.9%
Effective maturity ............................... 14.55 yrs.
Largest sectors:
Insured general obligations ............................... 14.2%*
Hospitals ................................................. 13.5
Insured hospitals 10.1*
Industrial develop./pollution control ..................... 9.3
Insured water & sewer ..................................... 8.9*
</TABLE>
* Private insurance does not remove the market risk associated with
this investment.
================================================================================
- --------------------------------------------------------------------------------
[Photo of Timothy T. Browse]
"With a stronger climate for bonds, the Portfolio has become more constructive
in its approach. Increasingly, I have pursued a "barbell" strategy that
emphasizes high income on one hand, and increased upside potential on the other.
Accordingly, I have avoided the current-coupon segment of the market, which is
not likely to perform as strongly as the discount sector in a market rally.
"Another aspect of our strategy has been to add to the Portfolio's liquidity.
Consistent with that strategy, insured bonds rank prominently among the
Portfolio's largest weightings. Finally, our long-held practice of maintaining
good call protection has served the Portfolio well in recent months. Due to a
scarcity of bonds with attractive call provisions, the market is increasingly
rewarding bonds with good call protection, while punishing issues with less
favorable call features. Accordingly, we have tried to further improve our call
protection.
Timothy T. Browse - Portfolio Manager
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
Ferris State University
General Revenue and
Refunding Bonds
This bond was issued in 1995 as an obligation of Ferris State University,
founded in 1884 and located in Big Rapids, Michigan. A portion of the proceeds
was used to to refund a previous Ferris State issue, while another portion
financed the costs of capital improvements on the school's campus. The previous
bonds financed the construction costs of renovations to several dormitory and
dining facilities as well as improvements to classrooms and faculty office
space. The bond is backed by a pledge of the school's general revenues,
including tuition payments, instructional fees, student activity fees, and
revenues from dining and housing facilities. The bonds are insured by MBIA, one
of the nation's largest municipal bond insuers. With a coupon of 5.25%, the bond
is rated Aaa by Moody's and AAA by Standard & Poor's, and is an example of the
Portfolio's recent efforts to seek value in well-regarded, smaller credits.
7
<PAGE> 8
EV MARATHON MINNESOTA MUNICIPALS FUND
Minnesota's economy made further progress in 1995, as the labor market remained
tight, farm income and spending improved, and metal mining and tourism remained
strong. The state's computer and technology sectors are providing strong job
growth. In the farm sector, there is continued optimism, as land prices rose
about 3% in the past year, helped by declining interest rates. Crop prices
remained in an uptrend, which in turn encouraged further spending on farm
equipment. Activity in the natural resources area has been fairly strong, with
iron and copper mines operating at high capacity. An exception to the strong
climate for natural resources was paper and forest products. A slower national
economy caused weaker demand for paper and sent prices lower for the first time
in two years. The slump in construction caused some large lumber mills to
temporary close facilities.
As a result of the weaker economic environment, Minnesota's 1996-97 budget
projects a slowing of revenue growth. Expenditures are slated to grow by 8% over
the previous budget, a manageable increase given the level of growth in the
state's economy. The increases generally reflect higher costs for health
services, public safety, and debt service. The state continues to maintain a
moderate debt burden, a deep and increasingly diversified economic base.
Minnesota remains in sound financial condition for the year ahead.
================================================================================
PORTFOLIO OVERVIEW
Based on market value as of January 31, 1996
<TABLE>
<S> <C>
Number of issues ................................. 70
Average quality .................................. Aa
Investment grade ................................. 98.8%
Effective maturity ............................... 10.88 yrs.
Largest sectors:
Housing .................................................. 19.2%
Insured hospitals ........................................ 19.2*
Industrial develop./pollution control .................... 8.3
Hospitals ................................................ 7.3
Escrowed ................................................. 6.1
</TABLE>
* Private insurance does not remove the market risk associated with
this investment.
================================================================================
- --------------------------------------------------------------------------------
[Photo of David C. Reilly]
"I've essentially followed a dual approach to the market in recent months.
First, I've attempted to improve the structure of the Portfolio by increasing
call protection. The spate of supply that entered the market in 1993 now has
call protection of only seven years, which tends to constrain performance in
market rallies. I've focused on trading out of those issues in favor of bonds
with nine-to-ten year calls. This is a long-term process, but will fundamentally
improve the Fund's performance characteristics in the long run.
"My second major focus is on relative value. I've taken advantage of periods of
market strength to acquire selective current coupon bonds for the purpose of
adding incrementally to the Fund's yield. The Fund's relatively long duration
has been a major advantage in that respect. I've been able to trade some
discount issues in favor of current coupons without significantly sacrificing
the Fund's upside potential in the event the market rallies at some point."
David C. Reilly - Portfolio Manager
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
Seaway Port Authority
of Duluth, MN
Cargill, Inc.
These bonds were issued by the Seaway Port Authority in 1992 to refund a
previous issue from 1982. The proceeds of the original issue were used to
finance the construction of solid waste disposal facilities at Cargill, Inc.'s
headquarters in Duluth. Cargill, Inc. is one of the largest privately-held
companies in the world, and a major employer in the Duluth area. The company is
primarily engaged in the processing and sale of agricultural and industrial
commodities. Its product list includes a wide array of food products, such as
corn, oilseed, cocoa, sugar, flour and rice, as well as industrial commodities
such as steel and ferrous metals. Cargill employs more than 70,000 people in 66
countries and posted revenues in excess of $50 billion in fiscal year 1995.
While refunding bonds that financed a project widely viewed as critical for the
environment, the 1992 bonds provide the Portfolio an attractive 6.8% coupon.
8
<PAGE> 9
EV MARATHON NEW JERSEY MUNICIPALS FUND
New Jersey registered mediocre economic growth in 1995, especially when compared
to the robust gains of the previous year. Sluggish consumer spending, a
lackluster real estate market, and weak demand in the manufacturing sector
combined to dampen the economy. Despite a significant decline in interest rates,
home construction showed little sign of rebounding, with only about 23,000 new
housing units authorized in 1995, the lowest number since 1992. Weakness was
especially evident in manufacturing, financial services, and utilities.
Fortunately, job losses in those sectors were offset by additions among retail
trade, business services, and healthcare providers. Overall employment gains
totalled over 40,000 in 1995, well short of the 71,000 increase in 1994, but
enough to push the state unemployment rate below 6% at year-end.
New Jersey has felt the impact of income tax cuts - 30% over two years - that
threatens revenues and pushes many expenditures to the local level. While the
state budgets have been generally successful, tighter budgets have left little
margin for error. Sales tax and operating revenues have remained soft, while
social expenditures such as welfare, health care and public safety have
continued to post increases. To ease these budgetary pressures, the
administration and legislature have targeted certain areas for savings,
including the possibility of outsourcing selected human services.
================================================================================
PORTFOLIO OVERVIEW
Based on market value as of January 31, 1996
<TABLE>
<S> <C>
Number of issues .............................. 125
Average quality ............................... A
Investment grade .............................. 86.3%
Effective maturity ............................ 11.3 yrs.
Largest sectors:
General obligations ...................................... 13.5%
Transportation ........................................... 12.0
Industrial develop./pollution control .................... 8.3
Hospitals ................................................ 7.4
Solid waste .............................................. 6.9
</TABLE>
================================================================================
- --------------------------------------------------------------------------------
[Photo of Robert B. MacIntosh]
"The market for New Jersey municipal bonds continues to feature strong demand,
with little new issuance coming to market. I focused the Portfolio's investments
increasingly on utilities - electric, gas, water and sewer. Another large
weighting for the Portfolio was the Port Authority of New York and New Jersey, a
strong credit backed by user fees from a diverse range of services.
"Because of the impact of income tax cuts on the state and localities, I
generally pared back general obligations and lease bonds. I also cut back on
selected solid waste bonds that may soon face a cash flow crisis. The failure of
the courts to uphold flow control provisions could mean that some of these
facilities may soon be hard-pressed to meet interest payments. Finally,
improving call protection continued to be an important theme for the Portfolio.
As bonds are called investors typically must reinvest at less attractive yields.
Maintaining a good average call protection helps avoid an untimely interruption
of income."
Robert B. MacIntosh - Portfolio Manager
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
New Jersey Health Care
Facilities Financing Authority
Deborah Heart & Lung Center
Deborah Heart and Lung Center owns and operates a 155-bed acute care hospital in
Browns Mills, New Jersey offering pulminary and cardiac care. The facility has
been a pioneer in performing outpatient catheterizations within the state, and
currently performs more open heart procedures than any other New Jersey
hospital. The Institute maintains teaching affiiations with the University of
Medicine and Dentistry of New Jersey and is widely-known for its intensive
research efforts.
The proceeds of these revenue bonds were used to finance the construction of
additions to the Center's hospital facilities, to purchase equipment related to
the project, and to refund a previous 1978 issue of the Institute. Carrying an
attractive 6.3% coupon, the bonds represent recent efforts of the Portfolio to
seek opport-unities in smaller, lower-rated, investment grade issues.
9
<PAGE> 10
EV MARATHON PENNSYLVANIA MUNICIPALS FUND
Pennsylvania's economy advanced unevenly in 1995, with the unemployment hovering
well above the national level. The commonwealth continued to lose manufacturing
jobs while gaining in the service sectors. According to the Bureau of Labor and
Industry, manufacturing shed 14,000 jobs during the year while the various
service sectors added 19,500. Pennsylvania manufacturing continues to suffer
from the commonwealth's reputation as a high cost region. The area's defense
industry was dealt numerous setbacks, with the Pentagon's closure of the
Philadelphia Naval Shipyard as well as the job cuts resulting from the
Lockheed-Martin merger. Meanwhile, technology and services, led by health care
and finance, were responsible for creating the majority of new jobs.
Interestingly, while growth in the major metropolitian areas of Pittsburgh and
Philadelphia lagged the nation, lower-cost regions, such as central
Pennsylvania, matched the growth of the industrial states.
Despite being caught in a changing global economy and facing rising costs
attributed to health care and public safety, Pennsylvania has maintained
relatively stable finances. The commonwealth has benefited from sound fiscal
management and conservative financial practices. Moreover, Pennsylvania
maintains a moderate debt burden, which, together with budgetary controls, will
help weather challenges if the economy weakens in the coming year.
================================================================================
PORTFOLIO OVERVIEW
Based on market value as of January 31, 1996
<TABLE>
<S> <C>
Number of issues .......................... 129
Average quality ........................... Aa-
Investment grade .......................... 95.9%
Effective maturity ........................ 10.5 yrs.
Largest sectors:
Hospitals ............................................ 18.8%
Industrial development ............................... 9.5
Insured hospitals .................................... 8.7*
Housing .............................................. 7.2
Escrowed ............................................. 6.3
</TABLE>
* Private insurance does not remove the market risk associated with
this investment.
================================================================================
- --------------------------------------------------------------------------------
[PHOTO--Timothy T> Browse]
"Given the signs of a slowing economy and a generally positive interest rate
outlook, I've adopted a "barbell" approach within the Portfolio. That has meant
a dual focus: first, on high-coupon issues that will provide the Portfolio a
continuing source of relatively high income; and second, on low-coupon bonds,
which increase the Portfolio's potential for capital appreciation in the event
of a decline in interest rates.
"In addition, I've increased the Portfolio's diversification by reducing our
holdings in housing bonds in favor of hospital issues, which represent one of
our major research strengths at Eaton Vance. Finally, I've redoubled our efforts
to improve the Portfolio's call protection. Because of a scarcity of bonds with
attractive call provisions, the market is increasingly rewarding bonds with good
call protection, while punishing those issues with less favorable call features.
We have always been very attentive to call protection and that has worked to our
advantage in recent months."
Timothy T. Browse - Portfolio Manager
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
Cumberland County, PA
Municipal Authority
Messiah College Project
These revenue bonds were issued in 1995 to finance the acquisition of property
and construction costs of renovations to several facilities of Messiah College,
a well-regarded institution founded in 1909 and located in Grantham, PA. Those
projects included additions to the College's Miller/Hess and
Bittner/Sollenberger dormitories, as well as renovations to the school's Kline
Hall of Science building. Interest payments on the bond are secured by a lien on
college tuition payments. Payments of principal and interest are guaranteed by
insurance issued by AMBAC, one of the nation's largest municipal bond insurance
companies. The 5.125% Messiah College issue is a good example of one end of the
Portfolio's recent "barbell" strategy: a high quality, low coupon issue that
provides the Portfolio with ample upside potential in the event of a further
rate decline.
10
<PAGE> 11
EV MARATHON TEXAS MUNICIPALS FUND
The Texas economy continues to benefit from favorable long-term factors,
including an increasingly diverse economy, which should continue to register
strong growth throughout the coming year. The state's economy outpaced the
national economy again in 1995, the sixth consecutive year of outperformance.
Diversification has led the state away from its long-time reliance on the energy
sector. Moreover, employment gains in technology, trade, services and finance
have helped give the Texas economy a profile that more and more resembles the
national economy. In the past year, Texas has added about 300,000 new non-farm
jobs in 1995, according to the Texas Employment Commission, ranking the state
seventh in the nation. One of the strongest sectors during 1995 was
construction. A surge in home building was fueled in part by the large migration
to Texas from other parts of the country.
Importantly, job growth has contributed to rising in-state resident income, as
per capita income growth continues to grow faster than the national average. The
state's financial performance remains sound, with debt remaining at a
historically low level. The state continues to benefit from its conservative
fiscal policies, which have emphasized strong fund balances. While Texas, like
other states, is likely to face rising social costs, the Lone Star State's
finances remain in sound condition.
================================================================================
PORTFOLIO OVERVIEW
Based on market value as of January 31, 1996
<TABLE>
<S> <C>
Number of issues .......................... 57
Average quality ........................... A+
Investment grade .......................... 95.0%
Effective maturity ........................ 12.9 yrs.
Largest sectors:
General obligations .................................... 17.2%
Insured electric utilities ............................. 15.5*
Hospitals .............................................. 13.6
Insured hospitals ...................................... 10.3*
Insured transportation ................................. 8.2*
</TABLE>
* Private insurance does not remove the market risk associated with
this investment.
================================================================================
- --------------------------------------------------------------------------------
[PHOTO--Nicole Anderes]
"Given the large Texas municipal market, there has historically been ample
opportunity to select the coupon and maturity structures that we prefer.
Consequently, the Portfolio is well-positioned in this market, with a good mix
of defensive, high coupon bonds as well as performance-oriented discount and
zero coupon bonds.
"Recently, the secondary market's strong bid for discount coupon bonds created a
good selling opportunity for those issues. The availability of
attractively-priced new issues allowed us to replace the discount issues we sold
with similarly structured bonds. As a result, the Fund was able to add
incrementally to the Fund's yield. The Harris Methodist Health System issue
(profiled in the column to the right) is an example of one of the higher
yielding issues the Portfolio was able to acquire using this strategy."
Nicole Anderes - Portfolio Manager
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
Tarrant County, TX
Methodist Health System
Tarrant County Health Facilities Corporation recently came to market with a new
issue for the Harris Methodist Health System. The bonds are insured by AMBAC,
one of the nation's major municipal bond insurers, and have garnered triple-A
ratings from Moody's and Standard & Poors. Because the underlying hospital
system had recently been downgraded by Moody's from A1 to A, the yields on the
new issue were very attractive for insured bonds. When the deal was priced, the
5.55% yield on the 2012 maturity was priced 50 basis points above similar
maturity high grade bonds. Since then, the bonds have outperformed the market.
Recent bids have reflected a narrower spread of around 30 basis points over the
high grade scale. Despite recent downgrades, the underlying hospital system
maintains a strong and stable presence in its market and continues to turn in
decent operating results.
11
<PAGE> 12
- --------------------------------------------------------------------------------
EV Marathon Municipals Funds
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
January 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $131,361,480 $42,914,396 $186,707,207 $175,293,163
Unrealized appreciation 10,943,049 3,531,852 8,184,921 13,447,828
------------ ----------- ------------ ------------
Total investment in Portfolio, at value (Note 1A) $142,304,529 $46,446,248 $194,892,128 $188,740,991
Receivable for Fund shares sold 157,692 146,015 15,333 23,764
Deferred organization expenses (Note 1D) 2,520 3,954 4,040 1,673
------------ ----------- ------------ ------------
Total assets $142,464,741 $46,596,217 $194,911,501 $188,766,428
------------ ----------- ------------ ------------
LIABILITIES:
Dividends payable $ 276,988 $ 94,548 $ 384,503 $ 376,358
Payable for Fund shares redeemed 328,793 21,067 349,926 848,256
Payable to affiliate --
Trustees' fees 255 13 255 255
Accrued expenses 28,847 12,671 52,957 59,420
------------ ----------- ------------ ------------
Total liabilities $ 634,883 $ 128,299 $ 787,641 $ 1,284,289
------------ ----------- ------------ ------------
NET ASSETS $141,829,858 $46,467,918 $194,123,860 $187,482,139
============ =========== ============ ============
SOURCES OF NET ASSETS:
Paid-in capital $136,244,038 $45,462,986 $192,063,248 $178,934,514
Accumulated net realized loss on investment and
financial futures transactions (computed on the
basis of identified cost) (5,304,383) (2,560,203) (5,486,969 ) (4,893,910)
Accumulated undistributed (distributions in excess
of ) net investment income (52,846) 33,283 (637,340 ) (6,293)
Unrealized appreciation of investments and financial
futures contracts from Portfolio (computed on the
basis of identified cost) 10,943,049 3,531,852 8,184,921 13,447,828
------------ ----------- ------------ ------------
Total $141,829,858 $46,467,918 $194,123,860 $187,482,139
============ =========== ============ ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 12,768,585 4,396,996 18,576,133 17,314,360
============ =========== ============ ============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 6) (net assets / shares of beneficial
interest outstanding) $11.11 $10.57 $10.45 $10.83
====== ====== ====== ======
</TABLE>
See notes to financial statements
12
<PAGE> 13
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
January 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $74,109,112 $378,749,553 $453,872,121 $25,755,497
Unrealized appreciation 6,063,038 30,382,799 34,008,412 1,765,273
----------- ------------ ------------ -----------
Total investment in Portfolio, at value (Note 1A) $80,172,150 $409,132,352 $487,880,533 $27,520,770
Receivable for Fund shares sold 227,628 180,229 300,039 102,097
Deferred organization expenses (Note 1D) 3,120 -- -- 6,339
----------- ------------ ------------ -----------
Total assets $80,402,898 $409,312,581 $488,180,572 $27,629,206
----------- ------------ ------------ -----------
LIABILITIES:
Dividends payable $ 158,091 $ 841,375 $ 1,006,627 $ 56,934
Payable for Fund shares redeemed 26,221 475,821 653,698 14,269
Payable to affiliate --
Trustees' fees 128 255 255 13
Accrued expenses 22,393 113,196 148,777 6,731
----------- ------------ ------------ -----------
Total liabilities $ 206,833 $ 1,430,647 $ 1,809,357 $ 77,947
----------- ------------ ------------ -----------
NET ASSETS $80,196,065 $407,881,934 $486,371,215 $27,551,259
=========== ============ ============ ===========
SOURCES OF NET ASSETS:
Paid-in capital $78,717,397 $393,494,721 $472,554,137 $26,851,432
Accumulated net realized loss on investment and
financial futures transactions (computed on the
basis of identified cost) (4,428,678) (15,447,475) (20,336,419 ) (1,095,404)
Accumulated undistributed (distributions in excess
of ) net investment income (155,692) (548,111) 145,085 29,958
Unrealized appreciation of investments and financial
futures contracts from Portfolio (computed on the
basis of identified cost) 6,063,038 30,382,799 34,008,412 1,765,273
----------- ------------ ------------ -----------
Total $80,196,065 $407,881,934 $486,371,215 $27,551,259
=========== ============ ============ ===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING 7,679,922 37,699,753 45,086,598 2,554,871
=========== ============ ============ ===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 6) (net assets / shares of beneficial
interest outstanding) $10.44 $10.82 $10.79 $10.78
======= ======= ========= =======
</TABLE>
See notes to financial statements
13
<PAGE> 14
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Six Months Ended January 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 4,256,370 $1,375,384 $5,733,204 $ 5,623,419
Expenses allocated from Portfolio (372,178) (92,782) (499,678 ) (499,825)
----------- ----------- ----------- -----------
Net investment income from Portfolio $ 3,884,192 $1,282,602 $5,233,526 $ 5,123,594
----------- ----------- ----------- -----------
Expenses --
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 1,598 $ 80 $ 1,602 $ 1,598
Distribution costs (Note 5) 630,439 208,677 897,131 859,469
Custodian fees (Note 4) 6,512 3,228 8,823 8,064
Transfer and dividend disbursing agent fees 55,527 16,818 75,108 78,597
Printing and postage 18,598 7,686 20,783 23,874
Legal and accounting services 11,828 9,965 11,811 11,893
Amortization of organization expenses (Note 1D) 2,672 1,875 1,716 4,087
Miscellaneous 9,683 3,944 12,370 11,143
----------- ----------- ----------- -----------
Total expenses $ 736,857 $ 252,273 $1,029,344 $ 998,725
----------- ----------- ----------- -----------
Net investment income $ 3,147,335 $1,030,329 $4,204,182 $ 4,124,869
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from Portfolio --
Investment transactions (identified cost basis) $ 720,131 $ 182,312 $ 480,429 $ 1,965,980
Financial futures contracts (175,245) (97,958) (826,464 ) (230,460)
----------- ----------- ----------- -----------
Net realized gain (loss) on investments $ 544,886 $ 84,354 $ (346,035 ) $ 1,735,520
Change in unrealized appreciation of investments and
financial futures contracts 7,074,446 2,380,998 9,674,694 8,806,161
----------- ----------- ----------- -----------
Net realized and unrealized gain $ 7,619,332 $2,465,352 $9,328,659 $10,541,681
----------- ----------- ----------- -----------
Net increase in net assets from operations $10,766,667 $3,495,681 $13,532,841 $14,666,550
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
14
<PAGE> 15
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Six Months Ended January 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $2,454,011 $12,821,300 $15,593,935 $ 827,604
Expenses allocated from Portfolio (202,597) (1,059,168) (1,228,346) (41,200)
---------- ----------- ------------ ----------
Net investment income from Portfolio $2,251,414 $11,762,132 $14,365,589 $ 786,404
---------- ----------- ------------ ----------
Expenses --
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 820 $ 1,620 $ 1,598 $ 80
Distribution costs (Note 5) 367,315 1,878,325 2,265,791 123,194
Custodian fees (Note 4) 4,992 11,000 -- 711
Transfer and dividend disbursing agent fees 31,992 146,402 186,138 10,176
Printing and postage 9,230 43,384 55,508 7,419
Legal and accounting services 9,243 12,032 12,342 10,479
Amortization of organization expenses (Note 1D) 3,251 4,387 3,951 2,819
Miscellaneous 6,210 22,097 20,021 1,306
---------- ----------- ------------ ----------
Total expenses $ 433,053 $2,119,247 $ 2,545,349 $ 156,184
---------- ----------- ------------ ----------
Net investment income $1,818,361 $9,642,885 $11,820,240 $ 630,220
---------- ----------- ------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from Portfolio --
Investment transactions (identified cost basis) $ 583,955 $1,916,574 $ 2,150,808 $ 137,766
Financial futures contracts (204,438 ) (778,442 ) 221 (27,368)
---------- ----------- ------------ ----------
Net realized gain on investments $ 379,517 $1,138,132 $ 2,151,029 $ 110,398
Change in unrealized appreciation of investments and
financial futures contracts 3,538,573 16,707,537 19,910,583 1,278,214
---------- ----------- ------------ ----------
Net realized and unrealized gain $3,918,090 $17,845,669 $22,061,612 $1,388,612
---------- ----------- ------------ ----------
Net increase in net assets from operations $5,736,451 $27,488,554 $33,881,852 $2,018,832
============ ============= =============== ===========
</TABLE>
See notes to financial statements
15
<PAGE> 16
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months Ended January 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 3,147,335 $ 1,030,329 $ 4,204,182 $ 4,124,869
Net realized gain (loss) on investments 544,886 84,354 (346,035 ) 1,735,520
Change in unrealized appreciation of investments 7,074,446 2,380,998 9,674,694 8,806,161
------------ ----------- ------------ ------------
Net increase in net assets from operations $ 10,766,667 $ 3,495,681 $13,532,841 $ 14,666,550
------------ ----------- ------------ ------------
Distributions to shareholders (Note 2) --
From net investment income $ (3,147,335) $(1,030,329) $(4,204,182 ) $ (4,124,869)
In excess of net investment income (125,402) (62,920) (289,539 ) (302,196)
------------ ----------- ------------ ------------
Total distributions to shareholders $ (3,272,737) $(1,093,249) $(4,493,721 ) $ (4,427,065)
------------ ----------- ------------ ------------
Transactions in shares of beneficial interest (Note
3) --
Proceeds from sales of shares $ 5,000,580 $ 3,012,039 $ 5,596,871 $ 3,616,367
Net asset value of shares issued to shareholders
in
payment of distributions declared 1,285,371 527,532 2,494,445 2,272,724
Cost of shares redeemed (13,809,069) (3,373,912) (11,906,737 ) (15,009,147)
------------ ----------- ------------ ------------
Increase (decrease) in net assets from Fund
share transactions $ (7,523,118) $ 165,659 $(3,815,421 ) $ (9,120,056)
------------ ----------- ------------ ------------
Net increase (decrease) in net assets $ (29,188) $ 2,568,091 $ 5,223,699 $ 1,119,429
NET ASSETS:
At beginning of period 141,859,046 43,899,827 188,900,161 186,362,710
------------ ----------- ------------ ------------
At end of period $141,829,858 $46,467,918 $194,123,860 $187,482,139
============ =========== ============ ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF)
NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END
OF PERIOD $ (52,846) $ 33,283 $ (637,340 ) $ (6,293)
============ =========== ============ ============
</TABLE>
See notes to financial statements
16
<PAGE> 17
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months Ended January 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,818,361 $ 9,642,885 $11,820,240 $ 630,220
Net realized gain on investments 379,517 1,138,132 2,151,029 110,398
Change in unrealized appreciation of investments 3,538,573 16,707,537 19,910,583 1,278,214
----------- ------------ ------------ -----------
Net increase in net assets from operations $ 5,736,451 $ 27,488,554 $33,881,852 $ 2,018,832
----------- ------------ ------------ -----------
Distributions to shareholders (Note 2) --
From net investment income $(1,818,361) $ (9,642,885) $(11,820,240) $ (630,220)
In excess of net investment income (51,058) (217,143) (151,007 ) (48,905)
----------- ------------ ------------ -----------
Total distributions to shareholders $(1,869,419) $ (9,860,028) $(11,971,247) $ (679,125)
----------- ------------ ------------ -----------
Transactions in shares of beneficial interest (Note 3)
--
Proceeds from sales of shares $ 2,461,311 $ 12,155,384 $ 9,590,021 $ 359,664
Net asset value of shares issued to shareholders in
payment of distributions declared 1,016,524 5,004,568 5,451,348 241,241
Cost of shares redeemed (6,118,830) (31,767,061) (46,436,408 ) (2,151,376)
----------- ------------ ------------ -----------
Decrease in net assets from Fund share
transactions $(2,640,995) $(14,607,109) $(31,395,039) $(1,550,471)
----------- ------------ ------------ -----------
Net increase (decrease) in net assets $ 1,226,037 $ 3,021,417 $(9,484,434 ) $ (210,764)
NET ASSETS:
At beginning of period 78,970,028 404,860,517 495,855,649 27,762,023
----------- ------------ ------------ -----------
At end of period $80,196,065 $407,881,934 $486,371,215 $27,551,259
=========== ============ ============ ===========
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF)
NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF
PERIOD $ (155,692) $ (548,111) $ 145,085 $ 29,958
=========== ============ ============ ===========
</TABLE>
See notes to financial statements
17
<PAGE> 18
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 6,968,989 $ 2,213,497 $ 8,870,606 $ 9,119,365
Net realized loss on investments (5,753,644) (2,384,344) (5,203,838 ) (5,992,077)
Change in unrealized depreciation of investments 7,699,454 2,698,422 4,383,108 6,691,551
------------ ----------- ------------ ------------
Net increase in net assets from operations $ 8,914,799 $ 2,527,575 $ 8,049,876 $ 9,818,839
------------ ----------- ------------ ------------
Distributions to shareholders (Note 2) --
From net investment income $ (6,968,989) $(2,213,497) $(8,870,606 ) $ (9,119,365)
In excess of net investment income (337,851) (105,001) (811,572 ) (345,753)
------------ ----------- ------------ ------------
Total distributions to shareholders $ (7,306,840) $(2,318,498) $(9,682,178 ) $ (9,465,118)
------------ ----------- ------------ ------------
Transactions in shares of beneficial interest (Note
3) --
Proceeds from sales of shares $ 18,037,914 $ 8,881,835 $21,244,459 $ 12,430,305
Net asset value of shares issued to shareholders
in
payment of distributions declared 2,931,820 1,176,328 5,534,626 4,966,547
Cost of shares redeemed (31,597,214) (8,452,610) (24,699,479 ) (28,469,861)
------------ ----------- ------------ ------------
Increase (decrease) in net assets from Fund
share transactions $(10,627,480) $ 1,605,553 $ 2,079,606 $(11,073,009)
------------ ----------- ------------ ------------
Net increase (decrease) in net assets $ (9,019,521) $ 1,814,630 $ 447,304 $(10,719,288)
NET ASSETS:
At beginning of year 150,878,567 42,085,197 188,452,857 197,081,998
------------ ----------- ------------ ------------
At end of year $141,859,046 $43,899,827 $188,900,161 $186,362,710
============== ============ ============== ==============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF)
NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END
OF YEAR $ 72,556 $ 96,203 $ (347,801 ) $ 295,903
============== ============ ============== ==============
</TABLE>
See notes to financial statements
18
<PAGE> 19
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 3,766,758 $ 20,246,485 $ 25,315,197 $ 1,403,370
Net realized loss on investments (4,909,804) (17,584,474) (20,055,939) (955,826)
Change in unrealized depreciation of investments 4,461,066 16,459,157 18,812,212 1,206,948
----------- ------------ ------------ -----------
Net increase in net assets from operations $ 3,318,020 $ 19,121,168 $ 24,071,470 $ 1,654,492
----------- ------------ ------------ -----------
Distributions to shareholders (Note 2) --
From net investment income $(3,766,758) $(20,246,485) $(25,315,197) $(1,403,370)
In excess of net investment income (299,978) (1,398,634) (1,189,501) (36,998)
In excess of realized gain on investments -- (226,540) -- --
----------- ------------ ------------ -----------
Total distributions to shareholders $(4,066,736) $(21,871,659) $(26,504,698) $(1,440,368)
----------- ------------ ------------ -----------
Transactions in shares of beneficial interest (Note 3)
--
Proceeds from sales of shares $ 9,450,064 $ 38,658,018 $ 34,704,368 $ 4,225,665
Net asset value of shares issued to shareholders in
payment of distributions declared 2,269,724 11,455,602 12,534,067 518,070
Cost of shares redeemed (11,223,976) (62,619,284) (79,064,263) (3,872,565)
----------- ------------ ------------ -----------
Increase (decrease) in net assets from Fund share
transactions $ 495,812 $(12,505,664) $(31,825,828) $ 871,170
----------- ------------ ------------ -----------
Net increase (decrease) in net assets $ (252,904) $(15,256,155) $(34,259,056) $ 1,085,294
NET ASSETS:
At beginning of year 79,222,932 420,116,672 530,114,705 26,676,729
----------- ------------ ------------ -----------
At end of year $78,970,028 $404,860,517 $495,855,649 $27,762,023
============ ============== ============= ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF)
NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF
YEAR $ (104,634) $ (330,968) $ 296,092 $ 78,863
============ ============== ============= ============
</TABLE>
See notes to financial statements
19
<PAGE> 20
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON ARIZONA FUND MARATHON COLORADO FUND
--------------------------------------------------------------- --------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
JANUARY JULY 31, SEPTEMBER 30, JANUARY JULY 31, SEPTEMBER 30,
31, 1996 ------------------- ---------------------------- 31, 1996 ----------------- -----------------
(UNAUDITED) 1995 1994*** 1993 1992 1991* (UNAUDITED) 1995 1994*** 1993 1992++
---------- -------- -------- -------- ------- ------- ---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE,
beginning
of period $ 10.530 $ 10.390 $ 11.570 $ 10.700 $10.320 $10.000 $ 10.020 $10.010 $10.960 $10.060 $10.000
---------- -------- -------- -------- ------- ------- ---------- ------- ------- ------- -------
INCOME
(LOSS)
FROM
OPERATIONS:
Net
investment
income $ 0.240 $ 0.492 $ 0.404 $ 0.496 $ 0.526 $ 0.088 $ 0.234 $ 0.494 $ 0.403 $ 0.484 $ 0.026
Net
realized
and
unrealized
gain
(loss)
on
investments 0.590 0.164 (0.862) 1.076 0.520 0.339+++ 0.564 0.033 (0.880) 0.996 0.082+++
---------- -------- -------- -------- ------- ------- ---------- ------- ------- ------- -------
Total
income
(loss)
from
operations $ 0.830 $ 0.656 $ (0.458) $ 1.572 $ 1.046 $ 0.427 $ 0.798 $ 0.527 $(0.477) $ 1.480 $ 0.108
---------- -------- -------- -------- ------- ------- ---------- ------- ------- ------- -------
LESS
DISTRIBUTIONS:
From net
investment
income $ (0.240) $ (0.492) $ (0.404) $ (0.496) $(0.526) $(0.088) $ (0.234) $(0.494) $(0.403) $(0.484) $(0.026)
In excess
of net
investment
income (0.010) (0.024) (0.074) (0.127) (0.120) (0.019) (0.014) (0.023) (0.070) (0.096) (0.022)
From net
realized
gain on
investment
transactions -- -- (0.233) (0.079) (0.020) -- -- -- -- -- --
In excess
of net
realized
gain on
investment
transactions -- -- (0.011) -- -- -- -- -- -- -- --
---------- -------- -------- -------- ------- ------- ---------- ------- ------- ------- -------
Total
distri-
butions $ (0.250) $ (0.516) $ (0.722) $ (0.702) $(0.666) $(0.107) $ (0.248) $(0.517) $(0.473) $(0.580) $(0.048)
---------- -------- -------- -------- ------- ------- ---------- ------- ------- ------- -------
NET ASSET
VALUE, end
of period $ 11.110 $ 10.530 $ 10.390 $ 11.570 $10.700 $10.320 $ 10.570 $10.020 $10.010 $10.960 $10.060
========== ========== ========== ========== ========= ========= ============ ========= ========= ========= =========
TOTAL RETURN
(3) 7.95% 6.64% (4.16)% 15.29% 10.43% 4.03% 8.04% 5.58% (4.46)% 15.52% 0.60%
RATIOS/SUPPLEMENTAL
DATA:**
Net
assets,
end of
period
(000
omitted) $141,830 $141,859 $150,879 $135,524 $62,498 $11,501 $ 46,468 $43,900 $42,085 $24,847 $ 2,464
Ratio of
net
expenses
to
average
daily
net
assets
(1)(4) 1.57%+ 1.53% 1.46%+ 1.53% 1.52% 1.37%+ 1.54%+ 1.28% 1.09%+ 1.00% 1.00%+
Ratio of
net
investment
income
to
average
daily
net
assets 4.41%+ 4.81% 4.47%+ 4.42% 4.83% 4.33%+ 4.52%+ 5.03% 4.59%+ 4.49% 2.26%+
PORTFOLIO
TURNOVER
(2) -- -- -- 39% 133% 8% -- -- -- 3% 0%
</TABLE>
** For the period from the start of business, July 25, 1991, to September 30,
1991, and for the year ended September 30, 1992 (for Marathon Arizona Fund)
and for the period from the start of business, August 25, 1992, to September
30, 1992, for the year ended September 30, 1993, for the ten months ended
July 31, 1994, for the year ended July 31, 1995 and for the six months ended
ended January 31, 1996 (for Marathon Colorado Fund), the operating expenses
of the Funds and the Portfolios may reflect a reduction of the investment
adviser fee, an allocation of expenses to the Investment Adviser, or both.
Had such actions not been taken, net investment income per share and the
ratios would have been as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME PER SHARE $ 0.513 $ 0.082 $ 0.232 $ 0.479 $ 0.373 $ 0.387 $ 0.011
========= ========= ============ ========= ========= ========= =========
RATIOS (As a percentage of average
daily net assets):
Expenses(1)(4) 1.64% 1.65%+ 1.59%+ 1.43% 1.42%+ 1.90% 2.34%+
Net investment income 4.71% 4.05%+ 4.48%+ 4.88% 4.26%+ 3.60% 0.92%+
+ Annualized.
++ For the period from the start of business, August 25, 1992 to September 30, 1992.
+++ The per share amount is not in accord with the net realized and unrealized gain (loss) for the period because of the
timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such
time.
* For the period from the start of business, July 25, 1991 to September 30, 1991.
*** For the ten months ended July 31, 1994.
(1) Includes the Fund's share of its corresponding Portfolio's allocated expenses subsequent to February 1, 1993.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The portfolio turnover for the period since the Fund transferred substantially all of its
investable assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in
this report.
(3) Total return is calculated assuming purchase at the net asset value on the first day and a sale at the net asset
value on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at
the net asset value on the payable date. Amount is computed on a non-annualized basis.
(4) The annualized expense ratios for the six months ended January 31, 1996 have been adjusted to reflect a change in
reporting requirements. The new reporting guidelines require each Fund to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense ratios for each period ended on or before
July 31, 1995 have not been adjusted to reflect this change.
</TABLE>
See notes to financial statements
20
<PAGE> 21
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON CONNECTICUT FUND
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
JANUARY JULY 31, SEPTEMBER 30,
31, 1996 --------------------- --------------------
(UNAUDITED) 1995 1994*** 1993 1992++
---------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period $ 9.970 $ 10.050 $ 11.030 $ 10.270 $10.000
---------- -------- -------- -------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income 0.224 $ 0.465 $ 0.388 $ 0.471 $ 0.192
Net realized and unrealized gain
(loss) on investments 0.495 (0.037) (0.883) 0.885 0.331+++
---------- -------- -------- -------- -------
Total income (loss) from
operations $ 0.719 $ 0.428 $ (0.495) $ 1.356 $ 0.523
---------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.224) $ (0.465) $ (0.388) $ (0.471) $(0.192)
In excess of net investment income (0.015) (0.043) (0.079) (0.120) (0.061)
From net realized gain on
investment transactions -- -- (0.018) (0.005) --
In excess of net realized gain on
investment transactions -- -- -- -- --
---------- -------- -------- -------- -------
Total distributions $ (0.239) $ (0.508) $ (0.485) $ (0.596) $(0.253)
---------- -------- -------- -------- -------
NET ASSET VALUE, end of period $ 10.450 $ 9.970 $ 10.050 $ 11.030 $10.270
========== ======== ======== ======== =======
TOTAL RETURN (3) 7.27% 4.55% (4.61)% 13.62% 5.00%
RATIOS/SUPPLEMENTAL DATA:**
Net assets, end of period
(000 omitted) $194,124 $188,900 $188,453 $160,790 $50,031
Ratio of net expenses to average
daily net assets (1)(4) 1.60%+ 1.55% 1.43%+ 1.56% 1.35%+
Ratio of net investment income to
average daily net assets 4.34%+ 4.77% 4.42%+ 4.33% 4.13%+
PORTFOLIO TURNOVER (2) -- -- -- 14% 16%
</TABLE>
<TABLE>
<CAPTION>
MARATHON MICHIGAN FUND
----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
JANUARY JULY 31, SEPTEMBER 30,
31, 1996 ------------------- ---------------------------------
(UNAUDITED) 1995 1994*** 1993 1992 1991*
---------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period $ 10.250 $ 10.210 $ 11.110 $ 10.570 $ 10.220 $10.000
-------- -------- -------- -------- -------- -------
INCOME (LOSS) FROM OPERATIONS:
Net invest income $ 0.232 $ 0.486 $ 0.398 $ 0.480 $ 0.499 $ 0.247
Net realized and unrealized gain
(loss) on investments 0.597 0.059 (0.794) 0.745 0.507 0.267
-------- -------- -------- -------- -------- -------
Total income (loss) from
operations $ 0.829 $ 0.545 $ (0.396) $ 1.225 $ 1.006 $ 0.514
-------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.232) $ (0.486) $ (0.398) $ (0.480) $ (0.499) $(0.247)
In excess of net investment income (0.017) (0.019) (0.062) (0.114) (0.144) (0.047)
From net realized gain on
investment transactions -- -- (0.028) (0.058) (0.013) --
In excess of net realized gain on
investment transactions -- -- (0.016) (0.033) -- --
-------- -------- -------- -------- -------- -------
Total distributions $ (0.249) $ (0.505) $ (0.504) $ (0.685) $ (0.656) $(0.294)
-------- -------- -------- -------- -------- -------
NET ASSET VALUE, end of period $ 10.830 $ 10.250 $ 10.210 $ 11.110 $ 10.570 $10.220
======== ======== ======== ======== ======== =======
TOTAL RETURN (3) 8.17% 5.61% (3.66)% 12.06% 10.13% 4.98%
RATIOS/SUPPLEMENTAL DATA:**
Net assets, end of period
(000 omitted) $187,482 $186,363 $197,082 $188,290 $107,034 $31,322
Ratio of net expenses to average
daily net assets (1)(4) 1.59%+ 1.51% 1.49%+ 1.54% 1.61% 1.29%+
Ratio of net investment income to
average daily net assets 4.39%+ 4.84% 4.49%+ 4.40% 4.65% 5.12%+
PORTFOLIO TURNOVER (2) -- -- -- 28% 72% 5%
</TABLE>
** For the period from the start of business, May 1, 1992, to September 30,
1992, (for Marathon Connecticut Fund) and for the period from the start of
business, April 19, 1991, to September 30, 1991, (for Marathon Michigan
Fund), the operating expenses of the Funds may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Investment Adviser,
or both. Had such actions not been taken, net investment income per share and
the ratios would have been as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME PER SHARE $ 0.184
======
RATIOS (As a percentage of average
daily net assets):
Expenses(1)(4) 1.52%+
Net investment income 3.96%+
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME PER SHARE $ 0.229
=======
RATIOS (As a percentage of average
daily net assets):
Expenses(1)(4) 1.66%+
Net investment income 4.75%+
</TABLE>
+ Annualized.
++ For the period from the start of business, May 1, 1992, to September 30,
1992.
+++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period due to the timing of the sales of Fund shares
and the amount of per-share realized and unrealized gains and losses at
such time.
* For the period from the start of business, April 19, 1991, to September
30, 1991.
*** For the ten month period ended July 31, 1994.
(1) Includes the Fund's share of its corresponding Portfolio's allocated
expenses subsequent to February 1, 1993.
(2) Portfolio Turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover for the period since the Fund transferred substantially
all of its investable assets to the Portfolio is shown in the Portfolio's
financial statements which are included elsewhere in this report.
(3) Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day
of each period reported. Dividends and distributions, if any, are assumed
to be reinvested at the net asset value on the payable date. Amount is
computed on a non-annualized basis.
(4) The annualized expense ratios for the six months ended January 31, 1996
have been adjusted to reflect a change in reporting requirements. The new
reporting guidelines require each Fund to increase its expense ratio by
the effect of any expense offset arrangements with its service providers.
The expense ratios for each period ended on or before July 31, 1995 have
not been adjusted to reflect this change.
See notes to financial statements
21
<PAGE> 22
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON MINNESOTA FUND
--------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
JANUARY JULY 31, SEPTEMBER 30,
31, 1996 -------------------- ---------------------------
(UNAUDITED) 1995 1994*** 1993 1992 1991*
---------- ----------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning
of period $ 9.950 $10.040 $10.910 $10.310 $10.080 $10.000
------- ------- ------- ------- ------- -------
INCOME (LOSS) FROM
OPERATIONS:
Net investment income $ 0.232 $ 0.470 $ 0.383 $ 0.473 $ 0.505 $ 0.051
Net realized and
unrealized gain (loss)
on investments 0.497 (0.053) (0.788) 0.749 0.361 0.129+++
------- ------- ------- ------- ------- -------
Total income (loss)
from operations $ 0.729 $ 0.417 $(0.405) $ 1.222 $ 0.866 $ 0.180
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment
income $ (0.232) $(0.470) $(0.383) $(0.473) $(0.505) $(0.051)
In excess of net
investment income (0.007) (0.037) (0.073) (0.125) (0.131) (0.049)
From net realized gain on
investment transactions -- -- (0.009) -- -- --
In excess of net realized
gain on investment
transactions -- -- -- (0.024) -- --
------- ------- ------- ------- ------- -------
Total distributions $ (0.239) $(0.507) $(0.465) $(0.622) $(0.636) $(0.100)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, end of
period $ 10.440 $ 9.950 $10.040 $10.910 $10.310 $10.080
======= ======= ======= ======= ======= =======
TOTAL RETURN (3) 7.39% 4.41% (3.81)% 12.28% 8.82% 1.56%
RATIOS/SUPPLEMENTAL DATA:**
Net assets, end of period
(000 omitted) $ 80,196 $78,970 $79,223 $68,004 $26,670 $ 2,467
Ratio of net expenses
to average daily net
assets (1)(4) 1.59%+ 1.52% 1.54%+ 1.59% 1.42% 1.71%+
Ratio of net investment
income to average daily
net assets 4.52%+ 4.80% 4.38%+ 4.38% 4.74% 2.59%+
PORTFOLIO TURNOVER (2) -- -- -- 16% 25% 3%
<CAPTION>
MARATHON NEW JERSEY FUND
-----------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
JANUARY JULY 31, SEPTEMBER 30,
31, 1996 ---------------------- -----------------------------
(UNAUDITED) 1995 1994*** 1993 1992 1991++
---------- ----------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning
of period $ 10.360 $ 10.410 $ 11.350 $ 10.680 $ 10.380 $10.000
------ -------- -------- -------- -------- -------
INCOME (LOSS) FROM
OPERATIONS:
Net investment income $ 0.252 $ 0.505 $ 0.421 $ 0.514 $ 0.516 $ 0.363
Net realized and
unrealized gain (loss)
on investments 0.466 (0.009) (0.836) 0.841 0.452 0.487+++
------ -------- -------- -------- -------- -------
Total income (loss)
from operations $ 0.718 $ 0.496 $ (0.415) $ 1.355 $ 0.968 $ 0.850
------ -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment
income $ (0.252) $ (0.505) $ (0.421) $ (0.514) $ (0.516) $(0.363)
In excess of net
investment income (0.006) (0.035) (0.075) (0.112) (0.124) (0.107)
From net realized gain on
investment transactions -- -- (0.029) (0.059) (0.028) --
In excess of net realized
gain on investment
transactions -- (0.006) -- -- -- --
------ -------- -------- -------- -------- -------
Total distributions $ (0.258) $ (0.546) $ (0.525) $ (0.685) $ (0.668) $(0.470)
------ -------- -------- -------- -------- -------
NET ASSET VALUE, end of
period $ 10.820 $ 10.360 $ 10.410 $ 11.350 $ 10.680 $10.380
====== ======== ======== ======== ======== =======
TOTAL RETURN (3) 6.99% 5.04% (3.77)% 13.15% 9.64% 8.47%
RATIOS/SUPPLEMENTAL DATA:**
Net assets, end of period
(000 omitted) $407,882 $ 404,861 $420,117 $395,421 $235,324 $99,590
Ratio of net expenses
to average daily net
assets (1)(4) 1.58%+ 1.53% 1.48%+ 1.56% 1.63% 1.78%+
Ratio of net investment
income to average daily
net assets 4.73%+ 4.97% 4.64%+ 4.66% 4.83% 4.82%+
PORTFOLIO TURNOVER (2) -- -- -- 20% 74% 68%
** For the period from the start of business, July 29, 1991 to September 30, 1991, and for the years ended September 30,
1992 and 1993 (for Marathon Minnesota Fund), the operating expenses of the Fund and the Portfolio may reflect a
reduction of the investment adviser fee, an allocation of expenses to the Investment Adviser, or both. Had such
actions not been taken, net investment income per share and the ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $0.472 $0.438 $0.031
----- ----- -----
----- ----- -----
RATIOS (As a percentage of average
daily net assets):
Expenses(1)(4) 1.61% 2.05% 2.72%+
Net investment income 4.37% 4.11% 1.58%+
+ Annualized.
++ For the period from the start of business, January 8, 1991, to September 30, 1991.
+++ The per share amount is not in accord with the net realized and unrealized gain (loss) for the period due to the
timing of the sales of Fund shares and the amount of per-share realized and unrealized gains and losses at such
time.
* For the period from the start of business, July 29, 1991, to September 30, 1991.
*** For the ten months ended July 31, 1994.
(1) Includes the Fund's share of its corresponding Portfolio's allocated expenses subsequent to February 1, 1993.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The portfolio turnover for the period since the Fund transferred substantially all of its
investable assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in
this report.
(3) Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the
net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Amount is computed on a non-annualized basis.
(4) The annualized expense ratios for the six months ended January 31, 1996 have been adjusted to reflect a change in
reporting requirements. The new reporting guidelines require each Fund to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense ratios for each period ended on or before
July 31, 1995 have not been adjusted to reflect this change.
</TABLE>
See notes to financial statements
22
<PAGE> 23
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARATHON PENNSYLVANIA FUND
-----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
JANUARY JULY 31, SEPTEMBER 30,
31, 1996 -------------------- ------------------------------
(UNAUDITED) 1995 1994*** 1993 1992 1991*
---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period $ 10.320 $ 10.340 $ 11.310 $ 10.650 $ 10.350 $ 10.000
-------- -------- -------- -------- -------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.253 $ 0.507 $ 0.422 $ 0.520 $ 0.531 $ 0.378
Net realized and unrealized gain
(loss) on investments 0.473 0.004+++ (0.841) 0.794 0.430 0.466+++
-------- -------- -------- -------- -------- -------
Total income (loss) from
operations $ 0.726 $ 0.511 $ (0.419) $ 1.314 $ 0.961 $ 0.844
-------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $ (0.253) $ (0.507) $ (0.422) $ (0.520) $ (0.531) $ (0.378)
In excess of net investment income (0.003) (0.024) (0.069) (0.115) (0.130) (0.116)
From net realized gain on
investment transactions -- -- (0.042) (0.019) -- --
In excess of net realized gain on
investment transactions -- -- (0.018) -- -- --
-------- -------- -------- -------- -------- -------
Total distributions $ (0.256) $ (0.531) $ (0.551) $ (0.654) $ (0.661) $ (0.494)
-------- -------- -------- -------- -------- -------
NET ASSET VALUE, end of period $ 10.790 $ 10.320 $ 10.340 $ 11.310 $ 10.650 $ 10.350
======== ======== ======== ======== ======== =======
TOTAL RETURN (3) 7.11% 5.24% (3.84)% 12.76% 9.56% 8.37%
RATIOS/SUPPLEMENTAL DATA:*
Net assets, end of period
(000 omitted) $486,371 $495,856 $530,115 $499,601 $280,193 $100,211
Ratio of net expenses to average
daily net assets (1)(4) 1.57%+ 1.51% 1.46%+ 1.56% 1.64% 1.56%+
Ratio of net investment income to
average daily net assets 4.79%+ 5.04% 4.68%+ 4.70% 4.92% 4.93%+
PORTFOLIO TURNOVER (2) -- -- -- 6% 15% 2%
<CAPTION>
MARATHON TEXAS FUND
--------------------
YEAR
SIX MONTHS ENDED
ENDED JULY YEAR ENDED
JANUARY 31, SEPTEMBER 30,
31, 1996 ------- -----------------
(UNAUDITED) 1995 1994*** 1993 1992++
---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period $ 10.280 $10.210 $11.110 $10.450 $10.000
------- ------- ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.239 $ 0.532 $ 0.436 $ 0.515 $ 0.255
Net realized and unrealized gain
(loss) on investments 0.519 0.084 (0.824) 0.787 0.516
------- ------- ------
Total income (loss) from
operations $ 0.758 $ 0.616 $(0.388) $ 1.302 $ 0.771
------- ------- ------
LESS DISTRIBUTIONS:
From net investment income $ (0.239) $(0.532) $(0.436) $(0.515) $(0.255)
In excess of net investment income (0.019) (0.014) (0.076) (0.106) (0.066)
From net realized gain on
investment transactions -- -- -- -- --
In excess of net realized gain on
investment transactions -- -- -- (0.021) --
------- ------- ------
Total distributions $ (0.258) $(0.546) $(0.512) $(0.642) $(0.321)
------- ------- ------
NET ASSET VALUE, end of period $ 10.780 $10.280 $10.210 $11.110 $10.450
======= ======= ======
TOTAL RETURN (3) 7.44% 6.36% (3.65)% 12.90% 7.51%
RATIOS/SUPPLEMENTAL DATA:*
Net assets, end of period
(000 omitted) $ 27,551 $27,762 $26,677 $16,338 $ 4,020
Ratio of net expenses to average
daily net assets (1)(4) 1.49%+ 0.99% 0.82%+ 1.06% 1.00%+
Ratio of net investment income to
average daily net assets 4.52%+ 5.29% 4.81%+ 4.67% 4.61%+
PORTFOLIO TURNOVER (2) -- -- -- 7% 11%
** For the period from the start of business, January 8, 1991, to September 30, 1991, (for Marathon Pennsylvania Fund),
and for the period from the start of business, March 24, 1992, to September 30, 1992, for the year ended September
30, 1993, for the ten months ended July 31, 1994, for the year ended July 31, 1995 and for the six months ended
January 31, 1996 (for Marathon Texas Fund), the operating expenses of the Funds and the Portfolios may reflect a
reduction of expenses by the Administrator or Investment Adviser. Had such actions not been taken, net investment
income per share and the ratios would have been as follows:
</TABLE>
<TABLE>
NET INVESTMENT INCOME PER SHARE
RATIOS (As a percentage of average
daily net assets):
Expenses(1)(4)
Net investment income
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME PER SHARE
$0.375 $0.234 $0.487 $0.359 $0.350 $0.180
====== ====== ====== ====== ====== ======
RATIOS (As a percentage of average
daily net assets):
Expenses(1)(4)
Net investment income 1.60%+ 1.59%+ 1.44% 1.67%+ 2.55% 2.35%+
+ Annualized. 4.89%+ 4.42%+ 4.84% 3.96%+ 3.18% 3.26%+
++ For the period from the start of business, March 24, 1992, to September 30, 1992.
+++ The per share amount is not in accord with the net realized and unrealized gain (loss) for the period due to the
timing of the sales of Fund shares and the amount of per share realized and unrealized gains and losses at such
time.
* For the period from the start of business, January 8, 1991, to September 30, 1991.
*** For the ten months ended July 31, 1994.
(1) Includes the Fund's share of its corresponding Portfolio's allocated expenses subsequent to February 1, 1993.
(2) Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The portfolio turnover for the period since the Fund transferred substantially all of its
investable assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in
this report.
(3) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset
value on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at
the net asset value on the payable date. Amount is computed on a nonannualized basis.
(4) The annualized expense ratios for the six months ended January 31, 1996 have been adjusted to reflect a change in
reporting requirements. The new reporting guidelines require each Fund to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense ratios for each period ended on or before
July 31, 1995 have not been adjusted to reflect this change.
</TABLE>
See notes to financial statements
23
<PAGE> 24
- --------------------------------------------------------------------------------
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Eaton Vance Municipals Trust (the Trust) is an entity of the type commonly known
as a Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The Trust
presently consists of sixty-three Funds, eight of which are included in these
financial statements. They include EV Marathon Arizona Municipals Fund
("Marathon Arizona Fund"), EV Marathon Colorado Municipals Fund ("Marathon
Colorado Fund"), EV Marathon Connecticut Municipals Fund ("Marathon Connecticut
Fund"), EV Marathon Michigan Municipals Fund ("Marathon Michigan Fund"), EV
Marathon Minnesota Municipals Fund ("Marathon Minnesota Fund"), EV Marathon New
Jersey Municipals Fund ("Marathon New Jersey Fund"), EV Marathon Pennsylvania
Municipals Fund ("Marathon Pennsylvania Fund"), and EV Marathon Texas Municipals
Fund ("Marathon Texas Fund"). Each Fund invests all of its investable assets in
interests in a separate corresponding open-end management investment company (a
Portfolio), a New York Trust, having the same investment objective as its
corresponding Fund. The Marathon Arizona Fund invests its assets in the Arizona
Municipals Portfolio, the Marathon Colorado Fund invests its assets in the
Colorado Municipals Portfolio, the Marathon Connecticut Fund invests its assets
in the Connecticut Municipals Portfolio, the Marathon Michigan Fund invests its
assets in the Michigan Municipals Portfolio, the Marathon Minnesota Fund invests
its assets in the Minnesota Municipals Portfolio, the Marathon New Jersey Fund
invests its assets in the New Jersey Municipals Portfolio, the Marathon
Pennsylvania Fund invests its assets in the Pennsylvania Municipals Portfolio,
and the Marathon Texas Fund invests its assets in the Texas Municipals
Portfolio. The value of each Fund's investment in its corresponding Portfolio
reflects the Fund's proportionate interest in the net assets of that Portfolio
(98.4%, 95.9%, 96.8%, 98.1%, 97.6%, 98.8%, 99.0% and 98.2% at January 31, 1996
for the Marathon Arizona Fund, Marathon Colorado Fund, Marathon Connecticut
Fund, Marathon Michigan Fund, Marathon Minnesota Fund, Marathon New Jersey Fund,
Marathon Pennsylvania Fund, and Marathon Texas Fund, respectively). The
performance of each Fund is directly affected by the performance of its
corresponding Portfolio. The financial statements of each Portfolio, including
the portfolio of investments, are included elsewhere in this report and should
be read in conjunction with each Fund's financial statements. The following is a
summary of significant accounting policies consistently followed by the Trust in
the preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
A. INVESTMENT VALUATION--Valuation of securities by the Portfolios is discussed
in Note 1 of the Portfolios' Notes to Financial Statements which are included
elsewhere in this report.
B. INCOME--Each Fund's net investment income consists of the Fund's pro rata
share of the net investment income of its corresponding Portfolio, less all
actual and accrued expenses of each Fund determined in accordance with generally
accepted accounting principles.
C. FEDERAL TAXES--Each Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable and tax-exempt income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is necessary. At July 31, 1995, the Funds, for
federal income tax purposes had capital loss carryovers which will reduce
taxable income arising from future net realized gain on investments, if any, to
the extent permitted by the Internal Revenue Code, and thus will reduce the
amount of the distributions to shareholders which would otherwise be necessary
to relieve the Funds of any liability for federal income or excise tax. The
amounts and expiration dates of the capital loss carryovers are as follows:
<TABLE>
<CAPTION>
FUND AMOUNT EXPIRES
- ------------------------------- --------- -------------
<S> <C> <C>
Marathon Arizona Fund $ 419,196 July 31, 2003
2,053 July 31, 2002
Marathon Colorado Fund 428,826 July 31, 2003
32,308 July 31, 2002
Marathon Connecticut Fund 248,898 July 31, 2003
Marathon Michigan Fund 1,242,775 July 31, 2003
662,307 July 31, 2002
Marathon Minnesota Fund 802,699 July 31, 2003
11,959 July 31, 2002
Marathon New Jersey Fund 25,638 July 31, 2003
Marathon Pennsylvania Fund 4,209,137 July 31, 2003
439,448 July 31, 2002
Marathon Texas Fund 184,976 July 31, 2003
68,395 July 31, 2002
</TABLE>
Additionally, at July 31, 1995, net capital losses of $5,344,462, $2,165,312,
$4,791,636, $4,548,995, $3,971,887, $16,512,658, $17,121,578 and $924,936 for
the Marathon Arizona Fund, Marathon Colorado Fund, Marathon Connecticut Fund,
Marathon Michigan Fund, Marathon Minnesota Fund, Marathon New Jersey Fund,
Marathon Pennsylvania Fund and Marathon Texas Fund, respectively, attributable
to security transactions incurred after October 31, 1994, are treated as arising
on the first day of the Fund's current 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.
24
<PAGE> 25
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D. DEFERRED ORGANIZATION EXPENSES--Cost incurred by each Fund in connection with
its organization, including registration costs, are being amortized on the
straight-line basis over five years.
E. OTHER--Investment transactions are accounted for on a trade date basis.
F. INTERIM FINANCIAL INFORMATION--The interim financial statements relating to
January 31, 1996 and for the six-month period then ended have not been audited
by independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting of normal recurring adjustments,
necessary for the fair presentation of the financial statements.
- --------------------------------------------------------------------------------
(2) DISTRIBUTIONS TO SHAREHOLDERS
The net income of each Fund is determined daily and substantially all of the net
income so determined is declared as a dividend to shareholders of record at the
time of declaration. Distributions are paid monthly. Distributions of allocated
realized capital gains, if any, are made at least annually. Shareholders may
reinvest capital gain distributions in additional shares of a Fund at the net
asset value as of the ex-dividend date. Distributions are paid in the form of
additional shares or, at the election of the shareholders, in cash.
The Funds distinguish between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result in temporary over distributions for financial statements
purposes are classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital.
25
<PAGE> 26
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Funds' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
MARATHON ARIZONA FUND MARATHON COLORADO FUND
------------------------------- -------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, YEAR ENDED JANUARY 31, YEAR ENDED
1996 JULY 31, 1996 JULY 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
---------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Sales 461,403 1,784,912 291,498 917,328
Issued to shareholders electing to receive
payments of distributions in Fund shares 119,284 287,027 51,377 119,919
Redemptions (1,278,740) (3,129,557) (325,780) (859,856 )
---------------- ---------- ---------------- ----------
Net increase (decrease) (698,053) (1,057,618) 17,095 177,391
=================== ============ =================== ============
</TABLE>
<TABLE>
<CAPTION>
MARATHON CONNECTICUT FUND MARATHON MICHIGAN FUND
------------------------------- -------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, YEAR ENDED JANUARY 31, YEAR ENDED
1996 JULY 31, 1996 JULY 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
---------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Sales 549,737 2,193,967 342,977 1,245,087
Issued to shareholders electing to receive
payments of distributions in Fund shares 244,461 567,064 216,492 494,913
Redemptions (1,162,147) (2,564,353) (1,427,015) (2,869,226)
---------------- ---------- ---------------- ----------
Net increase (decrease) (367,949) 196,678 (867,546) (1,129,226)
=================== ============ =================== ============
</TABLE>
<TABLE>
<CAPTION>
MARATHON MINNESOTA FUND MARATHON NEW JERSEY FUND
------------------------------- -------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, YEAR ENDED JANUARY 31, YEAR ENDED
1996 JULY 31, 1996 JULY 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
---------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Sales 242,019 970,983 1,145,940 3,794,186
Issued to shareholders electing to receive
payments of distributions in Fund shares 99,894 231,662 473,806 1,123,599
Redemptions (599,448) (1,157,611) (3,001,944) (6,182,637)
---------------- ---------- ---------------- ----------
Net increase (decrease) (257,535) 45,034 (1,382,198) (1,264,852)
=================== ============ =================== ============
</TABLE>
<TABLE>
<CAPTION>
MARATHON PENNSYLVANIA FUND MARATHON TEXAS FUND
------------------------------- -------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, YEAR ENDED JANUARY 31, YEAR ENDED
1996 JULY 31, 1996 JULY 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
---------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Sales 909,309 3,455,743 34,089 428,563
Issued to shareholders electing to receive
payments of distributions in Fund shares 518,293 1,241,799 22,958 51,552
Redemptions (4,407,465) (7,922,783) (203,866) (392,169 )
---------------- ---------- ---------------- ----------
Net increase (decrease) (2,979,863) (3,225,241) (146,819) 87,946
=================== ============ =================== ============
</TABLE>
26
<PAGE> 27
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(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), serves as custodian to the Funds and the
Portfolios. Prior to November 10, 1995, IBT was an affiliate of EVM. 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. No significant credit balances were used to reduce the Fund's
custody fees. Certain of the officers and Trustees of the Funds and Portfolios
are officers and directors/trustees of the above organizations (Note 5).
- --------------------------------------------------------------------------------
(5) DISTRIBUTION PLAN
Each Fund has adopted a distribution plan (the Plans) pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plans require the Funds to pay the
principal underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to
1/365 of 0.75% of each Fund's daily net assets, for providing ongoing
distribution services and facilities to the respective Fund. A Fund will
automatically discontinue payments to EVD during any period in which there are
no outstanding Uncovered Distribution Charges, which are equivalent to the sum
of (i) 5% of the aggregate amount received by the Fund for shares sold plus (ii)
distribution fees calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of EVD,
reduced by the aggregate amount of contingent deferred sales charges (Note 6)
and daily amounts theretofore paid to EVD. The amount payable to EVD with
respect to each day is accrued on such day as a liability of each Fund and,
accordingly, reduces the Fund's net assets. For the six months ended January 31,
1996, Marathon Arizona Fund, Marathon Colorado Fund, Marathon Connecticut Fund,
Marathon Michigan Fund, Marathon Minnesota Fund, Marathon New Jersey Fund,
Marathon Pennsylvania Fund, and Marathon Texas Fund, paid or accrued $534,633,
$170,845, $725,883, $704,813, $301,600, $1,529,781, $1,851,367, and $104,459,
respectively, to or payable to EVD, representing 0.75% (annualized) of average
daily net assets. At January 31, 1996, the amount of Uncovered Distribution
Charges of EVD calculated under the Plans for Marathon Arizona Fund, Marathon
Colorado Fund, Marathon Connecticut Fund, Marathon Michigan Fund, Marathon
Minnesota Fund, Marathon New Jersey Fund, Marathon Pennsylvania Fund, and
Marathon Texas Fund were approximately $4,762,000, $1,882,000, $7,113,000,
$5,715,000, $2,788,000, $12,498,000, $15,330,000, and $910,000, 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 six months ended January 31, 1996,
Marathon Arizona Fund, Marathon Colorado Fund, Marathon Connecticut Fund,
Marathon Michigan Fund, Marathon Minnesota Fund, Marathon New Jersey Fund,
Marathon Pennsylvania Fund, and Marathon Texas Fund paid or accrued service fees
to or payable to EVD in the amount of $95,806, $37,832, $171,248, $154,656,
$65,715, $348,544, $414,424 and $18,735, 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.
27
<PAGE> 28
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(6) CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally the CDSC is based upon the
lower of the net asset value at date of redemption or date of purchase. No
charge is levied on Fund shares acquired by reinvestment of dividends or capital
gains distributions. The CDSC is imposed at declining rates that begin at 5% in
the case of redemptions in the first and second year after purchase declining
one percentage point each subsequent year. No CDSC is levied on shares which
have been sold to EVD or its affiliates or to their respective employees or
clients. CDSC charges are paid to EVD to reduce the amount of Uncovered
Distribution Charges calculated under the Fund's Distribution Plan. CDSC charges
received when no Uncovered Distribution Charges exist will be credited to the
Fund. EVD received approximately $337,000, $86,000, $275,000, $344,000,
$199,000, $758,000, $1,066,000 and $76,000, respectively, of CDSC paid by
shareholders of Marathon Arizona Fund, Marathon Colorado Fund, Marathon
Connecticut Fund, Marathon Michigan Fund, Marathon Minnesota Fund, Marathon New
Jersey Fund, Marathon Pennsylvania Fund, and Marathon Texas Fund, respectively,
for the six months ended January 31, 1996.
- --------------------------------------------------------------------------------
(7) INVESTMENT TRANSACTIONS
Increases and decreases in each Fund's investment in its corresponding Portfolio
for the six months ended January 31, 1996 were as follows:
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
ARIZONA COLORADO CONNECTICUT MICHIGAN
FUND FUND FUND FUND
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increases $ 5,087,663 $2,915,279 $ 6,189,255 $ 4,407,497
Decreases 16,375,097 4,343,327 15,451,061 18,082,390
</TABLE>
<TABLE>
<CAPTION>
MARATHON MARATHON MARATHON MARATHON
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
FUND FUND FUND FUND
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increases $ 2,310,908 $12,686,132 $10,094,956 $ 327,286
Decreases 7,616,066 39,233,602 56,780,079 2,763,393
</TABLE>
- --------------------------------------------------------------------------------
(8) SPECIAL MEETINGS OF SHAREHOLDERS
On December 8, 1995, special meetings of the shareholders of the Marathon
Arizona Fund, Marathon Colorado Fund, Marathon Connecticut Fund, Marathon
Michigan Fund, Marathon Minnesota Fund, Marathon New Jersey Fund, Marathon
Pennsylvania Fund and Marathon Texas Fund were held for the purpose of voting on
the matters listed below. On October 23, 1995, the record date of the meetings,
each of the Funds had the following number of shares outstanding and each Fund
had the following number of shares represented at the December 8, 1995 meetings:
<TABLE>
<CAPTION>
SHARES OUTSTANDING SHARES REPRESENTED
FUND AT 10/23/95 AT 12/8/95 MEETINGS
- ------------------------------- --------------------
<S> <C> <C>
Arizona 13,151,731 7,650,439
Colorado 4,382,620 2,501,573
Connecticut 18,902,684 10,318,358
Michigan 17,774,587 9,208,624
Minnesota 7,869,453 4,519,007
New Jersey 38,412,316 20,915,594
Pennsylvania 46,828,977 25,969,063
Texas 2,638,783 1,343,245
</TABLE>
ITEM 1. To consider and act on a proposal to amend each Fund's investment
policy to provide that the Fund may invest without limit in municipal
obligations, the interest on which is exempt from regular federal income tax
(but which may be a tax preference item for purposes of alternative minimum tax)
and from the State taxes that, in accordance with each Fund's investment
objective, the Fund seeks to avoid.
ITEM 2. To approve the revision of certain of each Fund's fundamental
investment restrictions as follows:
<TABLE>
<S> <C>
2A. Eliminate the restriction concerning
transactions with affiliates.
2B. Eliminate the restriction concerning investing
for control.
2C. Eliminate the restriction concerning joint
transactions.
2D. Reclassify the restriction concerning short
sales.
2E. Reclassify the restriction concerning
investment in affiliated issuers.
2F. Reclassify the restriction concerning
investment in exploration companies.
2G. Eliminate the restriction concerning
diversification of assets.
2H. Amend the restriction concerning underwriting.
2I. Amend the restriction concerning investing in
futures transactions.
2J. Amend the restriction concerning lending.
2K. Amend the restriction concerning borrowing,
pledging and senior securities.
2L. Clarify the restrictions concerning investing
in another investment company.
</TABLE>
28
<PAGE> 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(8) SPECIAL MEETINGS OF SHAREHOLDERS (CONTINUED)
The following are the results of the voting on each proposal:
For the Marathon Arizona Fund:
PROPOSAL
<TABLE>
<CAPTION>
1 2A 2B 2C 2D 2E 2F
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 6,942,130 6,719,131 6,710,384 6,686,733 6,647,080 6,669,679 6,598,796
AGAINST 315,159 508,968 516,919 471,140 515,943 466,316 570,669
ABSTAIN 393,149 422,340 423,136 492,566 487,416 514,444 480,974
</TABLE>
PROPOSAL
<TABLE>
<CAPTION>
2G 2H 2I 2J 2K 2L
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 6,653,400 6,677,655 6,664,791 6,607,443 6,647,905 6,823,253
AGAINST 525,352 461,145 548,558 584,919 540,996 379,234
ABSTAIN 471,687 511,639 437,090 458,077 461,538 447,952
</TABLE>
For the Marathon Colorado Fund:
PROPOSAL
<TABLE>
<CAPTION>
1 2A 2B 2C 2D 2E 2F
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 2,307,675 2,209,700 2,200,849 2,200,539 2,203,314 2,189,075 2,205,156
AGAINST 85,417 132,417 149,109 141,025 122,159 128,897 135,814
ABSTAIN 108,481 159,455 151,615 160,009 176,100 183,601 160,603
</TABLE>
PROPOSAL
<TABLE>
<CAPTION>
2G 2H 2I 2J 2K 2L
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 2,224,239 2,219,128 2,208,625 2,188,676 2,209,415 2,251,845
AGAINST 121,214 96,680 113,902 152,247 127,887 90,517
ABSTAIN 156,120 185,764 179,045 160,650 164,271 159,211
</TABLE>
For the Marathon Connecticut Fund:
PROPOSAL
<TABLE>
<CAPTION>
1 2A 2B 2C 2D 2E 2F
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 9,738,238 9,582,972 9,539,501 9,570,170 9,441,848 9,512,366 9,508,883
AGAINST 246,227 394,034 409,877 392,177 484,553 455,055 449,576
ABSTAIN 333,893 341,352 368,980 356,011 391,957 350,938 359,900
</TABLE>
PROPOSAL
<TABLE>
<CAPTION>
2G 2H 2I 2J 2K 2L
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 9,614,954 9,565,866 9,388,875 9,398,614 9,333,747 9,689,604
AGAINST 351,899 367,466 501,627 537,741 541,429 301,184
ABSTAIN 351,505 385,027 427,857 382,004 443,182 327,571
</TABLE>
For the Marathon Michigan Fund:
PROPOSAL
<TABLE>
<CAPTION>
1 2A 2B 2C 2D 2E 2F
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 8,445,348 8,189,964 8,185,058 8,214,696 8,211,916 8,227,010 8,134,893
AGAINST 271,340 401,463 405,856 385,992 343,012 348,572 460,476
ABSTAIN 491,936 617,198 617,710 607,936 653,697 633,041 613,251
</TABLE>
PROPOSAL
<TABLE>
<CAPTION>
2G 2H 2I 2J 2K 2L
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 8,234,269 8,171,495 8,160,588 8,116,112 8,175,740 8,331,140
AGAINST 363,731 377,314 450,403 461,272 398,187 306,423
ABSTAIN 610,624 659,816 597,633 631,240 634,697 571,061
</TABLE>
29
<PAGE> 30
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(8) SPECIAL MEETINGS OF SHAREHOLDERS (CONTINUED)
For the Marathon Minnesota Fund:
PROPOSAL
<TABLE>
<CAPTION>
1 2A 2B 2C 2D 2E 2F
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 4,234,385 4,066,226 4,036,015 4,100,100 4,073,142 4,064,634 3,998,136
AGAINST 141,790 215,818 238,147 191,987 214,639 209,085 252,201
ABSTAIN 142,832 236,963 244,845 231,225 245,287 268,669 229,359
</TABLE>
PROPOSAL
<TABLE>
<CAPTION>
2G 2H 2I 2J 2K 2L
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 4,092,833 4,117,957 4,061,374 4,043,074 4,046,063 4,124,136
AGAINST 196,815 171,489 242,836 264,610 234,932 188,909
ABSTAIN 229,359 229,561 214,795 211,323 238,012 205,962
</TABLE>
For the Marathon New Jersey Fund:
PROPOSAL
<TABLE>
<CAPTION>
1 2A 2B 2C 2D 2E 2F
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 19,472,948 18,805,011 18,687,298 18,841,713 18,750,031 18,785,161 18,656,683
AGAINST 551,208 886,132 1,000,884 842,065 860,131 860,122 1,049,930
ABSTAIN 891,438 1,224,451 1,227,413 1,231,816 1,305,432 1,270,311 1,208,981
</TABLE>
PROPOSAL
<TABLE>
<CAPTION>
2G 2H 2I 2J 2K 2L
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 18,856,662 18,780,037 18,709,652 18,632,697 18,711,793 18,998,706
AGAINST 861,802 823,368 964,956 988,059 977,708 707,761
ABSTAIN 1,197,130 1,312,189 1,240,986 1,294,838 1,226,092 1,209,128
</TABLE>
For the Marathon Pennsylvania Fund:
PROPOSAL
<TABLE>
<CAPTION>
1 2A 2B 2C 2D 2E 2F
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 24,164,194 23,545,113 23,335,210 23,535,192 23,360,349 23,444,094 23,123,576
AGAINST 742,009 1,139,345 1,225,310 1,058,884 1,213,504 1,136,408 1,407,478
ABSTAIN 1,062,861 1,284,605 1,408,543 1,374,988 1,395,211 1,388,562 1,438,009
</TABLE>
PROPOSAL
<TABLE>
<CAPTION>
2G 2H 2I 2J 2K 2L
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 23,514,299 23,417,824 23,281,345 23,166,168 23,151,610 23,838,959
AGAINST 1,104,579 1,124,761 1,286,644 1,384,326 1,428,063 886,421
ABSTAIN 1,350,185 1,426,467 1,401,076 1,418,580 1,389,390 1,243,683
</TABLE>
For the Marathon Texas Fund:
PROPOSAL
<TABLE>
<CAPTION>
1 2A 2B 2C 2D 2E 2F
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 1,296,932 1,266,117 1,301,204 1,266,032 1,265,057 1,264,449 1,299,386
AGAINST 12,978 46,649 14,814 46,713 50,263 50,037 17,947
ABSTAIN 33,334 30,478 27,226 30,499 27,925 28,709 25,912
</TABLE>
PROPOSAL
<TABLE>
<CAPTION>
2G 2H 2I 2J 2K 2L
<S> <C> <C> <C> <C> <C> <C> <C>
FOR 1,306,400 1,304,503 1,264,977 1,267,807 1,264,474 1,302,045
AGAINST 12,238 13,273 50,310 50,310 48,016 12,978
ABSTAIN 24,607 25,469 27,958 25,128 30,755 28,221
</TABLE>
30
<PAGE> 31
- --------------------------------------------------------------------------------
Arizona Municipals Portfolio
Portfolio of Investments - January 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSISTED LIVING - 1.2%
NR NR $1,800 Arizona Health Facilities
Authority, Mesa Project,
7.625%, 1/01/26 $ 1,699,254
------------
EDUCATION - 6.5%
A1 AA $1,000 Arizona Board of Regents,
Arizona State University,
5.90%, 7/01/09 $ 1,060,790
NR AAA 1,000 City of Glendale,
Thunderbird Graduate
School, CLEE, 7.125%,
7/01/20 1,149,480
A1 AA 1,250 Arizona Board of Regents,
University of Arizona,
6.25%, 6/01/11 1,341,413
NR NR 2,000 Arizona Educational Loan
Marketing Corporation,
(AMT) 6.30%, 12/01/08 2,021,640
NR NR 2,000 Arizona Educational Loan
Marketing Corporation,
(AMT) 6.25%, 6/01/06 2,045,560
A NR 1,500 Student Loan Acquisition
Authority of Arizona,
(AMT) 7.625%, 5/01/10 1,664,490
------------
$ 9,283,373
------------
ESCROWED - 4.8%
Aaa AA $2,500 Arizona Transportation
Board Highway, 6.50%,
7/01/11 $ 1,139,440
Aaa AAA 7,500 Maricopa County, Single
Family Mortgage, 0%,
2/01/16 2,415,075
NR AA 2,500 City of Phoenix, Street &
Highway User, 6.25%,
7/01/11 2,775,725
NR NR 500 City of Scottsdale,
Westminster Village,
Multifamily Housing,
10.00%, 6/01/17 555,215
------------
$ 6,885,455
------------
GENERAL OBLIGATIONS - 9.1%
Aa AA+ $1,500 City of Phoenix,
6.375%, 7/01/13 $ 1,609,680
Aa AA+ 3,000 City of Phoenix,
5.10%, 7/01/13 2,989,560
NR A 2,000 City of Phoenix, Tatum
Ranch Community,
6.875%, 7/01/16 2,173,760
Aa AA+ 1,000 City of Tempe,
5.25%, 7/01/15 992,730
Aa AA 1,300 Scottsdale Unified School
District No. 48 of
Maricopa County, 4.60%,
7/01/11 1,214,031
Baa1 A 1,850 Commonwealth of Puerto
Rico, 5.40%, 7/01/25 1,799,440
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa1 A 1,000 Commonwealth of Puerto
Rico, Public Building
Authority, 5.75%, 7/01/16 1,013,710
NR NR 1,000 Virgin Islands,
7.25%, 10/01/18 1,075,430
------------
$ 12,868,341
------------
HOSPITALS - 3.3%
NR BBB $1,130 Arizona Health Facilities
Authority, Phoenix
Memorial Hospital, 8.125%,
6/01/12 $ 1,233,203
NR BBB 1,250 Arizona Health Facilities
Authority, Phoenix
Memorial Hospital, 8.20%,
6/01/21 1,365,388
Baa BBB- 1,000 Maricopa County, Sun
Health Corporation,
8.125%, 4/01/12 1,124,000
NR NR 915 City of Winslow, Winslow
Memorial Hospital Project,
9.50%, 6/01/22 1,016,482
------------
$ 4,739,073
------------
HOUSING - 6.0%
NR A $2,000 Maricopa County, Laguna
Point Apartments,
Multifamily Housing,
6.75%, 7/01/09 $ 2,077,040
NR AAA 2,775 City of Phoenix, Chris
Ridge Village Project, FHA
Insured Mortgage Loan,
6.80%, 11/01/25 2,894,492
NR AA 1,000 City of Phoenix, Woodstone
and Silver Springs
Apartments, Multifamily
Housing, (Asset Guaranty),
6.25%, 4/01/23 1,022,970
Aaa NR 1,500 City of Phoenix, Meadow
Glen Apartments,
Multifamily Housing, (GNMA
Collateralized) 5.80%,
8/20/28 1,471,965
NR AAA 1,000 City of Tempe, Multifamily
Housing, Quadrangle
Village Apartments, FHA
Insured Mortgage Loan,
6.25%, 6/01/26 1,023,990
------------
$ 8,490,457
------------
INDUSTRIAL DEVELOPMENT
REVENUE - 4.0%
A1 NR $1,000 City of Casa Grande,
Pollution Control,
Frito-Lay Inc., 6.60%,
12/01/10 $ 1,102,410
A2 A 4,500 Greenlee County, Pollution
Control, Phelps Dodge
Corporation, 5.45%,
6/01/09 4,577,805
------------
$ 5,680,215
------------
</TABLE>
31
<PAGE> 32
- --------------------------------------------------------------------------------
ARIZONA MUNICIPALS PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
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 - 9.0%
Aaa AAA $1,000 Peoria Unified School
District No. 11 of
Maricopa County, (MBIA)
6.40%, 7/01/10 $ 1,079,600
Aaa AAA 1,000 Alhambra Elementary School
District No. 68 of
Maricopa County, (AMBAC)
5.625% 7/01/13 1,018,320
Aaa AAA 1,000 Alhambra Elementary School
District No. 68 of
Maricopa County, (AMBAC)
5.125%, 7/01/13 977,990
Aaa AAA 1,000 Paradise Valley Unified
School District No. 69 of
Maricopa County, (MBIA),
5.00%, 7/01/09 1,026,490
Aaa AAA 1,000 Chandler Unified School
District No. 80 of
Maricopa County, (FGIC)
6.40%, 7/01/10 1,079,600
Aaa AAA 1,000 Maricopa County, Tolleson
High School District,
(FGIC) 5.00%, 7/01/13 969,430
Aaa AAA 1,000 Pima County, School
District No. 1, Tucson
Project, (FGIC) 5.40%,
7/01/13 1,008,010
Aaa AAA 1,750 Pima County, School
District No. 1, Tucson
Project, (FGIC) 5.875%,
7/01/14 1,823,868
Aaa AAA 1,000 Commonwealth of Puerto
Rico (FSA) 7/01/20 (1) 1,073,070
Aaa AAA 1,500 Commonwealth of Puerto
Rico, (AMBAC) 7/01/15 (1) 1,613,610
Aaa AAA 1,000 Commonwealth of Puerto
Rico, (FSA) 7/01/22 (1) 1,095,850
------------
$ 12,765,838
------------
INSURED HOSPITALS - 13.2%
Aaa AAA $2,000 Maricopa County, Hospital
District No. 1, (FGIC)
6.125%, 6/01/15 $ 2,115,700
Aaa AAA 2,000 Maricopa County, Catholic
Healthcare West, (MBIA)
5.625%, 7/01/23 2,025,360
Aaa AAA 2,000 Maricopa County, Samaritan
Health, (MBIA) 7.00%,
12/01/16 2,460,220
Aaa AAA 2,000 Mohave County, Kingman
Regional Medical Center,
(FGIC) 6.50%, 6/01/15 2,149,480
Aaa AAA 1,500 Pima County, Tucson
Medical Center, (MBIA)
6.375%, 4/01/12 1,611,915
Aaa AAA 3,500 Pima County, Tucson
Medical Center, (MBIA)
5.00%, 4/01/15 3,411,345
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 1,000 Pima County, Carondelet
Health Care Corporation,
(MBIA) 5.25%, 7/01/11 1,017,960
Aaa AAA 1,000 Pima County, Carondelet
Health Care Corporation,
(MBIA) 5.25%, 7/01/12 1,008,720
Aaa AAA 2,000 University of Arizona
Medical Center
Corporation, (MBIA) 5.00%,
7/01/13 1,938,860
Aaa AAA 1,000 University of Arizona
Medical Center
Corporation, (MBIA) 5.00%,
7/01/21 948,970
------------
$ 18,688,530
------------
INSURED HOUSING - 1.4%
Aaa AAA $1,975 City of Sierra Vista,
Mountain View Apartments,
FHA Insured Mortgage,
(MBIA), 5.75%, 1/01/24 $ 1,979,325
------------
INSURED UTILITIES - 6.2%
Aaa AAA $4,000 Navajo County, Pollution
Control, Arizona Public
Service Co., (AMBAC)
5.50%, 8/15/28 $ 4,023,480
Aaa AAA 3,500 Pima County, Irvington
Power Project, (FSA)
7.25%, 7/15/10 3,836,525
Aaa AAA 1,000 Arizona State Power
Authority, Hoover Uprating
Project, (MBIA) 5.25%,
10/01/17 998,640
------------
$ 8,858,645
------------
INSURED SPECIAL TAX - 1.4%
Aaa AAA $1,750 City of Phoenix, Civic
Improvement Excise Tax,
(MBIA) 6.60%, 7/01/08 $ 1,972,268
------------
INSURED WATER & SEWER - 1.6%
Aaa AAA $1,000 City of Chandler, Water
and Sewer, (FGIC) 6.25%,
7/01/13 $ 1,066,500
Aaa AAA 1,200 City of Phoenix, Civic
Improvement Wastewater
Systems, (MBIA) 5.00%,
7/01/18 1,151,532
------------
$ 2,218,032
------------
SPECIAL TAX - 1.4%
Baa1 A $1,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/01/20 $ 957,520
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/01/21 956,720
------------
$ 1,914,240
------------
</TABLE>
32
<PAGE> 33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION - 4.3%
Aa AA $1,000 State of Arizona,
Transportation Board &
Highway, 5.00%, 7/01/10 $ 993,860
Aa AA 2,000 State of Arizona,
Transportation Board &
Highway, 5.10%, 7/01/11 1,987,240
NR BBB 3,000 Guam Airport Authority,
(AMT) 6.70%, 10/01/23 3,092,040
------------
$ 6,073,140
------------
UTILITIES - 19.7%
Ba2 BB $2,500 Maricopa County, Pollution
Control, Public Service
Company of New Mexico,
Palo Verde Project,
6.375%, 8/15/23 $ 2,506,100
Baa1 BBB 5,300 Navajo County, Pollution
Control, Arizona Public
Service Co., 5.875%,
8/15/28 5,309,434
NR AA+ 1,000 Mohave County, Citizens
Utilities Company Project,
(AMT) 5.80%, 11/15/28 1,016,150
A A+ 1,000 Puerto Rico Telephone
Authority, Variable
1/01/20 (1) 1,091,930
A1 AA- 1,000 Central Arizona Water
Conservation District,
Central Arizona Project,
5.50%, 11/01/09 1,054,270
NR BBB 1,200 Guam Power Authority,
6.30%, 10/01/12 1,232,052
NR BBB 1,250 Guam Power Authority,
6.30%, 10/01/22 1,274,900
Baa1 A- 550 Puerto Rico Electric Power
Authority, 7.00%, 7/01/07 599,115
Baa1 A- 4,500 Puerto Rico Electric Power
Authority, 5.00%, 7/01/12 4,267,935
Baa1 A- 370 Puerto Rico Electric Power
Authority, 7.125%, 7/01/14 406,452
Aa AA 1,750 Salt River Project
Agricultural Improvement
and Power District, 5.50%
1/01/28 1,755,128
Aa AA 3,500 Salt River Project
Agricultural Improvement
and Power District, 5.25%,
1/01/25 3,510,255
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa AA 1,000 Salt River Project
Agricultural Improvement
and Power District, 6.25%,
1/01/27 1,064,630
Aa AA 1,000 Salt River Project
Agricultural Improvement
and Power District, 5.25%,
1/01/13 1,002,060
Aa AA 2,000 Salt River Project
Agricultural Improvement
and Power District, 5.25%,
1/01/19 1,968,460
------------
$ 28,058,871
------------
WATER & SEWER - 7.0%
Aa AA+ $2,000 State of Arizona,
Wastewater Management
Authority, 6.80%, 7/01/11 $ 2,235,960
A1 A 1,100 City of Phoenix, Water
System, 5.00%, 7/01/18 1,051,400
A1 A 5,000 City of Phoenix, Water
System, 4.75%, 7/01/23 4,577,650
A1 A+ 1,000 City of Tucson, Water
System, 6.50%, 7/01/16 1,087,520
A1 A+ 1,000 City of Tucson, Water
System, 5.50%, 7/01/10 1,041,440
------------
$ 9,993,970
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $131,097,970) $142,169,027
============
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
The Portfolio primarily invests in debt securities issued by Arizona
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at January 31, 1996, 23.7% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.4% to 1.5% of total investments.
See notes to financial statements
33
<PAGE> 34
- --------------------------------------------------------------------------------
Colorado Municipals Portfolio
Portfolio of Investments - January 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
ESCROWED - 3.7%
Aaa AAA $4,000 Colorado Health Facilities
Authority, Liberty Heights
Project, (FSA) 0%, 7/15/24 $ 648,440
Aaa NR 5,500 Dawson Ridge County,
Metropolitan District, 0%,
10/1/22 994,510
NR AAA 150 Puerto Rico Highway and
Transportation Authority,
6.50%, 7/1/22 172,286
-----------
$ 1,815,236
-----------
GENERAL OBLIGATIONS - 9.3%
A NR $ 500 City of Aspen, 5.625%,
4/15/14 $ 506,215
A1 AA 1,000 Boulder and Gilpin
Counties, Boulder Valley
School District, 6.30%,
12/1/13 1,074,490
NR A 750 Larimer, Weld & Boulder
Counties, Thompson School
District, 6.05%, 12/15/08 798,578
Baa1 A 1,000 Commonwealth of Puerto
Rico, 5.40%, 7/1/25 972,670
Baa1 A 1,000 Commonwealth of Puerto
Rico, Public Building
Authority, 5.75%, 7/1/15 1,013,710
NR NR 100 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 107,543
-----------
$ 4,473,206
-----------
HOSPITALS - 12.3%
Baa1 BBB+ $1,250 Boulder County, Longmont
United Hospital, 5.875%,
12/1/20 $ 1,226,663
Baa BBB 2,050 Colorado Health Facilities
Authority, Rocky Mountain
Adventist Healthcare,
6.625%, 2/1/13 2,109,327
Baa1 NR 2,000 Colorado Health Facilities
Authority, Parkview
Memorial Hospital, 6.125%,
9/1/25 1,958,440
NR BBB- 650 Colorado Health Facilities
Authority, National Jewish
Center, 6.875%, 2/15/12 659,366
-----------
$ 5,953,796
-----------
HOUSING - 13.3%
NR NR $ 350 Lake Creek Affordable
Housing Corporation,
Multi-family, 8.00%,
12/1/23 $ 360,665
NR AAA 1,000 City of Lakewood,
Multi-family,
Mortgage Loan (FHA), (AMT)
6.65%, 10/1/25 1,042,750
Aa NR 1,915 Colorado Housing and
Finance Authority, Single
Family Access Program,
7.90%, 12/1/24 2,170,844
Aa NR 970 Colorado Housing and
Finance Authority, Single
Family Access Program,
8.00%, 12/1/24 (2) 1,106,072
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa NR 600 Colorado Housing and
Finance Authority, Single
Family, (AMT) 7.65%,
12/1/25 674,117
NR AAA 1,000 Denver County,
Multi-family, Lofts
Project, 6.15%, 12/1/16 1,021,810
-----------
$ 6,376,258
-----------
INDUSTRIAL DEVELOPMENTS
REVENUE - 3.5%
A2 NR $1,750 Puerto Rico Pollution
Control, American Home
Products Corporation,
5.10%, 12/1/18 $ 1,661,660
-----------
INSURED EDUCATION - 2.1%
Aaa AAA $1,000 Board of Trustees of the
State Colleges in Colorado,
Adams State College of
Colorado Project, (MBIA)
5.70%, 5/15/14 $ 1,032,090
-----------
INSURED GENERAL OBLIGATIONS - 13.8%
Aaa AAA $ 500 City and County of Denver
School District #1, (MBIA)
5.125%, 12/1/12 $ 488,125
Aaa AAA 1,000 Douglas and Elbert
Counties, Douglas County
School District, (MBIA)
6.40%, 12/15/11 1,095,080
Aaa AAA 1,750 Eagle, Garfield & Routt
Counties, School District
No. RE 50J, (FGIC) 6.30%,
12/1/12 1,914,745
Aaa AAA 1,100 Highlands Ranch
Metropolitan District No.
2, Douglas County, (CGIC),
6.50%, 6/15/12 (2) 1,239,249
Aaa AAA 1,000 Poudre School District R-1
of Larimer County, (MBIA)
6.50%, 12/15/11 1,094,270
Aaa AAA 750 Pueblo County School
District No.70, Pueblo
Rural, (AMBAC) 6.40%,
12/1/14 808,013
-----------
$ 6,639,482
-----------
INSURED HOSPITALS - 13.8%
Aaa AAA $2,500 Colorado Health Facilities
Authority, Sisters of
Charity, (MBIA) 5.25%,
5/15/14 $ 2,465,125
Aaa AAA 2,000 Colorado Health Facilities
Authority, Boulder
Community Hospital, (MBIA)
5.875%, 10/1/23 2,064,580
Aaa AAA 2,000 Colorado Springs Hospital,
(MBIA) 6.00% 12/15/24 (4) 2,098,560
-----------
$ 6,628,265
-----------
</TABLE>
34
<PAGE> 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 HOUSING - 2.3%
Aaa AAA $1,000 City of Thornton, SCA
Realty MFMR, (FSA) 7.10%,
1/1/30 $ 1,105,060
-----------
INSURED UTILITIES - 0.7%
Aaa AAA $ 300 Puerto Rico Electric Power
Authority, (FSA) 7/1/03 (1) $ 351,495
-----------
INSURED SPECIAL TAX - 2.2%
Aaa AAA $1,000 City of Broomfield Sales
and User Tax, (AMBAC)
6.30%, 12/1/14 $ 1,064,770
-----------
INSURED TRANSPORTATION - 4.4%
Aaa AAA $2,100 City and County of Denver,
Denver International
Airport, (MBIA) 5.60%,
11/15/20 (4) $ 2,117,829
-----------
INSURED WATER & SEWER - 2.0%
Aaa AAA $1,000 Municipal Subdistrict,
Northern Colorado Water
Conservancy District,
(AMBAC) 5.00%, 12/1/17 $ 957,650
-----------
SPECIAL TAX - 5.5%
Baa1 A $2,750 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/20 $ 2,633,180
-----------
TRANSPORTATION - 5.7%
Baa3 BB $1,500 City and County of Denver,
Colorado Special Facilities
Airport System, United
Airlines, (AMT) 6.875%,
10/1/32 (3) $ 1,551,645
Baa BBB 500 City and County of Denver,
Colorado Airport System,
(AMT) 6.75%, 11/15/22 (3) 526,285
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa BBB 500 City and County of Denver,
Colorado Airport System,
(AMT) 7.50%, 11/15/23 557,940
NR BBB 100 Guam Airport Authority,
(AMT) 6.70%, 10/1/23 103,068
-----------
$ 2,738,938
-----------
UTILITIES - 5.4%
NR BBB $ 350 Guam Power Authority,
5.25%, 10/1/13 $ 323,418
NR BBB 500 Guam Power Authority,
6.625%, 10/1/14 524,285
Aa A+ 1,750 Platte River Power
Authority, 5.50%, 6/1/18 1,752,151
-----------
$ 2,599,854
-----------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $44,485,539) $48,148,769
===========
</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.
(4) Security has been segregated to cover margin requirements for open financial
futures contracts.
The Portfolio primarily invests in debt securities issued by Colorado
municipalities. The ability 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 January
31, 1996, 41.3% 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 2.6% to 25.9% of total investments.
See notes to financial statements
35
<PAGE> 36
- --------------------------------------------------------------------------------
Connecticut Municipals Portfolio
Portfolio of Investments - January 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------
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 -- 9.1%
Baa BBB $ 1,000 Connecticut HEFA,
University of Hartford,
6.75%, 7/1/12 $ 1,040,170
Baa BBB 5,500 Connecticut HEFA,
University of Hartford,
6.80%, 7/1/22 5,709,550
NR BBB- 4,775 Connecticut HEFA,
Quinnipiac College, 6.00%,
7/1/23 4,625,065
Baa A 1,000 Connecticut HEFA, Sacred
Heart University, 6.80%,
7/1/12 1,085,710
NR BBB- 1,000 Connecticut HEFA, Sacred
Heart University, 5.80%,
7/1/23 940,010
NR A 1,125 Connecticut HEFA, Taft
School, 5.40%, 7/1/20 1,120,399
Aaa AAA 3,400 Connecticut HEFA, Yale
University, 7.791%,
6/10/30 (1) 3,620,184
------------
$ 18,141,088
------------
ESCROWED TO MATURITY - 2.9%
NR AA- $ 650 State of Connecticut
General Obligations Bonds,
6.875%, 7/15/10 $ 733,440
NR AAA 800 Connecticut Special Tax
Obligation Bonds (STO),
Transportation
Infrastructure Purposes,
6.75%, 6/1/11 919,232
Aaa AA- 645 Connecticut STO
Transportation
Infrastructure Purposes,
6.50%, 7/1/09 708,191
A1 NR 300 Amity RSD No. 5 Bonds,
6.80%, 6/15/08 324,900
NR A- 1,630 City of Stratford,
Government Obligations
Bonds, 7.30%, 3/1/12 1,885,013
NR AAA 1,000 Puerto Rico Industrial
Medical & Environmental
Pollution Control
Facilities, Dr. Pila
Hospital, 7.85%, 8/1/28 1,114,790
------------
$ 5,685,566
------------
GENERAL OBLIGATIONS - 4.5%
A AA- $ 2,000 City of Bridgeport, 6.125%,
3/1/05 $ 2,176,900
Aa AA- 1,750 State of Connecticut,
Capital Appreciation Bonds,
0%, 11/1/09 869,068
Aa AA- 1,000 State of Connecticut,
5.50%, 3/15/10 1,049,090
Aa AA- 500 State of Connecticut,
5.50%, 3/15/11 521,935
Aa AA 1,270 City of Danbury, 4.50%,
2/1/14 1,154,468
Aa1 NR 650 City of Farmington, 5.70%,
1/15/11 702,468
NR BBB 500 Government of Guam, 5.40%,
11/15/18 464,710
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa1 AA+ 925 City of Norwalk Maritime
Center Project Bonds,
6.05%, 2/1/09 996,493
NR NR 1,000 Virgin Islands PFA Revenue
Bonds, 7.25%, 10/1/18 1,075,430
------------
$ 9,010,562
------------
HEALTH CARE (NON-HOSPITAL) - 12.3%
A1 AA- $ 600 Connecticut HEFA, Nursing
Home Program (NHP) (Noble
Horizons), 6.00%, 11/1/22 $ 618,216
A1 AA- 1,000 Connecticut HEFA, (NHP)
(Jewish Home-Fairfield),
6.25%, 11/1/20 1,059,270
A1 AA- 655 Connecticut HEFA, (NHP)
(St. Camillus), 6.25%,
11/1/18 693,822
A1 AA- 3,250 Connecticut HEFA, (NHP)
(St. Joseph's Manor) 6.25%,
11/1/16 3,434,535
A1 AA- 1,365 Connecticut HEFA, (NHP)
(Sharon Healthcare) 6.25%,
11/1/14 1,449,316
A2 NR 9,000 Connecticut Development
Authority Health Care Bonds
(Duncaster), 6.75%, 9/1/15 9,671,760
A1 AA- 720 Connecticut HEFA, (NHP)
(Highland View), 7.00%,
11/1/07 824,141
A1 AA- 335 Connecticut HEFA, (NHP)
(Wadsworth Glen), 7.00%,
11/1/07 383,454
A1 AA- 2,000 Connecticut HEFA, (NHP)
(Wadsworth Glen), 7.50%,
11/1/16 2,329,660
A1 AA- 500 Connecticut HEFA (NHP)
Windsor Nursing Home
7.125%, 11/1/24 566,425
A1 AA- 3,000 Connecticut HEFA, (NHP)
(Windsor), 7.125%, 11/1/14 3,409,830
------------
$ 24,440,429
------------
HOSPITALS - 7.2%
NR A- $ 3,770 Connecticut HEFA, William
W. Backus Hospital, 6.375%,
7/1/22 $ 3,902,214
Baa1 NR 9,150 Connecticut HEFA, Griffin
Hospital, 5.75%, 7/1/23 8,337,403
NR BBB- 2,000 Connecticut HEFA, New
Britan Memorial Hospital,
7.75%, 7/1/22 2,168,800
------------
$ 14,408,417
------------
HOUSING - 10.5%
Aa AA $ 100 Connecticut HFA Mortgage
Revenue Bonds (MRB), 7.40%,
11/15/99 $ 104,177
Aa AA 250 Connecticut HFA, (MRB),
7.10%, 11/15/00 263,120
</TABLE>
36
<PAGE> 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 200 Connecticut HFA, (MRB),
7.00%, 11/15/09 213,472
Aa AA 6,200 Connecticut HFA, (MRB),
6.70%, 11/15/12 6,640,510
Aa AA 210 Connecticut HFA, (MRB),
6.55%, 11/15/13 222,020
Aa AA 3,000 Connecticut HFA, (MRB),
6.20%, 5/15/14 3,102,210
Aa AA 1,700 Connecticut HFA, (MRB),
6.35%, 5/15/17 1,784,864
Aa AA+ 140 Connecticut HFA, (MRB),
7.625%, 11/15/17 145,254
Aa AA 1,340 Connecticut HFA, (MRB),
6.90%, 5/15/20 1,398,947
Aa AA 1,750 Connecticut HFA, (MRB),
6.20%, 5/12/21 1,783,180
Aa AA 100 Connecticut HFA, (MRB),
6.70%, 11/5/22 103,606
Aa AA 2,500 Connecticut HFA, (MRB),
6.60%, 11/15/23 2,632,250
Aa AA 2,000 Connecticut HFA, (MRB),
6.75%, 11/15/23 2,126,200
NR AA 305 Puerto Rico HFC, (MRB),
7.50%, 10/1/11 319,518
------------
$ 20,839,328
------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL
REVENUES - 4.7%
Aaa AAA $ 1,000 Connecticut Development
Authority PCR (Pfizer
Inc.), 6.55%, 2/15/13 $ 1,104,280
Aa AA- 2,000 Connecticut Development
Authority (Economic
Development Projects),
Revenue Bonds, 6.00%,
11/15/08 2,128,880
A1 A+ 2,000 Connecticut Development
Authority (New England
Power Company Project),
7.25%, 10/15/15 2,176,120
NR BBB+ 3,065 Connecticut Development
Authority Airport Facility
(Signature flight) 6.625%,
12/1/14 3,146,805
Baa3 BB+ 700 Puerto Rico Port Authority
American Airlines, 6.30%,
6/1/23 716,758
------------
$ 9,272,843
------------
INSURED AIRPORTS - 4.9%
Aaa AAA $ 8,200 State of Connecticut
Airport Revenue Bonds,
Bradley International
Airport, (FGIC), 7.65%,
10/1/12 $ 9,787,192
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED COLLEGE AND UNIVERSITY - 3.9%
Aaa AAA $ 725 Connecticut HEFA, Fairfield
University (MBIA), 5.00%,
7/1/18 $ 700,321
Aaa AAA 1,200 Connecticut HEFA,
Connecticut College (MBIA),
6.625%, 7/1/11 1,304,904
Aaa AAA 2,000 Connecticut HEFA, Trinity
College (MBIA), 6.00%,
7/1/22 2,095,220
Aaa AAA 1,555 Connecticut HEFA, Choate
Rosemary College (MBIA),
6.80%, 7/1/15 (2) 1,751,925
Aaa AAA 750 Connecticut HEFA, Loomis
Chafee (MBIA), 6.00%,
7/1/15 790,867
Aaa AAA 1,000 Connecticut HEFA, Loomis
Chafee (MBIA), 6.00%,
7/1/25 1,047,560
------------
$ 7,690,797
------------
INSURED MISCELLANEOUS - 1.6%
Aaa AAA $ 2,160 Connecticut Municipal
Electric Energy Cooperative
Bonds (MBIA), 5.00%, 1/1/18 $ 2,087,359
Aaa AAA 1,000 South Central Connecticut
Water Authority Revenue
Bonds 5.75%, 8/1/12 1,043,820
------------
$ 3,131,179
------------
INSURED GENERAL OBLIGATIONS - 3.3%
Aaa AAA $ 1,220 Town of Bethel, (MBIA),
6.50%, 2/15/09 $ 1,412,711
Aaa AAA 740 Town of Stratford, (MBIA),
6.60%, 3/1/11 867,717
Aaa AAA 1,000 City of New Britain,
(MBIA), 6.00%, 3/1/12 1,094,400
Aaa AAA 1,000 Town of Plainfield, (MBIA),
6.375%, 8/1/11 1,089,320
Aaa AAA 2,000 Puerto Rico Public Building
Authority Bonds (AMBAC),
5.50%, 7/1/25 2,013,360
------------
$ 6,477,508
------------
INSURED HEALTHCARE - 0.8%
Aaa AAA $ 1,735 Connecticut HEFA, (NHP)
(St. Joseph's Living
Center), (AMBAC) 5.10%,
11/1/19 $ 1,686,004
------------
INSURED HOSPITAL - 11.2%
Aaa AAA $ 1,000 Connecticut HEFA,
Bridgeport Hospital (MBIA),
6.625%, 7/1/18 $ 1,103,810
NR AAA 1,600 Connecticut HEFA,
Bridgeport Hospital (CLEE),
5.25%, 7/1/15 1,561,872
Aaa AAA 6,750 Connecticut HEFA, St.
Francis Hospital (FGIC),
5.00%, 7/1/23 6,384,150
Aaa AAA 1,500 Connecticut HEFA, Lawrence
and Memorial Hospital
(MBIA), 5.00%, 7/1/13 1,464,165
</TABLE>
37
<PAGE> 38
- --------------------------------------------------------------------------------
CONNECTICUT MUNICIPALS PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
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 5,750 Connecticut HEFA, Lawrence
and Memorial Hospital
(MBIA), 5.00%, 7/1/22 5,498,150
Aaa AAA 1,000 Connecticut HEFA, Hospital
of St. Raphael (AMBAC),
6.50%, 7/1/11 1,160,920
Aaa AAA 1,500 Connecticut HEFA, Hospital
of St. Raphael (AMBAC),
6.625%, 7/1/14 1,627,410
Aaa AAA 2,000 Connecticut HEFA, Yale-New
Haven Hospital (MBIA),
6.50%, 7/1/12 2,191,740
Aaa AAA 1,200 Connecticut HEFA, Yale-New
Haven Hospital (MBIA),
7.10%, 7/1/25 1,340,016
------------
$ 22,332,233
------------
INSURED SOLID WASTE - 1.0%
Aaa AAA $ 2,000 Connecticut Resources
Recovery Authority Mid-
Connecticut System Bonds
(MBIA), 5.50%, 11/15/12 $ 1,997,640
------------
INSURED WATER AND SEWER - 0.8%
Aaa AAA $ 1,750 Connecticut Development
Authority Water Facilities
Bonds, Connecticut Water
Company (AMBAC), (AMT),
5.875%, 9/1/22 $ 1,786,855
------------
SOLID WASTE - 8.1%
A NR $ 2,500 Bristol Resource Recovery
Facility Operating
Committee, (Ogden Martin
Systems), 6.50%, 7/1/14 $ 2,672,350
Baa1 AA- 450 Connecticut Resources
Recovery Authority
(American REF-FUEL
Company), (AMT), 8.00%,
11/15/15 495,581
Baa1 A 1,000 Connecticut Resources
Recovery Authority
(American REF-FUEL
Company), (AMT), 8.10%,
11/15/15 1,103,850
A2 A 4,250 Connecticut Resources
Recovery Authority
(American REF-FUEL
Company), (AMT), 6.45%,
11/15/22 4,462,628
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
NR A- 7,970 Eastern Connecticut
Resource Recovery
Authority, (Wheelabrator
Lisbon), 5.50%, 1/1/20 7,325,068
------------
$ 16,059,477
------------
SPECIAL TAX - 4.8%
A1 AA- $ 1,000 State of Connecticut STO,
5.40%, 9/1/10 $ 1,015,640
A1 AA- 3,180 State of Connecticut STO,
6.125%, 9/1/12 3,526,429
Baa1 A 4,465 Puerto Rico Highway &
Transportation Authority,
series x, 5.50%, 7/1/15 4,475,314
Baa1 A 500 Puerto Rico Highway &
Transportation Authority
5.50%, 7/1/15 505,335
------------
$ 9,522,718
------------
STUDENT LOANS - 2.4%
A1 NR $ 440 Connecticut Higher
Education Supplemental Loan
Authority Revenue Bonds
(AMT), 7.375%, 11/15/05 $ 467,795
A1 NR 1,340 Connecticut Higher
Education Supplemental Loan
Authority Revenue Bonds
(AMT), 6.20%, 11/15/09 1,397,647
A1 NR 2,760 Connecticut Higher
Education Supplemental Loan
Authority Revenue Bonds
(AMT), 7.50%, 11/15/10 2,943,098
------------
$ 4,808,540
------------
UTILITY - 4.3%
NR BBB $ 1,100 Guam Power Authority
Revenue Bonds, 6.625%,
10/1/14 $ 1,153,427
NR BBB 3,625 Guam Power Authority
Revenue Bonds, 6.30%,
10/1/22 3,697,210
NR NR 3,500 Virgin Islands Water and
Power Authority, Electric
Revenue System Bonds 7.40%,
7/1/11 3,758,825
------------
$ 8,609,462
------------
</TABLE>
38
<PAGE> 39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 - 1.7%
Aa AA+ $ 1,250 State of Connecticut Clean
Water Fund Revenue Bonds,
6.00%, 10/1/12 $ 1,393,075
NR A+ 2,225 Connecticut Development
Authority Water Facilities,
Stamford Water Company,
5.30%, 9/1/28 2,151,263
------------
$ 3,544,338
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $190,611,515) $199,232,176
============
</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 Connecticut
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at January 31, 1996, 27.5% 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 4.3% to 14.0% of total investments.
See notes to financial statements
39
<PAGE> 40
- --------------------------------------------------------------------------------
Michigan Municipals Portfolio
Portfolio of Investments - January 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------
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%
NR BBB- $2,000 Puerto Rico Polytechnic
University, 6.50%, 8/1/24 $ 2,078,560
------------
ELECTRIC UTILITIES - 3.5%
NR BBB $1,000 Guam Power Authority,
6.625%, 10/1/14 $ 1,048,570
A1 AA- 2,000 MI Pub Power Agency Belle
River Project, 5.00%,
1/1/19 1,877,960
Baa1 BBB+ 500 MI South Central Power
Agency Supply System,
6.75%, 11/1/10 534,350
Baa1 BBB 1,790 Monroe County, MI PCR
Detroit Edison Project,
7.75%, 12/1/19 1,977,126
Baa1 A- 1,000 Puerto Rico Electric Power
Authority, 5.00%, 7/1/12 948,430
Baa1 A- 365 Puerto Rico Electric Power
Authority, 7.125%, 7/1/14 400,960
------------
$ 6,787,396
------------
ESCROWED - 7.6%
Aa NR $2,550 Clintondale, MI Community
Schools, 6.75%, 5/1/24 $ 2,937,141
Ba1 AAA 500 Detroit, MI General
Obligation, 8.00%, 4/1/11 595,280
NR AA 940 Detroit City School
District, MI School
Building and Site, 7.15%,
5/1/11 1,084,224
Aaa AAA 1,000 Lake Orion, MI School
District General
Obligation, 7.00%, 5/1/20 1,189,620
Aaa AAA 750 MI HFA, Oakwood Hospital,
7.20%, 11/1/15 858,608
Aaa AAA 3,500 Monroe County, MI EDC
Mercy Memorial Hospital,
7.00%, 9/1/21 4,047,225
NR AA 955 Okemos Public Schools,
MI School Building and
Site, 6.90%, 5/1/11 1,090,400
NR NR 2,400 Wyandotte School District,
MI School Building and
Site, 6.90%, 5/1/16 2,740,272
------------
$ 14,542,770
------------
GENERAL OBLIGATIONS - 5.2%
Aa AA $ 500 Avondale School District,
Michigan School Building
and Site, 6.75%, 5/1/14 $ 544,180
Ba1 BBB 500 Detroit City, Michigan,
6.70%, 4/1/10 534,530
Ba1 BBB 5,630 Detroit City, Michigan,
6.35%, 4/1/14 5,786,627
A AA 500 East Lancing, Michigan
Building Authority, 7.00%,
10/1/16 536,295
Aa AA 1,350 Martin, Michigan Public
School Building and Site,
6.60%, 5/1/20 1,434,415
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa AA 1,000 Mattawan, Michigan
Consolidated Schools,
6.40%, 5/1/09 1,084,910
------------
$ 9,920,957
------------
HOSPITALS - 13.5%
A A $ 450 Michigan HFA Detroit
Medical Center Obligated
Group, 7.50%, 8/15/11 $ 496,787
A A 4,550 Michigan HFA Detroit
Medical Center Obligated
Group, 5.50%, 8/15/23 4,309,578
A A 5,500 Michigan HFA Detroit
Medical Center Obligated
Group, 6.25%, 8/15/13 5,650,700
Aa AA 250 Michigan HFA Henry Ford
Continuing Care
Corporation, 6.75%, 7/1/11 270,350
A1 NR 2,970 Michigan HFA McLaren
Obligated Group, 5.375%,
10/15/13 2,888,800
A1 NR 6,000 Michigan HFA McLaren
Obligated Group, 4.50%,
10/15/21 5,020,260
A A 4,130 Michigan HFA MidMichigan
Obligated Group, 6.625%,
6/1/10 4,286,857
NR NR 1,000 Michigan HFA Presbyterian
Villages, 6.50%, 1/1/25 989,630
Aa AA 1,750 Royal Oak, Michigan
William Beaumont Hospital,
6.75%, 1/1/20 1,867,303
------------
$ 25,780,265
------------
HOUSING - 1.7%
NR A+ $1,210 Michigan HDA Rental
Housing (AMT), 7.15%,
4/1/10 $ 1,312,305
NR A+ 1,000 Michigan HDA Rental
Housing, 7.10%, 4/1/21 1,069,080
NR AA+ 895 Michigan HDA Single Family
Mortgage, 6.95%, 12/1/20 957,516
------------
$ 3,338,901
------------
INDUSTRIAL DEVELOPMENT REVENUE/
POLLUTION CONTROL REVENUE - 9.3%
Baa1 BBB $6,970 Dickinson, Michigan PCR-
Champion International,
5.85%, 10/1/18 $ 6,874,720
A3 A- 6,970 Michigan Strategic Fund-
General Motors, 6.20%,
9/1/20 7,243,991
NR BBB+ 110 Michigan Strategic
Fund-KMart
Corporation, 6.80%,
6/15/07 92,777
NR NR 3,000 Michigan Strategic Fund-
SD Warren Company, 7.375%,
(AMT) 1/15/22 3,146,850
NR BB 530 Richmond, Michigan EDC
KMart Corporation, 6.625%,
1/1/07 442,656
------------
$ 17,800,994
------------
</TABLE>
40
<PAGE> 41
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 - 5.4%
Aaa AAA $ 500 Eastern Michigan
University, (AMBAC),
6.375%, 6/1/14 $ 530,995
Aaa AAA 1,500 Ferris State University,
Michigan (MBIA), 5.25%,
10/1/15 1,490,790
Aaa AAA 1,100 Ferris State University,
Michigan (MBIA), 5.25%,
10/1/20 1,092,399
Aaa AAA 500 Michigan Higher Education
Student Loan (AMBAC),
6.875%, 10/1/07 535,405
Aaa AAA 3,510 Wayne State University,
Michigan (AMBAC), 5.65%,
11/15/15 3,585,114
Aaa AAA 2,600 Western Michigan
University (FGIC), 5.00%,
7/15/21 2,463,838
Aaa AAA 500 Western Michigan
University (AMBAC), 6.50%,
7/15/21 534,820
------------
$ 10,233,361
------------
INSURED ELECTRIC UTILITIES - 2.8%
Aaa AAA $ 300 Michigan Strategic Fund,
Detroit Edison Company
(FGIC), 6.95%, 5/1/11 $ 355,452
Aaa AAA 4,000 Michigan Strategic Fund,
Detroit Edison Company
(FGIC), 6.95%, 9/1/21 4,382,520
Aaa AAA 550 Monroe County, Michigan
PCR Detroit Edison Company
(FGIC) (AMT), 7.65%,
9/1/20 619,108
------------
$ 5,357,080
------------
INSURED GENERAL OBLIGATIONS - 14.2%
Aaa AAA $2,000 Chippewa Valley, Michigan
School District (FGIC),
5.00%, 5/1/21 $ 1,895,560
Aaa AAA 1,000 Dearborn, Michigan School
District (MBIA), 5.00%,
5/1/10 988,880
Aaa AAA 545 Goodrich, Michigan School
District (AMBAC), 5.70%,
5/1/15 559,514
Aaa AAA 2,000 Grand Ledge, Michigan
School District (MBIA),
7.875%, 5/1/11 2,503,700
Aaa AAA 2,000 Grand Ledge, Michigan
School
District (MBIA), 5.375%,
5/1/24 1,972,640
Aaa AAA 2,000 Holland City, Michigan
School
District (AMBAC), 0%,
5/1/17 615,020
Aaa AAA 1,000 Holly, Michigan School
District (FGIC), 5.625%,
5/1/25 1,007,770
Aaa AAA 1,500 Iron Mountain, Michigan
School District (AMBAC),
5.125%, 5/1/21 (1) 1,435,425
Aaa AAA 4,500 Livonia, Michigan School
District (FGIC), 5.125%,
5/1/22 4,260,690
Aaa AAA 2,000 Lowell, Michigan Schools
(FGIC), 0%, 5/1/16 656,560
Aaa AAA 2,000 Napoleon, Michigan School
District (FGIC) 5.50%,
5/1/20 2,004,460
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 1,000 Napoleon, Michigan School
District (FGIC) 5.50%,
5/1/24 997,060
Aaa AAA 2,610 Okemos, Michigan Public
Schools (MBIA), 0%, 5/1/16 861,900
Aaa AAA 500 Pellston, Michigan Public
Schools (MBIA), 6.625%,
5/1/12 546,435
Aaa AAA 4,000 Riverview Community School
District, Michigan
(AMBAC), 5.25%, 5/1/21 3,853,480
Aaa AAA 1,245 Traverse, Michigan Public
Schools (MBIA), 5.70%,
5/1/16 1,268,680
Aaa AAA 1,400 Vicksburg Community
Schools, Michigan (MBIA),
0%, 5/1/16 452,410
Aaa AAA 1,000 Vicksburg Community
Schools, Michigan (MBIA),
0%, 5/1/17 305,610
Aaa AAA 1,000 Western, Michigan School
District (MBIA), 5.70%,
5/1/15 1,023,260
------------
$ 27,209,054
------------
INSURED HEALTHCARE - 0.7%
Aaa AAA $1,250 Farmington Hills, Michigan
EDC-Botsford Continuing
Care (MBIA), 5.75%,
2/15/25 $ 1,272,450
------------
INSURED HOSPITAL - 10.1%
Aaa AAA $3,000 Dearborn City, Michigan
EDC Oakwood Obligated
Group (MBIA), 5.25%,
8/15/14 $ 2,944,200
Aaa AAA 1,000 Dearborn City, Michigan
EDC Oakwood Obligated
Group (MBIA), 5.25%,
8/15/21 969,900
Aaa AAA 3,500 Jackson County, Michigan
HFA W.A. Foote Memorial
(FGIC), 4.75%, 6/1/15 3,232,845
Aaa AAA 5,735 Kalamazoo City, Michigan
HFA Borgess Medical Center
(FGIC), 5.25%, 6/1/17 5,619,268
Aaa AAA 3,200 Michigan HFA Linked Bulls
& Bears (FSA), 6.10%,
8/15/22 3,408,288
Aaa AAA 2,215 Michigan HFA Mercy
Memorial Hospital (MBIA),
5.25%, 6/1/21 2,157,321
Aaa AAA 1,000 Michigan HFA Foote
Memorial Hospital (FGIC),
5.25%, 6/1/23 967,520
------------
$ 19,299,342
------------
INSURED HOUSING - 0.3%
Aaa AAA $ 500 Michigan HDA Parkway
Meadows Projects (FSA),
6.85%, 10/15/18 $ 535,390
------------
INSURED SPECIAL TAX - 0.2%
Aaa AAA $ 400 Grand Rapids, Michigan
Downtown Development
Authority Tax Increment
(MBIA), 6.875%, 6/1/24 $ 446,800
------------
</TABLE>
41
<PAGE> 42
- --------------------------------------------------------------------------------
MICHIGAN TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
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 - 3.7%
Aaa AAA $4,000 Michigan State Trunk Line
(FGIC), 5.80%, 11/15/24 $ 4,092,920
Aaa AAA 1,000 Wayne County, Michigan
Airport (MBIA), 5.25%,
12/1/13 973,960
Aaa AAA 2,000 Wayne County, Michigan
Airport (MBIA), 5.25%,
(AMT) 12/1/21 1,950,160
------------
$ 7,017,040
------------
INSURED WATER & SEWER - 8.9%
Aaa AAA $ 300 Clinton Township, Michigan
Water and Sewage System
(AMBAC), 4.75%, 7/1/09 $ 287,067
Aaa AAA 400 Clinton Township, Michigan
Water and Sewage System
(AMBAC), 4.75%, 7/1/10 378,008
Aaa AAA 400 Clinton Township, Michigan
Water and Sewage System
(AMBAC), 4.75%, 7/1/11 375,008
Aaa AAA 400 Clinton Township, Michigan
Water and Sewage System
(AMBAC), 4.75%, 7/1/12 374,816
Aaa AAA 4,425 Detroit City, Michigan
Water Supply System
(FGIC), 6.25%, 7/1/12 4,997,418
Aaa AAA 7,180 Detroit City, Michigan
Water Supply System
(FGIC), 4.75%, 7/1/19 (2) 6,626,422
Aaa AAA 4,035 Detroit City, Michigan
Water Supply System
(FGIC), 5.50%, 7/1/25 4,017,246
------------
$ 17,055,985
------------
MISCELLANEOUS - 3.4%
A1 AA $ 590 Michigan Municipal Bond
Authority Local Government
Loan, 6.90%, 5/1/21 $ 667,438
A1 AA 2,550 Michigan Municipal Bond
Authority Local Government
Loan-Qualified School,
6.50%, 5/1/07 2,852,685
A1 AA 760 Michigan Municipal Bond
Authority Local Government
Loan, 6.50%, 5/1/08 847,871
NR A- 2,000 Michigan Strategic
Environmental Research
Institute, 6.375%, 8/15/12 2,122,420
------------
$ 6,490,414
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
SOLID WASTE - 1.6%
NR BBB- $1,915 Greater Detroit, Michigan
Resource Recovery
Authority, 9.25%, 12/13/08 $ 1,982,025
NR BBB- 1,000 Greater Detroit, Michigan
Resource Recovery
Authority, 9.25%, 12/13/08 1,035,000
------------
$ 3,017,025
------------
SPECIAL TAX REVENUE - 5.8%
NR BBB+ $ 250 Battle Creek, Michigan
Downtown Development
Authority Tax Increment,
7.60%, 5/1/16 $ 285,958
NR BBB+ 1,315 Battle Creek, Michigan
Downtown Development
Authority Tax Increment,
7.65%, 5/1/22 1,508,423
NR A 7,650 Detroit City Convention
Facility, Michigan Cobo
Hall Expansion Project,
5.25%, 9/30/12 (2) 7,219,458
NR A 1,825 Michigan Muni Bond
Authority Local Government
Loan Project, 6.75%,
5/1/12 2,017,410
------------
$ 11,031,249
------------
WATER AND SEWER - 1.0%
Aa AA $1,895 Lansing City, Michigan
Water and Electric Utility
System, 4.90%, 7/1/10 $ 1,837,751
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $177,452,450) $191,052,784
============
</TABLE>
(1) When-issued security.
(2) Security has been segregated to cover when-issued securities.
The Portfolio primarily invests in debt securities issued by Michigan
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at January 31, 1996, 46.3% 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 2.4% to 23.6% of total investments.
See notes to financial statements
42
<PAGE> 43
- --------------------------------------------------------------------------------
Minnesota Municipals Portfolio
Portfolio of Investments - January 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------
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 - 3.3%
A NR $ 100 Minnesota Higher Education
Facilities Authority, St.
Olaf College, 6.25%, 4/1/10 $ 100,144
Baa NR 1,000 Minnesota Higher Education
Facilities Authority, St.
Mary's College, 6.15%,
10/1/23 1,043,490
Aa NR 250 Minnesota Higher Education
Facilities Authority,
MacAlister College, 5.55%,
3/1/16 253,725
Aa AA 1,250 University of Minnesota,
Variable, 8/15/03 (1) 1,299,763
-----------
$ 2,697,122
-----------
ESCROWED - 6.1%
Aaa AAA $ 565 Duluth MN Economic
Development Authority, The
Duluth Clinic, (AMBAC)
6.30%, 11/1/22 $ 639,947
Aa1 AA+ 1,700 State of Minnesota,
Variable, 8/1/11 (1) 2,094,162
Aaa AAA 1,960 Western Minnesota Municipal
Power Agency, 6.375%,
1/1/16 2,168,309
-----------
$ 4,902,418
-----------
GENERAL OBLIGATIONS - 5.7%
Aaa AAA $ 700 City of Minneapolis, 6.25%,
4/1/12 $ 756,917
Aaa AAA 1,000 City of Minneapolis, Sports
Arena Project, 5.20%,
10/1/24 988,170
Aaa AAA 200 Cities of Minneapolis & St.
Paul, (AMT), 6.60%, 1/1/09 216,814
Aaa AAA 300 Cities of Minneapolis & St.
Paul, (AMT), 6.60%, 1/1/10 325,221
Aa1 AA+ 1,000 State of Minnesota, 5.40%,
8/1/13 1,005,490
Aa1 AA+ 1,000 State of Minnesota, Duluth
Airport, (AMT), 6.25%,
8/1/14 1,063,980
A AA- 200 City of Saint Cloud,
Variable, 8/1/13 (1) 218,080
-----------
$ 4,574,672
-----------
HEALTHCARE (NON-HOSPITAL) - 6.0%
A A- $1,250 St. Paul Minnesota Housing
and Redevelopment
Authority, Group Health
Plan, Inc., 6.75%, 12/1/13 $ 1,346,125
A A- 250 St. Paul Minnesota Housing
and Redevelopment
Authority, Group Health
Plan, Inc., 6.90%, 10/15/22 271,770
NR BBB+ 2,120 City of Red Wing, Minnesota
Health Care Facilities
Revenue, River Region
Obligated Group, 6.50%,
9/1/22 2,169,862
NR NR 1,000 St. Paul Minnesota Housing
and Redevelopment
Authority, Elder Care
Facility-Care Institute,
Inc., 8.75%, 11/1/24 1,025,520
-----------
$ 4,813,277
-----------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
HOSPITALS - 7.3%
NR AA+ $2,200 City of Rochester,
Minnesota Health Care
Facilities, Mayo
Foundation/Medical Center,
Variable 11/15/15 (1) $ 2,370,588
Baa BBB- 1,000 St. Paul Housing and
Redevelopment Authority,
Healtheast Project, 6.625%,
11/1/17 1,017,440
Baa BBB- 2,500 St. Paul Housing and
Redevelopment Authority,
Healtheast Project, 6.625%,
11/1/17 2,543,600
-----------
$ 5,931,628
-----------
HOUSING - 19.2%
NR AAA $ 300 City of Coon Rapids, Multi-
Family, Browns Meadow
Manor, (FHA), (AMT), 6.85%,
8/1/33 $ 309,282
NR AAA 1,395 County of Dakota, Housing
and Redevelopment
Authority, Multi-Family
(GNMA),
7.375%, 12/1/29 1,527,190
Aa NR 1,200 City of Maplewood, Multi-
Family, Beaver Creek
Apartments, (FHA),
6.50%, 9/1/24 1,261,752
NR AAA 90 Minneapolis and St. Paul
Housing Finance Board,
(GNMA), (AMT),
7.30%, 8/1/31 95,527
Aa AA+ 385 Minnesota Housing Finance
Agency, Single Family
Mortgage, 7.70%, 7/1/14 413,740
Aa AA+ 380 Minnesota Housing Finance
Agency, Single-Family,
(AMT), 7.05%, 7/1/22 402,895
Aa AA+ 445 Minnesota Housing Finance
Agency, Single-Family,
6.95%, 7/1/16 477,289
Aa AA+ 1,000 Minnesota Housing Finance
Agency, Single-Family,
(AMT), 6.75%, 7/1/12 1,064,470
Aa AA+ 1,235 Minnesota Housing Finance
Agency, Single-Family,
(AMT), 6.85%, 1/1/24 1,305,914
Aa AA+ 4,200 Minnesota Housing Finance
Agency, Single-Family,
(AMT), 6.50%, 1/1/26 4,351,704
</TABLE>
43
<PAGE> 44
- --------------------------------------------------------------------------------
MINNESOTA MUNICIPALS PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
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 690 Minnesota Housing Finance
Agency, Single-Family,
(AMT), 6.75%, 1/1/26 726,708
Aa NR 1,250 St. Louis Park,
Multi-Family Mortgage,
6.25%, 12/1/28 1,291,025
Aaa NR 1,685 St. Paul, Multi-Family
Mortgage, Sun Cliffe
Project, 6.00%, 7/1/31 1,686,299
NR AAA 225 St. Paul, Minnesota Housing
and Redevelopment
Authority, Single-Family
(FNMA), 6.95%, 12/1/31 238,019
NR AAA 355 St. Paul, Minnesota Housing
and Redevelopment
Authority, Single-Family
(FNMA), 6.90%, 12/1/21 375,578
-----------
$15,527,392
-----------
INDUSTRIAL DEVELOPMENT/POLLUTION
CONTROL - 8.3%
NR AA- $ 300 City of Minneapolis,
Minnesota Community
Development Agency, 6.40%,
12/1/04 $ 318,816
NR BBB+ 100 City of Minneapolis,
Minnesota Community
Development Agency, 7.35%,
12/1/09 106,988
NR BBB+ 1,250 City of Minneapolis,
Minnesota Community
Development Agency, 7.40%,
12/1/21 1,326,613
NR BBB+ 1,605 City of Minneapolis,
Minnesota Community
Development Agency, (AMT),
6.80%, 12/1/24 1,640,518
Aa3 NR 3,000 Seaway Port Authority of
Duluth, Minnesota, Cargill,
Inc., 6.80%, 5/1/12 3,276,000
-----------
$ 6,668,935
-----------
INSURED GENERAL OBLIGATION - 1.8%
Aaa AAA $1,330 St. Francis, Minnesota
Independent School District
No. 15, (CGIC), 6.35%,
2/1/12 $ 1,463,226
-----------
INSURED HOSPITALS - 19.2%
Aaa AAA $1,435 Duluth Economic Development
Authority, The Duluth
Clinic, (AMBAC), 6.30%,
11/1/22 $ 1,537,301
Aaa AAA 100 Minneapolis and St. Paul
Health Care Systems, Health
One Obligated Group,
(MBIA), 7.40%, 8/15/11 112,865
Aaa AAA 3,345 Minneapolis and St. Paul
Health Care Systems,
Healthspan, (AMBAC), 4.75%,
11/15/18 3,082,284
Aaa AAA 250 City of Minneapolis,
Minnesota Hospital Revenue,
Fairview Hospital and
Healthcare, (MBIA), 6.50%,
1/1/11 276,348
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 450 Plymouth, Minnesota Health
Facilities, Westhealth
Project, (CGIC), 6.25%,
6/1/16 481,761
Aaa AAA 1,000 City of Saint Cloud,
Minnesota Hospital
Facilities, The Saint Cloud
Hospital, (AMBAC), 6.75%,
7/1/15 1,098,750
Aaa AAA 1,000 City of Saint Cloud,
Minnesota Hospital
Facilities, The Saint Cloud
Hospital, (AMBAC), 5.30%,
10/1/20 985,040
Aaa AAA 2,650 City of St. Louis Park,
Minnesota, Health Care
Facilities Health System
Minnesota Obligated Group,
(AMBAC), 5.20%, 7/1/23 2,593,025
Aaa AAA 5,250 St. Paul Housing and
Redevelopment Authority,
St. Paul-Ramsey Medical
Center Project, (AMBAC),
5.55%, 5/15/23 5,283,547
-----------
$15,450,921
-----------
INSURED HOUSING - 2.1%
Aaa AAA $1,500 SCA Tax Exempt Trust,
Burnsville, Minnesota
Multi-Family, (FSA), 7.10%,
1/1/30 $ 1,657,590
-----------
INSURED SPECIAL TAX - 3.8%
Aaa AAA $3,000 St. Paul Housing and
Redevelopment Authority,
Civic Center Project,
(MBIA), 5.45%, 11/1/13 $ 3,038,160
-----------
INSURED UTILITIES - 5.8%
Aaa AAA $ 300 Northern Municipal Power
Agency, (AMBAC), 6.00%,
1/1/19 $ 305,487
Aaa AAA 450 Southern Minnesota
Municipal Power Agency,
(MBIA), 5.00%, 1/1/12 439,844
Aaa AAA 300 Southern Minnesota
Municipal Power Agency,
(MBIA), Variable, 1/1/18
(1) 313,110
Aaa AAA 6,950 Southern Minnesota
Municipal Power Agency,
(MBIA), 0%, 1/1/21 1,834,592
Aaa AAA 6,000 Southern Minnesota
Municipal Power Agency,
(MBIA), 0%, 1/1/25 1,278,780
</TABLE>
44
<PAGE> 45
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 UTILITIES - (CONTINUED)
Aaa AAA 510 Western Minnesota Municipal
Power Agency, (MBIA),
5.50%, 1/1/15 511,483
-----------
$ 4,683,296
-----------
LEASE/CERTIFICATE OF
PARTICIPATION - 2.8%
Baa1 NR $ 350 City of Cambridge,
Minnesota Economic
Development Authority,
6.25%, 2/1/14 $ 361,435
Aa AA 1,770 Hennepin County, Minnesota
Lease Revenue Certificates
of Participation, 6.80%,
5/15/17 1,913,246
-----------
$ 2,274,681
-----------
SOLID WASTE - 0.6%
Aa3 AA- $ 450 Anoka County, Minnesota
Solid Waste Disposal,
National Rural Utility,
(AMT), 6.95%, 12/1/08 $ 492,800
-----------
UTILITIES - 5.2%
A3 A- $1,000 Bass Brook, Minnesota
Pollution Control Revenue,
Minnesota Power & Light
Company, 6.00%, 7/1/22 $ 1,011,760
A A 1,500 Northern Municipal Power
Agency, Minnesota Electric,
7.25%, 1/1/16 1,614,420
A A+ 1,100 Southern Minnesota
Municipal Power Agency,
5.00%,
1/1/12 1,061,335
A1 A 450 Western Minnesota Municipal
Power Agency, 7.00%, 1/1/13 469,436
-----------
$ 4,156,951
-----------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
WATER & SEWER - 2.8%
Aa1 AAA $ 100 Minnesota Public Facilities
Authority Water Pollution
Control, 7.00%, 3/1/09 $ 109,140
Aa1 AAA 150 Minnesota Public Facilities
Authority Water Pollution
Control, 6.70%, 3/1/13 165,690
Aa1 AAA 1,835 Minnesota Public Facilities
Authority Water Pollution
Control, 6.50%, 3/1/14 2,024,042
-----------
$ 2,298,872
-----------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $74,342,228) $80,631,939
---------
---------
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
The Portfolio primarily invests in debt securities issued by Minnesota
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at January 31, 1996, 32.7% 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 2.1% to 19.3% of total investments.
See notes to financial statements
45
<PAGE> 46
- --------------------------------------------------------------------------------
New Jersey Municipals Portfolio
Portfolio of Investments - January 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
COGENERATION - 3.4%
NR BB+ $12,750 New Jersey Economic
Development Authority,
Vineland Cogeneration
Limited Partnership,
(AMT), 7.875%, 6/1/19 $ 13,815,390
------------
EDUCATION - 3.1%
Baa1 BBB $ 2,480 New Jersey Educational
Facilities Authority,
Seton Hall University,
7.00%, 7/1/21 $ 2,718,030
Aa1 AA+ 1,000 New Jersey Educational
Facilities Authority,
Princeton Theological
Seminary, 6.375%, 7/1/22 1,084,500
NR NR 8,800 New Jersey Higher
Educational Student Loan
Bonds, (AMT), 0%, 7/1/10 3,377,088
NR BBB- 750 Puerto Rico Industrial,
Tourist, Educational,
Medical and Environmental
Authority, Polytechnic
University, 5.50%, 8/1/24 679,260
NR BBB- 1,000 Puerto Rico Industrial,
Tourist, Educational,
Medical and Environmental
Authority, Polytechnic
University, 6.50%, 8/1/24 1,039,280
A1 AA 2,500 Rutgers, The State
University of New Jersey,
6.85%, 5/1/21 2,740,700
A AA 1,000 University of Medicine and
Dentistry of New Jersey,
7.20%, 12/1/19 1,112,870
------------
$ 12,751,728
------------
ESCROWED/PREREFUNDED - 2.6%
Aaa AAA $ 870 The City of Newark,
(AMBAC), Prerefunded to
10/1/99, 7.375%, 10/1/07 $ 985,519
NR NR 2,000 County of Passaic,
Prerefunded to 9/1/99,
6.70%, 9/1/13 2,212,740
Baa1 AAA 5,645 Puerto Rico Aqueduct and
Sewer Authority,
Prerefunded to 7/1/98,
7.875%, 7/1/17 6,285,708
Aa AAA 1,205 New Jersey Health Care
Facilities Financing
Authority, Barnett
Hospital, (FHA),
Prerefunded to 8/1/01,
6.80%, 8/1/19 1,367,192
------------
$ 10,851,159
------------
GENERAL OBLIGATIONS - 13.5%
NR BBB $ 9,745 Government of Guam, 5.40%,
11/15/18 $ 9,057,198
NR A+ 5,000 The Hudson County
Improvement Authority,
6.625%, 8/1/25 5,349,400
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa1 NR 3,000 Mercer County Improvement
Authority Solid Waste, 0%,
4/1/10 1,436,580
Baa1 A 2,000 Commonwealth of Puerto
Rico, 5.50%, 7/1/17 1,980,020
Baa1 A 1,990 Commonwealth of Puerto
Rico, 6.45%, 7/1/17 2,143,031
Baa1 A 5,000 Commonwealth of Puerto
Rico, 6.50%, 7/1/23 5,401,150
Baa1 A 4,925 Commonwealth of Puerto
Rico, 5.40%, 7/1/25 4,790,400
Baa1 A 4,000 Puerto Rico Public
Buildings Authority,
Public Education and
Health Facilities, 5.75%,
7/1/15 4,054,840
Baa1 A 2,075 Puerto Rico Public
Buildings Authority,
Public Education and
Health Facilities, 5.75%,
7/1/16 2,103,448
Baa1 A 5,125 Puerto Rico Public
Buildings Authority,
Public Education and
Health Facilities, 5.50%,
7/1/21 5,048,843
NR NR 13,350 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 14,356,990
------------
$ 55,721,900
------------
HEALTHCARE (NON-HOSPITAL) - 1.9%
NR NR $ 1,400 New Jersey Economic
Development Authority,
Claremont Health System,
8.75%, 9/1/22 $ 1,495,200
NR NR 2,500 New Jersey Economic
Development Authority,
Victoria Health, 7.65%,
1/1/14 2,452,300
NR NR 3,630 New Jersey Economic
Development Authority,
Forsgate, 8.625% 6/1/25 3,733,310
------------
$ 7,680,810
------------
HOSPITALS - 7.4%
Aa AAA $ 9,585 New Jersey Health Care
Facilities Financing
Authority, Barnett
Hospital, (FHA), 6.80%,
8/1/19 $ 10,360,043
A A- 2,300 New Jersey Health Care
Facilities Financing
Authority, Atlantic City
Medical Center, 6.80%,
7/1/11 2,485,449
Baa1 NR 5,875 New Jersey Health Care
Facilities Financing
Authority, Deborah Heart
and Lung Center, 6.30%,
7/1/23 6,063,764
</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>
HOSPITALS - (CONTINUED)
Baa NR 2,000 New Jersey Health Care
Facilities Financing
Authority, Southern Ocean
County Hospital, 6.25%,
7/1/23 1,984,280
A A- 10,425 New Jersey Health Care
Facilities Financing
Authority, Chilton
Memorial Hospital, 5.00%,
7/1/13 9,734,552
------------
$ 30,628,088
------------
HOUSING - 3.8%
NR AAA $ 2,000 New Jersey Housing and
Mortgage Finance Agency,
Presidential Plaza, (FHA),
6.95%, 5/1/13 $ 2,138,460
NR AAA 3,700 New Jersey Housing and
Mortgage Finance Agency,
Presidential Plaza, (FHA),
7.00%, 5/1/30 3,935,320
NR AA+ 1,975 New Jersey Housing and
Mortgage Finance Agency,
Section 8, 7.10%, 11/1/11 2,114,001
NR AA+ 1,000 New Jersey Housing and
Mortgage Finance Agency,
Section 8, 7.10%, 11/1/12 1,070,380
NR A+ 3,715 New Jersey Housing and
Mortgage Finance Agency,
Section 8, 6.60%, 11/1/14 3,890,125
NR A+ 1,000 New Jersey Housing and
Mortgage Finance Agency,
Rental Housing, (AMT),
7.10%, 5/1/22 1,061,880
NR AA+ 1,250 New Jersey Housing and
Mortgage Finance Agency,
Rental Housing, (AMT),
7.25%, 11/1/22 1,323,213
Aaa AAA 300 Puerto Rico Housing
Finance Corporation
Mortgage Revenue (GNMA),
6.85%, 10/15/23 207,043
------------
$ 15,740,422
------------
INDUSTRIAL DEVELOPMENT/POLLUTION
CONTROL - 8.3%
NR NR $ 2,000 Middlesex County Pollution
Control Financing
Authority, Amerada Hess
Corporation, 7.875%,
6/1/22 $ 2,278,380
NR NR 4,000 Middlesex County Pollution
Control Financing
Authority, Amerada Hess
Corporation, 6.875%,
12/1/22 4,259,120
Aa1 NR 3,000 New Jersey Economic
Development Authority,
Garden State Paper
Company, (AMT), 7.125%,
4/1/22 3,134,610
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
NR NR 2,000 New Jersey Economic
Development Authority, The
Seeing Eye, Inc., 7.30%,
4/1/11 2,150,480
NR NR 5,640 New Jersey Economic
Development Authority,
Holt Hauling, (AMT),
8.95%, 12/15/19 5,982,968
NR NR 1,160 New Jersey Economic
Development Authority,
National Association of
Accountants, Inc. 7.65%,
7/1/09 1,256,732
NR AA- 3,300 New Jersey Economic
Development Authority, Oak
Grove Associates, 6.125%,
12/1/06 3,497,274
Baa1 A- 2,135 New Jersey Economic
Development Authority,
GATX Terminals
Corporation, 7.30%, 9/1/19 2,437,316
Aa3 AA- 1,300 Puerto Rico Industrial,
Medical and Environmental
Pollution Control
Authority, Motorola, Inc.,
6.75%, 1/1/14 1,417,507
Baa3 BB+ 7,750 Puerto Rico Port
Authority, American
Airlines, (AMT), 6.30%,
6/1/23 7,935,536
------------
$ 34,349,923
------------
INSURED EDUCATION - 0.5%
Aaa AAA $ 2,000 New Jersey State
Educational Facilities
Authority, Seton Hall
University, (BIGI), 6.85%,
7/1/19 $ 2,189,120
------------
INSURED HEALTHCARE - 0.6%
Aaa AAA $ 2,500 New Jersey Economic
Development Authority,
Clara Maass Health System,
(FSA), 5.00%, 7/1/25 $ 2,378,025
------------
INSURED HOSPITALS - 0.9%
Aaa AAA $ 2,000 New Jersey Health Care
Facilities Financing
Authority, Hackensack
Medical Center, (FGIC),
6.25%, 7/1/21 $ 2,086,260
Aaa AAA 1,570 New Jersey Health Care
Facilities Financing
Authority, Cathedral
Health Services, (MBIA),
7.25%, 2/15/21 1,777,538
------------
$ 3,863,798
------------
INSURED HOUSING - 1.3%
Aaa AAA $ 1,410 New Jersey Housing and
Mortgage Finance Agency,
(MBIA), 7.375%, 10/1/17 $ 1,483,940
</TABLE>
47
<PAGE> 48
- --------------------------------------------------------------------------------
NEW JERSEY MUNICIPALS PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
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 HOUSING - (CONTINUED)
Aaa AAA 1,740 New Jersey Housing and
Mortgage Finance Agency,
(AMT), (MBIA), 7.70%,
10/1/29 1,840,694
Aaa AAA 1,745 Pennsauken Township
Housing Finance
Corporation, (MBIA),
8.00%, 4/1/11 1,829,371
------------
$ 5,154,005
------------
INSURED LEASE REVENUE - 4.9%
Aaa AAA $ 3,900 County of Atlantic, Public
Facilities Lease
Agreement, (FGIC), 6.00%,
3/1/13 $ 4,329,819
Aaa AAA 1,750 County of Hudson, New
Jersey Correctional
Facility, (MBIA), 6.50%,
12/1/11 1,925,840
Aaa AAA 6,240 County of Hudson, New
Jersey Correctional
Facility, (MBIA), 6.60%,
12/1/21 6,762,101
Aaa AAA 2,500 County of Hudson, New
Jersey Improvement
Authority, Secondary Yield
Curve Notes, (FGIC),
Variable, 12/1/25 (1) 2,712,825
Aaa AAA 1,800 County of Middlesex,
New Jersey Certificates of
Participation, (MBIA),
6.125%, 2/15/19 1,922,454
Aaa AAA 2,225 University of Medicine and
Dentistry Certificates of
Participation, (MBIA),
6.75%, 12/1/09 2,445,431
------------
$ 20,098,470
------------
INSURED SOLID WASTE - 0.4%
Aaa AAA $ 1,500 The Mercer County
Improvement Authority,
Solid Waste Revenue,
(AMT), (FGIC), 6.70%,
4/1/13 $ 1,570,710
------------
INSURED SPECIAL TAX - 0.6%
Aaa AAA 2,375 New Jersey Economic
Development Authority,
Market Transition
Facility, (MBIA), 5.875%,
7/1/11 $ 2,522,060
------------
INSURED TRANSPORTATION - 5.5%
Aaa AAA $ 8,000 Delaware River Port
Authority, (FGIC), 5.50%,
1/1/26 $ 8,048,160
Aaa AAA 5,000 New Jersey Turnpike
Authority "RITES", (MBIA),
Variable, 1/1/16 (1) 6,593,200
Aaa AAA 6,950 New Jersey Turnpike
Authority, (MBIA), 6.50%,
1/1/16 8,109,260
------------
$ 22,750,620
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED UTILITIES - 3.5%
Aaa AAA $ 2,750 New Jersey Economic
Development Authority, New
Jersey American Water Co.,
(AMT), (FGIC), 6.875%,
11/1/34 $ 3,072,025
Aaa AAA 11,500 Salem County, New Jersey,
Public Service Electric
and Gas, (MBIA), 5.55%,
11/1/33 11,507,475
------------
$ 14,579,500
------------
INSURED WATER & SEWER - 1.4%
Aaa AAA $ 2,500 Middlesex County Utilities
Authority, Sewer Revenue
(MBIA), Variable, 8/15/10
(1) $ 2,841,625
Aaa AAA 2,935 New Jersey Economic
Development Authority,
Middlesex Water, (MBIA),
5.25%, 2/1/29 2,836,824
------------
$ 5,678,449
------------
LEASE/CERTIFICATE OF
PARTICIPATION - 3.1%
Baa1 A- $ 720 County of Atlantic, New
Jersey Public Facilities
Lease Agreement, 8.875%,
1/15/14 $ 995,918
Baa1 A- 785 County of Atlantic, New
Jersey Public Facilities
Lease Agreement, 8.875%,
1/15/15 1,089,682
A1 NR 1,000 Township of Bedminster,
New Jersey Board of
Education, 7.125%, 9/1/10 1,132,310
Aa AA- 1,000 Mercer County Improvement
Authority, Richard J.
Hughes Justice Complex,
6.05%, 1/1/14 1,003,250
Aa AA- 2,000 Mercer County Improvement
Authority, Richard J.
Hughes Justice Complex,
6.05%, 1/1/15 2,006,500
Aa AA- 1,500 Mercer County Improvement
Authority, Richard J.
Hughes Justice Complex,
6.05%, 1/1/16 1,504,575
Aa AA- 1,500 Mercer County Improvement
Authority, Richard J.
Hughes Justice Complex,
6.05%, 1/1/17 1,504,575
Aa AA- 1,250 New Jersey Building
Authority, 7.20%, 6/15/13 1,358,413
Aa AA- 2,590 New Jersey Building
Authority, Garden State
Savings Bonds, 0%, 6/15/10 1,236,140
NR A+ 1,000 New Jersey Economic
Development Authority,
Performing Arts Center
Site Acquisition, 6.75%,
6/15/12 1,083,870
------------
$ 12,915,233
------------
</TABLE>
48
<PAGE> 49
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
LIFE CARE - 1.3%
NR NR $ 300 New Jersey Economic
Development Authority,
Cadbury Corporation,
8.70%, 7/1/07 $ 329,001
NR NR 615 New Jersey Economic
Development Authority,
Cadbury Corporation,
7.50%, 7/1/21 628,751
NR NR 4,000 New Jersey Economic
Development Authority,
Keswick Pines, 8.75%,
1/1/24 4,235,960
------------
$ 5,193,712
------------
MISCELLANEOUS - 3.0%
A1 A+ $ 1,650 New Jersey Economic
Development Authority,
Economic Recovery Fund,
0%, 9/15/09 $ 818,219
A1 A+ 5,500 New Jersey Economic
Development Authority,
Economic Recovery Fund,
0%, 3/15/13 2,232,175
NR NR 7,600 New Jersey Sports and
Exposition Authority,
Monmouth Park, 8.00%,
1/1/25 8,490,796
Aa A+ 1,000 New Jersey Sports and
Exposition Authority,
5.50%, 9/1/23 1,011,820
------------
$ 12,553,010
------------
SOLID WASTE - 6.9%
Ba NR $ 3,655 The Atlantic County
Utilities Authority, Solid
Waste Revenue, 7.125%,
3/1/16 $ 3,754,928
Ba BBB+ 6,125 Pollution Control
Financing Authority of
Camden County, (AMT),
7.50%, 12/1/09 6,475,901
Ba NR 5,975 Mercer County Improvement
Authority, Solid Waste
System Revenue (AMT), 0%,
4/1/14 1,614,146
Ba NR 6,000 Mercer County Improvement
Authority, Solid Waste
System Revenue (AMT), 0%,
4/1/15 1,508,160
Ba NR 3,000 Mercer County Improvement
Authority, Solid Waste
System Revenue (AMT), 0%,
4/1/16 701,640
Ba NR 1,500 Passaic County Utilities
Authority Solid Waste
System Revenue, 7.00%,
11/15/07 1,523,565
NR A- 11,930 Union County, New Jersey
Utilities Authority, Solid
Waste Revenue, (AMT),
7.20%, 6/15/14 12,746,012
------------
$ 28,324,352
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
SPECIAL TAX - 2.1%
Baa1 A $ 2,285 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/12 $ 2,525,793
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/15 1,010,670
Baa1 A 4,100 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/18 4,532,058
Baa1 BBB+ 550 Puerto Rico Infrastructure
Financing Authority,
7.90%, 7/1/07 602,426
------------
$ 8,670,947
------------
TRANSPORTATION - 12.0%
NR BBB $ 1,250 Guam Airport Authority,
(AMT), 6.60%, 10/1/10 $ 1,293,125
NR BBB 2,000 Guam Airport Authority,
(AMT), 6.70%, 10/1/23 2,061,360
NR BBB 1,400 Guam Airport Authority,
6.50%, 10/1/23 1,433,082
A1 AA- 5,000 The Port Authority of New
York and New Jersey,
(AMT), 6.25%, 1/15/27 5,203,350
A1 AA- 9,500 The Port Authority of New
York and New Jersey,
7.35%, 10/1/27 (2) 11,262,725
A1 AA- 2,645 The Port Authority of New
York and New Jersey,
6.75%, 8/1/26 2,870,380
A1 AA- 5,950 The Port Authority of New
York and New Jersey,
5.375%, 3/1/28 5,999,802
A1 AA- 9,000 The Port Authority of New
York and New Jersey,
6.125%, 6/1/2094 9,801,810
Ba1 BB 5,100 The Port Authority of New
York and New Jersey, Delta
Air Lines Inc., 6.95%,
6/1/08 5,539,416
Baa2 BB+ 3,900 New Jersey Economic
Development Authority,
American Airlines, (AMT),
7.10%, 11/1/31 4,160,754
------------
$ 49,625,804
------------
UTILITIES - 5.8%
NR BBB $ 100 Guam Power Authority,
5.25%, 10/1/13 $ 92,405
NR BBB 750 Guam Power Authority,
5.25%, 10/1/23 674,460
NR BBB 5,000 Guam Power Authority,
6.75%, 10/1/24 5,291,550
Baa2 BBB 625 New Jersey Economic
Development Authority,
Elizabethtown Gas Co.,
(AMT), 6.75%, 10/1/21 641,050
</TABLE>
49
<PAGE> 50
- --------------------------------------------------------------------------------
NEW JERSEY MUNICIPALS PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - (CONTINUED)
A2 A 1,455 New Jersey Economic
Development Authority,
Natural Gas Facilities,
7.05%, 3/1/16 1,550,506
Baa1 A- 460 Puerto Rico Electric Power
Authority, 7.125%, 7/1/14 505,319
Baa1 A- 3,000 Puerto Rico Electric Power
Authority, 6.00%, 7/1/14 3,107,820
Baa1 A- 1,000 Puerto Rico Electric Power
Authority, 5.25%, 7/1/21 965,940
Baa1 A- 5,340 Puerto Rico Electric Power
Authority, 5.50%, 7/1/25 5,270,687
NR NR 5,105 Virgin Islands Water and
Power Authority, Electric
System Revenue, 7.40%,
7/1/11 5,482,515
------------
$ 23,582,252
------------
WATER & SEWER - 2.2%
A1 AA- $ 2,000 Gloucester County
Utilities Authority,
6.50%, 1/1/21 $ 2,131,180
A3 A 3,250 New Jersey Economic
Development Authority,
Elizabethtown Water
Revenue, (AMT), 6.70%,
8/1/21 3,504,930
Aa AA 1,400 New Jersey Wastewater
Treatment Trust, 7.25%,
5/15/08 1,520,372
Aa AA 1,000 New Jersey Wastewater
Treatment Trust, 6.875%,
6/15/09 1,117,940
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa AA 250 New Jersey Wastewater
Treatment Trust, 7.00%,
6/15/10 280,185
A1 AA 500 The Somerset Raritan
Valley Sewerage Authority
6.75%, 07/1/10 546,805
------------
$ 9,101,412
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $381,677,960) $412,290,899
============
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
The Portfolio primarily invests in debt securities issued by New Jersey
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at January 31, 1996, 19.6% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.2% to 13.3% of total investments.
See notes to financial statements
50
<PAGE> 51
- --------------------------------------------------------------------------------
Pennsylvania Municipals Portfolio
Portfolio of Investments - January 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSISTED LIVING - 2.7%
NR NR $ 2,680 Chester County IDA Senior
Lifechoice of Paoli,
8.05%, 1/1/24 $ 2,715,992
NR NR 5,000 Chester County IDA Senior
Lifechoice of Kimberton,
8.50%, 9/1/25 5,096,100
NR NR 5,000 Delaware County IDA Senior
Quarters Project, 5.625%,
9/1/25 5,144,450
------------
$ 12,956,542
------------
COGENERATION - 5.6%
NR NR $12,000 PA EDA, Northampton
Generation Project (AMT),
6.50%, 1/1/13 $ 12,051,120
NR BBB- 9,000 PA EDA, Colver Project,
(AMT), 7.125%, 12/1/15 9,729,270
NR BBB- 5,000 PA EDA, Colver Project,
(AMT), 7.15%, 12/1/18 5,394,400
------------
$ 27,174,790
------------
EDUCATION - 4.8%
NR BBB $ 4,865 Erie Higher Education
Building Authority,
Mercyhurst College, 5.75%,
3/15/20 $ 4,864,611
Baa1 NR 1,500 Latrobe, Saint Vincent
College, 6.75%, 5/1/24 1,631,460
NR AAA 2,000 Lehigh County, Allentown
College of St. Francis,
6.75%, 12/15/12 2,190,820
NR A- 4,225 Scranton-Lackawanna,
Pennsylvania University,
University of Scranton,
6.40%, 3/1/07 4,536,298
NR AA 9,700 Swarthmore Borough,
Swarthmore College, 6.00%,
9/15/20 10,232,530
------------
$ 23,455,719
------------
ESCROWED - 6.3%
Aaa AAA $ 5,600 Berks County, GO, (FGIC),
Variable, 11/15/20, (1) $ 6,667,192
Aaa A- 1,750 Chester County, HEFA, Bryn
Mar Hospitals, 6.75%,
7/1/14 2,014,390
Aaa AAA 2,000 Doylestown Hospital
Authority, (AMBAC), 6.90%,
7/1/19 2,217,800
Aaa AAA 1,405 Lycoming County, GO,
(FGIC), 6.40%, 8/15/11 1,556,038
Aaa AAA 945 Lycoming County, GO,
(FGIC), 6.40%, 8/15/11 1,046,588
NR A- 1,000 PA HEFA, Elizabeth
College, 7.25%, 6/15/11 1,158,360
NR A- 6,900 PA IDA, Economic
Development, 7.00%, 1/1/11 7,917,405
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
NR A- 5,155 Philadelphia, Hospital and
Higher Education Facility
Authority, Presbyterian
Medical Center, 6.50%,
12/1/11 5,962,272
Baa1 A 1,000 Puerto Rico Aqueduct &
Sewer, 7.90%, 7/1/07 1,114,070
Aaa AAA 500 York County Hospital
Authority, (AMBAC), 7.00%,
7/1/21 569,610
------------
$ 30,223,725
------------
GENERAL OBLIGATIONS - 6.2%
NR A $ 3,000 Chester Upland School
District, 6.375%, 9/1/21 $ 3,170,040
NR A 3,000 Dauphin County, GO, 6.90%,
6/2/26 3,307,260
A1 A+ 2,050 Lower Providence Township
Sewer Authority
Guaranteed, 6.75%, 5/1/22 2,310,166
NR A 1,950 McKeesport Area School
District, GO, 5.00%,
4/1/13 1,871,727
A1 AA- 465 Pennsylvania, 6.75%,
1/1/07 509,073
A1 AA- 500 Pennsylvania, 6.75%,
1/1/08 545,100
A1 AA- 5,435 Pennsylvania, 6.50%,
11/1/09 5,872,789
A1 AA- 2,000 Pennsylvania, 6.375%,
9/15/12 2,134,800
Baa1 A 5,100 Puerto Rico, 5.40%, 7/1/25 4,960,617
Baa1 A 2,000 Puerto Rico Aqueduct &
Sewer, 6.25%, 7/1/12 2,208,700
Baa1 A 3,375 Puerto Rico Aqueduct &
Sewer, 5.00%, 7/1/19 3,196,631
------------
$ 30,086,903
------------
HOSPITALS - 18.8%
NR AAA $ 2,440 Allegheny County, IDA,
Presbyterian Medical
Center, 6.75%, 2/1/26 $ 2,610,507
Baa BBB 2,000 Dauphin County, Community
General Osteopathic
Hospital, 7.375%, 6/1/16 2,154,840
NR A- 10,250 Delaware County, Riddle
Memorial Hospital, 6.50%,
1/1/22 10,394,320
NR NR 4,755 Hazelton Luzerne County,
Saint Joseph Medical
Center, 8.375%, 7/1/12 4,992,890
Baa NR 2,670 Indiana County, Indiana
Hospital, 7.125%, 7/1/23 2,788,815
NR BBB+ 3,500 Lebanon County, Good
Samaritan Hospital, 6.00%,
11/15/18 3,377,570
A A 3,250 Lehigh County, Muhlenberg
Hospital, 6.60%, 7/15/22 3,364,498
NR BBB- 5,405 McKean County, Bradford
Hospital, 6.10%, 10/1/20 4,925,036
Baa1 BBB+ 2,550 Monroeville, Forbes Health
System, 6.25%, 10/1/15 2,589,806
</TABLE>
51
<PAGE> 52
- --------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPALS PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
HOSPITALS - (CONTINUED)
NR BBB+ 2,615 Montgomery County,
Pottstown Medical Center,
6.875%, 11/15/20 2,697,896
A1 A+ 500 PA Hospital and Higher
Education, Allegheny
General Hospital, 7.25%,
9/1/17 549,120
A BBB+ 8,500 PA Hospital and Higher
Education, Albert Einstein
Medical Center, 7.625%,
4/1/11 9,179,575
Baa1 BBB+ 12,800 PA Hospital and Higher
Education, Graduate Health
System, 6.625%, 7/1/21 12,995,328
Baa1 A- 10,515 PA Hospital and Higher
Education, Temple
University Hospital,
6.625%, 11/15/23 11,034,231
Aa AA 1,000 PA Hospital and Higher
Education, Children's
Hospital, 5.00%, 2/15/21 915,960
Aa NR 4,750 Pottsville, Hospital
Authority, Daughters of
Charity, 5.00%, 8/15/12 4,523,948
Baa NR 4,115 Somerset County, Community
Hospital Project, 6.75%,
3/1/11 4,099,322
A NR 7,000 Washington County,
Monongahela Valley
Hospital 6.75%, 12/1/08 7,554,820
------------
$ 90,748,482
------------
HOUSING - 7.2%
Aaa NR $ 2,175 Allegheny County SFMR,
(GNMA), 7.15%, 6/1/17 $ 2,231,876
NR AAA 2,900 Allegheny County SFMR,
Ladies Grand Army Project,
(FHA), 6.35%, 10/1/36 2,958,377
NR AAA 1,000 Bucks County, Mortgage
Revenue Bonds, Warminster
Heights Project, (FHA),
Section 8-A, 6.80%, 8/1/12 1,051,520
Aa AA 3,730 Pennsylvania HFA SFMR,
6.90%, 4/1/17 3,943,617
Aa AA 4,000 Pennsylvania HFA SFMR,
6.85%, 4/1/16 4,216,320
Aa AA 1,000 Pennsylvania HFA SFMR,
(AMT), Variable, 10/1/23,
(1) 1,129,190
Aa AA 8,350 Pennsylvania HFA SFMR,
(AMT), 7.50%, 10/1/25 9,177,903
Aaa NR 3,000 Philadelphia Redevelopment
Authority, MF, 6.95%,
5/15/24 3,186,180
A1 A 4,235 Urban Redevelopment
Authority of Pittsburgh
Mortgage, (AMT), 7.10%,
4/1/24 4,421,213
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
A1 A 265 Urban Redevelopment
Authority of Pittsburgh,
7.45%, 4/1/10 282,416
A1 A 1,000 Urban Redevelopment
Authority of Pittsburgh
Mortgage, 7.125%, 4/1/15 1,067,560
A1 A 1,055 Urban Redevelopment
Authority of Pittsburgh
Mortgage, (AMT), 7.40%,
4/1/24 1,113,447
------------
$ 34,779,619
------------
INDUSTRIAL DEVELOPMENT
AUTHORITY - 9.5%
A3 A $ 6,950 Butler County IDA, Witco
Corporation Project,
5.85%, 12/1/23 $ 7,058,212
NR BB 1,005 Clearfield County IDA,
KMart Corporation, 6.80%,
5/15/07 848,280
NR A+ 4,000 Franklin County IDA,
Corning Incorporated,
6.25%, 8/1/05 4,399,480
NR AAA 8,265 Mercer County IDA,
Hillcrest Nursing Center,
0%, 1/15/13 2,424,207
A2 A 12,000 New Morgan IDA, New Morgan
Landfill, (AMT), 6.50%,
4/1/19 12,750,240
Baa2 BBB- 5,000 Pennsylvania IDA,
Macmilliam Project, (AMT),
7.60%, 12/1/20 5,658,600
Baa1 BBB+ 4,450 Pennsylvania IDA, Sun
Company Project, (AMT),
7.60%, 12/1/24 5,004,114
NR NR 6,500 Philadelphia IDA
Refrigerated Enterprises
Project, (AMT), 9.05%,
12/1/19 6,938,685
NR BB 1,105 Shamokin IDA, KMart
Corporation, 6.70%, 7/1/07 923,868
------------
$ 46,005,686
------------
INSURED EDUCATION - 2.0%
Aaa AAA $ 5,000 Cumberland County Messiah
College Project, (AMBAC),
5.125%, 10/1/15 $ 4,840,200
Aaa AAA 2,500 PA Higher Education
Student Loan, (AMBAC),
(AMT), 7.15%, 9/1/21 2,698,675
Aaa AAA 1,500 PA Higher Education
Student Loan, (AMBAC),
(AMT), Variable, 3/1/22,
(1) 1,541,235
Aaa AAA 700 PA Higher Education
Student Loan, (AMBAC),
(AMT), Variable, 9/1/26,
(1) 773,283
------------
$ 9,853,393
------------
</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>
INSURED GENERAL OBLIGATIONS - 4.4%
Aaa AAA $ 1,750 Deer Lakes School
District, (MBIA), 6.45%,
1/15/19 $ 1,854,615
Aaa AAA 2,170 Elizabeth Forward School
District, (MBIA), 0%,
9/1/20 572,055
Aaa AAA 2,170 Elizabeth Forward School
District, (MBIA), 0%,
9/1/21 541,849
Aaa AAA 2,170 Elizabeth Forward School
District, (MBIA), 0%,
9/1/22 513,227
Aaa AAA 2,170 Elizabeth Forward School
District, (MBIA), 0%,
9/1/23 486,123
Aaa AAA 4,345 Elizabeth Forward School
District, (MBIA), 0%,
9/1/24 921,966
Aaa AAA 1,460 Haverford School District,
(FGIC), 6.125%, 6/1/14 1,532,066
Aaa AAA 7,500 Keystone Oaks School
District, (AMBAC),
Variable, 9/1/16 (1) 7,951,350
Aaa AAA 1,430 Mars Area School District,
(MBIA), 0%, 3/1/14 535,449
Aaa AAA 3,200 Philadelphia General
Obligation, (MBIA), 5.00%,
5/15/20 3,036,000
Aaa AAA 655 Rochester Area School
District, (AMBAC), 0%,
5/1/10 312,297
Aaa AAA 2,795 Venango County General
Obligation, (AMBAC),
6.30%, 12/1/19 2,930,194
------------
$ 21,187,191
------------
INSURED HOSPITALS - 8.7%
Aaa AAA $ 1,170 Allegheny County
Children's Hospital of
Pittsburgh, (MBIA), 6.75%,
7/1/08 $ 1,252,848
Aaa AAA 3,750 Allegheny County Magee-
Womens Hospital, (FGIC),
0%, 10/1/15 1,285,913
Aaa AAA 5,000 Allegheny County
University of Pittsburgh
Medical Center, (MBIA),
5.375%, 12/1/25 4,930,100
Aaa AAA 1,400 Armstrong County Saint
Francis Health Care,
(AMBAC), 6.25%, 6/1/13 1,487,472
Aaa AAA 2,500 Armstrong County Saint
Francis Health Care,
(AMBAC), 6.00%, 8/15/08 2,645,550
Aaa AAA 4,400 Bucks County, IDA, Grand
View Hospital, (AMBAC),
5.25%, 7/1/21 4,244,284
Aaa AAA 775 Carbon County, Gnaden
Memorial Hospital,
(AMBAC), 7.00%, 11/15/14 843,324
Aaa AAA 750 Erie County, Harlot
Medical Center, (AMBAC),
7.10%, 2/15/10 824,258
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA 230 Lehigh County Health East,
Incorporated, (MBIA),
7.00%, 7/1/15 249,672
Aaa AAA 5,000 Lehigh County, St. Luke's
Hospital, (AMBAC), 6.25%,
7/1/22 5,294,200
Aaa AAA 1,000 Montgomery County,
Abington Memorial
Hospital, (AMBAC),
Variable, 6/1/11 (1) 1,175,740
Aaa AAA 5,000 Philadelphia Hospital &
Higher Education, PA
Hospital, (FGIC),
Variable, 2/15/12 (1) 5,011,450
Aaa AAA 3,500 Sayre Health Care
Facilities Authority,
Guthrie Healthcare System,
(AMBAC), 6.00%, 3/1/21 3,591,910
Aaa AAA 1,500 Scranton-Lackawanna, Mercy
Health Systems, (MBIA),
6.90%, 1/1/23 1,608,015
Aaa AAA 7,500 Washington County,
Shadyside Hospital,
(AMBAC), 5.75%, 12/15/14 7,687,650
------------
$ 42,132,385
------------
INSURED LEASE - 3.3%
Aaa AAA $ 4,595 Harrisburg Authority,
Dauphin County, Lease
Revenue, (CGIC), 6.25%,
6/1/10 $ 5,007,723
Aaa AAA 3,000 Northumberland County,
Lease Revenue, (MBIA), 0%,
10/15/12 1,248,660
Aaa AAA 10,000 Commonwealth of
Pennsylvania, Lease
Revenue, (AMBAC), 5.00%,
7/1/15 9,499,000
------------
$ 15,755,383
------------
INSURED SPECIAL TAX - 0.9%
Aaa AAA $ 4,895 PA Intergovernmental
Special Tax, (MBIA),
5.00%, 6/15/22 $ 4,594,937
------------
INSURED TRANSPORTATION - 0.5%
Aaa AAA $ 2,500 Delaware River Port
Authority (FGIC), 5.50%,
1/1/26 $ 2,515,050
------------
INSURED UTILITIES - 5.5%
Aaa AAA $ 4,000 Beaver County IDA, Ohio
Edison Company, (FGIC),
7.00%, 6/1/21 $ 4,375,800
Aaa AAA 10,000 Beaver County IDA, Ohio
Edison Company, (FGIC),
7.05%, 10/1/20 11,194,400
</TABLE>
53
<PAGE> 54
- --------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPALS PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
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 UTILITIES - (CONTINUED)
Aaa AAA 3,800 Puerto Rico Electric Power
Authority, (FSA),
Variable, 7/1/02 (1) 4,377,258
Aaa AAA 6,050 Lehigh County IDA, PA
Power & Light Company,
(MBIA), 6.15%, 8/1/29 6,413,363
------------
$ 26,360,821
------------
INSURED WATER & SEWER - 3.5%
Aaa AAA $ 2,750 Allegheny County, Sewer
Revenue, (FGIC), 0%,
12/1/08 $ 1,420,292
Aaa AAA 2,500 Philadelphia Water and
Wastewater, (FGIC),
Variable, 6/15/12 (1) 2,613,975
Aaa AAA 9,000 Philadelphia Water and
Wastewater, (CGIC), 5.50%,
6/15/15 9,025,380
Aaa AAA 3,960 Philadelphia Water and
Wastewater, (CGIC), 5.00%,
6/15/16 3,774,910
------------
$ 16,834,557
------------
MISCELLANEOUS - 4.1%
NR AA $ 870 Pennsylvania
Infrastructure Investment
Authority, Pennvest,
6.80%, 9/1/10 $ 983,996
NR A 16,950 Pennsylvania Finance
Authority, Beaver County,
6.60%, 11/1/09 18,649,238
------------
$ 19,633,234
------------
NURSING HOMES - 2.0%
NR NR $ 3,500 Montgomery County IDA,
Geriatric Health Care
Institute, 8.375%, 7/1/23 $ 3,689,665
NR NR 1,460 Westmoreland County IDA,
Highland Health System,
9.250%, 6/1/22 1,552,389
NR NR 1,190 Philadelphia Hospital &
Higher Education
Facilities, Protestant
Home, 8.625%, 7/1/21 1,224,795
NR NR 2,750 Wilkens Area IDA, Fairview
Extended Care, 10.25%,
1/1/21 3,158,980
------------
$ 9,625,829
------------
SPECIAL TAX REVENUE - 0.4%
Baa1 A $ 1,500 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/13 $ 1,537,185
Baa1 BBB+ 500 Puerto Rico Special Tax
Revenue, 7.50%, 7/1/09 543,150
------------
$ 2,080,335
------------
UTILITIES - 3.6%
Baa3 BB+ $ 500 Beaver County, IDA, Ohio
Edison Company, 7.75%,
9/1/24 $ 538,665
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa1 BBB+ 3,250 Delaware County, IDA,
Philadelphia Electric
Company, 7.375%, 4/1/21 3,547,668
Baa1 BBB+ 4,070 Montgomery County, IDA,
Philadelphia Electric
Company, (AMT), 7.60%,
4/1/21 4,443,055
Baa1 A- 3,370 Puerto Rico Electric Power
Authority Power Revenue,
0%, 7/1/17 1,003,519
NR NR 1,500 Virgin Islands Water and
Power Authority, 7.40%,
7/1/11 1,610,925
A2 A 6,025 Washington County IDA West
Penn Power Company, 6.05%,
4/1/14 6,297,993
------------
$ 17,441,825
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $449,367,988) $483,446,406
----------
----------
</TABLE>
(1) The above designated securities have been issued as inverse floater bonds.
The Portfolio primarily invests in debt securities issued by Pennsylvania
municipalities. The ability of the issuers of debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at January 31, 1996, 28.8% 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 0.9% to 15.0% of total investments.
See notes to financial statements
54
<PAGE> 55
- --------------------------------------------------------------------------------
Texas Municipals Portfolio
Portfolio of Investments - January 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------
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 - 3.7%
Aa1 AA $ 250 University of Texas,
6.75%, 8/15/13 (1) $ 278,688
A NR 700 Brazo Texas Higher
Education Authority,
6.50%, 6/1/04 749,546
------------
$ 1,028,234
------------
ELECTRIC UTILITIES - 1.6%
NR BBB $ 500 Guam Power Authority,
5.25%, 10/1/23 $ 449,640
------------
ESCROWED - 3.8%
NR NR $ 200 Bexar County, Texas, St.
Luke's
Lutheran Hospital, 7.00%,
5/1/21 $ 243,792
Aaa NR 1,000 Central Texas Housing
Corporation Single Family,
0%, 9/1/16 308,440
Aaa AAA 85 Harris County, Texas, Toll
Road Unlimited Tax and
Subordinate Lien, 6.625%,
8/15/17 90,463
Aaa AAA 200 Montgomery County, Texas
Hospital District (FSA),
6.625%, 4/1/17 227,978
Aaa AAA 150 Texas National Research
Lab Super Collider, 6.95%,
12/1/12 177,312
------------
$ 1,047,985
------------
GENERAL OBLIGATIONS - 17.2%
Aaa AAA $ 1,000 Bastrop, Texas,
Independent School
District U.T.G.O. (PSF),
0%, 2/15/13 $ 396,310
Aaa NR 500 Crandall, Texas,
Independent School
District U.T.G.O. (PSF),
6.00%, 2/15/24 516,365
Aaa AAA 1,000 Cypress-Fairbanks, Texas,
Independent School
District U.T.G.O. (PSF),
5.25%, 2/15/19 975,200
Aaa AAA 550 Grand Prairie, Texas,
Independent School
District U.T.G.O. (PSF),
0%, 2/15/12 230,148
NR NR 500 Leander, Texas L.T.G.O
6.75%, 8/15/16 519,890
Aaa AAA 1,000 Round Rock, Texas
Independent School
District U.T.G.O. (PSF),
5.50%, 8/1/15 1,009,550
Aa AA 690 Texas Veterans' Housing
Assistance U.T.G.O. (AMT),
6.70%, 12/1/24 (1) 716,468
Aa AA 390 Texas Veterans' Housing
Assistance U.T.G.O. (AMT),
6.80%, 12/1/23 407,265
------------
$ 4,771,196
------------
HEALTH CARE - 2.0%
NR NR $ 500 Bell County, Texas HFC
Elder Care Facilities,
9.00%, 11/1/24 $ 542,670
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
HOSPITALS - 13.6%
NR BBB $ 500 Denison, Texas, Texoma
Medical Center, 7.10%,
8/15/24 $ 524,155
A A- 100 Ector County, Texas,
Hospital District, 7.30%,
4/15/12 108,396
A A- 100 Harris County, Texas,
Hospital District, 7.125%,
6/1/15 108,422
A A- 1,100 Harris County, Texas,
Hospital District,
Memorial Hospital System,
6.625%, 6/1/24 1,163,492
NR BBB 600 Lufkin Texas, Memorial
Health Systems of East
Texas, 6.875%, 2/15/26 593,592
Aa AA 250 McAllen Health Facilities,
Texas, Sisters of Mercy,
5.00%, 6/1/15 232,965
A NR 1,000 Tarrant County, Texas,
Methodist Health System,
6.00%, 9/1/24 1,020,340
------------
$ 3,751,362
------------
HOUSING - 2.8%
NR A $ 750 Travis County, Texas, HFC
Multifamily Travis Station
Apartments, 6.75%, 4/1/19 $ 788,738
------------
INDUSTRIAL DEVELOPMENT
REVENUE/POLLUTION CONTROL REVENUE -
8.1%
Baa1 BBB $ 450 Gulf Coast, Texas, Waste
Disposal Authority,
Champion International
(AMT), 7.25%, 4/1/17 $ 484,799
A2 A+ 1,000 Port Corpus Christi,
Texas, Hoechst Celanese
Corporation, 6.875%,
4/1/17 1,085,750
Baa3 BB+ 250 Puerto Rico Port
Authority, American Air
Lines, 6.30%, 6/1/23 255,985
Baa2 BBB 400 West Side Calhoun County
Navigation District,
Texas, Union Carbide
(AMT), 6.40%, 5/1/23 407,200
------------
$ 2,233,734
------------
INSURED EDUCATION - 0.4%
Aaa AAA $ 100 Southwest, Texas, Southern
Methodist University
(FGIC), 6.375%, 10/1/13 $ 108,423
------------
INSURED ELECTRIC UTILITIES - 15.5%
Aaa AAA $ 1,000 Austin, Texas, Utility
System (FGIC), 6.25%,
5/15/16 $ 1,070,350
</TABLE>
55
<PAGE> 56
- --------------------------------------------------------------------------------
TEXAS MUNICIPALS PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
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 ELECTRIC UTILITIES -
(CONTINUED)
Aaa AAA 1,050 Corpus Christi, Texas,
Utility System (MBIA),
5.20%, 7/15/13 1,039,280
Aaa AAA 500 Lower Colorado River
Authority Junior Lien,
Texas, (FGIC), 0%, 1/1/12 214,240
Aaa AAA 605 Montgomery County, Texas,
MUD #47 Water & Sewer
(AMBAC), 6.125%, 10/1/20 635,752
Aaa AAA 100 Sabine River Authority,
Texas, Utilities Electric
Company (FGIC), 6.55%,
10/1/22 108,043
Aaa AAA 1,395 Texas Municipal Power
Agency (MBIA), 0%, 9/1/13 542,278
Aaa AAA 1,000 Texas Municipal Power
Agency (MBIA), 0%, 9/1/17 306,980
Aaa AAA 250 Brazos River Authority,
Texas, Huston Light &
Power (FGIC), 7.20%,
12/1/18 275,890
Aaa AAA 75 Brazos River Authority,
Texas, Huston Light &
Power (FGIC), 6.70%,
3/1/17 83,048
------------
$ 4,275,861
------------
INSURED GENERAL OBLIGATIONS - 4.8%
Aaa AAA $ 100 Brownsville, Texas,
Navigation District
(MBIA), 6.25%,
3/1/14 $ 108,065
Aaa AAA 500 Ector County, Texas
(AMBAC), 4.25%, 2/15/10 455,430
Aaa AAA 250 Port Arthur, Texas (MBIA),
5.50%, 2/15/14 252,472
Aaa AAA 500 Puerto Rico Public
Buildings Authority,
Government Facilities
(AMBAC), 5.50%, 7/1/21 504,185
------------
$ 1,320,152
------------
INSURED HOSPITALS - 10.3%
Aaa AAA $ 250 Coastal Bend, Texas, HFC
Incarnate Word Health
Services (AMBAC), 6.30%,
1/1/17 $ 265,000
Aaa AAA 500 Harris County, Texas, HFC
Hermann Hospital (MBIA),
6.375%, 10/1/24, (2) 533,955
Aaa AAA 1,000 Tarrant County, Texas, HFC
Harris Methodist (AMBAC),
5.125%, 9/1/12 977,580
Aaa AAA 1,000 Tyler County, Texas, HFC
Mother Frances Hospital
(FGIC), 6.50%, 7/1/22 1,073,050
------------
$ 2,849,585
------------
INSURED LEASE / CERTIFICATES OF
PARTICIPATION - 1.8%
Aaa AAA $ 500 East Texas Jails, Angelina
County Project (MBIA),
5.25%, 5/1/14 $ 493,030
------------
<CAPTION>
RATINGS
(UNAUDITED)
- ----------------- PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED TRANSPORTATION - 8.2%
Aaa AAA $ 500 Dallas-Fort Worth
International Airport,
Texas (MBIA), 6.00%,
11/1/12 $ 528,475
Aaa AAA 1,750 Harris County, Texas, Toll
Road Subordinate Lien
(FGIC), 5.375%, 8/15/20 1,732,308
------------
$ 2,260,783
------------
LEASE / CERTIFICATES OF
PARTICIPATION - 0.9%
NR BBB- $ 250 Rio Grande, Texas,
Independent School
District Lease, 6.75%,
7/15/10 $ 249,528
------------
MISCELLANEOUS - 0.3%
NR NR $ 250 Retama Development, Texas,
Retama Racetrack, 8.75%,
12/15/18 $ 87,500
------------
TRANSPORTATION - 5.0%
Baa2 BB+ $ 505 Alliance Airport
Authority, American
Airlines, 7.50%, 12/1/29 $ 543,622
Ba1 BB 300 Dallas-Fort Worth Texas
Airport, Delta Airlines
(AMT), 7.125%, 11/1/26 315,684
Baa2 BB+ 225 Dallas-Fort Worth Texas
Airport, American Airlines
(AMT), 7.50%, 11/1/25 242,789
NR BBB 255 Guam Airport Authority
(AMT), 6.70%, 10/1/23 262,823
Aa AA 25 Harris County, Texas, Toll
Road, Subordinate Lien,
6.75%, 8/1/14 27,535
------------
$ 1,392,453
------------
TOTAL TAX-EXEMPT
INVESTMENTS (IDENTIFIED
COST, $25,889,003) $ 27,650,871
============
</TABLE>
(1) Security has been segregated to cover margin requirements for open financial
futures contracts.
The Portfolio invests primarily in debt securities issued by Texas
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at January 31, 1996, 41.0% 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 16.6% of total investments.
See notes to financial statements
56
<PAGE> 57
- --------------------------------------------------------------------------------
Municipals Portfolios
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
January 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $131,097,970 $44,485,539 $190,611,515 $177,452,450
Unrealized appreciation 11,071,057 3,663,230 8,620,661 13,600,334
------------ ----------- ------------ ------------
Total investments, at value (Note 1A) $142,169,027 $48,148,769 $199,232,176 $191,052,784
Cash 266,116 1,151,814 212,390 466,127
Receivable for daily variation margin on open
financial futures contracts (Note 1E) -- 187 -- --
Receivable for investments sold 2,526,830 743,298 1,469,160 1,356,926
Interest receivable 1,388,883 563,026 2,443,198 2,888,007
Deferred organization expenses (Note 1D) 3,573 1,153 5,501 5,244
------------ ----------- ------------ ------------
Total assets $146,354,429 $50,608,247 $203,362,425 $195,769,088
------------ ----------- ------------ ------------
LIABILITIES:
Payable for investments purchased $ 1,779,497 $ 1,186,832 $ 1,906,920 $ 1,861,851
Payable for when issued securities (Note 1F) -- 1,001,708 -- 1,435,436
Payable for daily variation margin on open financial
futures contracts (Note 1E) -- -- 13,500 --
Payable to affiliate --
Trustees' fees 672 128 876 876
Accrued expenses 5,233 4,247 7,556 5,862
------------ ----------- ------------ ------------
Total liabilities $ 1,785,402 $ 2,192,915 $ 1,928,852 $ 3,304,025
------------ ----------- ------------ ------------
Net Assets applicable to investors' interest in
Portfolio $144,569,027 $48,415,332 $201,433,573 $192,465,063
============ =========== ============ ============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $133,497,970 $44,751,915 $192,906,345 $178,864,729
Unrealized appreciation of investments and financial
futures contracts (computed on the basis of
identified cost) 11,071,057 3,663,417 8,527,228 13,600,334
------------ ----------- ------------ ------------
Total $144,569,027 $48,415,332 $201,433,573 $192,465,063
============ =========== ============ ============
</TABLE>
See notes to financial statements
57
<PAGE> 58
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
January 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments --
Identified cost $74,342,228 $381,677,960 $449,367,988 $25,889,003
Unrealized appreciation 6,289,711 30,612,939 34,078,418 1,761,868
----------- ------------ ------------ -----------
Total investments, at value (Note 1A) $80,631,939 $412,290,899 $483,446,406 $27,650,871
Cash 457,740 1,829,108 7,471,474 883,093
Receivable for daily variation margin on open
financial futures contracts (Note 1E) 318 -- -- --
Receivable for investments sold 984,806 3,717,284 30,000 --
Interest receivable 1,066,296 5,272,325 6,525,251 458,919
Deferred organization expenses (Note 1D) 1,836 9,020 10,898 1,111
----------- ------------ ------------ -----------
Total assets $83,142,935 $423,118,636 $497,484,029 $28,993,994
----------- ------------ ------------ -----------
LIABILITIES:
Payable for investments purchased $ 983,241 $ 8,708,966 $ 4,905,639 $ 956,538
Payable for daily variation margin on open financial
futures contracts (Note 1E) -- -- -- 2,000
Payable to affiliate --
Trustees' fees 519 1,488 1,488 128
Accrued expenses 4,779 13,914 3,607 1,632
----------- ------------ ------------ -----------
Total liabilities $ 988,539 $ 8,724,368 $ 4,910,734 $ 960,298
----------- ------------ ------------ -----------
Net Assets applicable to investors' interest in
Portfolio $82,154,396 $414,394,268 $492,573,295 $28,033,696
=========== ============ ============ ===========
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $75,864,369 $383,781,329 $458,494,877 $26,278,428
Unrealized appreciation of investments and financial
futures contracts (computed on the basis of
identified cost) 6,290,027 30,612,939 34,078,418 1,755,268
----------- ------------ ------------ -----------
Total $82,154,396 $414,394,268 $492,573,295 $28,033,696
=========== ============ ============ ===========
</TABLE>
See notes to financial statements
58
<PAGE> 59
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Six Months Ended January 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income $ 4,329,290 $1,431,313 $5,910,733 $ 5,748,886
----------- ---------- ----------- -----------
Expenses --
Investment adviser fee (Note 2) $ 298,571 $ 65,521 $ 427,474 $ 411,573
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 3,927 555 5,176 5,205
Custodian fees (Note 2) 43,445 16,022 51,966 32,626
Legal and accounting services 25,671 23,062 30,242 33,071
Amortization of organization expenses (Note 1D) 903 311 1,322 1,257
Miscellaneous 16,765 6,522 14,534 27,294
----------- ---------- ----------- -----------
Total expenses $ 389,282 $ 111,993 $ 530,714 $ 511,026
----------- ---------- ----------- -----------
Deduct --
Preliminary reduction of investment adviser fee (Note
2) $ -- $ 7,886 $ -- $ --
Reduction of custodian fee (Note 2) 10,717 7,544 15,526 --
----------- ---------- ----------- -----------
Total $ 10,717 $ 15,430 $ 15,526 $ --
----------- ---------- ----------- -----------
Net expenses $ 378,565 $ 96,563 $ 515,188 $ 511,026
----------- ---------- ----------- -----------
Net investment income $ 3,950,725 $1,334,750 $5,395,545 $ 5,237,860
----------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 732,439 $ 189,675 $ 496,039 $ 2,007,915
Financial futures contracts (178,231) (101,890) (851,688 ) (235,929)
----------- ---------- ----------- -----------
Net realized gain (loss) on investments $ 554,208 $ 87,785 $ (355,649 ) $ 1,771,986
----------- ---------- ----------- -----------
Change in unrealized appreciation (depreciation) --
Investments $ 7,242,435 $2,503,804 $10,174,997 $ 9,140,119
Financial futures contracts (48,427) (29,791) (204,892 ) (135,699)
----------- ---------- ----------- -----------
Net unrealized appreciation of investments $ 7,194,008 $2,474,013 $9,970,105 $ 9,004,420
----------- ---------- ----------- -----------
Net realized and unrealized gain on
investments $ 7,748,216 $2,561,798 $9,614,456 $10,776,406
----------- ---------- ----------- -----------
Net increase in net assets from operations $11,698,941 $3,896,548 $15,010,001 $16,014,266
=========== ========== =========== ===========
</TABLE>
See notes to financial statements
59
<PAGE> 60
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
Six Months Ended January 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income $2,561,226 $12,989,241 $15,739,768 $ 842,231
---------- ----------- ----------- ----------
Expenses --
Investment adviser fee (Note 2) $ 153,853 $ 957,368 $ 1,168,263 $ 29,100
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 2,932 9,183 9,388 800
Custodian fees (Note 2) 24,023 91,853 102,662 9,826
Legal and accounting services 20,771 38,571 40,671 18,871
Amortization of organization expenses (Note 1D) 672 2,250 2,660 304
Miscellaneous 13,567 27,309 18,833 7,019
---------- ----------- ----------- ----------
Total expenses $ 215,818 $1,126,534 $ 1,342,477 $ 65,920
---------- ----------- ----------- ----------
Deduct --
Preliminary reduction of investment adviser fee (Note
2) $ -- $ -- $ -- $ 14,459
Reduction of custodian fee (Note 2) 4,507 53,489 102,662 9,555
---------- ----------- ----------- ----------
Total $ 4,507 $ 53,489 $ 102,662 $ 24,014
---------- ----------- ----------- ----------
Net expenses $ 211,311 $1,073,045 $ 1,239,815 $ 41,906
---------- ----------- ----------- ----------
Net investment income $2,349,915 $11,916,196 $14,499,953 $ 800,325
---------- ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 609,784 $1,942,528 $ 2,172,378 $ 140,381
Financial futures contracts (214,250 ) (788,971 ) 612 (27,835)
---------- ----------- ----------- ----------
Net realized gain on investments $ 395,534 $1,153,557 $ 2,172,990 $ 112,546
---------- ----------- ----------- ----------
Change in unrealized appreciation (depreciation) --
Investments $3,719,646 $16,970,282 $20,097,215 $1,340,370
Financial futures contracts (14,180 ) (45,304 ) -- (40,373)
---------- ----------- ----------- ----------
Net unrealized appreciation of investments $3,705,466 $16,924,978 $20,097,215 $1,299,997
---------- ----------- ----------- ----------
Net realized and unrealized gain on
investments $4,101,000 $18,078,535 $22,270,205 $1,412,543
---------- ----------- ----------- ----------
Net increase in net assets from operations $6,450,915 $29,994,731 $36,770,158 $2,212,868
========== =========== =========== ==========
</TABLE>
See notes to financial statements
60
<PAGE> 61
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months Ended January 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 3,950,725 $ 1,334,750 $ 5,395,545 $ 5,237,860
Net realized gain (loss) on investment transactions 554,208 87,785 (355,649 ) 1,771,986
Change in unrealized appreciation of investments 7,194,008 2,474,013 9,970,105 9,004,420
------------ ----------- ------------ ------------
Net increase in net assets from operations $ 11,698,941 $ 3,896,548 $15,010,001 $ 16,014,266
------------ ----------- ------------ ------------
Capital transactions --
Contributions $ 5,189,026 $ 3,116,343 $ 7,108,028 $ 4,650,492
Withdrawals (16,839,955) (4,674,725) (15,960,245 ) (19,462,676)
------------ ----------- ------------ ------------
Decrease in net assets resulting from capital
transactions $(11,650,929) (1,558,382) $(8,852,217 ) $(14,812,184)
------------ ----------- ------------ ------------
Total increase in net assets $ 48,012 $ 2,338,166 $ 6,157,784 $ 1,202,082
NET ASSETS:
At beginning of period 144,521,015 46,077,166 195,275,789 191,262,981
------------ ----------- ------------ ------------
At end of period $144,569,027 $48,415,332 $201,433,573 $192,465,063
============== ============ ============== ==============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 2,349,915 $ 11,916,196 $14,499,953 $ 800,325
Net realized gain on investment transactions 395,534 1,153,557 2,172,990 112,546
Change in unrealized appreciation of investments 3,705,466 16,924,978 20,097,215 1,299,997
----------- ------------ ------------ -----------
Net increase in net assets from operations $ 6,450,915 $ 29,994,731 $36,770,158 $ 2,212,868
----------- ------------ ------------ -----------
Capital transactions --
Contributions $ 2,525,348 $ 13,522,474 $11,313,722 $ 417,877
Withdrawals (9,789,563) (40,161,359) (57,760,889 ) (2,824,070)
----------- ------------ ------------ -----------
Decrease in net assets resulting from capital
transactions $(7,264,215) $(26,638,885) $(46,447,167) $(2,406,193)
----------- ------------ ------------ -----------
Total increase (decrease) in net assets $ (813,300) $ 3,355,846 $(9,677,009 ) $ (193,325)
NET ASSETS:
At beginning of period 82,967,696 411,038,422 502,250,304 28,227,021
----------- ------------ ------------ -----------
At end of period $82,154,396 $414,394,268 $492,573,295 $28,033,696
============ ============== =============== ============
</TABLE>
See notes to financial statements
61
<PAGE> 62
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 8,611,581 $ 2,800,174 $11,005,611 $ 11,377,793
Net realized loss on investment transactions (5,872,496) (2,521,981) (5,335,034 ) (6,232,336)
Change in unrealized appreciation of investments 7,857,458 2,823,551 4,533,624 6,947,077
------------ ------------ ------------ ------------
Net increase in net assets from operations $ 10,596,543 $ 3,101,744 $10,204,201 $ 12,092,534
------------ ------------ ------------ ------------
Capital transactions --
Contributions $ 21,272,707 $ 10,355,365 $25,911,862 $ 14,779,804
Withdrawals (41,416,595) (11,778,902) (32,878,239 ) (39,641,020)
------------ ------------ ------------ ------------
Decrease in net assets resulting from capital
transactions $(20,143,888) $ (1,423,537) $(6,966,377 ) $(24,861,216)
------------ ------------ ------------ ------------
Total increase (decrease) in net assets $ (9,547,345) $ 1,678,207 $ 3,237,824 $(12,768,682)
NET ASSETS:
At beginning of year 154,068,360 44,398,959 192,037,965 204,031,663
------------ ------------ ------------ ------------
At end of year $144,521,015 $ 46,077,166 $195,275,789 $191,262,981
============== ============= ============== ==============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 4,867,333 $ 24,622,808 $ 30,623,550 $ 1,690,403
Net realized loss on investment transactions (5,215,244) (17,774,510) (20,294,984 ) (1,003,751)
Change in unrealized appreciation of investments 4,768,674 16,631,954 19,002,225 1,220,058
------------ ------------ ------------- -----------
Net increase in net assets from operations $ 4,420,763 $ 23,480,252 $ 29,330,791 $ 1,906,710
------------ ------------ ------------- -----------
Capital transactions --
Contributions $ 11,350,380 $ 43,487,001 $ 38,709,755 $ 4,736,724
Withdrawals (16,808,817) (79,782,847) (102,576,381 ) (6,005,420)
------------ ------------ ------------- -----------
Decrease in net assets resulting from capital
transactions $ (5,458,437) $(36,295,846) $(63,866,626 ) $(1,268,696)
------------ ------------ ------------- -----------
Total increase (decrease) in net assets $ (1,037,674) $(12,815,594) $(34,535,835 ) $ 638,014
NET ASSETS:
At beginning of year 84,005,370 423,854,016 536,786,139 27,589,007
------------ ------------ ------------- -----------
At end of year $ 82,967,696 $411,038,422 $502,250,304 $28,227,021
============= ============== =============== ============
</TABLE>
See notes to financial statements
62
<PAGE> 63
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ARIZONA PORTFOLIO COLORADO PORTFOLIO
-------------------------------------------------- ---------------------------------------------------
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED ------------------------------- ENDED -------------------------------
JANUARY 31, 1996 JULY 31, JULY 31, SEPT. 30, JANUARY 31, 1996 JULY 31, JULY 31, SEPT. 30,
(UNAUDITED) 1995 1994* 1993** (UNAUDITED) 1995 1994* 1993**
---------------- -------- -------- --------- ----------------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS (AS A
PERCENTAGE OF
AVERAGE DAILY
NET ASSETS)++:
Net expenses (1) 0.53%+ 0.52% 0.46%+ 0.42% + 0.44%+ 0.25% 0.02% + 0.06%+
Net investment
income 5.43%+ 5.81% 5.43%+ 5.46% + 5.61%+ 6.05% 5.73% + 5.60%+
PORTFOLIO TURNOVER 7% 22% 23% 107% 19% 52% 23% 10%
NET ASSETS, end of
period (000
omitted) $144,569 $144,521 $154,068 $133,539 $48,415 $46,077 $44,399 $24,346
</TABLE>
++The operating expenses of the Portfolios may reflect a reduction of the
investment adviser fee and/or allocation of expenses to the Investment
Adviser. Had such actions not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS):
Expenses (1) 0.47%+ 0.40% 0.35% + 0.35%+
Net investment income 5.58%+ 5.90% 5.40% + 5.31%+
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONNECTICUT PORTFOLIO MICHIGAN PORTFOLIO
-------------------------------------------------- --------------------------------------------------
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED ------------------------------- ENDED -------------------------------
JANUARY 31, 1996 JULY 31, JULY 31, SEPT. 30, JANUARY 31, 1996 JULY 31, JULY 31, SEPT. 30,
(UNAUDITED) 1995 1994* 1993** (UNAUDITED) 1995 1994* 1993**
---------------- -------- -------- --------- ---------------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS (AS A PERCENTAGE
OF AVERAGE DAILY
NET ASSETS):
Net expenses (1) 0.53%+ 0.53% 0.47%+ 0.46% + 0.53%+ 0.48% 0.47%+ 0.44% +
Net investment
income 5.39%+ 5.77% 5.40%+ 5.45% + 5.43%+ 5.85% 5.48%+ 5.46% +
PORTFOLIO TURNOVER 15% 29% 10% 10% 26% 54% 45% 20%
NET ASSETS, end of
period
(000 omitted) $201,434 $195,276 $192,038 $159,848 $192,465 $191,263 $204,032 $187,665
+ Annualized.
* For the ten months ended July 31, 1994.
** For the period from the start of business, February 1, 1993, to September 30, 1993.
(1) The annualized expense ratios for the six months ended January 31, 1996 have been adjusted to reflect a
change in reporting requirements. The new reporting guidelines require each Portfolio to increase its
expense ratio by the effect of any expense offset arrangements with its service providers. The expense
ratios for each of the three periods ended July 31, 1995 and 1994 and September 30, 1993 have not been
adjusted to reflect this change.
</TABLE>
See notes to financial statements
63
<PAGE> 64
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Continued)
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA PORTFOLIO NEW JERSEY PORTFOLIO
-------------------------------------------------- --------------------------------------------------
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED ------------------------------- ENDED -------------------------------
JANUARY 31, 1996 JULY 31, JULY 31, SEPT. 30, JANUARY 31, 1996 JULY 31, JULY 31, SEPT. 30,
(UNAUDITED) 1995 1994* 1993** (UNAUDITED) 1995 1994* 1993**
---------------- -------- -------- --------- ---------------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS (AS A
PERCENTAGE OF
AVERAGE DAILY
NET ASSETS):
Net expenses (1) 0.51%+ 0.47% 0.45% + 0.40%+ 0.54%+ 0.52% 0.50%+ 0.50% +
Net investment
income 5.58%+ 5.83% 5.50% + 5.58%+ 5.74%+ 5.96% 5.62%+ 5.67% +
PORTFOLIO TURNOVER 33% 76% 20% 10% 21% 54% 25% 12%
NET ASSETS, end of
period (000 omitted) $ 82,154 $82,968 $84,005 $67,019 $414,394 $411,038 $423,854 $393,677
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO TEXAS PORTFOLIO
-------------------------------------------------- --------------------------------------------------
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED ------------------------------- ENDED -------------------------------
JANUARY 31, 1996 JULY 31, JULY 31, SEPT. 30, JANUARY 31, 1996 JULY 31, JULY 31, SEPT. 30,
(UNAUDITED) 1995 1994* 1993** (UNAUDITED) 1995 1994* 1993**
---------------- -------- -------- --------- ---------------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS (AS A
PERCENTAGE OF
AVERAGE DAILY
NET ASSETS)++ :
Net expenses (1) 0.54%+ 0.49% 0.48%+ 0.50% + 0.36%+ 0.08% 0.00% + 0.03%+
Net investment
income 5.82%+ 6.02% 5.66%+ 5.71% + 5.63%+ 6.20% 5.69% + 5.82%+
PORTFOLIO TURNOVER 15% 44% 21% 17% 13% 49% 27% 8%
NET ASSETS, end of
period (000 omitted) $492,573 $502,250 $536,786 $497,001 $ 28,034 $28,227 $27,589 $16,029
</TABLE>
++The operating expenses of the Portfolios may reflect a reduction of the
investment adviser fee and/or allocation of expenses to the Investment
Adviser. Had such actions not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C> <C> <C> <C>
RATIOS (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS):
Expenses (1) 0.47%+ 0.35% 0.37% + 0.42%+
Net investment income 0.52%+ 5.93% 5.32% + 5.43%+
</TABLE>
+ Annualized.
* For the ten months ended July 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
(1) The annualized expense ratios for the six months ended January 31, 1996
have been adjusted to reflect a change in reporting requirements. The new
reporting guidelines require each Portfolio to increase its expense ratio
by the effect of any expense offset arrangements with its service
providers. The expense ratios for each of the three periods ended July 31,
1995 and 1994 and September 30, 1993 have not been adjusted to reflect this
change.
See notes to financial statements
64
<PAGE> 65
- --------------------------------------------------------------------------------
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Arizona Municipals Portfolio (Arizona Portfolio), Colorado Municipals Portfolio
(Colorado Portfolio), Connecticut Municipals Portfolio (Connecticut Portfolio),
Michigan Municipals Portfolio (Michigan Portfolio), Minnesota Municipals
Portfolio (Minnesota Portfolio), New Jersey Municipals Portfolio (New Jersey
Portfolio), Pennsylvania Municipals Portfolio (Pennsylvania Portfolio) and Texas
Municipals Portfolio (Texas Portfolio), collectively the Portfolios, are
registered under the Investment Company Act of 1940 as non-diversified open-end
management investment companies which were organized as trusts under the laws of
the State of New York on May 1, 1992. The Declarations of Trust permit the
Trustees to issue interests in the Portfolios. The following is a summary of
significant accounting policies of the Portfolios. The policies are in
conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts listed on commodity
exchanges are valued at closing settlement prices. Short-term obligations,
maturing in sixty days or less, are valued at amortized cost, which approximates
value. Investments for which valuations or market quotations are unavailable are
valued at fair value using methods determined in good faith by or at the
direction of the Trustees.
B. INCOME -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes.
C. INCOME TAXES -- The Portfolios are treated as partnerships for Federal tax
purposes. No provision is made by the Portfolios for federal or state taxes on
any taxable income of the Portfolios because each investor in the Portfolios are
ultimately responsible for the payment of any taxes. Since some of the
Portfolios' investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolios, the Portfolios normally
must satisfy the applicable source of income and diversification requirements
(under the Internal Revenue Code) in order for their respective investors to
satisfy them. The Portfolios will allocate at least annually among their
respective investors each investor's distributive share of the Portfolios' net
taxable (if any) and tax-exempt investment income, net realized capital
gains, and any other items of income, gain, loss, deductions or credit. Interest
income received by the Portfolios on investments in municipal bonds, which is
excludable from gross income under the Internal Revenue Code, will retain its
status as income exempt from federal income tax when allocated to each
Portfolio's investors. The portion of such interest, if any, earned on private
activity bonds issued after August 7, 1986, may be considered a tax preference
item for investors.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by a Portfolio in connection
with its organization are being amortized on the straight-line basis over five
years.
E. FINANCIAL FUTURES CONTRACTS -- Upon the entering of a financial futures
contract, a Portfolio is required to deposit ("initial margin") either in cash
or securities an amount equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by a Portfolio ("margin maintenance") each day, dependent on the daily
fluctuations in the value of the underlying security, and are recorded for book
purposes as unrealized gains or losses by a Portfolio. A Portfolio's investment
in financial futures contracts is designed only to hedge against anticipated
future changes in interest rates. Should interest rates move unexpectedly, the
Portfolio may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Portfolios may engage in
when-issued and delayed delivery transactions. The Portfolio records when-issued
securities on trade date and maintains security positions such that sufficient
liquid assets will be available to make payments for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are
marked-to-market daily and begin accruing interest on settlement date.
G. OTHER -- Investment transactions are accounted for on a trade date basis.
H. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
January 31, 1996 and for the six month period then ended have not been audited
by independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting of normal recurring adjustments,
necessary for the fair presentation of the financial statements.
65
<PAGE> 66
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(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 six months ended January 31, 1996, each Portfolio paid advisory fees as
follows:
<TABLE>
<CAPTION>
AMOUNT EFFECTIVE RATE*
---------- ----------------
<S> <C> <C>
Arizona $ 298,571 0.41%
Colorado 65,521 0.28%
Connecticut 427,474 0.43%
Michigan 411,573 0.43%
Minnesota 153,853 0.39%
New Jersey 957,368 0.46%
Pennsylvania 1,168,263 0.47%
Texas 29,100 0.20%
</TABLE>
* Advisory fees paid as a percentage of average daily net assets (annualized).
To enhance the net income of the Colorado Portfolio and the Texas Portfolio, BMR
made a preliminary reduction in its fee in the amount of $7,886 and $14,459,
respectively. 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), serves as custodian of the Portfolios.
Prior to November 10, 1995, IBT was an affiliate of EVM and BMR. 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. All
significant credit balances used to reduce the Portfolio's custody fees are
reported as a reduction of expenses in the Statement of Operations. 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
six months ended January 31, 1996, 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 six months ended January 31, 1996, were as
follows:
<TABLE>
<CAPTION>
ARIZONA PORTFOLIO COLORADO PORTFOLIO CONNECTICUT PORTFOLIO MICHIGAN PORTFOLIO
------------------- -------------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
Purchases $ 9,425,943 $ 9,027,980 $ 29,516,260 $ 49,103,849
Sales 19,400,775 9,073,787 32,117,333 55,895,435
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA PORTFOLIO NEW JERSEY PORTFOLIO PENNSYLVANIA PORTFOLIO TEXAS PORTFOLIO
------------------- -------------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
Purchases $27,318,336 $ 84,966,403 $ 72,937,855 $ 3,454,546
Sales 32,514,971 96,415,333 103,247,490 4,514,789
</TABLE>
66
<PAGE> 67
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned by each Portfolio at January 31, 1996, as computed on a federal income tax
basis, were as follows:
<TABLE>
<CAPTION>
ARIZONA COLORADO CONNECTICUT MICHIGAN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Aggregate Cost $131,097,970 $ 44,485,539 $190,611,515 $177,452,450
------------ ------------ ------------ ------------
Gross unrealized appreciation $ 11,266,775 $ 3,678,667 $ 8,948,596 $ 13,871,894
Gross unrealized depreciation 195,718 15,437 687,935 271,560
------------ ------------ ------------ ------------
Net unrealized appreciation $ 11,071,057 $ 3,663,230 $ 8,260,661 $ 13,600,334
============== ============== =============== ==============
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY PENNSYLVANIA TEXAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Aggregate Cost $ 74,342,228 $381,677,960 $449,367,988 $ 25,889,003
------------ ------------ ------------ ------------
Gross unrealized appreciation $ 6,289,711 $ 30,730,423 $34,849,073 $ 1,918,342
Gross unrealized depreciation -- 117,484 770,655 156,474
------------ ------------ ------------ ------------
Net unrealized appreciation $ 6,289,711 $ 30,612,939 $34,078,418 $ 1,761,868
============== ============== =============== ==============
</TABLE>
- --------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Portfolios participate with other portfolios and funds managed by BMR and
EVM in a $120 million unsecured line of credit agreement with a bank. The line
of credit consists of a $20 million committed facility and a $100 million
discretionary facility. Each Portfolio may temporarily borrow up to 5% of its
total assets to satisfy redemption requests or settle investment transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above either the bank's adjusted certificate of deposit rate, a variable
adjusted certificate of deposit rate, or a federal funds effective rate. In
addition, a fee computed at an annual rate of 1/4 of 1% on the $20 million
committed facility and on the daily unused portion of the $100 million
discretionary facility is allocated among the participating funds and portfolios
at the end of each quarter. The Portfolios did not have any significant
borrowings or allocated fees during the period.
67
<PAGE> 68
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(6) FINANCIAL INSTRUMENTS
The Portfolios regularly trade in financial instruments with off-balance sheet
risk in the normal course of their investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options and futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment a Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
A summary of obligations under these financial instruments at January 31, 1996
is as follows:
<TABLE>
<CAPTION>
FUTURES
CONTRACTS NET UNREALIZED
PORTFOLIO EXPIRATION DATE CONTRACTS POSITION APPRECIATION (DEPRECIATION)
- -------------- ---------------- ---------------------- --------
<S> <C> <C> <C> <C>
Colorado 3/96 10 U.S. Treasury Bonds Short $ 187
Connecticut 3/96 54 U.S. Treasury Bonds Short (93,433)
Minnesota 3/96 17 U.S. Treasury Bonds Short 317
Texas 3/96 8 U.S. Treasury Bonds Short (6,600)
</TABLE>
At January 31, 1996, the Colorado, Connecticut, Minnesota, and Texas Portfolios
had sufficient cash and/or securities to cover margin requirements on open
financial futures contracts. The Arizona, Michigan, New Jersey and Pennsylvania
Portfolios had no obligations outstanding under these financial instruments at
January 31, 1996.
68
<PAGE> 69
- --------------------------------------------------------------------------------
Investment Management
- --------------------------------------------------------------------------------
FUNDS OFFICERS INDEPENDENT TRUSTEES
THOMAS J. FETTER DONALD R. DWIGHT
President President, Dwight Partners, Inc.
Chairman, Newspaper of New
England, Inc.
JAMES B. HAWKES
Vice President, Trustee SAMUEL L. HAYES, III
Jacob H. Schiff Professor of
Investment Banking, Harvard
ROBERT B. MACINTOSH University Graduate
Vice President School of Business Administration
JAMES L. O'CONNOR
Treasurer NORTON H. REAMER
President and Director,
THOMAS OTIS United Asset Management
Secretary Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
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PORTFOLIOS OFFICERS JAMES L. O'CONNOR
THOMAS J. FETTER Treasurer
President
THOMAS OTIS
JAMES B. HAWKES Secretary
Vice President, Trustee
ROBERT B. MACINTOSH INDEPENDENT TRUSTEES
Vice President of Arizona, DONALD R. DWIGHT
Colorado, Connecticut, President, Dwight Partners, Inc.
Michigan, Minnesota, Chairman, Newspaper of New
New Jersey, Pennsylvania England, Inc.
and Texas Municipals
Portfolios and Portfolio
Manager of New Jersey SAMUEL L. HAYES, III
Municipals Portfolios Jacob H. Schiff Professor of
Investment Banking, Harvard
CYNTHIA J. CLEMSON University Graduate School
Vice President and of Business Administration
Portfolio Manager of
Arizona Municipals
Portfolios NORTON H. REAMER
President and Director,
DAVID C. REILLY United Asset Management
Vice President and Corporation
Portfolio Manager of
Colorado and Minnesota
Municipals Portfolio JOHN L. THORNDIKE
Director, Fiduciary Company
NICOLE ANDERES Incorporated
Vice President and
Portfolio Manager of JACK L. TREYNOR
Connecticut and Texas Investment Adviser and Consultant
Municipals Portfolio
TIMOTHY T. BROWSE
Vice President and
Portfolio Manager of
Michigan and Pennsylvania
Municipals Portfolios
<PAGE> 70
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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
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
TRANSFER AGENT
First Data Investor Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
70
<PAGE> 71
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<PAGE> 72
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This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Funds, including its distribution
plan, sales charges and expenses. Please read the prospectus carefully before
you invest or send money.
EATON VANCE
MUNICIPALS TRUST
24 FEDERAL STREET
BOSTON, MA 02110
M-TFCSRC 3/96
