<PAGE>
[LOGO OF EATON VANCE
APPEARS HERE]
Semiannual Report February 28, 1998
[PHOTO OF HIGHWAY EATON VANCE
APPEARS HERE]
MUNICIPALS
TRUST
Global Management-Global Distribution
[PICTURE OF BROOKLYN
BRIDGE APPEARS HERE]
[PICTURE OF EDUCATION
BUILDING APPEARS HERE]
EDUCATION
Alabama
Arkansas
Georgia
Kentucky
Louisiana
Maryland
Missouri
North Carolina
Oregon
South Carolina
Tennessee
Virginia
<PAGE>
Eaton Vance Municipal Funds as of February 28, 1998
LETTER TO SHAREHOLDERS
[PHOTO OF THOMAS J. FETTER APPEARS HERE]
Thomas J. Fetter,
President
The past six months have been very favorable for the municipal bond market. Low
inflation and declining interest rates produced strong returns for the
tax-exempt sector. As a measure of overall municipal bond market performance,
the Lehman Brothers Municipal Bond Index* - a widely recognized, unmanaged index
of municipal bonds - had a total return of 5.0% for the six months ended
February 28, 1998.
Amid volatile global markets, more investors were drawn to municipal bonds...
Against a backdrop of moderate-to-strong economic growth and low inflation,
investors in 1997 again focused on the unique advantages of municipals, which
remain among the best tax-advantaged vehicles. In addition, the municipal market
attracted an increasing number of crossover investors from other markets. Many
investors bought municipals in a flight to quality as the domestic equity market
reached overvalued levels and emerging markets were caught up in the turmoil of
the Asian currency crisis.
A sound economy has resulted in improving municipal credits...
The upbeat economic climate of recent years has provided strong support for the
municipal market. Steady job growth has generated increased tax revenues for
states and local issuers. As a result, many areas hard-hit in the recessions of
the 1970s and 1980s have since recovered, a fact reflected in the value of their
bonds. We expect to see many more such stories emerge in the coming year.
[BAR GRAPH APPEARS HERE]
Municipal bonds yield 88% of Treasury yields
5.13% 8.02%
30-Year AAA-rated Taxable equivalent yield
General Obligation (GO) Bonds* in 36% tax bracket
5.80%
30-Year Treasury bond
Principal and interest payments of Treasury securities guarenteed by the U.S.
government.
*Go yields are a compilation of a representative variety of general obligations
and are not necessarily representative of the Fund's yield. Statistics as of
January 31, 1998.
Past performance is no guarentee of future results.
Source: Bloomsberg, L.P
1998 should bring more opportunities for municipal investors...
At present, there is little sign of inflation on the horizon, and, with the
Asian turmoil of recent months, it's possible that the economy may slow somewhat
in the next year. Meanwhile, the federal budget situation has improved
dramatically in the past several years.
Naturally, those conditions are subject to change over time. The market could be
vulnerable if the economy strengthens or the budget situation unexpectedly
worsens. We will, of course, continue to closely monitor economic progress.
As for the tax-exempt market, municipal bonds currently represent unusual value
relative to their taxable counterparts. We believe that municipals will continue
to serve their traditional function of financing vital public works, while
offering good opportunities for tax-conscious investors.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter,
President
April 10, 1998
*It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
Effective November 24, 1997, Cynthia J. Clemson became Portfolio Manager of the
Kentucky Municipals Portfolio, replacing Nicole Anderes. Ms. Clemson, a Vice
President of Eaton Vance Management and Boston Management and Research, also
manages other Eaton Vance municipal portfolios.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mutual fund shares are not insured by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
2
<PAGE>
Alabama Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF WILLIAM H. AHERN APPEARS HERE]
William H. Ahern,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Alabama is still in transition from a low-wage, low-skill manufacturing-based
economy to one with greater diversity, higher wages, and higher-skilled jobs.
Manufacturing employment declined 1% in the 12 months ended September 30,
1997, but the loss of jobs was much less severe than it had been a year
earlier.
. Within manufacturing, low-paid apparel jobs are being replaced by higher paid
jobs in transportation equipment - including ships, vehicles, missiles, and
rockets - which should grow in 1998, according to a recent Federal Reserve
forecast. Boeing has announced that up to 3,000 new jobs will be created in a
new $400 million Decatur-based rocket plant upon its completion in 1999.
. The service sector, which accounts for 23% of Alabama's non-farm employment,
grew 2.6% from the third quarter of 1996 to the third quarter of 1997. Much
of this growth came from the expanding health services and business services
sectors.
Management Update
- --------------------------------------------------------------------------------
. The bond market has been favorable over the past six months, with declining
interest rates translating into solid total returns for investors. In this
environment, we have focused on increasing performance without sacrificing
yield. Where possible, we have sold some of our premium, or higher-coupon,
issues and replaced them with lower coupon bonds which perform better in a
rally.
. Our research staff continued to focus on locating non-rated, higher-yielding
bonds which can increase the Fund's income without taking unnecessary risks.
. Insured bonds, prevalent in Alabama, provide excellent security but do not
offer as much upside potential. As a result, fund turnover has been low as we
continue to seek issues meeting our high total return criteria.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.6%. This return resulted from an increase in net asset
value (NAV) per share to $10.06 on February 28, 1998 from $9.86 on August 31,
1997 and the reinvestment of $0.250 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.3% during the period, the
result of an increase in NAV to $11.07 from $10.85 and the reinvestment of
$0.237 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $10.06 for
Class A and $11.07 for Class B, the distribution rates were 4.91% and 4.20%,
respectively./2/ The SEC 30-day yields at February 28 were 3.70% and 3.07%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRADUATION CAP ICON APPEARS HERE]
University of Alabama in Huntsville
Student Housing Revenue Bonds,
Series 1994-A
. This bond issue was used to refinance a previous issue from 1991 whose
proceeds have been used for ongoing improvements and capital projects at The
University of Alabama in Huntsville. The bonds are secured in part by
revenues from the Student Housing Facility, a seven-story building housing
416 students in 104 suites.
. The bonds, which are insured by MBIA Insurance Corporation, are triple-A
rated by Moody's and Standard & Poor's.+
- --------------------------------------------------------------------------------
/1/ Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion of
the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/ The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the last
distribution per share (annualized) by the net asset value. /3/ The Fund's SEC
yield is calculated by dividing the net investment income per share for the 30-
day period by the offering price (for Class A shares) or the net asset value
(for Class B shares) at the end of the period and annualizing the result. /4/
Returns are calculated by determining the percentage change in net asset value
(NAV) with all distributions reinvested. SEC returns for Class A reflect maximum
sales charge as noted, and, for Class B, reflect applicable CDSC based on the
following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% -
5th year; 1% - 6th year. /5/Subject to change due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.4% 7.9%
Five Years N.A. 5.3
Life of Fund* 5.2 6.9
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.2% 2.9%
Five Years N.A. 5.0
Life of Fund* 4.0 6.7
*Inception Dates - Class A: 12/7/93; Class B: 5/1/92
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Hospitals 15.7%
Insured Water & Sewer+ 15.6%
Industrial Revenue/Pollution Control 13.4%
Insured General Obligations+ 9.8%
Insured Education+ 6.2%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 60
Average Maturity 21.2 Yrs.
Effective Maturity 9.3 Yrs.
Average Rating AA-
Average Call 6.5 Yrs.
Average Dollar Price $105.99
+Private insurance does not remove the interest rate risks that are associated
with these investments.
3
<PAGE>
Arkansas Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF TIMOTHY T. BROWSE APPEARS HERE]
Timothy T. Browse,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Despite a decline in Arkansas' manufacturing sector - which, like many other
Southern states, resulted from job losses in the apparel and textile
industries - the economy expanded in 1997. This growth came from the vibrant
services and construction sectors, as well as the state's dominant food
products, lumber, paper goods, and agricultural industries.
. Arkansas' growth, which has been ongoing since 1991, slowed in 1997 from a
faster pace in the early 1990s. Employment increased approximately 1.3% in
1997, and the unemployment rate remained below the nation's during the year.
. Revenue collections in the state grew at an annual rate of 4.6% in fiscal
1998, which was down from the 5.6% rate a year earlier, but ahead of
forecasts. The state's GO debt is rated Aa3 by Moody's, reflecting its sound
financial condition and solid economy.
Management Update
- --------------------------------------------------------------------------------
. To maintain the Fund's upside potential in a declining interest rate
environment, we have, in the past six months, sold some of the higher coupon
holdings and added some discounts. Our goal is to keep a diverse group of
bonds in which high- and low-coupon issues are balanced around the
ever-changing market interest rates.
. A positive and recent development in Arkansas was the issuance of bonds by
the University of Arkansas. We acquired two significant issues and are
pleased with the coupon and call structure and the good name of the
University. Because these are discount bonds, they should outperform in a
market rally. As new issues have come to market in Arkansas, we have been
able to liquidate some of our Puerto Rico holdings and swap into local bonds
that more directly benefit the state's residents.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.8%. This return resulted from an increase in net asset
value (NAV) per share to $10.03 on February 28, 1998 from $9.81 on August 31,
1997 and the reinvestment of $0.250 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.5% during the period, the
result of an increase in NAV to $10.75 from $10.51 and the reinvestment of
$0.229 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $10.03 for
Class A and $10.75 for Class B, the distribution rates were 5.02% and 4.19%,
respectively./2/ The SEC 30-day yields at February 28 were 4.35% and 3.69%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
[HOUSE ICON APPEARS HERE]
Arkansas Development Finance Authority
Single Family Mortgage Revenue Bonds
1995 Series C
. The proceeds from this bond issue will be used to provide mortgage loans for
single family residences in Arkansas. The mortgage program targets families
with low to middle income levels.
. The Authority was created in 1985 as part of the Arkansas Development Finance
Authority Act to make it easier for Arkansas families to obtain housing.
. The bonds provide funds for the Mortgage-Backed Securities Program, in which
U.S. Government-backed securities are backed by the proceeds from this issue.
These securities can then be sold to investors.
- --------------------------------------------------------------------------------
/1/ Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion of
the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/ The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the last
distribution per share (annualized) by the net asset value. /3/ The Fund's SEC
yield is calculated by dividing the net investment income per share for the 30-
day period by the offering price (for Class A shares) or the net asset value
(for Class B shares) at the end of the period and annualizing the result. /4/
Returns are calculated by determining the percentage change in net asset value
(NAV) with all distributions reinvested. SEC returns for Class A reflect maximum
sales charge as noted, and, for Class B, reflect applicable CDSC based on the
following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% -
5th year; 1% - 6th year./5/ Subject to change due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.7% 8.1%
Five Years N.A. 5.1
Life of Fund* 5.1 6.3
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.6% 3.1%
Five Years N.A. 4.8
Life of Fund* 3.9 6.2
*Inception Dates - Class A: 2/9/94; Class B: 10/2/92
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Industrial Development & Pollution Control 15.4%
Hospitals 14.6%
Housing 12.0%
Colleges and Universities 8.4%
Insured Electric Utilities+ 8.3%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 50
Average Maturity 20.0 Yrs.
Effective Maturity 10.0 Yrs.
Average Rating A+
Average Call 8.8 Yrs.
Average Dollar Price $105.24
+Private insurance does not remove the interest rate risks that are associated
with these investments.
4
<PAGE>
Georgia Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF CYNTHIA J.
CLEMSON APPEARS HERE]
Cynthia J. Clemson,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Georgia has experienced moderate growth since it's rapid expansion in the
years up to and including the 1996 summer Olympics. The state's economy
benefits from a diverse base, including services, trade, tourism, and
manufacturing. The unemployment rate, ranging between 4% and 4.5% in the
latter half of 1997, is below the nation's.
. Employment in the services sector grew 3.5% from the third quarter of 1996 to
the third quarter of 1997. Growth was led by business services, health and
hospital services, and the hotel industry. With 85 new hotels built in the
past two years alone, there is some concern about oversupply, but a bustling
convention business in 1998 is expected to keep occupancy up.
. Manufacturing, though hurt by severe losses in the apparel industry,
continues to benefit from growth in the aerospace, telecommunications, and
automotive industries. Trade has grown dramatically since the passage of
NAFTA, with 1996 exports to Mexico and Canada up 60% and 30%, respectively,
from the pre-NAFTA levels of 1993.
Management Discussion
- --------------------------------------------------------------------------------
. During the six-month period, we continued to seek lower-coupon bonds to
offset the Fund's high-yield issues, thereby keeping the Portfolio balanced
and enhancing its performance.
. We were fortunate to have found several attractively structured new issue
credits that helped diversify the Fund. These bonds came with long call
features, solid credit ratings, and good coupons.
. While issuance in municipal bonds at the state level has generally been low,
we have found good value in the water & sewer sector and the hospital sector.
In both cases, we found bonds with good call protection and attractive
coupons.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.9%. This return resulted from an increase in net asset
value (NAV) per share to $9.72 on February 28, 1998 from $9.50 on August 31,
1997 and the reinvestment of $0.243 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.7% during the period, the
result of an increase in NAV to $10.38 from $10.14 and the reinvestment of
$0.232 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $9.72 for
Class A and $10.38 for Class B, the distribution rates were 5.05% and 4.38%,
respectively./2/ The SEC 30-day yields at February 28 were 4.11% and 3.83%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
Municipal Electric Authority of Georgia [POWER LINE ICON APPEARS HERE]
Power Revenue Bonds, Series Z
. The proceeds from these bonds have been used to fund major capital projects
related to the maintenance and upgrading of several power generating plants
owned by the Municipal Electric Authority of Georgia, which was created to
provide power to residents of the state.
. Capital improvements undertaken thus far have included major additions,
renewals, replacements, repairs and betterments to the system's generating
and transmission facilities. The Authority's ownership in generating units
represents 1,558 megawatts of electrical capacity.
- --------------------------------------------------------------------------------
/1/Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion of
the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the last
distribution per share (annualized) by the net asset value. /3/The Fund's SEC
yield is calculated by dividing the net investment income per share for the 30-
day period by the offering price (for Class A shares) or the net asset value
(for Class B shares) at the end of the period and annualizing the result.
/4/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC returns for Class A reflect
maximum sales charge as noted, and, for Class B, reflect applicable CDSC based
on the following schedule: 5% - 1st and 2nd years; 4% -3rd year; 3% - 4th year;
2% -5th year; 1% - 6th year. /5/Subject to change due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.6% 8.1%
Five Years N.A. 4.6
Life of Fund* 4.4 5.9
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.5% 3.1%
Five Years N.A. 4.3
Life of Fund* 3.2 5.9
*Inception Dates - Class A: 12/7/93; Class B: 12/23/91
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Electric Utilities 14.9%
Housing 14.4%
Insured Hospitals+ 13.2%
Industrial Development/
Pollution Control 10.1%
Insured Water & Sewer+ 8.4%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 56
Average Maturity 21.3 Yrs.
Effective Maturity 12.3 Yrs.
Average Rating AA-
Average Call 8.6 Yrs.
Average Dollar Price $106.64
+Private insurance does not remove the interest rate risks that are associated
with these investments.
5
<PAGE>
Kentucky Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF CYNTHIA J.
CLEMSON APPEARS HERE]
Cynthia J. Clemson,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Kentucky's economy grew strongly in 1997, with employment rising 2.2%, just
slightly below the national increase of 2.3% and higher than the state's 1.9%
employment growth in 1996. Approximately 36,500 jobs were added in 1997, with
gains of 13,500 in services, 7,900 in retail trade, and 2,000 in
manufacturing.
. One of the pleasant surprises in 1997 was the rebound in manufacturing, which
had lost 2,000 jobs - primarily in the apparel industry - in 1996. Most of
the gains in 1997 occurred in the wood, paper, and transportation equipment
industries.
. Forecasters expect Kentucky to grow at a faster rate than the U.S. in 1998,
with an expanding population benefiting from higher personal income levels.
Services employment, especially in business, health care, and retail trade,
is expected to lead the way.
Management Update
- --------------------------------------------------------------------------------
. The municipal bond market has produced solid returns over the past six
months. As the equity markets have become more volatile, many investors are
beginning to realize the value of municipal bonds and the benefits of
tax-free income dividends.
. The Fund has continued to perform well in favorable bond market conditions.
The Fund's coupon "barbell" structure -- in which high and low coupon bonds
are balanced -- enhanced performance as interest rates declined.
. We have worked to refine the Portfolio's balance so that it will continue to
benefit from the market's upward movement. To this end, we have sought to
improve call structure, and have replaced some of the premium holdings with
better-performing discount issues.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.7%. This return resulted from an increase in net asset
value (NAV) per share to $9.88 on February 28, 1998 from $9.68 on August 31,
1997 and the reinvestment of $0.249 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.4% during the period, the
result of an increase in NAV to $10.63 from $10.41 and the reinvestment of
$0.234 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $9.88 for
Class A and $10.63 for Class B, the distribution rates were 5.08% and 4.33%,
respectively./2/ The SEC 30-day yields at February 28 were 4.26% and 3.75%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
[AIRPLANE ICON APPEARS HERE]
Kenton County, Kentucky Airport Board
Special Facilities Revenue Bonds
Delta Airlines Project
. This 1992 bond issue was used to finance several significant improvements and
upgrades to the Kenton County Airport. The projects included constructing a
new terminal and concourse, expanding and modifying an existing concourse,
and constructing a high-speed baggage conveying system. Several other
facilities improvements were also included.
. Delta Airlines, the major airline using this airport, is obligated under its
lease agreement to make rental payments sufficient to pay back the principal
and interest on the bonds.
- --------------------------------------------------------------------------------
/1/ Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion of
the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/ The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the last
distribution per share (annualized) by the net asset value. /3/ The Fund's SEC
yield is calculated by dividing the net investment income per share for the 30-
day period by the offering price (for Class A shares) or the net asset value
(for Class B shares) at the end of the period and annualizing the result.
/4/ Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC returns for Class A reflect
maximum sales charge as noted, and, for Class B, reflect applicable CDSC based
on the following schedule: 5% - 1st and 2nd years; 4% -3rd year; 3% - 4th year;
2% -5th year; 1% - 6th year. /5/ Subject to change due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 9.3% 8.5%
Five Years N.A. 5.1
Life of Fund* 4.9 6.3
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 4.2% 3.5%
Five Years N.A. 4.8
Life of Fund* 3.7 6.3
*Inception Dates - Class A: 12/7/93; Class B: 12/23/91
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Industrial Development/Pollution Control 24.3%
Insured Hospitals+ 15.5%
Lease/Certificates of Participation 10.6%
Insured Water & Sewer+ 8.9%
Housing 7.0%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 72
Average Maturity 22.1 Yrs.
Effective Maturity 8.8 Yrs.
Average Rating A+
Average Call 7.8 Yrs.
Average Dollar Price $104.50
+Private insurance does not remove the interest rate risks that are associated
with these investments.
6
<PAGE>
Louisiana Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF ROBERT B.
MACINTOSH APPEARS HERE]
Robert B. MacIntosh,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Louisiana's relatively slow growth in 1997 - below that of the nation - masks
positive trends in the manufacturing sector which portend solid growth over
the next several years. The service sector, although hurt by disappointments
related to the gambling industry, has been bolstered by employment gains in
health services and business services.
. The manufacturing sector in Louisiana has benefited from the shipbuilding
industry, whose growth should continue. One company, Avondale Industries, has
a contract in excess of $5 billion from the U.S. Navy to build eight
amphibious assault ships, as well as a contract to build two crude oil
carriers, with options for more oil-related ships. The company expects to add
1,000 new jobs by the year 2000.
. Unemployment in the state hovers around 6% - well above the national level -
but this is a tremendous improvement from the 8% average of 1994.
Management Update
- --------------------------------------------------------------------------------
. The municipal bond market has produced solid returns over the past six months
- both in Louisiana and nationally. As the equity markets have become more
volatile, many investors are beginning to realize the value of municipal
bonds and the benefits of tax-free income dividends.
. To increase performance, we have added zero coupon bonds and have swapped out
of bonds with shorter calls into longer-call bonds.
. The state has quite a few industrial revenue bonds, and, as a result, so does
the Fund. We have added some hospital issues and a university issue to bring
increased diversity. We have pared back on housing bonds because the
performance upside has become limited. We believe the Fund's shareholders
will be better served with stronger-performing issues.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.6%. This return resulted from an increase in net asset
value (NAV) per share to $9.93 on February 28, 1998 from $9.75 on August 31,
1997 and the reinvestment of $0.265 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.3% during the period, the
result of an increase in NAV to $10.50 from $10.31 and the reinvestment of
$0.246 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $9.93 for
Class A and $10.50 for Class B, the distribution rates were 5.38% and 4.59%,
respectively./2/ The SEC 30-day yields at February 28 were 4.49% and 3.95%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
State of Louisiana Hospital Service District [MEDICAL ICON APPEARS HERE]
No. #3 of Lafourche Parish
1993 Hospital Revenue Bonds
. This bond issue financed a major construction and renovation project for the
Thibodaux Hospital and Health Centers. The project included: constructing and
equipping a cancer center adjacent to the hospital; renovating and expanding
inpatient and surgical facilities; expanding intensive care and emergency
units; building an outpatient services facility; and renovating the
administrative areas of the hospital.
. The design aspects of the project were managed by Houston-based Falick/Klein
Partnership, Inc. (FKP), one of the largest architectural firms in the U.S.
- --------------------------------------------------------------------------------
/1/Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion of
the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the last
distribution per share (annualized) by the net asset value. /3/The Fund's SEC
yield is calculated by dividing the net investment income per share for the 30-
day period by the offering price (for Class A shares) or the net asset value
(for Class B shares) at the end of the period and annualizing the result.
/4/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC returns for Class A reflect
maximum sales charge as noted, and, for Class B, reflect applicable CDSC based
on the following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year;
2% -5th year; 1% - 6th year. /5/Subject to change due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.8% 7.8%
Five Years N.A. 4.9
Life of Fund* 5.3 6.3
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.6% 2.8%
Five Years N.A. 4.5
Life of Fund* 4.0 6.2
*Inception Dates - Class A: 2/14/94; Class B: 10/2/92
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Housing 20.3%
Life Care 14.1%
Industrial Development/
Pollution Control 12.8%
Insured General Obligations+ 9.7%
Hospitals 6.1%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 46
Average Maturity 25.0 Yrs.
Effective Maturity 12.4 Yrs.
Average Rating AA-
Average Call 10.4 Yrs.
Average Dollar Price $95.87
+Private insurance does not remove the interest rate risks that are associated
with these investments.
7
<PAGE>
Maryland Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF TIMOTHY T.
BROWSE APPEARS HERE]
Timothy T. Browse,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. The Maryland economy had a good year in 1997, with solid growth in the
services, trade, construction, communications, and utilities sectors. Nonfarm
payrolls increased 1.7% in fiscal 1997 and are expected to double to 2.2% in
fiscal 1998. The unemployment rate, which was 5.0% in January, 1997, finished
the year at 4.8%.
. Due to its proximity to Washington, D.C., Maryland's economy is highly
dependent on the federal government. As the U.S. government has closed
military bases around the country, some Maryland bases, such as the Patuxent
River Naval Air Station, have grown.
. Maryland's finances are sound, reflecting its healthy economy. The state
produced an estimated operating surplus of $80 million last year, bringing
its reserves to roughly $675 million. At the end of fiscal 1997, reserves
declined to $490.4 million. A10% income tax cut, phased in over the next five
years, should spur continued job growth.
Management Update
- --------------------------------------------------------------------------------
. Maryland has had the good fortune in recent months of experiencing a surge in
new municipal bond issuance. This has given us the opportunity to sell some
of the Fund's higher-coupon holdings and add some discount bonds, thus
maintaining the Fund's upside potential in a declining interest rate
environment. It also helps fulfill our goal of keeping a healthy mix of high-
and low-coupon holdings balanced around the ever-changing market interest
rate.
. The strong supply has also allowed us to tailor each new issue around our
particular needs for call protection and coupon structure. During the
six-month period, we have acquired some new hospital issues and a private
school bond. In both cases, the bonds were well structured, with attractive
coupons and call features that should enhance performance.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.8%. This return resulted from an increase in net asset
value (NAV) per share to $10.03 on February 28, 1998 from $9.81 on August 31,
1997 and the reinvestment of $0.247 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.5% during the period, the
result of an increase in NAV to $10.95 from $10.71 and the reinvestment of
$0.235 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $10.03 for
Class A and $10.95 for Class B, the distribution rates were 4.97% and 4.22%,
respectively./2/ The SEC 30-day yields at February 28 were 4.03% and 3.50%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
City of Baltimore Port Facilities [SHIP ICON APPEARS HERE]
Revenue Bonds - Consolidation
Coal Sales Company Project
. This bond issue was used to refinance a previous issue, which provided
funding for several improvements and renovations and additions to the Canton
area of the Port of Baltimore. This facility consists of piers, docks, and
wharves, as well as handling, transportation, and storage facilities for the
state's bustling export trade business.
. The bonds are backed by Consolidated Coal Sales Co. and E.I. du Pont de
Nemours & Co.
- --------------------------------------------------------------------------------
/1/Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion
of the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the
last distribution per share (annualized) by the net asset value. /3/The
Fund's SEC yield is calculated by dividing the net investment income per
share for the 30-day period by the offering price (for Class A shares) or the
net asset value (for Class B shares) at the end of the period and annualizing
the result. /4/Returns are calculated by determining the percentage change in
net asset value (NAV) with all distributions reinvested. SEC returns for
Class A reflect maximum sales charge as noted, and, for Class B, reflect
applicable CDSC based on the following schedule: 5% - 1st and 2nd years; 4% -
3rd year; 3% - 4th year; 2% -5th year; 1% - 6th year. /5/Subject to change
due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 9.5% 8.6%
Five Years N.A. 5.3
Life of Fund* 5.2 6.6
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 4.3% 3.6%
Five Years N.A. 4.9
Life of Fund* 4.0 6.6
*Inception Dates - Class A: 12/10/93; Class B: 2/3/92
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Hospitals 14.2%
Housing 11.6%
Insured Hospitals+ 11.2%
Industrial Development/
Pollution Control 8.4%
Electric Utilities 6.8%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 68
Average Maturity 23.4 Yrs.
Effective Maturity 11.8 Yrs.
Average Rating AA-
Average Call 7.6 Yrs.
Average Dollar Price $105.06
+Private insurance does not remove the interest rate risks that are associated
with these investments.
8
<PAGE>
Missouri Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF CYNTHIA J.
CLEMSON APPEARS HERE]
Cynthia J. Clemson,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Missouri's economy, like that of many states in the U.S., grew solidly in
1997. Total employment increased 2.2%, and the unemployment rate declined
from 4.7% in January, 1997 to 3.8% in January, 1998. Much of the state's
growth came from the services sector, as well as other nonmanufacturing
industries.
. Although the manufacturing sector as a whole showed a decline during the
year, some industries, such as automotive and aerospace manufacturing,
remained steady. Large employers in this sector include the Big Three
automakers and the military aircraft division of Boeing/McDonnell Douglas.
. The outlook for 1998 is positive. Services employment is expected to continue
growing in 1998, with an increase of 3.5%, or 24,000 new jobs, over 1997.
Employment in the finance, insurance and real estate (FIRE) sector is
expected to increase 2.4% in 1998, with job increases in the trade and
transportation sectors of 1.1% and 2.0%, respectively.
Management Update
- --------------------------------------------------------------------------------
. In Missouri, municipal bond issuance has been relatively light - a trend felt
in many states - but, as a leader in the municipal bond arena, we have been
able to find value through our excellent relationships with our dealers in
the marketplace.
. The health care sector has provided good opportunities for adding value to
the Portfolio during the past six months. The industry is generally well
managed in Missouri, and we have found high-yielding bonds with good call
features. Another sector where we found higher issuance was in industrial
development revenue (IDR) bonds, which added diversity to the Portfolio and
typically offer attractive yields.
. We continue to seek lower-coupon, insured bonds to offset our high-yield
issues, thereby providing the Portfolio with balance and performance.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 5.4%. This return resulted from an increase in net asset
value (NAV) per share to $10.21 on February 28, 1998 from $9.93 on August 31,
1997 and the reinvestment of $0.246 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 5.0% during the period, the
result of an increase in NAV to $11.31 from $11.01 and the reinvestment of
$0.240 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $10.21 for
Class A and $11.31 for Class B, the distribution rates were 4.86% and 4.17%,
respectively./2/ The SEC 30-day yields at February 28 were 4.14% and 3.63%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
Missouri Health and Educational [GRADUATION CAP
Authority Facilities Revenue Bonds - ICON APPEARS HERE]
St. Louis University, Series 1996
. The proceeds from this bond issue were used to finance a series of projects
at St. Louis University. Major projects included the relocation and
construction of Parks College ($12 million); new construction and major
renovations at the School of Allied Health Professions ($12 million); the
construction of additional student housing ($5 million) and the renovation of
Xavier Hall ($4.9 million).
. The bonds are triple-A rated by both Moody's and Standard &Poor's, and are
insured by AMBAC Indemnity Corporation.+
- --------------------------------------------------------------------------------
/1/Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion
of the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the
last distribution per share (annualized) by the net asset value. /3/The
Fund's SEC yield is calculated by dividing the net investment income per
share for the 30-day period by the offering price (for Class A shares) or the
net asset value (for Class B shares) at the end of the period and annualizing
the result. /4/Returns are calculated by determining the percentage change in
net asset value (NAV) with all distributions reinvested. SEC returns for
Class A reflect maximum sales charge as noted, and, for Class B, reflect
applicable CDSC based on the following schedule: 5% - 1st and 2nd years; 4% -
3rd year; 3% - 4th year; 2% -5th year; 1% - 6th year. /5/Subject to change
due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 10.2% 9.2%
Five Years N.A. 5.6
Life of Fund* 5.6 7.3
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 4.9% 4.2%
Five Years N.A. 5.3
Life of Fund* 4.4 7.2
*Inception Dates - Class A: 12/7/93; Class B: 5/1/92
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Hospitals 16.1%
Industrial Development/
Pollution Control 13.9%
Insured Hospitals+ 13.9%
Insured Electric Utilities+ 8.2%
Lease/Certificates of Participation 8.0%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 54
Average Maturity 21.2 Yrs.
Effective Maturity 10.4 Yrs.
Average Rating A+
Average Call 8.5 Yrs.
Average Dollar Price $103.22
+Private insurance does not remove the interest rate risks that are associated
with these investments.
9
<PAGE>
North Carolina Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF ROBERT B.
MACINTOSH APPEARS HERE]
Robert B. MacIntosh,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. North Carolina's economy continued growing at a solid rate in 1997, aided by
a diverse base of sectors that included services, finance, and trade. In
particular, the economy has benefited from rapid growth among high-technology
companies located in the Research Triangle Park area. This growth has been
fueled, to a large extent, by the highly skilled labor force educated at the
state's three major research universities.
. In fiscal 1997, employment growth in North Carolina was 2.6%, ahead of the
U.S. rate of 2.1% during the same period. Unemployment declined from 3.8% in
January, 1997, to 3.6% in January, 1998 - well below the U.S. unemployment
rate. The rate of personal income growth has exceeded that of the U.S. for
the past three years.
. North Carolina's thriving economy and conservative fiscal policies have
resulted in a triple-A rating of its GO debt by Moody's. The General Fund
balance increased 12.6% in 1997 over 1996 to nearly $1.5 billion, and the
ratio of state debt to personal income (1.1%) is almost the lowest in the
nation.
Management Update
- --------------------------------------------------------------------------------
. In the North Carolina Fund, we have added several bonds in the health care
sector. Ample supply has resulted in attractive prices for these high-quality
issues, and, as supply begins to slow, we should see some relative
appreciation within this sector.
. Some of our holdings have been pre-refunded, which is a positive development.
When a bond is pre-refunded, it is no longer backed by the credit of the
issuer; rather, it is backed by an escrow fund of U.S. Treasury Bonds, which
increases the value of the credit and gives it a superb, triple-A rating.
. To increase performance, we have added zero coupon bonds and have swapped out
of bonds with shorter calls into longer-call bonds.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.8%. This return resulted from an increase in net asset
value (NAV) per share to $9.82 on February 28, 1998 from $9.61 on August 31,
1997 and the reinvestment of $0.249 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.4% during the period, the
result of an increase in NAV to $10.56 from $10.34 and the reinvestment of
$0.235 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $9.82 for
Class A and $10.56 for Class B, the distribution rates were 5.11% and 4.36%,
respectively./2/ The SEC 30-day yields at February 28 were 4.13% and 3.46%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
City of Charlotte, North Carolina, [HOUSE ICON APPEARS HERE]
Mortgage Revenue Refunding Bonds -
Double Oaks Apartment Project
. These bonds were issued to refinance a previous offering originally issued in
1983. The original issue provided funding for a series of major renovations
at the Double Oaks Apartment complex, a 570-unit housing project in Charlotte
built in 1949-1950. Renovations included new siding, roofs, insulation,
windows, and doors, as well as new kitchen facilities, natural gas heating
systems, and bathrooms.
. The bonds, which are triple-A-rated by Standard &Poor's, are backed by
mortgages insured by the Federal Housing Authority (FHA).+
- --------------------------------------------------------------------------------
/1/Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion
of the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the
last distribution per share (annualized) by the net asset value. /3/The
Fund's SEC yield is calculated by dividing the net investment income per
share for the 30-day period by the offering price (for Class A shares) or the
net asset value (for Class B shares) at the end of the period and annualizing
the result. /4/Returns are calculated by determining the percentage change in
net asset value (NAV) with all distributions reinvested. SEC returns for
Class A reflect maximum sales charge as noted, and, for Class B, reflect
applicable CDSC based on the following schedule: 5% - 1st and 2nd years; 4% -
3rd year; 3% - 4th year; 2% -5th year; 1% - 6th year./5/ Subject to change
due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 9.5% 8.6%
Five Years N.A. 4.7
Life of Fund* 4.7 6.2
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 4.3% 3.6%
Five Years N.A. 4.3
Life of Fund* 3.5 6.2
*Inception Dates - Class A: 12/7/93; Class B: 10/23/91
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Hospitals 15.4%
Industrial Revenue/Pollution Control 14.7%
Housing 13.8%
Special Tax Revenue 9.9%
Lease Certificates
of Redemption 8.6%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 73
Average Maturity 21.7 Yrs.
Effective Maturity 10.7 Yrs.
Average Rating A+
Average Call 8.3 Yrs.
Average Dollar Price $102.74
+FHA insurance does not remove the interest rate risks that are associated with
these investments.
10
<PAGE>
Oregon Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF THOMAS M. METZOLD APPEARS HERE]
Thomas M. Metzold,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Oregon continued to show solid economic growth in 1997, with payroll
employment expanding at a healthy 2.8% rate. Though down from the 4% average
of the previous three years, Oregon's economic growth was still the 8th
fastest in the nation, according to the Federal Reserve Bank of San
Francisco.
. Much of Oregon's growth over the past several years has been in the service
sector, which accounts for close to a third of total non-farm employment.
However, in 1997, manufacturing employment grew 4.2%, helping push the
overall unemployment rate down to 5.1% by the fourth quarter. Most of the
growth occurred in the high-tech, transportation equipment, and paper and
pulp industries.
. The growth in Oregon's economy has resulted in higher housing prices, with
the median home price rising 10.2% in 1996 and 7.6% in 1997.
Management Update
- --------------------------------------------------------------------------------
. The municipal bond market's solid performance over the past six months
reflected the near-perfect U.S. economic environment, in which steady growth
was accompanied by low inflation and increased productivity. In this climate,
interest rates trended downward, producing favorable returns for bond
investors.
. In 1997, Oregon voters passed Measure 50, which limits the growth of property
taxes but ensures that vital services are still funded. As we expected, its
passage has not had a significant impact on the state's bonds. However, we
have worked to diversify the Portfolio to minimize any potential impact down
the road.
. We continue to pursue a value-oriented strategy, focusing on credit, coupon,
and sector selection. This allows us to balance our goals of providing a high
level of current income and maximizing potential for capital appreciation.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.5%. This return resulted from an increase in net asset
value (NAV) per share to $9.79 on February 28, 1998 from $9.60 on August 31,
1997 and the reinvestment of $0.242 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.1% during the period, the
result of an increase in NAV to $10.71 from $10.51 and the reinvestment of
$0.230 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $9.79 for
Class A and $10.71 for Class B, the distribution rates were 4.98% and 4.22%,
respectively./2/ The SEC 30-day yields at February 28 were 4.26% and 3.70%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRADUATION CAP ICON APPEARS HERE]
City of Salem Educational Facilities
Revenue and Refunding Bonds -
Willamette University, Series 1994
. The proceeds from this issue provided funding for several major improvements
at Willamette University, including construction of a $2.5 million student
housing apartment complex. This facility accommodates 100 students and
includes studio, 1-bedroom, and 2-bedroom units. Among other projects
financed was a new campus telephone system costing $500,000.
. Founded in 1842, Willamette is the oldest college in the West, offering its
2,500 students a liberal arts curriculum and graduate schools in law and
management.
- --------------------------------------------------------------------------------
/1/ Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion of
the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/ The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the last
distribution per share (annualized) by the net asset value. /3/ The Fund's SEC
yield is calculated by dividing the net investment income per share for the 30-
day period by the offering price (for Class A shares) or the net asset value
(for Class B shares) at the end of the period and annualizing the result.
/4/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC returns for Class A reflect
maximum sales charge as noted, and, for Class B, reflect applicable CDSC based
on the following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year;
2% -5th year; 1% - 6th year. /5/Subject to change due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.5% 7.7%
Five Years N.A. 4.8
Life of Fund* 4.5 6.3
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.4% 2.7%
Five Years N.A. 4.5
Life of Fund* 3.3 6.3
*Inception Dates - Class A: 12/28/93; Class B: 12/24/91
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Housing 34.8%
General Obligations 13.1%
Industrial Development/Pollution Control 10.1%
Escrowd/Prerefunded 7.1%
Electric Utilities 5.4%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 56
Average Maturity 22.4 Yrs.
Effective Maturity 7.8 Yrs.
Average Rating AA
Average Call 6.4 Yrs.
Average Dollar Price $105.96
11
<PAGE>
South Carolina Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF THOMAS J. FETTER APPEARS HERE]
Thomas J. Fetter,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. South Carolina's economy posted solid growth in 1997, despite some weakness
in the manufacturing sector - particularly, in the textile industry, which
lost 4,000 jobs - and the impact of base closings due to military cutbacks.
Total employment increased from January, 1997 to January, 1998, and the
unemployment rate declined 1.7% to 3.8% - well below the U.S. rate - in the
same 12-month period.
. Several sectors of the state's economy - including business services, health
care, and transportation equipment - performed well during 1997, reflecting
an increasingly diversified base. Along the coast, tourism continued to
expand, and the Port of Charleston benefited from an increase in regional
exports.
. Despite the decline in textile employment, the manufacturing sector is
recovering. A forecasted slowdown in the national economy - brought on, in
part, by the Asian currency crisis - is expected to slow the state's growth
somewhat in 1998.
Management Update
- --------------------------------------------------------------------------------
. The Fund's significant holdings in the industrial development and hospital
sectors reflect the importance of these bond issues to South Carolina's
economy. While these sectors offer good value, we have diversified into other
solid areas such as housing and electric utilities.
. The state government's Jobs Program - in which basic services jobs are backed
by municipal bond issues - has been a tremendous success both for South
Carolina's residents and for municipal bond holders. The Fund has several
issues supporting this effort.
. During the period, we have worked to balance our higher-yielding issues with
lower-coupon, performance bonds to maximize total return. We have also
selectively acquired some non-rated bonds, which can offer additional yield
without imparting significant risk.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.9%. This return resulted from an increase in net asset
value (NAV) per share to $9.99 on February 28, 1998 from $9.76 on August 31,
1997 and the reinvestment of $0.244 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.6% during the period, the
result of an increase in NAV to $10.62 from $10.38 and the reinvestment of
$0.238 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $9.99 for
Class A and $10.62 for Class B, the distribution rates were 4.93% and 4.40%,
respectively./2/ The SEC 30-day yields at February 28 were 4.07% and 3.56%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRADUATION CAP ICON APPEARS HERE]
Berkeley County, South Carolina
Berkeley Schools Facilities Group
Certificates of Participation, Series 1994
. The proceeds from this issue financed the construction of two new elementary
schools and one new high school for the Berkeley County School District. The
high school accommodates approximately 1,200 and includes an on-campus
stadium and athletic complex. Both elementary schools are designed to handle
up to 900 students, kindergarten through fifth grade.
. This issue, which is triple-A rated by Standard & Poor's and Moody's and
insured by AMBAC Indemnity Corp., is a good example of how municipal
financing can fulfill a vital community need.+
- --------------------------------------------------------------------------------
/1/ Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion of
the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/ The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the last
distribution per share (annualized) by the net asset value. /3/ The Fund's SEC
yield is calculated by dividing the net investment income per share for the 30-
day period by the offering price (for Class A shares) or the net asset value
(for Class B shares) at the end of the period and annualizing the result. /4/
Returns are calculated by determining the percentage change in net asset value
(NAV) with all distributions reinvested. SEC returns for Class A reflect maximum
sales charge as noted, and, for Class B, reflect applicable CDSC based on the
following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% -
5th year; 1% - 6th year. 5Subject to change due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.6% 8.1%
Five Years N.A. 4.9
Life of Fund* 5.0 6.1
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.5% 3.1%
Five Years N.A. 4.6
Life of Fund* 3.7 6.0
*Inception Dates - Class A: 2/14/94; Class B: 10/2/92
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Industrial Development/Pollution Control 32.5%
Insured Hospitals+ 14.5%
Housing 11.4%
Electric Utilities 9.15
Insured Electric Utilities+ 5.7%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 41
Average Maturity 21.5 Yrs.
Effective Maturity 9.4 Yrs.
Average Rating A+
Average Call 6.9 Yrs.
Average Dollar Price $106.04
+Private insurance does not remove the interest rate risks that are associated
with these investments.
12
<PAGE>
Tennessee Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF CYNTHIA J. CLEMSON APPEARS HERE]
Cynthia J. Clemson,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Tennessee's historical reliance on low-paying apparel jobs has changed over
the past several years, as higher-paying auto manufacturing jobs have
become more prevalent. Personal income has increased over 26% since 1993,
reflecting this transition in the manufacturing sector.
. The North American Free Trade Agreement (NAFTA) helped boost Tennessee's
exports to over 7% of gross state product in 1996 from 5.8% in 1993, with
Canada and Mexico providing the largest markets. Mexico primarily imports
auto-related products; Canada imports chemicals, paper and rubber.
. Employment growth in the service sector slowed from over 2% in 1996 to 1.5%
in the 12 months ending September 30, 1997. Business services employment grew
2.7% during this period, while job declines occurred in the hotel and lodging
industries. Health services grew strongly, and now accounts for 30% of all
service sector jobs.
Management Update
- --------------------------------------------------------------------------------
. Municipal issuance in Tennessee continued to be below average during the past
six months. As a result, we remained focused on finding bonds in sectors
where issuance was higher.
. The industrial development and housing sectors provided opportunities to add
to the Portfolio. For example, we acquired a Memphis Shelby Northwest Airlink
issue that came with excellent call protection and an attractive yield. Bonds
in the housing sector, which are issued by a well-managed housing authority,
also provided high yields for the Portfolio.
. As always, we seek to balance our higher-yielding issues with lower-coupon,
performance bonds in an effort to achieve a high overall total return for
shareholders. In addition, we continue to seek high-quality non-rated bonds,
which can offer additional yield without imparting significant risk.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.6%. This return resulted from an increase in net asset
value (NAV) per share to $9.93 on February 28, 1998 from $9.74 on August 31,
1997 and the reinvestment of $0.252 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.2% during the period, the
result of an increase in NAV to $10.79 from $10.58 and the reinvestment of
$0.229 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $9.93 for
Class A and $10.79 for Class B, the distribution rates were 5.12% and 4.17%,
respectively./2/ The SEC 30-day yields at February 28 were 4.22% and 3.59%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
[FACTORY ICON APPEARS HERE]
Maury County Industrial Development Board - Pollution Control Refunding
Revenue Bonds - Saturn Corporation Project, Series 1994
. The proceeds from this bond issue were used to finance a major capital
project at the Saturn automobile manufacturing plant and the component parts
manufacturing and assembly plant in Maury County. The project consisted of
constructing and equipping air and water pollution control facilities and
solid waste disposal facilities at the two plants.
. Payment is guaranteed by General Motors Corp., Saturn Corporation's parent
company. Saturn is a large manufacturing employer in the state of Tennessee.
- --------------------------------------------------------------------------------
/1/ Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion of
the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/ The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the last
distribution per share (annualized) by the net asset value. /3/ The Fund's SEC
yield is calculated by dividing the net investment income per share for the 30-
day period by the offering price (for Class A shares) or the net asset value
(for Class B shares) at the end of the period and annualizing the result. /4/
Returns are calculated by determining the percentage change in net asset value
(NAV) with all distributions reinvested. SEC returns for Class A reflect maximum
sales charge as noted, and, for Class B, reflect applicable CDSC based on the
following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% -
5th year; 1% - 6th year./5/ Subject to change due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 9.3% 8.4%
Five Years N.A. 5.5
Life of Fund* 5.0 6.6
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 4.1% 3.4%
Five Years N.A. 5.2
Life of Fund* 3.8 6.5
*Inception Dates - Class A: 12/9/93; Class B: 8/25/92
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Industrial Development/Pollution Control 27.0%
Housing 15.8%
Insured Electric Utilities+ 8.4%
Insured Hospitals+ 6.3%
Insured Education+ 5.8%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 53
Average Maturity 21.9 Yrs.
Effective Maturity 10.7 Yrs.
Average Rating AA-
Average Call 8.0 Yrs.
Average Dollar Price $107.06
+Private insurance does not remove the interest rate risks that are associated
with these investments.
13
<PAGE>
Virginia Municipals Fund as of February 28, 1998
INVESTMENT UPDATE
[PHOTO OF TIMOTHY T. BROWSE APPEARS HERE]
Timothy T. Browse,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Virginia's economy experienced solid growth in the first three quarters of
1997, though its rate of growth was slower than in the first three quarters
of 1996. Total employment increased 2.9% from January, 1997 to September,
1997, compared to a 4.6% increase in 1996's first nine months. Unemployment
declined from 4.5% in January to 4.1% in September.
. Manufacturing employment, which increased during 1996, declined in 1997 from
397,000 in January to 395,700 in September. Most of the job losses occurred
in the apparel and textile industries.
. Northern Virginia, in which the state's fast-growing high-technology,
computer and business service companies are located, had annualized job
growth exceeding 4% in the first three quarters of 1997. Strong growth in
these sectors is expected to continue in 1998.
Management Update
- --------------------------------------------------------------------------------
. As the market rallied in the past six months, bringing interest rates down to
record lows, we have sold out of our holdings with shorter call features and
added holdings with longer calls and lower coupons. Bonds with shorter calls
can inhibit performance in a market rally. As we expect the bond market to
continue performing well in 1998, the new additions to the Fund should
enhance its performance.
. We are always looking for ways to increase yield without sacrificing credit
quality. The ongoing due diligence of our research staff has been
instrumental in helping achieve this goal. In the Virginia Fund, we have
added some industrial development bonds -- specifically, a Georgia Pacific
issue -- which are solid credits that add significant yield.
. We have added some zero coupon bonds, which typically enhance performance in
a market rally and add balance to the Portfolio by offsetting the higher-
coupon bonds.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1998, the Fund's Class A shares had
a total return of 4.7%. This return resulted from an increase in net asset
value (NAV) per share to $9.81 on February 28, 1998 from $9.62 on August 31,
1997 and the reinvestment of $0.253 per share in tax-free dividend income./1/
. The Fund's Class B shares had a total return of 4.3% during the period, the
result of an increase in NAV to $10.85 from $10.63 and the reinvestment of
$0.237 per share in tax-free dividend income./1/
. Based on the Fund's most recent dividends and NAVs per share of $9.81 for
Class A and $10.85 for Class B, the distribution rates were 5.20% and 4.29%,
respectively./2/ The SEC 30-day yields at February 28 were 3.76% and 3.19%,
respectively./3/
Your Investment at Work
- --------------------------------------------------------------------------------
[BRIDGE ICON APPEARS HERE]
Chesapeake Bay Bridge and Tunnel
District General Resolution Revenue
Bonds, Refunding Series 1996
. This bond issue is financing the construction of a major refurbishment and
expansion of the 20-mile trestle bridge and tunnel crossing at the mouth of
the Chesapeake Bay between the City of Virginia Beach and Northampton County,
designated as part of U.S. Route 13. This massive project includes
construction of a parallel crossing of trestles, bridges, and roadways; the
rehabilitation of existing trestles and bridges; and the construction of two
new tunnels.
- --------------------------------------------------------------------------------
/1/ Returns do not include maximum 4.75% initial sales charge for Class A shares
or 5% contingent deferred sales charge (CDSC) for Class B shares; a portion of
the Fund's income may be subject to federal and state income taxes and/or
federal alternative minimum tax. /2/ The Fund's distribution rate represents
actual distributions paid to shareholders and is calculated by dividing the last
distribution per share (annualized) by the net asset value. /3/ The Fund's SEC
yield is calculated by dividing the net investment income per share for the 30-
day period by the offering price (for Class A shares) or the net asset value
(for Class B shares) at the end of the period and annualizing the result. /4/
Returns are calculated by determining the percentage change in net asset value
(NAV) with all distributions reinvested. SEC returns for Class A reflect maximum
sales charge as noted, and, for Class B, reflect applicable CDSC based on the
following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% -
5th year; 1% - 6th year. /5/ Subject to change due to active management.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1998
Performance/4/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 9.2% 8.2%
Five Years N.A. 4.9
Life of Fund* 4.8 6.6
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 4.1% 3.2%
Five Years N.A. 4.6
Life of Fund* 3.6 6.6
*Inception Dates - Class A: 12/17/93; Class B: 7/26/91
5 Largest Sectors/5/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH APPEARS HERE]
Industrial Development/Pollution Control 17.4%
Hospitals 14.0%
Housing 12.2%
Insured Hospitals+ 10.4%
Lease/Certificates of Participation 6.1%
Portfolio Overview/5/
- --------------------------------------------------------------------------------
Number of Issues 78
Average Maturity 21.4 Yrs.
Effective Maturity 11.2 Yrs.
Average Rating AA-
Average Call 7.6 Yrs.
Average Dollar Price $105.72
+Private insurance does not remove the interest rate risks that are associated
with these investments.
14
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited)
Statements of Assets and Liabilities
As of February 28, 1998
<TABLE>
<CAPTION>
Alabama Fund Arkansas Fund Georgia Fund Kentucky Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
- ---------------------------------------------------------------------------------------------------------------------------
Investment in Municipals Portfolio --
Identified cost $ 89,973,510 $ 54,787,240 $ 83,709,111 $ 109,007,103
Unrealized appreciation 8,591,061 4,481,915 7,624,990 9,831,283
- ---------------------------------------------------------------------------------------------------------------------------
Total investment in Portfolio, at value (Note 1A) $ 98,564,571 $ 59,269,155 $ 91,334,101 $ 118,838,386
- ---------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold $ 33,490 $ 129,764 $ 36,491 $ 22,703
Deferred organization expenses (Note 1D) 378 17 1,878 1,958
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $ 98,598,439 $ 59,398,936 $ 91,372,470 $ 118,863,047
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------------------------------------------------------------------
Dividends payable $ 132,277 $ 76,374 $ 122,567 $ 155,850
Payable for Fund shares redeemed 110,414 114,003 216,862 205,587
Payable to affiliate for Trustees' fees (Note 4) 548 271 273 542
Accrued expenses 48,117 29,631 49,242 60,493
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 291,356 $ 220,279 $ 388,944 $ 422,472
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets $ 98,307,083 $ 59,178,657 $ 90,983,526 $ 118,440,575
- ---------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 93,126,665 $ 57,356,826 $ 90,491,967 $ 112,435,480
Accumulated net realized loss on investments from
Portfolio (computed on the basis of identified
cost) (3,478,002) (2,611,188) (7,104,021) (3,701,162)
Accumulated undistributed (distributions in excess
of) net investment income 67,359 (48,896) (29,410) (125,026)
Net unrealized appreciation of investments from
Portfolio (computed on the basis of identified 8,591,061 4,481,915 7,624,990 9,831,283
cost)
- ---------------------------------------------------------------------------------------------------------------------------
Total $ 98,307,083 $ 59,178,657 $ 90,983,526 $ 118,440,575
- ---------------------------------------------------------------------------------------------------------------------------
Class A Shares
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets $ 4,989,181 $ 1,223,326 $ 1,783,639 $ 1,096,893
Shares Outstanding 495,816 121,943 183,539 110,982
Net Asset Value and Redemption Price Per Share
(Net assets / shares of beneficial interest 10.06 10.03 9.72 9.88
outstanding)
Offering Price Per Share
(100 / 95.25 of net asset value per share) 10.56 10.53 10.20 10.37
- ---------------------------------------------------------------------------------------------------------------------------
Class B Shares
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets $ 93,317,902 $ 57,955,331 $ 89,199,887 $ 117,343,682
Shares Outstanding 8,430,725 5,393,699 8,596,361 11,039,066
Net Asset Value, Offering Price and Redemption
Price Per Share (Note 6)
(Net assets / shares of beneficial interest
outstanding) 11.07 10.75 10.38 10.63
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
On sales of $25,000 or more, the offering price of Class A shares is reduced.
See notes to financial statements
15
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Assets and Liabilities
As of February 28, 1998
<TABLE>
<CAPTION>
Louisiana Fund Maryland Fund Missouri Fund North Carolina Fund
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
Investment in Municipals Portfolio --
Identified cost $ 32,362,756 $ 98,693,903 $ 71,228,789 $ 141,850,852
Unrealized appreciation 2,151,268 6,915,946 7,722,854 14,594,813
- -----------------------------------------------------------------------------------------------------------------------------
Total investment in Portfolio, at value (Note 1A) $ 34,514,024 $ 105,609,849 $ 78,951,643 $ 156,445,665
- -----------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold $ -- $ 65,929 $ 43,585 $ 33,822
Deferred organization expenses (Note 1D) 1,511 182 328 --
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 34,515,535 $ 105,675,960 $ 78,995,556 $ 156,479,487
- -----------------------------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Dividends payable $ 48,120 $ 133,970 $ 101,002 $ 198,762
Payable for Fund shares redeemed 771 245,224 151,296 86,685
Payable to affiliate for Trustees' fees (Note 4) 29 542 280 549
Accrued expenses 14,757 55,091 30,446 69,819
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 63,677 $ 434,827 $ 283,024 $ 355,815
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets $ 34,451,858 $ 105,241,133 $ 78,712,532 $ 156,123,672
- -----------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 34,374,532 $ 99,763,956 $ 72,957,595 $ 151,903,821
Accumulated net realized loss on investments from
Portfolio (computed on the basis of
identified cost) (2,070,557) (1,414,259) (2,013,361) (9,987,577)
Accumulated undistributed (distributions in excess
of) net investment income (3,385) (24,510) 45,444 (387,385)
Net unrealized appreciation of investments from
Portfolio (computed on the basis of identified
cost) 2,151,268 6,915,946 7,722,854 14,594,813
- -----------------------------------------------------------------------------------------------------------------------------
Total $ 34,451,858 $ 105,241,133 $ 78,712,532 $ 156,123,672
- -----------------------------------------------------------------------------------------------------------------------------
Class A Shares
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets $ 2,471,092 $ 1,297,157 $ 2,459,421 $ 10,958,390
Shares Outstanding 248,893 129,277 240,989 1,115,848
Net Asset Value and Redemption Price Per Share
(Net assets / shares of beneficial interest
outstanding) $ 9.93 $ 10.03 $ 10.21 $ 9.82
Offering Price Per Share
(100 / 95.25 of net asset value per share) $ 10.43 $ 10.53 $ 10.72 $ 10.31
- -----------------------------------------------------------------------------------------------------------------------------
Class B Shares
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets $ 31,980,766 $ 103,943,976 $ 76,253,111 $ 145,165,282
Shares Outstanding 3,046,265 9,488,272 6,742,557 13,744,347
Net Asset Value, Offering Price and Redemption
Price Per Share (Note 6)
(Net assets / shares of beneficial interest
outstanding) $ 10.50 $ 10.95 $ 11.31 $ 10.56
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
On sales of $25,000 or more, the offering price of Class A shares is reduced.
See notes to financial statements
16
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Assets and Liabilities
As of February 28, 1998
<TABLE>
<CAPTION>
Oregon Fund South Carolina Fund Tennessee Fund Virginia Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment in Municipals Portfolio --
Identified cost $ 101,130,843 $ 48,441,371 $ 49,773,144 $ 143,364,070
Unrealized appreciation 7,911,783 4,700,592 4,226,210 13,385,616
- -----------------------------------------------------------------------------------------------------------------------------------
Total investment, at value (Note 1A) $ 109,042,626 $ 53,141,963 $ 53,999,354 $ 156,749,686
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold $ 65,249 $ 126,187 $ 212,253 $ 93,781
Deferred organization expenses (Note 1D) 1,625 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 109,109,500 $ 53,268,150 $ 54,211,607 $ 156,843,467
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions payable $ 138,597 $ 72,089 $ 68,718 $ 204,167
Payable for Fund shares redeemed 24,300 66,177 121,331 323,745
Payable to affiliate for Trustees' fees (Note 4) 559 273 280 542
Accrued expenses 50,107 30,779 24,382 75,234
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 213,563 $ 169,318 $ 214,711 $ 603,688
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 108,895,937 $ 53,098,832 $ 53,996,896 $ 156,239,779
- -----------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 106,039,833 $ 52,218,746 $ 51,845,112 $ 149,565,059
Accumulated net realized loss on investments from
Portfolio (computed on the basis of identified
cost) (5,093,267) (3,899,690) (2,035,413) (6,552,917)
Accumulated undistributed (distributions in excess
of) net investment income 37,588 79,184 (39,013) (157,979)
Net unrealized appreciation of investments from
Portfolio (computed on the basis of identified
cost) 7,911,783 4,700,592 4,226,210 13,385,616
- -----------------------------------------------------------------------------------------------------------------------------------
Total $ 108,895,937 $ 53,098,832 $ 53,996,896 $ 156,239,779
- -----------------------------------------------------------------------------------------------------------------------------------
Class A Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 848,909 $ 1,199,007 $ 2,146,638 $ 1,807,299
Shares Outstanding 86,734 120,019 216,152 184,221
Net Asset Value and Redemption Price Per Share
(Net assets / shares of beneficial interest
outstanding) $ 9.79 $ 9.99 $ 9.93 $ 9.81
Offering Price Per Share
(100 / 95.25 of net assets value per share) $ 10.28 $ 10.49 $ 10.43 $ 10.30
- -----------------------------------------------------------------------------------------------------------------------------------
Class B Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 108,047,028 $ 51,899,825 $ 51,850,258 $ 154,432,480
Shares Outstanding 10,089,794 4,887,511 4,807,395 14,230,521
Net Asset Value, Offering Price and Redemption
Price Per Share (Note 6)
(Net assets / shares of beneficial interest
outstanding) $ 10.71 $ 10.62 $ 10.79 $ 10.85
- -----------------------------------------------------------------------------------------------------------------------------------
On sales of $25,000 or more, the offering price of Class A shares is reduced.
</TABLE>
See notes to financial statements
17
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Alabama Fund Arkansas Fund Georgia Fund Kentucky Fund
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------
Interest income allocated from Portfolios $ 2,859,404 $ 1,737,589 $ 2,716,113 $ 3,559,592
Expenses allocated from Portfolios (254,463) (146,105) (223,963) (299,437)
- ------------------------------------------------------------------------------------------------------------------------
Net investment income from Portfolios $ 2,604,941 $ 1,591,484 $ 2,492,150 $ 3,260,155
- ------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 1,024 $ 827 $ 829 $ 1,654
Distribution and service fees (Note 5)
Class A 3,662 512 2,019 1,271
Class B 434,619 275,526 422,959 553,033
Transfer and dividend disbursing agent fees 48,499 32,082 44,211 59,569
Printing and postage 4,768 2,908 3,379 4,091
Legal and accounting services 910 -- 631 1,943
Custodian fee 6,194 3,795 5,844 6,901
Amortization of organization expenses (Note 1D) 3,055 2,749 1,228 1,247
Registration fees 1,200 1,167 499 1,825
Miscellaneous 6,464 3,554 7,341 7,499
- ------------------------------------------------------------------------------------------------------------------------
Total expenses $ 510,395 $ 323,120 $ 488,940 $ 639,033
- ------------------------------------------------------------------------------------------------------------------------
Net investment income $ 2,094,546 $ 1,268,364 $ 2,003,210 $ 2,621,122
- ------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolios
- ------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 595,134 $ 536,316 $ 1,047,900 $ 1,111,625
Financial futures contracts (563,612) (255,994) (401,179) (454,932)
- ------------------------------------------------------------------------------------------------------------------------
Net realized gain on investment transactions $ 31,522 $ 280,322 $ 646,721 $ 656,693
- ------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments $ 1,909,955 $ 1,123,014 $ 1,524,388 $ 1,824,653
Financial futures contracts 22,153 (21,589) 34,814 31,170
- ------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments $ 1,932,108 $ 1,101,425 $ 1,559,202 $ 1,855,823
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 1,963,630 $ 1,381,747 $ 2,205,923 $ 2,512,516
- ------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 4,058,176 $ 2,650,111 $ 4,209,133 $ 5,133,638
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
18
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Louisiana Fund Maryland Fund Missouri Fund North Carolina Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income allocated from Portfolio $ 1,005,879 $ 2,982,945 $ 2,281,303 $ 4,696,575
Expenses allocated from Portfolio (66,262) (251,766) (187,091) (408,382)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income from Portfolio $ 939,617 $ 2,731,179 $ 2,094,212 $ 4,288,193
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 84 $ 1,654 $ 836 $ 747
Distribution and service fees (Note 5)
Class A 1,925 1,226 1,897 5,276
Class B 147,432 485,236 353,443 684,784
Transfer and dividend disbursing agent fees 20,524 41,909 42,749 72,990
Legal and accounting services 1,401 3,200 3,684 1,354
Printing and postage 2,278 19,827 4,586 6,623
Custodian fee 1,558 6,008 2,811 8,606
Amortization of organization expenses (Note 1D) 1,661 2,385 2,044 2,271
Registration fees 1,248 2,000 1,285 --
Miscellaneous 1,639 1,785 2,026 12,357
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 179,750 $ 565,230 $ 415,361 $ 795,008
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 759,867 $ 2,165,949 $ 1,678,851 $ 3,493,185
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 393,633 $ 1,060,741 $ 686,800 $ 2,470,431
Financial futures contracts (178,020) (398,376) (331,310) (1,024,189)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investment transactions $ 215,613 $ 662,365 $ 355,490 $ 1,446,242
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments $ 447,366 $ 1,847,502 $ 1,734,837 $ 2,089,663
Financial futures contracts 18,190 (36,115) 29,012 102,989
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments $ 465,556 $ 1,811,387 $ 1,763,849 $ 2,192,652
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 681,169 $ 2,473,752 $ 2,119,339 $ 3,638,894
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,441,036 $ 4,639,701 $ 3,798,190 $ 7,132,079
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
19
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Oregon Fund South Carolina Fund Tennessee Fund Virginia Fund
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (Note 1B)
- ---------------------------------------------------------------------------------------------------------------------------------
Interest income allocated from Portfolio $ 3,217,520 $ 1,567,164 $ 1,552,188 $ 4,620,957
Expenses allocated from Portfolio (274,197) (129,649) (122,810) (411,823)
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income from Portfolio $ 2,943,323 $ 1,437,515 $ 1,429,378 $ 4,209,134
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses
- ---------------------------------------------------------------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 1,671 $ 829 $ 836 $ 810
Distribution and service fees (Note 5)
Class A 604 1,086 1,076 1,512
Class B 506,016 244,330 240,467 726,654
Transfer and dividend disbursing agent fees 55,209 25,190 26,942 74,927
Printing and postage 4,398 2,483 3,045 6,158
Custodian fee 3,865 3,336 3,115 10,333
Legal and accounting services 1,165 275 1,801 1,108
Amortization of organization expenses (Note 1D) 1,044 2,460 72 2,345
Registration fees 900 -- 3,266 501
Miscellaneous 7,963 4,244 4,353 13,236
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 582,835 $ 284,233 $ 284,973 $ 837,584
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 2,360,488 $ 1,153,282 $ 1,144,405 $ 3,371,550
- ---------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 949,588 $ 622,499 $ 365,718 $ 2,284,353
Financial futures contracts (327,439) (15,862) (234,394) (626,776)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investment transactions $ 622,149 $ 606,637 $ 131,324 $ 1,657,577
- ---------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments $ 1,522,983 $ 649,028 $ 928,076 $ 1,781,655
Financial futures contracts (50,937) (6,490) 20,309 (56,837)
- ---------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments $ 1,472,046 $ 642,538 $ 948,385 $ 1,724,818
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 2,094,195 $ 1,249,175 $ 1,079,709 $ 3,382,395
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 4,454,683 $ 2,402,457 $ 2,224,114 $ 6,753,945
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
20
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Increase (Decrease) in Net Assets Alabama Fund Arkansas Fund Georgia Fund Kentucky Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 2,094,546 $ 1,268,364 $ 2,003,210 $ 2,621,122
Net realized gain on investment
transactions 31,522 280,322 646,721 656,693
Net change in unrealized appreciation
(depreciation) of investments 1,932,108 1,101,425 1,559,202 1,855,823
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 4,058,176 $ 2,650,111 $ 4,209,133 $ 5,133,638
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income
Class A $ (129,558) $ (30,003) $ (45,295) $ (32,468)
Class B (1,980,921) (1,238,361) (1,981,049) (2,588,654)
In excess of net investment income
Class A -- (337) -- (161)
Class B -- (14,070) (30,278) (8,558)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (2,110,479) $ (1,282,771) $ (2,056,622) $ (2,629,841)
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest
(Note 3) --
Proceeds from sale of shares
Class A $ 486,083 $ 93,285 $ 69,477 $ 59,411
Class B 1,895,059 771,987 1,598,901 2,023,131
Net asset value of shares issued to shareholders
in payment of distributions declared
Class A 57,412 14,241 24,837 26,054
Class B 1,046,044 630,275 898,585 1,385,791
Cost of shares redeemed
Class A (1,484,676) (91,536) (118,914) (402,437)
Class B (7,619,817) (6,109,436) (8,537,006) (9,918,763)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund
share transactions $ (5,619,895) $ (4,691,184) $ (6,064,120) $ (6,826,813)
- ------------------------------------------------------------------------------------------------------------------------------------
Contribution from EV Traditional
Municipals Funds $ 5,824,841 $ 1,180,015 $ 1,767,367 $ 1,387,318
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 2,152,643 $ (2,143,829) $ (2,144,242) $ (2,935,698)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of period $ 96,154,440 $ 61,322,486 $ 93,127,768 $ 121,376,273
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $ 98,307,083 $ 59,178,657 $ 90,983,526 $ 118,440,575
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $ 67,359 $ (48,896) $ (29,410) $ (125,026)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
21
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Increase (Decrease) in Net Assets Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 759,867 $ 2,165,949 $ 1,678,851 $ 3,493,185
Net realized gain on investment transactions 215,613 662,365 355,490 1,446,242
Net change in unrealized appreciation
(depreciation) of investments 465,556 1,811,387 1,763,849 2,192,652
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,441,036 $ 4,639,701 $ 3,798,190 $ 7,132,079
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income
Class A $ (62,980) $ (29,516) $ (58,302) $ (340,250)
Class B (729,521) (2,196,491) (1,605,238) (3,152,935)
In excess of net investment income
Class A -- (1,090) -- (2,719)
Class B (10,257) (23,258) -- (84,836)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (802,758) $ (2,250,355) $ (1,663,540) $ (3,580,740)
- ---------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Note 3) --
Proceeds from sale of shares
Class A $ 417,094 $ 158,337 $ 413,827 $ 1,250,637
Class B 907,695 2,795,818 1,648,978 1,989,061
Net asset value of shares issued to shareholders
in payment of distributions declared
Class A 46,562 20,100 37,522 119,704
Class B 362,553 1,163,168 806,648 1,629,171
Cost of shares redeemed
Class A (393,357) (208,613) (253,788) (6,184,945)
Class B (1,883,677) (8,048,530) (5,752,311) (13,219,581)
- ---------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund share transactions $ (543,130) $ (4,119,720) $ (3,099,124) $ (14,415,953)
- ---------------------------------------------------------------------------------------------------------------------------------
Contribution from EV Traditional Municipals Funds $ 2,360,799 $ 1,300,861 $ 2,197,879 $ 15,424,165
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 2,455,947 $ (429,513) $ 1,233,405 $ 4,559,551
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
At beginning of period $ 31,995,911 $ 105,670,646 $ 77,479,127 $ 151,564,121
- ---------------------------------------------------------------------------------------------------------------------------------
At end of period $ 34,451,858 $ 105,241,133 $ 78,712,532 $ 156,123,672
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated
distributions in excess of
net investment income
included in net assets
- ---------------------------------------------------------------------------------------------------------------------------------
At end of period $ (3,385) $ (24,510) $ 45,444 $ (387,385)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
22
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Increase (Decrease) in Net Assets Oregon Fund South Carolina Fund Tennessee Fund Virginia Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 2,360,488 $ 1,153,282 $ 1,144,405 $ 3,371,550
Net realized gain on investment transactions 622,149 606,637 131,324 1,657,577
Net change in unrealized appreciation
(depreciation) of investments 1,472,046 642,538 948,385 1,724,818
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 4,454,683 $ 2,402,457 $ 2,224,114 $ 6,753,945
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income
Class A $ (18,930) $ (27,027) $ (60,205) $ (37,570)
Class B (2,319,897) (1,152,981) (1,084,200) (3,333,980)
In excess of net investment income
Class A -- -- (1,430) (1,896)
Class B -- -- (2,852) (49,028)
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (2,338,827) $ (1,180,008) $ (1,148,687) $ (3,422,474)
- ----------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Note 3) --
Proceeds from sale of shares
Class A $ 101,537 $ 126,901 $ 96,973 $ 342,635
Class B 1,364,964 1,169,819 2,111,061 3,052,620
Net asset value of shares issued to
shareholders in payment of distributions declared
Class A 13,503 16,154 45,510 17,777
Class B 1,332,538 511,699 556,879 1,724,012
Cost of shares redeemed
Class A (4,349) (33,349) (491,357) (26,434)
Class B (9,338,493) (3,664,325) (3,554,712) (13,251,349)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund share
transactions $ (6,530,300) $ (1,873,101) $ (1,235,646) $ (8,140,739)
- ----------------------------------------------------------------------------------------------------------------------------------
Contribution from EV Traditional Municipals Funds $ 724,248 $ 1,063,786 $ 2,445,040 $ 1,446,129
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ (3,690,196) $ 413,134 $ 2,284,821 $ (3,363,139)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
At beginning of period $ 112,586,133 $ 52,685,698 $ 51,712,075 $ 159,602,918
- ----------------------------------------------------------------------------------------------------------------------------------
At end of period $ 108,895,937 $ 53,098,832 $ 53,996,896 $ 156,239,779
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- ----------------------------------------------------------------------------------------------------------------------------------
At end of period $ 37,588 $ 79,184 $ (39,013) $ (157,979)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
23
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1997
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Kentucky
Increase (Decrease) in Net Assets Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 4,380,164 $ 2,902,414 $ 4,470,164 $ 5,678,113
Net realized gain (loss) on investment 33,804 (191,001) 613,432 797,596
transactions
Net change in unrealized appreciation
(depreciation) of investments 3,642,060 2,305,376 2,820,690 4,618,779
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 8,056,028 $ 5,016,789 $ 7,904,286 $ 11,094,488
- -----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Class B) (Note 2) --
From net investment income $ (4,350,833) $ (2,902,414) $ (4,544,863) $ (5,595,715)
In excess of net investment income -- (28,093) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (4,350,833) $ (2,930,507) $ (4,544,863) $ (5,595,715)
- -----------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Class B)
(Note 3) --
Proceeds from sale of shares $ 3,425,462 $ 1,493,276 $ 4,418,041 $ 3,898,223
Net asset value of shares issued to shareholders
in payment of distributions declared 2,213,584 1,356,531 1,923,747 2,905,584
Cost of shares redeemed (14,881,607) (16,481,547) (23,565,774) (22,283,363)
- -----------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund share transactions $ (9,242,561) $ (13,631,740) $ (17,223,986) $ (15,479,556)
- -----------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (5,537,366) $ (11,545,458) $ (13,864,563) $ (9,980,783)
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 101,691,806 $ 72,867,944 $ 106,992,331 $ 131,357,056
- -----------------------------------------------------------------------------------------------------------------------------
At end of year $ 96,154,440 $ 61,322,486 $ 93,127,768 $ 121,376,273
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- -----------------------------------------------------------------------------------------------------------------------------
At end of year $ 75,588 $ (34,335) $ 22,371 $ (115,488)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
24
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1997
<TABLE>
<CAPTION>
Increase (Decrease) in Net Assets Louisiana Fund Maryland Fund Missouri Fund North Carolina Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 1,549,178 $ 4,637,040 $ 3,536,557 $ 7,269,485
Net realized gain on investment transactions 15,873 584,156 56,002 2,190,676
Net change in unrealized appreciation
(depreciation) of investments 1,080,103 3,721,766 3,605,665 3,787,543
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 2,645,154 $ 8,942,962 $ 7,198,224 $ 13,247,704
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Class B)
(Note 2) --
From net investment income $ (1,549,437) $ (4,735,705) $ (3,484,823) $ (7,269,485)
In excess of net investment income -- -- -- (77,187)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (1,549,437) $ (4,735,705) $ (3,484,823) $ (7,346,672)
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest
(Class B) (Note 3) --
Proceeds from sale of shares $ 2,269,242 $ 5,778,027 $ 2,001,069 $ 4,621,092
Net asset value of shares issued to
shareholders in payment of distributions
declared 703,988 2,443,240 1,707,681 3,553,856
Cost of shares redeemed (5,066,555) (16,001,200) (12,328,232) (32,400,429)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund share
transactions $ (2,093,325) $ (7,779,933) $ (8,619,482) $ (24,225,481)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (997,608) $ (3,572,676) $ (4,906,081) $ (18,324,449)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 32,993,519 $ 109,243,322 $ 82,385,208 $ 169,888,570
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 31,995,911 $ 105,670,646 $ 77,479,127 $ 151,564,121
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 29,181 $ 60,058 $ 23,640 $ (296,910)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
25
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1997
<TABLE>
<CAPTION>
Oregon South Carolina Tennessee Virginia
Increase (Decrease) in Net Assets Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 5,307,504 $ 2,491,974 $ 2,330,811 $ 7,569,428
Net realized gain (loss) on investment transactions (368,774) (179,440) (142,011) 1,835,006
Net change in unrealized appreciation (depreciation)
of investments 3,308,277 2,138,229 2,336,757 4,086,855
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 8,247,007 $ 4,450,763 $ 4,525,557 $ 13,491,289
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Class B) (Note 2) --
From net investment income $ (5,255,970) $ (2,527,975) $ (2,330,811) $ (7,542,233)
In excess of net investment income -- -- (27,480) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (5,255,970) $ (2,527,975) $ (2,358,291) $ (7,542,233)
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Class B)
(Note 3) --
Proceeds from sale of shares $ 5,350,504 $ 1,925,203 $ 2,458,541 $ 6,424,219
Net asset value of shares issued to shareholders in
payment of distributions declared 2,928,379 1,090,706 1,177,740 3,698,500
Cost of shares redeemed (27,263,830) (9,470,155) (8,624,032) (32,387,235)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund share transactions $ (18,984,947) $ (6,454,246) $ (4,987,751) $ (22,264,516)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (15,993,910) $ (4,531,458) $ (2,820,485) $ (16,315,460)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 128,580,043 $ 57,217,156 $ 54,532,560 $ 175,918,378
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 112,586,133 $ 52,685,698 $ 51,712,075 $ 159,602,918
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 16,090 $ 103,872 $ (34,169) $ (105,169)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
26
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Alabama Fund
----------------------------------------------------------------------------------------------
Year Ended
----------------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ---------------------------------------------- ----------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
---------------------- ---------------------------------------------- ----------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of
period $ 9.860 $ 10.850 $ 10.460 $ 10.440 $ 10.210 $ 11.060 $ 10.340 $ 10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.250 $ 0.229 $ 0.469 $ 0.470 $ 0.479 $ 0.425 $ 0.475 $ 0.208
Net realized and unrealized gain
(loss) on investments 0.195 0.222 0.386 0.030 0.244 (0.769) 0.837 0.385++
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.445 $ 0.451 $ 0.855 $ 0.500 $ 0.723 $ (0.344) $ 1.312 $ 0.593
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.245) $ (0.231) $ (0.465) $ (0.480) $ (0.479) $ (0.425) $ (0.475) $ (0.208)
In excess of net investment income -- -- -- -- (0.014) (0.081) (0.117) (0.045)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.245) $ (0.231) $ (0.465) $ (0.480) $ (0.493) $ (0.506) $ (0.592) $ (0.253)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 10.060 $ 11.070 $ 10.850 $ 10.460 $ 10.440 $ 10.210 $ 11.060 $ 10.340
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.56% 4.25% 8.33% 4.85% 7.38% (3.18)% 13.09% 5.71%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
27
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Alabama Fund (continued)
---------------------------------------------------------------------------------------
Year Ended
---------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------- --------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
---------------------- ----------------------------------------- --------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data+++
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 4,989 $ 93,318 $ 96,154 $101,692 $108,642 $105,553 $ 84,621 $ 21,105
Ratio of net expenses to average daily net
assets/(2)(3)/ 0.82%+ 1.61%+ 1.60% 1.57% 1.51% 1.43%+ 1.37% 1.01%+
Ratio of net expenses to average daily net --
assets after custodian fee
reduction/(2)/ 0.80%+ 1.59%+ 1.59% 1.52% -- -- -- --
Ratio of net investment income to average
daily net assets 5.00%+ 4.20%+ 4.39% 4.44% 4.74% 4.35%+ 4.30% 4.49%+
Portfolio Turnover/(4)/ -- -- -- -- -- -- 15% 13%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C> <C>
Expenses /(2)/ 1.49% 1.50%+
Net investment income 4.18% 4.00%+
Net investment income per share $ 0.462 $ 0.185
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gains and losses 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 eleven months ended August 31, 1994.
** For the period from the start of business, May 1, 1992, to September 30,
1992.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio Turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover rate for the period since the Fund transferred
substantially all of its investable assets to its respective Portfolio is
shown in the Portfolio's financial statements which are included elsewhere
in this report.
See notes to financial statements
28
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Arkansas Fund
--------------------------------------------------------------------------------
Year Ended
---------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ---------------------------------------- ---------------
(Unaudited) 1997 1996 1995 1994** 1993*
-------------------- ---------------------------------------- ---------------
Class A Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.810 $ 10.510 $ 10.190 $ 10.250 $ 10.140 $ 10.910 $ 10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.247 $ 0.220 $ 0.445 $ 0.450 $ 0.460 $ 0.431 $ 0.471
Net realized and unrealized gain (loss) on
investments 0.223 0.243 0.324 (0.038) 0.132 (0.703) 1.025
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.470 $ 0.463 $ 0.769 $ 0.412 $ 0.592 $ (0.272) $ 1.496
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.247) $ (0.220) $ (0.445) $ (0.471) $ (0.460) $ (0.431) $ (0.471)
In excess of net investment income (0.003) (0.003) (0.004) (0.001) (0.022) (0.067) (0.115)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.250) $ (0.223) $ (0.449) $ (0.472) $ (0.482) $ (0.498) $ (0.586)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 10.030 $ 10.750 $ 10.510 $ 10.190 $ 10.250 $ 10.140 $ 10.910
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.83% 4.50% 7.70% 4.05% 6.15% (2.53)% 15.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data++
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 1,223 $ 57,955 $ 61,322 $ 72,868 $ 80,823 $ 82,436 $ 59,205
Ratio of net expenses to average daily net
assets/(2)/(3)/ 0.74%+ 1.59%+ 1.60% 1.56% 1.50% 1.17%+ 0.88%+
Ratio of net expenses to average daily net
assets after custodian fee reduction/(2)/ 0.72%+ 1.57%+ 1.59% 1.54% -- -- --
Ratio of net investment income to average
daily net assets 5.01%+ 4.18%+ 4.31% 4.34% 4.67% 4.47%+ 4.27%+
Portfolio Turnover/(4)/ -- -- -- -- -- 5% 13%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C> <C>
Expenses/(2)/ 1.40%+ 1.42%+
Net investment income 4.24%+ 3.73%+
Net investment income per share $ 0.409 $ 0.411
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, October 2, 1992, to September
30, 1993.
** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio Turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover rate for the period since the Fund transferred
substantially all of its investable assets to its respective Portfolio is
shown in the Portfolio's financial statements which are included elsewhere
in this report.
See notes to financial statements
29
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Georgia Fund
--------------------------------------------------------------------------------------
Year Ended
----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------- ---------------------
(Unaudited) 1997 1996 1995 1994** 1993 1992*
------------------- ----------------------------------------- ---------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.500 $ 10.140 $ 9.810 $ 9.790 $ 9.800 $ 10.750 $ 10.120 $ 10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.239 $ 0.220 $ 0.449 $ 0.451 $ 0.450 $ 0.413 $ 0.459 $ 0.380
Net realized and unrealized gain (loss) on
investments 0.224 0.246 0.336 0.024 0.007++ (0.841) 0.776 0.215
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.463 $ 0.466 $ 0.785 $ 0.475 $ 0.457 $ (0.428) $ 1.235 $ 0.595
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.243) $ (0.222) $(0.455) $(0.455) $(0.450) $ (0.413) $ (0.459) $ (0.380)
In excess of net investment income -- (0.004) -- -- (0.017) (0.065) (0.129) (0.095)
From net realized gain on investments -- -- -- -- -- -- (0.017) --
In excess of net realized gain on investments -- -- -- -- -- (0.044) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.243) $ (0.226) $(0.455) $(0.455) $(0.467) $ (0.522) $ (0.605) $ (0.475)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 9.720 $ 10.380 $10.140 $ 9.810 $ 9.790 $ 9.800 $ 10.750 $ 10.120
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return /(1)/ 4.92% 4.69% 8.16% 4.91% 4.90% (4.08)% 12.60% 5.85%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
30
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Georgia Fund (continued)
--------------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------- ---------------------
(Unaudited) 1997 1996 1995 1994** 1993 1992*
------------------- ----------------------------------------- ---------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data +++
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 1,784 $ 89,200 $ 93,128 $106,992 $120,143 $134,481 $120,043 $ 42,156
Ratio of net expenses to average daily net
assets/(2)(3)/ 0.87%+ 1.57%+ 1.59% 1.58% 1.49% 1.41%+ 1.52% 1.13%+
Ratio of net expenses to average daily net
assets after custodian fee
reduction/(2)/ 0.85%+ 1.55%+ 1.57% 1.52% -- -- -- --
Ratio of net investment income to average
daily net assets 5.01%+ 4.31%+ 4.48% 4.55% 4.72% 4.39%+ 4.27% 4.72%+
Portfolio Turnover/(4)/ -- -- -- -- -- -- 20% 33%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C>
Expenses/(2)/ 1.61%+
Net investment income 4.24%+
Net investment income per share $ 0.341
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gains and losses 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, December 23, 1991, to September
30, 1992.
** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio Turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover rate for the period since the Fund transferred
substantially all of its investable assets to its respective Portfolio is
shown in the Portfolio's financial statements which are included elsewhere
in this report.
See notes to financial statements
31
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Kentucky Fund
--------------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------- ----------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
-------------------- ----------------------------------------- ----------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.680 $ 10.410 $ 9.970 $ 9.990 $ 9.850 $ 10.780 $ 10.090 $ 10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.253 $ 0.227 $ 0.456 $ 0.450 $ 0.458 $ 0.415 $ 0.462 $ 0.363
Net realized and unrealized gain (loss) on
investments 0.196 0.221 0.435 (0.009)++ 0.163 (0.811) 0.820 0.192
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.449 $ 0.448 $ 0.891 $ 0.441 $ 0.621 $ (0.396) $ 1.282 $ 0.555
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.248) $ (0.227) $ (0.451) $ (0.450) $ (0.458) $ (0.415) $ (0.462) $ (0.363)
In excess of net investment income (0.001) (0.001) -- (0.011) (0.023) (0.075) (0.125) (0.102)
From net realized gain on investments -- -- -- -- -- -- (0.005) --
In excess of net realized gain on investments -- -- -- -- -- (0.044) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.249) $ (0.228) $ (0.451) $ (0.461) $ (0.481) $ (0.534) $ (0.592) $ (0.465)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 9.880 $ 10.630 $ 10.410 $ 9.970 $ 9.990 $ 9.850 $ 10.780 $ 10.090
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.68% 4.40% 9.12% 4.45% 6.61% (3.78)% 13.05% 5.45%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
32
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Kentucky Fund (continued)
--------------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------- ----------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
------------------- ----------------------------------------- ----------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data+++
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 1,097 $117,344 $121,376 $131,357 $143,106 $141,994 $120,093 $ 46,835
Ratio of net expenses to average daily net
assets/(2)(3)/ 0.84%+ 1.58%+ 1.60% 1.57% 1.52% 1.44%+ 1.50% 1.44%+
Ratio of net expenses to average daily net
assets after custodian fee reduction/(2)/ 0.83%+ 1.57%+ 1.57% 1.54% -- -- -- --
Ratio of net investment income to average
daily net assets 5.12%+ 4.35%+ 4.50% 4.45% 4.74% 4.39%+ 4.29% 4.56%+
Portfolio Turnover/(4)/ -- -- -- -- -- -- 21% 64%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C>
Expenses/(2)/ 1.52%+
Net investment income 4.48%+
Net investment income per share $ 0.357
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) on investments 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 eleven months ended August 31, 1994.
** For the period from the start of business, December 23, 1991, to September
30, 1992.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio Turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover rate for the period since the Fund transferred
substantially all of its investable assets to its respective Portfolio is
shown in the Portfolio's financial statements which are included elsewhere
in this report.
See notes to financial statements
33
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Louisiana Fund
-----------------------------------------------------------------------------
Year Ended
--------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ------------------------------------------ ------------
(Unaudited) 1997 1996 1995 1994** 1993*
------------------- ------------------------------------------ ------------
Class A Class B Class B Class B Class B Class B Class B
- -------------------------------------------------------------------------- ------------------------------------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.750 $10.310 $ 9.960 $ 9.980 $10.010 $11.130 $10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.250 $ 0.233 $ 0.482 $ 0.486 $ 0.487 $ 0.447 $ 0.478
Net realized and unrealized gain (loss) on investments 0.195 0.196 0.350 (0.016) (0.006)++ (0.937) 1.234
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.445 $ 0.429 $ 0.832 $ 0.470 $ 0.481 $(0.490) $ 1.712
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.265) $(0.236) $(0.482) $(0.490) $(0.487) $(0.447) $(0.478)
In excess of net investment income -- (0.003) -- -- (0.024) (0.074) (0.104)
In excess of net realized gain on investments -- -- -- -- -- (0.109) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.265) $(0.239) $(0.482) $(0.490) $(0.511) $(0.630) $(0.582)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of period $ 9.930 $10.500 $10.310 $ 9.960 $ 9.980 $10.010 $11.130
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.60% 4.26% 8.52% 4.77% 5.08% (4.56)% 17.26%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
34
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Louisiana Fund (continued)
--------------------------------------------------------------------------
Year Ended
----------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 --------------------------------------- -----------
(Unaudited) 1997 1996 1995 1994** 1993*
--------------------- --------------------------------------- -----------
Class A Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------- --------------------------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data +++
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 2,471 $ 31,981 $ 31,996 $ 32,994 $ 31,836 $ 29,020 $ 17,935
Ratio of net expenses to average daily net assets/(2)/(3)/ 0.78%+ 1.53%+ 1.54% 1.41% 1.31% 1.08%+ 1.07%+
Ratio of net expenses to average daily net assets after
custodian fee reduction/(2)/ 0.73%+ 1.48%+ 1.52% 1.34% -- -- --
Ratio of net investment income to average daily net assets 5.11%+ 4.37%+ 4.74% 4.82% 4.97% 4.62%+ 4.27%+
Portfolio Turnover/(4)/ -- -- -- -- -- 14% 86%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C> <C> <C> <C>
Expenses/(2)/(3)/ 1.53% 1.42% 1.44%+ 1.76%+
Expenses after custodian fee reduction/(2)/ 1.45% -- -- --
Net investment income 4.70% 4.86% 4.26%+ 3.58%+
Net investment income per share $ 0.474 $ 0.470 $ 0.412 $ 0.401
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gains and losses 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, October 2, 1992, to September
30, 1993.
** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ 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.
See notes to financial statements
35
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Maryland Fund
-------------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------- ---------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
----------------- ----------------------------------------- ---------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.810 $10.710 $10.300 $10.230 $10.070 $11.070 $10.290 $10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.238 $ 0.225 $ 0.453 $ 0.464 $ 0.476 $ 0.428 $ 0.466 $ 0.303
Net realized and unrealized gain on
investments 0.229 0.244 0.419 0.086 0.169 (0.922) 0.890 0.375++
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.467 $ 0.469 $ 0.872 $ 0.550 $ 0.645 $(0.494) $ 1.356 $ 0.678
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.238) $(0.227) $(0.462) $(0.480) $(0.476) $(0.428) $(0.466) $(0.303)
In excess of net investment income (0.009) (0.002) -- -- (0.009) (0.070) (0.110) (0.085)
In excess of net realized gain on investments -- -- -- -- -- (0.008) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.247) $(0.229) $(0.462) $(0.480) $(0.485) $(0.506) $(0.576) $(0.388)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $10.030 $10.950 $10.710 $10.300 $10.230 $10.070 $11.070 $10.290
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.80% 4.47% 8.64% 5.44% 6.71% (4.56)% 13.61% 6.65%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
36
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Maryland Fund (continued)
---------------------------------------------------------------------------------------
Year Ended
----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ---------------------------------------- ---------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
--------------------- ---------------------------------------- ---------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000's omitted) $ 1,297 $103,944 $105,671 $109,243 $113,826 $116,721 $ 95,226 $ 29,180
Ratio of net expenses to average daily net
assets/(2)/(3)/ 0.87%+ 1.60%+ 1.57% 1.57% 1.50% 1.43%+ 1.43% 1.30%+
Ratio of net expenses to average daily net
assets after custodian fee reduction/(2)/ 0.83%+ 1.56%+ 1.54% 1.55% -- -- -- --
Ratio of net investment income to average
daily net assets 4.81%+ 4.10%+ 4.30% 4.46% 4.82% 4.44%+ 4.28% 4.25%+
Portfolio Turnover/(4)/ -- -- -- -- -- -- 12% 3%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C> <C>
Expenses/(2)/ 1.48% 1.62%+
Net investment income 4.23% 3.93%+
Net investment income per share $ 0.461 $ 0.280
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gains and losses 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 eleven months ended August 31, 1994.
** For the period from the start of business, February 3, 1992 to September
30, 1992.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ 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.
See notes to financial statements
37
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Missouri Fund
----------------------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ------------------------------------------ ---------------------
(Unaudited) 1997 1996 1995 1994** 1993 1992*
-------------------- ------------------------------------------ ---------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.930 $ 11.010 $ 10.510 $ 10.510 $ 10.240 $ 11.250 $ 10.400 $ 10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.249 $ 0.236 $ 0.478 $ 0.476 $ 0.477 $ 0.423 $ 0.470 $ 0.200
Net realized and unrealized gain (loss) on
investments 0.277 0.298 0.493 0.003 0.289 (0.904) 1.005 0.455
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.526 $ 0.534 $ 0.971 $ 0.479 $ 0.766 $ (0.481) $ 1.475 $ 0.655
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.246) $ (0.234) $ (0.471) $ (0.476) $ (0.477) $ (0.423) $ (0.470) $ (0.200)
In excess of net investment income -- -- -- (0.003) (0.019) (0.084) (0.128) (0.055)
In excess of net realized gain on
investments -- -- -- -- -- (0.022) (0.027) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.246) $ (0.234) $ (0.471) $ (0.479) $ (0.496) $ (0.529) $ (0.625) $ (0.255)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 10.210 $ 11.310 $ 11.010 $ 10.510 $ 10.510 $ 10.240 $ 11.250 $ 10.400
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 5.35% 4.95% 9.42% 4.60% 7.82% (4.33)% 14.66% 6.33%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data ++
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 2,459 $ 76,253 $ 77,479 $ 82,385 $ 89,811 $ 91,227 $ 76,653 $ 25,225
Ratio of net expenses to average daily net
assets/(2)/(3)/ 0.80%+ 1.57%+ 1.57% 1.56% 1.53% 1.49%+ 1.52% 1.32%
Ratio of net expenses to average daily net
assets after custodian fee
reduction/(2)/ 0.79%+ 1.56%+ 1.56% 1.54% -- -- -- --
Ratio of net investment income to average
daily net assets 5.01%+ 4.26%+ 4.44% 4.47% 4.72% 4.30%+ 4.23% 4.31%+
Portfolio Turnover/(4)/ -- -- -- -- -- -- 14% 21%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<S> <C> <C>
Ratios (As a percentage of average daily net assets):
Expenses/(2)/ 1.55% 1.49%+
Net investment income 4.20% 4.14%+
Net investment income per share $ 0.467 $ 0.192
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, May 1, 1992, to September 30,
1992.
** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ 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.
See notes to financial statements
38
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
North Carolina Fund
-------------------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ------------------------------------------- ---------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
-------------------- ------------------------------------------- ---------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.610 $ 10.340 $ 9.970 $ 9.960 $ 9.970 $ 10.940 $ 10.300 $ 10.000
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.246 $ 0.221 $ 0.452 $ 0.452 $ 0.466 $ 0.423 $ 0.468 $ 0.456
Net realized and unrealized gain (loss)
on investments 0.213 0.227 0.378 0.026 0.011++ (0.895) 0.794 0.423++
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.459 $ 0.448 $ 0.830 $ 0.478 $ 0.477 $ (0.472) $ 1.262 $ 0.879
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.246) $ (0.221) $ (0.455) $ (0.455) $ (0.466) $ (0.423) $ (0.468) $ (0.456)
In excess of net investment income (0.003) (0.007) (0.005) (0.013) (0.021) (0.075) (0.120) (0.123)
In excess of net realized gain on
investments -- -- -- -- -- -- (0.034) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.249) $ (0.228) $ (0.460) $ (0.468) $ (0.487) $ (0.498) $ (0.622) $ (0.579)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 9.820 $ 10.560 $ 10.340 $ 9.970 $ 9.960 $ 9.970 $ 10.940 $ 10.300
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return /(1)/ 4.82% 4.43% 8.50% 4.83% 5.03% (4.40)% 12.69% 8.75%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
39
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
North Carolina Fund (continued)
-------------------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ------------------------------------------- ----------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
-------------------- ------------------------------------------- ----------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data+++
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's
omitted) $ 10,958 $145,165 $151,564 $169,889 $188,450 $192,667 $173,828 $ 71,733
Ratio of net expenses to average daily
net assets/(2)//(3)/ 0.74%+ 1.59%+ 1.60% 1.59% 1.51% 1.42%+ 1.52% 1.35%+
Ratio of net expenses to average daily
net assets, after custodian
fee reduction/(2)/ 0.72%+ 1.57%+ 1.58% 1.54% -- -- -- --
Ratio of net investment income to
average daily net assets 5.17%+ 4.28%+ 4.48% 4.47% 4.78% 4.43%+ 4.34% 4.54%+
Portfolio Turnover/(4)/ -- -- -- -- -- -- 16% 52%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C>
Expenses/(2)/ 1.57%+
Net investment income 4.32%+
Net investment income per share $ 0.434
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gains and losses 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 eleven months ended August 31, 1994.
** For the period from the start of business, October 23, 1991, to
September 30, 1992.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ 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.
See notes to financial statements
40
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Oregon Fund
--------------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------- ---------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
-------------------- ----------------------------------------- ---------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.600 $ 10.510 $ 10.240 $ 10.310 $ 10.090 $ 11.130 $ 10.270 $ 10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.244 $ 0.226 $ 0.456 $ 0.450 $ 0.455 $ 0.415 $ 0.459 $ 0.351
Net realized and unrealized gain (loss) on
investments 0.188 0.198 0.266 (0.061) 0.241 (0.869) 0.983 0.368
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.432 $ 0.424 $ 0.722 $ 0.389 $ 0.696 $ (0.454) $ 1.442 $ 0.719
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.242) $ (0.224) $ (0.452) $ (0.457) $ (0.455) $ (0.415) $ (0.459) $ (0.351)
In excess of net investment income -- -- -- (0.002) (0.021) (0.078) (0.117) (0.098)
From net realized gain on investments -- -- -- -- -- (0.093) (0.006) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.242) $ (0.224) $ (0.452) $ (0.459) $ (0.476) $ (0.586) $ (0.582) $ (0.449)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 9.790 $ 10.710 $ 10.510 $ 10.240 $ 10.310 $ 10.090 $ 11.130 $ 10.270
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.54% 4.13% 7.20% 3.80% 7.22% (4.21)% 14.47% 7.10%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data ++
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 849 $108,047 $112,586 $128,580 $145,056 $151,127 $128,229 $ 41,703
Ratio of expenses to average daily net assets
/(2)/(3)/ 0.81%+ 1.58%+ 1.63% 1.56% 1.53% 1.43%+ 1.55% 1.47%+
Ratio of expenses to average daily net assets
after custodian fee reduction/(2)/ 0.80%+ 1.57%+ 1.63% 1.53% -- -- -- --
Ratio of net investment income to average 5.05%+ 4.30%+ 4.41% 4.33% 4.59% 4.28%+ 4.22% 4.27%+
daily net assets
Portfolio Turnover/(4)/ -- -- -- -- -- -- 23% 44%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<S> <C>
Ratios (As a percentage of average daily net
assets):
Expenses/(2)/ 1.63%+
Net investment income 4.11%+
Net investment income per share $ 0.338
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, December 24, 1991, to September
30, 1992.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio Turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover rate for the period since the Fund transferred
substantially all of its investable assets to its respective Portfolio is
shown in the Portfolio's financial statements which are included elsewhere
in this report.
See notes to financial statements
41
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
South Carolina Fund
------------------------------------------------------------------------
Year Ended
---------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 --------------------------------------- ----------
(Unaudited) 1997 1996 1995 1994* 1993**
-------------------- --------------------------------------- ----------
Class A Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.760 $ 10.380 $ 10.020 $ 10.000 $ 9.940 $ 10.890 $ 10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.247 $ 0.227 $ 0.463 $ 0.467 $ 0.460 $ 0.408 $ 0.461
Net realized and unrealized gain (loss) on investments 0.227 0.245 0.364 0.021 0.071 (0.870) 0.986
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.474 $ 0.472 $ 0.827 $ 0.488 $ 0.531 $ (0.462) $ 1.447
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.244) $ (0.232) $ (0.467) $ (0.468) $ (0.460) $ (0.408) $ (0.461)
In excess of net investment income -- -- -- -- (0.011) (0.080) (0.096)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.244) $ (0.232) $ (0.467) $ (0.468) $ (0.471) $ (0.488) $ (0.557)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 9.990 $ 10.620 $ 10.380 $ 10.020 $ 10.000 $ 9.940 $ 10.890
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.91% 4.64% 8.41% 4.92% 5.64% (4.33)% 14.50%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data++
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 1,199 $ 51,900 $ 52,686 $ 57,217 $ 59,955 $ 59,878 $ 43,169
Ratio of expenses to average daily net assets/(2)/(3)/ 0.84%+ 1.58%+ 1.63% 1.60% 1.49% 1.36%+ 1.07%+
Ratio of expenses to average daily net assets
after custodian fee reduction/(2)/ 0.84%+ 1.58%+ 1.62% 1.58% -- -- --
Ratio of net investment income to average daily net assets 5.07%+ 4.34%+ 4.50% 4.60% 4.77% 4.27%+ 4.22%+
Portfolio Turnover/(4)/ -- -- -- -- -- 3% 13%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<S> <C>
Ratio (As a percentage of average daily net assets):
Expenses/(2)/ 1.44%+
Net investment income 3.85%+
Net investment income per share $ 0.421
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, October 2, 1992, to September
30, 1993.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio Turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover rate for the period since the Fund transferred
substantially all of its investable assets to its respective Portfolio is
shown in the Portfolio's financial statements which are included elsewhere
in this report.
See notes to financial statements
42
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Tennessee Fund
----------------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------- ----------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
--------------------- ----------------------------------------- ----------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.740 $10.580 $10.150 $10.110 $10.020 $11.070 $10.010 $10.000
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.245 $ 0.222 $ 0.453 $ 0.457 $ 0.468 $ 0.426 $ 0.466 $ 0.040
Net realized and unrealized gain (loss)
on investments 0.197 0.211 0.436 0.059 0.115 (0.848) 1.158 0.027++
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.442 $ 0.433 $ 0.889 $ 0.516 $ 0.583 $(0.422) $ 1.624 $ 0.067
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.245) $(0.222) $(0.453) $(0.475) $(0.468) $(0.426) $(0.466) $(0.040)
In excess of net investment income (0.007) (0.001) (0.006) (0.001) (0.025) (0.071) (0.098) (0.017)
From net realized gain on investments -- -- -- -- -- (0.094) -- --
In excess of net realized gain on investments -- -- -- -- -- (0.037) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.252) $(0.223) $(0.459) $(0.476) $(0.493) $(0.628) $(0.564) $(0.057)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 9.930 $10.790 $10.580 $10.150 $10.110 $10.020 $11.070 $10.010
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.58% 4.19% 8.95% 5.16% 6.12% (3.93)% 16.97% 0.01%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
43
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Tennessee Fund (continued)
----------------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------- ----------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992**
--------------------- ----------------------------------------- ----------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data+++
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 2,147 $ 51,850 $ 51,712 $ 54,533 $ 57,484 $ 55,379 $ 39,648 $ 3,475
Ratio of expenses to average daily net
assets/(2)(3)/ 0.72%+ 1.56%+ 1.54% 1.53% 1.47% 1.37%+ 1.30% 1.00%+
Ratio of expenses to average daily net
assets after custodian fee reduction/(2)/ 0.70%+ 1.54%+ 1.53% 1.51% -- -- -- --
Ratio of net investment income to average
daily net assets 5.04%+ 4.19%+ 4.39% 4.45% 4.77% 4.44%+ 4.24% 2.91%+
Portfolio Turnover/(4)/ -- -- -- -- -- -- 28% 0%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C> <C>
Expenses/(2)/ 1.61% 2.10%+
Net investment income 3.93% 1.81%+
Net investment income per share $ 0.432 $ 0.025
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gains and losses 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 eleven months ended August 31, 1994.
** For the period from the start of business, August 25, 1992, to September
30, 1992.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio Turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover rate for the period since the Fund transferred
substantially all of its investable assets to its respective Portfolio is
shown in the Portfolio's financial statements which are included elsewhere
in this report.
See notes to financial statements
44
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Virginia Fund
---------------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 -------------------------------------------- -------------------
(Unaudited) 1997 1996 1995 1994* 1993 1992
--------------------- -------------------------------------------- -------------------
Class A Class B Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.620 $ 10.630 $ 10.260 $ 10.260 $ 10.120 $ 11.060 $ 10.460 $10.200
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.245 $ 0.227 $ 0.467 $ 0.471 $ 0.479 $ 0.438 $ 0.483 $ 0.526
Net realized and unrealized gain (loss) on
investments 0.198 0.224 0.369 0.006 0.161 (0.864) 0.762 0.385
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.443 $ 0.451 $ 0.836 $ 0.477 $ 0.640 $ (0.426) $ 1.245 $ 0.911
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.245) $ (0.227) $ (0.466) $ (0.471) $ (0.479) $ (0.438) $ (0.483) $(0.526)
In excess of net investment income (0.008) (0.004) -- (0.006) (0.021) (0.076) (0.130) (0.120)
From net realized gain on investments -- -- -- -- -- -- (0.022) (0.005)
In excess of net realized gain on investments -- -- -- -- -- -- (0.010) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.253) $ (0.231) $ (0.466) $ (0.477) $ (0.500) $ (0.514) $ (0.645) $(0.651)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 9.810 $ 10.850 $ 10.630 $ 10.260 $ 10.260 $ 10.120 $ 11.060 $10.460
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.65% 4.34% 8.31% 4.67% 6.62% (3.95)% 12.33% 9.16%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data++
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 1,807 $154,432 $159,603 $175,918 $189,535 $193,420 $175,426 $72,629
Ratio of expenses to average daily net
assets/(2)(3)/ 0.89%+ 1.61%+ 1.60% 1.56% 1.50% 1.44%+ 1.52% 1.36%
Ratio of expenses to average daily net assets
after custodian fee reduction/(2)/ 0.87%+ 1.59%+ 1.57% 1.53% -- -- -- --
Ratio of net investment income to average
daily net assets 4.96%+ 4.27%+ 4.47% 4.52% 4.81% 4.51%+ 4.42% 4.86%
Portfolio Turnover/(4)/ -- -- -- -- -- -- 27% 85%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ 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 Administrator, or both. Had such actions not been taken, the
ratios and net investment income per share would have been as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C>
Expenses/(2)/ 1.59%
Net investment income 4.63%
Net investment income per share $ 0.501
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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 prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio Turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover rate 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.
See notes to financial statements
45
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
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 twenty-nine Funds,
twelve of the non-diversified funds are included in these financial
statements. They include Eaton Vance Alabama Municipals Fund ("Alabama
Fund"), Eaton Vance Arkansas Municipals Fund ("Arkansas Fund"), Eaton Vance
Georgia Municipals Fund ("Georgia Fund"), Eaton Vance Kentucky Municipals
Fund ("Kentucky Fund"), Eaton Vance Louisiana Municipals Fund ("Louisiana
Fund"), Eaton Vance Maryland Municipals Fund ("Maryland Fund"), Eaton Vance
Missouri Municipals Fund ("Missouri Fund"), Eaton Vance North Carolina
Municipals Fund ("North Carolina Fund"), Eaton Vance Oregon Municipals Fund
("Oregon Fund"), Eaton Vance South Carolina Municipals Fund ("South Carolina
Fund"), Eaton Vance Tennessee Municipals Fund ("Tennessee Fund") and Eaton
Vance Virginia Municipals Fund ("Virginia Fund"). The Funds offer two
classes of shares. Class A shares are sold subject to a sales charge imposed
at the time of purchase. Class B shares are sold at net asset value and are
subject to a declining contingent deferred sales charge (see Note 6). All
classes of shares have equal rights to assets and voting privileges.
Realized and unrealized gains and losses and net investment income, other
than class specific expenses, are allocated daily to each class of shares
based on the relative net assets of each class to the total net assets of
the Fund. Each class of shares differs in its distribution plan and certain
other class specific expenses. 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 Alabama Fund invests its
assets in the Alabama Municipals Portfolio, the Arkansas Fund invests its
assets in the Arkansas Municipals Portfolio, the Georgia Fund invests its
assets in the Georgia Municipals Portfolio, the Kentucky Fund invests its
assets in the Kentucky Municipals Portfolio, the Louisiana Fund invests its
assets in the Louisiana Municipals Portfolio, the Maryland Fund invests its
assets in the Maryland Municipals Portfolio, the Missouri Fund invests its
assets in the Missouri Municipals Portfolio, the North Carolina Fund invests
its assets in the North Carolina Municipals Portfolio, the Oregon Fund
invests its assets in the Oregon Municipals Portfolio, the South Carolina
Fund invests its assets in the South Carolina Municipals Portfolio, the
Tennessee Fund invests its assets in the Tennessee Municipals Portfolio and
the Virginia Fund invests its assets in the Virginia 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 (100%
at February 28, 1998 for each Fund). 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 1A of the Portfolios' Notes to Financial Statements which
are included elsewhere in this report.
B Income -- Each Fund's net investment income consists of the Fund's pro
rata share of the net investment income of its corresponding Portfolio, less
all actual and accrued expenses of each Fund determined in accordance with
generally accepted accounting principles.
C Federal Taxes -- Each Fund's policy is to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute to shareholders each year all of its taxable and tax-exempt
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is necessary. At August 31, 1997,
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. A portion of such capital loss carryovers were
acquired through the Fund Reorganization (see Note 8) and may be subject to
certain limitations.
46
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
The amounts and expiration dates of the capital loss carryovers are as
follows:
Fund Amount Expires
----------------------------------------------------------------------------
Alabama Fund $ 94,556 August 31, 2005
988,165 August 31, 2004
1,959,872 August 31, 2003
493,798 August 31, 2002
1,050 August 31, 2000
Arkansas Fund 251,575 August 31, 2005
1,818,024 August 31, 2004
562,797 August 31, 2003
245,917 August 31, 2002
Georgia Fund 6,795,020 August 31, 2004
926,209 August 31, 2003
53,716 August 31, 2002
Kentucky Fund 233,391 August 31, 2005
2,983,452 August 31, 2004
1,058,495 August 31, 2003
15,369 August 31, 2002
Louisiana Fund 250,387 August 31, 2005
1,758,496 August 31, 2004
278,670 August 31, 2003
19,017 August 31, 2002
Maryland Fund 35 August 31, 2005
1,328,059 August 31, 2004
706,677 August 31, 2003
11,063 August 31, 2002
Missouri Fund 113,141 August 31, 2005
1,802,756 August 31, 2004
436,052 August 31, 2003
21,383 August 31, 2002
North Carolina Fund 73,745 August 31, 2005
8,479,506 August 31, 2004
2,765,374 August 31, 2003
106,971 August 31, 2002
Oregon Fund 924,680 August 31, 2005
4,256,656 August 31, 2004
476,104 August 31, 2003
7,028 August 31, 2002
South Carolina Fund 183,416 August 31, 2005
2,881,146 August 31, 2004
1,328,574 August 31, 2003
109,330 August 31, 2002
Tennessee Fund 246,996 August 31, 2005
1,740,777 August 31, 2004
196,181 August 31, 2003
5,333 August 31, 2002
Virginia Fund 7,591,132 August 31, 2004
537,061 August 31, 2003
Additionally, at August 31, 1997, net capital losses of $3,861 for the South
Carolina Fund, attributable to security transactions incurred after October
31, 1996, 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 tax-exempt interest dividends. The portion of such
interest, if any, earned on private activity bonds issued after August 7,
1986 may be considered a tax preference item to shareholders.
D Deferred Organization Expenses -- Costs incurred by each Fund in
connection with its organization, including registration costs, are being
amortized on the straight-line basis over five years.
E Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian to the Funds and the Portfolios. Pursuant to the respective
custodian agreements, IBT receives a fee reduced by credits which are
determined based on the average daily cash balances the Funds or the
Portfolios maintain with IBT. All significant credit balances used to reduce
each Fund's custodian fees are reported as a reduction of expenses in the
Statements of Operations.
47
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
F Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
G Other -- Investment transactions are accounted for on a trade date basis.
H Interim Financial Information -- The interim financial statements relating
to February 28, 1998 and for the six months then ended have not been audited
by independent certified public accountants, but in the opinion of the
Fund's management, reflect all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
2 Distributions to Shareholders
----------------------------------------------------------------------------
The net income of each Fund is determined daily and substantially all of the
net income so determined is declared as a dividend to shareholders of record
at the time of declaration. Distributions are paid monthly. Distributions of
allocated realized capital gains, if any, are made at least annually.
Shareholders may reinvest income and capital gain distributions in
additional shares of the 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 shareholder, 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 statement 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.
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). Such shares may be issued in a number of different classes.
Transactions in Fund shares were as follows:
Alabama Fund
-----------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
-----------------------------------------------
Class A Class B Class B
----------------------------------------------------------------------------
Sales 49,038 171,218 320,982
Issued to shareholders
electing to receive
payments of
distributions 95,194 207,245
in Fund shares 5,758
Redemptions (149,461) (694,049) (1,391,666)
Issued to EV
Traditional
Municipals
shareholders 590,481 -- --
----------------------------------------------------------------------------
Net increase (decrease) 495,816 (427,637) (863,439)
----------------------------------------------------------------------------
Arkansas Fund
-----------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
-----------------------------------------------
Class A Class B Class B
----------------------------------------------------------------------------
Sales 9,368 72,422 143,949
Issued to shareholders
electing to receive
payments of
distributions
in Fund shares 1,429 59,075 130,882
Redemptions (9,142) (574,055) (1,589,210)
Issued to EV Traditional
Municipals shareholders 120,288 -- --
----------------------------------------------------------------------------
Net increase (decrease) 121,943 (442,558) (1,314,379)
----------------------------------------------------------------------------
48
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
Georgia Fund
------------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
------------------------------------------------
Class A Class B Class B
---------------------------------------------------------------------------
Sales 7,102 155,034 441,579
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 2,574 87,144 192,185
Redemptions (12,234) (828,424) (2,356,341)
Issued to EV Traditional
Municipals shareholders 186,097 -- --
---------------------------------------------------------------------------
Net increase (decrease) 183,539 (586,246) (1,722,577)
---------------------------------------------------------------------------
Kentucky Fund
------------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
------------------------------------------------
Class A Class B Class B
---------------------------------------------------------------------------
Sales 6,066 191,791 382,603
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 2,066 131,324 284,793
Redemptions (41,013) (940,251) (2,186,957)
Issued to EV Traditional
Municipals shareholders 143,269 -- --
---------------------------------------------------------------------------
Net increase (decrease) 110,388 (617,136) (1,519,561)
---------------------------------------------------------------------------
Louisiana Fund
------------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
------------------------------------------------
Class A Class B Class B
---------------------------------------------------------------------------
Sales 41,942 86,841 222,047
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 4,710 34,651 69,196
Redemptions (39,923) (179,677) (497,956)
Issued to EV Traditional
Municipals shareholders 242,164 -- --
---------------------------------------------------------------------------
Net increase (decrease) 248,893 (58,185) (206,713)
---------------------------------------------------------------------------
Maryland Fund
------------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
------------------------------------------------
Class A Class B Class B
---------------------------------------------------------------------------
Sales 15,826 257,353 549,185
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 2,017 106,926 232,372
Redemptions (21,143) (741,281) (1,524,095)
Issued to EV Traditional
Municipals shareholders 132,577 -- --
---------------------------------------------------------------------------
Net increase (decrease) 129,277 (377,002) (742,538)
---------------------------------------------------------------------------
Missouri Fund
------------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
------------------------------------------------
Class A Class B Class B
---------------------------------------------------------------------------
Sales 41,218 147,741 186,027
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 3,720 72,131 158,432
Redemptions (25,272) (516,038) (1,144,910)
Issued to EV Traditional
Municipals shareholders 221,323 -- --
---------------------------------------------------------------------------
Net increase (decrease) 240,989 (296,166) (800,451)
---------------------------------------------------------------------------
North Carolina Fund
------------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
------------------------------------------------
Class A Class B Class B
---------------------------------------------------------------------------
Sales 127,050 189,184 454,728
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 12,218 155,394 349,575
Redemptions (628,722) (1,262,227) (3,186,918)
Issued to EV Traditional
Municipals shareholders 1,605,302 -- --
---------------------------------------------------------------------------
Net increase (decrease) 1,115,848 (917,649) (2,382,615)
---------------------------------------------------------------------------
49
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
Oregon Fund
------------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
------------------------------------------------
Class A Class B Class B
---------------------------------------------------------------------------
Sales 10,367 128,537 517,033
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 1,390 125,479 282,470
Redemptions (449) (881,264) (2,633,847)
Issued to EV Traditional
Municipals shareholders 75,426 -- --
---------------------------------------------------------------------------
Net increase (decrease) 86,734 (627,248) (1,834,344)
---------------------------------------------------------------------------
South Carolina Fund
------------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
------------------------------------------------
Class A Class B Class B
---------------------------------------------------------------------------
Sales 12,724 111,060 188,272
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 1,634 48,588 106,519
Redemptions (3,389) (348,053) (927,151)
Issued to EV Traditional
Municipals shareholders 109,050 -- --
---------------------------------------------------------------------------
Net increase (decrease) 120,019 (188,405) (632,360)
---------------------------------------------------------------------------
Tennessee Fund
------------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
------------------------------------------------
Class A Class B Class B
---------------------------------------------------------------------------
Sales 9,924 197,109 237,074
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 4,616 51,972 113,438
Redemptions (49,348) (331,543) (831,841)
Issued to EV Traditional
Municipals shareholders 250,960 -- --
---------------------------------------------------------------------------
Net increase (decrease) 216,152 (82,462) (481,329)
---------------------------------------------------------------------------
Virginia Fund
------------------------------------------------
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
------------------------------------------------
Class A Class B Class B
---------------------------------------------------------------------------
Sales 34,760 282,595 613,925
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 1,821 159,891 353,174
Redemptions (2,732) (1,229,450) (3,092,672)
Issued to EV Traditional
Municipals shareholders 150,372 -- --
---------------------------------------------------------------------------
Net increase (decrease) 184,221 (786,964) (2,125,573)
---------------------------------------------------------------------------
4 Transactions with Affiliates
----------------------------------------------------------------------------
Eaton Vance Management (EVM) serves as the Administrator of each Fund, but
receives no compensation. Each of 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. Certain of the
officers and Trustees of the Funds and Portfolios are officers and
directors/trustees of the above organizations. Except as to Trustees of the
Funds and 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 the investment adviser fee earned by BMR. Eaton Vance Distributors,
Inc. (EVD), a subsidiary of EVM and the Funds' principal underwriter,
received $106, $233, $158, $141, $363, $315, $1,100, $429, $254, $334, $272
and $71 from the Alabama Fund, Arkansas Fund, Georgia Fund, Kentucky Fund,
Louisiana Fund, Maryland Fund, Missouri Fund, North Carolina Fund, Oregon
Fund, South Carolina Fund, Tennessee Fund and Virginia Fund, respectively,
as its portion of the sales charge on sales of Class A shares for the six
months ended February 28, 1998.
5 Distribution Plan
----------------------------------------------------------------------------
Each Fund has adopted a distribution plan (the Plans) pursuant to Rule 12b-1
under the Investment Company Act of 1940 for each Fund's Class B shares. The
Plans require the Class B shares to pay the principal underwriter, Eaton
Vance Distributors, Inc. (EVD), amounts equal to 1/365 of
50
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
0.75% of each Fund's Class B daily net assets, for providing ongoing
distribution services and facilities to the respective Fund. A Fund's Class
B shares 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 Class B shares sold plus (ii) distribution fees calculated by applying
the rate of 1% over the prevailing prime rate to the outstanding balance of
Uncovered Distribution Charges of EVD reduced by the aggregate amount of
contingent deferred sales charges (Note 6) and amounts theretofore paid to
EVD. The amount payable to EVD with respect to each day is accrued on such
day as a liability of each Fund's Class B shares and, accordingly, reduces
each Fund's Class B net assets. For the six months ended February 28, 1998,
the Class B shares of the Alabama Fund, Arkansas Fund, Georgia Fund,
Kentucky Fund, Louisiana Fund, Maryland Fund, Missouri Fund, North Carolina
Fund, Oregon Fund, South Carolina Fund, Tennessee Fund and Virginia Fund
paid $350,499, $222,165, $341,101, $442,203, $120,189, $391,324, $285,000,
$552,246, $408,078, $194,695, $193,925 and $586,027, respectively, to EVD,
representing 0.75% (annualized) of each Fund's Class B average daily net
assets. At February 28, 1998, the amount of Uncovered Distribution Charges
of EVD calculated under the Class B Plans for Alabama Fund, Arkansas Fund,
Georgia Fund, Kentucky Fund, Louisiana Fund, Maryland Fund, Missouri Fund,
North Carolina Fund, Oregon Fund, South Carolina Fund, Tennessee Fund and
Virginia Fund were approximately $2,740,000, $1,918,000, $2,708,000,
$3,266,000, $1,130,000, $3,151,000, $2,088,000, $4,246,000, $3,240,000,
$1,697,000, $1,603,000 and $4,315,000, 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 attributable to both Class A and Class
B shares based on the value of Fund shares sold by such persons and
remaining outstanding for at least one year. For the six months ended
February 28, 1998, Alabama Fund, Arkansas Fund, Georgia Fund, Kentucky Fund,
Louisiana Fund, Maryland Fund, Missouri Fund, North Carolina Fund, Oregon
Fund, South Carolina Fund, Tennessee Fund and Virginia Fund paid or accrued
service fees to or payable to EVD in the amount of $3,662, $512, $2,019,
$1,271, $1,925, $1,226, $1,897, $5,276, $604, $1,086, $1,076 and $1,512,
respectively, for Class A shares, and $84,120, $53,361, $81,858, $110,830,
$27,243, $93,912, $68,443, $132,538, $97,938, $49,635, $46,542 and $140,627,
respectively, for Class B shares. 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.
6 Contingent Deferred Sales Charge
----------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on any redemption of
Class B 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 Class B 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 Class B 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 each Fund's Class B Fund's Distribution Plan (see Note 5).
CDSC charges received when no Uncovered Distribution Charges exist will be
credited to the Fund. EVD received approximately $111,000, $95,000,
$126,000, $161,000, $28,000, $116,000, $71,000, $183,000, $134,000, $59,000,
$57,000 and $190,000 of CDSC paid by Class B shareholders of Alabama Fund,
Arkansas Fund, Georgia Fund, Kentucky Fund, Louisiana Fund, Maryland Fund,
Missouri Fund, North Carolina Fund, Oregon Fund, South Carolina Fund,
Tennessee Fund and Virginia Fund, respectively, for the six months ended
February 28, 1998.
51
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
7 Investment Transactions
----------------------------------------------------------------------------
Increases and decreases in each Fund's investment in its corresponding
Portfolio for the six months ended February 28, 1998 were as follows:
Alabama Fund
----------------------------------------------------------------------------
Increases $ 2,713,155
Decreases 11,073,131
Arkansas Fund
----------------------------------------------------------------------------
Increases $ 933,140
Decreases 7,323,031
Georgia Fund
----------------------------------------------------------------------------
Increases $ 1,833,123
Decreases 10,359,141
Kentucky Fund
----------------------------------------------------------------------------
Increases $ 2,308,262
Decreases 12,352,729
Louisiana Fund
----------------------------------------------------------------------------
Increases $ 1,604,720
Decreases 3,143,596
Maryland Fund
----------------------------------------------------------------------------
Increases $ 3,114,767
Decreases 10,110,915
Missouri Fund
----------------------------------------------------------------------------
Increases $ 2,263,089
Decreases 7,406,690
North Carolina Fund
----------------------------------------------------------------------------
Increases $ 3,418,506
Decreases 22,470,871
Oregon Fund
----------------------------------------------------------------------------
Increases $ 1,533,124
Decreases 11,220,761
South Carolina Fund
----------------------------------------------------------------------------
Increases $ 1,305,961
Decreases 4,820,590
Tennessee Fund
----------------------------------------------------------------------------
Increases $ 2,195,745
Decreases 4,867,135
Virginia Fund
----------------------------------------------------------------------------
Increases $ 3,574,464
Decreases 16,073,816
8 Transfer of Assets
----------------------------------------------------------------------------
On September 1, 1997, EV Marathon Alabama Municipal Fund, EV Marathon
Arkansas Municipal Fund, EV Marathon Georgia Municipal Fund, EV Marathon
Kentucky Municipal Fund, EV Marathon Louisiana Municipal Fund, EV Marathon
Maryland Municipal Fund, EV Marathon Missouri Municipal Fund, EV Marathon
North Carolina Municipal Fund, EV Marathon Oregon Municipal Fund, EV
Marathon South Carolina Municipal Fund, EV Marathon Tennessee Municipal Fund
and EV Marathon Virginia Municipal Fund acquired the net assets of EV
Traditional Alabama Municipals Fund, EV Traditional Arkansas Municipals
Fund, EV Traditional Georgia Municipals Fund, EV Traditional Kentucky
Municipals Fund, EV Traditional Louisiana Municipals Fund, EV Traditional
Maryland Municipals Fund, EV Traditional Missouri Municipals Fund, EV
Traditional North Carolina Municipals Fund, EV Traditional Oregon Municipals
Fund, EV Traditional South Carolina Municipals Fund, EV Traditional
Tennessee Municipals Fund and EV Traditional Virginia Municipals Fund,
respectively, pursuant to an Agreement and Plan of Reorganization dated June
23, 1997. In accordance with the agreement, the Funds, at the closing,
issued Class A shares as follows:
Aggregate Net asset
Class A shares value of value per
Fund issued shares issued share
-------------------------------------------------------------------------
Alabama Fund 590,481 $ 5,824,841 $ 9.86
Arkansas Fund 120,288 1,180,015 9.81
Georgia Fund 186,097 1,767,367 9.50
Kentucky Fund 143,269 1,387,318 9.68
52
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
Aggregate Net asset
Class A shares value of value per
Fund issued shares issued share
-------------------------------------------------------------------------
Louisiana Fund 242,164 $ 2,360,799 $9.75
Maryland Fund 132,577 1,300,861 9.81
Missouri Fund 221,323 2,197,879 9.93
North Carolina Fund 1,605,302 15,424,165 9.61
Oregon Fund 75,426 724,248 9.60
South Carolina Fund 109,050 1,063,789 9.76
Tennessee Fund 250,960 2,445,040 9.74
Virginia Fund 150,372 1,446,129 9.62
The transaction was structured for tax purposes to qualify as a tax free
reorganization under the Internal Revenue Code. The net assets acquired,
including unrealized appreciation at the date of the transaction were as
follows:
Unrealized
Acquired appreciation
Fund Net Assets (depreciation)
-------------------------------------------------------------------------
Alabama Fund $ 5,824,841 $341,598
Arkansas Fund 1,180,015 36,550
Georgia Fund 1,767,367 36,495
Kentucky Fund 1,387,318 (3,075)
Louisiana Fund 2,360,799 105,625
Maryland Fund 1,300,861 20,996
Missouri Fund 2,197,879 106,055
North Carolina Fund 15,424,165 648,298
Oregon Fund 724,248 $(11,883)
South Carolina Fund 1,063,789 61,451
Tennessee Fund 2,445,040 84,917
Virginia Fund 1,446,129 81,920
Directly after the merger, the combined net assets of the Funds and the net
asset value of Class A shares and Class B shares were as follows:
Class A net Class B net
asset value per asset value per
Fund Combined Net Assets share share
-------------------------------------------------------------------------
Alabama Fund $101,979,281 $ 9.86 $10.85
Arkansas Fund 62,502,501 9.81 10.51
Georgia Fund 94,895,135 9.50 10.14
Kentucky Fund 122,763,591 9.68 10.41
Louisiana Fund 34,356,710 9.75 10.31
Maryland Fund 106,971,507 9.81 10.71
Missouri Fund 79,677,006 9.93 11.01
North Carolina Fund 166,988,286 9.61 10.34
Oregon Fund 113,310,381 9.60 10.51
South Carolina Fund 53,749,484 9.76 10.38
Tennessee Fund 54,157,115 9.74 10.58
Virginia Fund 161,049,047 9.62 10.63
53
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
9 Name Change
----------------------------------------------------------------------------
Effective September 1, 1997, the EV Marathon Alabama Municipals Fund, EV
Marathon Arkansas Municipals Fund, EV Marathon Georgia Municipals Fund, EV
Marathon Kentucky Municipals Fund, EV Marathon Louisiana Municipals Fund, EV
Marathon Maryland Municipals Fund, EV Marathon Missouri Municipals Fund, EV
Marathon North Carolina Municipals Fund, EV Marathon Oregon Municipals Fund,
EV Marathon South Carolina Municipals Fund, EV Marathon Tennessee Municipals
Fund and EV Marathon Virginia Municipals Fund changed their respective names
to Eaton Vance Alabama Municipals Fund, Eaton Vance Arkansas Municipals
Fund, Eaton Vance Georgia Municipals Fund, Eaton Vance Kentucky Municipals
Fund, Eaton Vance Louisiana Municipals Fund, Eaton Vance Maryland Municipals
Fund, Eaton Vance Missouri Municipals Fund, Eaton Vance North Carolina
Municipals Fund, Eaton Vance Oregon Municipals Fund, Eaton Vance South
Carolina Municipals Fund, Eaton Vance Tennessee Municipals Fund and Eaton
Vance Virginia Municipals Fund.
54
<PAGE>
Alabama Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Colleges and Universities -- 1.6%
- --------------------------------------------------------------------------------
A3 NR $1,500 Birmingham-Southern
College, 5.35%, 12/1/19 $ 1,522,185
- --------------------------------------------------------------------------------
$ 1,522,185
- --------------------------------------------------------------------------------
Electric Utilities -- 0.6%
- --------------------------------------------------------------------------------
Baa1 BBB+ $ 500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 $ 555,810
- --------------------------------------------------------------------------------
$ 555,810
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 4.9%
- --------------------------------------------------------------------------------
NR BBB $ 350 Gadsen East, AL Medical
Clinic Board (Baptist
Hospital), 7.60%, 11/1/08 $ 397,233
NR BBB 2,000 Gadsen East, AL Medical
Clinic Board (Baptist
Hospital), 7.80%, 11/1/21 2,283,420
Baa1 BBB+ 320 Puerto Rico Electric Power
Authority, 7.00%, 7/1/07 338,035
A1 NR 1,600 University of Alabama
Birmingham Medical and
Educational Foundation
Housing, 7.00%, 12/1/19 1,716,016
- --------------------------------------------------------------------------------
$ 4,734,704
- --------------------------------------------------------------------------------
General Obligations -- 0.3%
- --------------------------------------------------------------------------------
Baa1 A $ 650 Commonwealth of Puerto
Rico, Public Improvement,
0.00%, 7/1/15 $ 275,074
- --------------------------------------------------------------------------------
$ 275,074
- --------------------------------------------------------------------------------
Hospitals -- 15.7%
- --------------------------------------------------------------------------------
Aa AA+ $1,250 Alabama Special Care
(Daughters of Charity),
5.00%, 11/1/25 $ 1,199,288
NR BBB 3,000 Alexander City, AL Special
Care (Russell Hospital),
6.00%, 12/1/22 3,140,670
Baa3 BBB- 1,000 Baldwin County, AL (Thomas
Hospital), 6.75%, 4/1/21 1,093,670
Baa3 NR 1,000 Cullman, AL Medical Clinic
Board (Cullman Regional
Medical Center), 6.50%, 2/15/23 1,074,930
A3 NR 3,550 Jasper, AL Medical Clinic
Board (Walker Regional
Medical Center), 6.375%,
7/1/18/(1)/ 3,733,535
A3 NR 1,000 Jasper, AL Medical Clinic
Board (Walker Regional
Medical Center), 6.40%, 7/1/11 1,058,040
Baa3 BBB 2,000 Marshall, AL
(Boaz-Albertville Medical
Center), 7.00%, 1/1/20 2,217,780
A A- 745 Montgomery, AL Medical
Clinic Board (Jackson
Hospital), 7.00%, 3/1/15 793,015
NR BBB 735 Valley, AL, Special Tax
Care Facilities Authority,
(Lanier Memorial Hospital-Series A),
5.65%, 11/1/22 744,342
- --------------------------------------------------------------------------------
$15,055,270
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution
Control Revenue -- 13.4%
- --------------------------------------------------------------------------------
Baa1 BBB $1,200 Courtland, AL (Champion
International Corporation),
7.20%, 12/1/13 $ 1,342,464
Baa1 BBB 2,000 Courtland, AL (Champion
International Corporation),
(AMT), 6.50%, 9/1/25 2,196,340
Baa1 BBB 550 Courtland, AL (Champion
International Corporation),
(AMT), 7.00%, 6/1/22 601,937
Baa3 BBB- 2,000 Mobile, AL (Mobile Energy),
6.95%, 1/1/20 2,250,820
Baa3 BBB- 3,020 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 3,281,683
A3 A- 1,000 Selma, AL Solid Waste Disposal,
(AMT), 6.00%, 12/1/17 1,042,230
A2 A+ 2,000 Tallahassee, AL (United Tech),
6.10%, 8/1/14 2,160,260
- --------------------------------------------------------------------------------
$12,875,734
- --------------------------------------------------------------------------------
Insured-Colleges and Universities -- 1.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,330 Alabama State Board of Education,
(AMBAC), 5.25%, 9/1/17 $ 1,332,274
- --------------------------------------------------------------------------------
$ 1,332,274
- --------------------------------------------------------------------------------
Insured-Education -- 6.2%
- --------------------------------------------------------------------------------
Aaa AAA $4,000 University of Alabama Student
Housing (MBIA), 5.00%, 6/1/16 $ 3,976,000
Aaa AAA 2,000 University of South Alabama
Tuition (AMBAC), 5.00%, 11/15/15 1,999,840
- --------------------------------------------------------------------------------
$ 5,975,840
- --------------------------------------------------------------------------------
See notes to financial statements
55
<PAGE>
Alabama Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 3.5%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Columbia, AL (AL Power)
(AMBAC), 6.50%, 9/1/23 $ 2,106,940
Aaa AAA 250 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(2)/ 287,813
Aaa AAA 1,000 Robertsdale, AL, Water Sewer And
Electric Revenue Warrants,
(AMBAC), 5.125%, 4/1/22 991,070
- --------------------------------------------------------------------------------
$ 3,385,823
- --------------------------------------------------------------------------------
Insured-General Obligations -- 9.8%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Daphne, AL (AMBAC),
5.125%, 4/1/17 $ 2,000,900
Aaa AAA 250 Fairfield City, AL (AMBAC),
6.30%, 6/1/22 273,123
Aaa AAA 1,000 Greenville, AL (AMBAC),
5.25%, 12/1/21 1,003,180
Aaa AAA 500 Hamilton, AL (MBIA),
5.25%, 8/1/22 502,540
Aaa AAA 3,250 Madison, AL School Warrants
(MBIA), 6.00%, 2/1/24 3,503,305
Aaa AAA 500 North Port, AL (AMBAC),
5.70%, 3/1/21 529,725
Aaa AAA 1,000 Puerto Rico Public Building
Authority, (AMBAC), 5.00%, 7/1/27 980,320
Aaa AAA 500 Troy City, AL (CAPG),
6.60%, 6/1/12 557,230
- --------------------------------------------------------------------------------
$ 9,350,323
- --------------------------------------------------------------------------------
Insured-Hospitals -- 6.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,810 Bessemer, AL Medical Clinic
Board (MBIA), 6.00%, 5/15/19 $ 1,942,782
Aaa AAA 2,000 Huntsville, AL Health Care
Facilities (MBIA), 6.50%, 6/1/13 2,275,080
Aaa AAA 750 Montgomery, AL, Special Tax
Care Facilities Authority,
(Baptist Medical Center-Series A),
(AMBAC), 5.00%, 5/1/20 727,455
Aaa AAA 1,500 University of Alabama Hospital
Revenue - Birmingham (MBIA),
5.00%, 10/1/14 1,501,800
- --------------------------------------------------------------------------------
$ 6,447,117
- --------------------------------------------------------------------------------
Insured-Miscellaneous -- 5.9%
- --------------------------------------------------------------------------------
Aaa AAA $4,500 Alabama State Docks Department
(MBIA), (AMT), 6.30%, 10/1/21 $ 4,976,594
Aaa AAA 1,825 Birmingham Jefferson, AL
Civic Center Authority
(MBIA), 0.00%, 9/1/18 639,316
- --------------------------------------------------------------------------------
$ 5,615,910
- --------------------------------------------------------------------------------
Insured-Solid Waste -- 4.8%
- --------------------------------------------------------------------------------
Aaa AAA $ 250 Huntsville, AL Solid Waste
Disposal (FGIC), (AMT),
7.00%, 10/1/08 $ 270,933
Aaa AAA 4,000 Huntsville, AL Solid Waste
Disposal (FGIC), (AMT),
7.00%, 10/1/14 4,322,559
- --------------------------------------------------------------------------------
$ 4,593,492
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 2.6%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Commonwealth of Puerto
Rico, Financing Authority,
(AMBAC), 5.00%, 7/1/21 $ 492,515
Aaa AAA 2,000 Commonwealth of Puerto
Rico, Financing Authority,
(AMBAC), 5.00%, 7/1/28 1,960,080
- --------------------------------------------------------------------------------
$ 2,452,595
- --------------------------------------------------------------------------------
Insured-Transportation -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Huntsville-Madison County
Airport, AL (AMT), (MBIA),
5.40%, 7/1/19 $ 1,013,860
- --------------------------------------------------------------------------------
$ 1,013,860
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 15.6%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Alabama Water Pollution
Control Authority (AMBAC),
5.00%, 8/15/15 $ 1,481,055
Aaa AAA 2,050 Bessemer, AL Water (AMBAC),
5.75%, 7/1/26 2,183,086
Aaa AAA 3,075 Prichard, AL Water and
Sewer (AMBAC), 6.125%,
11/15/14 3,401,565
Aaa AAA 6,000 Scottsboro, AL Water, Sewer
and Gas (AMBAC), 6.50%,
12/1/14 6,728,219
Aaa AAA 1,000 West Morgan-East Lawrence,
AL Water Authority (FSA),
6.85%, 8/15/25 1,162,550
- --------------------------------------------------------------------------------
$14,956,475
- --------------------------------------------------------------------------------
See notes to financial statements
56
<PAGE>
Alabama Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Lease Revenue/
Certificates of Participation -- 0.5%
- --------------------------------------------------------------------------------
NR BBB $ 500 Puerto Rico (Guaynabo
Municipal Government Center
Lease), 5.625%, 7/1/22 $ 511,975
- --------------------------------------------------------------------------------
$ 511,975
- --------------------------------------------------------------------------------
Miscellaneous -- 0.1%
- --------------------------------------------------------------------------------
A A $ 100 Tennessee Valley, AL
Exhibit Commission, 6.70%, 6/1/10 $ 111,204
- --------------------------------------------------------------------------------
$ 111,204
- --------------------------------------------------------------------------------
Nursing Homes -- 1.1%
- --------------------------------------------------------------------------------
NR NR $ 325 Fairhope, AL Midtown Medical
Clinic Board (Beverly
Enterprises), 6.375%, 6/1/09 $ 327,496
NR NR 670 Mobile, AL Midtown Medical
Clinic Board (Beverly
Enterprises), 7.00%, 4/1/07 684,532
- --------------------------------------------------------------------------------
$ 1,012,028
- --------------------------------------------------------------------------------
Special Tax Revenue -- 0.3%
- --------------------------------------------------------------------------------
NR NR $ 250 Virgin Islands Public Finance
Authority, 7.25%, 10/1/18 $ 280,645
- --------------------------------------------------------------------------------
$ 280,645
- --------------------------------------------------------------------------------
Transportation -- 2.3%
- --------------------------------------------------------------------------------
NR BBB $2,000 Guam Airport Authority,
(AMT), 6.70%, 10/1/23 $ 2,196,420
- --------------------------------------------------------------------------------
$ 2,196,420
- --------------------------------------------------------------------------------
Water and Sewer -- 1.6%
- --------------------------------------------------------------------------------
NR NR $1,500 Moulton City, AL Water,
6.30%, 1/1/18 $ 1,561,470
- --------------------------------------------------------------------------------
$ 1,561,470
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $87,219,402) $95,816,228
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Alabama
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1998, 57.6% of securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 1.5% to 29.9% of total investments.
/(1)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
See notes to financial statements
57
<PAGE>
Arkansas Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Colleges and Universities -- 8.4%
- --------------------------------------------------------------------------------
NR A+ $2,750 Conway, AR Public Facilities
Board Capital Improvement
(Hendrix College), 6.00%, 10/1/26 $ 2,906,612
A1 NR 1,000 University of Arkansas,
5.00%, 9/1/17 996,290
A1 NR 1,000 University of Arkansas,
(Fayetteville Campus),
5.00%, 11/1/22 987,360
- --------------------------------------------------------------------------------
$ 4,890,262
- --------------------------------------------------------------------------------
Electric Utilities -- 7.1%
- --------------------------------------------------------------------------------
A NR $1,000 Conway, AR Electric,
5.70%, 8/1/09 $ 1,060,120
NR BBB 1,000 Guam Power Authority,
5.25%, 10/1/23 992,990
Baa2 BBB+ 550 Jefferson, AR Pollution Control
(AR Power and Light),
6.30%, 6/1/18 595,590
Baa3 BBB- 750 Jefferson, AR Pollution Control
(Entergy Arkansas, Inc.),
5.60%, 10/1/17 757,238
Baa2 BBB+ 500 Pope County, AR Pollution Control
(AR Power and Light),
6.30%, 12/1/16 541,445
Baa1 BBB+ 500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 185,220
- --------------------------------------------------------------------------------
$ 4,132,603
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Harrison, AR Residential Housing
Facility Board Single Family
Mortgage (FGIC), 7.40%, 9/1/11 $ 634,185
- --------------------------------------------------------------------------------
$ 634,185
- --------------------------------------------------------------------------------
General Obligations -- 2.7%
- --------------------------------------------------------------------------------
Aa3 AA $2,750 Arkansas State College Savings,
0.00%, 6/1/14 $ 1,194,380
Baa1 A 500 Commonwealth of Puerto Rico,
Public Improvement,
0.00%, 7/1/16 200,640
Baa1 A 500 Commonwealth of Puerto Rico,
Public Improvement,
0.00%, 7/1/18 178,415
- --------------------------------------------------------------------------------
$ 1,573,435
- --------------------------------------------------------------------------------
Hospitals -- 14.6%
- --------------------------------------------------------------------------------
Baa1 NR $ 700 Baxter, AR Hospital Improvement,
7.25%, 9/1/07 $ 774,256
Baa1 NR 750 Baxter, AR Hospital Improvement,
7.50%, 9/1/21 831,750
NR A 1,000 Little Rock, AR Health Facilities
Board (Baptist Medical
Center-Parkway Village),
7.00%, 10/1/17 1,092,230
NR A+ 550 Little Rock, AR Health Facilities
Board Healthcare (Baptist Medical
Center), 5.50%, 9/1/15 561,424
NR A+ 1,125 Little Rock, AR Health Facilities
Board Hospital (Baptist Medical
Center), 6.80%, 11/1/05 1,296,124
NR BBB 1,500 Paragould, AR Hospital,
6.375%, 10/1/17 1,614,225
NR A- 2,250 Pulaski County, AR Hospitals
(Children's Hospital),
6.20%, 3/1/22 2,367,563
- --------------------------------------------------------------------------------
$ 8,537,572
- --------------------------------------------------------------------------------
Housing -- 12.0%
- --------------------------------------------------------------------------------
A NR $3,000 Arkansas Development Finance
Authority Compound Accretion,
0.00%, 12/1/11 $ 1,162,320
NR AAA 1,220 Arkansas Development Finance
Authority Single Family Mortgage
(GNMA), (AMT), 5.80%, 6/1/25 1,248,938
NR AAA 990 Arkansas Development Finance
Authority Single Family Mortgage
(GNMA), (AMT), 7.45%, 1/1/27 1,093,623
NR AAA 3,270 Arkansas Development Finance
Authority Single Family Mortgage
(GNMA/FNMA), (AMT), 6.70%, 7/1/27 3,516,328
- --------------------------------------------------------------------------------
$ 7,021,209
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 15.4%
- --------------------------------------------------------------------------------
NR A- $ 750 Arkansas State Development Finance
Authority Economic Development,
(AMT), 6.00%, 10/1/11 $ 788,010
Baa2 BBB+ 2,350 Baxter, AR (Aeroquip Corporation),
5.80%, 10/1/13 2,533,770
See notes to financial statements
58
<PAGE>
Arkansas Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue (continued)
- --------------------------------------------------------------------------------
A1 AA- $2,500 Blytheville, AR Solid Waste
Recycling and Sewer Treatment
(Nucor Corporation), (AMT),
6.90%, 12/1/21 $ 2,718,049
A1 A+ 1,000 Jonesboro, AR (Anheuser-Busch),
6.50%, 11/15/12 1,085,130
A3 A- 775 Pine Bluff, AR Solid Waste
Disposal (International Paper),
(AMT), 5.55%, 10/1/17 786,455
Baa3 BBB- 250 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 271,663
Baa3 BBB- 750 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.30%, 6/1/23 801,615
- --------------------------------------------------------------------------------
$ 8,984,692
- --------------------------------------------------------------------------------
Insured-Education -- 0.9%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 University of Central Arkansas
(AMBAC), 6.125%, 4/1/26 $ 553,495
- --------------------------------------------------------------------------------
$ 553,495
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 8.3%
- --------------------------------------------------------------------------------
Aaa AAA $ 250 North Little Rock, AR Electric
System (MBIA), 6.50%, 7/1/10 $ 294,730
Aaa AAA 3,390 North Little Rock, AR Electric
System (MBIA), 6.50%, 7/1/15/(1)/ 4,031,862
Aaa AAA 450 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(2)/ 518,063
- --------------------------------------------------------------------------------
$ 4,844,655
- --------------------------------------------------------------------------------
Insured-Hospitals -- 6.5%
- --------------------------------------------------------------------------------
Aaa AAA $2,610 Jonesboro, AR Residential Housing
and Health Care Facilities Board
Hospital (Saint Bernard Regional
Medical Center) (AMBAC),
5.90%, 7/1/16 $ 2,814,806
Aaa AAA 400 Saline County, AR Retirement
Housing and Healthcare Facilities
Board (Evan Lutheran Good
Samaritan) (AMBAC), 5.80%, 6/1/11 432,532
Aaa AAA 500 Saline County, AR Retirement
Housing and Healthcare Facilities
Board (Evan Lutheran Good
Samaritan) (AMBAC), 6.00%, 6/1/18 539,970
- --------------------------------------------------------------------------------
$ 3,787,308
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 5.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,250 Arkansas Development Finance
Authority Wastewater System
(MBIA), 5.00%, 6/1/15 $ 1,249,900
Aaa AAA 1,250 Arkansas Development Finance
Authority Wastewater System
(MBIA), 5.40%, 12/1/15 1,287,563
Aaa NR 500 Texarkana, AR Water and Sewer,
(FGIC), 5.40%, 9/1/15 516,750
- --------------------------------------------------------------------------------
$ 3,054,213
- --------------------------------------------------------------------------------
Lease Revenue/Certificates of Participation -- 0.4%
- --------------------------------------------------------------------------------
NR BBB $ 250 Puerto Rico (Guaynabo Municipal
Government Center Lease),
5.625%, 7/1/22 $ 255,988
- --------------------------------------------------------------------------------
$ 255,988
- --------------------------------------------------------------------------------
Pooled Loans -- 4.8%
- --------------------------------------------------------------------------------
A2 NR $1,000 Arkansas State Student Loan
Authority, (AMT), 5.60%, 6/1/14 $ 1,021,430
A NR 1,000 Arkansas State Student Loan
Authority, (AMT), 6.25%, 6/1/10 1,057,990
A NR 610 Arkansas State Student Loan
Authority, (AMT), 7.25%, 6/1/09 704,221
- --------------------------------------------------------------------------------
$ 2,783,641
- --------------------------------------------------------------------------------
Special Tax Revenue -- 5.8%
- --------------------------------------------------------------------------------
A NR $2,000 Little Rock, AR Hotel and
Restaurant Gross Receipts Tax,
7.375%, 8/1/15 $ 2,537,299
NR NR 750 Virgin Islands Public Finance
Authority, 7.25%, 10/1/18 841,935
- --------------------------------------------------------------------------------
$ 3,379,234
- --------------------------------------------------------------------------------
Transportation -- 1.5%
- --------------------------------------------------------------------------------
NR NR $ 750 Northwest Arkansas Regional
Airport Authority, (AMT),
7.625%, 2/1/27 $ 863,130
- --------------------------------------------------------------------------------
$ 863,130
- --------------------------------------------------------------------------------
See notes to financial statements
59
<PAGE>
Arkansas Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Water and Sewer -- 5.3%
- --------------------------------------------------------------------------------
A1 NR $1,500 Little Rock, AR Sewer,
5.50%, 8/1/14 $ 1,538,055
NR NR 1,500 South Sebastian County, AR Water
Users Association, 6.15%, 6/1/23 1,561,215
- --------------------------------------------------------------------------------
$ 3,099,270
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $53,904,584) $58,394,892
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Arkansas
municipalities. The ability of the issuers of the debt securities to meet
their obligations may be affected by economic developments in a specific
industry or municipality. In order to reduce the risk associated with
such economic developments, at February 28, 1998, 22.0% 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 0.9% to 11.9% of total
investments.
/(1)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
See notes to financial statements
60
<PAGE>
Georgia Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 14.9%
- --------------------------------------------------------------------------------
A1 A $2,000 Burke County, Development
Authority Pollution Control
(Georgia Power), 6.375%,
8/1/24 $ 2,074,200
A3 A 1,000 Georgia Municipal Electric
Power Authority, 0.00%,
1/1/12 475,650
A3 A 2,000 Georgia Municipal Electric
Power Authority, 8.25%,
1/1/11 2,619,360
A1 A+ 1,000 Monroe County, Development
Authority Pollution Control
(Gulf Power Scherer),
6.30%, 9/1/24 1,039,030
A3 A 4,000 Monroe County, Development
Authority Pollution Control
(Ogelthorpe Power), 6.55%,
1/1/06 4,518,319
A3 A 1,000 Monroe County, Development
Authority Pollution Control
(Ogelthorpe Power), 6.70%,
1/1/09 1,166,940
A3 A 1,000 Monroe County, Development
Authority Pollution Control
(Ogelthorpe Power), 6.80%,
1/1/12 1,181,400
Baa1 BBB+ 665 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 246,349
- --------------------------------------------------------------------------------
$13,321,248
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 0.7%
- --------------------------------------------------------------------------------
NR AAA $ 500 Commonwealth of Puerto
Rico, "RIBS", (AMBAC),
Variable Rate, 7/1/15/(1)/ $ 585,625
- --------------------------------------------------------------------------------
$ 585,625
- --------------------------------------------------------------------------------
General Obligations -- 2.9%
- --------------------------------------------------------------------------------
Aa AA- $ 300 City of Alpharetta,
6.50%, 5/1/10/(2)/ $ 354,210
Baa1 A 1,000 Commonwealth of Puerto Rico
Aqueduct and Sewer
Authority, 6.25%, 7/1/12 1,147,900
A2 A 450 Paulding County School
District, 6.625%, 2/1/08 529,421
Aaa AAA 500 State of Georgia, 6.30%,
3/1/08/(2)/ 579,110
- --------------------------------------------------------------------------------
$ 2,610,641
- --------------------------------------------------------------------------------
Hospitals -- 11.8%
- --------------------------------------------------------------------------------
A2 NR $4,500 City of Savannah (Saint
Joseph's Hospital Project),
6.20%, 7/1/23 $ 4,760,189
Baa1 NR 3,500 Fulco County, Georgia
Baptist Health, 6.375%,
9/1/22/(3)/ 3,877,825
NR BBB 1,785 Toombs County, GA (Dr. John
M. Meadows Memorial),
7.00%, 12/1/17 1,945,150
- --------------------------------------------------------------------------------
$10,583,164
- --------------------------------------------------------------------------------
Housing -- 14.4%
- --------------------------------------------------------------------------------
Aa2 NR $1,450 Georgia Housing and Finance
Authority, (AMT),
6.875%, 12/1/20 $ 1,543,685
Aa2 AA+ 3,985 Georgia Housing and Finance
Authority, Single Family
Mortgage, FHA, (AMT),
6.55%, 12/1/27 4,270,406
Aa2 AA+ 2,395 Georgia Housing and Finance
Authority, Single Family
Mortgage, FHA, (AMT),
6.70%, 12/1/25 2,573,236
Aa2 AA+ 1,500 Georgia Housing and Finance
Authority, Single Family
Mortgage, FHA, (AMT),
7.05%, 12/1/20 1,609,005
Aa2 AA+ 835 Georgia Housing and Finance
Authority, Single Family
Mortgage, FHA, (AMT),
7.125%, 12/1/26 880,265
Aa2 AA+ 2,000 Georgia State Housing &
Finance Authority Revenue,
(AMT), 5.85%, 12/1/28 2,083,580
- --------------------------------------------------------------------------------
$12,960,177
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution
Control Revenue -- 10.1%
- --------------------------------------------------------------------------------
A1 A+ $1,000 Cartersville Development
Authority, (Anheuser-Busch),
(AMT), 6.125%, 5/1/27 $ 1,061,660
A1 A+ 1,000 Cartersville Development
Authority, (Anheuser-Busch),
(AMT), 7.375%, 5/1/09 1,229,650
Baa3 BBB- 1,750 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 1,901,638
NR A+ 500 Savannah Economic
Development Authority (Hershey
Foods), 6.60%, 6/1/12 543,240
See notes to financial statements
61
<PAGE>
Georgia Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue (continued)
- --------------------------------------------------------------------------------
A1 A- $ 750 Savannah Economic
Development Authority
(Union Camp Corporation),
6.80%, 2/1/12 $ 819,345
NR NR 1,220 Savannah, GA, Economic
Development Authority
(Intercat Incorporated),
(AMT), 9.00%, 1/1/15 1,352,175
NR AA- 2,000 Vienna Water and Sewer
(Cargill Project), (AMT),
6.00%, 9/1/14 2,118,820
- --------------------------------------------------------------------------------
$ 9,026,528
- --------------------------------------------------------------------------------
Insured-Education -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Fulton County, Development
Authority, (Georgia
Technology Research
Corp.-Series B), (MBIA),
5.00%, 9/1/27 $ 975,880
- --------------------------------------------------------------------------------
$ 975,880
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 6.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Georgia Municipal Electric
Power Authority (FGIC),
5.50%, 1/1/12 $ 1,069,090
Aaa AAA 750 Georgia Municipal Electric
Power Authority (MBIA),
0.00%, 1/1/07 505,973
Aaa AAA 3,000 Georgia Municipal Electric
Power Authority (MBIA),
5.50%, 1/1/20 3,168,990
Aaa AAA 900 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03/(1)/ 1,036,125
- --------------------------------------------------------------------------------
$ 5,780,178
- --------------------------------------------------------------------------------
Insured-General Obligations -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Puerto Rico Public Building
Authority, (AMBAC), 5.00%,
7/1/27 $ 980,320
- --------------------------------------------------------------------------------
$ 980,320
- --------------------------------------------------------------------------------
Insured-Hospitals -- 13.2%
- --------------------------------------------------------------------------------
Aaa AAA $ 650 Chatham County (MBIA),
5.50%, 1/1/21 $ 670,313
Aaa AAA 1,000 Clarke County, Hospital
Authority (MBIA), 5.00%,
1/1/27 973,130
Aaa AAA 1,300 Cobb County, Hospital
Authority, Kennestone
Hospital (MBIA),
5.00%, 4/1/24 1,259,427
Aaa AAA 1,000 Fulco, GA Hospital
Authority, (Catholic Health
East), (MBIA), 5.00%,
11/15/28 966,430
Aaa AAA 2,225 Gainsville and Hall County,
(North East Healthcare)
(MBIA), 6.00%, 10/1/25 2,403,378
Aaa AAA 1,500 Medical Center Hospital
Authority Floats (MBIA),
Variable Rate, 8/1/10/(1)/ 1,781,250
Aaa AAA 2,000 Medical Center, Columbus
Regional Healthcare (MBIA),
6.40%, 8/1/06 2,203,320
Aaa AAA 1,375 Walker, Dade and Catoosa
Counties Hospital (FGIC),
7.00%, 10/1/10 1,564,750
- --------------------------------------------------------------------------------
$11,821,998
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 1.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 East Point Building
Authority (FGIC), 6.00%,
2/1/10 $ 1,091,520
- --------------------------------------------------------------------------------
$ 1,091,520
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 2.6%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Metropolitan Atlanta Rapid
Transit Authority, (AMBAC), $ 1,159,310
6.25%, 7/1/11
Aaa AAA 1,000 Metropolitan Atlanta Rapid
Transit Authority, (AMBAC), 1,160,610
6.25%, 7/1/20
- --------------------------------------------------------------------------------
$ 2,319,920
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 8.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,975 Cherokee County, Water and
Sewer Authority (MBIA),
6.875%, 8/1/13 $ 2,170,881
Aaa AAA 500 Cherokee County, Water and
Sewer Authority, (FGIC),
5.00%, 8/1/27 487,940
Aaa AAA 4,500 Henry County, Water and
Sewer Authority, (AMBAC),
5.00%, 2/1/26/(4)/ 4,393,935
Aaa AAA 500 Upper Oconee Basin, Water
Authority, (FGIC), 5.25%,
7/1/27 502,220
- --------------------------------------------------------------------------------
$ 7,554,976
- --------------------------------------------------------------------------------
See notes to financial statements
62
<PAGE>
Georgia Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Lease Revenue/Certificates of Participation -- 1.5%
- --------------------------------------------------------------------------------
Aa AA $2,300 Fulton County, Building
Authority, Judicial Center,
0.00%, 1/1/10 $ 1,326,663
- --------------------------------------------------------------------------------
$ 1,326,663
- --------------------------------------------------------------------------------
Life Care -- 1.5%
- --------------------------------------------------------------------------------
NR NR $1,485 De Kalb County, Private
Hospital Authority (Atlanta
Incorporated), 8.50%,
3/1/25/(3)/ $ 1,356,295
- --------------------------------------------------------------------------------
$ 1,356,295
- --------------------------------------------------------------------------------
Miscellaneous -- 1.2%
- --------------------------------------------------------------------------------
NR NR $1,000 City of Atlanta, Downtown
Development Authority,
Childcare Facilities,
(Central Atlanta
Hospitality Childcare
Incorported),
8.00%, 1/1/26 $ 1,117,300
- --------------------------------------------------------------------------------
$ 1,117,300
- --------------------------------------------------------------------------------
Solid Waste -- 1.2%
- --------------------------------------------------------------------------------
A1 A+ $1,000 Savannah Resource Recovery
(Savannah Energy Systems
Company), 6.30%, 12/1/06 $ 1,075,050
- --------------------------------------------------------------------------------
$ 1,075,050
- --------------------------------------------------------------------------------
Special Tax Revenue -- 5.8%
- --------------------------------------------------------------------------------
Baa1 A $3,750 Commonwealth of Puerto Rico
Highway and Transportation
Authority, 5.00%, 7/1/36 $ 3,649,950
NR NR 1,400 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 1,571,612
- --------------------------------------------------------------------------------
$ 5,221,562
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $82,080,212) $89,709,045
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Georgia
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1998, 34.6% of securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 1.2% to 18.5% of total investments.
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(3)/ Security (or a portion thereof) has been segregated to cover when-issued
securities.
/(4)/ When-issued security.
See notes to financial statements
63
<PAGE>
Kentucky Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Assisted Living -- 2.9%
- --------------------------------------------------------------------------------
Aa NR $3,000 Kenton County, KY (Highland
Terrace) FHA, 6.95%, 12/1/26 $ 3,386,310
- --------------------------------------------------------------------------------
$ 3,386,310
- --------------------------------------------------------------------------------
Education -- 1.2%
- --------------------------------------------------------------------------------
A1 AA- $ 500 University of Kentucky
Consolidated Educational
Buildings, 6.40%, 5/1/09 $ 543,700
A1 AA- 785 University of Kentucky
Consolidated Educational
Buildings, 6.40%, 5/1/11 850,814
- --------------------------------------------------------------------------------
$ 1,394,514
- --------------------------------------------------------------------------------
Electric Utilities -- 4.9%
- --------------------------------------------------------------------------------
NR BBB $ 400 Guam Power Authority,
5.25%, 10/1/23 $ 397,196
Aa2 AA- 1,000 Muhlenburg County, KY
Collateralized Pollution
Control, Utilities
Company, 6.25%, 2/1/18 1,057,380
Baa1 BBB+ 3,500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 1,296,540
Baa1 BBB+ 500 Puerto Rico Electric Power
Authority, 5.50%, 7/1/25 509,025
Baa1 BBB+ 2,250 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 2,501,145
- --------------------------------------------------------------------------------
$ 5,761,286
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.4%
- --------------------------------------------------------------------------------
NR NR $ 545 Russell, KY, Health Systems,
8.10%, 7/1/15 $ 679,882
Aaa A 1,000 University of Puerto Rico
Revenue, 6.50%, 6/1/13 1,007,610
- --------------------------------------------------------------------------------
$ 1,687,492
- --------------------------------------------------------------------------------
General Obligations -- 2.2%
- --------------------------------------------------------------------------------
Baa1 A $1,125 Commonwealth of Puerto
Rico, 0.00%, 7/1/17 $ 423,878
Baa1 A 500 Commonwealth of Puerto
Rico, 5.375%, 7/1/25 506,745
NR A+ 1,030 Kentucky League of Cities
Funding Trust Floating
Indebtedness Certificates
of Participation, 6.15%, 8/1/13 1,120,074
NR NR 500 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 561,290
- --------------------------------------------------------------------------------
$ 2,611,987
- --------------------------------------------------------------------------------
Hospitals -- 0.4%
- --------------------------------------------------------------------------------
Baa1 BBB $ 430 Russell, KY, Health Systems,
8.10%, 7/1/15 $ 525,692
- --------------------------------------------------------------------------------
$ 525,692
- --------------------------------------------------------------------------------
Housing -- 7.0%
- --------------------------------------------------------------------------------
NR AAA $1,445 Boone County, KY
Multifamily Housing
Mortgage, Walnut Creek
Apartments, FHA, 7.00%,
1/1/27 $ 1,529,085
NR NR 1,200 Florence, KY, Housing
Facilities, (Blue Grass
Housing), 7.625%, 5/1/27 1,311,516
Aaa AAA 2,000 Kentucky Housing Corp.,
SFMR, Series 97B, 6.25%,
7/1/28 2,127,940
Aaa AAA 2,500 Kentucky Housing
Corporation, Multifamily
Mortgage, 6.30%, 1/1/28 2,682,475
Aaa AAA 590 Kentucky Housing
Corporation, Single Family
Mortgage, FHA, (AMT),
7.45%, 1/1/23 630,380
- --------------------------------------------------------------------------------
$ 8,281,396
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution
Control Revenue -- 24.3%
- --------------------------------------------------------------------------------
Baa1 NR $2,425 Ashland, KY Solid Waste
Disposal (Ashland Oil),
(AMT), 7.125%, 2/1/22 $ 2,754,873
Baa1 BBB 2,355 Ashland, KY Solid Waste
Disposal (Ashland Oil),
(AMT), 7.20%, 10/1/20 2,578,325
NR NR 1,000 City of Elsmmere, KY
(Courtaulds Pkg Inc.),
6.75%, 4/1/10 1,079,900
See notes to financial statements
64
<PAGE>
Kentucky Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue (continued)
- --------------------------------------------------------------------------------
NR NR $3,075 Fulton County, KY
Industrial Building, (Chic
Jeans), (AMT), 7.50%, 2/1/10 $ 3,220,940
NR A- 2,370 Hancock County, KY Solid
Waste Disposal
(Williamette Corporation),
(AMT), 6.60%, 5/1/26 2,634,800
NR NR 1,500 Hancock County, KY,
(Southwire Co.), (AMT),
7.75%, 7/1/26 1,624,770
Baa2 BBB- 3,000 Henderson County, KY Solid
Waste Disposal (MacMillan
Bloedel), (AMT), 7.00%,
3/1/25 3,290,310
Aa3 AA- 1,000 Jefferson County, KY
Pollution Control (E.I. du
Pont de Nemours), 6.30%,
7/1/12 1,092,180
NR BB- 985 Owensboro County, KY
(KMart Corporation),
6.80%, 12/1/07 1,061,141
NR NR 1,500 Perry County, Solid Waste
Disposal (TJI International),
6.80%, 5/1/26 1,676,730
NR BB- 915 Powderly, KY (KMart
Corporation), 6.90%, 3/1/07 987,797
A2 NR 2,665 Puerto Rico Industrial,
Medical and Environmental
Pollution Control Facility
Finance Authority,
(American Home Products),
5.10%, 12/1/18 2,621,214
Baa3 BBB- 500 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.30%, 6/1/23 534,410
A1 A 2,820 Wickliffe, KY Solid Waste
Disposal (Westvaco
Corporation), (AMT),
6.375%, 4/1/26 3,077,635
Baa3 NR 500 Winchester County, KY
(Kroger Corporation),
6.90%, 7/1/01 516,635
- --------------------------------------------------------------------------------
$ 28,751,660
- --------------------------------------------------------------------------------
Insured-Education -- 0.6%
- --------------------------------------------------------------------------------
Aaa AAA $ 700 Northern, KY University
Educational Buildings
(AMBAC), 6.25%, 5/1/12 $ 764,771
- --------------------------------------------------------------------------------
$ 764,771
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 1.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,600 Commonwealth of Puerto
Rico, Telephone Authority,
(MBIA), Variable Rate,
1/16/15/(1)/ $ 1,722,000
- --------------------------------------------------------------------------------
$ 1,722,000
- --------------------------------------------------------------------------------
Insured-General Obligations -- 2.4%
- --------------------------------------------------------------------------------
Aaa AAA $5,000 Commonwealth of Puerto
Rico Highway and
Transportation Authority,
(AMBAC), 0.00%, 7/1/18/(2)/ $ 1,826,650
Aaa AAA 1,000 Puerto Rico Public
Building Authority,
(AMBAC), 5.00%, 7/1/27 980,320
- --------------------------------------------------------------------------------
$ 2,806,970
- --------------------------------------------------------------------------------
Insured-Hospitals -- 15.5%
- --------------------------------------------------------------------------------
Aaa AAA $2,500 Daviess County, KY ODCH
Incorporated (MBIA),
6.25%, 8/1/22/(3)/ $ 2,727,500
Aaa AAA 2,500 Jefferson County, KY
Health Facilities (Jewish
Hosp.) (AMBAC),
6.50%, 5/1/15 2,731,825
Aaa AAA 750 Jefferson County, KY
Health Facilities (Jewish
Hosp.) (AMBAC), 6.55%, 5/1/22 820,958
Aaa AAA 1,000 Jefferson County, KY
Health Facilities
Authority (University
Medical Center) (MBIA),
5.25%, 7/1/22 1,002,470
Aaa AAA 1,000 Jefferson County, KY,
Health Facilities, (MBIA),
5.125%, 10/1/17 996,890
Aaa AAA 4,490 Jefferson County, KY,
Health Facilities, (MBIA),
5.125%, 10/1/27 4,403,926
Aaa AAA 4,000 Kentucky Development
Finance Authority (Saint
Luke's Hospital) (MBIA),
7.00%, 10/1/21/(3)/ 4,465,079
Aaa AAA 1,200 Warren County, KY,
Hospital Facilities,
(Bowling Green-Warren
County Hospital), (FSA),
5.00%, 4/1/17 1,176,804
- --------------------------------------------------------------------------------
$ 18,325,452
- --------------------------------------------------------------------------------
Insured-Transportation -- 5.8%
- --------------------------------------------------------------------------------
Aaa AAA $3,550 Kenton County, KY Airport,
6.30%, 3/1/15 $ 3,924,276
Aaa AAA 1,000 Kenton County, KY Airport
(FSA), (AMT), 6.30%, 3/1/15 1,074,130
See notes to financial statements
65
<PAGE>
Kentucky Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Transportation (continued)
- --------------------------------------------------------------------------------
Aaa AAA $1,195 Kenton County, KY Airport
Revenue Board (MBIA),
(AMT), 6.45%, 3/1/15 $ 1,350,828
Aaa AAA 1,000 Kentucky Economic
Development Authority,
State Turnpike
Revitalization (FGIC),
0.00%, 7/1/10 576,810
- --------------------------------------------------------------------------------
$ 6,926,044
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 8.9%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Kenton County, KY Water
District Waterworks
(FGIC), 6.00%, 2/1/17 $ 2,181,120
Aaa AAA 500 Lexington-Fayette County,
KY Government Sewer System
(MBIA), 6.375%, 7/1/12 550,040
Aaa AAA 3,415 Louisville and Jefferson
County, KY Metropolitan
Sewer District (MBIA),
6.25%, 5/15/26 3,788,600
Aaa AAA 1,000 Louisville and Jefferson
County, KY Sewer District
(AMBAC), 6.75%, 5/15/19 1,162,620
Aaa AAA 2,000 Louisville and Jefferson
County, KY Sewer District
(AMBAC), 6.75%, 5/15/25 2,325,240
Aaa AAA 500 Louisville and Jefferson
County, KY Sewer District
(FGIC), 5.20%, 5/15/26 497,030
- --------------------------------------------------------------------------------
$ 10,504,650
- --------------------------------------------------------------------------------
Lease Revenue/
Certificates of Participation -- 10.6%
- --------------------------------------------------------------------------------
A1 A $1,300 Boone County, KY School
District, 6.75%, 9/1/11 $ 1,447,446
A1 A+ 4,990 Jefferson County, KY
Capital Projects
Corporation, 0.00%, 8/15/15 2,046,000
A A- 1,000 Louisville, KY Public
Property Corporation,
6.80%, 12/1/22 1,113,220
Aa NR 2,000 Mount Sterling, KY Lease,
6.15%, 3/1/13 2,117,640
Aa NR 3,500 Mount Sterling, KY Lease,
6.20%, 3/1/18 3,692,920
A NR 2,000 Owensboro County, KY
Airport Lease, 5.875%,
6/1/15 2,090,560
- --------------------------------------------------------------------------------
$ 12,507,786
- --------------------------------------------------------------------------------
Nursing Homes -- 1.0%
- --------------------------------------------------------------------------------
NR NR $ 800 Jefferson County, KY
Health Facilities, Beverly
Enterprises, 9.75%, 8/1/07 $ 862,496
NR AAA 325 Pike County, KY, (Phelps
Regional Health), 5.35%,
9/20/12 331,734
- --------------------------------------------------------------------------------
$ 1,194,230
- --------------------------------------------------------------------------------
Solid Waste -- 1.1%
- --------------------------------------------------------------------------------
NR NR $1,200 Morgantown, KY Solid Waste
Revenue, 7.45%, 5/1/22 $ 1,276,656
- --------------------------------------------------------------------------------
$ 1,276,656
- --------------------------------------------------------------------------------
Transportation -- 7.8%
- --------------------------------------------------------------------------------
NR BBB $3,000 Guam Airport Authority,
(AMT), 6.70%, 10/1/23/(4)/ $ 3,294,630
Baa3 BB+ 500 Kenton County, KY Airport
(Delta Airlines), (AMT),
7.50%, 2/1/20 557,225
Baa3 BB+ 3,400 Kenton County, KY Airport
(Delta Airlines), (AMT),
6.125%, 2/1/22 3,509,072
Baa3 BB+ 1,500 Kenton County, KY Airport
(Delta Airlines), (AMT),
7.125%, 2/1/21 1,648,890
Baa3 BB+ 250 Kenton County, KY Airport
(Delta Airlines), (AMT),
7.50%, 2/1/12 279,663
- --------------------------------------------------------------------------------
$ 9,289,480
- --------------------------------------------------------------------------------
Water and Sewer -- 0.6%
- --------------------------------------------------------------------------------
A NR $ 650 Harden County, KY Water
District, 6.50%, 9/1/12 $ 706,342
- --------------------------------------------------------------------------------
$ 706,342
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $108,588,633) $118,424,718
- --------------------------------------------------------------------------------
See notes in financial statements
66
<PAGE>
Kentucky Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
AMT - Interest earned from these securities may be considered a tax preference
item for the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Kentucky
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1998, 34.6% 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 0.3% to 21.4% of total investments.
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ When-issued security.
/(3)/ Security has been segregated to cover when-issued securities.
/(4)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes in financial statements
67
<PAGE>
Louisiana Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Education -- 0.5%
- --------------------------------------------------------------------------
Aaa NR $ 115 Louisiana Public Facilities
Authority, Guaranteed
Student Loan Revenue Bonds,
(AMT), 6.75%, 9/1/06 $ 122,028
A2 NR 65 Louisiana Public Facilities
Authority, Student Loan
Revenue Bonds, (AMT),
7.00%, 9/1/06 69,596
- --------------------------------------------------------------------------
$ 191,624
- --------------------------------------------------------------------------
Electric Utilities -- 2.8%
- --------------------------------------------------------------------------
Baa1 BBB+ $2,500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 $ 933,125
Baa1 BBB+ 175 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 64,827
- --------------------------------------------------------------------------
$ 997,952
- --------------------------------------------------------------------------
Escrowed / Prerefunded -- 3.4%
- --------------------------------------------------------------------------
NR AAA $ 250 Commonwealth of Puerto
Rico, "RIBS", (AMBAC),
Variable Rate, 7/1/15/(1)/ $ 292,813
Aaa AAA 2,475 Parish of Jefferson, LA,
Home Mortgage Authority,
Single Family, (FGIC),
0.00%, 5/1/17 918,695
- --------------------------------------------------------------------------
$ 1,211,508
- --------------------------------------------------------------------------
General Obligations -- 0.2%
- --------------------------------------------------------------------------
Baa1 A $ 200 Commonwealth of Puerto
Rico, Public Improvement,
0.00%, 7/1/18 $ 71,366
- --------------------------------------------------------------------------
$ 71,366
- --------------------------------------------------------------------------
Hospitals -- 6.1%
- --------------------------------------------------------------------------
A3 NR $1,000 Lafourche Parish, LA,
Hospital Service District,
6.00%, 10/1/23/(2)/ $ 1,033,770
NR BBB 750 Louisiana PFA, General
Health Systems Project,
6.80%, 11/1/16 832,463
NR A- 250 Saint Tammany Parish, LA,
Hospital Service District,
6.50%, 7/1/22 264,668
- --------------------------------------------------------------------------
$ 2,130,901
- --------------------------------------------------------------------------
Housing -- 20.3%
- --------------------------------------------------------------------------
Aaa NR $ 85 East Baton Rouge Mortgage
Finance Authority, Single
Family, (GNMA), (AMT),
7.875%, 12/1/21 $ 90,035
Aaa NR 610 East Baton Rouge Mortgage
Finance Authority, Single
Family, (GNMA/FNMA), 7.00%,
4/1/32 644,349
Aaa NR 230 East Baton Rouge Mortgage
Finance Authority, Single
Family, (GNMA/FNMA), (AMT),
7.10%, 10/1/24 243,777
Aaa NR 485 Louisiana Housing Finance
Agency, Single Family,
6.375%, 12/1/27 516,234
NR AAA 150 Louisiana Housing Finance
Authority, Multifamily
Housing, (Westview
Apartment II), (FHA),
(AMT), 7.95%, 1/1/32 159,504
Aaa NR 595 Louisiana Housing Finance
Authority, Single Family,
(GNMA), (AMT), 6.30%,
12/1/27 629,016
Aaa NR 1,250 Louisiana Housing Finance
Authority, Single Family,
(GNMA), (AMT), 8.00%, 3/1/25 1,433,988
Aaa NR 640 Louisiana Housing Finance
Authority, Single Family,
(GNMA/FNMA), (AMT), 6.55%,
12/1/26 681,498
NR D 1,000 Louisiana Public Facilities
Authority, Multifamily
Housing, (Windsor Housing),
6.25%, 1/1/26 750,000
Aaa NR 1,890 New Orleans Home Mortgage
Authority, Single Family,
(GNMA/FNMA), (AMT),
6.30%, 6/1/28 1,992,777
- --------------------------------------------------------------------------
$ 7,141,178
- --------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 12.8%
- --------------------------------------------------------------------------
A3 A- $1,750 City of Bastrop, LA,
(International Paper
Company), (AMT),
6.60%, 3/1/19/(3)/ $ 1,938,632
A3 A- 750 De Soto Parish, LA,
(International Paper
Company), (AMT),
7.70%, 11/1/18 885,900
Baa3 BBB- 900 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 977,985
Aa3 NR 500 South Louisiana Port
Commission, (Cargill,
Inc.), 5.85%, 4/1/17 527,585
See notes to financial statements
68
<PAGE>
Louisiana Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- ------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue (continued)
- ------------------------------------------------------------------------------
Baa1 BBB+ $ 150 South Louisiana Port
Commission, (GATX Terminals
Corporation), 7.00%, 3/1/23 $ 164,535
- ------------------------------------------------------------------------------
$ 4,494,637
- ------------------------------------------------------------------------------
Insured-Colleges and Universities -- 5.5%
- ------------------------------------------------------------------------------
Aaa AAA $1,250 Louisiana Public Facilities
Authority, (Dillard Univ.),
(AMBAC), 5.00%, 2/1/28 $ 1,210,375
Aaa AAA 750 Louisiana Public Facilities
Authority, (Tulane
University), (MBIA),
5.00%, 11/15/27 724,950
- ------------------------------------------------------------------------------
$ 1,935,325
- ------------------------------------------------------------------------------
Insured-Education -- 3.3%
- ------------------------------------------------------------------------------
Aaa AAA $1,100 Louisiana State University,
(FGIC), 5.75%, 7/1/14 $ 1,180,289
- ------------------------------------------------------------------------------
$ 1,180,289
- ------------------------------------------------------------------------------
Insured-General Obligations -- 9.7%
- ------------------------------------------------------------------------------
Aaa AAA $3,000 New Orleans, LA, (AMBAC),
0.00%, 9/1/15 $ 1,259,100
Aaa AAA 4,000 New Orleans, LA, (AMBAC),
0.00%, 9/1/16 1,583,240
Aaa AAA 1,500 New Orleans, LA, (AMBAC),
0.00%, 9/1/17 559,380
- ------------------------------------------------------------------------------
$ 3,401,720
- ------------------------------------------------------------------------------
Insured-Hospitals -- 4.9%
- ------------------------------------------------------------------------------
Aaa AAA $ 100 Louisiana Public Facilities
Authority Hospital, (MBIA),
Variable Rate, 12/1/14/(1)/ $ 114,625
Aaa AAA 1,500 Ouachita Parish, Glenwood
Medical Center, (FSA),
5.75%, 5/15/21 1,604,625
- ------------------------------------------------------------------------------
$ 1,719,250
- ------------------------------------------------------------------------------
Insured-Housing -- 0.2%
- ------------------------------------------------------------------------------
Aaa AAA $ 415 East Baton Rouge Mortgage
Finance Authority, Single
Family, (MBIA) (GNMA/FNMA),
0.00%, 10/1/15 $ 67,479
- ------------------------------------------------------------------------------
$ 67,479
- ------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 5.7%
- ------------------------------------------------------------------------------
Aaa AAA $ 105 Baton Rouge, LA, Public
Improvement, (FGIC), 4.75%,
8/1/16 $ 101,003
Aaa AAA 345 Baton Rouge, LA, Public
Improvement, (FGIC), 4.75%,
8/1/17 329,392
Aaa AAA 1,000 Orleans Levee District,
(FSA), 5.95%, 11/1/14 1,095,560
Aaa AAA 500 Parish of Lafayette, LA,
School District, (FGIC),
4.60%, 4/1/18/(4)/ 465,800
- ------------------------------------------------------------------------------
$ 1,991,755
- ------------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 5.0%
- ------------------------------------------------------------------------------
Aa2 AA $1,650 Saint Bernard Parish,
(Mobil Oil), 5.90%, 11/1/26 $ 1,749,132
- ------------------------------------------------------------------------------
$ 1,749,132
- ------------------------------------------------------------------------------
Life Care -- 14.1%
- ------------------------------------------------------------------------------
NR NR $ 500 Louisiana Housing Finance
Agency, (HCC Assisted
Living Group 1), (AMT),
9.00%, 3/1/25 $ 564,965
NR AAA 500 Louisiana Housing Finance
Agency, (Saint Dominic
Assisted Care Facility),
(GNMA), 6.85%, 9/1/25 554,295
NR AAA 1,995 Louisiana Housing Finance
Agency, (Saint Joseph's
Manor Retirement Center),
(GNMA), 7.80%, 12/1/35 2,233,022
NR BBB 1,150 Louisiana Public Facilities
Authority, (Glen Retirement
System), 6.70%, 12/1/25 1,258,468
NR NR 300 Saint Tammany, LA, Public
Finance, (Christwood
Project), 9.00%, 11/15/25 351,618
- ------------------------------------------------------------------------------
$ 4,962,368
- ------------------------------------------------------------------------------
Transportation -- 5.5%
- ------------------------------------------------------------------------------
A A- $ 500 Mississippi River Bridge
Authority, Bridge Revenue,
6.75%, 11/1/12/(2)/ $ 553,270
See notes to financial statements
69
<PAGE>
Louisiana Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- ------------------------------------------------------------------------------
Transportation (continued)
- ------------------------------------------------------------------------------
Baa1 A $1,500 Puerto Rico, Highway and
Transportation Authority,
4.75%, 7/1/38 $ 1,381,775
- ------------------------------------------------------------------------------
$ 1,935,045
- ------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $33,028,050) $35,181,529
- ------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a
tax preference item for purposes of the Federal Alternative Minimum
Tax.
The Portfolio invests primarily in debt securities issued by Louisiana
municipalities. The ability of the issuers of the debt securities to meet
their obligations may be affected by economic developments in a specific
industry or municipality. In order to reduce the risk associated with
such economic developments, at February 28, 1998, 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 2.7% to 14.7% of total
investments.
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(3)/ Security has been segregated to cover when-issued securities.
/(4)/ When-issued security.
See notes to financial statements
70
<PAGE>
Maryland Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Cogeneration -- 1.3%
- --------------------------------------------------------------------------------
NR NR $1,250 Maryland Energy, AES Warrior Run
Project, (AMT), 7.40%, 9/1/19 $ 1,388,025
- --------------------------------------------------------------------------------
$ 1,388,025
- --------------------------------------------------------------------------------
Colleges and Universities -- 4.1%
- --------------------------------------------------------------------------------
Aa2 AA- $2,500 Maryland Health And Higher
Educational Facilities Authority,
(John Hopkins University),
5.125%, 7/1/20/(1)/ $ 2,484,650
NR BBB 500 Montgomery County, MD,
Economic Development
Authority, 5.60%, 11/1/18 509,210
NR BBB 350 Montgomery County, MD,
Economic Development Authority,
5.60%, 11/1/22 356,164
Aa3 AA+ 1,000 University of Maryland
Auxiliary Facilities and
Tuition, 6.30%, 2/1/10 1,076,970
- --------------------------------------------------------------------------------
$ 4,426,994
- --------------------------------------------------------------------------------
Electric Utilities -- 6.8%
- --------------------------------------------------------------------------------
A2 A $1,500 Calvert, MD Pollution Control
Revenue (Baltimore Gas and
Electric Company), 5.55%, 7/15/14 $ 1,564,815
NR BBB 2,500 Guam Power Authority,
5.25%, 10/1/13 2,504,525
NR BBB 750 Guam Power Authority,
6.625%, 10/1/14 833,460
A1 A 2,225 Prince George's County, MD
Pollution Control Revenue (Potomac
Electric), 6.375%, 1/15/23 2,397,972
- --------------------------------------------------------------------------------
$ 7,300,772
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 5.5%
- --------------------------------------------------------------------------------
Aaa NR $1,125 Baltimore, MD Single Family
Mortgage (Inner Harbor),
8.00%, 12/1/10 $ 1,490,975
NR AAA 1,000 Commonwealth of Puerto Rico
Public Improvement, 6.80%, 7/1/21 1,122,400
Aaa AAA 500 Maryland Health and Higher
Educational (University of
Maryland) (FGIC), 6.50%, 7/1/21 538,815
Aaa AAA 1,365 Maryland Health and Higher
Educational (Washington Community
Hospital) (AMBAC), 6.375%, 7/1/22 1,512,830
NR AAA 1,000 University of Maryland
System Auxiliary Facility
and Tuition, 6.50%, 4/1/11 1,071,570
NR AAA 175 University of Maryland
System Auxiliary Facility
and Tuition, 6.50%, 4/1/12 195,675
- --------------------------------------------------------------------------------
$ 5,932,265
- --------------------------------------------------------------------------------
General Obligations -- 5.5%
- --------------------------------------------------------------------------------
Baa1 A $1,000 Commonwealth of Puerto
Rico, 4.50%, 7/1/23 $ 903,270
Baa1 A 2,000 Commonwealth of Puerto Rico
Highway And Transportation
Authority, 5.00%, 7/1/38/(1)/ 1,900,380
Baa1 A 600 Commonwealth of Puerto Rico,
Public Improvement, 0.00%, 7/1/16 240,768
Baa1 A 500 Commonwealth of Puerto Rico
Public Improvement, 0.00%, 7/1/18 178,415
Aaa AAA 1,000 Howard County, MD,
4.75%, 2/15/27/(1)/ 948,760
Aa1 AA 1,000 Washington, MD Suburban Sanitary
District, 5.625%, 6/1/21 1,047,300
Aa1 AA 500 Washington, MD Suburban Sanitary
District, 6.20%, 6/1/11 549,145
Aa NR 190 Worcester, MD Sanitary
District, 6.55%, 8/15/17 210,098
- --------------------------------------------------------------------------------
$ 5,978,136
- --------------------------------------------------------------------------------
Hospitals -- 14.2%
- --------------------------------------------------------------------------------
NR NR $ 480 Berlin, MD (Atlantic
General), 8.375%, 6/1/22 $ 526,752
Baa1 BBB 1,250 Maryland Health and Higher
Educational (Howard County
General Hospital), 5.50%, 7/1/25 1,267,613
Baa1 NR 2,500 Maryland Health and Higher
Educational (Union Hospital of
Cecil), 6.70%, 7/1/22 2,701,700
See notes to financial statements
71
<PAGE>
Maryland Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Hospitals (continued)
- --------------------------------------------------------------------------------
Baa1 NR $1,000 Maryland Health And Higher
Educational Facilities
Authority, (Kennedy Krieger
Issue), 5.125%, 7/1/22 $ 985,160
A NR 4,000 Prince George's County, MD
(Dimensions Health),
5.30%, 7/1/24 3,971,639
Baa3 NR 1,355 Prince George's County, MD
(Greater SouthEast Healthcare
System), 6.375%, 1/1/13 1,421,354
Baa3 NR 4,250 Prince George's County, MD
(Greater SouthEast Healthcare
System), 6.375%, 1/1/23 4,458,122
- --------------------------------------------------------------------------------
$ 15,332,340
- --------------------------------------------------------------------------------
Housing -- 11.6%
- --------------------------------------------------------------------------------
Aa NR $1,000 Maryland Community Development
Administration Multifamily,
FHA, (AMT), 6.70%, 5/15/36 $ 1,078,500
Aa NR 245 Maryland Community
Development Administration
Single Family, 6.85%, 4/1/11 259,570
Aa2 NR 1,000 Maryland Community Development
Administration Single Family,
(AMT), 5.30%, 9/1/23 995,830
Aa NR 3,000 Maryland Community Development
Administration Single Family,
(AMT), 6.75%, 4/1/26 3,221,940
Aa NR 895 Maryland Community Development
Administration Single Family,
(AMT), 6.80%, 4/1/22 958,366
Aa NR 745 Maryland Community Development
Administration Single Family,
(AMT), 6.80%, 4/1/24 797,746
Aa2 NR 2,525 Montgomery County, MD
Single Family Mortgage
Revenue, (AMT), 6.05%, 7/1/27 2,658,270
NR A 300 Prince George's County, MD
(Antoinette Gardens
Apartments), FHA, 7.00%, 3/1/28 304,242
NR AAA 2,160 Prince George's County, MD,
Housing Authority (Langely
Gardens), (AMT), 5.875%,
2/20/39 2,218,666
- --------------------------------------------------------------------------------
$ 12,493,130
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 8.4%
- --------------------------------------------------------------------------------
A1 A $1,350 Allegany, MD Pollution
Control Revenue (Westvaco
Corporation), 6.20%, 1/1/08 $ 1,490,967
NR NR 1,350 Baltimore, MD Pollution Control
Revenue (Bethlehem Steel
Corporation), 7.50%, 6/1/15/(2)/ 1,516,185
Aa3 AA- 2,000 Baltimore, MD Port Facilities
(Consolidated Coal Sales Company
- E.I. du Pont de Nemours),
6.50%, 12/1/10 2,210,420
Aa3 AA- 2,000 Baltimore, MD Port Facilities
(Consolidated Coal Sales Company
- E.I. du Pont de Nemours),
6.50%, 10/1/11/(2)/ 2,205,900
NR AA- 1,425 Frederick, MD Economic
Development Authority (Cargill,
Incorporated), 6.30%,
11/1/09/(3)/ 1,571,704
- --------------------------------------------------------------------------------
$ 8,995,176
- --------------------------------------------------------------------------------
Insured-Colleges and Universities -- 6.0%
- --------------------------------------------------------------------------------
Aaa AAA $5,000 Maryland Health and Higher
Educational (Loyola College)
(MBIA), 5.375%, 10/1/26/(2)/ $ 5,098,899
Aaa AAA 1,200 Morgan State University,
Maryland Academic and
Facilities (MBIA), 6.10%,
7/1/20 1,381,464
- --------------------------------------------------------------------------------
$ 6,480,363
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 2.2%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Montgomery County, MD
Pollution Control Revenue
(MBIA), 5.375%, 2/15/24 $ 2,031,680
Aaa AAA 250 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(4)/ 287,813
- --------------------------------------------------------------------------------
$ 2,319,493
- --------------------------------------------------------------------------------
Insured-Hospitals -- 11.2%
- --------------------------------------------------------------------------------
Aaa AAA $2,500 Calvert, MD, Economic
Development Authority,
(MBIA), 5.00%, 1/1/27 $ 2,447,500
See notes to financial statements
72
<PAGE>
Maryland Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Hospitals (continued)
- --------------------------------------------------------------------------------
Aaa AAA $1,175 Maryland Health And Higher
Educational Facilities
Authority, (Baltimore-Good
Samaritan), (MBIA), 5.75%,
7/1/19 $ 1,237,381
Aaa AAA 5,000 Maryland Health And Higher
Educational Facilities
Authority, (Helix Health
Issue), (AMBAC), 5.00%, 7/1/27 4,901,599
Aaa AAA 3,150 Puerto Rico Industrial Medical
and Environmental Pollution
Control Facilities Financing
Authority (MBIA), 6.25%, 7/1/24 3,494,200
- --------------------------------------------------------------------------------
$ 12,080,680
- --------------------------------------------------------------------------------
Insured-Housing -- 0.5%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Prince George's County, MD
(Keystone Apartments),
FHA, (MBIA), 6.80%, 7/1/25 $ 532,290
- --------------------------------------------------------------------------------
$ 532,290
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of
Participation -- 3.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Baltimore, MD COP (AMBAC),
5.00%, 10/1/17 $ 1,001,700
Aaa AAA 1,000 Maryland Stadium Authority
(AMBAC), 5.60%, 3/1/14 1,058,260
Aaa AAA 1,300 Maryland Stadium Authority
(AMBAC), 5.80%, 3/1/26 1,380,509
- --------------------------------------------------------------------------------
$ 3,440,469
- --------------------------------------------------------------------------------
Insured-Solid Waste -- 5.1%
- --------------------------------------------------------------------------------
Aaa AAA $5,000 NE Maryland Solid Waste
Disposal (MBIA), (AMT),
6.30%, 7/1/16 $ 5,444,899
- --------------------------------------------------------------------------------
$ 5,444,899
- --------------------------------------------------------------------------------
Insured-Transportation -- 3.7%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Baltimore, MD International
Airport (FGIC), (AMT), 6.25%,
7/1/14 $ 2,180,700
Aaa AAA 1,750 Washington, D.C. Metro Area
Transportation (FGIC),
5.25%, 7/1/14 1,785,945
- --------------------------------------------------------------------------------
$ 3,966,645
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 6.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Baltimore, MD Sewer
(FGIC), 5.50%, 7/1/26 $ 1,035,030
Aaa AAA 1,000 Baltimore, MD Wastewater
(FGIC), 5.00%, 7/1/22 1,002,740
Aaa AAA 2,000 Baltimore, MD Wastewater
(MBIA), 5.65%, 7/1/20 2,165,040
Aaa AAA 2,600 Baltimore, MD Water
(FGIC), 5.50%, 7/1/26 2,691,078
- --------------------------------------------------------------------------------
$ 6,893,888
- --------------------------------------------------------------------------------
Lease Revenue/
Certificates of Participation -- 2.1%
- --------------------------------------------------------------------------------
A NR $1,000 Baltimore, MD Revenue
Authority, 5.375%, 7/1/18 $ 1,003,840
NR BBB 1,250 Puerto Rico (Guaynabo
Municipal Government
Center Lease), 5.625%, 7/1/22 1,279,938
- --------------------------------------------------------------------------------
$ 2,283,778
- --------------------------------------------------------------------------------
Special Tax Revenue -- 1.2%
- --------------------------------------------------------------------------------
Baa1 A $ 500 Commonwealth of Puerto Rico
Highway and Transportation
Authority, 5.00%, 7/1/36 $ 486,660
NR NR 750 Virgin Islands Public Finance
Authority, 7.25%, 10/1/18 841,935
- --------------------------------------------------------------------------------
$ 1,328,595
- --------------------------------------------------------------------------------
Water and Sewer -- 1.0%
- --------------------------------------------------------------------------------
Aa2 AA $1,000 Maryland Water Quality
Financing Administration
Revolving Loan Fund,
6.55%, 9/1/14 $ 1,100,490
- --------------------------------------------------------------------------------
$ 1,100,490
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $100,786,895) $ 107,718,428
- --------------------------------------------------------------------------------
See notes to financial statements
73
<PAGE>
Maryland Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
AMT-Interest earned from these securities may be considered a tax preference
item for the purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Maryland
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1998, 40.1% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.3% to 21.2% of total investments.
/(1)/ When-issued security.
/(2)/ Security has been segregated to cover when-issued securities.
/(3)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(4)/ Security has been issued as an inverse floater bond.
See notes to financial statements
74
<PAGE>
Missouri Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
- --------------------------------------------------------------------------
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Electric Utilities -- 3.5%
- --------------------------------------------------------------------------
NR BBB $1,010 Guam Power Authority
Revenue Bonds, 6.30%,
10/1/22 $ 1,075,478
Baa1 BBB+ 1,500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 1,667,430
- --------------------------------------------------------------------------
$ 2,742,908
- --------------------------------------------------------------------------
Escrowed / Prerefunded -- 2.5%
- --------------------------------------------------------------------------
NR AAA $ 500 Commonwealth of Puerto
Rico, "RIBS", (AMBAC),
Variable
Rate, 7/1/15/(1)/ $ 585,625
Aaa AAA 575 Missouri Health and
Education Authority, (Saint
Louis Children's), (MBIA),
0.00%, 5/15/08 357,897
NR AAA 1,000 Saint Louis County,
Mortgage Revenue, (GNMA),
(AMT), 5.40%, 1/1/16 1,035,160
- --------------------------------------------------------------------------
$ 1,978,682
- --------------------------------------------------------------------------
Hospitals -- 16.1%
- --------------------------------------------------------------------------
Aa2 AA $3,250 Missouri Health and
Education Authority,
(Barnes Jewish Christian),
5.25%, 5/15/14 $ 3,361,248
Baa NR 2,000 Missouri Health and
Education Authority,
(Jefferson Memorial
Hospital), 6.00%, 8/15/23 2,094,780
Baa NR 1,900 Missouri Health and
Education Authority,
(Jefferson Memorial
Hospital), 6.80%, 5/15/25 2,085,307
NR BBB+ 1,500 Missouri Health and
Education Authority, (Lake
of the Ozarks), 6.50%,
2/15/21 1,640,100
Aa1 AA+ 1,000 Missouri Health and
Education Authority,
(Sisters of Mercy),
6.25%, 6/1/15 1,069,130
NR BBB+ 1,000 Missouri Health And
Educational Facilities
Authority, (Freeman Health
Systems Project), 5.25%,
2/15/18 989,250
NR BBB- 1,250 West Plains, MO, Industrial
Development Authority,
(Ozarks Medical Center),
5.65%, 11/15/22 1,271,325
- --------------------------------------------------------------------------
$12,511,140
- --------------------------------------------------------------------------
Housing -- 3.3%
- --------------------------------------------------------------------------
NR AAA $ 935 Missouri Housing
Development Authority,
Single Family Mortgage
Revenue, (GNMA), 6.45%,
9/1/27 $ 995,962
NR AAA 535 Missouri Housing
Development Authority,
Single Family Mortgage
Revenue, (GNMA), (AMT),
6.75%, 6/1/24 567,897
NR AAA 915 Missouri Housing
Development Authority,
Single Family Mortgage
Revenue, (GNMA), (AMT),
7.25%, 9/1/26 1,028,433
- --------------------------------------------------------------------------
$ 2,592,292
- --------------------------------------------------------------------------
Industrial Development Revenue / Pollution
Control Revenue -- 13.9%
- --------------------------------------------------------------------------
NR BB- $1,035 Jefferson County, (Kmart
Corporation), 6.40%, 8/1/08 $ 1,094,347
NR NR 1,280 Kansas City, Industrial
Development Authority,
(Airline Cargo Facilities),
8.50%, 1/1/17
A3 NR 1,200 Missouri Environmental 1,453,414
Improvement and Energy
Resources Authority,
(American Cyanamid
Company), 5.80%, 9/1/09
Baa3 BBB- 2,750 Puerto Rico Port Authority, 1,330,068
(American Airlines), (AMT),
6.25%, 6/1/26
A1 A+ 3,750 Saint Louis Industrial 2,988,288
Development Authority,
(Anheuser-Busch), (AMT),
5.875%, 11/1/26 3,960,712
- --------------------------------------------------------------------------
$10,826,829
- --------------------------------------------------------------------------
Insured-Education -- 3.5%
- --------------------------------------------------------------------------
Aaa AAA $2,750 Missouri Health and
Education, (Saint Louis
University), (AMBAC),
5.20%, 10/1/26 $ 2,733,638
- --------------------------------------------------------------------------
$ 2,733,638
- --------------------------------------------------------------------------
Insured-Electric Utilities -- 8.2%
- --------------------------------------------------------------------------
Aaa AAA $1,000 City of Sikeston, Electric
System, (MBIA), 5.00%,
6/1/22 $ 983,360
Aaa AAA 4,500 Missouri Environmental
Improvement and Energy
Resources Authority, (Union
Electric), (AMBAC), (AMT),
5.45%, 10/1/28 4,586,084
See notes to financial statements
75
<PAGE>
Missouri Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Insured-Electric Utilities (continued)
- --------------------------------------------------------------------------
Aaa AAA $ 700 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03/(1)/ $ 805,875
- --------------------------------------------------------------------------
$ 6,375,319
- --------------------------------------------------------------------------
Insured-General Obligations -- 0.7%
- --------------------------------------------------------------------------
Aaa AAA $ 500 Commonwealth of Puerto
Rico, (FSA), Variable Rate,
8.998%, 7/1/22/(1)/ $ 572,500
- --------------------------------------------------------------------------
$ 572,500
- --------------------------------------------------------------------------
Insured-Hospitals -- 13.9%
- --------------------------------------------------------------------------
Aaa AAA $1,000 Jackson County, Saint
Joseph's Health System,
(MBIA), 6.50%, 7/1/12 $ 1,093,290
Aaa AAA 800 Jackson County, Saint
Joseph's Health System,
(MBIA), 6.50%, 7/1/19 876,296
Aaa AAA 1,500 Missouri Health and
Education Authority,
(AMBAC), 6.35%, 11/15/17 1,649,025
Aaa AAA 9,500 Missouri Health and
Education Authority,
(Lester Cox Medical
Center), (MBIA), 0.00%,
9/1/20 2,984,615
Aaa AAA 2,900 Missouri Health and
Education Authority,
(Lester Cox Medical
Center), (MBIA), 5.35%,
6/1/10 3,108,916
Aaa AAA 1,000 Missouri Health and
Education Authority,
(Sisters of Saint Mary),
(MBIA), 6.25%, 6/1/16 1,088,520
- --------------------------------------------------------------------------
$10,800,662
- --------------------------------------------------------------------------
Insured-Housing -- 2.1%
- --------------------------------------------------------------------------
Aaa AAA $1,500 SCA MFMR Receipts,
Springfield, MO, (FSA),
7.10%, 1/1/30 $ 1,641,375
- --------------------------------------------------------------------------
$ 1,641,375
- --------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of
Participation -- 3.3%
- --------------------------------------------------------------------------
Aaa AAA $1,400 Kansas City Municipal
Assistance Corporation,
Bartle Hall Convention,
(AMBAC), 5.00%, 4/15/20 $ 1,377,824
Aaa AAA 600 Kansas City School
District, Building
Corporation, (FGIC), 6.50%,
2/1/08 648,696
Aaa AAA 500 Saint Charles County,
Public Facilities Authority,
(FGIC), 6.375%, 3/15/07 547,375
- --------------------------------------------------------------------------
$ 2,573,895
- --------------------------------------------------------------------------
Insured-Transportation -- 1.3%
- --------------------------------------------------------------------------
Aaa AAA $ 910 Saint Louis, MO, Airport
Revenue, (Lambert
International Airport), $ 1,027,108
(FGIC), 6.00%, 7/1/14
- --------------------------------------------------------------------------
$ 1,027,108
- --------------------------------------------------------------------------
Insured-Water and Sewer -- 1.1%
- --------------------------------------------------------------------------
Aaa AAA $ 750 City of Saint Louis,
(FGIC), 6.00%, 7/1/14 $ 821,445
- --------------------------------------------------------------------------
$ 821,445
- --------------------------------------------------------------------------
Lease Revenue/
Certificates of Participation -- 8.0%
- --------------------------------------------------------------------------
A BBB+ $3,000 Saint Louis County,
Regional Convention and
Sports Complex Authority,
5.50%, 8/15/13 $ 3,047,610
A BBB+ 1,000 Saint Louis County,
Regional Convention and
Sports Complex Authority,
5.75%, 8/15/21 1,027,430
NR NR 75 Saint Louis, MO, Regional
Convention and Sports
Complex, 7.90%, 8/15/21 83,997
A1 A+ 2,000 State of Missouri, Regional
Convention and Sports
Complex Authority, 5.50%,
8/15/21 2,035,460
- --------------------------------------------------------------------------
$ 6,194,497
- --------------------------------------------------------------------------
Life Care -- 4.5%
- --------------------------------------------------------------------------
Baa1 NR $ 300 Cass County, Fox Springs
Living Center, 7.375%,
10/1/22 $ 331,860
NR NR 915 Kansas City, MO, Industrial
Development Authority,
(Kingswood United Methodist
Manor), 9.00%, 11/15/13 1,059,332
See notes to financial statements
76
<PAGE>
Missouri Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Life Care (continued)
- --------------------------------------------------------------------------------
NR NR $2,000 Missouri Health and
Education Authority,
(Lutheran Senior Services),
6.375%, 2/1/27 $ 2,116,100
- --------------------------------------------------------------------------------
$ 3,507,292
- --------------------------------------------------------------------------------
Nursing Homes -- 3.5%
- --------------------------------------------------------------------------------
NR NR $1,000 Kansas City, Industrial
Development Authority,
(Beverly Enterprises),
8.00%, 12/1/02 $ 1,078,200
NR NR 500 Missouri Health and
Education Authority,
(Bethesda Health Group of
Saint Louis Inc.), 6.625%,
8/15/05 533,425
NR NR 1,000 Missouri Health and
Education Authority,
(Bethesda Health Group of
Saint Louis, Inc.), 7.50%,
8/15/12 1,126,030
- --------------------------------------------------------------------------------
$ 2,737,655
- --------------------------------------------------------------------------------
Pooled Loans -- 3.6%
- --------------------------------------------------------------------------------
A NR $2,750 Missouri Higher Education
Loan Authority, Student
Loan, (AMT), 5.45%, 2/15/09 $ 2,787,153
- --------------------------------------------------------------------------------
$ 2,787,153
- --------------------------------------------------------------------------------
Special Tax Revenue -- 2.4%
- --------------------------------------------------------------------------------
Baa1 A $1,000 Puerto Rico, Highway and
Transportation Authority,
6.625%, 7/1/12 $ 1,101,130
NR NR 650 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 729,677
- --------------------------------------------------------------------------------
$ 1,830,807
- --------------------------------------------------------------------------------
Transportation -- 1.5%
- --------------------------------------------------------------------------------
NR NR $1,000 Lake of The Ozarks
Community Bridge
Corporation, 6.40%,
12/1/25/(2)/ $ 1,158,080
- --------------------------------------------------------------------------------
$ 1,158,080
- --------------------------------------------------------------------------------
Water and Sewer -- 3.1%
- --------------------------------------------------------------------------------
Aa1 NR $1,000 Missouri Environmental
Improvement and Energy
Resources Authority, 0.00%,
1/1/14 $ 455,860
Aa1 NR 500 Missouri Environmental
Improvement and Energy
Resources Authority, 6.55%,
7/1/14 548,245
Aa1 NR 1,250 Missouri Environmental
Improvement and Energy
Resources Authority, 7.20%,
7/1/16 1,435,263
- --------------------------------------------------------------------------------
$ 2,439,368
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $70,126,590) $77,852,645
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Missouri
municipalities. The ability of the issuers of the debt securities to
meet their obligations may be affected by economic developments in a
specific industry or municipality. In order to reduce the risk
associated with such economic developments, at February 28, 1998, 35.3%
of the securities in the portfolio of investments are backed by bond
insurance of various financial institutions and financial guaranty
assurance agencies. The aggregate percentage by financial institution
ranged from 3.4% to 15.4% of total investments.
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
77
<PAGE>
North Carolina Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 3.0%
- --------------------------------------------------------------------------------
Aa1 AA+ $1,000 North Carolina Educational
(Duke University), 6.75%,
10/1/21 $ 1,096,850
Aa2 AA 2,000 University of North
Carolina at Chapel Hill,
0.00%, 8/1/17 756,120
Aa2 AA 2,500 University of North
Carolina at Chapel Hill,
0.00%, 8/1/19 847,975
Aa3 AA 1,935 University of North
Carolina at Chapel Hill,
5.00%, 2/15/29 1,887,341
- --------------------------------------------------------------------------------
$ 4,588,286
- --------------------------------------------------------------------------------
Electric Utilities -- 4.9%
- --------------------------------------------------------------------------------
Baa1 BBB $5,000 North Carolina Municipal
Power Authority, (Eastern
Power), 6.125%, 1/1/09 $ 5,439,850
Baa1 BBB+ 2,000 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 746,500
Baa1 BBB+ 2,000 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 740,880
Baa1 BBB+ 365 Puerto Rico Electric Power
Authority, 7.125%, 7/1/14 385,148
NR NR 240 Virgin Islands Water and
Power Authority, 7.40%,
7/1/11 262,908
- --------------------------------------------------------------------------------
$ 7,575,286
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.3%
- --------------------------------------------------------------------------------
NR AAA $1,000 Commonwealth of Puerto
Rico, "RIBS", (AMBAC),
Variable Rate, 7/1/15/(1)/ $ 1,171,250
Baa1 AAA 635 Puerto Rico Electric Power
Authority, Prerefunded to
7/1/99, 7.125%, 7/1/14 672,598
NR AAA 150 Puerto Rico General
Obligations, Prerefunded
to 7/1/00, 7.30%, 7/1/20 164,352
- --------------------------------------------------------------------------------
$ 2,008,200
- --------------------------------------------------------------------------------
General Obligations -- 3.6%
- --------------------------------------------------------------------------------
Baa1 A $ 500 Commonwealth of Puerto
Rico, 0.00%, 7/1/17 $ 188,390
Aa1 AAA 700 Durham, Public
Improvement, 4.70%, 3/1/17/(2)/ 678,594
A A- 175 Eden, Water and Sewer
Bonds, (AMT), 6.75%, 6/1/08 192,276
Aaa AAA 3,550 North Carolina Capital
Improvements, 4.75%, 2/1/12 3,560,650
Baa1 A 1,000 Puerto Rico Public
Buildings Authority,
5.25%, 7/1/21 999,930
- --------------------------------------------------------------------------------
$ 5,619,840
- --------------------------------------------------------------------------------
Hospitals -- 15.4%
- --------------------------------------------------------------------------------
Aa3 AA $2,090 Charlotte-Mecklenberg
Hospital, 0.00%, 1/1/06 $ 1,491,215
Aa3 AA 2,000 Charlotte-Mecklenberg
Hospital, 5.875%, 1/15/26 2,122,220
Aa3 AA 7,750 Charlotte-Mecklenberg
Hospital, (Carolinas
Healthcare Systems-Class
A), 5.125%, 1/15/22/(3)/ 7,660,099
Aa3 AA 3,500 North Carolina Medical
Care Commission, (Duke
Univ. Hosp.), 0.00%, 6/1/09 2,033,640
Aa3 AA 1,750 North Carolina Medical
Care Commission, (Duke
Univ. Hosp.), 5.25%, 6/1/21 1,754,043
Aa3 AA 2,000 North Carolina Medical
Care Commission, (North
Carolina Baptist
Hospital), 6.00%, 6/1/22 2,124,000
Aa3 AA 1,700 North Carolina Medical
Care Commission,
(Presbyterian Health
Services), 6.00%, 10/1/24 1,810,466
A1 A+ 2,000 North Carolina Medical
Care Commission, (Rex
Hospital), 6.125%, 6/1/10 2,153,880
NR BBB+ 2,500 North Carolina Medical
Care Commission,
(Roanoke-Chowan Hospital),
7.75%, 10/1/19 2,649,150
- --------------------------------------------------------------------------------
$ 23,798,713
- --------------------------------------------------------------------------------
Housing -- 13.8%
- --------------------------------------------------------------------------------
NR AAA $1,900 Charlotte Housing
Authority, Double Oaks,
FHA, (FNMA), 7.35%, 5/15/26 $ 2,098,341
Aa2 AA 1,500 North Carolina Housing
Finance Agency , Single
Family Mortgage Revenue,
(AMT), 6.30%, 3/1/26 1,587,870
See notes to financial statements
78
<PAGE>
North Carolina Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Housing (continued)
- --------------------------------------------------------------------------------
Aa2 AA $2,250 North Carolina Housing
Finance Agency,
Multifamily Mortgage
Revenue, 6.70%, 1/1/26 $ 2,424,645
Aa2 AA 4,145 North Carolina Housing
Finance Agency,
Multifamily Mortgage
Revenue, 6.85%, 7/1/13 4,443,689
Aa2 AA 1,945 North Carolina Housing
Finance Agency,
Multifamily Mortgage
Revenue, (AMT), 6.45%, 9/1/27 2,074,984
Aa AA 1,250 North Carolina Housing
Finance Agency, Single
Family Mortgage Revenue,
(AMT), 6.20%, 9/1/27 1,310,600
Aa AA 2,080 North Carolina Housing
Finance Agency, Single
Family Mortgage Revenue,
(AMT), 6.60%, 9/1/26 2,217,842
Aa2 AA 3,880 North Carolina Housing
Finance Agency, Single
Family Mortgage Revenue,
(AMT), 6.70%, 9/1/26 4,148,884
Aa AA 785 North Carolina Housing
Finance Agency, Single
Family Mortgage Revenue,
(AMT), 7.05%, 9/1/20 837,375
Aaa AAA 125 Puerto Rico Housing
Finance Corp., Single
Family Mortgage Revenue,
(GNMA), 6.85%, 10/15/23 132,854
- --------------------------------------------------------------------------------
$ 21,277,084
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 14.7%
- --------------------------------------------------------------------------------
A2 A $1,015 Chatham County Industrial
Facilities and Pollution,
(Carolina Power and
Light), 6.30%, 6/15/14 $ 1,088,851
Baa1 NR 1,350 Haywood County Industrial
Development Authority,
(Champion International
Corporation), 6.25%, 9/1/25 1,463,481
Baa1 BBB 2,750 Haywood County Industrial
Development Authority,
(Champion International
Corporation), (AMT),
5.50%, 10/1/18/(4)/ 2,815,725
Baa1 BBB 1,500 Haywood County Industrial
Development Authority,
(Champion International
Corporation), (AMT),
5.75%, 12/1/25 1,567,305
A2 A 3,750 Martin County Industrial
Development Authority,
(Weyerhaeuser Company),
(AMT), 6.80%, 5/1/24 4,179,413
Baa2 BBB 2,500 New Hanover County,
(Occidental Petroleum
Corporation), 6.70%, 7/1/19 2,693,350
Baa3 BBB- 6,155 Puerto Rico Port
Authority, (American
Airlines), (AMT), 6.25%,
6/1/26/(3)/ 6,688,331
Baa3 BBB- 1,150 Puerto Rico Port
Authority, (American
Airlines), (AMT), 6.30%,
6/1/23 1,229,143
NR AA- 850 Robeson County, Industrial
Facilities and Pollution
Control Financing
Authority, (Campbell Soup
Company), 6.40%, 12/1/06 973,344
- --------------------------------------------------------------------------------
$ 22,698,943
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 7.7%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Fayetteville, NC, Public
Works Commission Revenue,
(FGIC), 4.75%, 3/1/14 $ 1,956,120
Aaa AAA 1,500 North Carolina Eastern
Municipal Power Authority,
(FSA), Variable Rate, 1/1/19/(1)/ 1,593,750
Aaa AAA 2,320 North Carolina Eastern
Municipal Power Authority,
(MBIA), 5.375%, 1/1/24 2,371,898
Aaa AAA 4,000 North Carolina Municipal
Power Authority, (Catawba
Electric), (MBIA),
Variable Rate, 1/1/12/(1)/ 4,350,000
Aaa AAA 1,400 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/02/(1)/ 1,575,000
- --------------------------------------------------------------------------------
$ 11,846,768
- --------------------------------------------------------------------------------
Insured-General Obligations -- 2.6%
- --------------------------------------------------------------------------------
Aaa AAA $3,500 Puerto Rico, (FSA),
Variable Rate, 7/1/22/(1)/ $ 4,007,500
- --------------------------------------------------------------------------------
$ 4,007,500
- --------------------------------------------------------------------------------
Insured-Hospitals -- 7.6%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Cumberland County
Hospital, (MBIA), 0.00%,
10/1/09 $ 294,430
See notes to financial statements
79
<PAGE>
North Carolina Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Hospitals (continued)
- --------------------------------------------------------------------------------
Aaa AAA $5,000 North Carolina Medical
Care Commission Hospital
Revenue, (Wake County
Hospital), (MBIA), 5.375%,
10/1/26 $ 5,079,550
Aaa AAA 935 North Carolina Medical
Care Commission, (Memorial
Mission Hospital), (FSA),
0.00%, 10/1/06 640,522
Aaa AAA 5,000 North Carolina Medical
Care Commission, (Saint
Joseph's Medical Center),
(AMBAC), 5.10%, 10/1/14 5,054,550
Aaa AAA 1,500 North Carolina Medical
Care Commission, (Wilson
Memorial Hospital),
(AMBAC), 0.00%, 11/1/15 619,020
- --------------------------------------------------------------------------------
$ 11,688,072
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 4.9%
- --------------------------------------------------------------------------------
Aaa AAA $2,150 Charlotte, Convention
Facility, (AMBAC), 5.25%,
12/1/13 $ 2,197,924
Aaa AAA 1,575 Franklin, (FGIC), 6.625%,
6/1/14 1,763,039
Aaa AAA 1,000 Mooresville School
District, (AMBAC), 6.35%,
10/1/14 1,099,720
Aaa AAA 1,000 New Hanover County, NC,
(New Hanover Project),
(MBIA), 5.00%, 12/1/17 986,340
Aaa AAA 1,500 Pasquotank County, NC,
Public Schools Project,
(MBIA), 5.00%, 6/1/15 1,494,735
- --------------------------------------------------------------------------------
$ 7,541,758
- --------------------------------------------------------------------------------
Lease Revenue/
Certificates of Participation -- 8.6%
- --------------------------------------------------------------------------------
A1 A $2,065 Buncombe County,
6.625%, 12/1/10 $ 2,242,631
A3 A- 6,000 Columbus County, NC,
Industrial Facility and
Pollution Control
Financing, (International
Paper Co., Project-Series
A), (AMT), 6.15%, 4/1/21 6,454,620
NR AA 825 Durham County, 6.10%, 7/15/07 896,363
Aa3 NR 985 Durham County, 6.75%, 12/1/11 1,095,064
A1 AA 2,400 Greensboro, Greensboro
Coliseum Arena, 6.75%, 12/1/09 2,613,096
- --------------------------------------------------------------------------------
$ 13,301,774
- --------------------------------------------------------------------------------
Special Tax Revenue -- 9.9%
- --------------------------------------------------------------------------------
Baa1 A $3,900 Commonwealth of Puerto
Rico Highway and
Transportation Authority,
5.00%, 7/1/36 $ 3,795,948
Baa1 A 4,000 Commonwealth of Puerto
Rico Highway and
Transportation Authority,
5.25%, 7/1/20 3,984,080
Baa1 A 1,490 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/15 1,582,767
Baa1 A 2,875 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/36 3,003,771
NR NR 2,550 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 2,862,579
- --------------------------------------------------------------------------------
$ 15,229,145
- --------------------------------------------------------------------------------
Transportation -- 0.7%
- --------------------------------------------------------------------------------
NR BBB $1,000 Guam Airport Authority,
(AMT), 6.70%, 10/1/23 $ 1,098,210
- --------------------------------------------------------------------------------
$ 1,098,210
- --------------------------------------------------------------------------------
Water and Sewer -- 1.3%
- --------------------------------------------------------------------------------
Aa2 AA $2,000 Orange County, Water and
Sewer, 5.20%, 7/1/16 $ 2,014,420
- --------------------------------------------------------------------------------
$ 2,014,420
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $139,689,431) $ 154,293,999
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
See notes to financial statements
80
<PAGE>
North Carolina Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
The Portfolio invests primarily in debt securities issued by North Carolina
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1998, 23.6% 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 2.5% to 9.6% of total investments.
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ When-issued security.
/(3)/ Security has been segregated to cover when-issued securities.
/(4)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
81
<PAGE>
Oregon Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Cogeneration -- 2.0%
- --------------------------------------------------------------------------
NR NR $2,000 Western Generation Agency
(Wauna Cogeneration),
(AMT), 7.40%, 1/1/16 $ 2,205,220
- --------------------------------------------------------------------------
$ 2,205,220
- --------------------------------------------------------------------------
Education -- 1.0%
- --------------------------------------------------------------------------
A2 NR $1,000 City of Salem, Educational
Facilities (Willamette
University), 6.10%, 4/1/14 $ 1,063,440
- --------------------------------------------------------------------------
$ 1,063,440
- --------------------------------------------------------------------------
Electric Utilities -- 5.4%
- --------------------------------------------------------------------------
Aa1 AA- $4,000 City of Eugene, Trojan
Nuclear Power, 5.90%,
9/1/09/(1)/ $ 4,005,640
A A+ 500 Commonwealth of Puerto
Rico, Telephone Authority,
Variable Rate, 1/1/20/(2)/ 561,875
Aa1 AA- 1,250 Northern Wasco County,
McNary Dam Fishway
Hydroelectric, Bonneville
Power Administration,
5.20%, 12/1/24 1,255,438
- --------------------------------------------------------------------------
$ 5,822,953
- --------------------------------------------------------------------------
Escrowed / Prerefunded -- 7.1%
- --------------------------------------------------------------------------
A1 AAA $2,000 City of Medford, Rogue
Valley Memorial Hospital,
6.25%, 12/1/07 $ 2,237,120
NR AAA 2,000 Commonwealth of Puerto
Rico, "RIBS", (AMBAC),
Variable Rate, 7/1/15/(2)/ 2,342,500
Aa A 1,500 Multnomah County, Juvenile
Justice Complex, 6.00%,
8/1/12 1,624,590
NR A+ 1,250 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority (Reed College),
6.75%, 7/1/21 1,375,725
- --------------------------------------------------------------------------
$ 7,579,935
- --------------------------------------------------------------------------
General Obligations -- 13.1%
- --------------------------------------------------------------------------
Baa1 A $1,050 Commonwealth of Puerto
Rico, 0.00%, 7/1/17 $ 395,619
Aa NR 1,000 Lane County, City of
Eugene, School District,
5.375%, 7/1/13 1,019,200
Aa2 AA 1,000 State of Oregon, Board of
Higher Education, 6.00%,
10/15/18 1,064,190
Aa2 AA 1,250 State of Oregon, Elderly
and Disabled Housing,
6.375%, 8/1/24 1,361,513
Aa2 AA 4,610 State of Oregon, Elderly
and Disabled Housing,
(AMT), 5.65%, 8/1/26 4,825,840
Aa2 AA 2,000 State of Oregon, Veterans
Welfare, Series 76A,
5.90%, 10/1/17 2,106,440
Aa2 AA 1,190 State of Oregon, Veterans'
Welfare Bonds, 5.85%,
10/1/15 1,240,480
Aa2 AA 1,460 State of Oregon, Veterans'
Welfare Bonds, 5.875%,
10/1/18 1,519,072
Aa AA+ 500 Tri-County Metropolitan
Transportation District,
Light Rail Extension,
6.00%, 7/1/12 531,145
- --------------------------------------------------------------------------
$ 14,063,499
- --------------------------------------------------------------------------
Hospitals -- 1.0%
- --------------------------------------------------------------------------
A2 A+ $1,000 Clackamas County, Kaiser
Permanente, 6.25%, 4/1/21 $ 1,059,940
- --------------------------------------------------------------------------
$ 1,059,940
- --------------------------------------------------------------------------
Housing -- 34.8%
- --------------------------------------------------------------------------
Aaa NR $2,875 City of Portland Housing
Authority, Multifamily
Mortgage Revenue, Cherry
Blossom Apartments, (AMT),
6.20%, 12/20/36 $ 3,027,433
NR A 1,750 City of Portland Housing
Authority, Multifamily
Mortgage Revenue,
Riverwood, 6.00%, 1/1/19 1,797,145
NR NR 2,105 Hood River County, OR,
Health Facility Authority
Elderly Housing Revenue
(Down Manor Project),
6.50%, 1/1/17 2,198,125
NR A 1,000 Portland, OR Housing
Authority, 6.00%, 1/1/27 1,026,110
See notes to financial statements
82
<PAGE>
Oregon Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Housing (continued)
- --------------------------------------------------------------------------------
Aa3 NR $5,810 Portland, OR, Housing
Authority, Multifamily
Revenue Housing (Berry
Ridge Project), (AMT), $ 6,115,256
6.30%, 5/1/29
Aa2 NR 1,975 State of Oregon Housing
and Community Services
Department, Single Family
Mortgage Revenue, (AMT), 2,089,175
6.20%, 7/1/27
Aa2 NR 3,500 State of Oregon Housing
and Community Services
Department, Single Family
Mortgage Revenue, (AMT), 3,747,380
6.375%, 7/1/27
Aa2 NR 1,985 State of Oregon Housing
and Community Services
Department, Single Family
Mortgage Revenue, (AMT), 2,118,471
6.40%, 7/1/26
Aa2 NR 2,500 State of Oregon Housing
and Community Services
Department, Single Family
Mortgage Revenue, (AMT), 2,677,150
6.45%, 7/1/26
Aa2 NR 1,500 State of Oregon, Housing
and Community Services
Department, Multifamily
Revenue (AMT), 6.20%,
7/1/28 1,584,285
Aa2 NR 2,500 State of Oregon, Housing
and Community Services
Department, Multifamily
Revenue, Series A, (AMT),
5.70%, 7/1/29 2,547,925
Aa2 NR 4,700 State of Oregon, Housing
and Community Services
Department, Single Family
Mortgage Revenue, Series
A, (AMT), 6.20%, 7/1/27 4,986,746
Aa3 NR 2,000 Washington County, OR,
Housing Authority,
Multifamily Revenue
(Bethany Meadows Project),
(AMT), 5.85%, 9/1/27 2,048,820
Aa3 NR 1,390 Washington County, OR,
Housing Authority,
Multifamily Revenue,
(Bethany Meadows Project),
(AMT), 5.75%, 9/1/17 1,424,111
- --------------------------------------------------------------------------------
$ 37,388,132
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 10.1%
- --------------------------------------------------------------------------------
Baa2 BBB- $3,500 Oregon Economic
Development Authority,
Georgia Pacific, (AMT),
6.35%, 8/1/25 $ 3,748,605
NR BBB- $5,000 Port of Astoria, Pollution
Control Revenue, James
River, 6.55%, 2/1/15 $ 5,337,799
NR NR 750 Port of Portland, Ash
Grove Cement Company,
7.25%, 10/1/09 813,773
NR NR 1,000 Port of Portland, North
Portland Crown Zellerbach
Corporation, 6.125%, 5/15/08 1,002,530
- --------------------------------------------------------------------------------
$ 10,902,707
- --------------------------------------------------------------------------------
Insured-Education -- 2.6%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority (Lewis and Clark
College) (MBIA), 6.00%,
10/1/13 $ 1,099,640
Aaa AAA 1,500 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority (Lewis and Clark
College) (MBIA), 6.125%,
10/1/24 1,643,625
- --------------------------------------------------------------------------------
$ 2,743,265
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 4.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 City of Eugene, Electric
Utility Revenue (MBIA),
5.80%, 8/1/22 $ 1,096,050
Aaa AAA 1,600 Commonwealth of Puerto
Rico, Telephone Authority,
(MBIA), Variable Rate,
1/16/15/(2)/ 1,722,000
Aaa AAA 1,000 Emerald People's Utility
District, Electric System
(AMBAC), 5.75%, 11/1/16 1,051,900
Aaa AAA 500 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03/(2)/ 575,625
- --------------------------------------------------------------------------------
$ 4,445,575
- --------------------------------------------------------------------------------
Insured-General Obligations -- 1.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Yamhill, Clackamas and
Washington Counties,
Newberg School District $ 1,049,510
(FSA), 5.50%, 6/1/10
- --------------------------------------------------------------------------------
$ 1,049,510
- --------------------------------------------------------------------------------
See notes to financial statements
83
<PAGE>
Oregon Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 2.8%
- --------------------------------------------------------------------------------
Aaa AAA $1,250 State of Oregon,
Department of General
Services, Real Property
Financing Program (AMBAC),
6.25%, 9/1/15 $ 1,355,025
Aaa AAA 1,500 State of Oregon,
Department of General
Services, Real Property
Financing Program (MBIA),
6.25%, 11/1/19 1,650,660
- --------------------------------------------------------------------------------
$ 3,005,685
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 0.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 City of Portland, Arena
Natural Gas Tax Revenue
(AMBAC), 0.00%, 6/1/17 $ 336,020
- --------------------------------------------------------------------------------
$ 336,020
- --------------------------------------------------------------------------------
Insured-Transportation -- 5.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Oregon Department of
Transportation, Westside
Light Rail (MBIA), 6.25%,
6/1/09 $ 1,676,655
Aaa AAA 1,000 Port of Portland, Portland
International Airport
(AMBAC), (AMT), 6.25%,
7/1/18 1,074,820
Aaa AAA 2,750 Port of Portland, Portland
International Airport,
(AMT), (FGIC), 6.00%,
7/1/23 2,928,393
- --------------------------------------------------------------------------------
$ 5,679,868
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 1.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,375 Washington County, Unified
Sewerage Agency, Senior
Lien (AMBAC), 6.125%,
10/1/12 $ 1,524,765
- --------------------------------------------------------------------------------
$ 1,524,765
- --------------------------------------------------------------------------------
Special Tax Revenue -- 4.4%
- --------------------------------------------------------------------------------
A NR $1,000 City of Portland, Urban
Renewal and Redevelopment
Bonds, Downtown Waterfront,
6.40%, 6/1/08 $ 1,074,850
Baa1 A 500 Commonwealth of Puerto
Rico Highway and
Transportation Authority,
6.375%, 7/1/08 541,735
A1 AA+ $3,000 Tri-County Metropolitan
Transportation District,
Limited Tax Pledge, 5.70%,
8/1/13 $ 3,156,480
- --------------------------------------------------------------------------------
$ 4,773,065
- --------------------------------------------------------------------------------
Transportation -- 1.5%
- --------------------------------------------------------------------------------
Baa3 BBB- $1,500 Port of Portland, Special
Obligation Revenue Bonds
(Delta Airlines
Incorporated), (AMT),
6.20%, 9/1/22 $ 1,569,735
- --------------------------------------------------------------------------------
$ 1,569,735
- --------------------------------------------------------------------------------
Water and Sewer -- 2.1%
- --------------------------------------------------------------------------------
NR A+ $2,000 Clackamus County, Water
Revenue, 6.375%, 10/1/14 $ 2,210,700
- --------------------------------------------------------------------------------
$ 2,210,700
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $99,512,231) $ 107,424,014
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative
Minimum Tax.
The Portfolio invests primarily in debt securities issued by Oregon
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1998, 19.7% 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 1.8% to 8.4% of total investments.
/(1)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
See notes to financial statements
84
<PAGE>
South Carolina Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 3.0%
- --------------------------------------------------------------------------------
NR A $1,500 South Carolina Education
Authority, Student Loan, (AMT),
6.30%, 9/1/08 $ 1,599,165
- --------------------------------------------------------------------------------
$ 1,599,165
- --------------------------------------------------------------------------------
Electric Utilities -- 9.1%
- --------------------------------------------------------------------------------
A1 A- $1,650 Berkeley County, SC Electric and
Gas Company, 6.50%, 10/1/14 $ 1,809,176
Baa1 BBB+ 1,400 Puerto Rico Electric Power
Authority, 6.25%, 7/1/17 1,507,730
Baa1 BBB+ 500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 555,810
Aa2 AA- 1,000 South Carolina Public Service
Authority, 5.125%, 1/1/32 967,950
- --------------------------------------------------------------------------------
$ 4,840,666
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 2.3%
- --------------------------------------------------------------------------------
Aaa AAA $ 300 Piedmont Municipal Power Agency
(MBIA), 6.25%, 1/1/09 $ 346,173
Aaa AAA 805 Piedmont Municipal Power Agency,
Electric Revenue, (MBIA),
6.30%, 1/1/14 895,080
- --------------------------------------------------------------------------------
$ 1,241,253
- --------------------------------------------------------------------------------
General Obligations -- 0.3%
- --------------------------------------------------------------------------------
Baa1 A $ 500 Commonwealth of Puerto Rico,
Public Improvement, 0.00%, 7/1/18 $ 178,415
- --------------------------------------------------------------------------------
$ 178,415
- --------------------------------------------------------------------------------
Hospitals -- 3.0%
- --------------------------------------------------------------------------------
A3 NR $1,500 Horry County, SC (Conway
Hospital), 6.75%, 7/1/12/(1)/ $ 1,613,850
- --------------------------------------------------------------------------------
$ 1,613,850
- --------------------------------------------------------------------------------
Housing -- 11.4%
- --------------------------------------------------------------------------------
NR BBB+ $1,000 South Carolina Housing Finance
Authority, Multifamily Mortgage
Revenue (Hunting Ridge) (AMT),
6.75%, 6/1/25 $ 1,062,930
NR AA- $1,780 South Carolina Housing Finance
Authority, Multifamily Mortgage
Revenue (Runaway Bay Apartments),
6.20%, 12/1/20 1,834,984
Aa AA 1,500 South Carolina Housing Finance
Authority, Single Family Mortgage
Revenue, 6.375%, 7/1/16 1,600,185
Aa2 NR 1,500 South Carolina Housing Finance
Authority, Single Family Mortgage
Revenue, 6.45%, 7/1/17 1,602,480
- --------------------------------------------------------------------------------
$ 6,100,579
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 32.5%
- --------------------------------------------------------------------------------
Baa2 BBB $1,890 Aiken County, SC Industrial
Development Board (Beloit
Corporation), 6.00%, 12/1/11 $ 2,050,707
NR BBB+ 1,500 Chester County, SC (Spring
Industries), 7.35%, 2/1/14 1,639,530
A1 AA- 1,500 Darlington County, SC (Nucor
Corporation), (AMT),
5.75%, 8/1/23/(1)/ 1,550,235
A2 A-1 1,500 Darlington County, SC (Power and
Light Company), 6.60%, 11/1/10 1,663,920
A2 A 2,500 Darlington County, SC (Sonoco
Products), 6.00%, 4/1/26 2,661,449
A2 A 500 Darlington County, SC (Sonoco
Products), (AMT), 6.125%, 6/1/25 534,365
NR NR 515 Florence County, SC, (Stone
Container Company), 7.375%,
2/1/07 561,505
A1 A- 2,665 Richland County, SC (Union Camp
Corporation), (AMT),
6.75%, 5/1/22 2,921,185
NR NR 1,500 Spartanburg County, SC Solid
Waste (Bavarian Motor Works
Corporation), (AMT), 7.55%,
11/1/24 1,737,240
A2 A+ 2,000 York County, SC (Hoechst Celanese
Corporation), (AMT),
5.70%, 1/1/24 2,068,800
- --------------------------------------------------------------------------------
$17,388,936
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 5.7%
- --------------------------------------------------------------------------------
Aaa NR $ 500 Edgefield County, SC, Water And
Sewer Authority, (FGIC),
5.00%, 1/1/28/(2)/ $ 486,370
See notes to financial statements
85
<PAGE>
South Carolina Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Electric Utilities (continued)
- --------------------------------------------------------------------------------
Aaa AAA $ 195 Piedmont Municipal Power Agency,
Electric Revenue, (MBIA),
6.30%, 1/1/14 $ 212,987
Aaa AAA 1,250 South Carolina Public Service
Authority (AMBAC), 6.375%, 7/1/21 1,370,913
Aaa AAA 1,000 South Carolina State Public
Service Authority, (MBIA),
5.00%, 1/1/29 969,360
- --------------------------------------------------------------------------------
$ 3,039,630
- --------------------------------------------------------------------------------
Insured-General Obligations -- 2.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Berkeley County, SC School
District (AMBAC), 6.30%, 2/1/16 $ 1,102,560
- --------------------------------------------------------------------------------
$ 1,102,560
- --------------------------------------------------------------------------------
Insured-Hospitals -- 14.5%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Greenwood County, (Self Memorial
Hospital) (FGIC),
5.875%, 10/1/17/(3)/ $ 1,581,045
Aaa AAA 3,000 South Carolina Jobs Economic
Development Authority (Anderson
Area Medical Center) (MBIA),
5.25%, 2/1/26 2,999,879
Aaa AAA 1,000 South Carolina Jobs Economic
Development Authority (Baptist
Hospital) (AMBAC), 5.45%, 8/1/15 1,023,800
Aaa AAA 1,000 South Carolina Jobs Economic
Development Authority (Baptist
Hospital) (AMBAC), Variable
Rate, 8/1/15/(4)/ 1,047,500
NR AAA 1,000 South Carolina Jobs Economic
Development Authority, (Oconee
Memorial Hospital) (CLEE),
6.15%, 3/1/25 1,092,340
- --------------------------------------------------------------------------------
$ 7,744,564
- --------------------------------------------------------------------------------
Insured-Housing -- 2.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 South Carolina Housing Finance
and Development Authority, Single
Family Mortgage Revenue (AMBAC),
(AMT), 5.95%, 7/1/29 $ 1,043,910
- --------------------------------------------------------------------------------
$ 1,043,910
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 3.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Charleston County, SC (MBIA),
6.10%, 6/1/11 $ 548,455
Aaa AAA 1,000 Florence County, SC (Law
Enforcement Center) (AMBAC),
6.00%, 3/1/14 1,085,920
- --------------------------------------------------------------------------------
$ 1,634,375
- --------------------------------------------------------------------------------
Insured-Life Care -- 2.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Florence County, SC, Hospital
Revenue, (McLeod Regional Medical
Center), (MBIA), 5.00%, 11/1/20 $ 1,456,320
- --------------------------------------------------------------------------------
$ 1,456,320
- --------------------------------------------------------------------------------
Lease Revenue/Certificates of Participation -- 5.1%
- --------------------------------------------------------------------------------
Baa NR $ 750 Lexington County School District,
6.90%, 7/1/08 $ 835,388
A3 BBB+ 1,750 Myrtle Beach Convention Center,
6.875%, 7/1/17 1,883,438
- --------------------------------------------------------------------------------
$ 2,718,826
- --------------------------------------------------------------------------------
Solid Waste -- 1.9%
- --------------------------------------------------------------------------------
A3 A- $1,000 Georgetown County, SC,
Environmental Improvement
Revenue, (International Paper
Co.), 5.70%, 10/1/21 $ 1,035,230
- --------------------------------------------------------------------------------
$ 1,035,230
- --------------------------------------------------------------------------------
Transportation -- 1.3%
- --------------------------------------------------------------------------------
Baa1 A $ 750 Puerto Rico, Highway and
Transportation Authority,
4.75%, 7/1/38/(2)/ $ 692,055
- --------------------------------------------------------------------------------
$ 692,055
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $48,723,252) $53,430,334
- --------------------------------------------------------------------------------
See notes to financial statements
86
<PAGE>
South Carolina Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by South Carolina
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1998, 32.4% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance. The aggregate percentage by financial institution
ranged from 0.9% to 14.9% of total investments.
/(1)/ Security has been segregated to cover when-issued securities.
/(2)/ When-issued security.
/(3)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(4)/ Security has been issued as an inverse floater bond.
See notes to financial statements
87
<PAGE>
Tennessee Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Education -- 2.0%
- --------------------------------------------------------------------------
Baa2 NR $1,000 Nashville and Davidson
County (Belmont
University),
6.40%, 12/1/19 $ 1,071,130
- --------------------------------------------------------------------------
$ 1,071,130
- --------------------------------------------------------------------------
Escrowed / Prerefunded -- 3.6%
- --------------------------------------------------------------------------
NR AAA $ 300 Commonwealth of Puerto
Rico, "RIBS", (AMBAC),
Variable Rate, 7/1/15/(1)/ $ 351,375
Aaa AAA 1,500 Shelby County (Lebonheur
Children's Hospital),
(MBIA), 5.50%, 8/15/12 1,573,065
- --------------------------------------------------------------------------
$ 1,924,440
- --------------------------------------------------------------------------
General Obligations -- 3.9%
- --------------------------------------------------------------------------
Aa2 AA $1,000 Metropolitan Government
Nashville and Davidson
County, 5.875%, 5/15/21 $ 1,065,640
Aa2 AA+ 1,000 Shelby County, 5.125%,
3/1/16 1,005,020
- --------------------------------------------------------------------------
$ 2,070,660
- --------------------------------------------------------------------------
Hospitals -- 4.6%
- --------------------------------------------------------------------------
Baa1 NR $ 500 City of Clarksville,
Clarksville Memorial,
6.25%, 7/1/08 $ 536,025
Baa1 NR 500 City of Clarksville,
Clarksville Memorial,
6.375%, 7/1/18 535,030
Baa1 BBB+ 250 Knox County (East Tennessee
Children's), 6.50%, 10/1/12 267,490
NR A- 1,000 Sumner County, Sumner
Regional Health Systems,
7.50%, 11/1/14 1,145,510
- --------------------------------------------------------------------------
$ 2,484,055
- --------------------------------------------------------------------------
Housing -- 15.8%
- --------------------------------------------------------------------------
NR A $ 750 Knoxville Community
Development Corporation
(Clinton Towers),
6.65%, 10/15/10 $ 792,645
NR AAA 500 Knoxville Community
Development Corporation
(Morningside Gardens)
(GNMA), 6.10%, 7/20/20 519,205
NR A 1,500 Nashville and Davidson
County (The Park at
Hermitage), 5.90%, 2/1/19 1,519,800
Aa2 AA $1,000 Tennessee Housing
Development Agency, 5.375%,
7/1/23 $ 1,000,370
Aa2 AA 445 Tennessee Housing
Development Agency,
Homeownership Program,
6.80%, 7/1/17 472,830
Aa AA 1,000 Tennessee Housing
Development Agency,
Homeownership Program,
(AMT), 5.75%, 7/1/24 1,017,270
A1 A+ 1,000 Tennessee Housing
Development Agency,
Mortgage Finance Program,
5.85%, 7/1/13 1,036,710
A1 A+ 2,000 Tennessee Housing
Development Agency,
Mortgage Finance Program,
5.95%, 7/1/28 2,067,020
- --------------------------------------------------------------------------
$ 8,425,850
- --------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 27.0%
- --------------------------------------------------------------------------
Aa3 AA- $1,000 City of Chattanooga (E.I.
du Pont de Nemours and
Co.), 6.35%, 7/1/22 $ 1,086,080
Aa3 AA- 1,000 Humphreys County (E.I. du
Pont de Nemours and Co.),
(AMT), 6.70%, 5/1/24 1,109,300
Aa2 AA 2,000 Loudon County
(Kimberly-Clark Corp.),
(AMT), 6.20%, 2/1/23/(2)/ 2,123,220
A3 A 2,750 Maury County (Saturn
Corp.), 6.50%, 9/1/24 3,028,025
Baa1 BBB 1,500 McMinn County,TN (Calhoun
Newsprint Co. Project -
Bowater Inc.), (AMT),
7.40%, 12/1/22 1,679,160
Baa2 BBB 1,500 Memphis-Shelby County
Airport Authority (Federal
Express Corp.), 6.75%,
9/1/12 1,650,135
Baa2 BBB 1,000 Memphis-Shelby County
Airport Authority (Federal
Express Corp.), (AMT),
6.20%, 7/1/14 1,056,880
NR BBB+ 500 Nashville and Davidson
County (Osco Treatment
Systems), (AMT),
6.00%, 5/1/03 524,680
Baa3 BBB- 1,000 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 1,086,650
A3 NR 1,000 South Fulton County, (Tyson
Foods Co.), (AMT), 6.40%,
10/1/20 1,084,890
- --------------------------------------------------------------------------
$14,429,020
- --------------------------------------------------------------------------
See notes to financial statements
88
<PAGE>
Tennessee Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Insured-Education -- 5.8%
- --------------------------------------------------------------------------
Aaa AAA $ 700 Jackson, TN Health,
Education and Housing
(Lambuth University),
(FSA), 5.90%, 9/1/20 $ 745,584
Aaa AAA 1,000 Metropolitan Nashville
Health and Education
(Meharry Medical College),
(AMBAC), 5.00%, 12/1/24 975,430
Aaa AAA 1,230 Metropolitan Nashville
Health and Education
(Meharry Medical College),
(AMBAC), 6.00%, 12/1/19 1,384,857
- --------------------------------------------------------------------------
$ 3,105,871
- --------------------------------------------------------------------------
Insured-Electric Utilities -- 8.4%
- --------------------------------------------------------------------------
Aaa AAA $ 750 City of Dickson, Electric
System Revenues (MBIA),
5.50%, 9/1/16 $ 791,715
Aaa AAA 1,000 City of Lawrenceburg
Electric Revenues (MBIA),
5.50%, 7/1/26 1,037,550
Aaa AAA 1,000 City of Lawrenceburg
Electric Revenues (MBIA),
6.625%, 7/1/18 1,207,940
Aaa AAA 1,000 Madison County Suburban
Utility District, (MBIA),
5.00%, 2/1/19 982,140
Aaa AAA 400 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03/(1)/ 460,500
- --------------------------------------------------------------------------
$ 4,479,845
- --------------------------------------------------------------------------
Insured-Hospitals -- 6.3%
- --------------------------------------------------------------------------
Aaa AAA $1,000 Chattanooga-Hamilton
County, Tennessee Hospital
Authority, (Erlanger
Medical Center), (MBIA),
5.00%, 10/1/28 $ 966,520
Aaa AAA 500 City of Bristol, Bristol
Memorial (FGIC), 6.75%,
9/1/10 603,255
Aaa AAA 250 City of Chattanooga,
Memorial Hospital (MBIA),
6.625%, 9/1/09 297,695
Aaa AAA 500 City of Johnson, Johnson
City Medical Center (MBIA),
5.00%, 7/1/13 502,680
Aaa AAA 500 Knox County, Fort Sanders
Alliance Obligated Group
(MBIA), 5.25%, 1/1/23 498,585
Aaa AAA 500 Nashville And Davidson
County, Tennessee HEFA,
(Baptist Hospital Inc.),
(MBIA), 4.75%, 11/1/18 474,090
- --------------------------------------------------------------------------
$ 3,342,825
- --------------------------------------------------------------------------
Insured-Housing -- 2.0%
- --------------------------------------------------------------------------
Aaa AAA $1,000 Knox County, SCA Realty
Multifamily Mortgage
Receipts (FSA),
7.125%, 1/1/30 $ 1,095,670
- --------------------------------------------------------------------------
$ 1,095,670
- --------------------------------------------------------------------------
Insured-Special Tax Revenue -- 2.2%
- --------------------------------------------------------------------------
Aaa AAA $1,000 City of Johnson, School
District Sales Tax (AMBAC),
6.70%, 5/1/21 $ 1,162,800
- --------------------------------------------------------------------------
$ 1,162,800
- --------------------------------------------------------------------------
Insured-Transportation -- 2.2%
- --------------------------------------------------------------------------
Aaa AAA $1,000 Memphis-Shelby County
Airport Authority (MBIA),
(AMT), 6.50%, 2/15/08 $ 1,154,710
- --------------------------------------------------------------------------
$ 1,154,710
- --------------------------------------------------------------------------
Insured-Water and Sewer -- 2.7%
- --------------------------------------------------------------------------
Aaa AAA $ 350 Nashville and Davidson
County, Water System
(AMBAC), Variable
Rate, 1/1/22/(1)/ $ 410,375
Aaa AAA 1,000 Nashville and Davidson
County, Water System
(FGIC), 5.20%, 1/1/13 1,048,570
- --------------------------------------------------------------------------
$ 1,458,945
- --------------------------------------------------------------------------
Miscellaneous -- 1.0%
- --------------------------------------------------------------------------
NR NR $ 500 Hardeman County, TN,
(Correctional Facilities
Corp.), 7.75%, 8/1/17 $ 563,825
- --------------------------------------------------------------------------
$ 563,825
- --------------------------------------------------------------------------
Nursing Homes -- 2.1%
- --------------------------------------------------------------------------
NR A+ $1,000 Tennessee State Veterans'
Homes Board, Humboldt,
6.65%, 2/1/14 $ 1,109,250
- --------------------------------------------------------------------------
$ 1,109,250
- --------------------------------------------------------------------------
Pooled Loans -- 3.7%
- --------------------------------------------------------------------------
NR A- $1,200 Tennessee Local Development
Authority, Community
Provider, 6.55%, 10/1/23 $ 1,302,288
See notes to financial statements
89
<PAGE>
Tennessee Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Pooled Loans (continued)
- --------------------------------------------------------------------------
A2 AA- $ 700 Tennessee Local Development
Authority, State Loan
Program, 5.00%, 3/1/15 $ 692,881
- --------------------------------------------------------------------------
$ 1,995,169
- --------------------------------------------------------------------------
Special Tax Revenue -- 2.9%
- --------------------------------------------------------------------------
Baa1 A $1,575 Commonwealth of Puerto Rico
Highway and Transportation
Authority, 5.00%, 7/1/36 $ 1,532,979
- --------------------------------------------------------------------------
$ 1,532,979
- --------------------------------------------------------------------------
Transportation -- 3.8%
- --------------------------------------------------------------------------
NR BBB $1,000 Guam Airport Authority,
(AMT), 6.70%, 10/1/23 $ 1,098,210
NR NR 900 Memphis-Shelby County,
Tennessee Airport
Authority, 6.125%, 12/1/16 921,735
- --------------------------------------------------------------------------
$ 2,019,945
- --------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $49,198,539) $53,426,989
- --------------------------------------------------------------------------
AMT- Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative
Minimum Tax.
The Portfolio invests primarily in debt securities issued by Tennessee
municipalities. The ability of the issuers of the debt securities to meet
their obligations may be affected by economic developments in a specific
industry or municipality. In order to reduce the risk associated with
such economic developments, at February 28, 1998, 33.2% of the securities
in the portfolio of investments are backed by bond insurance of various
financial institutions and financial guaranty assurance agencies. The
aggregate percentage by financial institution ranged from 1.0% to 17.9% of total
investments.
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
90
<PAGE>
Virginia Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 4.1%
- --------------------------------------------------------------------------------
NR A- $2,000 City of Lynchburgh (Randolph-
Macon Woman's College),
5.875%, 9/1/23 $ 2,078,020
Baa3 NR 1,000 Rockingham County,
Industrial Development
Authority (Bridgewater
College), 5.95%, 10/1/13 1,043,320
NR A- 1,570 Virginia College Building
Authority (Hampden-Sydney
College), 6.60%, 9/1/16 1,696,966
NR A+ 1,000 Virginia College Building
Authority (Hampton
University), 5.75%, 4/1/14 1,048,540
NR A+ 400 Virginia College Building
Authority (Hampton
University), 6.50%, 4/1/08 435,944
- --------------------------------------------------------------------------------
$ 6,302,790
- --------------------------------------------------------------------------------
Electric Utilities -- 0.7%
- --------------------------------------------------------------------------------
NR NR $ 965 Virgin Islands Water and
Power Authority, 7.40%, 7/1/11 $ 1,057,109
- --------------------------------------------------------------------------------
$ 1,057,109
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 6.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,665 Arlington County, Industrial
Development Authority (AMBAC),
5.00%, 9/1/21 $ 1,615,716
Aaa NR 1,000 Arlington County, Industrial
Development Authority,
(Arlington Hospital), 7.125%,
9/1/21 1,116,900
A NR 500 Augusta County, Industrial
Development Authority
(Augusta Hospital), 7.00%, 9/1/21 555,375
A2 NR 1,250 City of Martinsville
(Memorial Hospital of
Martinsville and Henry
County), 7.00%, 1/1/06 1,346,475
NR A+ 1,700 City of Virginia Beach,
Water and Sewer System,
6.625%, 2/1/17 1,880,897
A2 NR 2,400 Prince William County,
Industrial Development
Authority (Potomac
Hospital), 6.85%, 10/1/25 2,809,968
- --------------------------------------------------------------------------------
$ 9,325,331
- --------------------------------------------------------------------------------
General Obligations -- 2.0%
- --------------------------------------------------------------------------------
Baa1 A $ 350 Commonwealth of Puerto
Rico, 0.00%, 7/1/04 $ 266,543
Baa1 A 2,000 Commonwealth of Puerto
Rico, 4.50%, 7/1/23 1,806,540
Aaa AAA 1,000 Fairfax County, 5.625%,
6/1/14 1,070,330
- --------------------------------------------------------------------------------
$ 3,143,413
- --------------------------------------------------------------------------------
Hospitals -- 14.0%
- --------------------------------------------------------------------------------
A2 NR $3,800 Albermarle County, Industrial
Development Authority (Martha
Jefferson Hospital), 5.50%,
10/1/20 $ 3,861,028
A2 NR 245 Chesapeake Hospital Authority
(Chesapeake General Hospital),
7.60%, 7/1/00 258,294
Aa2 AA 2,910 Fairfax County, Industrial
Development Authority
(Inova Health System
Hospitals), 5.00%, 8/15/14 2,914,802
Aa2 AA 2,000 Fairfax County, Industrial
Development Authority
(Inova Health System
Hospitals), 5.00%, 8/15/15 1,991,900
Aa2 AA 1,000 Fairfax County, Industrial
Development Authority
(Inova Health System
Hospitals), 6.00%, 8/15/26 1,074,790
NR A- 2,000 Medical College of Hampton
Roads, 6.875%, 11/15/11 2,170,220
Aa2 AA- 3,500 Peninsula Ports Authority
of Virginia, (Riverside
Health System), 6.625%, 7/1/10 3,824,695
Aa2 AA 3,000 Virginia Beach Development
Authority (Sentara Bayside
Hospital), 6.60%, 11/1/09 3,285,630
A3 NR 1,000 Washington County, Industrial
Development Authority (Johnston
Memorial Hospital), 6.00%, 7/1/14 1,054,000
A3 NR 1,060 Washington County, Industrial
Development Authority (Johnston
Memorial Hospital), 7.00%, 7/1/22 1,155,400
- --------------------------------------------------------------------------------
$ 21,590,759
- --------------------------------------------------------------------------------
See notes to financial statements
91
<PAGE>
Virginia Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Housing -- 12.2%
- --------------------------------------------------------------------------------
NR AAA $1,250 Fairfax County Redevelopment
and Housing Authority
Multifamily Mortgage Revenue,
FHA, 7.00%, 5/1/26 $ 1,338,775
NR AAA 960 Hampton Redevelopment and
Housing Authority, Senior
Living (GNMA), 6.00%, 1/20/26 1,000,493
NR AAA 1,000 Newport News, Redevelopment
and Housing Authority, MFMR,
5.85%, 8/20/30 1,037,920
NR AAA 1,800 Suffolk Redevelopment and
Housing Authority (Prince
Williams Commons) (FNMA),
6.45%, 6/1/19 1,920,726
Aa1 AA+ 3,500 Virginia Housing Development
Authority, Multifamily Mortgage
Revenue, 7.05%, 5/1/18 3,741,920
Aa AA+ 5,000 Virginia Housing Development
Authority, Multifamily Mortgage
Revenue, (AMT), 6.75%, 7/1/21 5,269,699
Aa1 AA+ 2,330 Virginia Housing Development
Authority, Single Family
Mortgage Revenue, 6.85%, 1/1/15 2,487,811
Aa NR 1,900 Virginia Housing Development
Authority, Single Family
Mortgage Revenue, Variable
Rate, 7/1/04/(1)/ 2,014,000
- --------------------------------------------------------------------------------
$ 18,811,344
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control
Revenue -- 17.4%
- --------------------------------------------------------------------------------
Baa2 NR $4,500 Bedford County, Industrial
Development Authority,
(AMT), 5.60%, 12/1/25 $ 4,552,515
Aa3 AA- 2,190 City of Chesapeake
(Cargill Inc.), 5.875%, 3/1/13 2,325,649
A2 A+ 1,500 City of Giles (Hoechst Celanese
Corp.), (AMT), 5.95%, 12/1/25 1,580,430
A2 A+ 2,000 City of Giles (Hoechst Celanese
Corp.), (AMT), 6.45%, 5/1/26 2,202,200
A2 A+ 500 City of Giles (Hoechst Celanese
Corp.), (AMT), 6.625%, 12/1/22 542,235
A3 A 2,000 Henrico County (Browning Ferris
Inc.), (AMT), 5.45%, 1/1/14/(2)/ 2,057,740
A1 A- 4,000 Isle of Wright County, Industrial
Development Authority (Union Camp
Corp.), (AMT), 6.55%, 4/1/24 4,373,520
Baa3 BBB- 1,000 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 1,086,650
Baa3 BBB- 1,000 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.30%, 6/1/23 1,068,820
Baa3 BBB 980 West Point (Chesapeake
Corp.), 6.25%, 3/1/19 1,055,999
Baa3 BBB 5,520 West Point (Chesapeake
Corp.), (AMT), 6.375%, 3/1/19 5,945,867
- --------------------------------------------------------------------------------
$ 26,791,625
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 0.6%
- --------------------------------------------------------------------------------
Aaa AAA $ 900 Commonwealth of Puerto Rico,
Telephone Authority, (MBIA),
Variable Rate, 1/16/15/(1)/ $ 968,625
- --------------------------------------------------------------------------------
$ 968,625
- --------------------------------------------------------------------------------
Insured-General Obligations -- 3.4%
- --------------------------------------------------------------------------------
Aaa AAA $5,400 City of Richmond (FGIC),
5.00%, 1/15/21 $ 5,270,291
- --------------------------------------------------------------------------------
$ 5,270,291
- --------------------------------------------------------------------------------
Insured-Hospitals -- 10.4%
- --------------------------------------------------------------------------------
Aaa AAA $3,000 Augusta County, Industrial
Development Authority (Augusta
Hospital Corp.) (AMBAC),
5.125%, 9/1/21 $ 2,949,660
Aaa AAA 3,835 City of Fredericksburg,
Industrial Development Authority
(AMBAC), 5.25%, 6/15/23 3,829,363
Aaa AAA 5,000 City of Virginia Beach (Virginia
Beach Memorial Hospital)
(AMBAC), 5.125%, 2/15/18 5,018,549
Aaa AAA 2,000 City of Winchester, Industrial
Development Authority (Winchester
Medical Center) (AMBAC),
Variable Rate, 1/21/14/(1)/ 2,512,500
See notes to financial statements
92
<PAGE>
Virginia Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Hospitals (continued)
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Henrico County (Bon Secour
Health Systems) (MBIA),
6.25%, 8/15/20 $ 1,737,270
- --------------------------------------------------------------------------------
$ 16,047,342
- --------------------------------------------------------------------------------
Insured-Transportation -- 3.5%
- --------------------------------------------------------------------------------
Aaa AAA $3,300 Chesapeake Bay Bridge and
Tunnel Dist. (MBIA),
5.00%, 7/1/22 $ 3,218,127
Aaa AAA 1,000 Metropolitan Washington
Airports Authority (MBIA),
(AMT), 5.75%, 10/1/20 1,046,850
Aaa AAA 1,000 Richmond Metropolitan
Authority Expressway
(FGIC), 6.375%, 7/15/16 1,097,370
- --------------------------------------------------------------------------------
$ 5,362,347
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 4.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Loudoun County Sanitation
Authority (FGIC), 5.125%,
1/1/30 $ 983,730
Aaa AAA 1,000 Prince William County, Service
Authority, (FGIC), 4.75%, 7/1/29 936,570
Aaa AAA 4,500 Upper Occoquan Sewage
Authority (MBIA), 5.00%, 7/1/25 4,381,965
Aaa AAA 1,000 Upper Occoquan Sewage
Authority (MBIA), 5.15%, 7/1/20 1,019,440
- --------------------------------------------------------------------------------
$ 7,321,705
- --------------------------------------------------------------------------------
Lease Revenue/
Certificates of Participation -- 6.1%
- --------------------------------------------------------------------------------
Aa2 AA $2,000 Henrico County, Industrial
Development Authority,
Lease, 7.00%, 8/1/13 $ 2,327,560
Aa2 AA 2,250 Henrico County, Industrial
Development Authority,
Lease, 7.125%, 8/1/21 2,645,393
NR NR 1,250 King George County, Lease,
7.00%, 12/15/12 1,335,050
A NR 3,000 Rockingham and Harrisonburg
Counties, Harrisonburg
Redevelopment and Housing
Authority, 6.50%, 9/1/14 3,149,160
- --------------------------------------------------------------------------------
$ 9,457,163
- --------------------------------------------------------------------------------
Life Care -- 1.8%
- --------------------------------------------------------------------------------
NR A $ 400 Halifax County, Industrial
Development Authority,
(Halifax Regional
Hospital, Inc.), 5.25%, 9/1/17 $ 394,000
NR NR 2,000 Loudoun County, VA, Industrial
Development Authority, (Falcons
Landing), 8.75%, 11/1/24 2,330,060
- --------------------------------------------------------------------------------
$ 2,724,060
- --------------------------------------------------------------------------------
Nursing Homes -- 0.2%
- --------------------------------------------------------------------------------
NR NR $ 270 Covington-Allegheny
County, VA, IDA, (Beverly
Enterprises), 9.375%, 9/1/01 $ 293,587
- --------------------------------------------------------------------------------
$ 293,587
- --------------------------------------------------------------------------------
Solid Waste -- 3.5%
- --------------------------------------------------------------------------------
A1 A+ $ 915 Fairfax County Economic
Development Authority (Ogden
Martin Systems of Fairfax
Inc.), (AMT), 7.75%, 2/1/11 $ 970,367
A1 A+ 2,000 James City County, IDA,
(Anheuser Busch), (AMT),
6.00%, 4/1/32 2,127,540
Baa1 A- 2,250 Southeastern Public Service
Authority, Solid Waste
Systems, (AMT), 6.00%, 7/1/13 2,344,613
- --------------------------------------------------------------------------------
$ 5,442,520
- --------------------------------------------------------------------------------
Special Tax Revenue -- 4.6%
- --------------------------------------------------------------------------------
Baa1 A $1,500 Commonwealth of Puerto Rico
Highway and Transportation
Authority, 5.00%, 7/1/36 $ 1,459,980
NR NR 4,000 Virgin Islands Public Finance
Authority, 7.25%, 10/1/18 4,490,320
Aa AA 1,000 Virginia State Transportation
Board Revenue, Route 28,
Variable Rate, 4/1/18/(1)/ 1,193,750
- --------------------------------------------------------------------------------
$ 7,144,050
- --------------------------------------------------------------------------------
Transportation -- 1.1%
- --------------------------------------------------------------------------------
NR BBB $ 400 Charlottesville-Albermarle
VA Airport Authority,
(AMT), 6.125%, 12/1/13 $ 418,504
See notes to financial statements
93
<PAGE>
Virginia Municipals Portfolio as of February 28, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Transportation (continued)
- --------------------------------------------------------------------------------
Aa2 AA $1,250 Virginia Port Authority,
(AMT), 5.90%, 7/1/16 $ 1,326,263
- --------------------------------------------------------------------------------
$ 1,744,767
- --------------------------------------------------------------------------------
Water and Sewer -- 3.6%
- --------------------------------------------------------------------------------
Aa2 AA $1,000 Fairfax County, VA Water
Authority, 5.00%, 4/1/16 $ 992,900
Aa2 AA- 1,000 Fairfax County, VA Water
Authority, Variable Rate,
8.296%, 4/1/29/(1)/ 1,062,500
Aa2 AA 1,500 Fairfax County, Water
Authority, 5.00%, 4/1/21 1,491,795
Aa2 AA 805 Fairfax County, Water
Authority, 6.00%, 4/1/22 880,300
NR AA 1,000 Virginia Resource Authority
(Hopewell Waste Water),
(AMT), 6.00%, 10/1/25 1,064,440
- --------------------------------------------------------------------------------
$ 5,491,935
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $140,880,567) $ 154,290,763
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Virginia
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1998, 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 5.4% to 10.4% of total investments.
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
94
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited)
Statements of Assets and Liabilities
As of February 28, 1998
<TABLE>
<CAPTION>
Alabama Portfolio Arkansas Portfolio Georgia Portfolio Kentucky Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Investments --
Identified cost $87,219,402 $53,904,584 $82,080,212 $108,588,633
Unrealized appreciation 8,596,826 4,490,308 7,628,833 9,836,085
- ------------------------------------------------------------------------------------------------------------------------------------
Investments at value (Note 1A) $95,816,228 $58,394,892 $89,709,045 $118,424,718
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 1,266,417 $ 83 $ 81 $ 332,769
Receivable for investments sold -- 657,405 1,503,017 --
Interest receivable 1,512,913 901,009 1,189,872 1,922,429
Deferred organization expenses (Note 1D) -- 1,505 42 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $98,595,558 $59,954,894 $92,402,057 $120,679,916
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for when-issued securities (Note 1G) $ -- $ -- $ 490,018 $ 1,809,200
Demand note payable (Note 5) -- 665,000 552,000 --
Payable for daily variation margin on open financial
futures contracts (Note 1E) 13,781 3,938 13,500 16,875
Payable to affiliate for Trustees' fees (Note 2) 1,451 5,255 1,122 1,436
Accrued expenses 15,733 11,525 11,293 13,995
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 30,965 $ 685,718 $ 1,067,933 $ 1,841,506
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest in
Portfolio $98,564,593 $59,269,176 $91,334,124 $118,838,410
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $89,973,531 $54,787,261 $83,709,132 $109,007,126
Net unrealized appreciation of investments
(computed on the basis of identified cost) 8,591,062 4,481,915 7,624,992 9,831,284
- ------------------------------------------------------------------------------------------------------------------------------------
Total $98,564,593 $59,269,176 $91,334,124 $118,838,410
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
95
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Assets and Liabilities
As of February 28, 1998
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Assets Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments --
Identified cost $ 33,028,050 $100,786,895 $ 70,126,590 $139,689,431
Unrealized appreciation 2,153,479 6,931,533 7,726,055 14,604,568
- ------------------------------------------------------------------------------------------------------------------------------------
Investments at value (Note 1A) $ 35,181,529 $107,718,428 $ 77,852,645 $154,293,999
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 621,262 $ 1,720,743 $ 142,983 $ 491,000
Receivable for investments sold -- -- 5,000 50,000
Interest receivable 576,308 1,426,264 970,845 2,325,414
Deferred organization expenses (Note 1D) 1,384 75 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 36,380,483 $110,865,510 $ 78,971,473 $157,160,413
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased $ 1,388,504 $ -- $ -- $ --
Payable for when-issued securities (Note 1G) 468,880 5,234,413 -- 674,162
Payable for variation margin on open financial futures
contracts (Note 1E) 4,781 7,312 11,250 21,094
Payable to affiliate for Trustees' fees (Note 2) 280 1,436 1,122 1,870
Accrued expenses 3,993 12,478 7,435 17,600
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 1,866,438 $ 5,255,639 $ 19,807 $ 714,726
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $ 34,514,045 $105,609,871 $ 78,951,666 $156,445,687
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $ 32,362,777 $ 98,693,925 $ 71,228,812 $141,850,874
Net unrealized appreciation of investments (computed on the
basis of identified cost) 2,151,268 6,915,946 7,722,854 14,594,813
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 34,514,045 $105,609,871 $ 78,951,666 $156,445,687
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
96
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Assets and Liabilities
As of February 28, 1998
<TABLE>
<CAPTION>
South Carolina Tennessee
Assets Oregon Portfolio Portfolio Portfolio Virginia Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments --
Identified cost $ 99,512,231 $ 48,723,252 $ 49,198,539 $140,880,567
Unrealized appreciation 7,911,783 4,707,082 4,228,450 13,410,196
- ------------------------------------------------------------------------------------------------------------------------------------
Investments, at value (Note 1A) $107,424,014 $ 53,430,334 $ 53,426,989 $154,290,763
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 152,824 $ 187,073 $ 493 $ 116,118
Interest receivable 1,477,875 728,046 768,384 2,379,833
Deferred organization expenses (Note 1D) -- 1,384 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $109,054,713 $ 54,346,837 $ 54,195,866 $156,786,714
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for when-issued securities (Note 1G) $ -- $ 1,178,745 $ -- $ --
Demand note payable (Note 5) -- -- 181,000 --
Payable for daily variation margin on open
financial futures contracts (Note 1E) -- 11,250 7,875 11,531
Payable to affiliate for Trustees' fees (Note 2) 1,452 5,255 2,997 1,870
Accrued expenses 10,614 9,602 4,617 23,605
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 12,066 $ 1,204,852 $ 196,489 $ 37,006
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $109,042,647 $ 53,141,985 $ 53,999,377 $156,749,708
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $101,130,864 $ 48,441,393 $ 49,773,167 $143,364,092
Net unrealized appreciation of investments (computed on the
basis of identified cost) 7,911,783 4,700,592 4,226,210 13,385,616
- ------------------------------------------------------------------------------------------------------------------------------------
Total $109,042,647 $ 53,141,985 $ 53,999,377 $156,749,708
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
97
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
<TABLE>
<CAPTION>
For the Six Months Ended February 28, 1998
Alabama Portfolio Arkansas Portfolio Georgia Portfolio Kentucky Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income $ 2,859,405 $ 1,737,589 $ 2,716,113 $ 3,559,592
- ------------------------------------------------------------------------------------------------------------------------------------
Total income $ 2,859,405 $ 1,737,589 $ 2,716,113 $ 3,559,592
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 187,142 $ 96,193 $ 171,727 $ 240,241
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 2,486 -- 1,525 2,007
Custodian fee (Note 1I) 31,831 22,308 27,762 36,048
Legal and accounting services 25,602 23,500 23,499 25,600
Amortization of organization expenses (Note 1D) 615 660 1,076 511
Miscellaneous 12,443 7,843 5,852 3,982
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 260,119 $ 150,504 $ 231,441 $ 308,389
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee (Note 1I) $ 5,656 $ 4,399 $ 7,478 $ 8,952
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 5,656 $ 4,399 $ 7,478 $ 8,952
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 254,463 $ 146,105 $ 223,963 $ 299,437
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 2,604,942 $ 1,591,484 $ 2,492,150 $ 3,260,155
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 595,134 $ 536,316 $ 1,047,900 $ 1,111,625
Financial futures contracts (563,613) (255,994) (401,179) (454,932)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investment transactions $ 31,521 $ 280,322 $ 646,721 $ 656,693
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 1,909,955 $ 1,123,032 $ 1,524,390 $ 1,824,655
Financial futures contracts 22,154 (21,589) 34,814 31,170
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments $ 1,932,109 $ 1,101,443 $ 1,559,204 $ 1,855,825
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 1,963,630 $ 1,381,765 $ 2,205,925 $ 2,512,518
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 4,568,572 $ 2,973,249 $ 4,698,075 $ 5,772,673
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
98
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income $ 1,005,879 $ 2,982,945 $ 2,281,303 $ 4,696,575
- ------------------------------------------------------------------------------------------------------------------------------------
Total income $ 1,005,879 $ 2,982,945 $ 2,281,303 $ 4,696,575
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 39,212 $ 202,356 $ 137,655 $ 335,671
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 836 4,455 3,230 3,507
Custodian fee (Note 1I) 14,015 38,433 25,654 46,865
Legal and accounting services 16,900 25,600 20,000 25,600
Amortization of organization expenses (Note 1D) 664 749 549 1,583
Miscellaneous 1,906 4,914 4,835 13,893
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 73,533 $ 276,507 $ 191,923 $ 427,119
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee (Note 1I) $ 7,271 $ 24,741 $ 4,832 $ 18,737
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 7,271 $ 24,741 $ 4,832 $ 18,737
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 66,262 $ 251,766 $ 187,091 $ 408,382
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 939,617 $ 2,731,179 $ 2,094,212 $ 4,288,193
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost
basis) $ 393,633 $ 1,060,741 $ 686,800 $ 2,470,431
Financial futures contracts (178,020) (398,376) (331,310) (1,024,189)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investment transactions $ 215,613 $ 662,365 $ 355,490 $ 1,446,242
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 447,372 $ 1,847,502 $ 1,734,837 $ 2,089,664
Financial futures contracts 18,190 (36,114) 29,012 102,989
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments $ 465,562 $ 1,811,388 $ 1,763,849 $ 2,192,653
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on
investments $ 681,175 $ 2,473,753 $ 2,119,339 $ 3,638,895
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,620,792 $ 5,204,932 $ 4,213,551 $ 7,927,088
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
99
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Oregon South Carolina Tennessee Virginia
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income $ 3,217,520 $ 1,567,164 $ 1,552,188 $ 4,620,957
- ------------------------------------------------------------------------------------------------------------------------------------
Total income $ 3,217,520 $ 1,567,164 $ 1,552,188 $ 4,620,957
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 213,913 $ 79,364 $ 81,019 $ 328,450
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 4,227 -- 5,105 3,507
Custodian fee (Note 1I) 33,613 15,819 20,497 54,084
Legal and accounting services 22,044 23,501 20,000 25,501
Amortization of organization expenses (Note 1D) 848 707 1,084 1,258
Interest expense -- 7,629 -- --
Miscellaneous 6,037 2,629 1,514 13,207
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 280,682 $ 129,649 $ 129,219 $ 426,007
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee (Note 1I) $ 6,485 $ -- $ 6,409 $ 14,184
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 6,485 $ -- $ 6,409 $ 14,184
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 274,197 $ 129,649 $ 122,810 $ 411,823
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 2,943,323 $ 1,437,515 $ 1,429,378 $ 4,209,134
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost
basis) $ 949,588 $ 622,499 $ 365,718 $ 2,284,353
Financial futures contracts (327,439) (15,862) (234,394) (626,776)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investment transactions $ 622,149 $ 606,637 $ 131,324 $ 1,657,577
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 1,522,983 $ 649,027 $ 928,076 $ 1,781,654
Financial futures contracts (50,937) (6,490) 20,309 (56,837)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments $ 1,472,046 $ 642,537 $ 948,385 $ 1,724,817
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 2,094,195 $ 1,249,174 $ 1,079,709 $ 3,382,394
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 5,037,518 $ 2,686,689 $ 2,509,087 $ 7,591,528
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
100
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Kentucky
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 2,604,942 $ 1,591,484 $ 2,492,150 $ 3,260,155
Net realized gain on investment transactions 31,521 280,322 646,721 656,693
Net change in unrealized appreciation
(depreciation) of investments 1,932,109 1,101,443 1,559,204 1,855,825
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 4,568,572 $ 2,973,249 $ 4,698,075 $ 5,772,673
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 2,713,155 $ 933,140 $ 1,833,123 $ 2,308,262
Withdrawals (11,073,131) (7,323,031) (10,359,141) (12,352,729)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (8,359,976) $ (6,389,891) $ (8,526,018) $ (10,044,467)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (3,791,404) $ (3,416,642) $ (3,827,943) $ (4,271,794)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of period $ 102,355,997 $ 62,685,818 $ 95,162,067 $ 123,110,204
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $ 98,564,593 $ 59,269,176 $ 91,334,124 $ 118,838,410
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
101
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 939,617 $ 2,731,179 $ 2,094,212 $ 4,288,193
Net realized gain on investment transactions 215,613 662,365 355,490 1,446,242
Net change in unrealized appreciation
(depreciation) of investments 465,562 1,811,388 1,763,849 2,192,653
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,620,792 $ 5,204,932 $ 4,213,551 $ 7,927,088
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 1,604,720 $ 3,114,767 $ 2,263,089 $ 3,418,506
Withdrawals (3,143,596) (10,110,915) (7,406,690) (22,470,871)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (1,538,876) $ (6,996,148) $ (5,143,601) $ (19,052,365)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 81,916 $ (1,791,216) $ (930,050) $ (11,125,277)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of period $ 34,432,129 $ 107,401,087 $ 79,881,716 $ 167,570,964
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $ 34,514,045 $ 105,609,871 $ 78,951,666 $ 156,445,687
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
102
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 1998
<TABLE>
<CAPTION>
Oregon South Carolina Tennessee Virginia
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 2,943,323 $ 1,437,515 $ 1,429,378 $ 4,209,134
Net realized gain on investment transactions 622,149 606,637 131,324 1,657,577
Net change in unrealized appreciation
(depreciation) of investments 1,472,046 642,537 948,385 1,724,817
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 5,037,518 $ 2,686,689 $ 2,509,087 $ 7,591,528
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 1,533,124 $ 1,305,961 $ 2,195,745 $ 3,574,464
Withdrawals (11,220,761) (4,820,590) (4,867,135) (16,073,816)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (9,687,637) $ (3,514,629) $ (2,671,390) $ (12,499,352)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (4,650,119) $ (827,940) $ (162,303) $ (4,907,824)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of period $ 113,692,766 $ 53,969,925 $ 54,161,680 $ 161,657,532
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $ 109,042,647 $ 53,141,985 $ 53,999,377 $ 156,749,708
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
103
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1997
<TABLE>
<CAPTION>
Increase (Decrease) in Net Assets Alabama Arkansas Georgia Kentucky
Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 5,801,367 $ 3,707,520 $ 5,659,411 $ 7,114,833
Net realized gain (loss) on investments 36,452 (196,863) 619,588 790,878
Net change in unrealized appreciation
(depreciation) of investments 3,859,164 2,344,431 2,869,835 4,675,966
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 9,696,983 $ 5,855,088 $ 9,148,834 $ 12,581,677
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 4,814,194 $ 1,860,201 $ 5,129,603 $ 4,738,142
Withdrawals (20,698,730) (19,132,688) (28,090,665) (27,227,068)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital transactions $ (15,884,536) $ (17,272,487) $ (22,961,062) $ (22,488,926)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (6,187,553) $ (11,417,399) $ (13,812,228) $ (9,907,249)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 108,543,550 $ 74,103,217 $ 108,974,295 $ 133,017,453
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 102,355,997 $ 62,685,818 $ 95,162,067 $ 123,110,204
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
104
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1997
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 2,044,687 $ 5,868,209 $ 4,530,872 $ 9,890,637
Net realized gain on investment transactions 17,105 583,641 47,598 2,200,237
Net change in unrealized appreciation
(depreciation) of investments 1,149,891 3,765,437 3,709,574 4,378,307
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 3,211,683 $ 10,217,287 $ 8,288,044 $ 16,469,181
- -----------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 2,993,205 $ 6,463,344 $ 2,387,301 $ 5,496,793
Withdrawals (6,821,430) (19,867,889) (15,955,992) (41,439,395)
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital transactions $ (3,828,225) $ (13,404,545) $ (13,568,691) $ (35,942,602)
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (616,542) $ (3,187,258) $ (5,280,647) $ (19,473,421)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 35,048,671 $ 110,588,345 $ 85,162,363 $ 187,044,385
- -----------------------------------------------------------------------------------------------------------------------------------
At end of year $ 34,432,129 $ 107,401,087 $ 79,881,716 $ 167,570,964
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
105
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1997
<TABLE>
<CAPTION>
Oregon South Carolina Tennessee Virginia
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 6,643,900 $ 3,172,029 $ 3,029,119 $ 9,461,124
Net realized gain (loss) on investment transactions (379,737) (187,278) (147,294) 1,844,132
Net change in unrealized appreciation
(depreciation) of investments 3,337,142 2,182,137 2,422,406 4,117,767
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 9,601,305 $ 5,166,888 $ 5,304,231 $ 15,423,023
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,759,540 $ 2,536,482 $ 3,539,000 $ 7,439,212
Withdrawals (31,426,734) (12,051,592) (10,746,904) (38,849,024)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital transactions $ (25,667,194) $ (9,515,110) $ (7,207,904) $ (31,409,812)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (16,065,889) $ (4,348,222) $ (1,903,673) $ (15,986,789)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 129,758,655 $ 58,318,147 $ 56,065,353 $ 177,644,321
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 113,692,766 $ 53,969,925 $ 54,161,680 $ 161,657,532
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
106
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Alabama Portfolio
----------------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ---------------------------------------------------- ---------------
(Unaudited) 1997 1996 1995 1994* 1993**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:++
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses /(1)/ 0.53%+ 0.50% 0.49% 0.47% 0.44%+ 0.25%+
Net expenses after custodian
fee reduction 0.51%+ 0.49% 0.45% -- -- --
Net investment income 5.26%+ 5.47% 5.50% 5.77% 5.37%+ 5.52%+
Portfolio Turnover 9% 23% 52% 51% 26% 10%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(000's omitted) $ 98,565 $ 102,356 $ 108,544 $ 118,486 $ 117,163 $ 83,628
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ The operating expenses of the Portfolio may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Adviser, or
both. Had such actions not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C>
Expenses /(1)/ 0.35%+
Net investment income 5.42%+
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to
September 30, 1993.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
107
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Arkansas Portfolio
------------------------------------------------------------------
Year Ended
-----------------------------------------------
Six Months Ended August 31,
February 28, 1998 -----------------------------------------------
(Unaudited) 1997 1996 1995 1994*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets:++
- -----------------------------------------------------------------------------------------------------------------------
Net expenses/(1)/ 0.50%+ 0.49% 0.48% 0.46% 0.24%+
Net expenses after custodian fee reduction 0.48%+ 0.48% 0.46% -- --
Net investment income 5.25%+ 5.40% 5.40% 5.69% 5.60%+
Portfolio Turnover 9% 17% 11% 23% 16%
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $59,269 $62,686 $74,103 $81,535 $82,917
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
++ The operating expenses of the Portfolio may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Adviser, or both.
Had such actions not been taken, the ratios would have been as follows:
<TABLE>
<S> <C>
Expenses/(1)/ 0.43%+
Net investment income 5.41%+
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, February 1, 1994 to August 31,
1994.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
108
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Georgia Portfolio
--------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ------------------------------------------------ ------------
(Unaudited) 1997 1996 1995 1994* 1993**
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses/(1)/ 0.50%+ 0.49% 0.50% 0.46% 0.44%+ 0.40%+
Expenses after custodian fee reduction 0.48%+ 0.47% 0.45% -- -- --
Net investment income 5.36%+ 5.55% 5.59% 5.73% 5.37%+ 5.37%+
Portfolio Turnover 10% 13% 21% 48% 45% 35%
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $91,334 $95,162 $108,974 $122,949 $137,724 $119,311
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
109
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Kentucky Portfolio
-----------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 --------------------------------------------------- ------------
(Unaudited) 1997 1996 1995 1994* 1993**
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> A
Ratios to average daily net assets:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses/(1)/ 0.51%+ 0.51% 0.53% 0.49% 0.46%+ 0.40%+
Expenses after custodian fee reduction 0.50%+ 0.48% 0.50% -- -- --
Net investment income 5.41%+ 5.56% 5.49% 5.75% 5.39%+ 5.40%+
Portfolio Turnover 10% 28% 28% 30% 21% 11%
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $118,838 $123,110 $133,017 $145,269 $145,210 $117,936
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
110
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Louisiana Portfolio
---------------------------------------------------------------------
Year Ended
-------------------------------------------------
Six Months Ended August 31,
February 28, 1998 -------------------------------------------------
(Unaudited) 1997 1996 1995 1994*
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets:++
- -----------------------------------------------------------------------------------------------------------------------------
Net expenses/(1)/ 0.43%+ 0.40% 0.30% 0.22% 0.14%+
Net expenses after custodian fee reduction 0.38%+ 0.38% 0.23% -- --
Net investment income 5.45%+ 5.85% 5.90% 6.06% 5.86%+
Portfolio Turnover 23% 27% 99% 46% 21%
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $34,514 $34,432 $35,049 $34,309 $31,423
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ The operating expenses of 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, the ratios would have
been as follows:
<TABLE>
<S> <C> <C> <C>
Expenses/(1)/ 0.41% 0.33% 0.33%+
Expenses after custody fee reduction 0.35% -- --
Net investment income 5.79% 5.95% 5.67%+
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, February 1, 1994 to August 31,
1994.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
111
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Maryland Portfolio
------------------------------------------------------------------------------
Year Ended
------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------------- -----------
(Unaudited) 1997 1996 1995 1994* 1993**
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:++
- -----------------------------------------------------------------------------------------------------------------------------
Net expenses /(1)/ 0.52%+ 0.48% 0.51% 0.47% 0.44%+ 0.36%+
Net expenses after custodian fee reduction 0.48%+ 0.45% 0.48% -- -- --
Net investment income 5.16%+ 5.38% 5.50% 5.79% 5.44%+ 5.41%+
Portfolio Turnover 18% 30% 33% 30% 41% 34%
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $105,610 $107,401 $110,588 $115,004 $117,856 $94,213
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ The operating expenses of 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, the ratios would have been as
follows:
<TABLE>
<S> <C>
Expenses/(1)/ 0.38%+
Net investment income 5.39%+
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
112
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Missouri Portfolio
-------------------------------------------------------------------------------
Year Ended
-------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ------------------------------------------------ -----------
(Unaudited) 1997 1996 1995 1994* 1993**
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ----------------------------------------------------------------------------------------------------------------------------
Expenses/(1)/ 0.49%+ 0.47% 0.49% 0.48% 0.45%+ 0.40%+
Expenses after custodian fee reduction 0.48%+ 0.46% 0.47% -- -- --
Net investment income 5.32%+ 5.52% 5.52% 5.76% 5.36%+ 5.36%+
Portfolio Turnover 4% 5% 36% 24% 28% 6%
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $78,952 $79,882 $85,162 $93,162 $95,167 $75,273
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
113
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
North Carolina Portfolio
------------------------------------------------------------------------------------
Year Ended
-------------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------------------- -------------
(Unaudited) 1997 1996 1995 1994* 1993**
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses/(1)/ 0.53%+ 0.52% 0.52% 0.48% 0.46%+ 0.43%+
Expenses after custodian fee reduction 0.51%+ 0.50% 0.48% -- -- --
Net investment income 5.32%+ 5.53% 5.51% 5.78% 5.40%+ 5.43%+
Portfolio Turnover 15% 42% 54% 33% 37% 21%
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $156,446 $167,571 $187,044 $195,179 $199,772 $172,534
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
114
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Oregon Portfolio
----------------------------------------------------------------------------------
Year Ended
----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 --------------------------------------------------- ------------
(Unaudited) 1997 1996 1995 1994* 1993**
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses/(1)/ 0.51%+ 0.56% 0.50% 0.50% 0.46%+ 0.43%+
Expenses after custodian fee reduction 0.50%+ 0.55% 0.47% -- -- --
Net investment income 5.37%+ 5.46% 5.37% 5.60% 5.26%+ 5.30%+
Portfolio Turnover 4% 22% 28% 22% 15% 32%
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $109,043 $113,693 $129,759 $146,391 $153,119 $127,497
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
115
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
South Carolina Portfolio
-------------------------------------------------------------------
Year Ended
-------------------------------------------------
Six Months Ended August 31,
February 28, 1998 -------------------------------------------------
(Unaudited) 1997 1996 1995 1994*
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- -------------------------------------------------------------------------------------------------------------------------
Expenses/(1)/ 0.49%+ 0.51% 0.53% 0.44% 0.37%+
Expenses after custodian fee reduction 0.49%+ 0.50% 0.51% -- --
Net investment income 5.41%+ 5.59% 5.65% 5.81% 5.47%+
Portfolio Turnover 14% 8% 36% 75% 23%
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $53,142 $53,970 $58,318 $61,412 $62,265
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, February 1, 1994 to August 31,
1994.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
116
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Tennessee Portfolio
---------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 ----------------------------------------------- -------------
(Unaudited) 1997 1996 1995 1994* 1993**
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:++
- -------------------------------------------------------------------------------------------------------------------------------
Expenses/(1)/ 0.48%+ 0.43% 0.45% 0.41% 0.36%+ 0.08%+
Expenses after custodian fee reduction 0.46%+ 0.42% 0.43% -- -- --
Net investment income 5.27%+ 5.48% 5.52% 5.81% 5.49%+ 5.60%+
Portfolio Turnover 10% 3% 39% 20% 10% 69%
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $53,999 $54,162 $56,065 $58,673 $56,496 $39,266
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ The operating expenses of the Portfolio may reflect a reduction of the
Investment Adviser fee, an allocation of expenses to the Adviser, or both.
Had such actions not been taken, the ratios and net investment income per
share would have been as follows:
<TABLE>
<S> <C>
Expenses/(1)/ 0.31%+
Net investment income 5.37%+
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
117
<PAGE>
EV Municipals Portfolios as of February 28, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Virginia Portfolio
-----------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
Six Months Ended August 31, Sept. 30,
February 28, 1998 --------------------------------------------------- ------------
(Unaudited) 1997 1996 1995 1994* 1993**
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses/(1)/ 0.54%+ 0.52% 0.51% 0.48% 0.46%+ 0.43%+
Expenses after custodian fee reduction 0.52%+ 0.49% 0.48% -- -- --
Net investment income 5.32%+ 5.53% 5.55% 5.81% 5.49%+ 5.49%+
Portfolio Turnover 6% 25% 30% 38% 48% 29%
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $156,750 $161,658 $177,644 $191,748 $194,519 $174,260
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
/(1)/ The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
118
<PAGE>
EV Municipals Portfolios as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
------------------------------------------------------------------------------
Alabama Municipals Portfolio (Alabama Portfolio), Arkansas Municipals
Portfolio (Arkansas Portfolio), Georgia Municipals Portfolio (Georgia
Portfolio), Kentucky Municipals Portfolio (Kentucky Portfolio), Louisiana
Municipals Portfolio (Louisiana Portfolio), Maryland Municipals Portfolio
(Maryland Portfolio), Missouri Municipals Portfolio (Missouri Portfolio),
North Carolina Municipals Portfolio (North Carolina Portfolio), Oregon
Municipals Portfolio (Oregon Portfolio), South Carolina Municipals Portfolio
(South Carolina Portfolio), Tennessee Municipals Portfolio (Tennessee
Portfolio) and Virginia Municipals Portfolio (Virginia Portfolio),
collectively the Portfolios, are registered under the Investment Company Act
of 1940, as amended, 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 and options on
financial futures contracts listed on commodity exchanges are valued at
closing settlement prices. Over-the-counter options on financial futures
contracts are normally valued at the mean between the latest bid and asked
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 Federal 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
is ultimately responsible for the payment of any taxes. Since some of the
Portfolios' investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolios, the Portfolios normally
must satisfy the applicable source of income and diversification requirements
(under the Internal Revenue Code) in order for their respective investors to
satisfy them. The Portfolios will allocate at least annually among their
respective investors each investor's distributive share of the Portfolios' net
taxable (if any) and tax-exempt investment income, net realized capital gains,
and any other items of income, gain, loss, deduction 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, a Portfolio may not achieve the anticipated benefits of the
financial futures contracts and may realize a loss.
F Options on Financial Futures Contracts -- Upon purchase of a put option on a
financial futures contract by a Portfolio, the premium paid is recorded as an
investment, the value of which is marked-to-market daily. When a purchased
option expires, a Portfolio will realize a loss in the amount of the cost of
the option. When a Portfolio enters into a closing sale transaction, the
Portfolio will realize a gain or loss depending on whether the sales
119
<PAGE>
EV Municipals Portfolios as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
proceeds from the closing sale transaction are greater or less than the cost
of the option. When a Portfolio exercises a put option, settlement is made in
cash. The risk associated with purchasing options is limited to the premium
originally paid.
G When-issued and Delayed Delivery Transactions -- The Portfolios may engage
in when-issued and delayed delivery transactions. The Portfolios record when-
issued securities on trade date and maintain security positions such that
sufficient liquid assets will be available to make payments for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked-to-market daily and begin earning interest on settlement date.
H Other -- Investment transactions are accounted for on a trade date basis.
I Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolios. Pursuant to the custodian agreements, IBT
receives a fee reduced by credits which are determined based on the average
daily cash balances each Portfolio maintains with IBT. All significant credit
balances used to reduce each Portfolio's custodian fees are reported as a
reduction of expenses in the Statement of Operations.
J Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Actual results
could differ from those estimates.
K Interim Financial Information-- The interim financial statements relating to
February 28, 1998 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the
Portfolio's management, reflect all adjustments, consisting only of normal
recurring adjustments necessary for the fair presentation of the financial
statements.
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 February 28, 1998, the Portfolios paid advisory fees
as follows:
Portfolio Amount Effective Rate*
------------------------------------------------------------------------------
Alabama $ 187,142 0.38%
Arkansas 96,193 0.32%
Georgia 171,727 0.37%
Kentucky 240,241 0.40%
Louisiana 39,212 0.23%
Maryland 202,356 0.38%
Missouri 137,655 0.35%
North Carolina 335,671 0.42%
Oregon 213,913 0.39%
South Carolina 79,364 0.30%
Tennessee 81,019 0.30%
Virginia 328,450 0.42%
* Advisory fees paid as a percentage of average daily net assets (annualized).
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.
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 February 28, 1998, no significant amounts have been deferred.
Certain of the officers and Trustees of the Portfolios are officers and
directors/trustees of the above organizations.
120
<PAGE>
EV Municipals Portfolios as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
3 Investments
------------------------------------------------------------------------------
Purchases and sales of investments, other than U.S. Government securities,
purchased options and short-term obligations, for the six months ended
February 28, 1998 were as follows:
Alabama Portfolio
------------------------------------------------------------------------------
Purchases $ 8,729,809
Sales 16,643,921
Arkansas Portfolio
------------------------------------------------------------------------------
Purchases $ 5,221,428
Sales 10,875,500
Georgia Portfolio
------------------------------------------------------------------------------
Purchases $ 9,362,636
Sales 15,975,154
Kentucky Portfolio
------------------------------------------------------------------------------
Purchases $11,554,595
Sales 19,534,740
Louisiana Portfolio
------------------------------------------------------------------------------
Purchases $ 8,231,039
Sales 7,840,203
Maryland Portfolio
------------------------------------------------------------------------------
Purchases $19,534,037
Sales 21,233,944
Missouri Portfolio
------------------------------------------------------------------------------
Purchases $ 3,004,105
Sales 7,267,496
North Carolina Portfolio
------------------------------------------------------------------------------
Purchases $23,357,430
Sales 40,237,585
Oregon Portfolio
------------------------------------------------------------------------------
Purchases $ 3,890,593
Sales 13,460,890
South Carolina Portfolio
------------------------------------------------------------------------------
Purchases $ 7,550,174
Sales 9,631,716
Tennessee Portfolio
------------------------------------------------------------------------------
Purchases $ 5,487,975
Sales 6,178,638
Virginia Portfolio
------------------------------------------------------------------------------
Purchases $ 9,876,067
Sales 21,955,564
4 Federal Income Tax Basis of Investments
------------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned by each Portfolio at February 28, 1998, as computed on a
federal income tax basis, are as follows:
Alabama Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 87,219,402
------------------------------------------------------------------------------
Gross unrealized appreciation $ 8,602,546
Gross unrealized depreciation (5,720)
------------------------------------------------------------------------------
Net unrealized appreciation $ 8,596,826
------------------------------------------------------------------------------
Arkansas Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 53,904,584
------------------------------------------------------------------------------
Gross unrealized appreciation $ 4,501,056
Gross unrealized depreciation (10,748)
------------------------------------------------------------------------------
Net unrealized appreciation $ 4,490,308
------------------------------------------------------------------------------
Georgia Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 82,080,212
------------------------------------------------------------------------------
Gross unrealized appreciation $ 7,712,596
Gross unrealized depreciation (83,763)
------------------------------------------------------------------------------
Net unrealized appreciation $ 7,628,833
------------------------------------------------------------------------------
121
<PAGE>
EV Municipals Portfolios as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
Kentucky Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 108,588,633
------------------------------------------------------------------------------
Gross unrealized appreciation $ 9,884,682
Gross unrealized depreciation (48,597)
------------------------------------------------------------------------------
Net unrealized appreciation $ 9,836,085
------------------------------------------------------------------------------
Louisiana Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 33,028,050
------------------------------------------------------------------------------
Gross unrealized appreciation $ 2,460,615
Gross unrealized depreciation (307,136)
------------------------------------------------------------------------------
Net unrealized appreciation $ 2,153,479
------------------------------------------------------------------------------
Maryland Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 100,786,895
------------------------------------------------------------------------------
Gross unrealized appreciation $ 6,965,618
Gross unrealized depreciation (34,085)
------------------------------------------------------------------------------
Net unrealized appreciation $ 6,931,533
------------------------------------------------------------------------------
Missouri Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 70,126,590
------------------------------------------------------------------------------
Gross unrealized appreciation $ 7,726,055
Gross unrealized depreciation --
------------------------------------------------------------------------------
Net unrealized appreciation $ 7,726,055
------------------------------------------------------------------------------
North Carolina Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 139,689,431
------------------------------------------------------------------------------
Gross unrealized appreciation $ 14,625,092
Gross unrealized depreciation (20,524)
------------------------------------------------------------------------------
Net unrealized appreciation $ 14,604,568
------------------------------------------------------------------------------
Oregon Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 99,512,231
------------------------------------------------------------------------------
Gross unrealized appreciation $ 7,924,008
Gross unrealized depreciation (12,225)
------------------------------------------------------------------------------
Net unrealized appreciation $ 7,911,783
------------------------------------------------------------------------------
South Carolina Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 48,723,252
------------------------------------------------------------------------------
Gross unrealized appreciation $ 4,713,611
Gross unrealized depreciation (6,529)
------------------------------------------------------------------------------
Net unrealized appreciation $ 4,707,082
------------------------------------------------------------------------------
Tennessee Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 49,198,539
------------------------------------------------------------------------------
Gross unrealized appreciation $ 4,241,529
Gross unrealized depreciation (13,079)
------------------------------------------------------------------------------
Net unrealized appreciation $ 4,228,450
------------------------------------------------------------------------------
Virginia Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 140,880,567
------------------------------------------------------------------------------
Gross unrealized appreciation $ 13,458,682
Gross unrealized depreciation (48,486)
------------------------------------------------------------------------------
Net unrealized appreciation $ 13,410,196
------------------------------------------------------------------------------
5 Line of Credit
------------------------------------------------------------------------------
The Portfolios participate with other portfolios and funds managed by BMR and
EVM and its affiliates in a $100 million unsecured line of credit agreement
with a group of banks. Borrowings will be made by the portfolios or funds
solely to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Interest is charged to each portfolio or fund based on its
borrowings at an amount above either the Eurodollar rate or federal funds
effective rate. In addition, a fee computed at an annual rate of 0.10% on the
daily unused portion of the
122
<PAGE>
EV Municipals Portfolios as of February 28, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
facility is allocated among the participating portfolios and funds at the end
of each quarter. At February 28, 1998, the Arkansas Portfolio, Kentucky
Portfolio and Tennessee Portfolio had balances outstanding pursuant to this
line of credit of $665,000, $552,000 and $181,000, respectively. At February
28, 1998, the average daily loan balance was $236,391 and the average interest
rate was 6.4% for the South Carolina Portfolio. The maximum borrowing
outstanding for the South Carolina Portfolio at any time during the six months
ended February 28, 1998 was $2,032,000. The Portfolios (with the exception of
the South Carolina Portfolio) did not have any significant borrowings or
allocated fees during the six months ended February 28, 1998.
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 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 February 28,
1998, is as follows:
Futures
Contracts Net Unrealized
Expiration Appreciation
Portfolio Date Contracts Position (Depreciation)
------------------------------------------------------------------------------
Alabama 6/98 49 U.S. Treasury Bonds Short $ (5,764)
------------------------------------------------------------------------------
Arkansas 6/98 14 U.S. Treasury Bonds Short $ (8,393)
------------------------------------------------------------------------------
Georgia 6/98 48 U.S. Treasury Bonds Short $ (3,841)
------------------------------------------------------------------------------
Kentucky 6/98 60 U.S. Treasury Bonds Short $ (4,801)
------------------------------------------------------------------------------
Louisiana 6/98 17 U.S. Treasury Bonds Short $ (2,211)
------------------------------------------------------------------------------
Maryland 6/98 26 U.S. Treasury Bonds Short $ (15,587)
------------------------------------------------------------------------------
Missouri 6/98 40 U.S. Treasury Bonds Short $ (3,201)
------------------------------------------------------------------------------
North Carolina 6/98 75 U.S. Treasury Bonds Short $ (9,755)
------------------------------------------------------------------------------
South Carolina 6/98 40 U.S. Treasury Bonds Short $ (6,490)
------------------------------------------------------------------------------
Tennessee 6/98 28 U.S. Treasury Bonds Short $ (2,240)
------------------------------------------------------------------------------
Virginia 6/98 41 U.S. Treasury Bonds Short $ (24,580)
------------------------------------------------------------------------------
At February 28, 1998, the Portfolios had sufficient cash and/or securities
segregated to cover margin requirements on open futures contracts.
123
<PAGE>
Eaton Vance Municipals Funds as of February 28, 1998
INVESTMENT MANAGEMENT
Eaton Vance Municipals Funds
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and Trustee
Robert B. MacIntosh
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
Municipals Portfolios
Officers
Thomas J. Fetter
President and Portfolio
Manager of South Carolina
Municipals Portfolio
James B. Hawkes
Vice President and Trustee
William H. Ahern, Jr.
Vice President and Portfolio Manager
of Alabama Municipals Portfolio
Robert B. MacIntosh
Vice President and Portfolio Manager
of Louisiana and North Carolina
Municipals Portfolios
Timothy T. Browse
Vice President and Portfolio Manager
of Arkansas, Maryland and
Virginia Municipals Portfolios
Cynthia J. Clemson
Vice President and Portfolio Manager
of Georgia, Kentucky, Missouri, and
Tennessee Municipals Portfolios
Thomas M. Metzold
Vice President and Portfolio Manager of Oregon Municipals Portfolio
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
124
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<PAGE>
Portfolio Investment Advisor
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
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Eaton Vance Municipals Trust
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
- --------------------------------------------------------------------------------
