<PAGE>
Mutual Funds [PHOTO OF "EDUCATION"
for People SIGN ON STONE WALL
Who Pay APPEARS HERE]
Taxes/(R)/
Annual Report August 31, 1998
Alabama
EATON VANCE Arkansas
[NIGHT TIME PHOTO OF
TRAFFIC ON EXPRESSWAY MUNICIPALS Georgia
APPEARS HERE]
TRUST Kentucky
Louisiana
[PHOTO OF SUSPENSION
BRIDGE APPEARS HERE] Maryland
Missouri
North Carolina
Oregon
South Carolina
Tennessee
Virginia
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
LETTER TO SHAREHOLDERS
[PHOTO OF THOMAS J. FETTER APPEARS HERE]
Thomas J. Fetter,
President
The municipal bond market has posted solid returns in 1998 in an economy
characterized by slower growth and continued low inflation. First quarter GDP
rose a robust 5.5% annualized rate, but was followed by a more moderate 1.6%
pace in the second quarter as U.S. companies felt the effects of Asian economic
weakness. Meanwhile, the annualized inflation rate has declined to around 1%.
While there has been some pressure on wages and benefit costs, commodity prices
have continued to decline dramatically due to a slowing world economy and
slackening demand. As a consequence, the Federal Reserve maintained a stable
interest rate policy (until September 29, when the Federal Funds rate was
lowered to 5.25%). Against that backdrop, municipal bonds have turned in
positive returns, with the Lehman Brothers Municipal Bond Index* - an unmanaged
index of municipal bonds - rising 8.6% during the year ended August 31, 1998.
After a generation of deficit spending, the federal budget will register a
surplus in fiscal year 1998.
Bolstered by rising tax receipts, falling interest costs, and a renewed fiscal
discipline on the part of policy makers, the federal budget will register a
surplus this year for the first time in a generation. The surplus will likely
result in lower Treasury bond issuance in coming years, which should greatly
improve the outlook for interest rates.
With refundings producing heavy municipal supply, municipal bonds now offer
unusually good value.
The past twelve months have been characterized by a continued wave of
refundings, as municipal issuers have redeemed high-coupon older bonds and
replaced them with lower-coupon bonds. The surge in supply has restrained the
performance of municipals relative to Treasury bonds. As a result, municipal
yields represented 96% of Treasury yields at August 31, according to Bloomberg,
L.P. That ratio is very high by historical standards and suggests that
municipals may represent uncommonly good value. That is an important
consideration, especially given the recently overvalued status of some other
asset classes.
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[BAR CHART APPEARS HERE]
30-Year AAA-rated General Obligation (GO) Bond* 5.09%
Taxable equivalent yield in 36% tax bracket 7.95%
30 Year Treasury bond 5.27%
Principal and interest payments of Treasury securities are guaranteed by the
U.S. government.
* GO yields are a compilation of a representative variety of general obligations
and are not numerically representative of the Fund's yield. Statistics as of
August 31, 1998.
Past performance is no guarantee of future results
Source: Bloomberg L.P.
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Following an extraordinary three-year run of 20%-plus annual returns, the stock
market has entered a period of severe volatility. Moreover, the slowdown in Asia
and the economic uncertainty in emerging markets like Russia have clouded the
outlook for corporate profits, while prompting many investors to diversify their
portfolios further with bond investments. Given their attractive valuations
relative to other fixed-income vehicles, municipals are receiving increased
attention. And, of course, municipal bonds remain a good way to lower one's
income tax burden. For those reasons, we believe that municipals continue to
merit strong consideration from tax-conscious investors.
Sincerely,
/s/ Thomas J. Fetter,
Thomas J. Fetter,
President
October 9, 1998
* It is not possible to invest directly in an index.
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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>
Eaton Vance Alabama Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF WILLIAM H. AHERN APPEARS HERE]
William H. Ahern,
Portfolio Manager
The Economy
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. Economic growth in Alabama continued in 1998, though more slowly than it
has in recent years. Annual gross state product (GSP) growth estimates were
revised downward for 1998, from 3.1% to 2.6%, due to the impact of the
General Motors strike on Delphi plants, as well as the Japanese recession.
. At 5.4%, per capita personal income is still below national levels, but has
been on the rise, thanks in part to a diversifying economic base. The past
decade has seen a shift from the traditional manufacturing and agricultural
sectors to high-tech, health care, and business services. Unemployment as
of August 1998 was 3.7%.
Management Update
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. A relatively quiet municipals market this year allowed management the
opportunity to focus on structure, including strengthening call
characteristics. The primary structural goal is to effect a balance between
discount bonds with appreciation potential and premium bonds for income,
while avoiding current coupons.
. The Portfolio contains a number of industrial development bonds. The
proceeds of such bonds are used to finance projects, including utilities,
airport terminals and pollution control facilities for industry.
. Alabama has a very low rate of new credit issuance. Because management
invests whenever possible in non-rated and lower-rated investment grade
issues, we include credits from Puerto Rico in the portfolio. They are
attractive for their call protection and liquidity, which can often offer
higher returns.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 7.0% and 6.2%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$10.04 on August 31, 1998 from $9.86 on August 31, 1997, and the
reinvestment of $0.494 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $11.04 from $10.85, and the
reinvestment of $0.467 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$10.04 per share for Class A and $11.04 for Class B, distribution rates
were 4.92% and 4.21%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 3.97% and
3.39%, respectively./4/
Your Investment at Work
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[GRAPHIC APPEARS HERE]
The Board of Trustees of Alabama
Agricultural and Mechanical University
Revenue Bonds - Series 1998
. This bond issue helped refund the financing of improvements to the Living/
Learning Center, a 500-bed student center at Alabama A&M University.
. Located in Huntsville, A&M was founded in 1875 and has evolved into a
large, modern university with six undergraduate colleges.
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares./2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax./3/ 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./4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result./5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 7.0% 6.2%
Five Years N.A. 4.9
Life of Fund+ 5.1 6.6
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 1.9% 1.2%
Five Years N.A. 4.5
Life of Fund+ 4.0 6.6
+ Inception date: Class A: 12/7/93; Class B: 5/1/92
Comparison of Change in Value of a $10,000 Investment of Eaton Vance Alabama
Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
[LINE CHART APPEARS HERE]
Date Fund/NAV LMBI
-------- -------- -------
5/31/92 $10,000 $10,000
6/30/92 $10,225 $10,168
7/31/92 $10,685 $10,473
8/31/92 $10,438 $10,370
9/30/92 $10,476 $10,438
10/31/92 $10,231 $10,336
11/30/92 $10,571 $10,521
12/31/92 $10,702 $10,628
1/31/93 $10,806 $10,752
2/28/93 $11,255 $11,141
3/31/93 $11,094 $11,023
4/30/93 $11,229 $11,134
5/31/93 $11,294 $11,197
6/30/93 $11,469 $11,384
7/31/93 $11,466 $11,398
8/31/93 $11,722 $11,636
9/30/93 $11,847 $11,769
10/31/93 $11,875 $11,791
11/30/93 $11,733 $11,687
12/31/93 $12,032 $11,934
1/31/94 $12,152 $12,070
2/28/94 $11,806 $11,758
3/31/94 $11,150 $11,279
4/30/94 $11,223 $11,374
5/31/94 $11,330 $11,473
6/30/94 $11,212 $11,406
7/31/94 $11,474 $11,612
8/31/94 $11,470 $11,652
9/30/94 $11,263 $11,481
10/31/94 $10,977 $11,277
11/30/94 $10,709 $11,073
12/31/94 $11,061 $11,317
1/31/95 $11,476 $11,641
2/28/95 $11,854 $11,979
3/31/95 $11,954 $12,117
4/30/95 $11,945 $12,131
5/31/95 $12,301 $12,518
6/30/95 $12,092 $12,409
7/31/95 $12,176 $12,526
8/31/95 $12,317 $12,685
9/30/95 $12,353 $12,765
10/31/95 $12,591 $12,951
11/30/95 $12,830 $13,166
12/31/95 $12,961 $13,292
1/31/96 $13,035 $13,393
2/28/96 $12,891 $13,302
3/31/96 $12,696 $13,132
4/30/96 $12,686 $13,095
5/31/96 $12,697 $13,090
6/30/96 $12,822 $13,233
7/31/96 $12,928 $13,353
8/31/96 $12,914 $13,350
9/30/96 $13,112 $13,536
10/31/96 $13,195 $13,689
11/30/96 $13,381 $13,940
12/31/96 $13,343 $13,881
1/31/97 $13,379 $13,907
2/28/97 $13,521 $14,035
3/31/97 $13,337 $13,848
4/30/97 $13,460 $13,964
5/31/97 $13,661 $14,174
6/30/97 $13,777 $14,325
7/31/97 $14,132 $14,722
8/31/97 $13,990 $14,584
9/30/97 $14,118 $14,757
10/31/97 $14,168 $14,852
11/30/97 $14,249 $14,939
12/31/97 $14,439 $15,157
1/31/98 $14,568 $15,313
2/28/98 $14,584 $15,318
3/31/98 $14,576 $15,332
4/30/98 $14,494 $15,262
5/31/98 $14,598 $15,504
6/30/98 $14,637 $15,565
7/31/98 $14,662 $15,604
8/31/98 $14,853 $15,845
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
5/01/92. Index information is available only at month-end; therefore, the line
comparison begins at the next month following the commencement of the Fund's
investment operations.The chart compares the total return of the Fund's Class
B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 12/31/93 at net asset value would have grown to $12,613 on August
31, 1998; $12,015, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
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Federal income tax information on distributions. For federal income tax
purposes, 99.51% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
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3
<PAGE>
Eaton Vance Arkansas Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF TIMOTHY T. BROWSE APPEARS HERE]
Timothy T. Browse,
Portfolio Manager
The Economy
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. The Arkansas economy performed slightly above expectations in the first
half of 1998. Revised gross state product (GSP) projections of 3% reflect
above-average real growth. Unemployment was 4.5% for the month of August,
versus 5.3% a year ago. Total wage and salary gains were expected to
increase in 1998, exceeding the past two years.
. Farm income is being negatively affected by both the Asian financial crisis
and weakened commodity prices in the first half of 1998. Recovery is
expected to continue slowly, aided by federal assistance and general market
improvement.
. Manufacturing continued its mixed performance, exhibiting a decline in the
apparel and footwear industries, while food processing and industrial
machinery were on the rise. The forecast is for modest manufacturing losses
in 1999.
Management Update
- --------------------------------------------------------------------------------
. Despite some volatility in the bond market, the Portfolio achieved
favorable returns overall by trying to limit turnover in the portfolio. We
sought to minimize capital gains for shareholders through structural plays
and research.
. We purchased some Arkansas zero-coupon general obligation bonds to provide
upside potential and to complement the higher coupon bonds in the
portfolio. We're starting to move out of the lower credits and increase the
portfolio's average rating.
. Arkansas is a low-issuance state, so also in the Portfolio are
higher-yielding and non-rated credits from Puerto Rico, which can offer
good call protection and liquidity.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 8.0% and 7.2%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$10.07 on August 31, 1998 from $9.81 on August 31, 1997, and the
reinvestment of $0.504 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $10.80 from $10.51, and the
reinvestment of $0.453 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$10.07 per share for Class A and $10.80 for Class B, distribution rates
were 5.00% and 4.17%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 4.39% and
3.75%, respectively./4/
Your Investment at Work
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[GRAPHIC APPEARS HERE]
Little River County, Arkansas Refunding
Revenue Bonds - Georgia-Pacific Corp.
. This bond partly refunds a prior issue that financed the construction and
improvement of pollution control facilities for solid waste disposal at the
Georgia-Pacific plant near Ashdown.
. The bond will also help to refund all other Solid Waste Disposal Bonds in
Little River County, including the Nekoosa Papers, Inc. project.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares./2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax./3/ 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./4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result./5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.0% 7.2%
Five Years N.A. 4.7
Life of Fund+ 5.2 6.2
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 2.8% 2.2%
Five Years N.A. 4.4
Life of Fund+ 4.1 6.1
+ Inception date: Class A: 2/9/94; Class B: 10/2/92
Comparison of Change in Value of a $10,000 Investment in Eaton Vance Arkansas
Municipals Fund, Class B vs. the Lehman Brothers Municipal Bond Index*
[LINE CHART APPEARS HERE]
Date Fund/NAV Fund/CDSC LMBI
-------- -------- --------- -------
10/31/92 $10,000 - $10,000
11/30/92 $10,331 - $10,179
12/31/92 $10,482 - $10,283
1/31/93 $10,648 - $10,403
2/28/93 $11,130 - $10,779
3/31/93 $11,008 - $10,665
4/30/93 $11,124 - $10,773
5/31/93 $11,199 - $10,833
6/30/93 $11,387 - $11,014
7/31/93 $11,396 - $11,028
8/31/93 $11,633 - $11,258
9/30/93 $11,770 - $11,386
10/31/93 $11,766 - $11,408
11/30/93 $11,645 - $11,308
12/31/93 $11,925 - $11,546
1/31/94 $12,078 - $11,678
2/28/94 $11,730 - $11,376
3/31/94 $11,035 - $10,913
4/30/94 $11,162 - $11,005
5/31/94 $11,291 - $11,100
6/30/94 $11,181 - $11,036
7/31/94 $11,433 - $11,235
8/31/94 $11,472 - $11,274
9/30/94 $11,262 - $11,108
10/31/94 $10,950 - $10,911
11/30/94 $10,610 - $10,714
12/31/94 $10,930 - $10,950
1/31/95 $11,324 - $11,263
2/28/95 $11,716 - $11,590
3/31/95 $11,816 - $11,723
4/30/95 $11,806 - $11,737
5/31/95 $12,141 - $12,112
6/30/95 $11,942 - $12,006
7/31/95 $12,038 - $12,119
8/31/95 $12,179 - $12,273
9/30/95 $12,263 - $12,351
10/31/95 $12,478 - $12,530
11/30/95 $12,717 - $12,739
12/31/95 $12,862 - $12,861
1/31/96 $12,911 - $12,958
2/28/96 $12,754 - $12,870
3/31/96 $12,545 - $12,706
4/30/96 $12,509 - $12,670
5/31/96 $12,484 - $12,665
6/30/96 $12,596 - $12,803
7/31/96 $12,700 - $12,919
8/31/96 $12,673 - $12,916
9/30/96 $12,858 - $13,097
10/31/96 $12,940 - $13,245
11/30/96 $13,126 - $13,487
12/31/96 $13,086 - $13,430
1/31/97 $13,083 - $13,456
2/28/97 $13,199 - $13,579
3/31/97 $13,050 - $13,398
4/30/97 $13,147 - $13,510
5/31/97 $13,322 - $13,714
6/30/97 $13,450 - $13,860
7/31/97 $13,754 - $14,244
8/31/97 $13,649 - $14,110
9/30/97 $13,789 - $14,277
10/31/97 $13,864 - $14,370
11/30/97 $13,943 - $14,454
12/31/97 $14,133 - $14,665
1/31/98 $14,236 - $14,816
2/28/98 $14,263 - $14,821
3/31/98 $14,267 - $14,834
4/30/98 $14,197 - $14,767
5/31/98 $14,393 - $15,000
6/30/98 $14,417 - $15,060
7/31/98 $14,427 - $15,097
8/31/98 $14,630 $14,530 $15,331
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
10/02/92. Index information is available only at month-end; therefore, the
line comparison begins at the next month following the commencement of the
Fund's investment operations. The chart compares the total return of the
Fund's Class B with that of the Lehman Brothers Municipal Bond Index, a broad-
based, unmanaged market index. Returns are calculated by determining the
percentage change in net asset value (NAV) with all distributions reinvested.
The lines on the chart represent total returns of $10,000 hypothetical
investments in the Fund and the Lehman Brothers Municipal Bond Index. An
investment in Class A shares on 2/28/94 at net asset value would have grown to
$12,637 on August 31, 1998; $12,034, including the 4.75% sales charge. The
Index's total return does not reflect commissions or expenses that would have
been incurred if an investor individually purchased or sold the securities
represented in the Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 99.57% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
- --------------------------------------------------------------------------------
4
<PAGE>
Eaton Vance Georgia Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF CYNTHIA J. CLEMSON APPEARS HERE]
Cynthia J. Clemson,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Georgia continues to exhibit economic growth, but like other states, at a
slower rate in 1998. Forecasts call for real gross state product growth of
3.1%, lower than in 1997, but still higher than national gross domestic
product. An above-average rise in per capita total personal income will
help Georgia move closer to U.S. averages.
. Georgia's population is growing at twice the national rate, attributable to
an influx of both new workers and retirees. This combination helps keep
wages stable, while increasing demand for goods and services. The
unemployment rate as of August was 4.1%, down from 4.5% the previous year.
. The service sector continues to be the hottest growth area. Despite recent
slowdowns, the retail sector remains relatively robust, with Atlanta one of
the healthiest retail markets in the U.S.
Management Discussion
- --------------------------------------------------------------------------------
. The Portfolio strives to maintain a balanced, "barbell" approach:high-
coupon bonds for income and lower coupons to add upside trading potential.
To increase call protection, we have been investing in non-callable bonds.
. Management made selective changes in the Fund, concentrating on relative
value and making adjustments to increase upside trading potential.
. Long-term municipal issuance for Georgia continued to be fairly low. As a
result, we focused our efforts in sectors where issuance was higher, such
as the hospital sector, selectively investing for good relative value.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 7.8% and 7.0%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$9.73 on August 31, 1998 from $9.50 on August 31, 1997, and the
reinvestment of $0.491 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $10.38 from $10.14, and the
reinvestment of $0.457 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$9.73 per share for Class A and $10.38 for Class B, distribution rates were
5.05% and 4.38%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 4.32% and
3.79%, respectively./4/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Catholic Health East Revenue Bonds -
Fulco Hospital - Series 1998A
. This composite bond was used to refinance bonds issued by affiliates of
Catholic Health East, a Pennsylvania non-profit health care system. Fulco
Hospital in Fulton County is one of these affiliates.
. Catholic Health East system affiliates own and operate health care
facilities including acute care hospitals, long-term care facilities, and
skilled nursing facilities.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares./2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax./3/ 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./4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result./5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 7.8% 7.0%
Five Years N.A. 4.3
Life of Fund+ 4.5 5.8
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 2.7% 2.0%
Five Years N.A. 4.0
Life of Fund+ 3.4 5.8
+ Inception date: Class A: 12/7/93; Class B: 12/23/91
Comparison of Change in Value of a $10,000 Investment in Eaton Vance Georgia
Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
[LINE CHART APPEARS HERE]
Date Fund/NAV LMBI
-------- -------- -------
12/31/91 $10,000 $10,000
1/31/92 $9,880 $10,023
2/28/92 $9,908 $10,026
3/31/92 $9,886 $10,030
4/30/92 $9,968 $10,119
5/31/92 $10,154 $10,238
6/30/92 $10,374 $10,410
7/31/92 $10,799 $10,722
8/31/92 $10,587 $10,618
9/30/92 $10,585 $10,687
10/31/92 $10,281 $10,582
11/30/92 $10,622 $10,772
12/31/92 $10,751 $10,882
1/31/93 $10,859 $11,008
2/28/93 $11,366 $11,406
3/31/93 $11,155 $11,286
4/30/93 $11,306 $11,399
5/31/93 $11,361 $11,463
6/30/93 $11,553 $11,655
7/31/93 $11,505 $11,670
8/31/93 $11,780 $11,913
9/30/93 $11,919 $12,049
10/31/93 $11,913 $12,072
11/30/93 $11,786 $11,966
12/31/93 $12,054 $12,218
1/31/94 $12,187 $12,358
2/28/94 $11,837 $12,038
3/31/94 $11,198 $11,547
4/30/94 $11,259 $11,646
5/31/94 $11,309 $11,746
6/30/94 $11,194 $11,678
7/31/94 $11,417 $11,889
8/31/94 $11,433 $11,930
9/30/94 $11,237 $11,755
10/31/94 $10,937 $11,546
11/30/94 $10,608 $11,337
12/31/94 $10,901 $11,587
1/31/95 $11,269 $11,918
2/28/95 $11,612 $12,265
3/31/95 $11,726 $12,406
4/30/95 $11,703 $12,420
5/31/95 $11,998 $12,816
6/30/95 $11,802 $12,704
7/31/95 $11,838 $12,825
8/31/95 $11,993 $12,987
9/30/95 $12,089 $13,069
10/31/95 $12,309 $13,259
11/30/95 $12,553 $13,480
12/31/95 $12,687 $13,609
1/31/96 $12,748 $13,712
2/28/96 $12,595 $13,619
3/31/96 $12,390 $13,445
4/30/96 $12,351 $13,407
5/31/96 $12,347 $13,402
6/30/96 $12,476 $13,548
7/31/96 $12,584 $13,671
8/31/96 $12,582 $13,668
9/30/96 $12,787 $13,859
10/31/96 $12,885 $14,015
11/30/96 $13,103 $14,272
12/31/96 $13,049 $14,212
1/31/97 $13,033 $14,239
2/28/97 $13,180 $14,369
3/31/97 $13,013 $14,178
4/30/97 $13,127 $14,297
5/31/97 $13,296 $14,512
6/30/97 $13,375 $14,666
7/31/97 $13,743 $15,073
8/31/97 $13,608 $14,931
9/30/97 $13,767 $15,108
10/31/97 $13,845 $15,206
11/30/97 $13,914 $15,295
12/31/97 $14,124 $15,518
1/31/98 $14,258 $15,678
2/28/98 $14,246 $15,683
3/31/98 $14,210 $15,697
4/30/98 $14,109 $15,626
5/31/98 $14,341 $15,873
6/30/98 $14,352 $15,936
7/31/98 $14,363 $15,976
8/31/98 $14,560 $16,223
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
12/23/91. Index information is available only at month-end; therefore, the
line comparison begins at the next month following the commencement of the
Fund's investment operations.The chart compares the total return of the Fund's
Class B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 12/31/93 at net asset value would have grown to $12,310 on August
31, 1998; $11,725, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 99.86% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
- --------------------------------------------------------------------------------
5
<PAGE>
Eaton Vance Kentucky Municipals Fund as of August 31, 1998
- ----------------------------------------------------------
Investment Update
[PHOTO OF CYNTHIA J. CLEMSON APPEARS HERE]
Cynthia J. Clemson,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Steady but moderate growth was forecast for the Kentucky economy in 1998.
Gross state product was expected to rise by a moderate 2.8%, with similar
rates projected for the next three years.
. Kentucky's major industry groups, with the exception of mining, are
expected to add employment through 1999. The biggest growth sectors are
again projected to be services and retail trade, and total employment
should grow an average of nearly 2.6% for the next 3 years.
. Economists anticipate that growth in Kentucky will decelerate through 1999
and 2000, though it will outpace the U.S. economy for most employment and
income measures. Population growth will probably grow at about 2.6%,
lagging the national average.
Management Update
- --------------------------------------------------------------------------------
. Management's goal this year was to make structural changes to the
Portfolio. The ongoing aim of such changes is to achieve the
"barbell"structure, in which high and low coupon bonds are balanced to
provide both income and total return.
. Management added more upside trading potential to the Portfolio by
increasing the number of lower-coupon bonds, which have performed
especially well when interest rates decline.
. The Portfolio also continued its ongoing effort to improve call protection
by swapping out of shorter call bonds in favor of longer call bonds.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 7.7% and 7.0%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$9.91 on August 31, 1998 from $9.68 on August 31, 1997, and the
reinvestment of $0.502 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $10.66 from $10.41, and the
reinvestment of $0.463 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$9.91 per share for Class A and $10.66 for Class B, distribution rates were
5.07% and 4.32%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 4.07% and
3.55%, respectively./4/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Kentucky Economic Development Finance
Authority Medical Center Revenue Bonds
King's Daughters' Medical Center Project
. The proceeds from these bonds were used to help finance major improvements
and renovations at the King's Daughters' Medical Center, in Ashland, the
largest hospital in the area.
. The Center was founded in 1899, and is currently a 340-licensed bed, acute
care regional referral center serving a population of over a quarter of a
million people.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares./2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax./3/ 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./4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result./5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 7.7% 7.0%
Five Years N.A. 4.8
Life of Fund+ 5.0 6.2
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 2.6% 2.0%
Five Years N.A. 4.5
Life of Fund+ 3.9 6.2
+ Inception date: Class A: 12/7/93; Class B: 12/23/91
Comparison of Change in Value of a $10,000 investment in Eaton Vance Kentucky
Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
[LINE CHART APPEARS HERE]
Eaton Vance Kentucky Municipals Fund, Class B vs.
Lehman Brothers Municipal Bond Index*
Date Fund/NAV LMBI
-------- -------- -------
12/31/91 $10,000 $10,000
1/31/92 $9,840 $10,023
2/28/92 $9,919 $10,026
3/31/92 $9,863 $10,030
4/30/92 $9,976 $10,119
5/31/92 $10,160 $10,238
6/30/92 $10,359 $10,410
7/31/92 $10,761 $10,722
8/31/92 $10,527 $10,618
9/30/92 $10,545 $10,687
10/31/92 $10,261 $10,582
11/30/92 $10,611 $10,772
12/31/92 $10,726 $10,882
1/31/93 $10,843 $11,008
2/28/93 $11,328 $11,406
3/31/93 $11,150 $11,286
4/30/93 $11,300 $11,399
5/31/93 $11,377 $11,463
6/30/93 $11,589 $11,655
7/31/93 $11,563 $11,670
8/31/93 $11,782 $11,913
9/30/93 $11,921 $12,049
10/31/93 $11,938 $12,072
11/30/93 $11,802 $11,966
12/31/93 $12,080 $12,218
1/31/94 $12,203 $12,358
2/28/94 $11,832 $12,038
3/31/94 $11,172 $11,547
4/30/94 $11,246 $11,646
5/31/94 $11,343 $11,746
6/30/94 $11,207 $11,678
7/31/94 $11,454 $11,889
8/31/94 $11,471 $11,930
9/30/94 $11,231 $11,755
10/31/94 $10,921 $11,546
11/30/94 $10,641 $11,337
12/31/94 $10,958 $11,587
1/31/95 $11,387 $11,918
2/28/95 $11,756 $12,265
3/31/95 $11,858 $12,406
4/30/95 $11,849 $12,420
5/31/95 $12,218 $12,816
6/30/95 $11,999 $12,704
7/31/95 $12,073 $12,825
8/31/95 $12,229 $12,987
9/30/95 $12,302 $13,069
10/31/95 $12,535 $13,259
11/30/95 $12,792 $13,480
12/31/95 $12,927 $13,609
1/31/96 $12,976 $13,712
2/28/96 $12,812 $13,619
3/31/96 $12,646 $13,445
4/30/96 $12,608 $13,407
5/31/96 $12,605 $13,402
6/30/96 $12,746 $13,548
7/31/96 $12,815 $13,671
8/31/96 $12,774 $13,668
9/30/96 $12,965 $13,859
10/31/96 $13,076 $14,015
11/30/96 $13,254 $14,272
12/31/96 $13,239 $14,212
1/31/97 $13,274 $14,239
2/28/97 $13,407 $14,369
3/31/97 $13,267 $14,178
4/30/97 $13,354 $14,297
5/31/97 $13,534 $14,512
6/30/97 $13,679 $14,666
7/31/97 $14,034 $15,073
8/31/97 $13,939 $14,931
9/30/97 $14,072 $15,108
10/31/97 $14,150 $15,206
11/30/97 $14,233 $15,295
12/31/97 $14,416 $15,518
1/31/98 $14,523 $15,678
2/28/98 $14,553 $15,683
3/31/98 $14,585 $15,697
4/30/98 $14,500 $15,626
5/31/98 $14,690 $15,873
6/30/98 $14,716 $15,936
7/31/98 $14,741 $15,976
8/31/98 $14,910 $16,223
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
12/23/91. Index information is available only at month-end; therefore, the
line comparison begins at the next month following the commencement of the
Fund's investment operations.The chart compares the total return of the Fund's
Class B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 12/31/93 at net asset value would have grown to $12,574 on August
31, 1998; $11,976, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 99.89% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
- --------------------------------------------------------------------------------
6
<PAGE>
Eaton Vance Louisiana Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF ROBERT B. MACINTOSH APPEARS HERE]
Robert B. MacIntosh,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Louisiana's resource-driven economy continues to grow at a very modest rate
as a result of the depressed oil and gas industries. Though the state has
attempted to diversify from these industries somewhat, Louisiana's economy
is still not as strong as those of most other states.
. A further hindrance is the state property tax, which applies only to
properties valued above $75,000. This exempts a great deal of potential
revenue, and makes the state reliant on variable taxes.
. On a positive note, Louisiana's economic outlook has improved in several
ways: state government employment, Medicaid spending, and debt burden have
all been brought under better control.
Management Update
- --------------------------------------------------------------------------------
. Credit ratings have tended to be lower in Louisiana because of problems in
the economy. Industries such as paper, oil, and gas, which could be
bolstering the state economy, were in a slump. We have been swapping out of
a number of these industrial revenue bonds and into higher quality
securities to bring more diversity.
. We have also been increasing our call protection in the Portfolio by
upgrading as much as possible to include longer-call bonds.
. The Portfolio has an AA average rating, due in part to its holdings in
insured paper. The Portfolio has a fairly high percentage of insured
bonds,+ at about 32%, which offsets some of the lower-quality,
high-yielding paper.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 8.1% and 7.4%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$9.99 on August 31, 1998 from $9.75 on August 31, 1997, and the
reinvestment of $0.534 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $10.57 from $10.31, and the
reinvestment of $0.485 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$9.99 per share for Class A and $10.57 for Class B, distribution rates were
5.35% and 4.56%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 4.64% and
4.12%, respectively./4/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
State of Louisiana - Louisiana Offshore
Terminal Authority
. These bonds provide revenues for the Authority, which helps licensees
finance deepwater ports and terminal accommodations for oil tankers.
. The Port Complex provides off-loading facilities for oil tankers and
onshore oil storage sites; it has an average daily throughput of 1.0 to 1.2
million barrels of oil.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares./2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax. /3/ 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./4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result./5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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. +Private
insurance does not decrease the risk of loss of principal associated with
this investment. 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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.1% 7.4%
Five Years N.A. 4.4
Life of Fund+ 5.4 6.3
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.0% 2.4%
Five Years N.A. 4.1
Life of Fund+ 4.3 6.2
+ Inception date: Class A: 2/14/94; Class B: 10/2/92
Comparison of Change in Value of a $10,000 Investment in Eaton Vance Louisiana
Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
[LINE CHART APPEARS HERE]
Date Fund/NAV Fund/CDSC LMBI
-------- ------- --------- -------
10/31/92 $10,000 - $10,000
11/30/92 $10,439 - $10,179
12/31/92 $10,601 - $10,283
1/31/93 $10,778 - $10,403
2/28/93 $11,303 - $10,779
3/31/93 $11,160 - $10,665
4/30/93 $11,307 - $10,773
5/31/93 $11,382 - $10,833
6/30/93 $11,613 - $11,014
7/31/93 $11,578 - $11,028
8/31/93 $11,881 - $11,258
9/30/93 $12,051 - $11,386
10/31/93 $12,047 - $11,408
11/30/93 $11,905 - $11,308
12/31/93 $12,219 - $11,546
1/31/94 $12,364 - $11,678
2/28/94 $11,912 - $11,376
3/31/94 $11,165 - $10,913
4/30/94 $11,264 - $11,005
5/31/94 $11,409 - $11,100
6/30/94 $11,267 - $11,036
7/31/94 $11,514 - $11,235
8/31/94 $11,501 - $11,274
9/30/94 $11,268 - $11,108
10/31/94 $10,954 - $10,911
11/30/94 $10,647 - $10,714
12/31/94 $10,963 - $10,950
1/31/95 $11,378 - $11,263
2/28/95 $11,767 - $11,590
3/31/95 $11,848 - $11,723
4/30/95 $11,817 - $11,737
5/31/95 $12,065 - $12,112
6/30/95 $11,864 - $12,006
7/31/95 $11,952 - $12,119
8/31/95 $12,085 - $12,273
9/30/95 $12,172 - $12,351
10/31/95 $12,393 - $12,530
11/30/95 $12,613 - $12,739
12/31/95 $12,762 - $12,861
1/31/96 $12,777 - $12,958
2/28/96 $12,580 - $12,870
3/31/96 $12,393 - $12,706
4/30/96 $12,395 - $12,670
5/31/96 $12,446 - $12,665
6/30/96 $12,564 - $12,803
7/31/96 $12,686 - $12,919
8/31/96 $12,661 - $12,916
9/30/96 $12,867 - $13,097
10/31/96 $12,993 - $13,245
11/30/96 $13,199 - $13,487
12/31/96 $13,162 - $13,430
1/31/97 $13,175 - $13,456
2/28/97 $13,284 - $13,579
3/31/97 $13,161 - $13,398
4/30/97 $13,238 - $13,510
5/31/97 $13,382 - $13,714
6/30/97 $13,490 - $13,860
7/31/97 $13,858 - $14,244
8/31/97 $13,740 - $14,110
9/30/97 $13,861 - $14,277
10/31/97 $13,968 - $14,370
11/30/97 $14,067 - $14,454
12/31/97 $14,252 - $14,665
1/31/98 $14,321 - $14,816
2/28/98 $14,325 - $14,821
3/31/98 $14,360 - $14,834
4/30/98 $14,222 - $14,767
5/31/98 $14,497 - $15,000
6/30/98 $14,484 - $15,060
7/31/98 $14,497 - $15,097
8/31/98 $14,753 $14,653 $15,331
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
10/02/92. Index information is available only at month-end; therefore, the
line comparison begins at the next month following the commencement of the
Fund's investment operations.The chart compares the total return of the Fund's
Class B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 2/28/94 at net asset value would have grown to $12,761 on August
31, 1998; $12,151, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For Federal income tax
purposes, 99.86% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
- --------------------------------------------------------------------------------
7
<PAGE>
Eaton Vance Maryland Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF TIMOTHY T. BROWSE APPEARS HERE]
Timothy T. Browse,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Maryland's stable outlook is a reflection of its sound financial
performance, prudent debt management, revived economic growth, and well-
diversified economy. The unemployment rate as of August 1998 was 4.7%, a
decrease from over 5.0% a year ago.
. Per capita personal income still ranks sixth in the U.S. at 113.2% of the
national average. Housing permits increased 22.7% from July 1997 to July
1998.
. Maryland's state finances are strong going into 1999. The 1999 budget is
$16.6 billion, to be spent in part on education, children's health
initiatives, and the year 2000 computer problem. The 1999 budget estimates
a general fund surplus of $14.5 million.
Management Update
- --------------------------------------------------------------------------------
. With most investment activity focused on other assets this year, lower
demand for municipals led to historically attractive yield ratios. This
environment allowed us to minimize capital gains for shareholders while
maximizing distribution rates.
. In general, management seeks to diversify the Portfolio by being broadly
distributed across sectors, rather than investing in one particular area.
We continued to invest using the "barbell" strategy, which balances
discount bonds for higher yields and premium, or "cushion" bonds, for
better overall returns.
. Maryland has had increasing school issuance, so we have been investing in a
number of lower-rated schools and colleges as a way of diversifying from
the hospital sector. These schools offer both attractive credits and
slightly higher yields.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 7.7% and 7.0%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$10.05 on August 31, 1998 from $9.81 on August 31, 1997, and the
reinvestment of $0.498 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $10.98 from $10.71, and the
reinvestment of $0.465 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$10.05 per share for Class A and $10.98 for Class B, distribution rates
were 4.96% and 4.21%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 4.10% and
3.58%, respectively./4/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
City of Annapolis, Maryland, Economic
Development Revenue Bonds -
St. John's College Facility
. This bond issue is helping to advance refund an earlier series and to
finance construction and acquisition of facilities at the Annapolis campus
of St. John's, a four-year, co-educational liberal arts college founded in
1696.
. Specific improvements include:renovations to the boat-house, dormitories,
President's House, and library; and campus-wide telephone and computer
systems.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares./2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax. /3/ 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./4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result./5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 7.7% 7.0%
Five Years N.A. 4.9
Life of Fund+ 5.2 6.5
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 2.6% 2.0%
Five Years N.A. 4.5
Life of Fund+ 4.1 6.5
+ Inception date: Class A: 12/10/93; Class B: 2/3/92
Comparison of Change in Value of $10,000 Investment in Eaton Vance Maryland
Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
[LINE CHART APPEARS HERE]
Date Fund/NAV LMBI
------- -------- -------
2/28/92 $10,000 $10,000
3/31/92 $9,999 $10,003
4/30/92 $10,098 $10,093
5/31/92 $10,238 $10,212
6/30/92 $10,432 $10,383
7/31/92 $10,871 $10,694
8/31/92 $10,648 $10,590
9/30/92 $10,676 $10,659
10/31/92 $10,320 $10,554
11/30/92 $10,665 $10,743
12/31/92 $10,830 $10,853
1/31/93 $10,987 $10,979
2/28/93 $11,434 $11,376
3/31/93 $11,277 $11,256
4/30/93 $11,425 $11,370
5/31/93 $11,500 $11,433
6/30/93 $11,721 $11,625
7/31/93 $11,674 $11,640
8/31/93 $11,946 $11,882
9/30/93 $12,128 $12,018
10/31/93 $12,134 $12,041
11/30/93 $11,966 $11,934
12/31/93 $12,258 $12,186
1/31/94 $12,402 $12,326
2/28/94 $12,003 $12,006
3/31/94 $11,252 $11,517
4/30/94 $11,281 $11,615
5/31/94 $11,401 $11,716
6/30/94 $11,279 $11,647
7/31/94 $11,535 $11,858
8/31/94 $11,576 $11,899
9/30/94 $11,328 $11,724
10/31/94 $11,011 $11,516
11/30/94 $10,678 $11,307
12/31/94 $11,049 $11,556
1/31/95 $11,449 $11,887
2/28/95 $11,894 $12,232
3/31/95 $12,007 $12,373
4/30/95 $11,974 $12,388
5/31/95 $12,361 $12,783
6/30/95 $12,087 $12,671
7/31/95 $12,184 $12,791
8/31/95 $12,352 $12,953
9/30/95 $12,426 $13,035
10/31/95 $12,682 $13,225
11/30/95 $12,963 $13,444
12/31/95 $13,134 $13,574
1/31/96 $13,235 $13,676
2/28/96 $13,051 $13,584
3/31/96 $12,839 $13,410
4/30/96 $12,804 $13,372
5/31/96 $12,791 $13,367
6/30/96 $12,919 $13,513
7/31/96 $13,039 $13,635
8/31/96 $13,024 $13,632
9/30/96 $13,240 $13,822
10/31/96 $13,337 $13,979
11/30/96 $13,553 $14,235
12/31/96 $13,501 $14,175
1/31/97 $13,486 $14,201
2/28/97 $13,618 $14,332
3/31/97 $13,429 $14,141
4/30/97 $13,555 $14,259
5/31/97 $13,748 $14,474
6/30/97 $13,879 $14,628
7/31/97 $14,243 $15,033
8/31/97 $14,149 $14,892
9/30/97 $14,294 $15,069
10/31/97 $14,371 $15,166
11/30/97 $14,467 $15,255
12/31/97 $14,661 $15,478
1/31/98 $14,794 $15,637
2/28/98 $14,782 $15,642
3/31/98 $14,788 $15,656
4/30/98 $14,690 $15,585
5/31/98 $14,919 $15,832
6/30/98 $14,931 $15,894
7/31/98 $14,928 $15,934
8/31/98 $15,137 $16,180
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
2/03/92. Index information is available only at month-end; therefore, the line
comparison begins at the next month following the commencement of the Fund's
investment operations. The chart compares the total return of the Fund's Class
B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in
Class A shares on 12/31/93 at net asset value would have grown to $12,653 on
August 31, 1998; $12,053, including the 4.75% sales charge. The Index's total
return does not reflect commissions or expenses that would have been incurred
if an investor individually purchased or sold the securities represented in
the Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 99.82% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
- --------------------------------------------------------------------------------
8
<PAGE>
Eaton Vance Missouri Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF CYNTHIA J. CLEMSON APPEARS HERE]
Cynthia J. Clemson,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Missouri's financial standing has grown steadily over the last four years.
Such growth is a result of strong economic performance, both nationwide and
statewide, and state management's success in slowing expenditures.
. Employment and personal wealth continue to make positive gains.
Unemployment was a low 4.1% as of August. Modest employment declines have
occurred in manufacturing, but they have been offset by gains in the trade
and service sectors. Standard & Poor's Data Research, Inc. predicts
Missouri will continue its job growth, but at a lower rate, over the next 5
years.
. The state's fund balance, excluding constitutionally mandated tax refunds,
is a robust 11% of general fund expenditures and transfers. Thanks to
Missouri's strong economic performance, it is anticipating surplus
operations for its fiscal year 1998.
Management Update
- --------------------------------------------------------------------------------
. Long-term municipal issuance for Missouri has been fairly low this past
year. As a result, we focused our efforts in sectors where issuance was
higher, selectively investing for good relative value.
. We found some good opportunities in both the hospital and school district
sectors. The Portfolio has added some BBB-rated hospitals, which added
yield, and several of the school district bonds came with zero-coupons,
which helped maintain the coupon structure.
. Management has also been selling out of prerefunded bonds and increasing
call protection by swapping out of bonds with shorter calls into
longer-call and non-callable issues.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 8.6% and 7.8%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$10.27 on August 31, 1998 from $9.93 on August 31, 1997, and the
reinvestment of $0.497 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $11.38 from $11.01, and the
reinvestment of $0.474 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$10.27 per share for Class A and $11.38 for Class B, distribution rates
were 4.84% and 4.14%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 4.25% and
3.70%, respectively./4/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Francis Howell School District, St. Charles
County, MO School Bonds
. The proceeds from this bond issue are financing the renovation and
construction of additional school sites, buildings, and repairs, as well as
the purchase of furniture and equipment.
. The Francis Howell School District covers 150 miles of St. Charles County,
bordering the St. Louis metropolitan area. It currently maintains 7
elementary schools, 2 junior highs, and 2 high schools.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares./2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax./3/ 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. /4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result./5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.6% 7.8%
Five Years N.A. 5.2
Life of Fund+ 5.6 7.2
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.4% 2.8%
Five Years N.A. 4.9
Life of Fund+ 4.6 7.2
+ Inception date: Class A: 12/7/93; Class B: 5/1/92
Comparison of Change in Value of a $10,000 Investment in Eaton Vance Missouri
Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
[LINE CHART APPEARS HERE]
Date Fund/NAV LMBI
------- -------- -------
5/31/92 $10,000 $10,000
6/30/92 $10,245 $10,168
7/31/92 $10,635 $10,473
8/31/92 $10,480 $10,370
9/30/92 $10,528 $10,438
10/31/92 $10,192 $10,336
11/30/92 $10,593 $10,521
12/31/92 $10,722 $10,628
1/31/93 $10,857 $10,752
2/28/93 $11,379 $11,141
3/31/93 $11,259 $11,023
4/30/93 $11,395 $11,134
5/31/93 $11,481 $11,197
6/30/93 $11,679 $11,384
7/31/93 $11,645 $11,398
8/31/93 $11,913 $11,636
9/30/93 $12,071 $11,769
10/31/93 $12,057 $11,791
11/30/93 $11,894 $11,687
12/31/93 $12,175 $11,934
1/31/94 $12,317 $12,070
2/28/94 $11,938 $11,758
3/31/94 $11,236 $11,279
4/30/94 $11,276 $11,374
5/31/94 $11,395 $11,473
6/30/94 $11,310 $11,406
7/31/94 $11,540 $11,612
8/31/94 $11,548 $11,652
9/30/94 $11,307 $11,481
10/31/94 $10,997 $11,277
11/30/94 $10,683 $11,073
12/31/94 $11,037 $11,317
1/31/95 $11,477 $11,641
2/28/95 $11,892 $11,979
3/31/95 $11,981 $12,117
4/30/95 $11,996 $12,131
5/31/95 $12,425 $12,518
6/30/95 $12,226 $12,409
7/31/95 $12,275 $12,526
8/31/95 $12,451 $12,685
9/30/95 $12,523 $12,765
10/31/95 $12,749 $12,951
11/30/95 $13,024 $13,166
12/31/95 $13,180 $13,292
1/31/96 $13,266 $13,393
2/28/96 $13,085 $13,302
3/31/96 $12,828 $13,132
4/30/96 $12,781 $13,095
5/31/96 $12,780 $13,090
6/30/96 $12,918 $13,233
7/31/96 $13,049 $13,353
8/31/96 $13,023 $13,350
9/30/96 $13,248 $13,536
10/31/96 $13,382 $13,689
11/30/96 $13,607 $13,940
12/31/96 $13,544 $13,881
1/31/97 $13,543 $13,907
2/28/97 $13,699 $14,035
3/31/97 $13,502 $13,848
4/30/97 $13,613 $13,964
5/31/97 $13,829 $14,174
6/30/97 $13,958 $14,325
7/31/97 $14,367 $14,722
8/31/97 $14,250 $14,584
9/30/97 $14,380 $14,757
10/31/97 $14,457 $14,852
11/30/97 $14,552 $14,939
12/31/97 $14,782 $15,157
1/31/98 $14,913 $15,313
2/28/98 $14,956 $15,318
3/31/98 $14,975 $15,332
4/30/98 $14,867 $15,262
5/31/98 $15,105 $15,504
6/30/98 $15,132 $15,565
7/31/98 $15,143 $15,604
8/31/98 $15,363 $15,845
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
5/01/92. Index information is available only at month-end; therefore, the line
comparison begins at the next month following the commencement of the Fund's
investment operations. The chart compares the total return of the Fund's Class
B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 12/31/93 at net asset value would have grown to $12,885 on August
31, 1998; $12,275 including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 99.13% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
- --------------------------------------------------------------------------------
9
<PAGE>
Eaton Vance North Carolina Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF ROBERT B. MACINTOSH APPEARS HERE]
Robert B. MacIntosh,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. North Carolina's economy is one of the healthiest in the U.S., as well as
one of the most well-diversified. Nonfarm employment rose 1.7%, or by
about 60,000 jobs, between July 1997 and July 1998, while the unemployment
rate remained steady at 3.6% for August 1998 from a year ago.
. Other economic indicators were also on the rise. North Carolina's
residential building permits, an indicator of construction activity,
increased by 5.1% between June 1997 and June 1998. Retail sales, a measure
of consumer spending, rose 4.1% in the period from May 1997 to May 1998,
versus the national average of 3.5%.
. The tobacco industry, historically a staple of the North Carolina economy,
has slowed somewhat. The sector is still strong, thanks in part to an
expanding overseas market, but over the long term will likely continue to
shrink.
Management Update
- --------------------------------------------------------------------------------
. North Carolina has a large number of high-quality bonds; its credit quality
is perhaps the highest in the nation. As a result, the Portfolio is
invested more heavily in AA and A-rated bonds, rather than in insured AAA
credits, to increase the overall yield.
. Healthcare is the Portfolio's biggest holding, at about 22%, due in part to
the high level of issuance in that area. A bigger supply in a sector tends
to make those bonds more attractive, because yields are higher.
. To increase call protection, we have been trying to invest in non-callable
bonds. We've also added some zero-coupon bonds, the ultimate instrument of
upward trading potential. They offset some of the higher-coupon bonds that
don't trade up as well but provide good current income.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 8.2% and 7.4%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$9.88 on August 31, 1998 from $9.61 on August 31, 1997, and the
reinvestment of $0.502 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $10.63 from $10.34, and the
reinvestment of $0.463 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$9.88 per share for Class A and $10.63 for Class B, distribution rates were
5.08% and 4.33%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 4.22% and
3.61%, respectively./4/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
North Carolina Medical Care Commission-
Annie Pitt Memorial Hospital Revenue
Refunding Bonds
. This bond issue helped refinance construction projects at Annie Penn
Memorial Hospital, a 152-bed facility located in Reidsville, founded in
1930.
. Recent projects have included the construction of a patient tower with 80
acute care rooms, the addition of emergency services and radiology, and the
introduction of home health services and nursing facilities.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares./2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax./3/ 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. /4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result./5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.2% 7.4%
Five Years N.A. 4.4
Life of Fund+ 4.9 6.1
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.1% 2.4%
Five Years N.A. 4.1
Life of Fund+ 3.9 6.1
+ Inception date: Class A: 12/7/93; Class B: 10/23/91
Comparison of Change in Value of a $10,000 Investment in Eaton Vance North
Carolina Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
Date Fund/NAV LMBI
-------- -------- -------
10/31/91 $10,000 $10,000
11/30/91 $9,920 $10,028
12/31/91 $10,226 $10,243
1/31/92 $10,208 $10,266
2/28/92 $10,217 $10,270
3/31/92 $10,214 $10,273
4/30/92 $10,307 $10,365
5/31/92 $10,474 $10,487
6/30/92 $10,695 $10,663
7/31/92 $11,111 $10,983
8/31/92 $10,845 $10,876
9/30/92 $10,843 $10,947
10/31/92 $10,525 $10,839
11/30/92 $10,899 $11,033
12/31/92 $11,052 $11,146
1/31/93 $11,171 $11,276
2/28/93 $11,606 $11,683
3/31/93 $11,426 $11,560
4/30/93 $11,567 $11,676
5/31/93 $11,634 $11,742
6/30/93 $11,827 $11,938
7/31/93 $11,790 $11,954
8/31/93 $12,089 $12,203
9/30/93 $12,219 $12,342
10/31/93 $12,192 $12,366
11/30/93 $12,043 $12,256
12/31/93 $12,321 $12,515
1/31/94 $12,468 $12,658
2/28/94 $12,107 $12,330
3/31/94 $11,445 $11,828
4/30/94 $11,497 $11,929
5/31/94 $11,573 $12,032
6/30/94 $11,449 $11,962
7/31/94 $11,651 $12,178
8/31/94 $11,681 $12,220
9/30/94 $11,488 $12,041
10/31/94 $11,188 $11,827
11/30/94 $10,849 $11,613
12/31/94 $11,180 $11,868
1/31/95 $11,577 $12,208
2/28/95 $11,947 $12,563
3/31/95 $12,064 $12,707
4/30/95 $12,042 $12,722
5/31/95 $12,341 $13,128
6/30/95 $12,122 $13,013
7/31/95 $12,160 $13,136
8/31/95 $12,269 $13,303
9/30/95 $12,354 $13,387
10/31/95 $12,626 $13,582
11/30/95 $12,911 $13,807
12/31/95 $13,047 $13,940
1/31/96 $13,085 $14,045
2/28/96 $12,920 $13,950
3/31/96 $12,715 $13,772
4/30/96 $12,715 $13,733
5/31/96 $12,700 $13,728
6/30/96 $12,805 $13,878
7/31/96 $12,889 $14,003
8/31/96 $12,861 $14,000
9/30/96 $13,068 $14,196
10/31/96 $13,167 $14,356
11/30/96 $13,387 $14,619
12/31/96 $13,308 $14,557
1/31/97 $13,305 $14,585
2/28/97 $13,413 $14,719
3/31/97 $13,233 $14,522
4/30/97 $13,348 $14,644
5/31/97 $13,558 $14,865
6/30/97 $13,692 $15,023
7/31/97 $14,130 $15,439
8/31/97 $13,954 $15,294
9/30/97 $14,074 $15,476
10/31/97 $14,166 $15,575
11/30/97 $14,237 $15,667
12/31/97 $14,435 $15,895
1/31/98 $14,584 $16,059
2/28/98 $14,572 $16,064
3/31/98 $14,578 $16,079
4/30/98 $14,463 $16,006
5/31/98 $14,683 $16,259
6/30/98 $14,737 $16,323
7/31/98 $14,748 $16,364
8/31/98 $14,990 $16,617
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
10/23/91. Index information is available only at month-end; therefore, the
line comparison begins at the next month following the commencement of the
Fund's investment operations.The chart compares the total return of the Fund's
Class B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 12/31/93 at net asset value would have grown to $12,520 on August
31, 1998; $11,925, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 98.75% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
- --------------------------------------------------------------------------------
10
<PAGE>
Eaton Vance Oregon Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF THOMAS M. METZOLD APPEARS HERE]
Thomas M. Metzold,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Over the past few years, Oregon's economy has mirrored the rest of the
U.S., with strong growth accompanied by low unemployment. The state did
experience a slight contraction in the second quarter:total payroll
employment fell by 0.2%. In August, unemployment was at 5.7%.
. Although moderate gains were made in the transportation, services, and
financial sectors, these were offset by net job losses in construction,
manufacturing, and retail and wholesale trade.
. Oregon's high-technology industry, which accounted for 17.6% of total
manufacturing jobs in early 1997, suffered employment losses in the first
half of 1998, as high-tech firms reacted to the new market conditions
caused by the Asian economic conditions with job cuts and layoffs.
Management Update
- --------------------------------------------------------------------------------
. Management strives to maintain a balanced, "barbell" approach to the
Portfolio:high-coupon bonds for income and lower coupons to add upside
trading potential. To increase call protection, we have been trying to
invest in non-callable bonds.
. With the municipal market trading in a narrow range this year, management
made relatively few changes, concentrating on valuation and adjustments to
increase upside trading potential.
. Municipal issuance in Oregon was relatively high. With ample supply, we
focused our efforts on selecting new bonds while reducing our exposure to
housing issues.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 8.1% and 7.2%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$9.87 on August 31, 1998 from $9.60 on August 31, 1997, and the
reinvestment of $0.488 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $10.80 from $10.51, and the
reinvestment of $0.454 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$9.87 per share for Class A and $10.80 for Class B, distribution rates were
4.94% and 4.19%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 4.19% and
3.64%, respectively./4/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Hood River County Health Facilities
Authority Elderly Housing - Down
Manor Project Revenue Bonds
. The Down Manor Retirement Center is a non-profit residential community for
active retirees. The Center provides independent living facilities and a
full complement of services.
. The Center is affiliated with the Hood River Hospital, and the bonds are
guaranteed by the Hospital, as part of a plan to fully integrate healthcare
and community issues for Hood River County residents.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares./2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax./3/ 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./4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result./5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.1% 7.2%
Five Years N.A. 4.3
Life of Fund+ 4.8 6.3
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 2.9% 2.2%
Five Years N.A. 4.0
Life of Fund+ 3.7 6.3
+ Inception date: Class A: 12/28/93; Class B: 12/24/91
Comparison of Change in Value of a $10,000 Investment Eaton Vance Oregon
Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
[LINE CHART APPEARS HERE]
Date Fund/NAV LMBI
-------- -------- -------
12/31/91 $10,000 $10,000
1/31/92 $9,990 $10,023
2/28/92 $10,054 $10,026
3/31/92 $10,028 $10,030
4/30/92 $10,148 $10,119
5/31/92 $10,331 $10,238
6/30/92 $10,506 $10,410
7/31/92 $10,866 $10,722
8/31/92 $10,682 $10,618
9/30/92 $10,710 $10,687
10/31/92 $10,404 $10,582
11/30/92 $10,772 $10,772
12/31/92 $10,943 $10,882
1/31/93 $11,102 $11,008
2/28/93 $11,551 $11,406
3/31/93 $11,469 $11,286
4/30/93 $11,586 $11,399
5/31/93 $11,662 $11,463
6/30/93 $11,874 $11,655
7/31/93 $11,903 $11,670
8/31/93 $12,165 $11,913
9/30/93 $12,259 $12,049
10/31/93 $12,254 $12,072
11/30/93 $12,128 $11,966
12/31/93 $12,405 $12,218
1/31/94 $12,562 $12,358
2/28/94 $12,192 $12,038
3/31/94 $11,488 $11,547
4/30/94 $11,539 $11,646
5/31/94 $11,625 $11,746
6/30/94 $11,502 $11,678
7/31/94 $11,714 $11,889
8/31/94 $11,743 $11,930
9/30/94 $11,481 $11,755
10/31/94 $11,171 $11,546
11/30/94 $10,857 $11,337
12/31/94 $11,232 $11,587
1/31/95 $11,660 $11,918
2/28/95 $12,098 $12,265
3/31/95 $12,176 $12,406
4/30/95 $12,166 $12,420
5/31/95 $12,558 $12,816
6/30/95 $12,351 $12,704
7/31/95 $12,412 $12,825
8/31/95 $12,591 $12,987
9/30/95 $12,663 $13,069
10/31/95 $12,883 $13,259
11/30/95 $13,115 $13,480
12/31/95 $13,249 $13,609
1/31/96 $13,310 $13,712
2/28/96 $13,159 $13,619
3/31/96 $12,968 $13,445
4/30/96 $12,942 $13,407
5/31/96 $12,939 $13,402
6/30/96 $13,054 $13,548
7/31/96 $13,123 $13,671
8/31/96 $13,070 $13,668
9/30/96 $13,261 $13,859
10/31/96 $13,345 $14,015
11/30/96 $13,510 $14,272
12/31/96 $13,469 $14,212
1/31/97 $13,414 $14,239
2/28/97 $13,546 $14,369
3/31/97 $13,394 $14,178
4/30/97 $13,454 $14,297
5/31/97 $13,608 $14,512
6/30/97 $13,713 $14,666
7/31/97 $14,052 $15,073
8/31/97 $14,010 $14,931
9/30/97 $14,088 $15,108
10/31/97 $14,192 $15,206
11/30/97 $14,260 $15,295
12/31/97 $14,442 $15,518
1/31/98 $14,548 $15,678
2/28/98 $14,589 $15,683
3/31/98 $14,621 $15,697
4/30/98 $14,562 $15,626
5/31/98 $14,751 $15,873
6/30/98 $14,789 $15,936
7/31/98 $14,827 $15,976
8/31/98 $15,022 $16,223
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
12/24/91. Index information is available only at month-end; therefore, the
line comparison begins at the next month following the commencement of the
Fund's investment operations.The chart compares the total return of the Fund's
Class B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 12/31/93 at net asset value would have grown to $12,424 on August
31, 1998; $11,832, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 99.69% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
- --------------------------------------------------------------------------------
11
<PAGE>
Eaton Vance South Carolina Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF THOMAS J. FETTER APPEARS HERE]
Thomas J. Fetter,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. South Carolina's economic performance was strong in 1998. The cost of
living was low, and per capita income levels, while relatively low at 81.1%
of U.S. levels, are on the rise and growing faster than the national rate.
Unemployment rates have dropped to their lowest levels in four years.
. The manufacturing sector of South Carolina is expanding beyond the
traditional areas, reducing the state's reliance on textiles. In a more
well-balanced employment scenario, industrial expansion has created
higher-skill and higher-wage job opportunities.
. The BMW plant in Spartanburg is at full production and is attracting other
auto-related business to the state. Other thriving industries are tourism
and retirement, especially in rapidly growing cities like Myrtle Beach and
Hilton Head.
Management Update
- --------------------------------------------------------------------------------
. Management strives to maintain a balanced, "barbell" approach to the
portfolio: high-coupon bonds for income and lower coupons to add upside
trading potential. To increase call protection, we have been trying to
invest in non-callable bonds.
. With the municipal market trading in a narrow range this year, management
made relatively few changes, concentrating on valuation and making
adjustments to increase upside trading potential.
. Municipal issuance for many states continued to be fairly low, and South
Carolina's municipal market was no exception. As a result, we focused our
efforts in sectors where issuance was higher, selectively investing for
good relative value.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 8.6% and 8.0%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$10.09 on August 31, 1998 from $9.76 on August 31, 1997, and the
reinvestment of $0.493 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $10.72 from $10.38, and the
reinvestment of $0.470 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$10.09 per share for Class A and $10.72 for Class B, distribution rates
were 4.89% and 4.36%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 4.25% and
3.74%, respectively./4/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Georgetown County, South Carolina
Environmental Improvement Revenue
Bonds - International Paper Corp.
. The proceeds from this bond issue will be used to finance the installation
of sewage and solid waste disposal facilities at the International Paper
plant in Georgetown.
. International Paper is a worldwide manufacturer of printing and writing
paper, pulp, paperboard, and packaging materials.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares. /2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax. /3/ 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. /4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result. /5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.6% 8.0%
Five Years N.A. 4.7
Life of Fund+ 5.2 6.1
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.4% 3.0%
Five Years N.A. 4.4
Life of Fund+ 4.1 6.0
+ Inception date: Class A: 2/14/94; Class B: 10/2/92
Comparison of Change in Value of a $10,000 Investment in Eaton Vance South
Carolina Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
[LINE CHART APPEARS HERE]
Date Fund/NAV Fund/CDSC LMBI
-------- -------- --------- -------
10/31/92 $10,000 - $10,000
11/30/92 $10,286 - $10,179
12/31/92 $10,434 - $10,283
1/31/93 $10,577 - $10,403
2/28/93 $11,065 - $10,779
3/31/93 $10,941 - $10,665
4/30/93 $11,064 - $10,773
5/31/93 $11,115 - $10,833
6/30/93 $11,268 - $11,014
7/31/93 $11,264 - $11,028
8/31/93 $11,540 - $11,258
9/30/93 $11,696 - $11,386
10/31/93 $11,680 - $11,408
11/30/93 $11,536 - $11,308
12/31/93 $11,834 - $11,546
1/31/94 $11,941 - $11,678
2/28/94 $11,571 - $11,376
3/31/94 $10,912 - $10,913
4/30/94 $10,983 - $11,005
5/31/94 $11,055 - $11,100
6/30/94 $10,957 - $11,036
7/31/94 $11,162 - $11,235
8/31/94 $11,189 - $11,274
9/30/94 $11,003 - $11,108
10/31/94 $10,714 - $10,911
11/30/94 $10,409 - $10,714
12/31/94 $10,692 - $10,950
1/31/95 $11,059 - $11,263
2/28/95 $11,402 - $11,590
3/31/95 $11,535 - $11,723
4/30/95 $11,501 - $11,737
5/31/95 $11,810 - $12,112
6/30/95 $11,634 - $12,006
7/31/95 $11,670 - $12,119
8/31/95 $11,820 - $12,273
9/30/95 $11,891 - $12,351
10/31/95 $12,127 - $12,530
11/30/95 $12,400 - $12,739
12/31/95 $12,542 - $12,861
1/31/96 $12,602 - $12,958
2/28/96 $12,420 - $12,870
3/31/96 $12,236 - $12,706
4/30/96 $12,187 - $12,670
5/31/96 $12,196 - $12,665
6/30/96 $12,334 - $12,803
7/31/96 $12,477 - $12,919
8/31/96 $12,401 - $12,916
9/30/96 $12,600 - $13,097
10/31/96 $12,734 - $13,245
11/30/96 $12,933 - $13,487
12/31/96 $12,857 - $13,430
1/31/97 $12,893 - $13,456
2/28/97 $13,011 - $13,579
3/31/97 $12,852 - $13,398
4/30/97 $12,924 - $13,510
5/31/97 $13,114 - $13,714
6/30/97 $13,243 - $13,860
7/31/97 $13,548 - $14,244
8/31/97 $13,445 - $14,110
9/30/97 $13,574 - $14,277
10/31/97 $13,663 - $14,370
11/30/97 $13,744 - $14,454
12/31/97 $13,923 - $14,665
1/31/98 $14,040 - $14,816
2/28/98 $14,069 - $14,821
3/31/98 $14,102 - $14,834
4/30/98 $14,006 - $14,767
5/31/98 $14,231 - $15,000
6/30/98 $14,270 - $15,060
7/31/98 $14,295 - $15,097
8/31/98 $14,514 $14,414 $15,331
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
10/02/92. Index information is available only at month-end; therefore, the
line comparison begins at the next month following the commencement of the
Fund's investment operations. The chart compares the total return of the
Fund's Class B with that of the Lehman Brothers Municipal Bond Index, a broad-
based, unmanaged market index. Returns are calculated by determining the
percentage change in net asset value (NAV) with all distributions reinvested.
The lines on the chart represent total returns of $10,000 hypothetical
investments in the Fund and the Lehman Brothers Municipal Bond Index. An
investment in Class A shares on 2/28/94 at net asset value would have grown to
$12,662 on August 31, 1998; $12,057, including the 4.75% sales charge. The
Index's total return does not reflect commissions or expenses that would have
been incurred if an investor individually purchased or sold the securities
represented in the Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 99.43% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
- --------------------------------------------------------------------------------
12
<PAGE>
Eaton Vance Tennessee Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF CYNTHIA J. CLEMSON APPEARS HERE]
Cynthia J. Clemson,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. The increasing diversity in Tennessee's economy has been an asset in 1998.
Losses in textiles and apparel were offset by growth in sectors like
services, trade, and durable manufacturing. Personal income growth is
expected to rise 4.9% through 1998, boosted statewide by auto durable
manufacturing and related companies.
. The state's robust economic outlook has been aided by the growth in service
sector employment, including the health and consumer services areas, which
now account for over a quarter of Tennessee's employment.
. At 4.1%, unemployment continues to be very low in Tennessee. To some
extent, this has slowed economic growth, but it has also helped the state
draw new labor sources. Increased spending on education reform is expected
to help make the workforce more employable.
Management Update
- --------------------------------------------------------------------------------
. Like many states, Tennessee's municipal market was characterized by
sporadic issuance this year. Focusing our efforts in sectors where issuance
was higher, we selectively invested in the hospital sector. We were
interested in hospitals with a decided community need and presence.
. Management focused on making changes to enhance the upside trading
potential of the Portfolio, as well as executing relative value trades.
. In an environment of low inflation and volatile interest rates, we continue
to seek call protection and to maintain a balanced approach between
high-coupon, high-yield bonds and low-coupon, performance-oriented bonds.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 7.9% and 6.9%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$9.98 on August 31, 1998 from $9.74 on August 31, 1997, and the
reinvestment of $0.508 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $10.84 from $10.58, and the
reinvestment of $0.452 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$9.98 per share for Class A and $10.84 for Class B, distribution rates were
5.09% and 4.15%, respectively./3/
. The SEC 30-day yields for Class A and B shares at August 31 were 4.33% and
3.71%, respectively./4/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Tennessee State Veterans' Homes Board Revenue Bonds, Humboldt Project
. These bonds were issued for the development and construction of a 120-bed
nursing home for aging veterans. Located in Humboldt, the project is being
financed in conjunction with a U.S. Department of Veterans' Affairs grant.
. Studies show that older Americans are the fastest growing population group.
By 2000, Tennessee will have more than 180,000 veterans over the age of 65.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares. /2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax and state income tax. /3/ 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. /4/ The Fund's SEC yield is calculated
by dividing the net investment income per share for the 30-day period by the
offering price at the end of the period and annualizing the result. /5/
Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 7.9% 6.9%
Five Years N.A. 4.8
Life of Fund+ 5.2 6.5
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 2.7% 1.9%
Five Years N.A. 4.5
Life of Fund+ 4.1 6.5
+ Inception date: Class A: 12/9/93; Class B: 8/25/92
Comparison of Change in Value of a $10,000 Investment Eaton Vance Tennessee
Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
[LINE CHART APPEARS HERE]
Date Fund/NAV Fund/CDSC LMBI
------- -------- --------- -------
8/31/92 $10,000 - $10,000
9/30/92 $9,970 - $10,065
10/31/92 $9,709 - $9,966
11/30/92 $10,110 - $10,145
12/31/92 $10,276 - $10,249
1/31/93 $10,437 - $10,368
2/28/93 $10,865 - $10,743
3/31/93 $10,733 - $10,629
4/30/93 $10,906 - $10,736
5/31/93 $11,008 - $10,797
6/30/93 $11,242 - $10,977
7/31/93 $11,238 - $10,991
8/31/93 $11,520 - $11,220
9/30/93 $11,662 - $11,348
10/31/93 $11,657 - $11,370
11/30/93 $11,505 - $11,270
12/31/93 $11,767 - $11,508
1/31/94 $11,917 - $11,639
2/28/94 $11,551 - $11,338
3/31/94 $10,876 - $10,876
4/30/94 $10,904 - $10,968
5/31/94 $11,021 - $11,063
6/30/94 $10,914 - $10,999
7/31/94 $11,174 - $11,197
8/31/94 $11,203 - $11,236
9/30/94 $10,963 - $11,071
10/31/94 $10,633 - $10,874
11/30/94 $10,309 - $10,678
12/31/94 $10,637 - $10,913
1/31/95 $11,073 - $11,225
2/28/95 $11,485 - $11,551
3/31/95 $11,550 - $11,684
4/30/95 $11,518 - $11,698
5/31/95 $11,862 - $12,071
6/30/95 $11,642 - $11,965
7/31/95 $11,714 - $12,079
8/31/95 $11,889 - $12,232
9/30/95 $11,960 - $12,309
10/31/95 $12,197 - $12,488
11/30/95 $12,469 - $12,696
12/31/95 $12,648 - $12,817
1/31/96 $12,673 - $12,914
2/28/96 $12,517 - $12,827
3/31/96 $12,335 - $12,663
4/30/96 $12,311 - $12,627
5/31/96 $12,322 - $12,622
6/30/96 $12,435 - $12,760
7/31/96 $12,552 - $12,876
8/31/96 $12,502 - $12,873
9/30/96 $12,700 - $13,053
10/31/96 $12,820 - $13,200
11/30/96 $13,030 - $13,442
12/31/96 $12,980 - $13,385
1/31/97 $12,978 - $13,410
2/28/97 $13,094 - $13,534
3/31/97 $12,936 - $13,353
4/30/97 $13,058 - $13,465
5/31/97 $13,232 - $13,668
6/30/97 $13,359 - $13,813
7/31/97 $13,725 - $14,196
8/31/97 $13,621 - $14,063
9/30/97 $13,735 - $14,229
10/31/97 $13,809 - $14,321
11/30/97 $13,900 - $14,405
12/31/97 $14,076 - $14,616
1/31/98 $14,164 - $14,766
2/28/98 $14,178 - $14,771
3/31/98 $14,209 - $14,784
4/30/98 $14,125 - $14,717
5/31/98 $14,320 - $14,950
6/30/98 $14,331 - $15,009
7/31/98 $14,353 - $15,046
8/31/98 $14,555 $14,455 $15,279
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
8/25/92. Index information is available only at month-end; therefore, the line
comparison begins at the next month following the commencement of the Fund's
investment operations. The chart compares the total return of the Fund's Class
B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 12/31/93 at net asset value would have grown to $12,623 on August
31, 1998; $12,025, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 99.68% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt
interest dividend.
- --------------------------------------------------------------------------------
13
<PAGE>
Eaton Vance Virginia Municipals Fund as of August 31, 1998
INVESTMENT UPDATE
[PHOTO OF TIMOTHY T. BROWSE APPEARS HERE]
Timothy T. Browse,
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
. Virginia came into 1998 with great economic momentum: jobs, earnings, and
retail sales all continued the gains of 1997. With the rest of the nation
also enjoying economic prosperity, Virginia recorded record highs for some
of its indicators: initial jobless claims, production hours, factory
employment, and single-family housing permits.
. Virginia's historically low unemployment numbers reached 3.1% as of August
1998, the lowest level since the state began recording jobless figures in
1974. The significant employment gainers were high technology industries,
business services, and retail trade.
. According to Standard & Poor's, over 260 companies decided to expand or
locate to Virginia in 1997. This corporate capital investment represented
about $4.1 billion, and could result in as many as 20,000 new jobs.
Management Update
- --------------------------------------------------------------------------------
. With most investment activity focused on other assets this year, lower
demand for municipal bonds led to historically attractive yield ratios.
This environment allowed us to minimize capital gains for shareholders
while maximizing distribution rates.
. Because Virginia is a larger state and has a higher rate of issuance, there
were more opportunities to buy non-rated bonds. We worked to restructure
the Portfolio by buying into more high quality issues and seeking better
performance on the upside.
. We have invested in non-callable and zero-coupon bonds whenever possible to
provide upside trading potential. Generally, management strives to remain
broadly diversified across sectors.
The Fund
- --------------------------------------------------------------------------------
. For the year ended August 31, 1998, the Fund's Class A and Class B shares
had total returns of 8.1% and 7.4%, respectively./1/ For Class A, this
return resulted from an increase in net asset value (NAV) per share to
$9.87 on August 31, 1998 from $9.62 on August 31, 1997, and the
reinvestment of $0.510 per share in tax-free income./2/ For Class B, this
return resulted from an increase in NAV to $10.93 from $10.63, and the
reinvestment of $0.469 per share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on August 31, 1998 of
$9.87 per share for Class A and $10.93 for Class B, the Fund's distribution
rates were 5.17% and 4.26%, respectively./3/
. The SEC yields for Class A and B shares at August 31 were 4.08% and 3.54%,
respectively./4/
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
City of Richmond, Virginia - General
Obligation Public Improvement Bonds
. These bonds will help refund the financing of public improvements in the
Virginia state capital, and are backed by the full faith and credit of the
City.
. Richmond, a stable and economically diverse regional center, provides a
broad range of services. Such services include: public safety; human
services; utilities; refuse collection; and cultural, recreational, and
park facilities.
- --------------------------------------------------------------------------------
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares. /2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax./3/ 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./4/ The Fund's SEC yield is calculated by dividing the net investment
income per share for the 30-day period by the offering price at the end of
the period and annualizing the result./5/ Returns are historical and are
calculated by determining the percentage change in net asset value with all
distributions reinvested. SEC returns for Class A reflect the maximum 4.75%
sales charge. SEC returns 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.
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 August 31, 1998
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 8.1% 7.4%
Five Years N.A. 4.8
Life of Fund+ 5.0 6.6
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 3.0% 2.4%
Five Years N.A. 4.4
Life of Fund+ 3.9 6.6
+ Inception date: Class A: 12/17/93; Class B: 7/26/91
Comparison of Change in Value of a $10,000 Investment in Eaton Vance Virginia
Municipals Fund, Class B vs. Lehman Brothers Municipal Bond Index*
Date Fund/NAV LMBI
------- -------- -------
7/31/91 $10,000 $10,000
8/31/91 $10,080 $10,132
9/30/91 $10,262 $10,264
10/31/91 $10,374 $10,356
11/30/91 $10,369 $10,385
12/31/91 $10,655 $10,608
1/31/92 $10,606 $10,632
2/28/92 $10,618 $10,636
3/31/92 $10,564 $10,639
4/30/92 $10,681 $10,734
5/31/92 $10,830 $10,861
6/30/92 $11,036 $11,043
7/31/92 $11,440 $11,374
8/31/92 $11,224 $11,263
9/30/92 $11,202 $11,337
10/31/92 $10,892 $11,225
11/30/92 $11,285 $11,426
12/31/92 $11,414 $11,543
1/31/93 $11,539 $11,677
2/28/93 $11,995 $12,100
3/31/93 $11,837 $11,972
4/30/93 $11,972 $12,092
5/31/93 $12,009 $12,160
6/30/93 $12,198 $12,364
7/31/93 $12,186 $12,379
8/31/93 $12,437 $12,637
9/30/93 $12,582 $12,781
10/31/93 $12,579 $12,806
11/30/93 $12,428 $12,693
12/31/93 $12,735 $12,961
1/31/94 $12,874 $13,109
2/28/94 $12,508 $12,770
3/31/94 $11,905 $12,249
4/30/94 $11,949 $12,353
5/31/94 $11,993 $12,460
6/30/94 $11,856 $12,388
7/31/94 $12,041 $12,611
8/31/94 $12,085 $12,655
9/30/94 $11,914 $12,469
10/31/94 $11,611 $12,248
11/30/94 $11,290 $12,026
12/31/94 $11,606 $12,291
1/31/95 $12,011 $12,642
2/28/95 $12,414 $13,010
3/31/95 $12,546 $13,160
4/30/95 $12,525 $13,175
5/31/95 $12,918 $13,596
6/30/95 $12,683 $13,477
7/31/95 $12,723 $13,604
8/31/95 $12,885 $13,777
9/30/95 $12,974 $13,864
10/31/95 $13,227 $14,065
11/30/95 $13,505 $14,299
12/31/95 $13,696 $14,436
1/31/96 $13,749 $14,545
2/28/96 $13,556 $14,447
3/31/96 $13,336 $14,263
4/30/96 $13,298 $14,222
5/31/96 $13,323 $14,217
6/30/96 $13,457 $14,372
7/31/96 $13,556 $14,502
8/31/96 $13,489 $14,499
9/30/96 $13,713 $14,701
10/31/96 $13,828 $14,867
11/30/96 $14,066 $15,140
12/31/96 $13,999 $15,076
1/31/97 $13,957 $15,104
2/28/97 $14,082 $15,243
3/31/97 $13,886 $15,040
4/30/97 $14,044 $15,166
5/31/97 $14,245 $15,394
6/30/97 $14,368 $15,558
7/31/97 $14,760 $15,989
8/31/97 $14,609 $15,839
9/30/97 $14,746 $16,027
10/31/97 $14,841 $16,130
11/30/97 $14,927 $16,225
12/31/97 $15,130 $16,462
1/31/98 $15,254 $16,631
2/28/98 $15,243 $16,636
3/31/98 $15,291 $16,651
4/30/98 $15,190 $16,576
5/31/98 $15,442 $16,838
6/30/98 $15,456 $16,905
7/31/98 $15,467 $16,947
8/31/98 $15,685 $17,209
*Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
7/26/91. Index information is available only at month-end; therefore, the line
comparison begins at the next month following the commencement of the Fund's
investment operations.The chart compares the total return of the Fund's Class
B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 12/31/93 at net asset value would have grown to $12,583 on August
31, 1998; $11,985, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 99.13% of the total dividends paid by the Fund from net investment
income during the year ended August 31, 1998 was designated as an exempt-
interest dividend.
- --------------------------------------------------------------------------------
14
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
As of August 31, 1998
<TABLE>
<CAPTION>
Alabama Fund Arkansas Fund Georgia Fund Kentucky Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investment in Municipals Portfolio --
Identified cost $86,623,081 $51,735,945 $80,053,884 $103,274,897
Unrealized appreciation 8,153,599 4,519,078 7,197,367 9,360,360
- -----------------------------------------------------------------------------------------------------------------------------------
Total investment in Portfolio, at value $94,776,680 $56,255,023 $87,251,251 $112,635,257
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold $ 816 $ 41,659 $ 13,560 $ 43,964
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $94,777,496 $56,296,682 $87,264,811 $112,679,221
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends payable $ 159,674 $ 92,874 $ 150,807 $ 186,217
Payable for Fund shares redeemed 105,300 230,653 191,060 114,158
Payable to affiliate for Trustees' fees 155 155 155 310
Other accrued expenses 51,300 31,158 49,579 60,982
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 316,429 $ 354,840 $ 391,601 $ 361,667
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $94,461,067 $55,941,842 $86,873,210 $112,317,554
- -----------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $89,535,249 $53,872,176 $86,367,125 $106,023,679
Accumulated net realized loss from Portfolio (computed on the
basis of identified cost) (3,222,780) (2,369,543) (6,540,475) (2,908,993)
Accumulated distributions in excess of net investment income (5,001) (79,869) (150,807) (157,492)
Net unrealized appreciation from Portfolio (computed on the
basis of identified cost) 8,153,599 4,519,078 7,197,367 9,360,360
- -----------------------------------------------------------------------------------------------------------------------------------
Total $94,461,067 $55,941,842 $86,873,210 $112,317,554
- -----------------------------------------------------------------------------------------------------------------------------------
Class A Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 5,140,284 $ 1,286,398 $ 2,043,179 $ 1,302,842
Shares Outstanding 511,899 127,683 210,079 131,463
Net Asset Value and Redemption Price Per Share
(net assets/shares of beneficial interest outstanding) $ 10.04 $ 10.07 $ 9.73 $ 9.91
Maximum Offering Price Per Share
(100/95.25 of net asset value per share) $ 10.54 $ 10.57 $ 10.22 $ 10.40
- -----------------------------------------------------------------------------------------------------------------------------------
Class B Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $89,320,783 $54,655,444 $84,830,031 $111,014,712
Shares Outstanding 8,088,775 5,061,948 8,171,697 10,414,623
Net Asset Value, Offering Price and Redemption Price Per Share
(net assets/shares of beneficial interest outstanding) $ 11.04 $ 10.80 $ 10.38 $ 10.66
- -----------------------------------------------------------------------------------------------------------------------------------
</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 August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Assets and Liabilities
As of August 31, 1998
<TABLE>
<CAPTION>
Louisiana Fund Maryland Fund Missouri Fund North Carolina Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment in Municipals Portfolio --
Identified cost $34,144,980 $ 98,071,986 $66,866,630 $137,597,566
Unrealized appreciation 2,364,771 7,080,246 7,531,343 15,332,535
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment in Portfolio, at value $36,509,751 $105,152,232 $74,397,973 $152,930,101
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold $ 38,515 $ 13,264 $ 38,800 $ 42,743
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $36,548,266 $105,165,496 $74,436,773 $152,972,844
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends payable $ 77,244 $ 169,483 $ 124,410 $ 266,313
Payable for Fund shares redeemed 36,305 10,888 32,570 333,960
Payable to affiliate for Trustees' fees -- -- -- 310
Other accrued expenses 13,051 53,051 28,295 79,979
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 126,600 $ 233,422 $ 185,275 $ 680,562
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $36,421,666 $104,932,074 $74,251,498 $152,292,282
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $36,065,764 $ 99,247,112 $68,064,383 $146,868,128
Accumulated net realized loss from Portfolio (computed on
the basis of identified cost) (1,931,625) (1,251,721) (1,412,690) (9,642,069)
Accumulated undistributed (distributions in excess of) net
investment income (77,244) (143,563) 68,462 (266,312)
Net unrealized appreciation from Portfolio (computed on the
basis of identified cost) 2,364,771 7,080,246 7,531,343 15,332,535
- ------------------------------------------------------------------------------------------------------------------------------------
Total $36,421,666 $104,932,074 $74,251,498 $152,292,282
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 4,885,898 $ 1,624,872 $ 2,665,102 $ 12,967,435
Shares Outstanding 488,949 161,613 259,478 1,312,329
Net Asset Value and Redemption Price Per Share
(net assets/shares of beneficial interest outstanding) $ 9.99 $ 10.05 $ 10.27 $ 9.88
Maximum Offering Price Per Share
(100/95.25 of net asset value per share) $ 10.49 $ 10.55 $ 10.78 $ 10.37
- ------------------------------------------------------------------------------------------------------------------------------------
Class B Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $31,535,768 $103,307,202 $71,586,396 $139,324,847
Shares Outstanding 2,984,384 9,410,100 6,291,498 13,103,977
Net Asset Value, Offering Price and Redemption Price
Per Share
(net assets/shares of beneficial interest outstanding) $ 10.57 $ 10.98 $ 11.38 $ 10.63
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
On sales of $25,000 or more, the offering price of Class A shares is reduced.
See notes to financial statements
16
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Assets and Liabilities
As of August 31, 1998
<TABLE>
<CAPTION>
Oregon Fund South Carolina Fund Tennessee Fund Virginia Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment in Municipals Portfolio --
Identified cost $ 95,879,258 $45,504,890 $ 49,533,157 $ 137,123,548
Unrealized appreciation 7,875,816 4,612,162 4,175,526 14,133,900
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment, at value $103,755,074 $50,117,052 $ 53,708,683 $ 151,257,448
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold $ 31,669 $ 32,608 $ 43,800 $ 233,503
Deferred organization expenses 563 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $103,787,306 $50,149,660 $ 53,752,483 $ 151,490,951
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions payable $ 166,150 $ 86,858 $ 85,243 $ 252,567
Payable for Fund shares redeemed 99,528 157,368 142,631 135,167
Payable to affiliate for Trustees' fees -- 151 -- 310
Other accrued expenses 36,779 27,300 22,374 84,155
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 302,457 $ 271,677 $ 250,248 $ 472,199
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $103,484,849 $49,877,983 $ 53,502,235 $ 151,018,752
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 99,761,564 $48,553,500 $ 51,098,314 $ 143,310,650
Accumulated net realized loss from Portfolio
(computed on the basis of identified cost) (4,144,406) (3,330,831) (1,703,382) (6,173,231)
Accumulated undistributed (distributions in excess
of) net investment income (8,125) 43,152 (68,223) (252,567)
Net unrealized appreciation from Portfolio
(computed on the basis of identified cost) 7,875,816 4,612,162 4,175,526 14,133,900
- ------------------------------------------------------------------------------------------------------------------------------------
Total $103,484,849 $49,877,983 $ 53,502,235 $ 151,018,752
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 914,082 $ 1,316,333 $ 3,412,628 $ 2,116,895
Shares Outstanding 92,607 130,453 342,107 214,511
Net Asset Value and Redemption Price Per Share
(net assets/shares of beneficial interest
outstanding) $ 9.87 $ 10.09 $ 9.98 $ 9.87
Maximum Offering Price Per Share
(100/95.25 of net asset value per share) $ 10.36 $ 10.59 $ 10.48 $ 10.36
- ------------------------------------------------------------------------------------------------------------------------------------
Class B Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $102,570,767 $48,561,650 $ 50,089,607 $ 148,901,857
Shares Outstanding 9,498,027 4,532,036 4,621,717 13,629,038
Net Asset Value, Offering Price and Redemption Price
Per Share
(net assets/shares of beneficial interest
outstanding) $ 10.80 $ 10.72 $ 10.84 $ 10.93
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
On sales of $25,000 or more, the offering price of Class is reduced.
See notes to financial statements
17
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Alabama Fund Arkansas Fund Georgia Fund Kentucky Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest allocated from Portfolio $5,550,375 $3,354,994 $5,222,856 $6,945,303
Expenses allocated from Portfolio (455,132) (254,731) (421,534) (570,189)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income from Portfolio $5,095,243 $3,100,263 $4,801,322 $6,375,114
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Trustees fees and expenses $ 2,053 $ 2,134 $ 2,134 $ 4,268
Distribution and service fees
Class A 7,972 1,759 3,945 2,482
Class B 866,551 545,632 831,456 1,094,304
Transfer and dividend disbursing agent fees 103,437 62,166 92,409 118,672
Printing and postage 8,426 6,222 7,618 10,268
Legal and accounting services 2,248 1,337 4,303 3,281
Custodian fee 12,919 8,138 12,067 14,667
Amortization of organization expenses 3,433 2,766 3,106 3,205
Registration fees 1,293 3,177 540 2,272
Miscellaneous 7,077 4,870 7,113 9,186
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $1,015,409 $ 638,201 $ 964,691 $1,262,605
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $4,079,834 $2,462,062 $3,836,631 $5,112,509
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $1,047,057 $ 929,882 $1,803,386 $2,152,959
Financial futures contracts (760,313) (407,915) (593,119) (704,097)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments $ 286,744 $ 521,967 $1,210,267 $1,448,862
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments $1,509,868 $1,197,153 $1,229,880 $1,520,359
Financial futures contracts (15,222) (58,565) (98,301) (135,459)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $1,494,646 $1,138,588 $1,131,579 $1,384,900
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain $1,781,390 $1,660,555 $2,341,846 $2,833,762
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $5,861,224 $4,122,617 $6,178,477 $7,946,271
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
18
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Louisiana Fund Maryland Fund Missouri Fund North Carolina Fund
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------
Interest allocated from Portfolio $1,950,541 $5,865,329 $4,490,815 $ 9,153,114
Expenses allocated from Portfolio (118,598) (464,487) (353,985) (765,032)
- ----------------------------------------------------------------------------------------------------------------------
Net investment income from Portfolio $1,831,943 $5,400,842 $4,136,830 $ 8,388,082
- ----------------------------------------------------------------------------------------------------------------------
Expenses
- ----------------------------------------------------------------------------------------------------------------------
Trustees fees and expenses $ 199 $ 3,958 $ 1,978 $ 3,355
Distribution and service fees
Class A 4,667 2,632 3,942 23,089
Class B 293,974 967,591 698,748 1,357,814
Transfer and dividend disbursing agent fees 40,775 99,694 82,604 151,191
Legal and accounting services 3,009 2,253 5,336 2,542
Printing and postage 3,475 20,369 8,960 14,344
Custodian fee 3,721 12,106 8,421 15,454
Amortization of organization expenses 3,172 2,567 2,372 2,271
Registration fees 2,500 2,017 1,285 501
Miscellaneous 3,689 9,732 6,838 14,617
- ----------------------------------------------------------------------------------------------------------------------
Total expenses $ 359,181 $1,122,919 $ 820,484 $ 1,585,178
- ----------------------------------------------------------------------------------------------------------------------
Net investment income $1,472,762 $4,277,923 $3,316,346 $ 6,802,904
- ----------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 620,522 $1,505,418 $1,449,475 $ 3,440,718
Financial futures contracts (265,977) (680,515) (493,314) (1,648,968)
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain $ 354,545 $ 824,903 $ 956,161 $ 1,791,750
- ----------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments $ 691,786 $2,080,470 $1,654,308 $ 2,817,630
Financial futures contracts (12,727) (104,783) (81,970) 112,744
- ----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) $ 679,059 $1,975,687 $1,572,338 $ 2,930,374
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain $1,033,604 $2,800,590 $2,528,499 $ 4,722,124
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $2,506,366 $7,078,513 $5,844,845 $11,525,028
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
19
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Oregon Fund South Carolina Fund Tennessee Fund Virginia Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
Interest allocated from Portfolio $6,246,608 $3,042,537 $3,047,856 $9,013,939
Expenses allocated from Portfolio (523,444) (223,426) (226,354) (774,874)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income from Portfolio $5,723,164 $2,819,111 $2,821,502 $8,239,065
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Trustees fees and expenses $ 3,958 $ 2,130 $ 1,979 $ 3,425
Distribution and service fees
Class A 1,322 2,331 2,322 3,550
Class B 997,280 481,595 478,784 1,448,389
Transfer and dividend disbursing agent fees 108,879 50,771 53,564 155,988
Custodian fee 12,179 7,264 7,220 16,506
Printing and postage 9,791 4,793 5,592 14,753
Legal and accounting services 4,178 1,479 3,195 2,446
Amortization of organization expenses 2,106 2,460 72 2,345
Registration fees 900 541 3,267 586
Miscellaneous 12,816 4,778 6,991 17,469
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $1,153,409 $ 558,142 $ 562,986 $ 1,665,457
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $4,569,755 $2,260,969 $2,258,516 $ 6,573,608
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $1,898,448 $1,166,828 $ 814,847 $ 3,098,693
Financial futures contracts (327,438) 8,668 (351,492) (1,061,430)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain $1,571,010 $1,175,496 $ 463,355 $ 2,037,263
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
- ------------------------------------------------------------------------------------------------------------------------------------
Investments $1,487,016 $ 554,108 $ 955,174 $ 2,634,984
Financial futures contracts (50,937) -- (57,473) (161,882)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $1,436,079 $ 554,108 $ 897,701 $ 2,473,102
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain $3,007,089 $1,729,604 $1,361,056 $ 4,510,365
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $7,576,844 $3,990,573 $3,619,572 $11,083,973
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
20
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Increase (Decrease) in Net Assets Alabama Arkansas Georgia Kentucky
Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 4,079,834 $ 2,462,062 $ 3,836,631 $ 5,112,509
Net realized gain 286,744 521,967 1,210,267 1,448,862
Net change in unrealized appreciation (depreciation) 1,494,646 1,138,588 1,131,579 1,384,900
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 5,861,224 $ 4,122,617 $ 6,178,477 $ 7,946,271
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (256,747) $ (60,637) $ (92,887) $ (62,581)
Class B (3,900,023) (2,401,425) (3,767,746) (5,049,928)
In excess of net investment income
Class A -- (1,495) (1,254) (643)
Class B (11,357) (43,885) (152,617) (40,542)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (4,168,127) $ (2,507,442) $ (4,014,504) $ (5,153,694)
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 965,736 $ 180,715 $ 400,263 $ 549,886
Class B 4,317,818 2,540,276 4,434,797 5,050,902
Issued in reorganization of EV
Traditional Municipals Funds
Class A 5,824,841 1,180,015 1,767,367 1,387,318
Net asset value of shares issued to shareholders in
payment of distributions declared
Class A 120,247 27,552 47,911 51,125
Class B 2,020,391 1,217,405 1,719,213 2,661,634
Cost of shares redeemed
Class A (1,866,128) (135,293) (216,783) (716,037)
Class B (14,769,375) (12,006,489) (16,571,299) (20,836,124)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund share transactions $ (3,386,470) $ (6,995,819) $ (8,418,531) $ (11,851,296)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (1,693,373) $ (5,380,644) $ (6,254,558) $ (9,058,719)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 96,154,440 $ 61,322,486 $ 93,127,768 $ 121,376,273
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 94,461,067 $ 55,941,842 $ 86,873,210 $ 112,317,554
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions
in excess of net
investment income
included in net assets
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ (5,001) $ (79,869) $ (150,807) $ (157,492)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
21
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
North Carolina
Increase (Decrease) in Net Assets Louisiana Fund Maryland Fund Missouri Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 1,472,762 $ 4,277,923 $ 3,316,346 $ 6,802,904
Net realized gain 354,545 824,903 956,161 1,791,750
Net change in unrealized appreciation (depreciation) 679,059 1,975,687 1,572,338 2,930,374
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 2,506,366 $ 7,078,513 $ 5,844,845 $ 11,525,028
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (148,596) $ (62,710) $ (120,579) $ (642,314)
Class B (1,363,672) (4,275,271) (3,157,438) (6,160,590)
In excess of net investment income
Class A (5,372) (2,889) -- (16,355)
Class B (110,293) (140,512) -- (179,601)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $(1,627,933) $ (4,481,382) $ (3,278,017) $ (6,998,860)
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 3,105,905 $ 528,321 $ 691,095 $ 3,292,983
Class B 1,949,759 7,687,378 3,543,773 5,635,754
Issued in reorganization of EV Traditional
Municipals Funds
Class A 2,360,799 1,300,861 2,197,879 15,424,165
Net asset value of shares issued to shareholders
in payment of distributions declared
Class A 86,786 43,075 68,901 204,670
Class B 705,051 2,273,990 1,567,422 3,140,609
Cost of shares redeemed
Class A (745,401) (279,302) (374,022) (6,393,149)
Class B (3,915,577) (14,890,026) (13,489,505) (25,103,039)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund
share transactions $ 3,547,322 $ (3,335,703) $ (5,794,457) $ (3,798,007)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 4,425,755 $ (738,572) $ (3,227,629) $ 728,161
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $31,995,911 $105,670,646 $ 77,479,127 $151,564,121
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $36,421,666 $104,932,074 $ 74,251,498 $152,292,282
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ (77,244) $ (143,563) $ 68,462 $ (266,312)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
22
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 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 $ 4,569,755 $ 2,260,969 $ 2,258,516 $ 6,573,608
Net realized gain 1,571,010 1,175,496 463,355 2,037,263
Net change in unrealized appreciation
(depreciation) 1,436,079 554,108 897,701 2,473,102
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 7,576,844 $ 3,990,573 $ 3,619,572 $ 11,083,973
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (40,919) $ (57,957) $ (127,482) $ (87,472)
Class B (4,544,926) (2,265,770) (2,131,034) (6,486,136)
In excess of net investment income
Class A (439) -- (4,443) (4,904)
Class B (7,523) -- (29,049) (169,210)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (4,593,807) $ (2,323,727) $ (2,292,008) $ (6,747,722)
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 240,287 $ 236,369 $ 1,476,876 $ 683,695
Class B 3,335,606 2,255,119 3,766,007 6,983,975
Issued in reorganization of EV
Traditional Municipals Funds
Class A 724,248 1,063,786 2,445,040 1,446,129
Net asset value of shares issued to
shareholders in payment of
distributions declared
Class A 28,491 34,909 92,311 42,011
Class B 2,549,727 984,003 1,091,081 3,353,218
Cost of shares redeemed
Class A (100,479) (57,302) (670,289) (96,379)
Class B (18,862,201) (8,991,445) (7,738,430) (25,333,066)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund
share transactions $ (12,084,321) $ (4,474,561) $ 462,596 $ (12,920,417)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ (9,101,284) $ (2,807,715) $ 1,790,160 $ (8,584,166)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 112,586,133 $ 52,685,698 $ 51,712,075 $ 159,602,918
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 103,484,849 $ 49,877,983 $ 53,502,235 $ 151,018,752
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ (8,125) $ 43,152 $ (68,223) $ (252,567)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
Eaton Vance Municipals Funds as of August 31, 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 Fund Arkansas Fund Georgia Fund Kentucky 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) 33,804 (191,001) 613,432 797,596
Net change in unrealized appreciation
(depreciation) 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 --
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 --
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 August 31, 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 15,873 584,156 56,002 2,190,676
Net change in unrealized appreciation
(depreciation) 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 --
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 --
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 August 31, 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 Oregon Fund South Carolina Tennessee Virginia 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) (368,774) (179,440) (142,011) 1,835,006
Net change in unrealized appreciation
(depreciation) 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 --
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 --
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>
This Page Intentionally Left Blank
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Alabama Fund
------------------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------------------------- ---------
1998 1997 1996 1995 1994/(1)/ 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 year $ 9.860 $ 10.850 $ 10.460 $ 10.440 $ 10.210 $ 11.060 $ 10.340
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.493 $ 0.455 $ 0.469 $ 0.470 $ 0.479 $ 0.425 $ 0.475
Net realized and unrealized gain (loss) 0.181 0.200 0.386 0.030 0.244 (0.769) 0.837
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.674 $ 0.655 $ 0.855 $ 0.500 $ 0.723 $ (0.344) $ 1.312
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.494) $ (0.464) $ (0.465) $ (0.480) $ (0.479) $ (0.425) $ (0.475)
In excess of net investment income -- (0.001) -- -- (0.014) (0.081) (0.117)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.494) $ (0.465) $ (0.465) $ (0.480) $ (0.493) $ (0.506) $ (0.592)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 10.040 $ 11.040 $ 10.850 $ 10.460 $ 10.440 $ 10.210 $ 11.060
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(2)/ 6.98% 6.17% 8.33% 4.85% 7.38% (3.18)% 13.09%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
28
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Alabama Fund (continued)
----------------------------------------------------------------------------
Year Ended
----------------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------------------- ---------
1998 1997 1996 1995 1994(1) 1993
------------------- -------------------------------------------- ---------
Class A Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of year (000's omitted) $ 5,140 $ 89,321 $ 96,154 $ 101,692 $ 108,642 $ 105,553 $ 84,621
Ratios (As a percentage of average daily net assets):
Net expenses/(3)(4)/ 0.78% 1.57% 1.60% 1.57% 1.51% 1.43%/(5)/ 1.37%
Net expenses after custodian fee reduction/(3)/ 0.76% 1.55% 1.59% 1.52% -- -- --
Net investment income 4.93% 4.15% 4.39% 4.44% 4.74% 4.35%/(5)/ 4.30%
Portfolio Turnover/(6)/ -- -- -- -- -- -- 15%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
/+/ 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:
Ratios (As a percentage of average daily net assets):
Expenses/(3)/ 1.49%
Net investment income 4.18%
Net investment income per share $ 0.462
- --------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
/(3)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(4)/ 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 provider. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(5)/ Annualized.
/(6)/ 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 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
29
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Arkansas Fund
---------------------------------------------------------------------------
Year Ended
---------------------------------------------------------------------------
August 31, Sept. 30,
-------------------------------------------------------------- ----------
1998/(1)/ 1997 1996 1995 1994/(2)/ 1993/(3)/
------------------- ---------------------------------------- ----------
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 year $ 9.810 $ 10.510 $ 10.190 $ 10.250 $ 10.140 $ 10.910 $ 10.000
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.492 $ 0.442 $ 0.445 $ 0.450 $ 0.460 $ 0.431 $ 0.471
Net realized and unrealized gain (loss) 0.272 0.298 0.324 (0.038) 0.132 (0.703) 1.025
- ------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.764 $ 0.740 $ 0.769 $ 0.412 $ 0.592 $ (0.272) $ 1.496
- ------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.492) $ (0.442) $ (0.445) $ (0.471) $ (0.460) $ (0.431) $ (0.471)
In excess of net investment income (0.012) (0.008) (0.004) (0.001) (0.022) (0.067) (0.115)
- ------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.504) $ (0.450) $ (0.449) $ (0.472) $ (0.482) $ (0.498) $ (0.586)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 10.070 $ 10.800 $ 10.510 $ 10.190 $ 10.250 $ 10.140 $ 10.910
- ------------------------------------------------------------------------------------------------------------------------
Total Return/(4)/ 7.95% 7.19% 7.70% 4.05% 6.15% (2.53)% 15.00%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
30
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Arkansas Fund (continued)
---------------------------------------------------------------------------------
Year Ended
---------------------------------------------------------------------------------
August 31, Sept. 30,
--------------------------------------------------------------- --------------
1998/(1)/ 1997 1996 1995 1994/(2)/ 1993/(3)/
------------------- ------------------------------------------ --------------
Class A Class B Class B Class B Class B Class B Class B
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of year (000's omitted) $ 1,286 $ 54,655 $ 61,322 $ 72,868 $ 80,823 $ 82,436 $ 59,205
Ratios (As a percentage of average daily
net assets):
Net expenses/(5)(6)/ 0.73% 1.53% 1.60% 1.56% 1.50% 1.17%/(7)/ 0.88%/(7)/
Net expenses after custodian fee 0.72% 1.52% 1.59% 1.54% -- -- --
reduction/(5)/
Net investment income 4.93% 4.14% 4.31% 4.34% 4.67% 4.47%/(7)/ 4.27%/(7)/
Portfolio Turnover/(8)/ -- -- -- -- -- 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>
<S> <C> <C>
Ratios (As a percentage of average daily net assets):
Expenses/(5)/ 1.40%/(7)/ 1.42%/(7)/
Net investment income 4.24%/(7)/ 3.73%/(7)/
Net investment income per share $ 0.409 $ 0.411
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Net investment income per share was computed using average shares
outstanding.
/(2)/ For the eleven month period ended August 31, 1994.
/(3)/ For the period from the start of business, October 2, 1992, to September
30, 1993.
/(4)/ 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
/(5)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(6)/ 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 provider. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(7)/ Annualized.
/(8)/ 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 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
31
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Georgia Fund
------------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------------------- ---------
1998 1997 1996 1995 1994/(1)/ 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 year $ 9.500 $10.140 $ 9.810 $ 9.790 $ 9.800 $10.750 $10.120
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.476 $ 0.434 $ 0.449 $ 0.451 $ 0.450 $ 0.413 $ 0.459
Net realized and unrealized gain (loss) 0.245 0.261 0.336 0.024 0.007/(2)/ (0.841) 0.776
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.721 $ 0.695 $ 0.785 $ 0.475 $ 0.457 $(0.428) $ 1.235
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.484) $(0.437) $(0.455) $(0.455) $(0.450) $(0.413) $(0.459)
In excess of net investment income (0.007) (0.018) -- -- (0.017) (0.065) (0.129)
From net realized gain -- -- -- -- -- -- (0.017)
In excess of net realized gain -- -- -- -- -- (0.044) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.491) $(0.455) $(0.455) $(0.455) $(0.467) $(0.522) $(0.605)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of year $ 9.730 $10.380 $10.140 $ 9.810 $ 9.790 $ 9.800 $10.750
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(3)/ 7.75% 7.00% 8.16% 4.91% 4.90% (4.08)% 12.60%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $ 2,043 $84,830 $93,128 $106,992 $120,143 $134,481 $120,043
Ratios (As a percentage of average daily net assets):
Expenses/(4)(5)/ 0.83% 1.56% 1.59% 1.58% 1.49% 1.41%/(6)/ 1.52%
Expenses after custodian fee reduction/(4)/ 0.82% 1.55% 1.57% 1.52% -- -- --
Net investment income 4.92% 4.22% 4.48% 4.55% 4.72% 4.39%/(6)/ 4.27%
Portfolio Turnover/(7)/ -- -- -- -- -- -- 20%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ The per share amounts are not in accord with the net realized and
unrealized gain for the period because of the timing of sales of Fund
shares and the amount of the per share realized and unrealized gains and
losses at such time.
/(3)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
/(4)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(5)/ 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 provider. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(6)/ Annualized.
/(7)/ 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 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
32
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Kentucky Fund
------------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------------------- ---------
1998/(1)/ 1997 1996 1995 1994/(2)/ 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 year $ 9.680 $10.410 $ 9.970 $ 9.990 $ 9.850 $10.780 $10.090
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.497 $ 0.456 $ 0.456 $ 0.450 $ 0.458 $ 0.415 $ 0.462
Net realized and unrealized gain (loss) 0.235 0.254 0.435 (0.009)/(3)/ 0.163 (0.811) 0.820
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.732 $ 0.710 $ 0.891 $ 0.441 $ 0.621 $(0.396) $ 1.282
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.497) $(0.456) $(0.451) $(0.450) $(0.458) $(0.415) $(0.462)
In excess of net investment income (0.005) (0.004) -- (0.011) (0.023) (0.075) (0.125)
From net realized gain -- -- -- -- -- -- (0.005)
In excess of net realized gain -- -- -- -- -- (0.044) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.502) $(0.460) $(0.451) $(0.461) $(0.481) $(0.534) $(0.592)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of year $ 9.910 $10.660 $10.410 $ 9.970 $ 9.990 $ 9.850 $10.780
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(4)/ 7.72% 6.97% 9.12% 4.45% 6.61% (3.78)% 13.05%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $ 1,303 $111,015 $121,376 $131,357 $143,106 $141,994 $120,093
Ratios (As a percentage of average daily net assets):
Expenses/(5)(6)/ 0.83% 1.57% 1.60% 1.57% 1.52% 1.44%/(7)/ 1.50%
Expenses after custodian fee reduction/(5)/ 0.82% 1.56% 1.57% 1.54% -- -- --
Net investment income 5.05% 4.32% 4.50% 4.45% 4.74% 4.39%/(7)/ 4.29%
Portfolio Turnover (8) -- -- -- -- -- -- 21%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Net investment income per share was computed using average shares
outstanding.
/(2)/ For the eleven month period ended August 31, 1994.
/(3)/ The per share amounts are not in accord with the net realized and
unrealized gain (loss) for the period because of the timing of sales of
Fund shares and the amount of the per share realized and unrealized gains
and losses at such time.
/(4)/ 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
/(5)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(6)/ 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 provider. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(7)/ Annualized.
/(8)/ 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 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
33
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Louisiana Fund
-----------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------------------------
August 31, Sept. 30,
---------------------------------------------------------------------- -----------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
------------------- ----------------------------------------------- -----------
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 year $ 9.750 $10.310 $ 9.960 $ 9.980 $10.010 $11.130 $10.000
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.480 $ 0.436 $ 0.482 $ 0.486 $ 0.487 $ 0.447 $ 0.478
Net realized and unrealized gain (loss) 0.294 0.306 0.350 (0.016) (0.006)/(3)/ (0.937) 1.234
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.774 $ 0.742 $ 0.832 $ 0.470 $ 0.481 $(0.490) $ 1.712
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.515) $(0.446) $(0.482) $(0.490) $(0.487) $ (0.447) $(0.478)
In excess of net investment income (0.019) (0.036) -- -- (0.024) (0.074) (0.104)
In excess of net realized gain -- -- -- -- -- (0.109) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.534) $(0.482) $(0.482) $(0.490) $(0.511) $(0.630) $(0.582)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 9.990 $10.570 $10.310 $ 9.960 $ 9.980 $10.010 $11.130
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return/(4)/ 8.13% 7.37% 8.52% 4.77% 5.08% (4.56)% 17.26%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
34
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Louisiana Fund (continued)
-----------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------------------
August 31, Sept. 30,
--------------------------------------------------------------- -------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
------------------- ------------------------------------------ -------------
Class A Class B Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of year (000's omitted) $ 4,886 $31,536 $31,996 $32,994 $31,836 $29,020 $17,935
Ratios (As a percentage of average daily net assets):
Net expenses/(5)(6)/ 0.71% 1.49% 1.54% 1.41% 1.31% 1.08%/(7)/ 1.07%/(7)/
Net expenses after custodian fee reduction/(5)/ 0.66% 1.44% 1.52% 1.34% -- -- --
Net investment income 4.79% 4.18% 4.74% 4.82% 4.97% 4.62%/(7)/ 4.27%/(7)/
Portfolio Turnover/(8)/ -- -- -- -- -- 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/(5)(6)/ 1.53% 1.42% 1.44%/(7)/ 1.76%/(7)/
Expenses after custodian fee reduction/(5)/ 1.45% -- -- --
Net investment income 4.70% 4.86% 4.26%/(7)/ 3.58%/(7)/
Net investment income per share $ 0.474 $ 0.470 $ 0.412 $ 0.401
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, October 2, 1992, to September
30, 1993.
/(3)/ The per share amounts are not in accord with the net realized and
unrealized gain (loss) for the period because of the timing of sales of
Fund shares and the amount of the per share realized and unrealized gains
and losses at such time.
/(4)/ 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
/(5)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(6)/ 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 provider. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(7)/ Annualized.
/(8)/ 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 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 August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Maryland Fund
------------------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------------------
August 31, Sept. 30,
---------------------------------------------------------------------- -----------
1998/(1)/ 1997 1996 1995 1994/(2)/ 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 year $ 9.810 $ 10.710 $ 10.300 $ 10.230 $ 10.070 $ 11.070 $ 10.290
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.476 $ 0.441 $ 0.453 $ 0.464 $ 0.476 $ 0.428 $ 0.466
Net realized and unrealized gain (loss) 0.262 0.291 0.419 0.086 0.169 (0.922) 0.890
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.738 $ 0.732 $ 0.872 $ 0.550 $ 0.645 $ (0.494) $ 1.356
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.476) $ (0.447) $ (0.462) $ (0.480) $ (0.476) $ (0.428) $ (0.466)
In excess of net investment income (0.022) (0.015) -- -- (0.009) (0.070) (0.110)
In excess of net realized gain -- -- -- -- -- (0.008) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.498) $ (0.462) $ (0.462) $ (0.480) $ (0.485) $ (0.506) $ (0.576)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of year $ 10.050 $ 10.980 $ 10.710 $ 10.300 $ 10.230 $ 10.070 $ 11.070
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(3)/ 7.68% 6.98% 8.64% 5.44% 6.71% (4.56)% 13.61%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
36
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Maryland Fund (continued)
-----------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------------------
August 31, Sept. 30
-------------------------------------------------------------- ----------
1998/(1)/ 1997 1996 1995 1994/(2)/ 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 year (000's omitted) $ 1,625 $103,307 $105,671 $109,243 $113,826 $116,721 $ 95,226
Ratios (As a percentage of average daily net assets):
Net expenses/(4)(5)/ 0.82% 1.56% 1.57% 1.57% 1.50% 1.43%/(6)/ 1.43%
Net expenses after custodian fee reduction/(4)/ 0.78% 1.52% 1.54% 1.55% -- -- --
Net investment income 4.76% 4.05% 4.30% 4.46% 4.82% 4.44%/(6)/ 4.28%
Portfolio Turnover/(7)/ -- -- -- -- -- -- 12%
- ------------------------------------------------------------------------------------------------------------------------------------
</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/(4)/ 1.48%
Net investment income 4.23%
Net investment income per share $ 0.461
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Net investment income per share was computed using average shares
outstanding.
/(2)/ For the eleven month period ended August 31, 1994.
/(3)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
/(4)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(5)/ 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 provider. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(6)/ Annualized.
/(7)/ 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 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 August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Missouri Fund
---------------------------------------------------------------------------------------
Year Ended
---------------------------------------------------------------------------------------
August 31, Sept. 30,
-------------------------------------------------------------------------- -----------
1998 1997 1996 1995 1994/(1)/ 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 year $ 9.930 $11.010 $10.510 $10.510 $10.240 $11.250 $10.400
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.503 $ 0.477 $ 0.478 $ 0.476 $ 0.477 $ 0.423 $ 0.470
Net realized and unrealized gain (loss) 0.334 0.364 0.493 0.003 0.289 (0.904) 1.005
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.837 $ 0.841 $ 0.971 $ 0.479 $ 0.766 $(0.481) $ 1.475
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.497) $(0.471) $(0.471) $(0.476) $(0.477) $(0.423) $(0.470)
In excess of net investment income -- -- -- (0.003) (0.019) (0.084) (0.128)
In excess of net realized gain -- -- -- -- -- (0.022) (0.027)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.497) $(0.471) $(0.471) $(0.479) $(0.496) $(0.529) $(0.625)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $10.270 $11.380 $11.010 $10.510 $10.510 $10.240 $11.250
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return /(2)/ 8.61% 7.81% 9.42% 4.60% 7.82% (4.33)% 14.66%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
38
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Missouri Fund (continued)
--------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------------------- ------------
1998 1997 1996 1995 1994/(1)/ 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 year (000's omitted) $ 2,665 $ 71,586 $ 77,479 $ 82,385 $ 89,811 $ 91,227 $ 76,653
Ratios (As a percentage of average daily net assets):
Net expenses /(3)//(4)/ 0.79% 1.56% 1.57% 1.56% 1.53% 1.49%/(5)/ 1.52%
Net expenses after custodian fee reduction /(3)/ 0.77% 1.54% 1.56% 1.54% -- -- --
Net investment income 5.00% 4.25% 4.44% 4.47% 4.72% 4.30%/(5)/ 4.23%
Portfolio Turnover /(6)/ -- -- -- -- -- -- 14%
- -----------------------------------------------------------------------------------------------------------------------------------
</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 /(3)/ 1.55%
Net investment income 4.20%
Net investment income per share $ 0.467
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
/(3)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(4)/ 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 provider. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(5)/ Annualized.
/(6)/ 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 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
39
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
North Carolina Fund
-----------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------------------
August 31, Sept. 30,
- -------------------------------------------------------------------------------------------------------------------------- ---------
1998/(1)/ 1997 1996 1995 1994/(2)/ 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 year $ 9.610 $10.340 $ 9.970 $ 9.960 $ 9.970 $10.940 $10.300
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.490 $ 0.447 $ 0.452 $ 0.452 $ 0.466 $ 0.423 $ 0.468
Net realized and unrealized gain (loss) 0.282 0.303 0.378 0.026 0.011/(3)/ (0.895) 0.794
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.772 $ 0.750 $ 0.830 $ 0.478 $ 0.477 $(0.472) $ 1.262
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.490) $(0.447) $(0.455) $(0.455) $(0.466) $(0.423) $(0.468)
In excess of net investment income (0.012) (0.013) (0.005) (0.013) (0.021) (0.075) (0.120)
In excess of net realized gain -- -- -- -- -- -- (0.034)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.502) $(0.460) $(0.460) $(0.468) $(0.487) $(0.498) $(0.622)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 9.880 $10.630 $10.340 $ 9.970 $ 9.960 $ 9.970 $10.940
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return/(4)/ 8.22% 7.42% 8.50% 4.83% 5.03% (4.40)% 12.69%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $12,967 $139,325 $151,564 $169,889 $188,450 $192,667 $173,828
Ratios (As a percentage of average daily net assets):
Expenses/(5)(6)/ 0.83% 1.58% 1.60% 1.59% 1.51% 1.42%/(7)/ 1.52%
Expenses after custodian fee reduction/(5)/ 0.80% 1.55% 1.58% 1.54% -- -- --
Net investment income 5.03% 4.26% 4.48% 4.47% 4.78% 4.43%/(7)/ 4.34%
Portfolio Turnover/(8)/ -- -- -- -- -- -- 16%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/Net investment income per share was computed using average shares
outstanding.
/(2)/For the eleven month period ended August 31, 1994.
/(3)/The per share amounts are not in accord with the net realized and
unrealized gain (loss) for the period because of the timing of sales of
Fund shares and the amount of the per share realized and unrealized gains
and losses at such time.
/(4)/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
reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.
/(5)/Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(6)/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 provider. The expense ratios
for each of the prior periods have not been adjusted to reflect this
change.
/(7)/Annualized.
/(8)/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 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 August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Oregon Fund
-----------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------------------- ---------
1998/(1)/ 1997 1996 1995 1994/(2)/ 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 year $ 9.600 $10.510 $10.240 $10.310 $10.090 $11.130 $10.270
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.483 $ 0.450 $ 0.456 $ 0.450 $ 0.455 $ 0.415 $ 0.459
Net realized and unrealized gain (loss) 0.275 0.292 0.266 (0.061) 0.241 (0.869) 0.983
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.758 $ 0.742 $ 0.722 $ 0.389 $ 0.696 $(0.454) $ 1.442
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.483) $(0.451) $(0.452) $(0.457) $(0.455) $(0.415) $(0.459)
In excess of net investment income (0.005) (0.001) -- (0.002) (0.021) (0.078) (0.117)
From net realized gain -- -- -- -- -- (0.093) (0.006)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.488) $(0.452) $(0.452) $(0.459) $(0.476) $(0.586) $(0.582)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 9.870 $10.800 $10.510 $10.240 $10.310 $10.090 $11.130
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return/(3)/ 8.08% 7.22% 7.20% 3.80% 7.22% (4.21)% 14.47%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $ 914 $102,571 $112,586 $128,580 $145,056 $151,127 $128,229
Ratios (As a percentage of average daily net assets):
Expenses/(4)(5)/ 0.78% 1.56% 1.63% 1.56% 1.53% 1.43%/(6)/ 1.55%
Expenses after custodian fee reduction/(4)/ 0.78% 1.56% 1.63% 1.53% -- -- --
Net investment income 4.95% 4.22% 4.41% 4.33% 4.59% 4.28%/(6)/ 4.22%
Portfolio Turnover/(7)/ -- -- -- -- -- -- 23%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/Net investment income per share was computed using average shares
outstanding.
/(2)/For the eleven month period ended August 31, 1994.
/(3)/Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.
/(4)/Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(5)/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 provider. The expense ratios
for each of the prior periods have not been adjusted to reflect this
change.
/(6)/Annualized.
/(7)/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 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
41
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
South Carolina Fund
------------------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------------------------- -----------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
----------------------- ------------------------------------------------ -----------
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 year $ 9.760 $10.380 $10.020 $10.000 $ 9.940 $10.890 $10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.495 $ 0.455 $ 0.463 $ 0.467 $ 0.460 $ 0.408 $ 0.461
Net realized and unrealized gain (loss) 0.328 0.352 0.364 0.021 0.071 (0.870) 0.986
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.823 $ 0.807 $ 0.827 $ 0.488 $ 0.531 $(0.462) $ 1.447
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.493) $(0.467) $(0.467) $(0.468) $(0.460) $(0.408) $(0.461)
In excess of net investment income -- -- -- -- (0.011) (0.080) (0.096)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.493) $(0.467) $(0.467) $(0.468) $(0.471) $(0.488) $(0.557)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $10.090 $10.720 $10.380 $10.020 $10.000 $ 9.940 $10.890
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return /(3)/ 8.62% 7.96% 8.41% 4.92% 5.64% (4.33)% 14.50%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
42
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
South Carolina Fund (continued)
--------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------------------ ------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
---------------------- ------------------------------------------ ------------
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 year (000's omitted) $ 1,316 $48,562 $52,686 $57,217 $59,955 $59,878 $43,169
Ratio (As a percentage of average daily net assets):
Net expenses /(4)//(5)/ 0.77% 1.52% 1.63% 1.60% 1.49% 1.36%/(6)/ 1.07%/(6)/
Net expenses after custodian fee reduction /(4)/ 0.76% 1.51% 1.62% 1.58% -- -- --
Net investment income 5.03% 4.30% 4.50% 4.60% 4.77% 4.27%(6) 4.22%(6)
Portfolio Turnover /(7)/ -- -- -- -- -- 3% 13%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
/+/ 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:
Ratio (As a percentage of average daily net assets):
<S> <C>
Expenses /(4)/ 1.44%/(6)/
Net investment income 3.85%/(6)/
Net investment income per share $ 0.421
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, October 2, 1992, to September
30, 1993.
/(3)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
/(4)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(5)/ 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 provider. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(6)/ Annualized.
/(7)/ 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 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
43
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS CONT'D
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Tennessee Fund
--------------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------------------------- -----------
1998/(1)/ 1997 1996 1995 1994/(2)/ 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 year $ 9.740 $10.580 $10.150 $10.110 $10.020 $11.070 $10.010
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.491 $ 0.444 $ 0.453 $ 0.457 $ 0.468 $ 0.426 $ 0.466
Net realized and unrealized gain (loss) 0.257 0.266 0.436 0.059 0.115 (0.848) 1.158
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.748 $ 0.710 $ 0.889 $ 0.516 $ 0.583 $(0.422) $ 1.624
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.491) $(0.444) $(0.453) $(0.475) $(0.468) $(0.426) $(0.466)
In excess of net investment income (0.017) (0.006) (0.006) (0.001) (0.025) (0.071) (0.098)
From net realized gain -- -- -- -- -- (0.094) --
In excess of net realized gain -- -- -- -- -- (0.037) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.508) $(0.450) $(0.459) $(0.476) $(0.493) $(0.628) $(0.564)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 9.980 $10.840 $10.580 $10.150 $10.110 $10.020 $11.070
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return /(3)/ 7.85% 6.86% 8.95% 5.16% 6.12% (3.93)% 16.97%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
44
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS CONT'D
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Tennessee Fund (continued)
--------------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------------------------- -----------
1998/(1)/ 1997 1996 1995 1994/(2)/ 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 year (000's omitted) $ 3,413 $50,090 $51,712 $54,533 $57,484 $55,379 $39,648
Ratios (As a percentage of average daily net assets):
Net expenses /(4)//(5)/ 0.67% 1.52% 1.54% 1.53% 1.47% 1.37%/(6)/ 1.30%
Net expenses after custodian fee reduction /(4)/ 0.65% 1.50% 1.53% 1.51% -- -- --
Net investment income 4.94% 4.14% 4.39% 4.45% 4.77% 4.44%/(6)/ 4.24%
Portfolio Turnover /(7)/ -- -- -- -- -- -- 28%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
+ 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:
Ratios (As a percentage of average daily net assets):
Expenses /(4)/ 1.61%
Net investment income 3.93%
Net investment income per share $ 0.432
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Net investment income per share was computed using average shares
outstanding.
/(2)/ For the eleven month period ended August 31, 1994.
/(3)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
/(4)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(5)/ 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 provider. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(6)/ Annualized.
/(7)/ 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 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 August 31, 1998
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS CONT'D
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Virginia Fund
------------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------------------- ---------
1998/(1)/ 1997 1996 1995 1994/(2)/ 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 year $ 9.620 $10.630 $10.260 $10.260 $10.120 $11.060 $10.460
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.483 $ 0.454 $ 0.467 $ 0.471 $ 0.479 $ 0.438 $ 0.483
Net realized and unrealized gain (loss) 0.277 0.312 0.369 0.006 0.161 (0.864) 0.762
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.760 $ 0.766 $ 0.836 $ 0.477 $ 0.640 $(0.426) $ 1.245
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.483) $(0.454) $(0.466) $(0.471) $(0.479) $(0.438) $(0.483)
In excess of net investment income (0.027) (0.012) -- (0.006) (0.021) (0.076) (0.130)
From net realized gain -- -- -- -- -- -- (0.022)
In excess of net realized gain -- -- -- -- -- -- (0.010)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.510) $(0.466) $(0.466) $(0.477) $(0.500) $(0.514) $(0.645)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 9.870 $10.930 $10.630 $10.260 $10.260 $10.120 $11.060
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return /(3)/ 8.08% 7.37% 8.31% 4.67% 6.62% (3.95)% 12.33%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $ 2,117 $148,902 $159,603 $175,918 $189,535 $193,420 $175,426
Ratios (As a percentage of average daily net assets):
Expenses /(4)//(5)/ 0.85% 1.59% 1.60% 1.56% 1.50% 1.44%(6) 1.52%
Expenses after custodian fee reduction /(4)/ 0.83% 1.57% 1.57% 1.53% -- -- --
Net investment income 4.92% 4.21% 4.47% 4.52% 4.81% 4.51%(6) 4.42%
Portfolio Turnover /(7)/ -- -- -- -- -- -- 27%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Net investment income per share was computed using average shares
outstanding.
/(2)/ For the eleven month period ended August 31, 1994.
/(3)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
/(4)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(5)/ 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 provider. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(6)/ Annualized.
/(7)/ 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 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
46
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-----------------------------------------------------------------------------
Eaton Vance Municipals Trust (the Trust) is an entity of the type commonly
known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Trust presently consists of twenty-nine Funds, twelve
of which, each non-diversified, 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 (approximately 100% at August
31, 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, 1998,
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. The amounts and expiration dates of the capital loss
carryovers are as follows:
47
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
Fund Amount Expires
---------------------------------------------------------------------------
Alabama Fund $ 94,556 August 31, 2005
988,165 August 31, 2004
1,959,872 August 31, 2003
223,327 August 31, 2002
Arkansas Fund 251,575 August 31, 2005
1,818,024 August 31, 2004
345,312 August 31, 2003
Georgia Fund 6,662,979 August 31, 2004
Kentucky Fund 233,391 August 31, 2005
2,773,213 August 31, 2004
Louisiana Fund 250,387 August 31, 2005
1,714,365 August 31, 2004
Maryland Fund 35 August 31, 2005
1,328,059 August 31, 2004
97 August 31, 2003
Missouri Fund 113,141 August 31, 2005
1,413,730 August 31, 2004
North Carolina Fund 73,745 August 31, 2005
8,479,506 August 31, 2004
997,556 August 31, 2003
Oregon Fund 924,680 August 31, 2005
3,219,725 August 31, 2004
South Carolina Fund 183,416 August 31, 2005
2,881,146 August 31, 2004
266,269 August 31, 2003
109,330 August 31, 2002
Tennessee Fund 246,996 August 31, 2005
1,536,409 August 31, 2004
Virginia Fund 6,252,812 August 31, 2004
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.
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.
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 are
paid in the form of additional shares or, at the election of the shareholder,
in cash. 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.
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
48
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
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.
During the year ended August 31, 1998, the following reclassifications were
made due to permanent differences between book and tax accounting for
reallocation of gain/loss:
Georgia Fund Increase/Decrease
-----------------------------------------------------------------------
Accumulated undistributed (distributions in
excess of) net investment income 3,064
Paid in capital (3,064)
-----------------------------------------------------------------------
Louisiana Fund Increase/Decrease
-----------------------------------------------------------------------
Accumulated undistributed (distributions
in excess of) net investment income 38,421
Paid in capital (38,421)
-----------------------------------------------------------------------
North Carolina Fund Increase/Decrease
-----------------------------------------------------------------------
Accumulated undistributed (distributions in
excess of) net investment income 229,474
Paid in capital (229,474)
-----------------------------------------------------------------------
Virginia Fund Increase/Decrease
-----------------------------------------------------------------------
Accumulated undistributed (distributions in
excess of) net investment income 28,602
Paid in capital (28,602)
------------------------------------------------------------------------
Net investment income, net realized gains, and net assets were not affected
by these reclassifications.
The tax treatment of distributions for the calendar year will be reported to
shareholders prior to February 1, 1999, and will be based on tax accounting
methods which may differ from amounts determined for financial statement
purposes.
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
--------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
--------------------------------------
Class A Class B Class B
- ----------------------------------------------------------------------------
Sales 96,942 392,145 320,982
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 12,052 183,966 207,245
Redemptions (187,576) (1,345,698) (1,391,666)
Issued to EV Traditional
Municipals shareholders 590,481 -- --
- ----------------------------------------------------------------------------
Net increase(decrease) 511,899 (769,587) (863,439)
- ----------------------------------------------------------------------------
Arkansas Fund
--------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
--------------------------------------
Class A Class B Class B
- -----------------------------------------------------------------------------
Sales 18,182 236,560 143,949
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 2,761 113,885 130,882
Redemptions (13,548) (1,124,754) (1,589,210)
Issued to EV Traditional
Municipals shareholders 120,288 -- --
- ----------------------------------------------------------------------------
Net increase (decrease) 127,683 (774,309) (1,314,379)
- ----------------------------------------------------------------------------
Georgia Fund
--------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
--------------------------------------
Class A Class B Class B
- ----------------------------------------------------------------------------
Sales 41,385 430,422 441,579
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 4,967 166,705 192,185
Redemptions (22,370) (1,608,037) (2,356,341)
Issued to EV Traditional
Municipals shareholders 186,097 -- --
- ----------------------------------------------------------------------------
Net increase(decrease) 210,079 (1,010,910) (1,722,577)
- ----------------------------------------------------------------------------
49
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
Kentucky Fund
-------------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
-------------------------------------------
Class A Class B Class B
- --------------------------------------------------------------------------
Sales 55,826 477,522 382,603
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 5,205 251,649 284,793
Redemptions (72,837) (1,970,750) (2,186,957)
Issued to EV Traditional
Municipals shareholders 143,269 -- --
- --------------------------------------------------------------------------
Net increase (decrease) 131,463 (1,241,579) (1,519,561)
- --------------------------------------------------------------------------
Louisiana Fund
-------------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
-------------------------------------------
Class A Class B Class B
- --------------------------------------------------------------------------
Sales 313,546 186,443 222,047
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 8,780 67,357 69,196
Redemptions (75,541) (373,866) (497,956)
Issued to EV Traditional
Municipals shareholders 242,164 -- --
- --------------------------------------------------------------------------
Net increase (decrease) 488,949 (120,066) (206,713)
- --------------------------------------------------------------------------
Maryland Fund
-------------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
-------------------------------------------
Class A Class B Class B
- --------------------------------------------------------------------------
Sales 52,926 705,126 549,185
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 4,317 208,732 232,372
Redemptions (28,207) (1,369,032) (1,524,095)
Issued to EV Traditional
Municipals shareholders 132,577 -- --
- --------------------------------------------------------------------------
Net increase (decrease) 161,613 (455,174) (742,538)
- --------------------------------------------------------------------------
Missouri Fund
-------------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
-------------------------------------------
Class A Class B Class B
Sales 68,428 315,672 186,027
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 6,805 139,565 158,432
Redemptions (37,078) (1,202,462) (1,144,910)
Issued to EV Traditional
Municipals shareholders 221,323 -- --
- --------------------------------------------------------------------------
Net increase(decrease) 259,478 (747,225) (800,451)
- --------------------------------------------------------------------------
North Carolina Fund
-------------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
-------------------------------------------
Class A Class B Class B
- --------------------------------------------------------------------------
Sales 336,246 535,860 454,728
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 20,900 299,045 349,575
Redemptions (650,119) (2,392,924) (3,186,918)
Issued to EV Traditional
Municipals shareholders 1,605,302 -- --
- --------------------------------------------------------------------------
Net increase(decrease) 1,312,329 (1,558,019) (2,382,615)
- --------------------------------------------------------------------------
Oregon Fund
-------------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
-------------------------------------------
Class A Class B Class B
- --------------------------------------------------------------------------
Sales 24,544 312,672 517,033
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 2,921 239,123 282,470
Redemptions (10,284) (1,770,810) (2,633,847)
Issued to EV Traditional
Municipals shareholders 75,426 -- --
- --------------------------------------------------------------------------
Net increase(decrease) 92,607 (1,219,015) (1,834,344)
- --------------------------------------------------------------------------
50
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
South Carolina Fund
---------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
---------------------------------------
Class A Class B Class B
- ----------------------------------------------------------------------------
Sales 23,792 213,365 188,272
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 3,412 93,082 106,519
Redemptions
(5,801) (850,327) (927,151)
Issued to EV Traditional
Municipals shareholders 109,050 -- --
- ----------------------------------------------------------------------------
Net increase (decrease) 130,453 (543,880) (632,360)
- ----------------------------------------------------------------------------
Tennessee Fund
---------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
---------------------------------------
Class A Class B Class B
- ----------------------------------------------------------------------------
Sales 149,164 350,938 237,074
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 9,340 101,626 113,438
Redemptions (67,357) (720,704) (831,841)
Issued to EV Traditional
Municipals shareholders 250,960 -- --
- ----------------------------------------------------------------------------
Net increase(decrease) 342,107 (268,140) (481,329)
- ----------------------------------------------------------------------------
Virginia Fund
---------------------------------------
Year Ended Year Ended
August 31, 1998 August 31, 1997
---------------------------------------
Class A Class B Class B
- ----------------------------------------------------------------------------
Sales 69,689 645,327 613,925
Issued to shareholders
electing to receive
payments of distributions 4,299 310,137 353,174
in Fund shares
Redemptions (9,849) (2,343,911) (3,092,672)
Issued to EV Traditional
Municipals shareholders 150,372 -- --
- ----------------------------------------------------------------------------
Net increase(decrease) 214,511 (1,388,447) (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 for 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 $955, $463, $1,084, $1,277, $1,441, $987, $1,741, $1,536, $583,
$578, $1,361 and $960 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 year ended August 31, 1998.
5 Distribution Plan
- --------------------------------------------------------------------------------
Each Fund has adopted a distribution plan (Class B Plans) pursuant to Rule
12b-1 under the Investment Company Act of 1940 and a service Plan (Class A
Plans, the Plans). The Plans require the Class B shares to pay the principal
underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to 1/365 of
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 year ended August 31, 1998, the Class
B shares of the Alabama Fund, Arkansas Fund, Georgia Fund, Kentucky Fund,
Louisiana
51
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
Fund, Maryland Fund, Missouri Fund, North Carolina Fund, Oregon Fund, South
Carolina Fund, Tennessee Fund and Virginia Fund paid $691,815, $434,913,
$665,255, $872,503, $239,653, $779,861, $563,472, $1,084,915, $804,263,
$384,035, $386,116 and $1,156,266 respectively to EVD, representing 0.75%
(annualized) of each Fund's Class B average daily net assets. At August 31,
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 $2,531,000, $1,795,000, $2,541,000, $3,008,000, $1,074,000,
$2,972,000, $1,901,000, $3,942,000, $2,956,000, $1,552,000, $1,504,000 and
$3,964,000 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 year ended August 31,
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 $7,972, $1,759, $3,945, $2,482,
$4,667, $2,632, $3,942, $23,089, $1,322, $2,331, $2,322 and $3,550,
respectively, for Class A shares, and $174,736, $110,719, $166,201,
$221,801, $54,321, $187,730, $135,276, $272,899, $193,017, $97,560, $92,668
and $292,123 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 Funds 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 Plan (see Note 5). CDSC charges
received when no Uncovered Distribution Charges exist will be credited to
the Fund. EVD received approximately $200,000, $166,000, $201,000, $267,000,
$65,000, $208,000, $156,000, $294,000, $253,000, $134,000, $117,000 and
$321,000 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 year ended August 31, 1998.
7 Investment Transactions
- --------------------------------------------------------------------------------
Increases and decreases in each Fund's investment in its corresponding
Portfolio for the year ended August 31, 1998, were as follows:
Alabama Fund
----------------------------------------------------------------------------
Increases $ 5,971,850
Decreases 20,427,780
Arkansas Fund
----------------------------------------------------------------------------
Increases $ 3,190,175
Decreases 14,381,768
Georgia Fund
----------------------------------------------------------------------------
Increases $ 5,270,754
Decreases 20,324,717
Kentucky Fund
----------------------------------------------------------------------------
Increases $ 5,929,474
Decreases 25,613,276
52
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
Louisiana Fund
----------------------------------------------------------------------------
Increases $ 5,706,360
Decreases 6,494,266
Maryland Fund
----------------------------------------------------------------------------
Increases $ 8,581,280
Decreases 19,031,547
Missouri Fund
----------------------------------------------------------------------------
Increases $ 4,493,837
Decreases 16,642,888
North Carolina Fund
----------------------------------------------------------------------------
Increases $ 9,214,460
Decreases 36,965,507
Oregon Fund
----------------------------------------------------------------------------
Increases $ 3,763,506
Decreases 22,431,429
South Carolina Fund
----------------------------------------------------------------------------
Increases $ 2,733,381
Decreases 11,134,947
Tennessee Fund
----------------------------------------------------------------------------
Increases $ 5,452,717
Decreases 10,088,250
Virginia Fund
----------------------------------------------------------------------------
Increases $ 7,893,877
Decreases 31,043,370
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
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 1,063,786 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 transactions, 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
53
<PAGE>
Eaton Vance Municipals Funds as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
Unrealized
Acquired appreciation
Fund Net Assets (depreciation)
-----------------------------------------------------------
Oregon Fund $ 724,248 $(11,883)
South Carolina Fund 1,063,786 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
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>
Eaton Vance Municipals Funds as of August 31, 1998
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders
of Eaton Vance Municipals Trust:
- --------------------------------------------------------------------------------
We have audited the accompanying statements of assets and liabilities of 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 (the
Funds) (certain of the series of Eaton Vance Municipals Trust) as of August 31,
1998, the related statements of operations for the year then ended, and the
statements of changes in net assets for the years ended August 31, 1998, and
1997 and financial highlights for each of the years in the four year period
ended August 31, 1998, the eleven months ended August 31, 1994, and the year
ended September 30, 1993. These financial statements and financial highlights
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on the financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the aforementioned
Funds of Eaton Vance Municipals Trust at August 31, 1998, the results of their
operations, the changes in their net assets and their financial highlights for
the respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 2, 1998
55
<PAGE>
Alabama Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 1.7%
- --------------------------------------------------------------------------------
A3 NR $1,500 Birmingham-Southern
College, 5.35%, 12/1/19 $ 1,552,170
- --------------------------------------------------------------------------------
$ 1,552,170
- --------------------------------------------------------------------------------
Electric Utilities -- 0.6%
- --------------------------------------------------------------------------------
Baa1 BBB+ $ 500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 $ 570,690
- --------------------------------------------------------------------------------
$ 570,690
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 8.4%
- --------------------------------------------------------------------------------
NR BBB $ 350 Gadsen East Medical Clinic
Board, (Baptist Hospital),
Prerefunded to 11/1/01,
7.60%, 11/1/08 $ 395,122
NR BBB 2,000 Gadsen East Medical Clinic
Board, (Baptist Hospital),
Prerefunded to 11/1/01,
7.80%, 11/1/21 2,269,660
Aaa AAA 2,000 Huntsville, Health Care
Facilities, (MBIA),
Prerefunded to 6/1/04,
6.50%, 6/1/13 2,284,600
A1 NR 1,600 University of Alabama,
Birmingham Medical and
Educational Foundation
Housing, Prerefunded to
12/1/99, 7.00%, 12/1/19 1,698,560
Aaa AAA 1,000 West Morgan-East Lawrence,
Water Authority, (FSA),
Prerefunded to 8/15/04,
6.85%, 8/15/25 1,166,350
- --------------------------------------------------------------------------------
$ 7,814,292
- --------------------------------------------------------------------------------
General Obligations -- 1.5%
- --------------------------------------------------------------------------------
Baa1 A $1,100 Puerto Rico Aqueduct and
Sewer Authority, 5.00%, 7/1/19 $ 1,089,385
Baa1 A 650 Puerto Rico, Public
Improvement, 0.00%, 7/1/15 285,864
- --------------------------------------------------------------------------------
$ 1,375,249
- --------------------------------------------------------------------------------
Hospitals -- 14.1%
- --------------------------------------------------------------------------------
NR BBB $3,000 Alexander City, Special
Care, (Russell Hospital),
6.00%, 12/1/22 $ 3,137,190
Baa3 BBB- 1,000 Baldwin County, (Thomas
Hospital), 6.75%, 4/1/21 1,097,370
Baa3 NR 1,000 Cullman Medical Clinic
Board, (Cullman Regional
Medical Center), 6.50%, 2/15/23 1,070,500
A3 NR 3,550 Jasper Medical Clinic Board,
(Walker Regional Medical
Center), 6.375%, 7/1/18/(1)/ 3,754,479
A3 NR 1,000 Jasper Medical Clinic Board,
(Walker Regional Medical
Center), 6.40%, 7/1/11 1,062,410
Baa3 BBB 2,000 Marshall, (Boaz-Albertville
Medical Center), 7.00%, 1/1/20 2,223,720
A A- 745 Montgomery, Medical Clinic
Board, (Jackson Hospital),
7.00%, 3/1/15 790,661
- --------------------------------------------------------------------------------
$13,136,330
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 11.4%
- --------------------------------------------------------------------------------
Baa1 BBB $1,200 Courtland, (Champion
International Corp.),
7.20%, 12/1/13 $ 1,331,712
Baa1 BBB 2,000 Courtland, (Champion
International Corp.),
(AMT), 6.50%, 9/1/25 2,180,700
Baa1 BBB 550 Courtland, (Champion
International Corp.),
(AMT), 7.00%, 6/1/22 601,519
Baa3 BBB- 3,020 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 3,289,777
A3 A- 1,000 Selma, Solid Waste
Disposal, (International
Paper), (AMT), 6.00%, 12/1/17 1,054,070
A2 A+ 2,000 Tallahassee, (United Tech),
6.10%, 8/1/14 2,190,000
- --------------------------------------------------------------------------------
$10,647,778
- --------------------------------------------------------------------------------
Insured-Education -- 8.4%
- --------------------------------------------------------------------------------
AAA AAA $2,000 Alabama Agricultural and
Mechanical University,
(MBIA), 5.00%, 11/1/25 $ 1,980,780
Aaa AAA 1,330 Alabama State Board of
Education, (AMBAC), 5.25%, 9/1/17 1,352,796
Aaa AAA 2,500 University of Alabama,
Student Housing, (MBIA),
5.00%, 6/1/16 2,508,575
See notes to financial statements
56
<PAGE>
Alabama Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Education (continued)
- --------------------------------------------------------------------------------
Aaa AAA $2,000 University of South
Alabama, Tuition, (AMBAC),
5.00%, 11/15/15 $ 2,025,180
- --------------------------------------------------------------------------------
$ 7,867,331
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 2.5%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Columbia, (Alabama Power),
(AMBAC), 6.50%, 9/1/23 $ 2,088,620
Aaa AAA 250 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(2)/ 288,438
- --------------------------------------------------------------------------------
$ 2,377,058
- --------------------------------------------------------------------------------
Insured-General Obligations -- 10.3%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Daphne, (AMBAC),
5.125%, 4/1/17 $ 506,625
Aaa AAA 250 Fairfield City, (AMBAC),
6.30%, 6/1/22 276,208
Aaa AAA 1,000 Greenville, (AMBAC),
5.25%, 12/1/21 1,015,370
Aaa AAA 2,000 Madison, Warrants (MBIA),
5.00%, 9/1/27/(3)/ 1,977,360
Aaa AAA 3,250 Madison, Warrants, (MBIA),
6.00%, 2/1/24 3,540,355
AAA AAA 4,000 Mobile, (MBIA),
0.00%, 8/15/20 1,269,480
Aaa AAA 500 North Port, (AMBAC),
5.70%, 3/1/21 533,810
Aaa AAA 500 Troy City, (CAPG),
6.60%, 6/1/12 555,975
- --------------------------------------------------------------------------------
$ 9,675,183
- --------------------------------------------------------------------------------
Insured-Hospitals -- 6.7%
- --------------------------------------------------------------------------------
AAA AAA $2,000 Anniston Regional Medical
Center Board, (AMBAC),
5.125%, 6/1/28 $ 1,997,420
Aaa AAA 1,810 Bessemer, Medical Clinic
Board, (MBIA), 6.00%, 5/15/19 1,980,249
Aaa AAA 750 Montgomery, Special Tax
Care Facilities Authority,
(Baptist Medical Center),
(AMBAC), 5.00%, 5/1/20 739,695
Aaa AAA 1,500 University of Alabama, Hospital
Revenue - Birmingham, (MBIA),
5.00%, 10/1/14 1,509,270
- --------------------------------------------------------------------------------
$ 6,226,634
- --------------------------------------------------------------------------------
Insured-Miscellaneous -- 6.1%
- --------------------------------------------------------------------------------
Aaa AAA $4,500 Alabama State Docks
Department, (MBIA), (AMT),
6.30%, 10/1/21 $ 5,026,634
Aaa AAA 1,825 Birmingham Jefferson, Civic
Center Authority, (MBIA),
0.00%, 9/1/18 683,682
- --------------------------------------------------------------------------------
$ 5,710,316
- --------------------------------------------------------------------------------
Insured-Solid Waste -- 4.9%
- --------------------------------------------------------------------------------
Aaa AAA $ 250 Huntsville, Solid Waste
Disposal, (FGIC), (AMT),
7.00%, 10/1/08 $ 269,075
Aaa AAA 4,000 Huntsville, Solid Waste
Disposal, (FGIC), (AMT),
7.00%, 10/1/14 4,303,959
- --------------------------------------------------------------------------------
$ 4,573,034
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 1.6%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Puerto Rico Financing
Authority, (AMBAC),
5.00%, 7/1/28 $ 1,496,430
- --------------------------------------------------------------------------------
$ 1,496,430
- --------------------------------------------------------------------------------
Insured-Transportation -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Huntsville-Madison County
Airport, (AMT), (MBIA),
5.40%, 7/1/19 $ 1,028,240
- --------------------------------------------------------------------------------
$ 1,028,240
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 14.4%
- --------------------------------------------------------------------------------
Aaa AAA $2,050 Bessemer, Water, (AMBAC),
5.75%, 7/1/26 $ 2,205,247
AAA NR 1,000 Limestone County Water and
Sewer Authority, (AMBAC),
5.00%, 12/1/24 994,860
Aaa AAA 3,075 Prichard Water and Sewer,
(AMBAC), 6.125%, 11/15/14 3,434,652
Aaa AAA 6,000 Scottsboro, Water, Sewer and
Gas, (AMBAC),
6.50%, 12/1/14/(4)/ 6,777,659
- --------------------------------------------------------------------------------
$13,412,418
- --------------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 0.5%
- --------------------------------------------------------------------------------
NR BBB $ 500 Puerto Rico, (Guaynabo Municipal
Government Center Lease),
5.625%, 7/1/22 $ 519,085
- --------------------------------------------------------------------------------
$ 519,085
- --------------------------------------------------------------------------------
See notes to financial statements
57
<PAGE>
Alabama Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Miscellaneous -- 0.1%
- --------------------------------------------------------------------------------
A A $ 100 Tennessee Valley, Exhibit
Commission, 6.70%, 6/1/10 $ 110,680
- --------------------------------------------------------------------------------
$ 110,680
- --------------------------------------------------------------------------------
Nursing Homes -- 1.1%
- --------------------------------------------------------------------------------
NR NR $ 325 Fairhope Midtown Medical
Clinic Board, (Beverly
Enterprises), 6.375%, 6/1/09 $ 327,308
NR NR 670 Mobile, Midtown Medical Clinic
Board, (Beverly Enterprises),
7.00%, 4/1/07 682,663
- --------------------------------------------------------------------------------
$ 1,009,971
- --------------------------------------------------------------------------------
Transportation -- 2.9%
- --------------------------------------------------------------------------------
Baa1 A $1,000 Puerto Rico Highway and
Transportation Authority,
4.75%, 7/1/38 $ 969,520
BAA A- 800 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/22 790,616
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/38 983,810
- --------------------------------------------------------------------------------
$ 2,743,946
- --------------------------------------------------------------------------------
Water and Sewer -- 1.7%
- --------------------------------------------------------------------------------
NR NR $1,500 Moulton City, Water,
6.30%, 1/1/18 $ 1,570,245
- --------------------------------------------------------------------------------
$ 1,570,245
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $85,220,338) $93,417,080
- --------------------------------------------------------------------------------
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 August 31, 1998, 59.8% 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 0.6% to 27.2% 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.
/(3)/ When-issued security.
/(4)/ Security (or a portion thereof) has been segregated to cover when-issued
securities.
See notes to financial statements
58
<PAGE>
Arkansas Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 7.1%
- --------------------------------------------------------------------------------
NR A+ $2,750 Conway, Public Facilities Board
Capital Improvement, (Hendrix
College), 6.00%, 10/1/26 $ 2,937,467
A1 NR 1,000 University of Arkansas, 5.00%,
9/1/17 1,007,570
- --------------------------------------------------------------------------------
$ 3,945,037
- --------------------------------------------------------------------------------
Electric Utilities -- 2.4%
- --------------------------------------------------------------------------------
Baa2 BBB+ $ 550 Jefferson, Pollution Control,
(Arkansas Power and Light),
6.30%, 6/1/18 $ 595,590
Baa2 BBB+ 500 Pope County, Pollution Control,
(Arkansas Power and Light), 6.30%,
12/1/16 542,625
Baa1 BBB+ 500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 200,550
- --------------------------------------------------------------------------------
$ 1,338,765
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Harrison, Residential Housing
Facility Board, Single Family
Mortgage, (FGIC), Escrowed to
Maturity, 7.40%, 9/1/11 $ 637,835
- --------------------------------------------------------------------------------
$ 637,835
- --------------------------------------------------------------------------------
General Obligations -- 3.0%
- --------------------------------------------------------------------------------
Aa3 AA $2,750 Arkansas State College Savings,
0.00%, 6/1/14 $ 1,277,045
Baa1 A 500 Puerto Rico, 0.00%, 7/1/16 209,055
Baa1 A 500 Puerto Rico, 0.00%, 7/1/18 188,850
- --------------------------------------------------------------------------------
$ 1,674,950
- --------------------------------------------------------------------------------
Hospitals -- 13.4%
- --------------------------------------------------------------------------------
Baa1 NR $ 700 Baxter, Hospital Improvement,
7.25%, 9/1/07 $ 772,114
Baa1 NR 750 Baxter, Hospital Improvement,
7.50%, 9/1/21 829,245
NR A+ 550 Little Rock, Health Facilities
Board Healthcare, (Baptist Medical
Center), 5.50%, 9/1/15 569,536
NR A+ 1,125 Little Rock, Health Facilities
Board, (Baptist Medical Center),
6.80%, 11/1/05 1,305,000
NR BBB 1,500 Paragould, Hospital, 6.375%,
10/1/17 1,619,760
NR A- 2,250 Pulaski County, (Children's
Hospital), 6.20%, 3/1/22 2,379,803
- --------------------------------------------------------------------------------
$ 7,475,458
- --------------------------------------------------------------------------------
Housing -- 12.8%
- --------------------------------------------------------------------------------
A NR $3,000 Arkansas Development Finance
Authority, Compound Accretion,
0.00%, 12/1/11 $ 1,218,000
NR AAA 1,205 Arkansas Development Finance
Authority, Single Family Mortgage,
(GNMA), (AMT), 5.80%, 6/1/25 1,238,571
NR AAA 990 Arkansas Development Finance
Authority, Single Family Mortgage,
(GNMA), (AMT), 7.45%, 1/1/27 1,100,058
NR AAA 3,270 Arkansas Development Finance
Authority, Single Family Mortgage,
(GNMA/FNMA), (AMT), 6.70%, 7/1/27 3,537,779
- --------------------------------------------------------------------------------
$ 7,094,408
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 18.0%
- --------------------------------------------------------------------------------
NR A- $ 750 Arkansas Development Finance
Authority, Economic Development,
(AMT), 6.00%, 10/1/11 $ 785,400
Baa2 BBB+ 2,350 Baxter, (Aeroquip Corp.), 5.80%,
10/1/13 2,573,015
A1 AA- 2,500 Blytheville, Solid Waste Recycling
and Sewer Treatment, (Nucor Corp.),
(AMT), 6.90%, 12/1/21 2,717,600
A1 A+ 1,000 Jonesboro, (Anheuser-Busch),
6.50%, 11/15/12 1,094,580
Baa2 NR 2,000 Little River County, (Georgia-
Pacific Corp.), (AMT), 5.60%,
10/1/26 2,025,100
A3 A- 775 Pine Bluff, Solid Waste Disposal,
(International Paper), (AMT),
5.55%, 10/1/17 796,406
- --------------------------------------------------------------------------------
$ 9,992,101
- --------------------------------------------------------------------------------
See notes to financial statements
59
<PAGE>
Arkansas Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Education -- 1.0%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 University of Central Arkansas,
(AMBAC), 6.125%, 4/1/26 $ 552,190
- --------------------------------------------------------------------------------
$ 552,190
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 8.8%
- --------------------------------------------------------------------------------
Aaa AAA $ 250 North Little Rock, Electric
System, (MBIA), 6.50%, 7/1/10 $ 297,243
Aaa AAA 3,390 North Little Rock, Electric
System, (MBIA), 6.50%, 7/1/15/(1)/ 4,080,779
Aaa AAA 450 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7.526%, 7/1/03/(2)/ 519,188
- --------------------------------------------------------------------------------
$ 4,897,210
- --------------------------------------------------------------------------------
Insured-General Obligations -- 0.3%
- --------------------------------------------------------------------------------
AAA AAA $ 500 Arkansas State College Savings,
(FGIC), 0.00%, 6/1/17 $ 195,910
- --------------------------------------------------------------------------------
$ 195,910
- --------------------------------------------------------------------------------
Insured-Hospitals -- 6.9%
- --------------------------------------------------------------------------------
Aaa AAA $2,610 Jonesboro, Residential Housing
and Health Care Facilities Board
Hospital, (Saint Bernard Regional
Medical Center), (AMBAC), 5.90%,
7/1/16 $ 2,835,530
Aaa AAA 400 Saline County, Retirement Housing
and Healthcare Facilities Board,
(Evan Lutheran Good Samaritan),
(AMBAC), 5.80%, 5/1/11 436,244
Aaa AAA 500 Saline County, Retirement Housing
and Healthcare Facilities Board,
(Evan Lutheran Good Samaritan),
(AMBAC), 6.00%, 6/1/18 543,285
- --------------------------------------------------------------------------------
$ 3,815,059
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 5.5%
- --------------------------------------------------------------------------------
Aaa AAA $1,250 Arkansas Development Finance
Authority, Wastewater System,
(MBIA), 5.00%, 6/1/15 $ 1,263,113
Aaa AAA 1,250 Arkansas Development Finance
Authority, Wastewater System,
(MBIA), 5.40%, 12/1/15 1,297,500
Aaa NR 500 Texarkana, Water and Sewer,
(FGIC), 5.40%, 9/1/15 524,065
- --------------------------------------------------------------------------------
$ 3,084,678
- --------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 0.5%
- --------------------------------------------------------------------------------
NR BBB $ 250 Puerto Rico, (Guaynabo Municipal
Government Center Lease),
5.625%, 7/1/22 $ 259,543
- --------------------------------------------------------------------------------
$ 259,543
- --------------------------------------------------------------------------------
Nursing Homes -- 2.0%
- --------------------------------------------------------------------------------
NR A $1,000 Little Rock, Health Facilities
Board, (Baptist Medical Center-
Parkway Village), 7.00%, 10/1/17 $ 1,091,750
- --------------------------------------------------------------------------------
$ 1,091,750
- --------------------------------------------------------------------------------
Pooled Loans -- 5.0%
- --------------------------------------------------------------------------------
A2 NR $1,000 Arkansas State Student Loan
Authority, (AMT), 5.60%, 6/1/14 $ 1,027,380
A NR 1,000 Arkansas State Student Loan
Authority, (AMT), 6.25%, 6/1/10 1,056,060
A NR 610 Arkansas State Student Loan
Authority, (AMT), 7.25%, 6/1/09 702,940
- --------------------------------------------------------------------------------
$ 2,786,380
- --------------------------------------------------------------------------------
Special Tax Revenue -- 4.6%
- --------------------------------------------------------------------------------
A NR $2,000 Little Rock, Hotel and Restaurant
Gross Receipts Tax, 7.375%,
8/1/15 $ 2,555,260
- --------------------------------------------------------------------------------
$ 2,555,260
- --------------------------------------------------------------------------------
Transportation -- 2.0%
- --------------------------------------------------------------------------------
NR NR $ 750 Northwest Arkansas Regional
Airport Authority, (AMT),
7.625%, 2/1/27 $ 866,505
Baa1 A 250 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 251,010
- --------------------------------------------------------------------------------
$ 1,117,515
- --------------------------------------------------------------------------------
See notes to financial statements
60
<PAGE>
Arkansas Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Water and Sewer -- 5.6%
- --------------------------------------------------------------------------------
A1 NR $1,500 Little Rock, Sewer, 5.50%, 8/1/14 $ 1,542,015
NR NR 1,500 South Sebastian County, Water
Users Association, 6.15%, 6/1/23 1,565,880
- --------------------------------------------------------------------------------
$ 3,107,895
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $51,057,516) $55,621,944
- --------------------------------------------------------------------------------
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 August 31, 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 0.9% to 12.5% 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
61
<PAGE>
Georgia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 14.2%
- --------------------------------------------------------------------------------
A1 A $2,000 Burke County Development
Authority Pollution Control
(Georgia Power),
6.375%, 8/1/24 $ 2,066,940
A3 A 1,000 Georgia Municipal Electric
Power Authority,
0.00%, 1/1/12 498,490
A3 A 2,000 Georgia Municipal Electric
Power Authority,
8.25%, 1/1/11 2,637,560
A1 A+ 1,000 Monroe County, Development
Authority Pollution
Control, (Gulf Power
Scherer), 6.30%, 9/1/24 1,035,340
A3 A 4,000 Monroe County, Development
Authority Pollution
Control, (Ogelthorpe
Power), 6.55%, 1/1/06 4,540,999
A3 A 1,000 Monroe County, Development
Authority Pollution
Control, (Ogelthorpe
Power), 6.80%, 1/1/12 1,204,120
Baa1 BBB+ 665 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 266,732
- --------------------------------------------------------------------------------
$12,250,181
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 3.3%
- --------------------------------------------------------------------------------
Baa1 NR $2,000 Fulco County, Georgia
Baptist Health, Prerefunded
to 9/1/02, 6.375%, 9/1/22 $ 2,217,160
NR AAA 500 Puerto Rico, "RIBS",
(AMBAC), Variable Rate,
Prerefunded to 7/1/02,
7.544%, 7/1/15/(1)(2)/ 586,115
- --------------------------------------------------------------------------------
$ 2,803,275
- --------------------------------------------------------------------------------
General Obligations -- 3.0%
- --------------------------------------------------------------------------------
Aa AA- $ 300 Alpharetta, 6.50%,
5/1/10/(3)/ $ 357,744
Aaa AAA 500 Georgia State, 6.30%,
3/1/08/(3)/ 583,050
A2 A 450 Paulding County School
District, 6.625%, 2/1/08 528,201
Baa1 A 1,000 Puerto Rico Aqueduct and
Sewer Authority, 6.25%,
7/1/12 1,159,040
- --------------------------------------------------------------------------------
$ 2,628,035
- --------------------------------------------------------------------------------
Hospitals -- 9.0%
- --------------------------------------------------------------------------------
NR BBB $1,000 Baldwin County, (Oconee
Regional Medical Center),
5.375%, 12/1/28 $ 995,470
A2 NR 4,500 Savannah, (Saint Josephs
Hospital), 6.20%, 7/1/23 4,796,819
NR BBB 1,785 Toombs County, (Dr. John M.
Meadows Memorial),
7.00%, 12/1/17 1,943,901
- --------------------------------------------------------------------------------
$ 7,736,190
- --------------------------------------------------------------------------------
Housing -- 14.3%
- --------------------------------------------------------------------------------
NR NR $ 875 Atlanta Urban Residential
Finance Authority, (New
Community John Hope),
7.25%, 6/1/07 $ 882,175
Aa2 AA+ 2,000 Georgia Housing and Finance
Authority, (AMT),
5.85%, 12/1/28 2,090,740
Aa2 NR 1,450 Georgia Housing and
Finance Authority, (AMT),
6.875%, 12/1/20 1,544,294
Aa2 AA+ 3,985 Georgia Housing and Finance
Authority, Single Family
Mortgage, FHA, (AMT),
6.55%, 12/1/27 4,294,355
Aa2 AA+ 2,395 Georgia Housing and Finance
Authority, Single Family
Mortgage, FHA, (AMT),
6.70%, 12/1/25 2,583,726
Aa2 AA+ 885 Georgia Housing and Finance
Authority, Single Family
Mortgage, FHA, (AMT),
7.05%, 12/1/20 954,092
- --------------------------------------------------------------------------------
$12,349,382
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 13.5%
- --------------------------------------------------------------------------------
BAA-2 NR $1,000 Brunswick and Glynn County
Development Authority,
(Georgia-Pacific Corp.),
5.55%, 3/1/26 $ 1,015,300
A1 A+ 1,000 Cartersville Development
Authority, (Anheuser-Busch),
(AMT), 6.125%, 5/1/27 1,085,070
A1 A+ 1,000 Cartersville Development
Authority, (Anheuser-Busch),
(AMT), 7.375%, 5/1/09 1,235,790
Baa2 BBB- 1,500 Effingham County, Solid
Waste Disposal, (Fort
James), (AMT),
5.625%, 7/1/18 1,517,850
Baa3 BBB- 1,750 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 1,906,328
See notes to financial statements
62
<PAGE>
Georgia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue (continued)
- --------------------------------------------------------------------------------
NR A+ $ 500 Savannah Economic
Development Authority,
(Hershey Foods),
6.60%, 6/1/12 $ 544,100
A1 A- 750 Savannah Economic
Development Authority,
(Union Camp Corp.),
6.80%, 2/1/12 819,293
NR NR 1,220 Savannah EDA,
(Intercat-Savannah, Inc.),
(AMT), 9.00%, 1/1/15 1,356,079
NR AA- 2,000 Vienna Water and Sewer,
(Cargill), (AMT),
6.00%, 9/1/14 2,124,720
- --------------------------------------------------------------------------------
$11,604,530
- --------------------------------------------------------------------------------
Insured-Education -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Fulton County, Development
Authority, (Georgia
Technology Research
Corp.-Series B), (MBIA),
5.00%, 9/1/27 $ 990,180
- --------------------------------------------------------------------------------
$ 990,180
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 7.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Georgia Municipal Electric
Power Authority, (FGIC),
5.50%, 1/1/12 $ 1,087,330
Aaa AAA 750 Georgia Municipal Electric
Power Authority, (MBIA),
0.00%, 1/1/07 523,553
Aaa AAA 3,100 Georgia Municipal Electric
Power Authority, (MBIA),
5.50%, 1/1/20 3,350,666
Aaa AAA 900 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03/(2)/ 1,038,375
- --------------------------------------------------------------------------------
$ 5,999,924
- --------------------------------------------------------------------------------
Insured-Hospitals -- 9.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Clarke County, Hospital
Authority, (MBIA),
5.00%, 1/1/27 $ 985,770
Aaa AAA 1,000 Fulco, Hospital Authority,
(Catholic Health East),
(MBIA), 5.00%, 11/15/28 985,360
Aaa AAA 2,225 Gainsville and Hall County,
(North East Healthcare),
(MBIA),6.00%, 10/1/25 2,427,364
Aaa AAA 2,000 Medical Center, Columbus
Regional Healthcare,
(MBIA), 6.40%, 8/1/06 2,202,760
Aaa AAA 1,500 Medical Center, Hospital
Authority Floats, (MBIA),
Variable Rate, 8/1/10/(2)/ $ 1,773,750
- --------------------------------------------------------------------------------
$ 8,375,004
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of
Participation -- 1.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 East Point Building
Authority, (FGIC),
6.00%, 2/1/10 $ 1,097,720
- --------------------------------------------------------------------------------
$ 1,097,720
- --------------------------------------------------------------------------------
Insured-Pooled Loans -- 1.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 George L. Smith, (Georgia
World Congress Center-Domed
Stadium), (MBIA), (AMT),
5.50%, 7/1/20/(4)/ $ 994,840
- --------------------------------------------------------------------------------
$ 994,840
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 2.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Metropolitan Atlanta Rapid
Transit Authority, (AMBAC),
6.25%, 7/1/11 $ 1,171,260
Aaa AAA 1,000 Metropolitan Atlanta Rapid
Transit Authority, (AMBAC),
6.25%, 7/1/20 1,185,680
- --------------------------------------------------------------------------------
$ 2,356,940
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 7.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,975 Cherokee County, Water and
Sewer Authority, (MBIA),
6.875%, 8/1/13 $ 2,166,674
Aaa AAA 4,500 Henry County, Water and
Sewer Authority, (AMBAC),
5.00%, 2/1/26/(5)/ 4,463,279
- --------------------------------------------------------------------------------
$ 6,629,953
- --------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 1.6%
- --------------------------------------------------------------------------------
Aa AA $2,300 Fulton County, Building
Authority, Judicial Center,
0.00%, 1/1/10 $ 1,376,711
- --------------------------------------------------------------------------------
$ 1,376,711
- --------------------------------------------------------------------------------
See notes to financial statements
63
<PAGE>
Georgia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Life Care -- 1.3%
- --------------------------------------------------------------------------------
NR NR $1,485 De Kalb County, Private
Hospital Authority,
(Atlanta, Inc.),
8.50%, 3/1/25/(5)/ $ 1,113,750
- --------------------------------------------------------------------------------
$ 1,113,750
- --------------------------------------------------------------------------------
Miscellaneous -- 1.3%
- --------------------------------------------------------------------------------
NR NR $1,000 Atlanta, Downtown
Development Authority,
Childcare Facilities,
(Central Atlanta
Hospitality Childcare
Inc.), 8.00%, 1/1/26 $ 1,124,780
- --------------------------------------------------------------------------------
$ 1,124,780
- --------------------------------------------------------------------------------
Solid Waste -- 1.2%
- --------------------------------------------------------------------------------
A1 A+ $1,000 Savannah Resource Recovery,
(Savannah Energy Systems
Co.), 6.30%, 12/1/06 $ 1,074,990
- --------------------------------------------------------------------------------
$ 1,074,990
- --------------------------------------------------------------------------------
Transportation -- 6.6%
- --------------------------------------------------------------------------------
Baa1 A $3,750 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 $ 3,765,150
Baa1 A 2,000 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/38 1,967,600
- --------------------------------------------------------------------------------
$ 5,732,750
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
- --------------------------------------------------------------------------------
(identified cost $78,904,810) $86,239,135
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 August 31, 1998, 31.3% 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 19.0% of total
investments.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $586,115 or 0.7% of the
Portfolio's net assets.
/(2)/ Security has been issued as an inverse floater bond.
/(3)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(4)/ When-issued security.
/(5)/ Security (or a portion thereof) has been segregated to cover when-issued
securities.
See notes to financial statements
64
<PAGE>
Kentucky Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Assisted Living -- 3.1%
- --------------------------------------------------------------------------------
Aa NR $3,000 Kenton County, (Highland
Terrace), FHA, 6.95%, 12/1/26 $ 3,423,570
- --------------------------------------------------------------------------------
$ 3,423,570
- --------------------------------------------------------------------------------
Education -- 1.3%
- --------------------------------------------------------------------------------
A1 AA- $ 500 University of Kentucky,
Consolidated Educational
Buildings, 6.40%, 5/1/09 $ 547,995
A1 AA- 785 University of Kentucky,
Consolidated Educational
Buildings, 6.40%, 5/1/11 860,352
- --------------------------------------------------------------------------------
$ 1,408,347
- --------------------------------------------------------------------------------
Electric Utilities -- 4.0%
- --------------------------------------------------------------------------------
Aa2 AA- $1,000 Muhlenburg County, (Kentucky
Utilities Co.), 6.25%, 2/1/18 $ 1,072,150
Baa1 BBB+ 3,500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 1,403,850
Baa1 BBB+ 500 Puerto Rico Electric Power
Authority, 5.50%, 7/1/25 514,140
Baa1 BBB+ 1,250 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 1,426,725
- --------------------------------------------------------------------------------
$ 4,416,865
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Louisville and Jefferson County,
Metropolitan Sewer District,
(AMBAC), Prerefunded to 11/15/04,
6.75%, 5/15/19 $ 1,166,870
NR NR 545 Russell, Health Systems,
Prerefunded to 7/1/06,
8.10%, 7/1/15 695,949
- --------------------------------------------------------------------------------
$ 1,862,819
- --------------------------------------------------------------------------------
General Obligations -- 0.4%
- --------------------------------------------------------------------------------
Baa1 A $1,125 Puerto Rico, 0.00%, 7/1/17 $ 447,109
- --------------------------------------------------------------------------------
$ 447,109
- --------------------------------------------------------------------------------
Hospitals -- 0.5%
- --------------------------------------------------------------------------------
Baa1 BBB $ 430 Russell, Health Systems,
8.10%, 7/1/15 $ 526,045
- --------------------------------------------------------------------------------
$ 526,045
- --------------------------------------------------------------------------------
Housing -- 7.5%
- --------------------------------------------------------------------------------
NR AAA $1,435 Boone County, Multifamily Housing
Mortgage, (Walnut Creek
Apartments), FHA, 7.00%, 1/1/27 $ 1,519,048
NR NR 1,200 Florence, Housing Facilities,
(Blue Grass Housing),
7.625%, 5/1/27 1,323,900
Aaa AAA 2,500 Kentucky Housing Corp., MFMR,
6.30%, 1/1/28 2,704,950
Aaa AAA 535 Kentucky Housing Corp., SFMR,
FHA, (AMT), 7.45%, 1/1/23 570,273
Aaa AAA 2,000 Kentucky Housing Corp., SFMR,
Series 97B, 6.25%, 7/1/28 2,147,200
- --------------------------------------------------------------------------------
$ 8,265,371
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 23.9%
- --------------------------------------------------------------------------------
Baa1 NR $2,425 Ashland, Solid Waste Disposal,
(Ashland Oil), (AMT),
7.125%, 2/1/22 $ 2,756,595
Baa1 BBB 2,355 Ashland, Solid Waste Disposal,
(Ashland Oil), (AMT),
7.20%, 10/1/20 2,569,258
NR NR 1,000 Elsmmere, (Courtaulds Pkg, Inc.),
6.75%, 4/1/10 1,084,680
NR NR 3,075 Fulton County, Industrial
Building, (Chic Jeans), (AMT),
7.50%, 2/1/10 3,213,437
NR NR 1,500 Hancock County, (Southwire Co.),
(AMT), 7.75%, 7/1/26 1,634,265
NR A- 2,370 Hancock County, Solid Waste
Disposal, (Williamette Corp.),
(AMT), 6.60%, 5/1/26 2,665,539
Baa2 BBB- 3,000 Henderson County, Solid Waste
Disposal, (MacMillan Bloedel),
(AMT), 7.00%, 3/1/25 3,270,360
Aa3 AA- 1,000 Jefferson County, Pollution
Control, (E.I. du Pont de
Nemours), 6.30%, 7/1/12 1,102,220
NR BB- 985 Owensboro County, (KMart Corp.),
6.80%, 12/1/07 1,066,873
See notes to financial statements
65
<PAGE>
Kentucky Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS 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 $1,500 Perry County, Solid Waste
Disposal, (TJI International),
6.80%, 5/1/26 $ 1,683,960
NR BB- 915 Powderly, (KMart Corp.),
6.90%, 3/1/07 990,506
Baa3 BBB- 500 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.30%, 6/1/23 537,685
A1 A 2,820 Wickliffe, Solid Waste Disposal,
(Westvaco Corp.), (AMT),
6.375%, 4/1/26 3,115,959
Baa3 NR 500 Winchester County, (Kroger Corp.),
6.90%, 7/1/01 511,380
- --------------------------------------------------------------------------------
$26,202,717
- --------------------------------------------------------------------------------
Insured-Education -- 0.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 700 Northern Kentucky University
Educational Buildings, (AMBAC),
6.25%, 5/1/12 $ 762,895
- --------------------------------------------------------------------------------
$ 762,895
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 1.6%
- --------------------------------------------------------------------------------
Aaa AAA $1,600 Puerto Rico Telephone Authority,
(MBIA), Variable Rate,
1/16/15/(1)/ $ 1,726,000
- --------------------------------------------------------------------------------
$ 1,726,000
- --------------------------------------------------------------------------------
Insured-General Obligations -- 1.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Puerto Rico Public Building
Authority, (AMBAC),
5.00%, 7/1/27 $ 1,496,490
- --------------------------------------------------------------------------------
$ 1,496,490
- --------------------------------------------------------------------------------
Insured-Hospitals -- 13.7%
- --------------------------------------------------------------------------------
Aaa AAA $2,500 Daviess County, (ODCH, Inc.),
(MBIA), 6.25%, 8/1/22 $ 2,726,175
Aaa AAA 500 Jefferson County, Health
Facilities Authority, (University
Medical Center), (MBIA),
5.25%, 7/1/22 507,605
Aaa AAA 2,500 Jefferson County, Health
Facilities, (Jewish Hospital),
(AMBAC), 6.50%, 5/1/15 2,727,775
Aaa AAA 750 Jefferson County, Health
Facilities, (Jewish Hospital),
(AMBAC), 6.55%, 5/1/22 819,593
Aaa AAA 3,000 Jefferson County, Health
Facilities, (MBIA),
5.125%, 10/1/27 3,004,890
Aaa AAA 3,000 Kentucky Development Finance
Authority (Saint Luke's Hospital)
(MBIA), 7.00%, 10/1/21 3,337,110
AAA AAA 1,000 Kentucky EDA, (Ashland Hospital
Corp.), (FSA), 5.00%, 2/1/28 984,060
Aaa AAA 1,000 Warren County, Hospital
Facilities, (Bowling Green-Warren
County Hospital), (FSA),
5.00%, 4/1/17 1,000,390
- --------------------------------------------------------------------------------
$15,107,598
- --------------------------------------------------------------------------------
Insured-Transportation -- 9.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Kenton County Airport, (FSA),
(AMT), 6.30%, 3/1/15 $ 1,072,120
Aaa AAA 3,550 Kenton County Airport, (MBIA),
6.30%, 3/1/15 3,958,924
Aaa AAA 1,195 Kenton County, Airport Revenue
Board, (MBIA), (AMT),
6.45%, 3/1/15 1,357,771
Aaa AAA 1,000 Kentucky EDA, (State Turnpike
Revitalization), (FGIC),
0.00%, 7/1/10 598,570
AAA AAA 1,300 Louisville and Jefferson County,
Regional Airport Authority,
(MBIA), (AMT), 5.00%, 7/1/25 1,272,648
Aaa AAA 5,000 Puerto Rico Highway and
Transportation Authority, (AMBAC),
0.00%, 7/1/18 1,944,100
- --------------------------------------------------------------------------------
$10,204,133
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 9.0%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Kenton County, Water District
Waterworks, (FGIC),
6.00%, 2/1/17 $ 2,156,560
Aaa AAA 500 Lexington-Fayette County,
Government Sewer System, (MBIA),
6.375%, 7/1/12 548,590
AAA AAA 1,000 Louisville and Jefferson County,
(Metropolitan District Sewer and
Drainage System), (FGIC), 5.00%,
5/15/22 995,110
See notes to financial statements
66
<PAGE>
Kentucky Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Water and Sewer (continued)
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Louisville and Jefferson County,
Metropolitan Sewer District,
(AMBAC), 6.75%, 5/15/25 $ 2,333,740
Aaa AAA 3,415 Louisville and Jefferson County,
Metropolitan Sewer District,
(MBIA), 6.25%, 5/15/26 3,823,809
- --------------------------------------------------------------------------------
$ 9,857,809
- --------------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 12.2%
- --------------------------------------------------------------------------------
A1 A+ $4,990 Jefferson County, (Capital
Projects Corp.), 0.00%, 8/15/15 $ 2,145,700
A1 NR 1,000 Kenton County, (Public Properties
Corp.), 5.00%, 3/1/29 979,310
NR A+ 1,030 Kentucky, League of Cities Funding
Trust, Floating Indebtedness
Certificates of Participation,
6.15%, 8/1/13 1,128,417
A A- 1,000 Louisville, (Public Property
Corp.), 6.80%, 12/1/22 1,130,090
Aa NR 2,000 Mount Sterling, Lease,
6.15%, 3/1/13 2,132,460
Aa NR 3,500 Mount Sterling, Lease,
6.20%, 3/1/18/(2)/ 3,721,234
A NR 2,000 Owensboro County, Airport Lease,
5.875%, 6/1/15 2,117,540
- --------------------------------------------------------------------------------
$ 13,354,751
- --------------------------------------------------------------------------------
Nursing Homes -- 0.7%
- --------------------------------------------------------------------------------
NR NR $ 765 Jefferson County, Health
Facilities, (Beverly Enterprises),
9.75%, 8/1/07 $ 814,235
- --------------------------------------------------------------------------------
$ 814,235
- --------------------------------------------------------------------------------
Solid Waste -- 1.2%
- --------------------------------------------------------------------------------
NR NR $1,200 Morgantown, Solid Waste Revenue,
7.45%, 5/1/22 $ 1,288,008
- --------------------------------------------------------------------------------
$ 1,288,008
- --------------------------------------------------------------------------------
Transportation -- 7.2%
- --------------------------------------------------------------------------------
Baa3 BB+ $3,400 Kenton County Airport, (Delta
Airlines), (AMT), 6.125%, 2/1/22 $ 3,496,049
Baa3 BB+ 1,500 Kenton County Airport, (Delta
Airlines), (AMT), 7.125%, 2/1/21 1,633,635
Baa3 BB+ 250 Kenton County Airport, (Delta
Airlines), (AMT), 7.50%, 2/1/12 275,610
Baa3 BB+ 500 Kenton County Airport, (Delta
Airlines), (AMT), 7.50%, 2/1/20 552,555
Baa1 A 2,000 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/38 1,962,580
- --------------------------------------------------------------------------------
$ 7,920,429
- --------------------------------------------------------------------------------
Water and Sewer -- 0.6%
- --------------------------------------------------------------------------------
A NR $ 650 Harden County, Water District,
6.50%, 9/1/12 $ 706,433
- --------------------------------------------------------------------------------
$ 706,433
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $100,259,833) $109,791,624
- --------------------------------------------------------------------------------
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 August 31, 1998, 36.7% 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 2.8% to 20.3% 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
67
<PAGE>
Louisiana Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 2.8%
- --------------------------------------------------------------------------------
Baa1 BBB+ $2,500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 $ 1,002,750
- --------------------------------------------------------------------------------
$ 1,002,750
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 4.7%
- --------------------------------------------------------------------------------
Aaa AAA $2,475 Jefferson Parish, Home Mortgage
Authority, Single Family, (FGIC),
Escrowed to Maturity,
0.00%, 5/1/17 $ 991,708
NR AAA 250 Puerto Rico, "RIBS", (AMBAC),
Variable Rate, Prerefunded to
7/1/02, 7.544%, 7/1/15/(1)(2)/ 293,058
NR NR 300 Saint Tammany, Public Finance,
(Christwood), Prerefunded to
5/15/05, 9.00%, 11/15/25 395,040
- --------------------------------------------------------------------------------
$ 1,679,806
- --------------------------------------------------------------------------------
Hospitals -- 6.0%
- --------------------------------------------------------------------------------
A3 NR $1,000 Lafourche Parish, Hospital
Service District, 6.00%,
10/1/23/(3)/ $ 1,036,660
NR BBB 750 Louisiana Public Facilities
Authority, (General Health
Systems), 6.80%, 11/1/16 836,160
NR A- 250 Saint Tammany Parish,
Hospital Service District,
6.50%, 7/1/22 265,653
- --------------------------------------------------------------------------------
$ 2,138,473
- --------------------------------------------------------------------------------
Housing -- 19.3%
- --------------------------------------------------------------------------------
Aaa NR $ 575 East Baton Rouge Mortgage Finance
Authority, Single Family,
(GNMA/FNMA), 7.00%, 4/1/32 $ 608,091
NR AAA 300 Guam Housing Corp., Single
Family, 5.75%, 9/1/31 323,406
Aaa NR 480 Louisiana HFA, Single
Family, 6.375%, 12/1/27 515,640
Aaa NR 585 Louisiana HFA, Single Family,
(GNMA), (AMT), 6.30%, 12/1/27 623,990
Aaa NR 1,165 Louisiana HFA, Single Family,
(GNMA), (AMT), 8.00%, 3/1/25 1,359,404
Aaa NR 615 Louisiana HFA, Single Family,
(GNMA/FNMA), (AMT), 6.55%,
12/1/26 660,184
NR D 1,000 Louisiana Public Facilities
Authority, Multifamily, (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 2,043,751
- --------------------------------------------------------------------------------
$ 6,884,466
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 17.5%
- --------------------------------------------------------------------------------
A3 BBB+ $1,750 Bastrop, (International Paper
Co.), (AMT), 6.60%, 3/1/19 $ 1,946,193
A3 BBB+ 750 De Soto Parish, (International
Paper Co.), (AMT), 7.70%, 11/1/18 878,895
Baa2 NR 1,000 East Baton Rouge Parish,
(Georgia-Pacific Corp.), (AMT),
5.35%, 9/1/11 1,005,980
A3 A 800 Louisiana Offshore Terminal
Authority, Deepwater Port Revenue,
(Loop, LLC), 5.20%, 10/1/18 802,768
Aa2 AA 1,000 Saint Bernard Parish, (Mobil
Oil), 5.90%, 11/1/26 1,083,000
Aa3 NR 500 South Louisiana Port Commission,
(Cargill, Inc.), 5.85%, 4/1/17 534,830
- --------------------------------------------------------------------------------
$ 6,251,666
- --------------------------------------------------------------------------------
Insured-Education -- 5.2%
- --------------------------------------------------------------------------------
Aaa AAA $ 450 Louisiana Public Facilities
Authority, (Dillard University),
(AMBAC), 5.00%, 2/1/28 $ 444,177
Aaa AAA 250 Louisiana Public Facilities
Authority, (Tulane University),
(MBIA), 5.00%, 11/15/27 248,273
Aaa AAA 1,100 Louisiana State University,
(FGIC), 5.75%, 7/1/14 1,176,483
- --------------------------------------------------------------------------------
$ 1,868,933
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 2.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,750 Puerto Rico Electric Power
Authority, (MBIA), (IBC),
0.00%, 7/1/17 $ 714,945
- --------------------------------------------------------------------------------
$ 714,945
- --------------------------------------------------------------------------------
See notes to financial statements
68
<PAGE>
Louisiana Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-General Obligations -- 9.7%
- --------------------------------------------------------------------------------
Aaa AAA $3,000 New Orleans, (AMBAC), 0.00%,
9/1/15 $ 1,268,100
Aaa AAA 4,000 New Orleans, (AMBAC), 0.00%,
9/1/16 1,604,440
Aaa AAA 1,500 New Orleans, (AMBAC), 0.00%,
9/1/17 570,840
- --------------------------------------------------------------------------------
$ 3,443,380
- --------------------------------------------------------------------------------
Insured-Hospitals -- 6.3%
- --------------------------------------------------------------------------------
Aaa AAA $ 100 Louisiana Public Facilities
Authority, (MBIA), Variable Rate,
12/1/14/(2)/ $ 115,250
Aaa AAA 1,500 Ouachita Parish, Glenwood
Medical Center, (FSA), 5.75%,
5/15/21 1,614,510
Aaa AAA 500 Terrebonne Parish, Hospital
Service District No. 1,
(Terrebonne General Medical
Center), (AMBAC), 5.375%, 4/1/28 513,875
- --------------------------------------------------------------------------------
$ 2,243,635
- --------------------------------------------------------------------------------
Insured-Housing -- 0.2%
- --------------------------------------------------------------------------------
Aaa AAA $ 345 East Baton Rouge Mortgage Finance
Authority, Single Family, (MBIA),
(GNMA/FNMA), 0.00%, 10/1/15 $ 58,281
- --------------------------------------------------------------------------------
$ 58,281
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 5.0%
- --------------------------------------------------------------------------------
Aaa AAA $ 345 Baton Rouge, Public Improvement,
(FGIC), 4.75%, 8/1/17 $ 336,368
Aaa AAA 1,000 Ernest N. Morial-New Orleans,
Exhibition Hall Authority,
(MBIA), 5.00%, 7/15/27 985,660
Aaa AAA 500 Lafayette Parish, School District,
(FGIC), 4.60%, 4/1/18 476,930
- --------------------------------------------------------------------------------
$ 1,798,958
- --------------------------------------------------------------------------------
Life Care -- 12.9%
- --------------------------------------------------------------------------------
NR NR $ 500 Louisiana HFA, (HCC Assisted
Living Group 1), (AMT), 9.00%,
3/1/25 $ 566,310
NR AAA 500 Louisiana HFA, (Saint Dominic
Assisted Care Facility), (GNMA),
6.85%, 9/1/25 556,765
NR AAA 1,995 Louisiana HFA, (Saint Joseph's
Manor Retirement Center), (GNMA),
7.80%, 12/1/35 2,240,284
NR BBB 1,150 Louisiana Public Facilities
Authority, (Glen Retirement
System), 6.70%, 12/1/25 1,256,030
- --------------------------------------------------------------------------------
$ 4,619,389
- --------------------------------------------------------------------------------
Transportation -- 8.4%
- --------------------------------------------------------------------------------
A A- $ 500 Mississippi River Bridge
Authority, Bridge Revenue, 6.75%,
11/1/12/(3)/ $ 555,120
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority, 4.75%,
7/1/38 969,520
Baa1 A 1,500 Puerto Rico Highway and
Transportation Authority, 5.00%,
7/1/38 1,475,700
- --------------------------------------------------------------------------------
$ 3,000,340
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $33,307,126) $35,705,022
- --------------------------------------------------------------------------------
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 August 31, 1998, 32.0% 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 4.5% to 13.1% of total investments.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $293,058 or 0.8% of the
Portfolio's net assets.
/(2)/ Security has been issued as an inverse floater bond.
/(3)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
69
<PAGE>
Maryland Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
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), (AMT), 7.40%, 9/1/19 $ 1,392,888
- --------------------------------------------------------------------------------
$ 1,392,888
- --------------------------------------------------------------------------------
Education -- 3.3%
- --------------------------------------------------------------------------------
NR BBB+ $1,500 Annapolis, Economic Development
Revenue, (Saint Johns College),
5.50%, 10/1/23 $ 1,531,935
NR BBB 500 Montgomery County, EDA,
5.60%, 11/1/18 516,595
NR BBB 350 Montgomery County, EDA,
5.60%, 11/1/22 361,337
Aa3 AA+ 1,000 University of Maryland
Auxiliary Facilities and
Tuition, 6.30%, 2/1/10 1,076,760
- --------------------------------------------------------------------------------
$ 3,486,627
- --------------------------------------------------------------------------------
Electric Utilities -- 8.1%
- --------------------------------------------------------------------------------
A2 A $1,500 Calvert, Pollution Control
Revenue, (Baltimore Gas and
Electric Co.), 5.55%, 7/15/14 $ 1,582,290
NR BBB 2,500 Guam Power Authority,
5.25%, 10/1/13 2,522,675
NR BBB 750 Guam Power Authority,
6.625%, 10/1/14 835,410
A1 A 2,225 Prince George's County,
Pollution Control Revenue,
(Potomac Electric), 6.375%,
1/15/23 2,412,901
Baa1 BBB+ 1,250 Puerto Rico Electric Power
Authority, Series DD, 5.00%,
7/1/28 1,233,688
- --------------------------------------------------------------------------------
$ 8,586,964
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 8.2%
- ----------------------------------------------------------------------------
Aaa NR $1,125 Baltimore, SFMR, (Inner
Harbor), Escrowed to Matuity,
8.00%, 12/1/10 $ 1,497,598
Baa1 BBB 1,250 Maryland HEFA, (Howard County
General Hospital), Escrowed to
Maturity, 5.50%, 7/1/25 1,308,125
Aaa AAA 500 Maryland HEFA, (University of
Maryland), (FGIC), Prerefunded
to 7/1/01, 6.50%, 7/1/21 537,090
Aaa AAA 1,365 Maryland HEFA, (Washington
Community Hospital), (AMBAC),
Prerefunded to 7/1/02,
6.375%, 7/1/22 1,512,570
NR AAA 1,000 Puerto Rico Public Improvement,
Prerefunded to 7/1/02,
6.80%, 7/1/21 1,120,710
NR AAA 1,000 University of Maryland System
Auxiliary Facility and Tuition,
Prerefunded to 4/1/00,
6.50%, 4/1/11 1,063,190
NR AAA 175 University of Maryland System
Auxiliary Facility and Tuition,
Prerefunded to 4/1/02,
6.50%, 4/1/12 195,675
NR NR 750 Virgin Islands Public Finance
Authority, Prerefunded to
10/1/02, 7.25%, 10/1/18 859,380
Aa1 AA 500 Washington, Suburban Sanitary
District, Prerefunded to
6/1/02, 6.20%, 6/1/11 549,575
- --------------------------------------------------------------------------------
$ 8,643,913
- --------------------------------------------------------------------------------
General Obligations -- 2.5%
- --------------------------------------------------------------------------------
Aaa AAA $ 600 Howard County, 4.75%, 2/15/27 $ 584,004
Baa1 A 600 Puerto Rico, 0.00%, 7/1/16 250,866
Baa1 A 500 Puerto Rico, 0.00%, 7/1/18 188,850
Baa1 A 1,000 Puerto Rico, 4.50%, 7/1/23 924,590
Aa1 AA 500 Washington, Suburban Sanitary
District, 5.625%, 6/1/21 525,240
Aa NR 190 Worcester, Sanitary District,
6.55%, 8/15/17 210,108
- --------------------------------------------------------------------------------
$ 2,683,658
- --------------------------------------------------------------------------------
Hospitals -- 15.2%
- --------------------------------------------------------------------------------
NR NR $ 475 Berlin, (Atlantic General),
8.375%, 6/1/22 $ 517,850
A2 NR 1,200 Maryland HEFA, (Calvert
Memorial Hospital), 5.00%, 7/1/28 1,175,316
A1 A 1,175 Maryland HEFA, (Good Samaritan
Hospital), 5.75%, 7/1/19 1,242,445
See notes to financial statements
70
<PAGE>
Maryland Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Hospitals (continued)
- --------------------------------------------------------------------------------
Baa1 NR $1,000 Maryland HEFA, (Kennedy Krieger
Issue), 5.125%, 7/1/22 $ 990,560
Baa1 NR 2,500 Maryland HEFA, (Union Hospital
of Cecil), 6.70%, 7/1/22 2,704,150
A NR 4,000 Prince George's County,
(Dimensions Health), 5.30%, 7/1/24 4,023,879
Baa3 NR 1,355 Prince George's County,
(Greater SouthEast Healthcare
System), 6.375%, 1/1/13 1,334,255
Baa3 NR 4,250 Prince George's County,
(Greater SouthEast Healthcare
System), 6.375%, 1/1/23 4,065,209
- --------------------------------------------------------------------------------
$16,053,664
- --------------------------------------------------------------------------------
Housing -- 10.9%
- --------------------------------------------------------------------------------
Aa NR $1,000 Maryland Community Development
Administration Multifamily,
FHA, (AMT), 6.70%, 5/15/36 $ 1,084,440
Aa NR 245 Maryland Community Development
Administration Single Family,
6.85%, 4/1/11 258,992
Aa NR 3,000 Maryland Community Development
Administration Single Family,
(AMT), 6.75%, 4/1/26 3,232,860
Aa NR 885 Maryland Community Development
Administration Single Family,
(AMT), 6.80%, 4/1/22 949,269
Aa NR 745 Maryland Community Development
Administration Single Family,
(AMT), 6.80%, 4/1/24 799,102
Aa2 NR 1,000 Montgomery County, Housing
Opportunities Commission, SFMR,
0.00%, 7/1/28 196,610
Aa2 NR 2,525 Montgomery County, SFMR, (AMT),
6.05%, 7/1/27 2,683,646
NR A 40 Prince George's County,
(Antoinette Gardens
Apartments), FHA, 7.00%, 3/1/28 40,235
NR AAA 2,160 Prince George's County, Housing
Authority, (Langely Gardens),
(AMT), 5.875%, 2/20/39 2,265,084
- --------------------------------------------------------------------------------
$11,510,238
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 8.5%
- --------------------------------------------------------------------------------
A1 A $1,350 Allegany, Pollution Control
Revenue, (Westvaco Corp.),
6.20%, 1/1/08 $ 1,499,108
NR NR 1,350 Baltimore, Pollution Control
Revenue, (Bethlehem Steel Corp.),
7.50%, 6/1/15/(1)/ 1,509,314
Aa3 AA- 2,000 Baltimore, Port Facilities,
(Consolidated Coal Sales Co.-
E.I. du Pont de Nemours),
6.50%, 12/1/10 2,209,460
Aa3 AA- 2,000 Baltimore, Port Facilities,
(Consolidated Coal Sales Co.-
E.I. du Pont de Nemours),
6.50%, 10/1/11/(1)/ 2,199,980
NR AA- 1,425 Frederick, EDA, (Cargill, Inc.),
6.30%, 11/1/09/(2)/ 1,572,103
- --------------------------------------------------------------------------------
$ 8,989,965
- --------------------------------------------------------------------------------
Insured-Education -- 5.8%
- --------------------------------------------------------------------------------
Aaa AAA $4,600 Maryland HEFA, (Loyola College),
(MBIA), 5.375%, 10/1/26/(1)/ $ 4,773,879
Aaa AAA 1,200 Morgan State University,
Maryland Academic and
Facilities, (MBIA), 6.10%, 7/1/20 1,406,460
- --------------------------------------------------------------------------------
$ 6,180,339
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 1.9%
- --------------------------------------------------------------------------------
Aaa AAA $1,700 Montgomery County, Pollution
Control Revenue, (Potomac
Electric Power Co.), (MBIA),
5.375%, 2/15/24 $ 1,748,280
Aaa AAA 250 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(3)/ 288,438
- --------------------------------------------------------------------------------
$ 2,036,718
- --------------------------------------------------------------------------------
Insured-Hospitals -- 9.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 750 Calvert, EDA, (Asbury -
Solomon), (MBIA), 5.00%, 1/1/27 $ 746,010
Aaa AAA 3,000 Maryland HEFA, (Helix Health
Issue), (AMBAC), 5.00%, 7/1/27 2,983,920
See notes to financial statements
71
<PAGE>
Maryland Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Hospitals (continued)
- --------------------------------------------------------------------------------
Aaa AAA $3,000 Maryland HEFA, (Johns Hopkins
Medicine-Howard County General
Hospital Acquisition), (MBIA),
5.00%, 7/1/29 $ 2,983,440
Aaa AAA 3,150 Puerto Rico ITEM & EC, (Auxilio
Mutuo), (MBIA), 6.25%, 7/1/24 3,536,221
- --------------------------------------------------------------------------------
$ 10,249,591
- --------------------------------------------------------------------------------
Insured-Housing -- 0.5%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Prince George's County,
(Keystone Apartments), FHA,
(MBIA), 6.80%, 7/1/25 $ 534,320
- --------------------------------------------------------------------------------
$ 534,320
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 5.6%
- --------------------------------------------------------------------------------
Aaa AAA $3,460 Baltimore, Certificates of
Participation (Board of
Education Administration), (MBIA),
5.00%, 4/1/13/(4)/ $ 3,414,397
Aaa AAA 1,000 Maryland Stadium Authority,
(AMBAC), 5.60%, 3/1/14 1,070,500
Aaa AAA 1,300 Maryland Stadium Authority,
(AMBAC), 5.80%, 3/1/26 1,393,145
- --------------------------------------------------------------------------------
$ 5,878,042
- --------------------------------------------------------------------------------
Insured-Solid Waste -- 5.2%
- --------------------------------------------------------------------------------
Aaa AAA $5,000 NE Maryland Solid Waste
Disposal, (MBIA), (AMT),
6.30%, 7/1/16 $ 5,462,049
- --------------------------------------------------------------------------------
$ 5,462,049
- --------------------------------------------------------------------------------
Insured-Transportation -- 3.8%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Baltimore, International
Airport, (FGIC), (AMT),
6.25%, 7/1/14 $ 2,196,060
Aaa AAA 1,750 Washington, D.C., Metro Area
Transportation, (FGIC),
5.25%, 7/1/14 1,808,450
- --------------------------------------------------------------------------------
$ 4,004,510
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 6.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Baltimore, Sewer, (FGIC),
5.50%, 7/1/26 $ 1,051,080
Aaa AAA 1,000 Baltimore, Wastewater, (FGIC),
5.00%, 7/1/22 1,023,130
Aaa AAA 2,000 Baltimore, Wastewater, (MBIA),
5.65%, 7/1/20 2,219,580
Aaa AAA 2,100 Baltimore, Water, (FGIC),
5.50%, 7/1/26 2,207,268
- --------------------------------------------------------------------------------
$ 6,501,058
- --------------------------------------------------------------------------------
Transportation -- 2.3%
- --------------------------------------------------------------------------------
Baa1 A $ 500 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 $ 502,020
Baa1 A 2,000 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/38 1,967,600
- --------------------------------------------------------------------------------
$ 2,469,620
- --------------------------------------------------------------------------------
Water and Sewer -- 1.0%
- --------------------------------------------------------------------------------
Aa2 AA $1,000 Maryland Water Quality
Financing Administration
Revolving Loan Fund,
6.55%, 9/1/14 $ 1,102,130
- --------------------------------------------------------------------------------
$ 1,102,130
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $98,601,792) $105,766,294
- --------------------------------------------------------------------------------
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 August 31, 1998, 40.6% 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 25.4% of total investments.
/(1)/ Security (or a portion thereof) has been segregated to cover when-issued
securities.
/(2)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(3)/ Security has been issued as an inverse floater bond.
/(4)/ When-issued security.
See notes to financial statements
72
<PAGE>
Missouri Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 2.7%
- --------------------------------------------------------------------------------
NR BBB $1,010 Guam Power Authority,
6.30%, 10/1/22 $ 1,077,317
Baa1 BBB+ 750 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 856,035
- --------------------------------------------------------------------------------
$ 1,933,352
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 4.4%
- --------------------------------------------------------------------------------
NR NR $1,000 Lake of The Ozarks,
(Community Bridge Corp.),
Prerefunded to 12/1/06,
6.40%, 12/1/25/(1)/ $ 1,175,000
Aaa AAA 575 Missouri HEFA, (Saint Louis
Children's), (MBIA),
Escrowed to Maturity,
0.00%, 5/15/08 374,394
NR AAA 500 Puerto Rico, "RIBS",
(AMBAC), Variable Rate,
Prerefunded to 7/1/02,
7.544%, 7/1/15/(2)(3)/ 586,115
NR AAA 1,000 Saint Louis County,
Mortgage Revenue, (GNMA),
(AMT), Escrowed to
Maturity, 5.40%, 1/1/16 1,052,480
- --------------------------------------------------------------------------------
$ 3,187,989
- --------------------------------------------------------------------------------
Hospitals -- 19.7%
- --------------------------------------------------------------------------------
Aa2 AA $3,250 Missouri HEFA, (Barnes
Jewish Christian), 5.25%, 5/15/14 $ 3,400,637
NR A+ 1,500 Missouri HEFA, (Childrens
Mercy Hospital), 5.30%, 5/15/28 1,513,170
NR BBB+ 1,000 Missouri HEFA, (Freeman
Health Systems), 5.25%, 2/15/18 991,070
Baa NR 2,000 Missouri HEFA, (Jefferson
Memorial Hospital), 6.00%, 8/15/23 2,090,560
Baa NR 1,900 Missouri HEFA, (Jefferson
Memorial Hospital), 6.80%, 5/15/25 2,093,572
NR BBB+ 1,500 Missouri HEFA, (Lake of the
Ozarks General Hospital),
6.50%, 2/15/21 1,642,110
NR BBB+ 1,250 Taney County IDA, (The
Skaggs Community Hospital
Association), 5.30%, 5/15/18 1,250,438
NR BBB- 1,250 West Plains IDA, (Ozarks
Medical Center), 5.65%, 11/15/22 1,275,375
- --------------------------------------------------------------------------------
$14,256,932
- --------------------------------------------------------------------------------
Housing -- 3.6%
- --------------------------------------------------------------------------------
NR AAA $ 905 Missouri Housing
Development Authority,
SFMR, (GNMA), 6.45%, 9/1/27 $ 971,898
NR AAA 535 Missouri Housing
Development Authority, SFMR,
(GNMA), (AMT), 6.75%, 6/1/24 568,491
NR AAA 915 Missouri Housing Development
Authority, SFMR, (GNMA), (AMT),
7.25%, 9/1/26 1,034,655
- --------------------------------------------------------------------------------
$ 2,575,044
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 14.3%
- --------------------------------------------------------------------------------
NR BB- $1,035 Jefferson County, (Kmart
Corp.), 6.40%, 8/1/08 $ 1,104,221
NR NR 1,280 Kansas City IDA, (Airline
Cargo Facilities), 8.50%, 1/1/17 1,460,429
A3 NR 1,200 Missouri Environmental
Improvement and Energy
Resources Authority,
(American Cyanamid
Company), 5.80%, 9/1/09 1,345,812
Baa3 BBB- 2,250 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 2,450,993
A1 A+ 3,750 Saint Louis IDA, (Anheuser-Busch),
(AMT), 5.875%, 11/1/26 4,011,412
- --------------------------------------------------------------------------------
$10,372,867
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 8.9%
- --------------------------------------------------------------------------------
Aaa AAA $4,500 Missouri Environmental
Improvement and Energy
Resources Authority, (Union
Electric), (AMBAC), (AMT),
5.45%, 10/1/28 $ 4,667,309
Aaa AAA 700 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(3)/ 807,625
Aaa AAA 1,000 Sikeston, Electric System,
(MBIA), 5.00%, 6/1/22 992,370
- --------------------------------------------------------------------------------
$ 6,467,304
- --------------------------------------------------------------------------------
Insured-General Obligations -- 1.9%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Puerto Rico, (FSA),
Variable Rate, 7/1/22/(2)(3)/ $ 573,750
See notes to financial statements
73
<PAGE>
Missouri Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------ Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-General Obligations (continued)
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Saint Charles County, (Francis
Howell School District), (FGIC),
5.25%, 3/1/16 $ 835,580
- --------------------------------------------------------------------------------
$ 1,409,330
- --------------------------------------------------------------------------------
Insured-Hospitals -- 11.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Jackson County, (Saint Joseph's
Health System), (MBIA),
6.50%, 7/1/12 $ 1,092,230
Aaa AAA 800 Jackson County, (Saint Joseph's
Health System), (MBIA),
6.50%, 7/1/19 875,272
Aaa AAA 1,500 Missouri HEFA, (Heartland
Health), (AMBAC), 6.35%, 11/15/17 1,648,515
Aaa AAA 9,500 Missouri HEFA, (Lester Cox
Medical Center), (MBIA), 0.00%,
9/1/20 3,226,009
Aaa AAA 1,500 Missouri HEFA, (Lester Cox
Medical Center), (MBIA), 5.35%,
6/1/10 1,626,675
- --------------------------------------------------------------------------------
$ 8,468,701
- --------------------------------------------------------------------------------
Insured-Housing -- 2.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 SCA, MFMR Receipts, Springfield,
(FSA), 7.10%, 1/1/30 $ 1,649,115
- --------------------------------------------------------------------------------
$ 1,649,115
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 2.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Kansas City Municipal Assistance
Corp., Bartle Hall Convention,
(AMBAC), 5.00%, 4/15/20 $ 995,360
Aaa AAA 500 Saint Charles County, PFA,
(FGIC), 6.375%, 3/15/07 546,985
- --------------------------------------------------------------------------------
$ 1,542,345
- --------------------------------------------------------------------------------
Insured-Transportation -- 1.4%
- --------------------------------------------------------------------------------
Aaa AAA $ 910 Saint Louis, Airport Revenue,
(Lambert International Airport),
(FGIC), 6.00%, 7/1/14 $ 1,033,887
- --------------------------------------------------------------------------------
$ 1,033,887
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 750 Saint Louis Water, (FGIC),
6.00%, 7/1/14 $ 829,073
- --------------------------------------------------------------------------------
$ 829,073
- --------------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 8.5%
- --------------------------------------------------------------------------------
A1 A+ $2,000 Missouri Regional Convention and
Sports Complex Authority,
5.50%, 8/15/21 $ 2,063,420
A BBB+ 3,000 Saint Louis County, Regional
Convention and Sports Complex
Authority, 5.50%, 8/15/13 3,086,250
A BBB+ 1,000 Saint Louis County, Regional
Convention and Sports Complex
Authority, 5.75%, 8/15/21 1,039,120
- --------------------------------------------------------------------------------
$ 6,188,790
- --------------------------------------------------------------------------------
Life Care -- 4.9%
- --------------------------------------------------------------------------------
Baa1 NR $ 300 Cass County, (Fox Springs Living
Center), 7.375%, 10/1/22 $ 331,026
NR NR 915 Kansas City IDA, (Kingswood
United Methodist Manor),
9.00%, 11/15/13 1,061,821
NR NR 2,000 Missouri HEFA, (Lutheran Senior
Services), 6.375%, 2/1/27 2,134,140
- --------------------------------------------------------------------------------
$ 3,526,987
- --------------------------------------------------------------------------------
Nursing Homes -- 3.8%
- --------------------------------------------------------------------------------
NR NR $1,000 Kansas City IDA, (Beverly
Enterprises), 8.00%, 12/1/02 $ 1,082,660
NR NR 500 Missouri HEFA, (Bethesda Health
Group of Saint Louis, Inc.),
6.625%, 8/15/05 536,005
NR NR 1,000 Missouri HEFA, (Bethesda Health
Group of Saint Louis, Inc.),
7.50%, 8/15/12 1,127,090
- --------------------------------------------------------------------------------
$ 2,745,755
- --------------------------------------------------------------------------------
Pooled Loans -- 3.8%
- --------------------------------------------------------------------------------
A NR $2,750 Missouri Higher Education Loan
Authority, Student Loan, (AMT),
5.45%, 2/15/09 $ 2,787,730
- --------------------------------------------------------------------------------
$ 2,787,730
- --------------------------------------------------------------------------------
Transportation -- 1.5%
- --------------------------------------------------------------------------------
Baa1 A $1,000 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/12 $ 1,098,690
- --------------------------------------------------------------------------------
$ 1,098,690
- --------------------------------------------------------------------------------
See notes to financial statements
74
<PAGE>
Missouri Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Water and Sewer -- 3.4%
- --------------------------------------------------------------------------------
Aa1 NR $1,000 Missouri Environmental
Improvement and Energy Resources
Authority, 0.00%, 1/1/14 $ 476,740
Aa1 NR 500 Missouri Environmental
Improvement and Energy Resources
Authority, 6.55%, 7/1/14 547,175
Aa1 NR 1,250 Missouri Environmental
Improvement and Energy Resources
Authority, 7.20%, 7/1/16 1,440,300
- --------------------------------------------------------------------------------
$ 2,464,215
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $64,892,579) $72,538,106
- --------------------------------------------------------------------------------
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 August 31, 1998, 30.8% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 4.2% to 11.3% of total investments.
/(1)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(2)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $1,159,865 or 1.6% of the
Portfolio's net assets.
/(3)/ Security has been issued as an inverse floater bond.
See notes to financial statements
75
<PAGE>
North Carolina Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 5.5%
- --------------------------------------------------------------------------------
Aa1 AA+ $1,000 North Carolina Educational
Facilities Finance Agency,
(Duke University), 6.75%,
10/1/21 $ 1,093,780
Aa2 AA 2,000 University of North
Carolina at Chapel Hill,
0.00%, 8/1/17 798,960
Aa2 AA 2,500 University of North
Carolina at Chapel Hill,
0.00%, 8/1/19 904,525
Aa3 AA 5,685 University of North
Carolina at Chapel Hill,
5.00%, 2/15/29 5,627,808
- --------------------------------------------------------------------------------
$ 8,425,073
- --------------------------------------------------------------------------------
Electric Utilities -- 5.1%
- --------------------------------------------------------------------------------
Baa1 BBB $5,000 North Carolina Municipal
Power Authority, (Eastern
Power),
6.125%, 1/1/09 $ 5,547,299
Baa1 BBB+ 2,000 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 802,200
Baa1 BBB+ 2,000 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 802,200
Baa1 BBB+ 365 Puerto Rico Electric Power
Authority, 7.125%, 7/1/14 380,341
NR NR 230 Virgin Islands Water and
Power Authority, 7.40%,
7/1/11 253,490
- --------------------------------------------------------------------------------
$ 7,785,530
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 2.5%
- --------------------------------------------------------------------------------
Baa1 AAA $ 635 Puerto Rico Electric Power
Authority, Prerefunded to
7/1/99,
7.125%, 7/1/14 $ 663,442
NR AAA 150 Puerto Rico General
Obligations, Prerefunded
to 7/1/00,
7.30%, 7/1/20 162,570
NR AAA 1,000 Puerto Rico, "RIBS",
(AMBAC), Variable Rate,
Prerefunded to 7/1/02,
7.544%, 7/1/15/(1)(2)/ 1,172,230
NR NR 1,550 Virgin Islands Public
Finance Authority,
Prerefunded to 10/1/02,
7.25%, 10/1/18 1,776,052
- --------------------------------------------------------------------------------
$ 3,774,294
- --------------------------------------------------------------------------------
General Obligations -- 3.8%
- --------------------------------------------------------------------------------
Aa1 AAA $ 700 Durham, Public
Improvement, 4.70%, 3/1/17 $ 690,046
A A- 175 Eden, Water and Sewer
Bonds, (AMT), 6.75%, 6/1/08 192,640
Aaa AAA 3,550 North Carolina Capital
Improvements, 4.75%, 2/1/12 3,629,556
Baa1 A 500 Puerto Rico, 0.00%, 7/1/17 198,715
Baa1 A 1,000 Puerto Rico Public
Buildings Authority,
5.25%, 7/1/21 1,010,220
- --------------------------------------------------------------------------------
$ 5,721,177
- --------------------------------------------------------------------------------
Hospitals -- 16.4%
- --------------------------------------------------------------------------------
Aa3 AA $2,090 Charlotte-Mecklenberg
Hospital, 0.00%, 1/1/06 $ 1,534,248
Aa3 AA 4,000 Charlotte-Mecklenberg
Hospital, 5.125%,
1/15/22/(3)/ 4,012,520
Aa3 AA 2,000 Charlotte-Mecklenberg
Hospital, 5.875%, 1/15/26 2,164,780
Baa3 NR 1,500 North Carolina Medical
Care Commission, (Annie
Penn Memorial Hospital),
5.375%, 1/1/22 1,497,900
Aa3 AA 3,400 North Carolina Medical
Care Commission, (Duke
University Hospital),
0.00%, 6/1/09 2,077,774
Aa3 AA 1,000 North Carolina Medical
Care Commission, (Duke
University Hospital),
5.25%, 6/1/21 1,013,570
A1 A+ 1,000 North Carolina Medical
Care Commission, (Gaston
Health Care), 5.00%, 965,860
2/15/29
Aa3 AA 2,000 North Carolina Medical
Care Commission, (North
Carolina Baptist
Hospital), 6.00%, 6/1/22 2,130,060
Aa3 AA- 2,750 North Carolina Medical
Care Commission, (Pitt
County Memorial Hospital),
4.75%, 12/1/28/(4)/ 2,600,208
Aa3 AA 1,700 North Carolina Medical
Care Commission,
(Presbyterian Health
Services), 6.00%, 10/1/24 1,864,220
NR BBB+ 2,500 North Carolina Medical
Care Commission,
(Roanoke-Chowan Hospital),
7.75%, 10/1/19 2,622,250
Aa3 AA- 2,500 Pitt County Memorial
Hospital, 5.25%, 12/1/21 2,537,300
- --------------------------------------------------------------------------------
$ 25,020,690
- --------------------------------------------------------------------------------
See notes to financial statements
76
<PAGE>
North Carolina Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Housing -- 11.7%
NR AAA $1,900 Charlotte Housing
Authority,
Double Oaks, FHA, (FNMA),
7.35%, 5/15/26 $ 2,123,364
NR AAA 1,000 Guam Housing Corp., Single
Family, 5.75%, 9/1/31 1,078,020
Aa2 AA 2,250 North Carolina HFA, MFMR,
6.70%, 1/1/26 2,445,165
Aa2 AA 1,945 North Carolina HFA, MFMR,
(AMT), 6.45%, 9/1/27 2,090,739
Aa AA 1,250 North Carolina HFA, SFMR,
(AMT), 6.20%, 9/1/27 1,320,063
Aa2 AA 1,500 North Carolina HFA, SFMR,
(AMT), 6.30%, 3/1/26 1,600,455
Aa AA 2,080 North Carolina HFA, SFMR,
(AMT), 6.60%, 9/1/26 2,230,051
Aa2 AA 3,880 North Carolina HFA, SFMR,
(AMT), 6.70%, 9/1/26 4,163,667
Aa AA 755 North Carolina HFA, SFMR,
(AMT), 7.05%, 9/1/20 805,034
- --------------------------------------------------------------------------------
$ 17,856,558
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 13.9%
- --------------------------------------------------------------------------------
A2 A $1,015 Chatham County Industrial
Facilities and Pollution,
(Carolina Power and
Light), 6.30%, 6/15/14 $ 1,094,028
Baa1 BBB 2,750 Haywood County IDA,
(Champion International
Corp.), (AMT), 2,821,005
5.50%, 10/1/18
Baa1 BBB 1,500 Haywood County IDA,
(Champion International
Corp.), (AMT),
5.75%, 12/1/25 1,560,390
A2 A 3,750 Martin County IDA,
(Weyerhaeuser Co.), (AMT),
6.80%, 5/1/24 4,176,263
Baa2 BBB 2,500 New Hanover County,
(Occidental Petroleum
Corp.), 6.70%, 7/1/19 2,696,200
Baa3 BBB- 6,155 Puerto Rico Port
Authority,
(American Airlines),
(AMT),
6.25%, 6/1/26/(3)/ 6,704,825
Baa3 BBB- 1,150 Puerto Rico Port
Authority, (American
Airlines), (AMT), 6.30%,
6/1/23 1,236,676
NR AA- 850 Robeson County, Industrial
Facilities and Pollution
Control Financing
Authority, (Campbell Soup
Co.), 6.40%, 12/1/06 975,673
- --------------------------------------------------------------------------------
$ 21,265,060
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 6.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 North Carolina Eastern
Municipal Power Authority,
(FSA), Variable Rate,
1/1/19/(1)(2)/ $ 1,605,120
Aaa AAA 2,000 North Carolina Eastern
Municipal Power Authority,
(MBIA),
5.375%, 1/1/24 2,080,840
Aaa AAA 4,000 North Carolina Municipal
Power Authority, (Catawba
Electric), (MBIA),
Variable Rate, 1/1/12/(2)/ 4,375,000
Aaa AAA 1,400 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/02/(2)/ 1,569,750
- --------------------------------------------------------------------------------
$ 9,630,710
- --------------------------------------------------------------------------------
Insured-General Obligations -- 2.6%
- --------------------------------------------------------------------------------
Aaa AAA $3,500 Puerto Rico, (FSA),
Variable
Rate, 7/1/22/(2)/ $ 4,016,250
- --------------------------------------------------------------------------------
$ 4,016,250
- --------------------------------------------------------------------------------
Insured-Hospitals -- 9.2%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Cumberland County
Hospital, (MBIA), 0.00%,
10/1/09 $ 305,990
Aaa AAA 935 North Carolina Medical
Care Commission, (Memorial
Mission Hospital), (FSA),
0.00%, 10/1/06 665,019
Aaa AAA 2,125 North Carolina Medical
Care Commission, (Rex
Healthcare), (AMBAC), 2,096,610
5.00%, 6/1/23
Aaa AAA 5,000 North Carolina Medical
Care Commission, (Saint
Joseph's Medical Center),
(AMBAC),
5.10%, 10/1/14 5,113,750
Aaa AAA 5,000 North Carolina Medical
Care Commission, (Wake
County Hospital), (MBIA),
5.375%, 10/1/26 5,185,849
Aaa AAA 1,500 North Carolina Medical
Care Commission, (Wilson
Memorial Hospital),
(AMBAC),
0.00%, 11/1/15 654,495
- --------------------------------------------------------------------------------
$ 14,021,713
- --------------------------------------------------------------------------------
See notes to financial statements
77
<PAGE>
North Carolina Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Lease Revenue /
Certificates of Participation -- 3.3%
Aaa AAA $2,150 Charlotte, Convention
Facility, (AMBAC), 5.25%,
12/1/13 $ 2,230,475
Aaa AAA 1,575 Franklin, County Jail,
(FGIC), 6.625%, 6/1/14 1,771,859
Aaa AAA 1,000 Mooresville School
District, (AMBAC), 6.35%,
10/1/14 1,100,910
- --------------------------------------------------------------------------------
$ 5,103,244
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 0.8%
- --------------------------------------------------------------------------------
Aaa AAA $1,250 Centennial Authority,
Hotel Tax Revenue,
(Arena), (FSA),
5.125%, 9/1/19 $ 1,255,225
- --------------------------------------------------------------------------------
$ 1,255,225
- --------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 8.9%
- --------------------------------------------------------------------------------
A1 A $2,065 Buncombe County,
6.625%, 12/1/10 $ 2,323,951
A3 A- 6,000 Columbus County,
Industrial Facility and
Pollution Control
Financing, (International
Paper Co.), (AMT), 6.15%,
4/1/21 6,563,819
NR AA 825 Durham County, 6.10%,
7/15/07 897,427
Aa3 NR 985 Durham County, 6.75%,
12/1/11 1,092,168
A1 AA 2,400 Greensboro, Greensboro
Coliseum Arena, 6.75%,
12/1/09 2,623,920
- --------------------------------------------------------------------------------
$ 13,501,285
- --------------------------------------------------------------------------------
Transportation -- 8.7%
- --------------------------------------------------------------------------------
Baa1 A $4,450 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 $ 4,467,978
Baa1 A 4,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/20 4,042,000
Baa1 A 1,490 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/15 1,608,500
Baa1 A $2,925 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/36 $ 3,133,699
- --------------------------------------------------------------------------------
$ 13,252,177
- --------------------------------------------------------------------------------
Water and Sewer -- 1.3%
- --------------------------------------------------------------------------------
Aa2 AA $2,000 Orange County, Water and
Sewer, 5.20%, 7/1/16 $ 2,039,580
- --------------------------------------------------------------------------------
$ 2,039,580
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $137,336,031) $152,668,566
- --------------------------------------------------------------------------------
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 North Carolina
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at August 31, 1998, 23.1% 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 1.2% to 8.1% of total investments.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $2,777,350 or 1.8% of the
Portfolio's net assets.
/(2)/ Security has been issued as an inverse floater bond.
/(3)/ Security (or a portion thereof) has been segregated to cover when-issued
securities.
/(4)/ When-issued security.
See notes to financial statements
78
<PAGE>
Oregon Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Cogeneration -- 2.2%
- --------------------------------------------------------------------------------
NR NR $2,000 Western Generation Agency,
(Wauna Cogeneration),
(AMT), 7.40%, 1/1/16 $ 2,209,180
- --------------------------------------------------------------------------------
$ 2,209,180
- --------------------------------------------------------------------------------
Education -- 1.1%
- --------------------------------------------------------------------------------
A2 NR $1,000 Salem EFA, (Willamette
University), 6.10%, 4/1/14 $ 1,074,960
- --------------------------------------------------------------------------------
$ 1,074,960
- --------------------------------------------------------------------------------
Electric Utilities -- 5.4%
- --------------------------------------------------------------------------------
Aa1 AA- $4,000 Eugene, Trojan Nuclear
Power, 5.90%, 9/1/09 $ 4,006,200
Aa1 AA- 1,000 Northern Wasco County,
(Bonneville Power
Administration), 5.20%,
12/1/24 1,007,420
A A+ 500 Puerto Rico Telephone
Authority, Variable
Rate, 1/1/20/(1)/(2)/ 557,420
- --------------------------------------------------------------------------------
$ 5,571,040
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 5.8%
- --------------------------------------------------------------------------------
A1 AAA $2,000 Medford, Rogue Valley
Memorial Hospital,
Escrowed to Maturity,
6.25%, 12/1/07 $ 2,223,500
NR A+ 1,250 Oregon State, Health,
Housing, Educational and
Cultural Facilities
Authority, (Reed College),
Prerefunded to 7/1/02,
6.75%, 7/1/21 1,371,088
NR AAA 2,000 Puerto Rico, "RIBS",
(AMBAC), Variable Rate,
Prerefunded to 7/1/02,
7.544%, 7/1/15/(1)/(2)/ 2,344,460
- --------------------------------------------------------------------------------
$ 5,939,048
- --------------------------------------------------------------------------------
General Obligations -- 13.3%
- --------------------------------------------------------------------------------
Aa NR $1,000 Lane County, Eugene School
District, 5.375%, 7/1/13 $ 1,030,780
Aa2 AA 1,000 Oregon State, Board of
Higher Education, 6.00%,
10/15/18 1,072,320
Aa2 AA $1,250 Oregon State, Elderly and
Disabled Housing, 6.375%,
8/1/24 $ 1,367,250
Aa2 AA 4,610 Oregon State, Elderly and
Disabled Housing, (AMT),
5.65%, 8/1/26 4,889,597
Aa2 AA 1,190 Oregon State, Veterans
Welfare, 5.85%, 10/1/15 1,251,535
Aa2 AA 500 Oregon State, Veterans
Welfare, 5.875%, 10/1/18 524,900
Aa2 AA 1,500 Oregon State, Veterans
Welfare, 5.90%, 10/1/17 1,595,865
Baa1 A 4,850 Puerto Rico, 0.00%, 7/1/17 1,927,536
- --------------------------------------------------------------------------------
$ 13,659,783
- --------------------------------------------------------------------------------
Hospitals -- 1.0%
- --------------------------------------------------------------------------------
A2 A+ $1,000 Clackamas County, (Kaiser
Permanente), 6.25%, 4/1/21 $ 1,059,630
- --------------------------------------------------------------------------------
$ 1,059,630
- --------------------------------------------------------------------------------
Housing -- 35.4%
- --------------------------------------------------------------------------------
NR NR $2,105 Hood River County, Health
Facility Authority,
Elderly Housing Revenue,
(Down Manor Project),
6.50%, 1/1/17 $ 2,216,144
Aa2 NR 2,500 Oregon State, Housing and
Community Services
Department, MFMR, (AMT),
5.70%, 7/1/29 2,587,675
Aa2 NR 1,500 Oregon State, Housing and
Community Services
Department, MFMR, (AMT),
6.20%, 7/1/28 1,605,855
Aa2 NR 1,975 Oregon State, Housing and
Community Services
Department, SFMR, (AMT),
6.20%, 7/1/27 2,108,135
Aa2 NR 4,700 Oregon State, Housing and
Community Services
Department, SFMR, (AMT),
6.20%, 7/1/27 5,032,807
Aa2 NR 3,500 Oregon State, Housing and
Community Services
Department, SFMR, (AMT),
6.375%, 7/1/27 3,776,780
Aa2 NR 1,985 Oregon State, Housing and
Community Services
Department, SFMR, (AMT),
6.40%, 7/1/26 2,137,587
Aa2 NR 2,500 Oregon State, Housing and
Community Services
Department, SFMR, (AMT),
6.45%, 7/1/26 2,693,275
See notes to financial statements
79
<PAGE>
Oregon Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Housing (continued)
- --------------------------------------------------------------------------------
NR A $1,000 Portland Housing
Authority,
6.00%, 1/1/27 $ 1,034,330
Aa3 NR 4,810 Portland Housing
Authority, MFMR, (Berry
Ridge), (AMT),
6.30%, 5/1/29 5,147,276
Aaa NR 2,875 Portland Housing
Authority, MFMR, (Cherry
Blossom), (AMT),
6.20%, 12/20/36 3,074,956
NR A 1,750 Portland Housing
Authority, MFMR,
(Riverwood), 6.00%, 1/1/19 1,826,720
Aa3 NR 1,000 Washington County Housing
Authority, MFMR, (Bethany
Meadows), (AMT),
5.75%, 9/1/17 1,039,690
Aa3 NR 2,000 Washington County Housing
Authority, MFMR, (Bethany
Meadows), (AMT),
5.85%, 9/1/27 2,078,960
- --------------------------------------------------------------------------------
$ 36,360,190
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 10.7%
- --------------------------------------------------------------------------------
Baa2 BBB- $3,500 Oregon EDA, (Georgia
Pacific), (AMT), 6.35%,
8/1/25 $ 3,757,565
NR BBB- 5,000 Port of Astoria, Pollution
Control Revenue, (James
River Corp.), 6.55%, 2/1/15 5,356,699
NR NR 750 Port of Portland, (Ash
Grove Cement Co.), 7.25%,
10/1/09 811,613
NR NR 1,000 Port of Portland, (North
Portland Crown Zellerbach
Corp.),
6.125%, 5/15/08 1,002,850
- --------------------------------------------------------------------------------
$ 10,928,727
- --------------------------------------------------------------------------------
Insured-Colleges and Universities -- 1.5%
- --------------------------------------------------------------------------------
Aaa AAA $4,850 Oregon Health Science
University, Capital
Appreciation (MBIA),
0.00%, 7/1/21 $ 1,577,075
- --------------------------------------------------------------------------------
$ 1,577,075
- --------------------------------------------------------------------------------
Insured-Education -- 2.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Oregon State, Health,
Housing, Educational and
Cultural Facilities
Authority, (Lewis and
Clark College), (MBIA),
6.00%, 10/1/13 $ 1,108,670
Aaa AAA $1,500 Oregon State, Health,
Housing, Educational and
Cultural Facilities
Authority, (Lewis and
Clark College), (MBIA),
6.125%, 10/1/24 $ 1,655,085
- --------------------------------------------------------------------------------
$ 2,763,755
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 5.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Emerald People's Utility
District, Electric System,
(AMBAC),
5.75%, 11/1/16 $ 1,059,430
Aaa AAA 500 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03/(2)/ 576,875
Aaa AAA 5,300 Puerto Rico Electric Power
Authority, (MBIA), (IBC),
0.00%, 7/1/17 2,165,262
Aaa AAA 1,600 Puerto Rico Telephone
Authority, (MBIA),
Variable
Rate, 1/16/15/(2)/ 1,726,000
- --------------------------------------------------------------------------------
$ 5,527,567
- --------------------------------------------------------------------------------
Insured-Lease Revenue /
Certificates of Participation -- 1.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,250 Oregon State, Department
of General Services, Real
Property Financing
Program, (AMBAC), 6.25%,
9/1/15 $ 1,354,275
- --------------------------------------------------------------------------------
$ 1,354,275
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 0.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Portland, Arena Natural
Gas Tax Revenue (AMBAC),
0.00%, 6/1/17 $ 348,920
- --------------------------------------------------------------------------------
$ 348,920
- --------------------------------------------------------------------------------
Insured-Transportation -- 5.5%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Oregon Department of
Transportation, (Westside
Light Rail), (MBIA),
6.25%, 6/1/09 $ 1,680,780
Aaa AAA 1,000 Port of Portland, Portland
International Airport,
(AMBAC), (AMT), 6.25%,
7/1/18 1,073,460
See notes to financial statements
80
<PAGE>
Oregon Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Transportation (continued)
- --------------------------------------------------------------------------------
Aaa AAA $2,750 Port of Portland, Portland
International Airport,
(AMT), (FGIC), 6.00%,
7/1/23 $ 2,925,450
- --------------------------------------------------------------------------------
$ 5,679,690
- --------------------------------------------------------------------------------
Special Tax Revenue -- 4.1%
- --------------------------------------------------------------------------------
A NR $1,000 Portland, Urban Renewal
and Redevelopment Bonds,
(Downtown Waterfront),
6.40%, 6/1/08 $ 1,074,260
A1 AA+ 3,000 Tri-County Metropolitan
Transportation District,
Limited Tax Pledge, 5.70%,
8/1/13 3,160,200
- --------------------------------------------------------------------------------
$ 4,234,460
- --------------------------------------------------------------------------------
Transportation -- 2.1%
- --------------------------------------------------------------------------------
Baa3 BBB- $1,500 Port of Portland, Special
Obligation Revenue Bonds,
(Delta Airlines Inc.),
(AMT), 6.20%, 9/1/22 $ 1,576,080
Baa1 A 500 Puerto Rico Highway and
Transportation Authority,
6.375%, 7/1/08 542,180
- --------------------------------------------------------------------------------
$ 2,118,260
- --------------------------------------------------------------------------------
Water and Sewer -- 2.2%
- --------------------------------------------------------------------------------
NR A+ $2,000 Clackamas County, Water
Revenue, 6.375%, 10/1/14 $ 2,233,720
- --------------------------------------------------------------------------------
$ 2,233,720
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $94,764,463) $102,640,280
- --------------------------------------------------------------------------------
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 August 31, 1998, 19.1% 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 0.6% to 9.7% of total investments.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $2,901,880 or 2.8% of the
Portfolio's net assets.
/(2)/ Security has been issued as an inverse floater bond.
See notes to financial statements
81
<PAGE>
South Carolina Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 8.7%
- --------------------------------------------------------------------------------
A1 A- $1,650 Berkeley County, (South
Carolina Electric and Gas
Co.), 6.50%, 10/1/14 $ 1,810,116
Baa1 BBB+ 1,400 Puerto Rico Electric Power
Authority, 6.25%, 7/1/17 1,537,004
Aa2 AA- 1,000 South Carolina Public
Service Authority, 5.125%,
1/1/32 992,030
- --------------------------------------------------------------------------------
$ 4,339,150
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 0.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 300 Piedmont Municipal Power
Agency, (MBIA), Escrowed to
Maturity, 6.25%, 1/1/09 $ 349,326
- --------------------------------------------------------------------------------
$ 349,326
- --------------------------------------------------------------------------------
General Obligations -- 0.4%
- --------------------------------------------------------------------------------
Baa1 A $ 500 Puerto Rico, 0.00%, 7/1/18 $ 188,850
- --------------------------------------------------------------------------------
$ 188,850
- --------------------------------------------------------------------------------
Hospitals -- 3.1%
- --------------------------------------------------------------------------------
A3 NR $1,440 Horry County, (Conway
Hospital), 6.75%, 7/1/12 $ 1,566,706
- --------------------------------------------------------------------------------
$ 1,566,706
- --------------------------------------------------------------------------------
Housing -- 10.2%
- --------------------------------------------------------------------------------
NR AA- $1,780 South Carolina Housing
Finance Authority, MFMR,
(Runaway Bay Apartments),
6.20%, 12/1/20 $ 1,850,897
Aa AA 1,500 South Carolina Housing
Finance Authority, SFMR,
6.375%, 7/1/16 1,607,460
Aa2 NR 1,500 South Carolina Housing
Finance Authority, SFMR,
6.45%, 7/1/17 1,609,125
- --------------------------------------------------------------------------------
$ 5,067,482
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 29.1%
- --------------------------------------------------------------------------------
Baa2 BBB $1,890 Aiken County, (Beloit
Corp.), 6.00%, 12/1/11 $ 2,023,944
NR BBB+ $1,500 Chester County, (Spring
Industries), 7.35%, 2/1/14 $ 1,636,350
A2 A-1 1,150 Darlington County,
(Carolina Power and Light
Co.), 6.60%, 11/1/10 1,276,385
A1 AA- 1,500 Darlington County, (Nucor
Corp.), (AMT), 5.75%, 8/1/23 1,568,145
A2 A 2,500 Darlington County, (Sonoco
Products), 6.00%, 4/1/26 2,683,474
A2 A 500 Darlington County, (Sonoco
Products), (AMT), 6.125%,
6/1/25 539,610
NR NR 515 Florence County, (Stone
Container Co.), 7.375%,
2/1/07 556,313
A3 A- 1,000 Georgetown County,
Environmental Improvement
Revenue, (International
Paper Co.), 5.70%, 10/1/21 1,040,390
A1 A- 1,000 Richland County, (Union
Camp Corp.), (AMT), 6.75%,
5/1/22 1,094,140
A2 A+ 2,000 York County, (Hoechst
Celanese Corp.), (AMT),
5.70%, 1/1/24 2,063,240
- --------------------------------------------------------------------------------
$14,481,991
- --------------------------------------------------------------------------------
Insured-Education -- 1.5%
- --------------------------------------------------------------------------------
Baa2 AA $ 750 Richland County EFA,
(Benedict College), (AGR),
5.125%, 1/1/28 $ 738,750
- --------------------------------------------------------------------------------
$ 738,750
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 8.7%
- --------------------------------------------------------------------------------
Aaa NR $ 500 Edgefield County, Water and
Sewer Authority, (FGIC),
5.00%, 1/1/28 $ 495,030
Aaa AAA 250 Hilton Head Public Service
District
No. 1, (FSA), 5.00%, 12/1/23 247,680
Aaa AAA 195 Piedmont Municipal Power
Agency, Electric Revenue,
(MBIA), 6.30%, 1/1/14 213,621
Aaa AAA 2,500 Puerto Rico Electric Power
Authority, (MBIA), (IBC),
0.00%, 7/1/17 1,021,350
Aaa AAA 1,250 South Carolina Public
Service Authority, (AMBAC),
6.375%, 7/1/21 1,371,475
Aaa AAA 1,000 South Carolina State Public
Service Authority, (MBIA),
5.00%, 1/1/29 989,910
- --------------------------------------------------------------------------------
$ 4,339,066
- --------------------------------------------------------------------------------
See notes to financial statements
82
<PAGE>
South Carolina Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-General Obligations -- 2.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Berkeley County, School
District, (AMBAC), 6.30%,
2/1/16 $ 1,109,260
- --------------------------------------------------------------------------------
$ 1,109,260
- --------------------------------------------------------------------------------
Insured-Hospitals -- 14.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Greenwood County, (Self
Memorial Hospital), (FGIC),
5.875%, 10/1/17 $ 1,593,480
Aaa AAA 750 Horry County, (Conway
Hospital), (AMBAC), 5.00%,
7/1/28 737,948
Aaa AAA 1,500 South Carolina Jobs
Economic Development
Authority, (Anderson Area
Medical Center), (MBIA),
5.25%, 2/1/26 1,518,270
Aaa AAA 1,000 South Carolina Jobs
Economic Development
Authority, (Baptist
Hospital), (AMBAC),
5.45%, 8/1/15 1,036,020
Aaa AAA 1,000 South Carolina Jobs
Economic Development
Authority, (Baptist
Hospital), (AMBAC),
Variable Rate, 8/1/15/(1)/ 1,071,250
NR AAA 1,000 South Carolina Jobs
Economic Development
Authority, (Oconee Memorial
Hospital), (CLEE),
6.15%, 3/1/25 1,099,040
- --------------------------------------------------------------------------------
$ 7,056,008
- --------------------------------------------------------------------------------
Insured-Housing -- 2.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 South Carolina Housing
Finance and Development
Authority, SFMR, (AMBAC),
(AMT), 5.95%, 7/1/29 $ 1,054,860
- --------------------------------------------------------------------------------
$ 1,054,860
- --------------------------------------------------------------------------------
Insured-Lease Revenue /
Certificates of Participation -- 3.3%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Charleston County,
(Charleston PFC), (MBIA),
6.10%, 6/1/11 $ 551,995
Aaa AAA 1,000 Florence County, (Law
Enforcement Center),
(AMBAC), 6.00%, 3/1/14 1,092,500
- --------------------------------------------------------------------------------
$ 1,644,495
- --------------------------------------------------------------------------------
Insured-Life Care -- 2.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Florence County, Hospital
Revenue, (McLeod Regional
Medical Center), (MBIA),
5.00%, 11/1/20 $ 986,090
- --------------------------------------------------------------------------------
$ 986,090
- --------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 5.6%
- --------------------------------------------------------------------------------
Baa NR $ 750 Lexington County School
District, 6.90%, 7/1/08 $ 838,785
A3 BBB+ 1,750 Myrtle Beach Convention
Center, 6.875%, 7/1/17 1,965,443
- --------------------------------------------------------------------------------
$ 2,804,228
- --------------------------------------------------------------------------------
Pooled Loans -- 3.2%
- --------------------------------------------------------------------------------
NR A $1,500 South Carolina Education
Authority, Student Loan,
(AMT), 6.30%, 9/1/08 $ 1,605,135
- --------------------------------------------------------------------------------
$ 1,605,135
- --------------------------------------------------------------------------------
Solid Waste -- 3.5%
- --------------------------------------------------------------------------------
NR NR $1,500 Spartanburg County, Solid
Waste, (Bavarian Motor
Works Corp.), (AMT), 7.55%,
11/1/24 $ 1,736,265
- --------------------------------------------------------------------------------
$ 1,736,265
- --------------------------------------------------------------------------------
Transportation -- 1.5%
- --------------------------------------------------------------------------------
Baa1 A $ 750 Puerto Rico Highway and
Transportation Authority,
4.75%, 7/1/38 $ 727,140
- --------------------------------------------------------------------------------
$ 727,140
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $45,182,640) $49,794,802
- --------------------------------------------------------------------------------
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 August 31, 1998,
34.7% 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
0.5% to 15.0% of total investments.
/(1)/ Security has been issued as an inverse floater bond.
See notes to financial statements
83
<PAGE>
Tennessee Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 4.9%
- --------------------------------------------------------------------------------
Aa3 AA $1,500 Metropolitan Government
Nashville and Davidson
County, (Vanderbilt
University), 5.00%, 10/1/28 $ 1,484,955
Baa2 NR 1,000 Nashville and Davidson
County, (Belmont
University),
6.40%, 12/1/19 1,079,140
- --------------------------------------------------------------------------------
$ 2,564,095
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 3.7%
- --------------------------------------------------------------------------------
NR AAA $ 300 Puerto Rico, "RIBS",
(AMBAC), Variable Rate,
Prerefunded to 7/1/02,
7.544%, 7/1/15/(1)//(2)/ $ 351,669
Aaa AAA 1,500 Shelby County, (Lebonheur
Children's Hospital),
(MBIA), Escrowed to
Maturity, 5.50%, 8/15/12 1,594,755
- --------------------------------------------------------------------------------
$ 1,946,424
- --------------------------------------------------------------------------------
General Obligations -- 4.0%
- --------------------------------------------------------------------------------
Aa2 AA $1,000 Metropolitan Government
Nashville and Davidson
County, 5.875%, 5/15/21 $ 1,087,880
Aa2 AA+ 1,000 Shelby County, 5.125%,
3/1/16 1,013,450
- --------------------------------------------------------------------------------
$ 2,101,330
- --------------------------------------------------------------------------------
Hospitals -- 6.6%
- --------------------------------------------------------------------------------
Baa1 NR $ 500 Clarksville, (Clarksville
Memorial), 6.25%, 7/1/08 $ 535,605
Baa1 NR 500 Clarksville, (Clarksville
Memorial), 6.375%, 7/1/18 533,360
Baa1 BBB+ 250 Knox County, (East
Tennessee Children's),
6.50%, 10/1/12 267,003
Baa2 BBB 1,000 Montgomery County,
(Clarksville Regional
Health System),
5.375%, 1/1/28 990,450
NR A- 1,000 Sumner County, (Sumner
Regional Health Systems),
7.50%, 11/1/14 1,147,930
- --------------------------------------------------------------------------------
$ 3,474,348
- --------------------------------------------------------------------------------
Housing -- 15.2%
- --------------------------------------------------------------------------------
NR A $ 750 Knoxville Community
Development Corp., (Clinton
Towers), 6.65%, 10/15/10 $ 793,928
NR AAA 500 Knoxville Community
Development Corp.,
(Morningside Gardens),
(GNMA), 6.10%, 7/20/20 521,300
NR A 1,500 Nashville and Davidson
County, (The Park at
Hermitage), 5.90%, 2/1/19 1,532,400
Aa2 AA 1,000 Tennessee Housing
Development Agency,
5.375%, 7/1/23 1,009,960
A1 A+ 1,000 Tennessee Housing
Development Agency,
5.85%, 7/1/13 1,043,320
A1 A+ 2,000 Tennessee Housing
Development Agency,
5.95%, 7/1/28 2,080,520
Aa AA 1,000 Tennessee Housing
Development Agency, (AMT),
5.75%, 7/1/24 1,026,010
- --------------------------------------------------------------------------------
$ 8,007,438
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 27.0%
- --------------------------------------------------------------------------------
Aa3 AA- $1,000 Chattanooga, (E.I. du Pont
de Nemours and Co.),
6.35%, 7/1/22 $ 1,097,470
Aa3 AA- 1,000 Humphreys County, (E.I. du
Pont de Nemours and Co.),
(AMT), 6.70%, 5/1/24 1,114,040
Aa2 AA 2,000 Loudon County,
(Kimberly-Clark Corp.),
(AMT), 6.20%, 2/1/23/(3)/ 2,152,139
A3 A 2,250 Maury County, (Saturn
Corp.), 6.50%, 9/1/24 2,474,414
Baa1 BBB 1,500 McMinn County, (Calhoun
Newsprint Co. - Bowater
Inc.), (AMT), 7.40%, 12/1/22 1,677,000
Baa2 BBB 1,500 Memphis-Shelby County
Airport Authority, (Federal
Express Corp.), 6.75%, 9/1/12 1,644,510
Baa2 BBB 1,000 Memphis-Shelby County
Airport Authority, (Federal
Express Corp.), (AMT),
6.20%, 7/1/14 1,059,170
NR BBB+ 500 Nashville and Davidson
County, (Osco Treatment
Systems), (AMT), 6.00%, 5/1/03 526,765
Baa3 BBB- 1,250 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 1,361,663
A3 NR 1,000 South Fulton County, (Tyson
Foods Co.), (AMT),
6.40%, 10/1/20 1,097,510
- --------------------------------------------------------------------------------
$14,204,681
- --------------------------------------------------------------------------------
See notes to financial statements
84
<PAGE>
Tennessee Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Education -- 4.6%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Metropolitan Nashville
HEFA, (Meharry Medical
College), (AMBAC), 5.00%,
12/1/24 $ 984,830
Aaa AAA 1,230 Metropolitan Nashville
HEFA, (Meharry Medical
College), (AMBAC), 6.00%,
12/1/19 1,415,300
- --------------------------------------------------------------------------------
$ 2,400,130
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 5.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Lawrenceburg, Electric
Revenues, (MBIA), 6.625%,
7/1/18 $ 1,227,760
Aaa AAA 1,000 Madison County Suburban
Utility District, (MBIA),
5.00%, 2/1/19 998,050
Aaa AAA 400 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03/(2)/ 461,500
- --------------------------------------------------------------------------------
$ 2,687,310
- --------------------------------------------------------------------------------
Insured-Hospitals -- 5.0%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Bristol, (Bristol Memorial
Hospital), (FGIC), 6.75%,
9/1/10 $ 607,075
Aaa AAA 250 Chattanooga, (Memorial
Hospital), (MBIA), 6.625%,
9/1/09 299,425
Aaa AAA 1,500 Chattanooga-Hamilton
County, (Erlanger Medical
Center), (MBIA), 5.00%,
10/1/28 1,471,335
Aaa AAA 250 Shelby County, (Methodist
Care), (MBIA), 5.00%, 4/1/18 249,525
- --------------------------------------------------------------------------------
$ 2,627,360
- --------------------------------------------------------------------------------
Insured-Housing -- 2.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Knox County, SCA Realty,
MFMR, (FSA), 7.125%, 1/1/30 $ 1,100,750
- --------------------------------------------------------------------------------
$ 1,100,750
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 2.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Johnson, School District
Sales Tax, (AMBAC), 6.70%,
5/1/21 $ 1,171,290
- --------------------------------------------------------------------------------
$ 1,171,290
- --------------------------------------------------------------------------------
Insured-Transportation -- 4.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Memphis-Shelby County
Airport Authority, (MBIA),
(AMT), 6.50%, 2/15/09 $ 1,166,690
Aaa AAA 1,000 Puerto Rico Highway and
Transportation Authority,
(MBIA), (IBC), 5.00%, 7/1/38 997,360
- --------------------------------------------------------------------------------
$ 2,164,050
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 2.8%
- --------------------------------------------------------------------------------
Aaa AAA $ 350 Nashville and Davidson
County, Water System,
(AMBAC), Variable
Rate, 1/1/22/(2)/ $ 409,063
Aaa AAA 1,000 Nashville and Davidson
County, Water System,
(FGIC), 5.20%, 1/1/13 1,060,780
- --------------------------------------------------------------------------------
$ 1,469,843
- --------------------------------------------------------------------------------
Miscellaneous -- 1.1%
- --------------------------------------------------------------------------------
NR NR $ 500 Hardeman County,
(Correctional Facilities
Corp.), 7.75%, 8/1/17 $ 566,990
- --------------------------------------------------------------------------------
$ 566,990
- --------------------------------------------------------------------------------
Nursing Homes -- 2.2%
- --------------------------------------------------------------------------------
NR A+ $1,000 Tennessee State Veterans'
Homes Board, (Humboldt),
6.65%, 2/1/14 $ 1,130,670
- --------------------------------------------------------------------------------
$ 1,130,670
- --------------------------------------------------------------------------------
Pooled Loans -- 3.5%
- --------------------------------------------------------------------------------
NR A- $1,200 Tennessee Local Development
Authority, Community
Provider, 6.55%, 10/1/23 $ 1,315,236
A2 AA- 500 Tennessee Local Development
Authority, State Loan
Program, 5.00%, 3/1/15 500,000
- --------------------------------------------------------------------------------
$ 1,815,236
- --------------------------------------------------------------------------------
See notes to financial
85
<PAGE>
Tennessee Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Transportation -- 5.9%
- --------------------------------------------------------------------------------
NR NR $ 900 Memphis-Shelby County
Airport Authority, 6.125%,
12/1/16 $ 931,959
Baa1 A 1,575 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 1,581,363
Baa1 A 600 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/38 588,774
- --------------------------------------------------------------------------------
$ 3,102,096
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $48,278,492) $52,534,041
- --------------------------------------------------------------------------------
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 August 31, 1998, 29.6% 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 3.0% to 15.2% of total
investments.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $351,669 or 0.7% of the
Portfolio's net assets.
/(2)/ Security has been issued as an inverse floater bond.
/(3)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
86
<PAGE>
Virginia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 5.7%
- --------------------------------------------------------------------------------
NR A- $2,000 Lynchburgh, (Randolph-Macon
Woman's College), 5.875%, 9/1/23 $ 2,092,080
NR A- 2,000 Medical College of Hampton
Roads, 6.875%, 11/15/11 2,168,260
Baa3 NR 1,000 Rockingham County IDA,
(Bridgewater College),
5.95%, 10/1/13 1,046,630
NR A- 1,570 Virginia College Building
Authority, (Hampden-Sydney
College), 6.60%, 9/1/16 1,721,348
NR A+ 1,000 Virginia College Building
Authority, (Hampton
University), 5.75%, 4/1/14 1,060,450
NR A+ 400 Virginia College Building
Authority, (Hampton
University), 6.50%, 4/1/08 436,136
- --------------------------------------------------------------------------------
$ 8,524,904
- --------------------------------------------------------------------------------
Electric Utilities -- 0.7%
- --------------------------------------------------------------------------------
NR NR $ 925 Virgin Islands Water and
Power Authority, 7.40%, 7/1/11 $ 1,019,470
- --------------------------------------------------------------------------------
$ 1,019,470
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 11.9%
- --------------------------------------------------------------------------------
Aaa AAA $1,665 Arlington County IDA,
(AMBAC), Prerefunded to
9/1/03, 5.00%, 9/1/21 $ 1,637,078
Aaa NR 1,000 Arlington County IDA,
(Arlington Hospital),
Prerefunded to 9/1/01,
7.125%, 9/1/21 1,112,210
A NR 500 Augusta County IDA,
(Augusta Hospital),
Prerefunded to 9/1/01,
7.00%, 9/1/21 553,520
Aaa AAA 2,000 Loudoun County IDA,
(Falcons Landing),
Prerefunded to 11/1/04,
8.75%, 11/1/24 2,560,820
A2 NR 1,250 Martinsville, (Memorial
Hospital of Martinsville
and Henry County),
Prerefunded to 1/1/01,
7.00%, 1/1/06 1,337,700
A2 NR 2,400 Prince William County IDA
(Potomac Hospital),
Prerefunded to 10/1/05,
6.85%, 10/1/25 2,847,072
Aaa AAA 1,000 Richmond Metropolitan
Authority Expressway
(FGIC), Prerefunded to
7/15/02, 6.375%, 7/15/16 1,108,190
NR NR 4,000 Virgin Islands Public
Finance Authority,
Prerefunded to 10/1/02,
7.25%, 10/1/18 4,583,360
NR A+ 1,700 Virginia Beach, Water and
Sewer System, Prerefunded
to 2/1/02, 6.625%, 2/1/17 1,876,868
- --------------------------------------------------------------------------------
$17,616,818
- --------------------------------------------------------------------------------
General Obligations -- 2.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Fairfax County, 5.625%, 6/1/14 $ 1,067,270
Baa1 A 350 Puerto Rico, 0.00%, 7/1/04 275,429
Baa1 A 2,000 Puerto Rico, 4.50%, 7/1/23 1,849,180
- --------------------------------------------------------------------------------
$ 3,191,879
- --------------------------------------------------------------------------------
Hospitals -- 13.5%
- --------------------------------------------------------------------------------
A2 NR $3,800 Albermarle County IDA,
(Martha Jefferson Hospital),
5.50%, 10/1/20 $ 3,904,006
A2 NR 170 Chesapeake Hospital
Authority, (Chesapeake
General Hospital), 7.60%, 7/1/00 177,968
Aa2 AA 2,910 Fairfax County IDA, (Inova
Health System Hospitals),
5.00%, 8/15/14 2,972,652
Aa2 AA 2,000 Fairfax County IDA, (Inova
Health System Hospitals),
5.00%, 8/15/15 2,033,200
Aa2 AA 1,000 Fairfax County IDA, (Inova
Health System Hospitals),
6.00%, 8/15/26 1,091,920
NR A 400 Halifax County IDA,
(Halifax Regional
Hospital, Inc.), 5.25%, 9/1/17 402,676
Aa2 AA- 3,500 Peninsula Ports Authority
of Virginia, (Riverside
Health System), 6.625%, 7/1/10 3,828,965
See notes to financial statements
87
<PAGE>
Virginia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Hospitals (continued)
- --------------------------------------------------------------------------------
Aa2 AA $3,000 Virginia Beach Development
Authority, (Sentara Bayside
Hospital), 6.60%, 11/1/09 $ 3,280,680
A3 NR 1,000 Washington County IDA,
(Johnston Memorial
Hospital), 6.00%, 7/1/14 1,124,450
A3 NR 1,060 Washington County IDA,
(Johnston Memorial
Hospital), 7.00%, 7/1/22 1,194,366
- --------------------------------------------------------------------------------
$20,010,883
- --------------------------------------------------------------------------------
Housing -- 11.1%
- --------------------------------------------------------------------------------
NR AAA $1,250 Fairfax County Redevelopment
and Housing Authority MFMR,
FHA, 7.00%, 5/1/26 $ 1,338,300
NR AAA 960 Hampton Redevelopment and
Housing Authority, Senior
Living, (GNMA), 6.00%, 1/20/26 1,010,726
NR AAA 1,000 Newport News Redevelopment
and Housing Authority,
MFMR, 5.85%, 12/20/30 1,049,170
NR AAA 1,800 Suffolk Redevelopment and
Housing Authority, (Prince
Williams Commons), (FNMA),
6.45%, 6/1/19 1,962,612
Aa1 AA+ 3,500 Virginia Housing
Development Authority,
MFMR, 7.05%, 5/1/18 3,771,285
Aa AA+ 5,000 Virginia Housing
Development Authority,
MFMR, (AMT), 6.75%, 7/1/21 5,272,499
Aa NR 1,900 Virginia Housing
Development Authority,
SFMR, Variable Rate, 7/1/04/(1)/ 2,030,625
- --------------------------------------------------------------------------------
$16,435,217
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 19.7%
- --------------------------------------------------------------------------------
Baa2 NR $4,500 Bedford County, (Nekoosa
Packaging), (AMT),
5.60%, 12/1/25 $ 4,571,910
Aa3 AA- 2,190 Chesapeake, (Cargill,
Inc.), 5.875%, 3/1/13 2,344,789
A2 A+ 1,500 Giles, (Hoechst Celanese
Corp.), (AMT), 5.95%, 12/1/25 1,592,385
A2 A+ 2,000 Giles, (Hoechst Celanese
Corp.), (AMT), 6.45%, 5/1/26 2,229,020
A2 A+ 500 Giles, (Hoechst Celanese
Corp.), (AMT), 6.625%, 12/1/22 544,345
A3 A 2,000 Henrico County, (Browning
Ferris, Inc.), (AMT),
5.45%, 1/1/14/(2)/ 2,114,160
A1 A- 4,000 Isle of Wright County IDA,
(Union Camp Corp.), (AMT),
6.55%, 4/1/24 4,405,640
A1 A+ 2,000 James City County IDA,
(Anheuser Busch), (AMT),
6.00%, 4/1/32 2,163,560
Baa3 BBB- 1,000 Puerto Rico Port
Authority, (American
Airlines), (AMT), 6.25%, 6/1/26 1,089,330
Baa3 BBB- 1,000 Puerto Rico Port
Authority, (American
Airlines), (AMT), 6.30%, 6/1/23 1,075,370
Baa3 BBB 980 West Point, (Chesapeake
Corp.), 6.25%, 3/1/19 1,052,726
Baa3 BBB 5,520 West Point, (Chesapeake
Corp.), (AMT), 6.375%, 3/1/19 5,958,563
- --------------------------------------------------------------------------------
$29,141,798
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 0.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 900 Puerto Rico Telephone
Authority, (MBIA),
Variable Rate, 1/16/15/(1)/ $ 970,875
- --------------------------------------------------------------------------------
$ 970,875
- --------------------------------------------------------------------------------
Insured-General Obligations -- 3.5%
- --------------------------------------------------------------------------------
Aaa AAA $5,250 Richmond, (FGIC),
5.00%, 1/15/21 $ 5,204,325
- --------------------------------------------------------------------------------
$ 5,204,325
- --------------------------------------------------------------------------------
Insured-Hospitals -- 8.8%
- --------------------------------------------------------------------------------
Aaa AAA $3,585 Fredericksburg IDA,
(Medicorp Health),
(AMBAC), 5.25%, 6/15/23 $ 3,639,313
Aaa AAA 1,500 Henrico County, (Bon
Secour Health Systems), (MBIA),
6.25%, 8/15/20 1,772,700
See notes to financial statements
88
<PAGE>
Virginia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Hospitals (continued)
- --------------------------------------------------------------------------------
Aaa AAA $5,000 Virginia Beach, (Virginia
Beach Memorial Hospital),
(AMBAC), 5.125%, 2/15/18 $ 5,117,800
Aaa AAA 2,000 Winchester IDA, (Winchester
Medical Center), (AMBAC),
Variable Rate, 1/21/14/(1)/ 2,552,500
- --------------------------------------------------------------------------------
$13,082,313
- --------------------------------------------------------------------------------
Insured-Transportation -- 1.9%
- --------------------------------------------------------------------------------
Aaa AAA $1,650 Chesapeake Bay Bridge and
Tunnel Dist., (MBIA),
5.00%, 7/1/22 $ 1,632,890
Aaa AAA 1,105 Metropolitan Washington
Airports Authority,
(MBIA), (AMT), 5.75%, 10/1/20 1,164,383
- --------------------------------------------------------------------------------
$ 2,797,273
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 4.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Prince William County
Service Authority, (FGIC),
4.75%, 7/1/29 $ 959,320
Aaa AAA 4,635 Upper Occoquan Sewage
Authority, (MBIA), 5.00%, 7/1/25 4,590,736
Aaa AAA 1,000 Upper Occoquan Sewage
Authority, (MBIA), 5.15%, 7/1/20 1,043,500
- --------------------------------------------------------------------------------
$ 6,593,556
- --------------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 6.4%
- --------------------------------------------------------------------------------
Aa2 AA $2,000 Henrico County IDA, Lease,
7.00%, 8/1/13 $ 2,343,920
Aa2 AA 2,250 Henrico County IDA, Lease,
7.125%, 8/1/21 2,646,158
NR NR 1,250 King George County, Lease,
7.00%, 12/15/12 1,336,525
A NR 3,000 Rockingham and Harrisonburg
Counties, Harrisonburg
Redevelopment and Housing
Authority, 6.50%, 9/1/14 3,227,190
- --------------------------------------------------------------------------------
$ 9,553,793
- --------------------------------------------------------------------------------
Nursing Homes -- 0.2%
- --------------------------------------------------------------------------------
NR NR $ 215 Covington-Allegheny County
IDA, (Beverly Enterprises),
9.375%, 9/1/01 $ 229,846
- --------------------------------------------------------------------------------
$ 229,846
- --------------------------------------------------------------------------------
Solid Waste -- 2.2%
- --------------------------------------------------------------------------------
A1 A+ $ 915 Fairfax County EDA, (Ogden
Martin Systems of Fairfax,
Inc.), (AMT), 7.75%, 2/1/11 $ 956,742
Baa1 A- 2,250 Southeastern Public Service
Authority, Solid Waste Systems,
(AMT), 6.00%, 7/1/13 2,362,118
- --------------------------------------------------------------------------------
$ 3,318,860
- --------------------------------------------------------------------------------
Special Tax Revenue -- 1.8%
- --------------------------------------------------------------------------------
NR NR $1,500 Dulles Community Development
Authority, (Dulles Town Center),
6.25%, 3/1/26 $ 1,532,085
Aa AA 1,000 Virginia State Transportation
Board Revenue, Route 28,
Variable Rate, 4/1/18/(1)/ 1,183,730
- --------------------------------------------------------------------------------
$ 2,715,815
- --------------------------------------------------------------------------------
Transportation -- 2.2%
- --------------------------------------------------------------------------------
NR BBB $ 400 Charlottesville-Albermarle,
Airport Authority, (AMT),
6.125%, 12/1/13 $ 422,396
Baa1 A 1,500 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 1,506,060
Aa2 AA 1,250 Virginia Port Authority,
(AMT), 5.90%, 7/1/16 1,347,850
- --------------------------------------------------------------------------------
$ 3,276,306
- --------------------------------------------------------------------------------
Water and Sewer -- 3.1%
- --------------------------------------------------------------------------------
Aa2 AA $1,500 Fairfax County Water
Authority, 5.00%, 4/1/21 $ 1,531,650
Aa2 AA 805 Fairfax County Water
Authority, 6.00%, 4/1/22 891,103
See notes to financial statements
89
<PAGE>
Virginia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Water and Sewer (continued)
- --------------------------------------------------------------------------------
Aa2 AA- $1,000 Fairfax County Water Authority,
Variable Rate, 4/1/29/(1)(3)/ $ 1,097,170
NR AA 1,000 Virginia Resource Authority,
(Hopewell Waste Water), (AMT),
6.00%, 1/1/25 1,084,640
- --------------------------------------------------------------------------------
$ 4,604,563
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $134,024,968) $148,288,494
- --------------------------------------------------------------------------------
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 August 31, 1998, 21.2% 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 4.9% to 8.7% 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 exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $1,097,170 or 0.7% of the
Portfolio's net assets.
See notes to financial statements
90
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
As of August 31, 1998
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Kentucky
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments --
Identified cost $85,220,338 $51,057,516 $78,904,810 $100,259,833
Unrealized appreciation 8,196,742 4,564,428 7,334,325 9,531,791
- ------------------------------------------------------------------------------------------------------------------------------------
Investments, at value $93,417,080 $55,621,944 $86,239,135 $109,791,624
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 2,691,379 $ 181 $ 919,365 $ 3,121,864
Receivable for investments sold 1,004,372 -- -- --
Interest receivable 1,398,455 841,648 1,077,404 1,719,202
Deferred organization expenses -- 747 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $98,511,286 $56,464,520 $88,235,904 $114,632,690
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased $ 1,776,119 $ -- $ -- $ 1,966,224
Payable for when-issued securities 1,940,976 -- 958,690 --
Demand note payable -- 194,000 -- --
Payable for daily variation margin on open
financial futures contracts 7,719 8,750 14,250 17,812
Payable to affiliate for Trustees' fees 713 775 620 837
Other accrued expenses 9,056 5,951 11,070 12,537
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 3,734,583 $ 209,476 $ 984,630 $ 1,997,410
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest
in Portfolio $94,776,703 $56,255,044 $87,251,274 $112,635,280
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $86,623,101 $51,735,985 $80,053,905 $103,274,919
Net unrealized appreciation (computed on the
basis of identified cost) 8,153,602 4,519,059 7,197,369 9,360,361
- ------------------------------------------------------------------------------------------------------------------------------------
Total $94,776,703 $56,255,044 $87,251,274 $112,635,280
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
91
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Assets and Liabilities
As of August 31, 1998
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments --
Identified cost $33,307,126 $ 98,601,792 $64,892,579 $137,336,031
Unrealized appreciation 2,397,896 7,164,502 7,645,527 15,332,535
- ------------------------------------------------------------------------------------------------------------------------------------
Investments, at value $35,705,022 $105,766,294 $72,538,106 $152,668,566
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 129,539 $1,329,282 $ 1,004,800 $ 697,467
Receivable for investments sold 85,000 -- 30,000 --
Interest receivable 596,721 1,365,345 846,902 2,156,141
Deferred organization expenses 701 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $36,516,983 $108,460,921 $74,419,808 $155,522,174
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for when-issued securities $ -- $ 3,289,180 $ -- $ 2,576,011
Payable for daily variation margin on open
financial futures contracts 3,562 16,250 11,875 --
Payable to affiliate for Trustees' fees -- 806 -- 1,085
Other accrued expenses 3,648 2,432 9,936 14,954
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 7,210 $ 3,308,668 $ 21,811 $ 2,592,050
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors'
interest in Portfolio $36,509,773 $105,152,253 $74,397,997 $152,930,124
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $34,145,005 $ 98,072,007 $66,866,653 $137,597,589
Net unrealized appreciation (computed on
the basis of identified cost) 2,364,768 7,080,246 7,531,344 15,332,535
- ------------------------------------------------------------------------------------------------------------------------------------
Total $36,509,773 $105,152,253 $74,397,997 $152,930,124
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
92
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Assets and Liabilities
As of August 31, 1998
<TABLE>
<CAPTION>
South
Oregon Portfolio Carolina Portfolio Tennessee Portfolio Virginia Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments --
Identified cost $ 94,764,463 $45,182,640 $48,278,492 $134,024,968
Unrealized appreciation 7,875,817 4,612,162 4,255,549 14,263,526
- ------------------------------------------------------------------------------------------------------------------------------------
Investments, at value $102,640,280 $49,794,802 $52,534,041 $148,288,494
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 27 $ 816 $ 1,036,567 $ 650,298
Receivable for investments sold -- -- -- 55,000
Interest receivable 1,312,130 673,947 742,249 2,307,324
Deferred organization expenses -- 703 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $103,952,437 $50,470,268 $54,312,857 $151,301,116
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased $ -- $ -- $ 589,867 $ --
Demand note payable 186,000 344,000 -- --
Payable for daily variation margin on open financial
futures contracts -- -- 8,313 25,000
Payable to affiliate for Trustees' fees -- 3,124 -- 1,085
Other accrued expenses 11,340 6,071 5,970 17,561
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 197,340 $ 353,195 $ 604,150 $ 43,646
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors'
interest in Portfolio $103,755,097 $50,117,073 $53,708,707 $151,257,470
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $95,879,280 $45,504,911 $49,533,180 $137,123,569
Net unrealized appreciation (computed on the basis of
identified cost) 7,875,817 4,612,162 4,175,527 14,133,901
- ------------------------------------------------------------------------------------------------------------------------------------
Total $103,755,097 $50,117,073 $53,708,707 $151,257,470
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
93
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Kentucky
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest $5,550,375 $3,354,995 $5,222,856 $6,945,303
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income $5,550,375 $3,354,995 $5,222,856 $6,945,303
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee $ 366,055 $ 185,589 $ 333,875 $ 470,058
Trustees fees and expenses 6,956 728 6,231 8,324
Custodian fee 60,119 38,254 59,098 71,520
Legal and accounting services 23,398 21,298 21,298 23,398
Amortization of organization expenses 615 1,418 1,118 511
Miscellaneous 18,863 16,251 12,638 11,787
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 476,006 $ 263,538 $ 434,258 $ 585,598
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 20,874 $ 8,807 $ 12,724 $ 15,409
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 20,874 $ 8,807 $ 12,724 $ 15,409
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 455,132 $ 254,731 $ 421,534 $ 570,189
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $5,095,243 $3,100,264 $4,801,322 $6,375,114
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost
basis) $1,047,057 $ 929,883 $1,803,386 $2,152,959
Financial futures contracts (760,313) (407,915) (593,119) (704,097)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain $ 286,744 $ 521,968 $1,210,267 $1,448,862
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments (identified cost basis) $1,509,871 $1,197,152 $1,229,882 $1,520,361
Financial futures contracts (15,222) (58,565) (98,301) (135,459)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) $1,494,649 $1,138,587 $1,131,581 $1,384,902
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain $1,781,393 $1,660,555 $2,341,848 $2,833,764
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $6,876,636 $4,760,819 $7,143,170 $9,208,878
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
94
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest $1,950,541 $5,865,329 $4,490,817 $ 9,153,114
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income $1,950,541 $5,865,329 $4,490,817 $ 9,153,114
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee $ 78,185 $ 401,391 $ 272,984 $ 655,565
Trustees fees and expenses 1,978 10,741 7,635 11,916
Custodian fee 28,922 60,589 51,709 89,096
Legal and accounting services 17,417 23,598 20,516 23,398
Amortization of organization expenses 1,347 824 549 1,583
Miscellaneous 7,194 13,796 11,867 22,843
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 135,043 $ 510,939 $ 365,260 $ 804,401
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 16,445 $ 46,452 $ 11,275 $ 39,369
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 16,445 $ 46,452 $ 11,275 $ 39,369
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 118,598 $ 464,487 $ 353,985 $ 765,032
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,831,943 $5,400,842 $4,136,832 $ 8,388,082
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost
basis) $ 620,522 $1,505,418 $1,449,475 $ 3,440,718
Financial futures contracts (265,977) (680,515) (493,314) (1,648,96)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain $ 354,545 $ 824,903 $ 956,161 $ 1,791,750
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 691,789 $2,080,471 $1,654,309 $ 2,817,631
Financial futures contracts (12,727) (104,783) (81,970) 112,744
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) $ 679,062 $1,975,688 $1,572,339 $ 2,930,375
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain $1,033,607 $2,800,591 $2,528,500 $ 4,722,125
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $2,865,550 $8,201,433 $6,665,332 $13,110,207
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
95
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Oregon South Carolina Tennessee Virginia
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest $6,246,608 $3,042,537 $3,047,857 $ 9,013,940
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income $6,246,608 $3,042,537 $3,047,857 $ 9,013,940
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee $ 419,629 $ 154,671 $ 161,125 $ 647,387
Trustees fees and expenses 9,691 3,077 7,316 11,916
Custodian fee 55,385 32,919 40,090 94,759
Legal and accounting services 22,716 22,187 20,717 23,398
Amortization of organization expenses 848 1,388 1,084 1,258
Miscellaneous 15,175 16,108 7,184 27,326
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 523,444 $ 230,350 $ 237,516 $ 806,044
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ -- $ 6,924 $ 11,162 $ 31,170
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ -- $ 6,924 $ 11,162 $ 31,170
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 523,444 $ 223,426 $ 226,354 $ 774,874
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $5,723,164 $2,819,111 $2,821,503 $ 8,239,066
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost $1,898,448 $1,166,828 $ 814,847 $ 3,098,693
basis)
Financial futures contracts (327,438) 8,668 (351,492) (1,061,43)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain $1,571,010 $1,175,496 $ 463,355 $ 2,037,263
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $1,487,017 $ 554,107 $ 955,175 $ 2,634,984
Financial futures contracts (50,937) -- (57,473) (161,882)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation $1,436,080 $ 554,107 $ 897,702 $ 2,473,102
(depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain $3,007,090 $1,729,603 $1,361,057 $ 4,510,365
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $8,730,254 $4,548,714 $4,182,560 $12,749,431
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
96
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 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 $ 5,095,243 $ 3,100,264 $ 4,801,322 $ 6,375,114
Net realized gain 286,744 521,968 1,210,267 1,448,862
Net change in unrealized appreciation
(depreciation) 1,494,649 1,138,587 1,131,581 1,384,902
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 6,876,636 $ 4,760,819 $ 7,143,170 $ 9,208,878
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,971,850 $ 3,190,175 $ 5,270,754 $ 5,929,474
Withdrawals (20,427,780) (14,381,768) (20,324,717) (25,613,276)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (14,455,930) $(11,191,593) $(15,053,963) $ (19,683,802)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (7,579,294) $ (6,430,774) $ (7,910,793) $ (10,474,924)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 102,355,997 $ 62,685,818 $ 95,162,067 $ 123,110,204
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 94,776,703 $ 56,255,044 $ 87,251,274 $ 112,635,280
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
97
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 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 $ 1,831,943 $ 5,400,842 $ 4,136,832 $ 8,388,082
Net realized gain 354,545 824,903 956,161 1,791,750
Net change in unrealized appreciation
(depreciation) 679,062 1,975,688 1,572,339 2,930,375
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 2,865,550 $ 8,201,433 $ 6,665,332 $ 13,110,207
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,706,360 $ 8,581,280 $ 4,493,837 $ 9,214,460
Withdrawals (6,494,266) (19,031,547) (16,642,888) (36,965,507)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (787,906) $(10,450,267) $(12,149,051) $ (27,751,047)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 2,077,644 $ (2,248,834) $ (5,483,719) $ (14,640,840)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $34,432,129 $107,401,087 $ 79,881,716 $ 167,570,964
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $36,509,773 $105,152,253 $ 74,397,997 $ 152,930,124
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
98
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 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 $ 5,723,164 $ 2,819,111 $ 2,821,503 $ 8,239,066
Net realized gain 1,571,010 1,175,496 463,355 2,037,263
Net change in unrealized
appreciation (depreciation) 1,436,080 554,107 897,702 2,473,102
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 8,730,254 $ 4,548,714 $ 4,182,560 $ 12,749,431
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 3,763,506 $ 2,733,381 $ 5,452,717 $ 7,893,877
Withdrawals (22,431,429) (11,134,947) (10,088,250) (31,043,370)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (18,667,923) $ (8,401,566) $ (4,635,533) $ (23,149,493)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (9,937,669) $ (3,852,852) $ (452,973) $ (10,400,062)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 113,692,766 $ 53,969,925 $ 54,161,680 $ 161,657,532
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 103,755,097 $ 50,117,073 $ 53,708,707 $ 151,257,470
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
99
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 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) 36,452 (196,863) 619,588 790,878
Net change in unrealized appreciation
(depreciation) 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
100
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 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 Maryland Missouri North Carolina
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 17,105 583,641 47,598 2,200,237
Net change in unrealized appreciation
(depreciation) 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
101
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 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) (379,737) (187,278) (147,294) 1,844,132
Net change in unrealized appreciation
(depreciation) 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
102
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Alabama Portfolio
---------------------------------------------------------------------
Year Ended
---------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------ -------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- --------------------------------------------------------------------------------------------------------------------------
Net expenses/(3)/ 0.49% 0.50% 0.49% 0.47% 0.44%/(4)/ 0.25%/(4)/
Net expenses after custodian fee reduction 0.47% 0.49% 0.45% -- -- --
Net investment income 5.21% 5.47% 5.50% 5.77% 5.37%/(4)/ 5.52%/(4)/
Portfolio Turnover 23% 23% 52% 51% 26% 10%
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $94,777 $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 Investment Adviser,
or both. Had such action not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C>
Expenses/(3)/ 0.35%/(4)/
Net investment income 5.42%/(4)/
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(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 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)/ Annualized.
See notes to financial statements
103
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Arkansas Portfolio
------------------------------------------------------
Year Ended
------------------------------------------------------
August 31,
------------------------------------------------------
1998 1997 1996 1995 1994/(1)/
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- -----------------------------------------------------------------------------------------------------------------------
Net expenses/(2)/ 0.44% 0.49% 0.48% 0.46% 0.24%/(3)/
Net expenses after custodian fee reduction 0.43% 0.48% 0.46% -- --
Net investment income 5.22% 5.40% 5.40% 5.69% 5.60%/(3)/
Portfolio Turnover 13% 17% 11% 23% 16%
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $56,255 $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 Investment Adviser,
or both. Had such action not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C>
Expenses/(2)/ 0.43%/(3)/
Net investment income 5.41%/(3)/
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the period from the start of business, February 1, 1994, to August 31,
1994.
/(2)/ 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.
/(3)/ Annualized.
See notes to financial statements
104
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Georgia Portfolio
-----------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------ ---------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
Expenses/(3)/ 0.48% 0.49% 0.50% 0.46% 0.44%/(4)/ 0.40%/(4)/
Expenses after custodian fee reduction 0.47% 0.47% 0.45% -- -- --
Net investment income 5.29% 5.55% 5.59% 5.73% 5.37%/(4)/ 5.37%/(4)/
Portfolio Turnover 19% 13% 21% 48% 45% 35%
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $87,251 $95,162 $108,974 $122,949 $137,724 $119,311
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(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 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)/ Annualized.
See notes to financial statements
105
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Kentucky Portfolio
-------------------------------------------------------------------------------
Year Ended
-------------------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------------------- ------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average daily net assets:
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expenses/(3)/ 0.49% 0.51% 0.53% 0.49% 0.46%/(4)/ 0.40%/(4)/
Expenses after custodian fee reduction 0.48% 0.48% 0.50% -- -- --
Net investment income 5.38% 5.56% 5.49% 5.75% 5.39%/(4)/ 5.40%/(4)/
Portfolio Turnover 15% 28% 28% 30% 21% 11%
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $112,635 $123,110 $133,017 $145,269 $145,210 $117,936
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(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 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)/ Annualized.
See notes to financial statements
106
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Louisiana Portfolio
------------------------------------------------------
Year Ended
------------------------------------------------------
August 31,
------------------------------------------------------
1998 1997 1996 1995 1994/(1)/
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- -----------------------------------------------------------------------------------------------------------------------
Net expenses/(2)/ 0.39% 0.40% 0.30% 0.22% 0.14%/(3)/
Net expenses after custodian fee reduction 0.34% 0.38% 0.23% -- --
Net investment income 5.25% 5.85% 5.90% 6.06% 5.86%/(3)/
Portfolio Turnover 43% 27% 99% 46% 21%
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $36,510 $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 action not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C> <C> <C>
Expenses /(2)/ 0.41% 0.33% 0.33%/(3)/
Expenses after custodian fee reduction 0.35% -- --
Net investment income 5.79% 5.95% 5.67%/(3)/
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the period from the start of business, February 1, 1994, to August 31,
1994.
/(2)/ 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.
/(3)/ Annualized.
See notes to financial statements
107
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Maryland Portfolio
------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------- --------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- ----------------------------------------------------------------------------------------------------------------------------
Net expenses/(3)/ 0.48% 0.48% 0.51% 0.47% 0.44%/(4)/ 0.36%/(4)/
Net expenses after custodian fee reduction 0.44% 0.45% 0.48% -- -- --
Net investment income 5.11% 5.38% 5.50% 5.79% 5.44%/(4)/ 5.41%/(4)/
Portfolio Turnover 30% 30% 33% 30% 41% 34%
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $105,152 $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 action not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C>
Expenses/(3)/ 0.38%/(4)/
Net investment income 5.39%/(4)/
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(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 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)/ Annualized.
See notes to financial statements
108
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Missouri Portfolio
------------------------------------------------------------------
Year Ended
------------------------------------------------------------------
August 31, Sept. 30,
-------------------------------------------------- ---------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ---------------------------------------------------------------------------------------------------------------------------
Expenses/(3)/ 0.47% 0.47% 0.49% 0.48% 0.45%/(4)/ 0.40%/(4)/
Expenses after custodian fee reduction 0.45% 0.46% 0.47% -- -- --
Net investment income 5.31% 5.52% 5.52% 5.76% 5.36%/(4)/ 5.36%/(4)/
Portfolio Turnover 11% 5% 36% 24% 28% 6%
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $74,398 $79,882 $85,162 $93,162 $95,167 $75,273
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(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 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)/ Annualized.
See notes to financial statements
109
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
North Carolina Portfolio
------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------- ---------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ----------------------------------------------------------------------------------------------------------------------------
Expenses/(3)/ 0.51% 0.52% 0.52% 0.48% 0.46%/(4)/ 0.43%/(4)/
Expenses after custodian fee reduction 0.48% 0.50% 0.48% -- -- --
Net investment income 5.31% 5.53% 5.51% 5.78% 5.40%/(4)/ 5.43%/(4)/
Portfolio Turnover 26% 42% 54% 33% 37% 21%
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $152,930 $167,571 $187,044 $195,179 $199,772 $172,534
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(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 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)/ Annualized.
See notes to financial statements
110
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Oregon Portfolio
--------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------- -----------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ------------------------------------------------------------------------------------------------------------------------
Expenses/(3)/ 0.48% 0.56% 0.50% 0.50% 0.46%/(4)/ 0.43%/(4)/
Expenses after custodian fee reduction 0.48% 0.55% 0.47% -- -- --
Net investment income 5.28% 5.46% 5.37% 5.60% 5.26%/(4)/ 5.30%/(4)/
Portfolio Turnover 9% 22% 28% 22% 15% 32%
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $103,755 $113,693 $129,759 $146,391 $153,119 $127,497
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(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 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)/ Annualized.
See notes to financial statements
111
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
South Carolina Portfolio
-----------------------------------------------------
Year Ended
-----------------------------------------------------
August 31,
-----------------------------------------------------
1998 1997 1996 1995 1994/(1)/
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ----------------------------------------------------------------------------------------------------------------------
Expenses/(2)/ 0.44% 0.51% 0.53% 0.44% 0.37%/(3)/
Expenses after custodian fee reduction 0.43% 0.50% 0.51% -- --
Net investment income 5.37% 5.59% 5.65% 5.81% 5.47%/(3)/
Portfolio Turnover 21% 8% 36% 75% 23%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $50,117 $53,970 $58,318 $61,412 $62,265
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the period from the start of business, February 1, 1994, to August 31,
1994.
/(2)/ 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.
/(3)/ Annualized.
See notes to financial statements
112
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Tennessee Portfolio
-----------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
August 31, Sept. 30,
-------------------------------------------------- -------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- --------------------------------------------------------------------------------------------------------------------------
Net Expenses/(3)/ 0.44% 0.43% 0.45% 0.41% 0.36%/(4)/ 0.08%/(4)/
Net Expenses after custodian fee reduction 0.42% 0.42% 0.43% -- -- --
Net investment income 5.20% 5.48% 5.52% 5.81% 5.49%/(4)/ 5.60%/(4)/
Portfolio Turnover 21% 3% 39% 20% 10% 69%
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $53,709 $54,162 $56,065 $58,673 $56,496 $39,266
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ The operating expenses of the Portfolios may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Investment Adviser,
or both. Had such action not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C>
Expenses/(3)/ 0.31%/(4)/
Net investment income 5.37%/(4)/
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(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 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)/ Annualized.
See notes to financial statements
113
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Virginia Portfolio
-------------------------------------------------------------------------
Year Ended
-------------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------- -------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average daily net assets:
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expenses/(3)/ 0.52% 0.52% 0.51% 0.48% 0.46%/(4)/ 0.43%/(4)/
Expenses after custodian fee reduction 0.50% 0.49% 0.48% -- -- --
Net investment income 5.27% 5.53% 5.55% 5.81% 5.49%/(4)/ 5.49%/(4)/
Portfolio Turnover 8% 25% 30% 38% 48% 29%
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $151,257 $161,658 $177,644 $191,748 $194,519 $174,260
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(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 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)/ Annualized.
See notes to financial statements
114
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS
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. Financial 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
115
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS 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.
2 Investment Adviser Fee and Other Transactions with Affiliates
---------------------------------------------------------------------------
The investment adviser fee is earned by Boston Management and Research
(BMR), a wholly-owned subsidiary of Eaton Vance Management (EVM), as
compensation for management and investment advisory services rendered to
each Portfolio. The fee is based upon a percentage of average daily net
assets plus a percentage of gross income (i.e., income other than gains
from the sale of securities). For the year ended August 31, 1998, the
Portfolios paid advisory fees as follows:
Portfolio Amount Effective Rate*
----------------------------------------------------------------------
Alabama $ 366,055 0.37%
Arkansas 185,589 0.31%
Georgia 333,875 0.37%
Kentucky 470,058 0.40%
Louisiana 78,185 0.22%
Maryland 401,391 0.38%
Missouri 272,984 0.35%
North Carolina 655,565 0.42%
Oregon 419,629 0.39%
South Carolina 154,671 0.29%
Tennessee 161,125 0.30%
Virginia 647,387 0.41%
* Advisory fees paid as a percentage of average daily net assets.
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 year ended August 31, 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.
116
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
3 Investments
---------------------------------------------------------------------------
Purchases and sales of investments, other than U.S. Government securities,
purchased options and short-term obligations, for the year ended August 31,
1998, were as follows:
Alabama Portfolio
---------------------------------------------------------------------------
Purchases $21,784,632
Sales 32,173,115
Arkansas Portfolio
---------------------------------------------------------------------------
Purchases $ 7,621,246
Sales 16,574,805
Georgia Portfolio
---------------------------------------------------------------------------
Purchases $17,164,501
Sales 27,720,456
Kentucky Portfolio
---------------------------------------------------------------------------
Purchases $18,137,971
Sales 35,627,636
Louisiana Portfolio
---------------------------------------------------------------------------
Purchases $15,255,613
Sales 14,927,613
Maryland Portfolio
---------------------------------------------------------------------------
Purchases $31,862,511
Sales 36,187,295
Missouri Portfolio
---------------------------------------------------------------------------
Purchases $ 8,449,775
Sales 18,846,885
North Carolina Portfolio
---------------------------------------------------------------------------
Purchases $40,027,788
Sales 60,615,562
Oregon Portfolio
---------------------------------------------------------------------------
Purchases $ 9,245,962
Sales 24,639,514
South Carolina Portfolio
---------------------------------------------------------------------------
Purchases $10,666,059
Sales 16,868,417
Tennessee Portfolio
---------------------------------------------------------------------------
Purchases $11,162,049
Sales 13,198,582
Virginia Portfolio
---------------------------------------------------------------------------
Purchases $11,615,157
Sales 31,360,371
4 Federal Income Tax Basis of Investments
---------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned by each Portfolio at August 31, 1998, as computed on a
federal income tax basis, are as follows:
Alabama Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 85,220,338
---------------------------------------------------------------------------
Gross unrealized appreciation $ 8,198,632
Gross unrealized depreciation (1,890)
---------------------------------------------------------------------------
Net unrealized appreciation $ 8,196,742
---------------------------------------------------------------------------
Arkansas Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 51,057,516
---------------------------------------------------------------------------
Gross unrealized appreciation $ 4,565,898
Gross unrealized depreciation (1,470)
---------------------------------------------------------------------------
Net unrealized appreciation $ 4,564,428
---------------------------------------------------------------------------
Georgia Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 78,904,810
---------------------------------------------------------------------------
Gross unrealized appreciation $ 7,631,954
Gross unrealized depreciation (297,629)
---------------------------------------------------------------------------
Net unrealized appreciation $ 7,334,325
---------------------------------------------------------------------------
Kentucky Portfolio
---------------------------------------------------------------------------
Aggregate Cost $100,259,833
---------------------------------------------------------------------------
Gross unrealized appreciation $ 9,532,622
Gross unrealized depreciation (831)
---------------------------------------------------------------------------
Net unrealized appreciation $ 9,531,791
---------------------------------------------------------------------------
117
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
Louisiana Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 33,307,126
---------------------------------------------------------------------------
Gross unrealized appreciation $ 2,666,822
Gross unrealized depreciation (268,926)
---------------------------------------------------------------------------
Net unrealized appreciation $ 2,397,896
---------------------------------------------------------------------------
Maryland Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 98,601,792
---------------------------------------------------------------------------
Gross unrealized appreciation $ 7,407,800
Gross unrealized depreciation (243,298)
---------------------------------------------------------------------------
Net unrealized appreciation $ 7,164,502
---------------------------------------------------------------------------
Missouri Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 64,892,579
---------------------------------------------------------------------------
Gross unrealized appreciation $ 7,645,527
Gross unrealized depreciation --
---------------------------------------------------------------------------
Net unrealized appreciation $ 7,645,527
---------------------------------------------------------------------------
North Carolina Portfolio
---------------------------------------------------------------------------
Aggregate Cost $137,336,894
---------------------------------------------------------------------------
Gross unrealized appreciation $ 15,332,041
Gross unrealized depreciation (369)
---------------------------------------------------------------------------
Net unrealized appreciation $ 15,331,672
---------------------------------------------------------------------------
Oregon Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 94,764,463
---------------------------------------------------------------------------
Gross unrealized appreciation $ 7,875,817
Gross unrealized depreciation --
---------------------------------------------------------------------------
Net unrealized appreciation $ 7,875,817
---------------------------------------------------------------------------
South Carolina Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 45,182,640
---------------------------------------------------------------------------
Gross unrealized appreciation $ 4,612,897
Gross unrealized depreciation (735)
---------------------------------------------------------------------------
Net unrealized appreciation $ 4,612,162
---------------------------------------------------------------------------
Tennessee Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 48,278,492
---------------------------------------------------------------------------
Gross unrealized appreciation $ 4,255,549
Gross unrealized depreciation --
---------------------------------------------------------------------------
Net unrealized appreciation $ 4,255,549
---------------------------------------------------------------------------
Virginia Portfolio
---------------------------------------------------------------------------
Aggregate Cost $134,052,511
---------------------------------------------------------------------------
Gross unrealized appreciation $ 14,237,351
Gross unrealized depreciation (1,368)
---------------------------------------------------------------------------
Net unrealized appreciation $ 14,235,983
---------------------------------------------------------------------------
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 facility is allocated among the
participating portfolios and funds at the end of each quarter. At August
31, 1998, the Arkansas Portfolio, Oregon Portfolio and South Carolina
Portfolio had balances outstanding pursuant to this line of credit of
$194,000, $186,000 and $344,000 respectively. The Portfolios did not have
any significant borrowings or allocated fees during the year ended August
31, 1998.
118
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
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 August 31,
1998, is as follows:
Futures
Contracts Net Unrealized
Expiration Appreciation
Portfolio Date Contracts Position (Depreciation)
----------------------------------------------------------------------------
Alabama 9/98 13 U.S. Treasury Bonds Short $ (43,140)
----------------------------------------------------------------------------
Arkansas 9/98 7 U.S. Treasury Bonds Short $ (40,948)
12/98 7 U.S. Treasury Bonds Short $ (4,421)
----------------------------------------------------------------------------
Georgia 9/98 24 U.S. Treasury Bonds Short $ (136,956)
----------------------------------------------------------------------------
Kentucky 9/98 30 U.S. Treasury Bonds Short $ (171,430)
----------------------------------------------------------------------------
Louisiana 9/98 6 U.S. Treasury Bonds Short $ (33,128)
----------------------------------------------------------------------------
Maryland 9/98 13 U.S. Treasury Bonds Short $ (76,046)
12/98 13 U.S. Treasury Bonds Short $ (8,210)
----------------------------------------------------------------------------
Missouri 9/98 20 U.S. Treasury Bonds Short $ (114,183)
----------------------------------------------------------------------------
Tennessee 9/98 14 U.S. Treasury Bonds Short $ (80,022)
----------------------------------------------------------------------------
Virginia 9/98 20 U.S. Treasury Bonds Short $ (116,995)
12/98 20 U.S. Treasury Bonds Short $ (12,630)
----------------------------------------------------------------------------
At August 31, 1998, the Portfolios had sufficient cash and/or securities
segregated to cover margin requirements on open futures contracts.
119
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of Alabama Municipals Portfolio, Arkansas
Municipals Portfolio, Georgia Municipals Portfolio, Kentucky Municipals
Portfolio, Louisiana Municipals Portfolio, Maryland Municipals Portfolio,
Missouri Municipals Portfolio, North Carolina Municipals Portfolio, Oregon
Municipals Portfolio, South Carolina Municipals Portfolio, Tennessee Municipals
Portfolio and Virginia Municipals Portfolio:
- --------------------------------------------------------------------------------
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Alabama Municipals Portfolio, Arkansas
Municipals Portfolio, Georgia Municipals Portfolio, Kentucky Municipals
Portfolio, Louisiana Municipals Portfolio, Maryland Municipals Portfolio,
Missouri Municipals Portfolio, North Carolina Municipals Portfolio, Oregon
Municipals Portfolio, South Carolina Municipals Portfolio, Tennessee Municipals
Portfolio and Virginia Municipals Portfolio (the Portfolios) as of August 31,
1998, the related statements of operations for the year then ended, the
statements of changes in net assets for the years ended August 31, 1998 and
1997, and supplementary data for each of the years in the four year period ended
August 31, 1998, the period ended August 31, 1994, and for the period from the
start of business February 1, 1993, to September 30, 1993. These financial
statements and supplementary data are the responsibility of the Trusts'
management. Our responsibility is to express an opinion on the financial
statements and supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at August
31, 1998, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other audit procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of the aforementioned
Portfolios at August 31, 1998, the results of their operations, the changes in
their net assets and their supplementary data for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 2, 1998
120
<PAGE>
Eaton Vance Municipals Funds as of August 31, 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
Chairman and Chief Executive Officer, 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
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
Chairman and Chief Executive Officer, United Asset Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
121
<PAGE>
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<PAGE>
This Page Intentionally Left Blank
<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
Independent Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
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.
12 MUNISRC. 10/98
