<PAGE>
TO SHAREHOLDERS
During the six months that ended March 31, 1995, EV Marathon California
Municipals Fund paid to its shareholders monthly income dividends of $0.251 per
share and capital gains of $0.117 per share.
Based on the most recent dividend paid and the Funds net asset value of $9.35
per share on March 31, 1995, the Funds annualized distribution rate was 5.19
percent. To equal that rate in a taxable investment, a couple in the combined
43.04 percent tax bracket would have to receive 9.11 percent.
During 1994 the economy remained stronger than economists and money managers had
anticipated at the start of the year. In response to this strength, and in an
attempt to keep inflation in check, the Federal Reserve raised short-term
interest rates six times in 1994 and once again in 1995. Long-term rates moved
upward as well and, as a result, the prices of municipal bonds dropped.
But the market slide was not the only concern in 1994. Many shareholders of
Eaton Vance tax free mutual funds may have wondered whether the problems that
surfaced in Orange County, had in any way affected their investment. The answer
is no. After a brief period during which the value of California bonds declined,
the market realized that this was a county problem. From that point on, other
California investments were not significantly impacted.
Despite the difficulties that beset the market in 1994, we feel optimistic about
prospects for 1995. The market now appears convinced that the Federal Reserve
is, in fact, keeping a tight watch on inflation. And, while it is impossible to
predict the outcomes of government initiatives, it appears that proposals put
forth by the new Congress to cut spending and taxes could have an overall
positive effect if enacted.
This report features some changes which we hope will help you to better
understand your invest-ment, and how your portfolios holdings help provide the
means for the Federal government, as well as state and local governments, to
fund such projects as roads, bridges, hospitals and schools. The Fund review
includes a Portfolio Overview, or snapshot, as well as comments from the
portfolio manager. In addition, we are profiling a specific bond holding.
Regardless of what lies ahead for the economy, the goal of your fund remains the
same: to provide you with a competitive distribution of tax-free income from a
portfolio of high-quality municipal bonds.+
<PAGE>
30-Year treasuries chart, revised
This chart is entitled as follows: "In 1994, long-term interest rates hit their
highest level in 3 years."
Below the title is a three-dimensional line graph labeled, "Month-end 30-year
Treasuries rate." The axis ascending on the left side of the chart is labeled
from 5% to 8% at one-percent intervals. Along the bottom of the chart, the axis
lists dates from 3/92 to 3/95, at one-year intervals.
The high point of interest rates during that period, 8.04%, is labeled on the
chart and occurred near the end of the period being measured.
Attachment: DeltaGraph plot points.
Interest Rate Month
7.35 2/92
7.6 3/92
7.82 4/92
7.85 5/92
8.1 6/92
7.92 7/92
7.78 8/92
7.46 9/92
7.53 10/92
7.58 11/92
7.31 12/92
7.31 1/93
6.92 2/93
6.65 3/93
6.29 4/93
6.28 5/93
6.31 6/93
5.99 7/93
5.99 8/93
6.16 9/93
6.63 10/93
6.76 11/93
6.97 12/93
6.89 1/94
6.95 2/94
6.89 3/94
7.23 4/94
7.39 5/94
7.36 6/94
7.63 7/94
7.34 8/94
7.44 9/94
7.46 10/94
7.82 11/94
7.89 12/94
8.04 1/95
7.97 2/95
Sincerely,
[Photo of Thomas J. Fetter]
/s/ Thomas J. Fetter
Thomas J. Fetter
President
May 5, 1995
+ A portion of the Portfolios income could be subject to Federal alternative
minimum tax.
<PAGE>
MANAGEMENT REPORT
California rebounded somewhat from the recession during 1994, though it
continued to lag behind the national economy. The state was later than most to
enter the recession and is now later than most in terms of recovery.
That tardiness was compounded by defense cutbacks, both in terms of base
closings and cuts experienced by defense contractors, many of which are major
employers in the state.
Californias economy is expected to continue to recover, though the pace will
probably remain slower than that of the nation. The state appears to have
revenues and expenditures better balanced, and credit rating agencies seem to
agree that its rating has stabilized.
The well-documented financial problems of Orange County had virtually no effect
on the Portfolio, which owns no direct Orange County credits. The Portfolio does
own bonds of five issuers that invested in the Orange County investment pool,
but there has been no adverse effect on the creditworthiness of these issuers.
PORTFOLIO OVERVIEW
Based on market value as of March 31, 1995
Number of issues .................. 114
Average quality ................... A+
Investment grade .................. 87.2%
Effective maturity (years) ........ 15.82
Largest sectors:
Lease Revenue ............................ 17.7%
Escrowed ................................. 15.3
Tax allocation ........................... 9.1
Housing .................................. 8.7
Insured utilities ........................ 7.5*
* Private insurance does not remove the market risks associated with this
investment.
YOUR INVESTMENT AT WORK
Central Valley
Financing Authority
Carson Cogeneration Project
The CVFA is using the money raised by the sale of these bonds to finance
construction of a cogeneration project. This facility will generate electrical
power that will be purchased by the Sacramento Municipal Utility District.
This project is the first of four cogeneration plants planned in the Sacramento
area that will replace power that is now purchased from Pacific Gas & Electric
Co. and Southern California Edison Co.
FROM THE PORTFOLIO MANAGER
[Photo of Robert B. MacIntosh]
"We agree with the credit rating agencies that have given California a rating in
the A range and we believe that the states rating has stabilized at that level.
Approximately 8.5 percent of the Portfolio consists of state-backed bonds, an
indication of our belief that the ratings have bottomed and will improve over
time.
"We have adopted a strategy of maintaining a low exposure to health care because
it is an extremely competitive industry in the United States, and even more so
in California."
- -- Robert B. MacIntosh, Portfolio Manager
<PAGE>
EV MARATHON CALIFORNIA MUNICIPALS FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investment in California Tax Free Portfolio,
at value Note 1A)
(identified cost, $403,864,393) $418,872,672
Receivable for Fund shares sold 482,304
------------
Total assets $419,354,976
LIABILITIES:
Dividends payable $950,285
Payable for Fund shares redeemed 617,127
Payable to affiliates --
Custodian fee 1,000
Trustees fees 796
Accrued expenses 263,702
--------
Total liabilities 1,832,910
------------
NET ASSETS for 44,667,505 shares of beneficial
interest outstanding $417,522,066
============
SOURCES OF NET ASSETS:
Paid-in capital $435,011,305
Accumulated net realized loss on investments
and financial futures transactions
(computed on the basis of identified cost) (25,891,069)
Accumulated distributions in excess of net
realized gain on investments (5,310,866)
Accumulated distributions in excess of net
investment income (1,295,583)
Unrealized appreciation of investments and
financial futures contracts from Portfolio
(computed on the basis of identified cost) 15,008,279
------------
Total $417,522,066
============
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE
(NOTE 6) PER SHARE ($417,522,066 / 44,667,505 shares
of beneficial interest outstanding) $9.35
=====
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Six Months Ended March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 14,351,059
Expenses allocated from Portfolio (1,209,758)
------------
Total investment income $ 13,141,301
Expenses --
Compensation of Trustees not members of
the Administrator's organization $ 1,608
Custodian fees (Note 4) 12,540
Distribution fees (Note 5) 1,947,004
Transfer and dividend disbursing agent
fees 151,455
Printing and postage 59,452
Legal and accounting services 14,003
Registration costs 1,370
Miscellaneous 8,569
------------
Total expenses 2,196,001
------------
Net investment income $ 10,945,300
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) from Portfolio --
Investment transactions (identified cost
basis) $(16,590,337)
Financial futures contracts (211,224)
------------
Net realized loss on investments $(16,801,561)
Change in unrealized appreciation
(depreciation) of investments 24,171,847
------------
Net realized and unrealized gain on
investments $ 7,370,286
------------
Net increase in net assets from
operations $ 18,315,586
============
See notes to financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED
SEPTEMBER 30,
----------------------------
1995** 1994*
------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 10,945,300 $ 11,467,925
Net realized loss on investments (16,801,561) (10,559,752)
Change in unrealized appreciation
(depreciation) of investments 24,171,847 (926,810)
Net increase (decrease) in net assets
from operations $ 18,315,586 $ (18,637)
------------ ------------
Distributions to shareholders from (Note 2) --
From net investment income $(10,945,300) $(11,467,925)
In excess of net investment income (521,777) (1,709,784)
In excess of net realized gain on
investments (5,310,866) --
------------ ------------
Total distributions to shareholders $(16,777,943) $(13,177,709)
------------ ------------
Transactions in shares of beneficial interest
(Note 3) --
Proceeds from sales of shares $ 16,563,821 $ 20,853,736
Net asset value of shares issued to
shareholder in payment of distributions
declared 7,320,394 5,336,955
Cost of shares redeemed (47,490,519) (36,817,405)
------------ ------------
Decrease in net assets from Fund share
transactions $(23,606,304) $(10,626,714)
------------ ------------
Net decrease in net assets $(22,068,661) $(23,823,060)
NET ASSETS:
At beginning of period 439,590,727 463,413,787
------------ ------------
At end of period (including accumulated
distributions in excess of net investment
income of $1,295,583 and $1,177,662,
respectively) $417,522,066 $439,590,727
============ ============
* For the six months ended September 30, 1994. The Fund changed its fiscal year
end from March 31, to September 30, effective September 30, 1994.
** For the six months ended March 31, 1995 (unaudited).
See notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, YEAR ENDED MARCH 31, YEAR ENDED
------------------------ ----------------------------- SEPTEMBER 30,
1995<F3> 1994<F1> 1994 1993 1992<F2> 1991
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $ 9.290 $ 9.560 $10.200 $ 9.850 $10.000 $ 9.570
------- ------- ------- ------- ------- -------
INCOME FROM
OPERATIONS:
Net investment
income $ 0.239 $ 0.240 $ 0.480 $ 0.509 $ 0.264 $ 0.533
Net realized and
unrealized gain (loss)
on investments 0.188 (0.234) (0.395) 0.524 (0.100) 0.544
------- ------- ------- ------- ------- -------
Total income from
operations $ 0.427 $ 0.006 $ 0.085 $ 1.033 $ 0.164 $ 1.077
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment
income $(0.239) $(0.240) $(0.480) $(0.509) $(0.264) $(0.533)
In excess of net
investment income (0.011) (0.036) (0.092) (0.115) (0.050) (0.114)
In excess of net
realized gain on
investments (0.117) -- (0.153) (0.059) -- --
------- ------- ------- ------- ------- -------
Total
distributions $(0.367) $(0.276) $(0.725) $(0.683) $(0.314) $(0.647)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
end of period $ 9.350 $ 9.290 $ 9.560 $10.200 $ 9.850 $10.000
======= ======= ======= ======= ======= =======
TOTAL RETURN<F7> 4.87% 0.06% 0.55% 10.82% 3.29% 11.59%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (000 omitted) $417,522 $439,591 $463,414 $438,938 $362,597 $353,990
Ratio of net expenses to
average net assets<F5> 1.66%<F4> 1.63%<F4> 1.67% 1.84% 1.87%<F4> 1.90%
Ratio of net investment
income to average
net assets 5.33%<F4> 5.06%<F4> 4.64% 5.05% 5.28%<F4> 5.42%
PORTFOLIO TURNOVER
RATE<F6> -- -- 5% 139% 65% 36%
<FN>
<F1> For the six months ended September 30, 1994. The Fund changed its fiscal
year end from March 31, to September 30, effective September 30, 1994.
<F2> For the six months ended March 31, 1992. The Fund changed its fiscal year
end from September 30, to March 31, effective March 31, 1992.
<F3> For the six months ended March 31, 1995 (unaudited).
<F4> Computed on an annualized basis.
<F5> Includes the Fund's share of California Tax Free Portfolio's allocated
expenses for the periods ended March 31, 1995 and September 30, 1994 and
the period from May 3, 1993, to March 31, 1994.
<F6> Portfolio Turnover represents the rate of portfolio activity for the period
while the Fund was making investments directly in securities. The portfolio
turnover rate for the period since the Fund transferred substantially all
of its investable assets to the Portfolio is shown in the Portfolio's
financial statements which are included elsewhere in this report.
<F7> Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Marathon California Municipals Fund (the Fund) is a diversified series of
Eaton Vance Investment Trust (the 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 mangement investment
company. The Fund invests all of its investable assets in interests in the
California Tax Free Portfolio (the Portfolio), a New York Trust, having the same
investment objective as the Fund. The value of the Fund's investment in the
Portfolio reflects the Fund's proportionate interest in the net assets of the
Portfolio (98.2% at March 31, 1995). The performance of the Fund is directly
affected by the performance of the Portfolio. The financial statements of the
Portfolio, including the portfolio of investments, are included elsewhere in
this report and should be read in conjunction with the Fund's financial
statements. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. INVESTMENT VALUATIONS -- Valuation of securities by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INCOME -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with generally accepted accounting
principles.
C. FEDERAL TAXES -- The 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 income, if any, and
tax-exempt income, including any net realized gain on investments. Accordingly,
no provision for federal income or excise tax is necessary. At September 30,
1994, the Fund, for federal income tax purposes had a capital loss carryover of
$11,262,006 which will reduce the taxable income arising from future net
realized gains 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 Fund of any
liability for federal income or excise tax. Such capital loss carryover will
expire on September 30, 2002. Dividends paid by the Fund from net interest on
tax-exempt municipal bonds allocated from the Portfolio are not includable by
shareholders as gross income for federal income tax purposes because the Fund
and Portfolio intend to meet certain requirements of the Internal Revenue Code
applicable to regulated investment companies which will enable the Fund to pay
exempt-interest dividends. The portion of such interest, if any, earned on
private activity bonds issued after August 7, 1986, may be considered a tax
preference item to shareholders.
D. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale of
shares and other distribution costs are charged to operations. For tax purposes,
commissions paid were charged to paid-in capital prior to November 16, 1994 and
subsequently charged to operations. The change in the tax accounting practice
was prompted by a recent Internal Revenue Service ruling, and has no effect on
either the Fund's current yield or total return (Notes 2 and 5).
E. OTHER -- Investment transactions are accounted for on a trade date basis.
F. RECLASSIFICATION -- Certain prior year amounts have been reclassified to
conform to the current year presentation.
<PAGE>
- --------------------------------------------------------------------------------
G. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
March 31, 1995 and for the six month period then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
- --------------------------------------------------------------------------------
(2) DISTRIBUTIONS TO SHAREHOLDERS
The net income of the Fund is determined daily, and substantially all of the net
income so determined is declared as a dividend to shareholders of record at the
time of declaration. Distributions are paid monthly. Distributions of allocated
realized capital gains, if any, are made at least annually. Shareholders may
reinvest capital gain distributions in additional shares of the Fund at the net
asset value as of the ex-dividend date. Distributions are paid in the form of
additional shares or, at the election of the shareholder, in cash. The Fund
distinguishes 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 over-distributions for financial statement purposes are
classified as distributions in excess of net investment income or accumulated
net realized gains. Permanent differences between book and tax accounting are
reclassified to paid-in capital. During the period from October 1, 1994 to
November 15, 1994, $403,856 was reclassified from distributions in excess of net
investment income to paid in capital, due to differences between book and tax
accounting for distribution costs being considered as permanent differences. Net
investment income, net realized gains and net assets were not affected by this
reclassification.
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
YEAR ENDED SEPTEMBER 30,
----------------------------
1995** 1994*
----------------------------
Sales 1,838,114 2,200,594
Issued to shareholders electing
to receive payments of
distributions in Fund shares 822,946 563,552
Redemptions (5,327,474) (3,895,080)
----------- -----------
Net decrease (2,666,414) (1,130,934)
=========== ===========
* For the six months ended September 30, 1994.
** For the six months ended March 31, 1995 (unaudited).
<PAGE>
- --------------------------------------------------------------------------------
(4) TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves only as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services. See
Note 2 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report. Except as to Trustees of the Fund and the Portfolio
who are not members of EVM's or BMR's organization, officers and Trustees
receive remuneration for their services to the Fund out of such investment
adviser fee. Investors Bank & Trust Company (IBT), an affiliate of EVM, serves
as custodian of the Fund and the Portfolio. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based on
the average cash balances the Fund or the Portfolio maintains with IBT. Certain
of the officers and Trustees of the Fund and Portfolio are officers and
directors/trustees of the above organizations (Note 5).
- --------------------------------------------------------------------------------
(5) DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay the
Principal Underwriter, Eaton Vance Distributors, Inc. (EVD) amounts equal to
1/365 of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
Uncovered Distribution Charges, which are equivalent to the sum of (i) 5% of the
aggregate amount received by the Fund for shares sold plus (ii) distribution
fees calculated by applying the rate of 1% over the prevailing prime rate to the
outstanding balance of Uncovered Distribution Charges of EVD, reduced by the
aggregate amount of contingent deferred sales charges (see Note 6) and daily
amounts theretofore paid to EVD. The amount payable to EVD with respect to each
day is accrued on such day as a liability of the Fund and, accordingly, reduces
the Fund's net assets. The Fund paid $1,541,482 to EVD for the six months ended
March 31, 1995, representing 0.75% (annualized) of daily average net assets. At
March 31, 1995, the amount of Uncovered Distribution Charges of EVD calculated
under the Plan was approximately $8,662,000.
In addition, the Plan authorizes the Fund to make payments of service fees
to the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees have initially implemented the Plan by authorizing the Fund to make
quarterly payments of service fees to the Principal Underwriter and Authorized
Firms in amounts not expected to exceed 0.25% per annum of the Fund's average
daily net assets based on the value of Fund shares sold by such persons and
remaining outstanding for at least one year. Provision for service fee payments
during the six months ended March 31, 1995 amounted to $405,522. Service fee
payments will be made for personal services and/or the maintenance of
shareholder accounts. Service fees are separate and distinct from the sales
commissions and distribution fees payable by the Fund to EVD, and, as such, are
not subject to automatic discontinuance where there are no outstanding Uncovered
Distribution Charges of EVD.
Certain officers and Trustees of the Fund are officers or directors of EVD.
<PAGE>
- --------------------------------------------------------------------------------
(6) CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon the
lower of net asset value at date of redemption or date of purchase. No charge is
levied on shares acquired by reinvestment of dividends or capital gain
distributions. The CDSC is imposed at declining rates that begin at 5% in the
case of redemptions in the first year and second year after purchase (6% and 5%,
respectively, for shares purchased prior to August 1, 1994), declining one
percentage point each subsequent year. No CDSC is levied on shares which have
been sold to EVM or its affiliates or to their respective employees or clients.
CDSC charges are paid to EVD to reduce the amount of Uncovered Distribution
Charges calculated under the Fund's Distribution Plan. CDSC received when no
Uncovered Distribution Charges exist will be credited to the Fund. For the six
months ended March 31, 1995, EVD received approximately $723,000 of CDSC paid by
shareholders.
- --------------------------------------------------------------------------------
(7) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$17,756,842 and $60,227,839, respectively, for the six month period ended March
31, 1995.
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA TAX FREE PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------
RATINGS (UNAUDITED)
- -------------------
PRINCIPAL
STANDARD AMOUNT
MOODY'S & POOR'S (000 OMITTED) SECURITY VALUE
- --------------------------------------------------------------------------------
COGENERATION - 3.9%
NR BBB- $ 9,985 Central Valley Financing
Authority, Carson Ice-Gen
Project 6.20%, 7/1/20 $ 9,531,381
NR BBB- 2,100 Central Valley Financing
Authority, Carson Ice-Gen
Project 6.10%, 7/1/13 2,006,445
Aa NR 6,000 University of California at
Los Angeles Chiller/
Cogeneration Project,
5.60%, 11/1/20 5,413,380
------------
$ 16,951,206
------------
ESCROWED TO MATURITY - 15.3%
NR AAA $ 3,140 City of Bakersfield
Assisted Living Center,
0%, 4/15/21 $ 498,349
NR NR 130 City of Commerce Joint
Powers Financing
Authority, 8.00%, 3/1/22 150,705
NR BBB 2,000 City of Rancho Mirage Joint
Powers Financing
Authority, Civic Center,
7.50%, 4/1/17 2,274,420
Aaa AAA 14,285 County of Sacramento,
California, Single Family
Mortgage Revenue Bonds
(GNMA), (AMT), 8.50%, 11/1/16 18,162,949
Aaa AAA 8,000 County of Sacramento,
California, Single Family
Mortgage Revenue Bonds
(GNMA), (AMT), 8.125%, 7/1/16 9,641,920
Aaa AAA 6,000 County of Sacramento,
California, Single Family
Mortgage Revenue Bonds
(GNMA), (AMT), 8.25%, 1/1/21 7,570,680
Aaa AAA 3,000 City and County of San
Francisco Sewer System
Secondary "RITES", (AMBAC),
Variable, 10/1/21 (1) 3,487,320
Baa1 A- 2,375 City of San Luis Obispo,
Capital Improvement
Board, 8.25%, 6/1/06 2,520,564
NR BBB 1,575 Fontana Public Financing
Authority, North Fontana
Redevelopment Project,
7.75%, 12/1/20 1,830,276
Aaa AAA 6,400 Port of Oakland, (BIGI),
0%, 11/1/15 3,667,392
NR NR 3,200 Oceanside California
Community Development
Commission, 8.40%, 6/1/18 3,401,440
NR NR 3,000 Poway Redevelopment Agency,
Paguay Redevelopment
Project, 7.75%, 12/15/21 3,488,280
NR BBB+ 1,000 City of Upland Police
Building Construction
8.20%, 8/1/16 1,066,480
NR NR 4,000 Huntington Beach Public
Financing Authority,
Huntington Beach
Redevelopment Projects,
8.375%, 5/1/18 4,468,560
NR NR 2,975 Sacramento-Yolo Port
District Port Facilities,
8.30%, 12/1/03 3,296,746
------------
$ 65,526,081
------------
GENERAL OBLIGATION - 1.0%
AA Aa $ 5,000 East Bay Municipal
Utilities District,
Wastewater System
5.00%, 4/1/15 $ 4,348,800
------------
HEALTH CARE - 0.8%
NR NR $ 3,250 Banning, California, San
Georgonio Pass
Convalescent Hospital,
(AMT), 9.50%, 12/1/11 $ 3,356,990
------------
HOSPITALS - 1.0%
NR BBB+ $ 2,700 City of Stockton,
California, Dameron
Hospital Association,
8.30%, 12/1/14 $ 2,853,657
NR A 1,500 Woodland, California,
Woodland Memorial
Hospital, 8.20%, 8/1/15 1,607,850
------------
$ 4,461,507
------------
HOUSING - 8.7%
Aa AA- $ 2,500 California Housing Finance
Agency, 8.20%, 8/1/17 $ 2,635,550
Aa AA- 1,425 California Housing Finance
Agency, (AMT),
8.60%, 8/1/19 1,501,907
Aa3 NR 60 California Housing Finance
Agency, 9.875%, 8/1/10 61,324
Aa AA- 2,500 California Housing Finance
Agency, 8.10%, 8/1/16 2,599,400
A1 A+ 2,000 California Housing Finance
Agency, 6.70%, 8/1/15 2,031,560
Aa AA- 3,835 California Housing Finance
Agency, (AMT),
7.35%, 8/1/11 4,001,631
Aa AA- 8,185 California Housing Finance
Agency, (AMT),
7.65%, 8/1/23 8,574,688
Aa AA- 840 California Housing Finance
Agency, 7.375%, 8/1/17 887,536
Aa AA- 5,000 California Housing Finance
Agency, (AMT),
7.40%, 8/1/26 (4) 5,219,600
Aa AA- 3,875 California Housing Finance
Agency, (AMT),
7.50%, 8/1/25 4,070,533
NR NR 2,000 The Housing Authority of
the County of Los
Angeles, 10.50%, 12/1/29 2,077,500
A NR 845 The Housing Authority of
the County of Los
Angeles, 7.875%, 8/1/16 888,416
NR A+ 2,185 City of Oakland,
California, Housing
Finance Agency,
7.10%, 1/1/10 2,274,257
NR AAA 545 County of Riverside,
California Housing
Finance Agency, (GNMA),
(AMT), 6.85%, 10/1/16 573,405
------------
$ 37,397,307
------------
INDUSTRIAL DEVELOPMENT/
POLLUTION CONTROL - 0.1%
NR NR $ 4,500 City of Long Beach,
California, Kress
Rehabilitation Project,
(AMT), 9.75%, 12/1/16 (2)(3) $ 135,000
------------
INSURED EDUCATION - 2.6%
Aaa AAA $ 2,670 Regents of the University
of California, (MBIA),
4.75%, 9/1/21 $ 2,181,871
Aaa AAA 10,000 Regents of the University
of California, (AMBAC),
4.70%, 9/1/06 9,044,600
------------
$ 11,226,471
------------
INSURED HOUSING - 0.2%
Aaa AAA $ 720 California Housing Finance
Agency, (MBIA), (AMT),
7.00%, 8/1/23 $ 744,775
------------
INSURED HOSPITALS - 1.1%
Aaa AAA $ 5,250 Anaheim Memorial Hospital,
5.125%, 5/15/20 $ 4,559,835
------------
INSURED LEASE REVENUE/
CERTIFICATE OF
PARTICIPATION - 5.1%
Aaa AAA $ 3,300 California Statewide
Communities Development
Authority, Motion Picture
and Television Fund,
(AMBAC), 5.35%, 1/1/24 $ 2,990,724
Aaa AAA 5,000 Los Angeles County Capital
Asset Leasing
Corporation, "Yield
Enhancement Securities,"
(AMBAC), Variable, 12/1/08 4,926,150
INSURED LEASE REVENUE/
CERTIFICATES OF
PARTICIPATION - CONTINUED
Aaa AAA $ 7,700 Moulton Niguel Water
District, (AMBAC),
4.80%, 9/1/17 6,436,276
Aaa AAA 4,350 Stockton, California
Wastewater Treatment
Plant, 6.80%, 9/1/24 4,630,314
Aaa AAA 13,985 Visalia Unified School
District, (MBIA),
0%, 12/1/17 3,091,804
------------
$ 22,075,268
------------
INSURED TAX ALLOCATION - 0.8%
Aaa AAA $ 4,500 City of San Jose
Redevelopment Agency,
4.75%, 8/1/24 $ 3,643,515
------------
INSURED TRANSPORTATION - 2.9%
Aaa AAA 10,000 Port of Oakland California,
(AMT), (BIGI), 0%, 11/1/19 $ 1,680,200
Aaa AAA 10,000 Airports Commission City
and County of San
Francisco, California,
San Francisco International
Airport, (MBIA),
6.75%, 5/1/13 10,591,000
------------
$ 12,271,200
------------
INSURED UTILITIES - 7.5%
Aaa AAA $ 5,700 Anaheim Public Financing
Authority, Anaheim
Electric Utility,
5.75%, 10/1/22 $ 5,428,281
Aaa AAA 8,000 Northern California Power
Agency "RIBS," (MBIA),
Variable, 9/2/25 (1) 8,471,520
Aaa AAA 3,500 Sacramento Municipal
Utilities District,
6.375%, 8/15/22 3,564,995
Aaa AAA 4,000 Southern California Public
Power Authority, (FGIC),
5.35%, 7/1/12 3,759,480
Aaa AAA 6,915 Southern California Public
Power Authority,
5.00%, 1/1/20 5,941,575
Aaa AAA 5,000 Southern California Public
Power Authority,
5.75%, 7/1/21 4,765,600
------------
$ 31,931,451
------------
INSURED WATER & SEWER - 2.4%
Aaa AAA $ 5,000 East Bay Municipal Utility
District "Yield Curve
Notes," Variable,
6/1/08 (1) $ 4,455,400
Aaa AAA 3,500 San Diego Public Facilities
Financing Authority
5.00%, 5/15/23 2,981,055
Aaa AAA 3,000 San Diego County Water
Authority, "RITES",
(FGIC), Variable,
4/22/09(1) 2,944,200
------------
$ 10,380,655
------------
LEASE REVENUE/CERTIFICATES
OF PARTICIPATION - 17.7%
A1 AA- $ 2,945 City of Beverly Hills,
California, 6.75%, 6/1/19 $ 3,006,874
A1 A- 7,130 California State Public
Works Board, Various
University of California
Projects, 5.00%, 6/1/23 5,787,065
A1 A- 7,000 California State Public
Works Board, Various
University of California
Projects, 5.50%, 6/1/14 6,338,150
A1 A- 3,000 California State Public
Works Board, Various
University of California
Projects, 5.50%, 6/1/10 2,778,660
A A- 3,500 California State Public
Works Board, California
State Prison-Susanville,
5.375%, 6/1/18 3,065,685
A A- 2,800 California State Public
Works Board, California
State Prison-Susanville,
5.375%, 6/1/12 2,527,812
LEASE REVENUE/CERTIFICATES
OF PARTICIPATION -
CONTINUED
A1 A- $10,000 California State Public
Works Board, Various
University of California
Projects, 5.25%, 6/1/20 8,504,600
A1 A- 14,325 California State Public
Works Board, Various
University of California
Projects, 5.50%, 6/1/19 12,733,063
A BBB 2,750 City of Inglewood,
California, Civic Center
Improvement Project,
7.00%, 8/1/19 2,810,363
A A- 4,590 County of Los Angeles,
Disney Parking Project,
0%, 3/1/15 1,171,781
A A- 3,100 County of Los Angeles,
Disney Parking Project,
0%, 3/1/20 561,565
A A- 1,925 County of Los Angeles,
Disney Parking Project,
0%, 3/1/17 428,428
A A- 5,000 County of Los Angeles,
Disney Parking Project,
0%, 9/1/17 1,075,250
A A- 5,370 County of Los Angeles,
Disney Parking Project,
0%, 3/1/18 1,115,886
A A- 1,000 County of Los Angeles,
Disney Parking Project,
6.50%, 3/1/23 997,360
NR NR 14,000 Los Angeles County Capital
Asset Leasing Corporation
Marina del Rey,
6.50%, 7/1/08 (5) 13,706,840
Aa AA 2,700 Orange County Water
District, 5.00%, 8/15/18 2,261,925
NR A- 2,360 Richmond Joint Powers
Financing Authority,
7.00%, 5/15/07 2,479,392
Aa A+ 4,000 City of Sacramento
Financing Authority,
5.40%, 11/1/20 3,596,720
NR BBB 1,000 Watsonville Mammoth Lakes,
California, 7.875%, 6/1/11 1,066,420
------------
$ 76,013,839
------------
MISCELLANEOUS - 2.8%
A NR $ 5,445 Association of Bay Area
Governments, Municipal
Financing Pool,
8.05%, 9/1/10 (6) $ 5,820,215
NR NR 6,500 VRDC-IVRC Trust, Series
1993 F, Variable,
6/29/00 (1) 6,220,760
------------
$ 12,040,975
------------
SOLID WASTE - 0.6%
Baa1 NR $ 2,350 Mojave Desert and Mountain
Solid Waste Joint Powers
Authority, (AMT),
7.875%, 6/1/20 $ 2,506,252
------------
SPECIAL TAX - 6.1%
NR NR $ 2,185 City of Fairfield, Green
Valley Road-Mangels
Boulevard Extension
Assessment District,
7.375%, 9/2/18 $ 2,222,766
NR NR 995 City of Fairfield, Green
Valley Road-Mangels
Boulevard Extension
Assessment District,
8.00%, 9/2/11 1,025,407
NR NR 3,000 Lincoln Unified School
District, 7.625%, 9/1/21 3,124,980
Baa NR 16,000 Pleasanton Joint Powers
Financing Authority,
6.15%, 9/2/12 15,533,600
NR NR 3,000 County of Riverside
Community Facilities
District, 7.55%, 9/1/17 3,048,120
NR NR 1,065 County of Riverside
Community Facilities
District, Winchester
Ranch, 8.20%, 9/1/14 1,071,603
------------
$ 26,026,476
------------
TAX ALLOCATION - 9.1%
NR BBB+ $ 2,500 City of Buena Park
Community Redevelopment
Agency, 7.10%, 9/1/14 $ 2,476,400
NR BR 2,945 City of Commerce Joint
Powers Financing
Authority, 8.00%, 3/1/22 3,110,126
NR BBB 5,000 County of Contra Costa
Public Financing
Authority, 7.10%, 8/1/22 5,077,450
NR BBB 3,910 Fontana Public Financing
Authority, Downtown
Redevelopment Project
7.00%, 9/1/21 3,909,609
NR BBB 8,220 Fontana Redevelopment
Agency, Jurupa Hills
Redevelopment Project
Area, 7.00%, 10/1/14 8,253,620
NR BBB 2,500 City of Pittsburg
Redevelopment Agency,
7.40%, 8/15/20 2,591,100
NR BBB 600 City of Rancho Mirage Joint
Powers Financing
Authority, 7.50%, 4/1/17 627,408
NR BBB 2,500 County of Riverside
Redevelopment Agency,
7.50%, 10/1/26 2,595,050
NR BBB 5,605 San Carlos Redevelopment
Agency, 7.10%, 9/1/17 5,707,459
NR NR 1,400 City of Simi Valley
Community Development
Agency, 8.20%, 9/1/12 1,418,158
Baa1 BBB+ 3,000 Westminster Redevelopment
Agency, 7.30%, 8/1/21 3,049,920
------------
$ 38,816,300
------------
TRANSPORTATION - 6.0%
NR BBB $ 1,250 Guam Airport Authority,
(AMT), 6.60%, 10/1/10 $ 1,249,975
NR BBB 5,350 Guam Airport Authority,
(AMT), 6.70%, 10/1/23 5,316,242
Aa AA- 2,000 City of Long Beach Harbor
Revenue Bonds, (AMT),
7.25%, 5/15/19 2,098,340
A1 A- 1,400 County of Orange,
California Airport
Revenue Bonds,
8.125%, 7/1/16 1,451,954
Baa3 BB+ 840 Puerto Rico Ports
Authority, American
Airlines Project, (AMT),
6.30%, 6/1/23 790,541
NR NR 12,000 San Joaquin Hills
Transportation Corridor
Agency, Toll Road Revenue
Bonds, (Fitch: rated
BBB), 0%, 1/1/14 3,177,720
NR NR 35,975 San Joaquin Hills
Transportation Corridor
Agency, Toll Road Revenue
Bonds, (Fitch: rated
BBB), 0%, 1/1/27 3,674,487
NR NR 4,940 San Joaquin Hills
Transportation Corridor
Agency, Toll Road Revenue
Bonds, (Fitch: rated
BBB), 7.00%, 1/1/30 4,894,700
Baa1 BBB 1,500 Stockton Port District,
7.95%, 1/1/05 1,594,515
Baa1 BBB 1,500 Stockton Port District,
8.10%, 1/1/14 1,621,395
------------
$ 25,869,869
------------
UTILITIES - 1.9%
Aa AA- $ 7,070 Southern California Public
Power Authority,
0%, 7/1/15 $ 2,011,415
Aa AA- 5,000 Southern California Public
Power Authority,
5.50%, 7/1/20 4,573,700
Aa AA 1,490 Southern California Public
Power Authority,
6.875%, 7/1/15 1,530,692
------------
$ 8,115,807
------------
WATER AND SEWER - 2.4%
Aa AA $ 1,000 California State Department
of Water Resources,
5.75%, 12/1/19 $ 951,910
NR BBB 3,190 Orange Cove Irrigation
District, 6.625%, 2/1/17 3,173,189
Aa AA- 7,015 City of Pasadena, Water
Revenue Bonds,
5.00%, 7/1/18 6,015,924
------------
$ 10,141,023
------------
TOTAL TAX-EXEMPT
INVESTMENTS
(identified cost,
$412,848,377) $428,540,602
============
(1) The above security has been issued as an inverse floater bond.
(2) Non-income producing security.
(3) Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
(4) When-issued security.
(5) At March 31, 1995, the market value of securities segregated to cover
when-issued securities amounted to $13,706,840.
(6) At March 31, 1995, the market value of securities segregated to cover
margin requirements on open financial futures contracts amounted to
$5,820,215.
The Portfolio invests primarily in debt securities issued by California
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 March 31, 1995, 22.6% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guarenty assurance agencies. The aggregate percentage by financial
institution ranged from 3.9% to 11.1% of total investments.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$412,848,377) $428,540,602
Cash 168
Receivable for investments sold 7,710,530
Interest receivable 7,186,431
Deferred organization expenses (Note 1D) 17,384
-------------
Total assets $443,455,115
LIABILITIES:
Demand note payable (Note 5) $2,743,000
Payable for investments purchased 9,054,878
Payable for when-issued securities (Note 1F) 5,000,000
Payable to affiliates --
Custodian fee 5,202
Trustees' fees 4,583
Accrued expenses 5,318
----------
Total liabilities 16,812,981
-------------
NET ASSETS applicable to investor's interest in Portfolio $426,642,134
============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $411,284,377
Unrealized appreciation of investments and
financial futures contracts (computed on the
basis of identified cost) 15,357,757
-------------
Total $426,642,134
============
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the six months ended March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income $ 14,593,296
-------------
Expenses --
Investment adviser fee (Note 2) $1,071,771
Compensation of Trustees not members of the
Investment Adviser's organization 9,163
Custodian fee (Note 2) 66,871
Interest expense (Note 5) 34,442
Legal and accounting services 33,470
Bond pricing 6,384
Amortization of organization expense (Note 1D) 2,804
Miscellaneous 5,259
-------------
Total expenses 1,230,164
-------------
Net investment income $ 13,363,132
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) --
Investment transactions (identified
cost basis) $(16,868,757)
Financial futures contracts (217,665)
-------------
Net realized loss on investments $(17,086,422)
Change in unrealized appreciation
(depreciation) --
Investments $ 25,514,964
Financial futures contracts (811,278)
-------------
Change in net unrealized appreciation 24,703,686
-------------
Net realized and unrealized gain on
investments $ 7,617,264
-------------
Net increase in net assets from
operations $ 20,980,396
============
See notes to financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED
SEPTEMBER 30,
------------------------------------
1995* 1994**
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 13,363,132 $ 13,943,369
Net realized loss on
investments (17,086,422) (10,624,666)
Change in unrealized
appreciation (depreciation) of
investments 24,703,686 (942,071)
------------- -------------
Net increase in net assets
from operations $ 20,980,396 $ 2,376,632
------------- -------------
Capital transactions --
Contributions $ 22,254,971 $ 24,605,354
Withdrawals (61,724,634) (49,109,598)
------------- -------------
Decrease in net assets
resulting from capital
transactions $ (39,469,663) $ (24,504,244)
------------- -------------
Total decrease in net assets $ (18,489,267) $ (22,127,612)
NET ASSETS:
At beginning of period 445,131,401 467,259,013
------------- -------------
At end of period $ 426,642,134 $ 445,131,401
============= =============
*For the six months ended March 31, 1995 (unaudited).
**For the six months ended September 30, 1994. The Portfolio changed its
fiscal year end from March 31, to September 30, effective September 30, 1994.
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
YEAR ENDED
----------------------------
SEPTEMBER 30,
---------------- MARCH 31,
1995*** 1994** 1994*
---- ---- ----
RATIOS (As a percentage of average net assets): 0.59%+ 0.57%+ 0.55%+
Expenses
Net investment income 6.36%+ 6.09%+ 5.72%+
PORTFOLIO TURNOVER 38% 40% 91%
+Computed on an annualized basis.
*For the period from the start of business, May 3, 1993 to March 31, 1994.
**For the six months ended September 30, 1994. The Portfolio changed its fiscal
year end from March 31, to September 30, effective September 30, 1994.
***For the six months ended March 31, 1995 (unaudited).
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES
California Tax Free Portfolio (the Portfolio) is registered under the Investment
Company Act of 1940 as a diversified open-end investment company which was
organized as a trust under the laws of the State of New York on May 1, 1992. The
Declaration of Trust permits the Trustees to issue interests in the Portfolio.
The following is a summary of significant accounting policies of the Portfolio.
The policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts listed on commodity
exchanges are valued at closing settlement prices. Short-term obligations,
maturing in sixty days or less, are valued at amortized cost, which approximates
value. Investments for which valuations or market quotations are unavailable are
valued at fair value using methods determined in good faith by or at the
direction of the Trustees.
B. INCOME -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes.
C. INCOME TAXES -- The Portfolio is treated as a partnership for Federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally must
satisfy the applicable source of income and diversification requirements (under
the Internal Revenue Code) in order for its investors to satisfy them. The
Portfolio will allocate at least annually among its investors each investors'
distributive share of the Portfolio's 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 Portfolio 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 the 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 the 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, the 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 the 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 the Portfolio. The Portfolio's
investment in financial futures contracts is designed only to hedge against
anticipated future changes in interest rates. Should interest rates move
unexpectedly, the Portfolio may not achieve the anticipated benefits of the
financial futures contracts and may realize a loss.
- ------------------------------------------------------------------------------
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Portfolio may engage in
when-issued or delayed delivery transactions. The Portfolio records when- issued
securities on trade date and maintains security positions such that sufficient
liquid assets will be available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked to
market daily and begin accruing interest on settlement date.
G. OTHER -- Investment transactions are accounted for on a trade date basis.
H. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
March 31, 1995 and for the six month period then ended have not been audited by
independent certified public accountants, but in the opinion of the Portfolio's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
- ------------------------------------------------------------------------------
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to the Portfolio. The fee
is based upon a percentage of average daily net assets plus a percentage of
gross income, (i.e., income other than gains from the sale of securities). For
the six month period ended March 31, 1995, the annualized fee was equivalent to
0.51% of the Portfolio's average daily net assets and amounted to $1,071,771.
Except as to Trustees of the Portfolio who are not members of EVM's or BMR's
organization, officers and Trustees receive remuneration for their service to
the Portfolio out of such investment adviser fee. Investors Bank & Trust Company
(IBT), an affiliate of EVM and BMR, serves as custodian of the Portfolio.
Pursuant to the custodian agreement, IBT receives a fee reduced by credits which
are determined based on the average daily cash balances the Portfolio maintains
with IBT. Certain of the officers and Trustees of the Portfolio are officers and
directors/trustees of the above organizations. Trustees of the Portfolio that
are not affiliated with the Investment Advisor may elect to defer receipt of all
or a portion of their annual fees in accordance with the terms of the Trustees
Deferred Compensation Plan. For the six months ended March 31, 1995, no
significant amounts have been deferred.
- ------------------------------------------------------------------------------
(3) INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities and
short term obligations, aggregated $159,245,046 and $173,647,824, respectively,
for the six month period ended March 31, 1995.
- ------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of investments owned
at March 31, 1995, as computed on a federal income tax basis, are as follows:
Aggregate cost $412,848,377
============
Gross unrealized depreciation $ 5,351,745
Gross unrealized appreciation 21,043,970
----------
Net unrealized appreciation $ 15,692,225
============
- ------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM in a $120 million unsecured line of credit agreement with a bank. The line
of credit consists of a $20 million committed facility and a $100 million
discretionary facility. Borrowings will be made by the Portfolio solely to
facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Interest is charged to each portfolio or fund based on its
borrowings at an amount above either the bank's adjusted certificate of deposit
rate, a variable adjusted certificate of deposit rate, or a federal funds
effective rate. In addition, a fee computed at an annual rate of 1/4 of 1% on
the $20 million committed facility and on the daily unused portion of the $100
million discretionary facility is allocated among the participating funds and
portfolios at the end of each quarter. At March 31, 1995 the Portfolio had an
outstanding balance pursuant to this line of credit of $2,743,000.
- ------------------------------------------------------------------------------
(6) FINANCIAL INSTRUMENTS
The Portfolio regularly trades in financial instruments with off-balance sheet
risk in the normal course of its 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 the 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 March 31,
1995 is as follows:
FUTURES CONTRACTS NET UNREALIZED
EXPIRATION DATE CONTRACTS POSITION DEPRECIATION
- ----------------- --------- -------- --------------
6/95 430 U.S. Treasury Bonds Short $ 334,468
=========
At March 31, 1995 the Portfolio had sufficient cash and/or securities to cover
margin requirements on open futures contracts.
<PAGE>
INVESTMENT MANAGEMENT
EV MARATHON OFFICERS INDEPENDENT TRUSTEES
CALIFORNIA THOMAS J. FETTER DONALD R. DWIGHT
MUNICIPALS FUND President President, Dwight Partners, Inc.
24 Federal Street Chairman, Newspapers of
Boston, MA 02110 JAMES B. HAWKES New England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
ROBERT B. MacINTOSH Jacob H. Schiff Professor of
Vice President Investment Banking, Harvard
University Graduate School
JAMES L. O'CONNOR of Business Administration
Treasurer
NORMAN H. REAMER
THOMAS OTIS President and Director,
Secretary United Asset Management
Corporation
JAMES F. ALBAN
Assistant Treasurer JOHN L. THORNDIKE
Director, Fiduciary Company
DOUGLAS C. MILLER Incorporated
Assistant Treasurer
JACK L. TREYNOR
JANET E. SANDERS Investment Adviser and Consultant
Assistant Treasurer and
Assistant Secretary
A. JOHN MURPHY
Assistant Secretary
- --------------------------------------------------------------------------------
CALIFORNIA OFFICERS INDEPENDENT TRUSTEES
TAX FREE THOMAS J. FETTER DONALD R. DWIGHT
PORTFOLIO President President, Dwight Partners, Inc.
24 Federal Street Chairman, Newspapers of
Boston, MA 02110 JAMES B. HAWKES New England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
ROBERT B. MacINTOSH Jacob H. Schiff Professor of
Vice President and Investment Banking, Harvard
Portfolio Manager University Graduate School
JAMES L. O'CONNOR of Business Administration
Treasurer
NORMAN H. REAMER
THOMAS OTIS President and Director,
Secretary United Asset Management
Corporation
JAMES F. ALBAN
Assistant Treasurer JOHN L. THORNDIKE
Director, Fiduciary Company
DOUGLAS C. MILLER Incorporated
Assistant Treasurer
JACK L. TREYNOR
JANET E. SANDERS Investment Adviser and Consultant
Assistant Treasurer and
Assistant Secretary
A. JOHN MURPHY
Assistant Secretary
<PAGE>
INVESTMENT ADVISER OF
CALIFORNIA MUNICIPALS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV MARATHON CALIFORNIA
MUNICIPALS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
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.
EV MARATHON
CALIFORNIA MUNICIPALS FUND
24 FEDERAL STREET
BOSTON, MA 02110
M-CASRC
EV MARATHON
CALIFORNIA
MUNICIPALS FUND
SEMI-ANNUAL
SHAREHOLDER REPORT
MARCH 31, 1995
