<PAGE>
[LOGO OF EATON VANCE MUTUAL FUNDS [PHOTO OF INSTITUTION APPEARS
APPEARS HERE] HERE]
Semiannual Report February 28, 1997
Alabama
Arkansas
[PHOTO OF E A T O N V A N C E Georgia
HIGHWAY
APPEARS HERE] MUNICIPALS Kentucky
TRUST
Louisiana
MARATHON
Maryland
Global Management-Global Distribution Missouri
North Carolina
Oregon
South Carolina
[PHOTO OF BRIDGE APPEARS HERE]
Tennessee
Virginia
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
LETTER TO SHAREHOLDERS
[PHOTO OF THOMAS J. FETTER, PRESIDENT
APPEARS HERE]
The municipal bond market in 1996 was characterized by heightened volatility as
investors reacted to a seesaw interest rate environment and a politically-
charged debate over the possibility of a flat tax. At the outset of the year,
the economy seemed poised for a slowdown, and the Federal Reserve appeared ready
to revive growth through interest rate reductions. In January, 1996, the Fed
lowered the Federal Funds Rate -- the rate banks charge each other for overnight
loans and a key short-term interest rate barometer -- 5.25%. However, it soon
became apparent that the economy was stronger than anticipated and that
inflation, while still at a low level, would bear further watching. Long-term
bond yields climbed steadily higher, reaching their peak in mid-June.
Investors were heartened by economic reports in the second half of the year that
showed a scenario of slow growth and low inflation. In addition, the federal
budget deficit, which had ballooned in the 1980s and had been so long the bane
of fixed-income investors, fell to just 1.5% of gross domestic product. Against
that favorable backdrop, bond yields finished the year at lower levels than at
mid-year.
According to the Public Securities Association, state and local governments sold
roughly $183 billion in securities in 1996, and will sell approximately the same
volume in 1997. That is sharply lower than the supply levels for 1995 and
earlier. With greatly reduced supply and increasing competition for bonds,
municipal bonds should retain their value among tax-conscious investors.
We believe an investment in municipal bonds continues to represent good value
for several reasons. First, the nation's economy should continue to grow at a
fairly modest pace in 1997, which is favorable for bonds in general. Second,
due to public demand, it is increasingly likely that Congress and the Clinton
Administration will make progress toward a balanced budget. Third, with the
equity markets having turned in two consecutive years of performances well above
historical averages, investors may look for alternatives within the bond
markets. Finally, taxes remain a burden and, for most investors, municipal
bonds are the last remaining vehicle for tax relief. For these reasons, we
believe that the municipal market will continue to be a favored avenue for
tax-conscious investors. Eaton Vance's municipal bond department will continue
to seek high, tax-free current income for shareholders.
Tax-exempt bonds yield 81% of Treasury yields
5.50% 8.59%
30-year AAA General Taxable equivalent yield of investment
Obligation (GO) Bonds* for couple in 36% tax bracket
6.80%
30-year Treasury Bond
Principal and interest payments of Treasury securities are guaranteed by the
U.S. government.
*GO yield is a compilation of a representative variety of general obligations
and is not necessarily representative of the Funds' yields. Statistics as of
February 28, 1997.
Past performance is not indicative of future results.
Source: Bloomberg, L.P.
Sincerely,
/s/ Thomas J. Fetter,
Thomas J. Fetter,
President
April 4, 1997
- -------------------------------------------------------------------------------
Fund shares are not guaranteed 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>
EV Marathon Alabama Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF TIMOTHY T. BROWSE,
PORTFOLIO MANAGER, APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. Since the mid-1980's Alabama's economy has diversified into the service,
trade and financial sectors, as its traditional textile and food processing
industries have faced increasing competition.
. In the past year, the state has seen an increase in economic growth and
employment. The unemployment rate, which stood at 5.7% in January, 1996,
dropped to 4.4% by January, 1997.
. Aided by state government economic incentives, manufacturers Briggs &
Stratton, British Steel, Lockheed Martin, and Mercedes Benz have invested
approximately $9 billion in Alabama since 1993.
. Alabama's finances are well managed, with low spending growth and a solid AA-
rating from Standard & Poor's on the state's general obligation debt.
Management Update
- --------------------------------------------------------------------------------
. The overall bond market was increasingly volatile in 1996, as reports of
lower inflation alternated with signs of stronger economic growth.
. The new issue market in Alabama has provided bonds with good credit quality,
attractive yields, and appropriate call protection and structure.
. During the period, management has sought bonds that perform well in a
declining rate environment to balance the Portfolio's existing holdings of
higher coupon, defensive issues. This helps maintain the desired "barbell"
structure of the Portfolio.
. We continue to direct efforts towards maintaining an average dollar price
below par, improving the Portfolio's call protection, and addition lower-
coupon bonds.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
4.7%./1/
. This return resulted from an increase in net asset value per share to $10.71
on February 28, 1997 from $10.46 on August 31, 1996, and the reinvestment of
$0.238 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.71 per
share, the Fund's distribution rate on February 28, 1997 was 4.34%.
. To equal 4.34% in a taxable investment, a couple in the 39.20% combined
federal and state tax bracket would need a yield of 7.14%.
Your Investment at Work
- --------------------------------------------------------------------------------
City of Bessemer, Alabama -- [GRAPHIC OF HYDROWORKER APPEARS HERE]
Water Revenue Warrants
. The proceeds from the issue of these warrants are being used, in part, to
finance improvements to the city of Bessemer's water distribution system.
. This system, which serves over 26,000 commercial and residential customers,
covers a 51-square mile area, including the communities of Hueytown,
Midfield, and Lipscomb.
. Improvements include a water intake, treatment and supply facility, and a new
20-mile supply line.
. The bonds are insured by AMBAC Indemnity Corp.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributors reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these Investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (or net asset value)
- --------------------------------------------------------------------------------
One Year 4.9%
Five Years N.A.
Life of Fund (5/1/92) 6.6
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One Year -0.1%
Five Years N.A.
Life of Fund (5/1/92) 6.3
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Insured water & sewer 20.6%/5/
Industrial revenue/pollution control 13.3%
Hospitals 12.0%
Insured utilities 9.9%/5/
Insured general obligations 8.4%/5/
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 66
Average Maturity 22.3 Yrs.
Effective Maturity 12.4 Yrs.
Average Rating AA-
Average Call 7.1 Yrs.
Average Dollar Price $102.13
3
<PAGE>
EV Marathon Arkansas Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF TIMOTHY T. BROWSE,
PORTFOLIO MANAGER APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. Arkansas' overall economy has slowed somewhat in the past year after several
years of growth.
. Non-manufacturing jobs -- including the service and trade sectors -- have
increased, however. This trend is expected to continue through 1997.
. The state's finances have been well managed, with increasing reserves,
operating surpluses, and low debt levels. Revenues for FY1997 exceeded those
for FY1996 by nearly 3% and continue to closely match forecasts.
. The economic outlook is positive, with an increasing population fueling the
housing and construction sectors. Other key sectors, such as food processing
and manufacturing, are expected to improve.
Management Update
- --------------------------------------------------------------------------------
. The overall bond market was increasingly volatile in 1996, as reports of
lower inflation alternated with signs of stronger economic growth.
. In Arkansas, management has focused on maintaining an average dollar price
below par, improving the Portfolio's call protection, and adding lower-coupon
bonds to balance our existing holdings of higher coupon, defensive issues.
This also helps maintain the desired "barbell" structure of the Portfolio.
. One of the strengths of Eaton Vance's municipal bond department is our
research staff, which is adept at finding non-rated or lower-rated bonds that
can offer significantly higher yield without adding significantly higher risk
to the Portfolio.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
4.2%./1/
. This return resulted from an increase in net asset value per share to $10.38
on February 28, 1997 from $10.19 on August 31, 1996, and the reinvestment of
$0.230 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.38 per
share, the Fund's distribution rate on February 28, 1997 was 4.34%.
. To equal 4.34% in a taxable investment, a couple in the 40.48% combined
federal and state tax bracket would need a yield of 7.29%.
Your Investment at Work
- --------------------------------------------------------------------------------
City of Jonesboro, Arkansas -- Industrial [GRAPHIC OF FACTORY APPEARS
Development Refunding Revenue Bonds HERE]
. Proceeds of this bond issue will be used to refund a 1982 issue which had
financed a rice milling facility for Anheuser-Busch Companies, Inc.
. The rice milling facility is owned by Busch Agricultural Resources, Inc., a
subsidiary of Anheuser Busch, which has operations throughout the United
States. The rice milling facility is part of the parent company's beer-
related businesses.
. This bond issue helps spur growth in food processing, one of Arkansas' key
industries.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to Federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 3.5%
Five Years N.A.
Life of Fund (10/2/92) 5.9
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year -1.5%
Five Years N.A.
Life of Fund (10/2/92) 5.6
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Industrial revenue/pollution control 17.5%
Hospitals 17.4%
Housing 10.2%
Utilities 8.7%
Insured utilities 8.5%/5/
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 57
Average Maturity 20.3 Yrs.
Effective Maturity 12.7 Yrs.
Average Rating A+
Average Call 8.7 Yrs.
Average Dollar Price $100.22
4
<PAGE>
EV Marathon Georgia Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF CYNTHIA CLEMSON,
PORTFOLIO MANAGER APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. Georgia has a healthy mix of economic factors, including strong growth, low
unemployment, rising personal income, and increasing tax revenues.
. The state's economic base includes manufacturing construction, finance,
insurance and real estate
. The population of Georgia increased by 10.7% between 1990 and 1995, double
the rate of the U.S.
. The state's finances are well managed. Its successful lottery has added
significantly to reserves, and debt service for FY1997 has been pre-funded.
Management Discussion
- --------------------------------------------------------------------------------
. The Georgia municipal bond market has been increasingly dominated by insured
bonds, resulting in narrowing quality spreads.
. Insurance of municipal bonds has been low during the past six months.
. Management is currently seeking value in attractively priced sectors, such as
insured hospitals.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
4.8%./1/
. This return resulted from an increase in net asset value per share to $10.03
on February 28, 1997 from $9.81 on August 31, 1996, and the reinvestment of
$0.233 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.03 per
share, the Fund's distribution rate on February 28, 1997 was 4.53%.
. To equal 4.53% in a taxable investment, a couple in the 39.84% combined
federal and state tax bracket would need a yield of 7.53%.
Your Investment at Work
- --------------------------------------------------------------------------------
Hospital Authority of Liberty County, [GRAPHIC OF MEDICAL SYMBOL
Georgia -- Liberty Regional Medical Center APPEARS HERE]
. Proceeds of this bond issue will be used to help finance the acquisition,
construction, and equipping of a replacement hospital for Liberty Regional
Medical Center. The new facility will retain the same name.
. The facility is located in Liberty County, approximately 30 miles south of
Savannah, Georgia.
. Construction commenced in December, 1996, and is scheduled to take 14 to 18
months for completion.
. The bonds are insured by MBLA Insurance Corp.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
flucuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 4.6%
Five Years 5.9
Life of Fund (12/23/91) 5.5
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One Year -0.4%
Five Years 5.6
Life of Fund (12/23/91) 5.3
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR GRAPH Insured Hospital 18.4%/5/
APPEARS HERE]
Utilities 12.9%
Hospitals 12.5%
Housing 11.4%
General obligation 7.8%
APPEARS HERE]
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 64
Average Maturity 21.0 Yrs.
Effective Maturity 13.1 Yrs.
Average Rating Aa-
Average Call 8.8 Yrs.
Average Dollar Price $102.22
5
<PAGE>
EV Marathon Kentucky Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF NICOLE ANDERES,
PORTFOLIO MANAGER APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. Kentucky is fortunate to have a healthy economy, with strength in
manufacturing, construction, service and trade.
. Manufacturing and other goods--producing industries, which have been growing
at twice the rate for the U.S. are expected to contribute almost half of
Kentucky's overall growth over the next two years.
. Service and trade, also growing at healthy rates, are expected to contribute
14.5% and 16.7% of the state's growth during the next two years.
. Exports have also been a big part of Kentucky's economic success. Between
1989 and 1994, the rate of export growth was double the rate of the state's
overall economic growth.
Management Update
- --------------------------------------------------------------------------------
. The Kentucky Municipals Portfolio came under new management in November,
1996. Since then, hedging has been reduced, and overall yields have been
boosted without a significant increase in risk.
. Specifically, bonds with poor structure and call features have been swapped
for bonds with either price appreciation potential or higher yields.
. As opportunities arise, management will continue to take steps to increase
call protection, while improving the Portfolio's structure by adding premium
and discount bonds and reducing current coupon bonds.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
5.0%./1/
. This return resulted from an increase in net asset value per share to $10.23
on February 28, 1997 from $9.97 on August 31, 1996, and the reinvestment of
$0.230 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.23 per
share, the Fund's distribution rate on February 28, 1997 was 4.40%.
. To equal 4.40% in a taxable investment, a couple in the 43.48% combined
federal and state tax bracket would need a yield of 7.78%.
Your Investment at Work
- --------------------------------------------------------------------------------
County of Kenton, Kentucky [GRAPHIC OF HOUSE APPEARS HERE]
Industrial Revenue Refunding Bonds -
Highland Terrace Project
. This bond issue will serve as an FHA mortgage note for the Highland Terrace
Project, a 137-unit apartment complex located in Covington, Kentucky. These
apartments provide low-income housing for needy Kentucky residents.
. The federal agency of Housing and Urban Development (HUD) is responsible for
the regulation, supervision and inspection of the project.
. The bonds are FHA-insured, and provide added yield to the Portfolio without
significantly higher risk.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to Federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 4.6%
Five Years 6.2
Life of Fund (12/23/91) 5.8
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year -0.4%
Five Years 5.9
Life of Fund (12/23/91) 5.7
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Industrial revenue/pollution control 21.0%
Lease revenue 19.0%
Insured Hospitals 10.3%
Transportation 6.9%
Insured water & sewer 6.1%/5/
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 81
Average Maturity 21.6 Yrs.
Effective Maturity 10.4 Yrs.
Average Rating A+
Average Call 7.0 Yrs.
Average Dollar Price $102.19
6
<PAGE>
EV Marathon Louisiana Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF ROBERT B. MACINTOSH,
PORTFOLIO MANAGER APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. Louisiana's economy has expanded at a healthy rate since the recession of
1990-91, aided in part by the chemical industry, where heavy capital
investment also spurred growth in the construction industry.
. The oil and gas industries, significant contributors to the economy, have
recovered from difficult years. Related products and services have been
buoyed by the recovery.
. The gaming industry has grown rapidly in Louisiana. From 1993 to 1996, the
state added 17,600 new jobs in river boat gambling alone.
. Louisiana is hindered financially by the lack of a stable tax base, relying
instead on cyclical taxes. Nevertheless, the state government is working on a
more permanent tax structure. In the meantime, Louisiana has produced budget
surpluses for the past several years.
Management Update
- --------------------------------------------------------------------------------
. This Fund owns several industrial development bonds (IDBs), due to the
significant presence of heavy industry in Louisiana. Examples include
International Paper, Mobil Oil, and Gulf States Utilities.
. Issuance of municipal bonds has been low during the past six months, so new
issues have been added on a selective basis only.
. The Fund holds a small percentage of bonds from Puerto Rico and Guam because
management has found higher-yield Louisiana bonds of similar credit quality.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
4.9%./1/
. This return resulted from an increase in net asset value per share to $10.20
on February 28, 1997 from $9.96 on August 31, 1996, and the reinvestment of
$0.246 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.20 per
share, the Fund's distribution rate on February 28, 1997 was 4.73%.
. To equal 4.73% in a taxable investment, a couple in the 39.84% combined
federal and state tax bracket would need a yield of 7.86%.
Your Investment at Work
- --------------------------------------------------------------------------------
Parish of DeSoto, Louisiana, [GRAPHIC OF FACTORY APPEARS HERE]
Environmental Improvement Revenue
Bonds -- International Paper Company
. This bond issue financed a complex of solid waste disposal and sewage
facilities, located at International Paper Company's Mansfield Mill site.
. The project included landfill improvements and additional sewage facilities
for the Mansfield Mill.
. The bonds, issued by the parish of DeSoto, Louisiana, not only helped provide
new jobs to the state, but also served an important environmental need.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to Federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 5.6%
Five Years N.A.
Life of Fund (10/2/92) 6.0
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One Year 0.6%
Five Years N.A.
Life of Fund (10/2/92) 5.6
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Housing 31.1%
???? 16.1%
Industrial revenue/pollution control 11.5%
Insured special tax revenue 9.1%/5/
Hospitals 5.9%
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 45
Average Maturity 26.6 Yrs.
Effective Maturity 13.6 Yrs.
Average Rating AA-
Average Call 10.9 Yrs.
Average Dollar Price $101.61
7
<PAGE>
EV Marathon Maryland Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF TIMOTHY T. BROWSE,
PORTFOLIO MANAGER, APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. Maryland's economy is healthy and well diversified, with low unemployment,
high personal income and wealth levels, and sound state finances.
. Since the recession of 1990-1992, Maryland's economy has been somewhat slow
to recover. Employment is forecast to grow at a 1.4% annual rate in 1997 and
1998, versus an average of 2.5% prior to the recession. Government employment
has also slowed due to budget cutbacks.
. The state has managed the slowdown well, curbing government spending and
attracting business in the service and trade sectors. Wholesale and retail
trade grew at over 3% annually in 1995-1996.
. As an added economic incentive, Maryland has proposed a personal tax cut,
designed to return $485 million to taxpayers and create new jobs.
Management Update
- --------------------------------------------------------------------------------
. The overall bond market was increasingly volatile in 1996, as reports of
lower inflation alternated with signs of stronger economic growth.
. An attractive new issue market in Maryland has allowed us to lighten up in
the hospital sector. We have also added to the university and water and sewer
sectors.
. Management has sought bonds that perform well in a declining rate environment
to balance the Portfolio's existing holdings of higher coupon, defensive
issues. This helps maintain the desired "barbell" structure of the Portfolio.
. We continue to direct efforts towards maintaining an average dollar price
below par, improving the Portfolio's call protection, and adding lower-coupon
bonds.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
4.6%./1/
. This return resulted from an increase in the net asset value per share to
$10.53 on February 28, 1997 from $10.30 on August 31, 1996, and the
reinvestment of $0.236 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.53 per
share, the Fund's distribution rate on February 28, 1997 was 4.39%.
. To equal 4.39% in a taxable investment, a couple in the 41.12% combined
federal and state tax bracket would need a yield of 7.46%.
Your Investment at Work
- --------------------------------------------------------------------------------
Maryland Health and Higher Education [GRAPHIC OF MEDICAL SYMBOL
Facilities Authority Revenue Bonds - APPEARS HERE]
Johns Hopkins Hospital
. The proceeds from this bond issue will be used to finance the construction
and equipping of the Alpha Commons Building, a new administrative office
complex, at Hopkins Hospital's Bayview Campus.
. The new facility will consolidate vital functions once spread throughout the
city of Baltimore.
. The proceeds will also be used to help renovate the Mason Lord Building,
which houses several clinics and treatment programs at the Hopkins Bayview
Campus.
. The bonds are insured by AMBAC Indemnity Corp.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 4.4%
Five Years 6.4
Life of Fund (2/3/92) 6.3
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year -0.6%
Five Years 6.1
Life of Fund (2/3/92) 6.1
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Hospitals 17.9%
Industrial revenue/pollution control 11.7%
Insured water & sewer 8.6%/5/
Insured hospitals 8.2%/5/
Housing 7.8%
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 64
Average Maturity 23.2 Yrs.
Effective Maturity 15.4 Yrs.
Average Rating AA-
Average Call 8.1 Yrs.
Average Dollar Price $101.60
8
<PAGE>
EV Marathon Missouri Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF CYNTHIA J. CLEMSON,
PORTFOLIO MANAGER, APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. Missouri is fortunate to have a well-diversified economy, with strong
manufacturing, trade, service and agriculture sectors. Railroad, trucking,
and air transport are also significant economic contributors.
. The auto sector, which includes Ford and Chrysler, has made a strong
contribution to the economy, while defense, which has downsized in recent
years, is stable.
. Missouri benefits from sound financial management. During the recession of
1990-92, the state incurred operating deficits. However, careful financial
control has led to surpluses in every year since 1993. State debt as a
percentage of personal income is 1.3%, versus the national median of 2.1%.
Management Update
- --------------------------------------------------------------------------------
. Our strategy continues to emphasize relative value, trading into sectors
which are relatively cheap.
. Bond structure remains a primary focus, and we continue to work on improving
call protection and Portfolio diversity.
. Insured bonds have begun to dominate the overall market in recent years,
significantly narrowing quality spreads. This has been especially true in
Missouri, where new issuance is typically thin.
. To counter the narrowing of spreads, we have sought opportunities in lower-or
non-rated health care and hospital bonds. Careful analysis has shown that
these credits can add yield without significantly adding to risk.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
5.2%./1/
. This return resulted from an increase in net asset value per share to $10.81
on February 28, 1997 from $10.51 on August 31, 1996, and the reinvestment of
$0.241 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.81 per
share, the Fund's distribution rate on February 28, 1997 was 4.36%.
. To equal 4.36% in a taxable investment, a couple in the 39.84% combined
federal and state tax bracket would need a yield of 7.25%.
Your Investment at Work
- --------------------------------------------------------------------------------
Missouri Health and Educational
Facilities Authority - Lake of the Ozarks [GRAPHIC OF MEDICAL SYMBOL
General Hospital, Series 1996 APPEARS HERE]
. This bond issue will help finance the costs of several capital projects for
Lake of the Ozarks General Hospital, a medical and surgical facility serving
residents in the central area of Missouri.
. The capital projects include renovating the hospital's interior, including
the outpatient and admissions area, constructing a new 5,900-square foot
addition, and purchasing several new pieces of equipment.
. The hospital, which currently has 99 beds and seven other medical clinics,
was founded in 1973.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to Federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 4.7%
Five Years N.A.
Life of Fund (5/1/92) 7.0
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year -0.3%
Five Years N.A.
Life of Fund (5/1/92) 6.6
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Insured hospitals 14.9%/5/
Industrial revenue/pollution control 13.8%
Hospitals 12.0%
Lease/certificates of participation 9.5%
Insured utilities 8.0%/5/
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 57
Average Maturity 22.0 Yrs.
Effective Maturity 14.6 Yrs.
Average Rating A+
Average Call 8.9 Yrs.
Average Dollar Price $98.76
9
<PAGE>
EV Marathon North Carolina Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF ROBERT B. MACINTOSH,
PORTFOLIO MANAGER, APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. Since the recession of 1990-91, North Carolina's economy has diversified away
from its traditional manufacturing base into the trade, financial services,
and construction sectors.
. Manufacturing, however, remains the largest sector of the economy,
contributing approximately 31% of growth in 1996.
. With a well-diversified economy, North Carolina has had average job growth of
3% since 1992.
. The state's finances are very well managed. In 1996, tax revenues increased
7.3% over 1995, and the state's General Fund balance increased from $1.57
billion to $1.88 billion.
Management Update
- --------------------------------------------------------------------------------
. The strong economy in North Carolina has resulted in greater issuance of good
credits.
. A combination of healthy conditions, including attractive land values, low
labor costs, and low taxes has helped increase the number of industrial
development bonds in the state. Issuers include Champion Intl., Weyerhauser,
Campbell Soup, and American Airlines.
. Availability of university issuers have also increased, including the
University of North Carolina and Duke University.
. This Fund holds few certificates of participation because they tend to have
higher credit risk without sufficiently higher yield.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
4.3%./1/
. This return resulted from an increase in net asset value per share to $10.16
on February 28, 1997 from $9.97 on August 31, 1996, and the reinvestment of
$0.235 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.16 per
share, the Fund's distribution rate on February 28, 1997 was 4.53%.
. To equal 4.53% in a taxable investment, a couple in the 40.96% combined
federal and state tax bracket would need a yield of 7.67%.
Your Investment at Work
- --------------------------------------------------------------------------------
Robeson County Industrial Facilities and [GRAPHIC OF FACTORY APPEARS
Pollution Control Financing Authority - HERE]
Campbell Soup Company
. Proceeds of this bond issue will be used to refinance a previous issue. That
issue funded the acquisition and installation of pollution control equipment
for Campbell Soup Company's manufacturing plant in Robeson County, NC.
. The pollution control equipment financed by these bonds not only fills a
vital environmental need for the citizens of Robeson County, but also helps a
company which is providing many jobs in the area.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to Federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (or net asset value)
- --------------------------------------------------------------------------------
One Year 3.8%
Five Years 5.6
Life of Fund (10/23/91) 5.7
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year -1.1%
Five Years 5.3
Life of Fund (10/23/91) 5.5
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Hospitals 19.9%
Industrial revenue/pollution control 14.5%
Housing 12.5%
Utilities 8.5%
Insured hospitals 7.9%/5/
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 79
Average Maturity 22.2 Yrs.
Effective Maturity 14.1 Yrs.
Average Rating AA-
Average Call 8.5 Yrs.
Average Dollar Price $100.03
10
<PAGE>
EV Marathon Oregon Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF THOMAS M. METZOLD,
PORTFOLIO MANAGER, APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. Oregon has experienced significant economic growth over the past several
years, as its economic base has become less dependent on the timber industry.
. The high-technology industry -- specifically, semiconductor manufacturing
-- has grown rapidly in Oregon due, in part, to immigration from California.
This population growth has also contributed to robust growth in housing
construction.
. Although Oregon is a significant issuer of general obligation (G.O.) debt,
direct G.O. debt has decreased every year since 1990.
. In November, 1996, Measure 47 -- a tax limitation statute which will reduce
property taxes in 1997-1998 and limit growth in this tax to 3% after 1998 --
was approved by voters. Local governments will be affected, but the state's
strong fiscal condition gives it flexibility to mitigate the measure's
impact.
Management Update
- --------------------------------------------------------------------------------
. Issuance in the Oregon municipal market has begun to level off after several
years of significant increases. Bond issuance in the state may be reduced by
the passage of Measure 47.
. Demand for Oregon municipal bonds, which has waned in recent years, has begun
to pick up.
. Combined with moderate issuance, the increase in demand bodes well for the
Oregon municipal bond market.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
3.7%./1/
. This return resulted from an increase in net asset value per share to $10.38
on February 28, 1997 from $10.24 on August 31, 1996, and the reinvestment of
$0.231 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.38 per
share, the Fund's distribution rate on February 28, 1997 was 4.35%.
. To equal 4.35% in a taxable investment, a couple in the 41.76% combined
federal and state tax bracket would need a yield of 7.47%.
Your Investment at Work
- --------------------------------------------------------------------------------
City of Portland, Oregon, Urban Renewal [GRAPHIC OF BRICK WALL CONSTRUC-
and Redevelopment Refunding Bonds TION APPEARS HERE]
. This bond issue helped fund urban renewal projects for the Portland
Development Commission. Projects such as this stimulated private sector
investment and job creation.
. These bonds helped finance the Downtown Waterfront Urban Renewal Project,
which was originated in 1974. It consisted of 270 acres on the west bank of
the Willamette River and 130 blocks of the downtown central business
district.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to Federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 2.9%
Five Years 6.1
Life of Fund (12/24/91) 6.0
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year -2.0%
Five Years 5.8
Life of Fund (12/24/91) 5.9
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Housing 20.7%
General obligations 12.3%
Industrial revenue/pollution control 8.5%
Special tax 7.5%
Utilities 6.9%
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 74
Average Maturity 22.1 Yrs.
Effective Maturity 12.2 Yrs.
Average Rating AA-
Average Call 7.0 Yrs.
Average Dollar Price $100.82
4
<PAGE>
EV Marathon South Carolina Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF THOMAS J. FETTER
PORTFOLIO MANAGER APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. South Carolina's economy has benefited from positive trends in personal
income and population growth over the past several years.
. Per capita income growth exceeded the national average in 1995, growing at
5.9%. Employment in 1995 grew by 1.8%, slightly less than the national
average.
. Manufacturing is a prominent part of the economy. New investment from Mikasa,
Nucor Steel, Amoco Chemical, Michelin Tire, and BMW should help keep this
sector strong for many years.
. The state's finances have been well managed, the result of conservative
forecasting, a strong economy, and restraints on spending. In addition, the
state provided property tax relief of $208 million in FY 1996, and expects to
provide $214 million in FY 1997 and $294 in FY 1998.
Management Update
- --------------------------------------------------------------------------------
. Issuance of municipal bonds with appropriate credit ratings has been
relatively light during the past six months. As a result, we have sought out
more insured bonds for the Portfolio.
. The supply of general obligation (G.O.) bonds should increase in the areas of
higher education and public safety. The Government has proposed a bond bill
which would allocate debt issues within these needy areas.
. Management continues to seek bonds which will strengthen the Portfolio's
structure by increasing call protection, provide upside potential, and boost
yield.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
4.9%./1/
. This return resulted from an increase in net asset value per share to $10.27
on February 28, 1997 from $10.02 on August 31, 1996, and the reinvestment of
$0.239 in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.27 per
share, the Fund's distribution rate on February 28, 1997 was 4.55%.
. To equal 4.55% in a taxable investment, a couple in the 40.48% combined
federal and state tax bracket would need a yield of 7.64%.
Your Investment at Work
- --------------------------------------------------------------------------------
[GRAPHIC OF POWER LINE APPEARS HERE]
South Carolina Public Service Authority Revenue Bonds
. This bond issue will help finance improvements to this vital power supplier.
Improvements include the construction of a new power unit in Cross, SC; the
construction of new transmission facilities for this facility; the
acquisition of new coal rail cars; and the purchase of an initial coal-fuel
stockpile for the facility.
. The Authority's overall service area encompasses more than 75% of South
Carolina and includes over 1 million customers. Coal-fired plants account
for 80% of the state's electric requirements.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 4.8%
Five Years N.A.
Life of Fund (10/2/92) 5.6
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year -0.2%
Five Years N.A.
Life of Fund (10/2/92) 5.3
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Industrial revenue/pollution control 30.5%
Housing 14.0%
Utilities 10.5%
Insured utilities 10.0%/5/
Insured lease revenue 6.5%/5/
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 46
Average Maturity 21.8 Yrs.
Effective Maturity 11.8 Yrs.
Average Rating A+
Average Call 7.4 Yrs.
Average Dollar Price $101.82
12
<PAGE>
EV Marathon Tennessee Municipals Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF CYNTHIA J. CLEMSON,
PORTFOLIO MANAGER APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. The economy in Tennessee thrives on manufacturing, due to generous tax
incentives provided by the state government and low-cost power provided by
the Tennessee Valley Authority.
. Investment in manufacturing totalled $2.1 billion for the first 3 quarters of
1996, a 45% increase over the previous year. Over 150 manufacturing
facilities were expanded or added during this period.
. Tennessee has carefully managed its finances, resulting in a balanced budget
and a sizable "Rainy Day Fund." This reserve has been maintained at roughly
4% of general revenues over the past few years.
. The overall debt level in Tennessee remains well below that of most other
states, allowing the state to finance a significant number of capital
projects with current funds and achieve high bond ratings.
Management Update
- --------------------------------------------------------------------------------
. Issuance of municipal bonds in Tennessee has remained light during the past
six months, contributing to a narrowing of credit spreads.
. We have continued to pursue a "relative value" approach, seeking value in
sectors that are comparatively inexpensive. We continue to emphasize bond
structure and improve call protection.
. To add further value, we have sought higher-yielding opportunities, including
lower- or non-rated bonds. These issues, which require significant research
and analysis, can provide attractive yields to the Fund.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
4.7%./1/
. This return resulted from an increase in net asset value per share to $10.39
on February 28, 1997 from $10.15 on August 31, 1996, and the reinvestment of
$0.238 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.39 per
share, the Fund's distribution rate on February 28, 1997 was 4.48%.
. To equal 4.48% in a taxable investment, a couple in the 39.84% combined
federal and state tax bracket would need a yield of 7.45%.
Your Investment at Work
- --------------------------------------------------------------------------------
Heath and Education Facilities Industrial [GRAPHIC OF MEDICAL SYMBOL
Board of Nashville and Davidson County- HERE]
Meharry Medical College
. This bond issue will finance improvements for the George W. Hubbard Hospital
and related facilities at the Meharry Medical College.
. Meharry Medical College is large private medical college with 848 full-time
students, 170 full-time medical professors, and 42 full-time dental
professors.
. The bonds are insured by AMBAC Indemnity Corp., and are rated "AAA" by
Standard and Poor's and "Aaa" by Moody's Investors Service.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to Federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of Future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 4.6%
Five Years N.A.
Life of Fund (8/25/92) 6.3
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year -0.4%
Five Years N.A.
Life of Fund (8/25/92) 5.9
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Industrial revenue/pollution control 25.8%
Housing 15.0%
Insured education 8.6%/5/
Insured utilities 7.7%/5/
Insured hospitals 7.6%/5/
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 53
Average Maturity 22.5 Yrs.
Effective Maturity 14.0 Yrs.
Average Rating Aa-
Average Call 8.8 Yrs.
Average Dollar Price $102.28
13
<PAGE>
EV Marathon Virginia Municipals Funds as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF TIMOTHY T. BROWSE,
PORTFOLIO MANAGER, APPEARS HERE]
The Economy
- --------------------------------------------------------------------------------
. Virginia's economy benefits from a rising population, a well-educated work
force, a diverse base of industry sectors, and sound financial management.
. Employment has risen in the last two years and is expected to grow at a 1.5%
annual rate through the end of the decade.
. Virginia's government has succeeded in attracting over $10 billion in
corporate investment in the last two and a half years. Motorola, for example,
has invested $1 billion in a new semiconductor plant which could employ up to
5,000 workers by 1998.
. Careful financial management since the recession of 1990-91 has resulted in
cash surpluses every year since 1994 and growing reserves in the Revenue
Stabilization Fund.
Management Update
- --------------------------------------------------------------------------------
. In Virginia, we have focused on keeping higher coupon bonds and swapping
bonds with current coupons or poor call features for those with better call
protection and total return potential.
. Other swapping opportunities involved trading bonds with "AA" ratings for
insured bonds which add more liquidity to the Portfolio.
. Through careful research and analysis, management has sought lower-rated and
non-rated bonds which offer higher yield without significantly adding to
risk.
The Fund
- --------------------------------------------------------------------------------
. During the six months ended February 28, 1997, the Fund had a total return of
4.4%./1/
. This return resulted from an increase in net asset value per share to $10.47
on February 28, 1997 from $10.26 on August 31, 1996, and the reinvestment of
$0.238 per share in tax-free income dividends./2/
. Based on the Fund's most recent dividend, and a net asset value of $10.47 per
share, the Fund's distribution rate on February 28, 1997 was 4.45%.
. To equal 4.45% in a taxable investment, a couple in the 39.68% combined
federal and state tax bracket would need a yield of 7.38%.
Your Investment at Work
- --------------------------------------------------------------------------------
Industrial Development Authority, County [GRAPHIC OF FACTORY APPEARS
of Isle of Wight - Union Camp Corp. HERE]
. This bond issue is helping to finance the acquisition, construction and
installation of new solid waste disposal facilities at the Union Camp
Corporation's Isle of Wight facilities.
. Union Camp Corporation's principal businesses include manufacturing paper,
paperboard, packaging products, wood products, and wood and non-wood based
chemicals.
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 5% applicable contingent deferred
sales charge (CDSC).
/2/A portion of the Fund's income could be subject to federal alternative
minimum tax.
/3/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/4/Based on market value as of 2/28/97. May not represent the Portfolio's
current or future investments.
/5/Private insurance does not remove the interest rate risks that are associated
with these investments.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/3/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 3.9%
Five Years 5.8
Life of Fund (7/26/91) 6.3
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year -1.1%
Five Years 5.5
Life of Fund (7/26/91) 6.2
5 Largest Sectors/4/
- --------------------------------------------------------------------------------
By total investments
[BAR CHART APPEARS HERE] Hospitals 17.8%
Industrial revenue/development 12.3%
Insured hospitals 12.3%/5/
Housing 10.6%
Lease/certificates of participation 7.8%
Portfolio Overview/4/
- --------------------------------------------------------------------------------
Number of Issues 87
Average Maturity 21.8 Yrs.
Effective Maturity 14.5 Yrs.
Average Rating AA-
Average Call 8.3 Yrs.
Average Dollar Price $100.26
14
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited)
Statements of Assets and Liabilities
As of February 28, 1997
<TABLE>
<CAPTION>
Marathon Marathon Marathon Marathon
Alabama Fund Arkansas Fund Georgia Fund Kentucky Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Investment in Municipals Portfolio --
Identified cost $ 95,446,132 $65,211,903 $ 94,142,500 $119,478,974
Unrealized appreciation 5,223,679 2,562,548 5,627,320 7,122,094
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment, at value (Note 1A) $100,669,811 $67,774,451 $ 99,769,820 $126,601,068
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold $ 16,036 $ 11,076 $ 29,191 $ 27,084
Deferred organization expenses (Note 1D) 365 230 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $100,686,212 $67,785,757 $ 99,799,011 $126,628,152
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions payable $ 119,785 $ 80,519 $ 124,047 $ 152,804
Payable for Fund shares redeemed 133,466 92,682 243,512 162,909
Payable to affiliate for Trustees' fees (Note 4) 530 260 530 530
Accrued expenses 49,484 35,690 47,682 62,021
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 303,265 $ 209,151 $ 415,771 $ 378,264
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets for shares of beneficial
interest outstanding $100,382,947 $67,576,606 $ 99,383,240 $126,249,888
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 98,365,770 $67,887,303 $101,814,191 $124,762,856
Accumulated net realized loss on
investments and financial futures
contracts (computed on basis of
identified cost) (3,289,777) (2,861,270) (8,147,881) (5,509,587)
Accumulated net investment income (loss) 83,275 (11,975) 89,610 (125,475)
Net unrealized appreciation of
investments and financial futures
contracts (computed on basis of
identified cost) 5,223,679 2,562,548 5,627,320 7,122,094
- ------------------------------------------------------------------------------------------------------------------------------------
Total $100,382,947 $67,576,606 $ 99,383,240 $126,249,888
- ------------------------------------------------------------------------------------------------------------------------------------
Shares of Beneficial Interest Outstanding
- ------------------------------------------------------------------------------------------------------------------------------------
9,375,061 6,509,804 9,906,504 12,344,281
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
- ------------------------------------------------------------------------------------------------------------------------------------
(Net assets / shares of beneficial
interest outstanding) $ 10.71 $ 10.38 $ 10.03 $ 10.23
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
15
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited)
Statements of Assets and Liabilities
As of February 28, 1997
<TABLE>
<CAPTION>
Marathon Marathon Marathon Marathon
Louisiana Fund Maryland Fund Missouri Fund North Carolina Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Investment in Municipals Portfolio --
Identified cost $31,481,184 $105,123,709 $74,822,204 $153,413,266
Unrealized appreciation 1,365,679 3,540,519 4,549,619 10,251,517
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment, at value (Note 1A) $32,846,863 $108,664,228 $79,371,823 $163,664,783
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold $ 23,950 $ 58,276 $ 2,350 $ 6,888
Deferred organization expenses (Note 1D) 199 -- 292 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $32,871,012 $108,722,504 $79,374,465 $163,671,671
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions payable $ 42,638 $ 130,622 $ 94,697 $ 202,836
Payable for Fund shares redeemed 42,723 274,990 28,756 164,655
Payable to affiliate for Trustees'
fees (Note 4) 27 530 263 530
Accrued expenses 16,399 54,884 39,179 84,304
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 101,787 $ 461,026 $ 162,895 $ 452,325
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets for shares of beneficial
interest outstanding $32,769,225 $108,261,478 $79,211,570 $163,219,346
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $33,621,845 $106,958,381 $76,978,758 $165,295,565
Accumulated net realized loss on
investments and financial futures
contracts (computed on basis of
identified cost) (2,259,411) (2,384,113) (2,324,113) (12,093,108)
Accumulated net investment income (loss) 41,112 146,691 7,306 (234,628)
Net unrealized appreciation of
investments and financial futures
contracts (computed on basis of
identified cost) 1,365,679 3,540,519 4,549,619 10,251,517
- ------------------------------------------------------------------------------------------------------------------------------------
Total $32,769,225 $108,261,478 $79,211,570 $163,219,346
- ------------------------------------------------------------------------------------------------------------------------------------
Shares of Beneficial Interest Outstanding
- ------------------------------------------------------------------------------------------------------------------------------------
3,213,624 10,284,950 7,330,582 16,059,166
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
- ------------------------------------------------------------------------------------------------------------------------------------
(Net assets / shares of beneficial
interest outstanding) $ 10.20 $ 10.53 $ 10.81 $ 10.16
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
16
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Assets and Liabilities
As of February 28, 1997
<TABLE>
<CAPTION>
Marathon Marathon Marathon Marathon
Oregon Fund South Carolina Fund Tennessee Fund Virginia Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Investment in Municipals Portfolio --
Identified cost $116,320,123 $52,634,123 $51,273,923 $159,620,249
Unrealized appreciation 5,571,964 3,444,681 2,286,671 10,386,432
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment, at value (Note 1A) $121,892,087 $56,078,804 $53,560,594 $170,006,681
- ----------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold $ 22,597 $ -- $ 151,150 $ 26,644
Deferred organization expenses (Note 1D) -- 1,144 492 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $121,914,684 $56,079,948 $53,712,236 $170,033,325
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions payable $ 253,315 $ 69,736 $ 65,783 $ 207,454
Payable for Fund shares redeemed 420,533 5,532 188,396 75,740
Payable to affiliate for Trustees'
fees (Note 4) 527 260 263 530
Accrued expenses 60,413 26,181 26,155 84,985
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 734,788 $ 101,709 $ 280,597 $ 368,709
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets for shares of beneficial
interest outstanding $121,179,896 $55,978,239 $53,431,639 $169,664,616
- ----------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $121,633,540 $56,726,073 $53,302,772 $168,675,990
Accumulated net realized loss on
investments and financial futures
contracts (computed on basis of
identified cost) (6,039,214) (4,327,134) (2,131,644) (9,332,670)
Accumulated net investment income (loss) 13,606 134,619 (26,160) (65,136)
Net unrealized appreciation of
investments and financial futures
contracts (computed on basis of
identified cost) 5,571,964 3,444,681 2,286,671 10,386,432
- ----------------------------------------------------------------------------------------------------------------------------------
Total $121,179,896 $55,978,239 $53,431,639 $169,664,616
- ----------------------------------------------------------------------------------------------------------------------------------
Shares of Beneficial Interest Outstanding
- ----------------------------------------------------------------------------------------------------------------------------------
11,677,522 5,450,389 5,144,411 16,204,105
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
- ----------------------------------------------------------------------------------------------------------------------------------
(Net assets / shares of beneficial
interest outstanding) $ 10.38 $ 10.27 $ 10.39 $ 10.47
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
17
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
For the Six Months Ended February 28, 1997
<TABLE>
<CAPTION>
Marathon Marathon Marathon Marathon
Alabama Fund Arkansas Fund Georgia Fund Kentucky Fund
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------------
Interest income allocated from Portfolio $3,042,093 $2,089,591 $3,161,402 $3,925,451
Expenses allocated from Portfolio (251,847) (182,399) (256,403) (307,621)
- ------------------------------------------------------------------------------------------------------------------------------
Total investment income $2,790,246 $1,907,192 $2,904,999 $3,617,830
- ------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 2,449 $ 797 $ 1,604 $ 1,604
Custodian fee 5,139 3,793 5,162 6,122
Distribution fees (Note 5) 467,867 325,239 479,779 602,220
Transfer and dividend disbursing agent fees 39,681 27,812 40,387 46,877
Printing and postage 16,822 7,760 13,211 18,779
Legal and accounting services 11,600 11,600 11,600 12,276
Registration fees 1,300 431 1,000 1,758
Amortization of organization expenses (Note 1D) 1,708 1,790 1,629 188
Miscellaneous 5,802 9,136 4,487 6,656
- ------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 552,368 $ 388,358 $ 558,859 $ 696,480
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income $2,237,878 $1,518,834 $2,346,140 $2,921,350
- ------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 476,792 $ 287,495 $ 602,365 $ 516,530
Financial futures contracts (688,496) (478,010) (627,366) (1,038,949)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized loss on investment transactions $ (211,704) $ (190,515) $ (25,001) $ (522,419)
- ------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $2,695,660 $1,627,185 $2,405,468 $3,425,743
Financial futures contracts (147,276) (103,201) 13,249 336,595
- ------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments $2,548,384 $1,523,984 $2,418,717 $3,762,338
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $2,336,680 $1,333,469 $2,393,716 $3,239,919
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $4,574,558 $2,852,303 $4,739,856 $6,161,269
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
18
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
February 28, 1997
Marathon Marathon Marathon Marathon
Louisiana Fund Maryland Fund Missouri Fund North Carolina Fund
- ------------------------------------------------------------------------------------------------------------------------------
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income allocated from Portfolio $1,030,300 $3,232,139 $2,452,085 $5,085,143
Expenses allocated from Portfolio (54,782) (255,869) (197,863) (424,616)
- ------------------------------------------------------------------------------------------------------------------------------
Total investment income $ 975,518 $2,976,270 $2,254,222 $4,660,527
- ------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------
Compensation of Trustees not members of
the Administrator's organization (Note 4) $ 81 $ 1,604 $ 802 $ 1,604
Custodian fee (Note 1E) 2,565 5,981 5,402 7,303
Distribution fees (Note 5) 149,844 506,017 375,738 771,636
Transfer and dividend disbursing agent fees 13,154 41,010 28,352 61,304
Printing and postage 4,777 16,377 8,718 23,714
Legal and accounting services 10,336 11,600 11,554 11,600
Registration fees 1,250 1,600 1,512 100
Amortization of organization expenses (Note 1D) 1,662 644 1,558 769
Miscellaneous 4,630 5,988 10,446 6,370
- ------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 188,299 $ 590,821 $ 444,082 $ 884,400
- ------------------------------------------------------------------------------------------------------------------------------
Less Allocations --
Reduction of custodian fee (Note 1E) $ -- $ 1,382 $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ -- $ 1,382 $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 188,299 $ 589,439 $ 444,082 $ 884,400
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 787,219 $2,386,831 $1,810,140 $3,776,127
- ------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 65,642 $ 947,842 $ 461,333 $1,765,415
Financial futures contracts (188,095) (713,655) (522,810) (750,457)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment
transactions $ (122,453) $ 234,187 $ (61,477) $1,014,958
- ------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ 892,070 $2,336,869 $2,288,786 $2,354,542
Financial futures contracts (26,375) (158,147) 13,548 (69,345)
- ------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of
investments $ 865,695 $2,178,722 $2,302,334 $2,285,197
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on
investments $ 743,242 $2,412,909 $2,240,857 $3,300,155
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $1,530,461 $4,799,740 $4,050,997 $7,076,282
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
19
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
For the Six Months Ended February 28, 1997
<TABLE>
<CAPTION>
Marathon Marathon
Oregon Fund South Carolina Fund
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income (Note 1B)
- --------------------------------------------------------------------------------------------------
Interest income allocated from Portfolio $3,805,744 $1,733,683
Expenses allocated from Portfolio (366,621) (135,878)
- --------------------------------------------------------------------------------------------------
Total investment income $3,439,123 $1,597,805
- --------------------------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 1,605 $ 797
Custodian fee 6,055 2,852
Distribution fees (Note 5) 577,444 259,700
Transfer and dividend disbursing agent fees 44,604 17,674
Printing and postage 20,470 6,482
Legal and accounting services 13,605 11,600
Registration fees 1,400 --
Amortization of organization expenses (Note 1D) 391 1,663
Miscellaneous 9,632 10,721
- --------------------------------------------------------------------------------------------------
Total expenses $ 675,206 $ 311,489
- --------------------------------------------------------------------------------------------------
Net investment income $2,763,917 $1,286,316
- --------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 122,405 $ 175,593
Financial futures contracts (937,980) (366,248)
- --------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions $ (815,575) $ (190,655)
- --------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $2,552,419 $1,525,163
Financial futures contracts (123,798) 61,144
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments $2,428,621 $1,586,307
- --------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $1,613,046 $1,395,652
- --------------------------------------------------------------------------------------------------
Net increase in net assets from operations $4,376,963 $2,681,968
- --------------------------------------------------------------------------------------------------
<CAPTION>
Marathon Marathon
Tennessee Fund Virginia Fund
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income (Note 1B)
- --------------------------------------------------------------------------------------------------------
Interest income allocated from Portfolio $1,611,085 $5,293,698
Expenses allocated from Portfolio (119,849) (438,796)
- --------------------------------------------------------------------------------------------------------
Total investment income $1,491,236 $4,854,902
- --------------------------------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 802 $ 1,604
Custodian fee 3,225 5,174
Distribution fees (Note 5) 248,894 808,559
Transfer and dividend disbursing agent fees 19,228 63,794
Printing and postage 10,302 27,025
Legal and accounting services 11,500 11,200
Registration fees 1,540 700
Amortization of organization expenses (Note 1D) 1,761 --
Miscellaneous 3,460 12,947
- --------------------------------------------------------------------------------------------------------
Total expenses $ 300,712 $ 931,003
- --------------------------------------------------------------------------------------------------------
Net investment income $1,190,524 $3,923,899
- --------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 142,520 $1,554,754
Financial futures contracts (315,535) (978,055)
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions $ (173,015) $ 576,699
- --------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $1,413,713 $2,939,006
Financial futures contracts 16,807 (44,597)
- --------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments $1,430,520 $2,894,409
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $1,257,505 $3,471,108
- --------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $2,448,029 $7,395,007
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
20
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 1997
<TABLE>
<CAPTION>
Marathon Marathon Marathon Marathon
Increase (Decrease) in Net Assets Alabama Fund Arkansas Fund Georgia Fund Kentucky Fund
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 2,237,878 $ 1,518,834 $ 2,346,140 $ 2,921,350
Net realized loss on investments
and financial futures contracts (211,704) (190,515) (25,001) (522,419)
Change in unrealized appreciation 2,548,384 1,523,984 2,418,717 3,762,338
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from
operations $ 4,574,558 $ 2,852,303 $ 4,739,856 $ 6,161,269
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income $ (2,200,860) $(1,518,835) $ (2,353,600) $ (2,848,939)
In excess of net investment income -- (5,732) -- --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (2,200,860) $(1,524,567) $ (2,353,600) $ (2,848,939)
- ----------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares $ 1,791,940 $ 749,054 $ 2,157,255 $ 2,146,331
Net asset value of shares issued
to shareholders in payment of 1,129,742 720,811 1,011,540 1,517,264
distributions declared
Cost of shares redeemed (6,604,239) (8,088,939) (13,164,142) (12,083,093)
- ----------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund share
transactions $ (3,682,557) $(6,619,074) $ (9,995,347) $ (8,419,498)
- ----------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (1,308,859) $(5,291,338) $ (7,609,091) $ (5,107,168)
- ----------------------------------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------
At beginning of period $101,691,806 $72,867,944 $106,992,331 $131,357,056
- ----------------------------------------------------------------------------------------------------------------------
At end of period $100,382,947 $67,576,606 $ 99,383,240 $126,249,888
- ----------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of) net
investment income included in net assets
- ----------------------------------------------------------------------------------------------------------------------
At end of period $ 83,275 $ (11,975) $ 89,610 $ (125,475)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
21
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six Months Ended February 28, 1997
Marathon Marathon Marathon Marathon
Increase (Decrease) in Net Assets Louisiana Fund Maryland Fund Missouri Fund North Carolina Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 787,219 $ 2,386,831 $ 1,810,140 $ 3,776,127
Net realized gain (loss) on
investments and financial (122,453) 234,187 (61,477) 1,014,958
futures contracts
Change in unrealized appreciation 865,695 2,178,722 2,302,334 2,285,197
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from
operations $ 1,530,461 $ 4,799,740 $ 4,050,997 $ 7,076,282
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income $ (775,547) $ (2,398,863) $ (1,774,740) $ (3,774,821)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (775,547) $ (2,398,863) $ (1,774,740) $ (3,774,821)
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares $ 837,838 $ 2,911,797 $ 1,106,094 $ 2,496,512
Net asset value of shares issued
to shareholders in payment of 353,337 1,275,131 898,654 1,878,263
distributions declared
Cost of shares redeemed (2,170,383) (7,569,649) (7,454,643) (14,345,460)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund
share transactions $ (979,208) $ (3,382,721) $ (5,449,895) $ (9,970,685)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (224,294) $ (981,844) $ (3,173,638) $ (6,669,224)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of period $32,993,519 $109,243,322 $ 82,385,208 $169,888,570
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $32,769,225 $108,261,478 $ 79,211,570 $163,219,346
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of) net
investment income included in net assets
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $ 41,112 $ 146,691 $ 7,306 $ (234,628)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
22
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 1997
<TABLE>
<CAPTION>
Marathon Marathon Marathon Marathon
Increase (Decrease) in Net Assets Oregon Fund South Carolina Fund Tennessee Fund Virginia Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 2,763,917 $ 1,286,316 $ 1,190,524 $ 3,923,899
Net realized gain (loss) on
investments and financial
futures contracts (815,575) (190,655) (173,015) 576,699
Change in unrealized appreciation 2,428,621 1,586,307 1,430,520 2,894,409
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 4,376,963 $ 2,681,968 $ 2,448,029 $ 7,395,007
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income $ (2,714,867) $ (1,291,570) $ (1,190,524) $ (3,856,671)
In excess of net investment income -- -- (19,471) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (2,714,867) $ (1,291,570) $ (1,209,995) $ (3,856,671)
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares $ 3,246,011 $ 1,470,989 $ 1,338,644 $ 3,616,398
Net asset value of shares issued to
shareholders in payment of
distributions declared 1,557,139 570,254 615,944 1,939,136
Cost of shares redeemed (13,865,393) (4,670,558) (4,293,543) (15,347,632)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund
share transactions $ (9,062,243) $ (2,629,315) $ (2,338,955) $ (9,792,098)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (7,400,147) $ (1,238,917) $ (1,100,921) $ (6,253,762)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of period $ 128,580,043 $ 57,217,156 $ 54,532,560 $ 175,918,378
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $ 121,179,896 $ 55,978,239 $ 53,431,639 $ 169,664,616
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of) net investment
income included in net assets
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $ 13,606 $ 134,619 $ (26,160) $ (65,136)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
23
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1996
<TABLE>
<CAPTION>
Marathon Marathon Marathon Marathon
Increase (Decrease) in Net Assets Alabama Fund Arkansas Fund Georgia Fund Kentucky Fund
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 4,765,991 $ 3,384,458 $ 5,270,914 $ 6,161,006
Net realized gain (loss) on
investments and financial futures contracts 1,384,151 286,714 759,762 (1,157,193)
Change in unrealized appreciation (depreciation) (998,165) (461,293) (243,119) 1,295,426
- --------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 5,151,977 $ 3,209,879 $ 5,787,557 $ 6,299,239
- --------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income $ (4,874,378) $(3,545,480) $ (5,318,073) $ (6,161,006)
In excess of net investment income -- (6,242) -- (154,635)
- --------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (4,874,378) $(3,551,722) $ (5,318,073) $ (6,315,641)
- --------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Note 3) --
Proceeds from sale of shares $ 4,160,973 $ 2,851,899 $ 3,711,347 $ 5,687,743
Net asset value of shares issued to shareholders
in payment of distributions declared 2,550,774 1,648,737 2,421,301 3,359,495
Cost of shares redeemed (13,939,744) (12,113,699) (19,752,574) (20,779,572)
- --------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund share transactions $ (7,227,997) $(7,613,063) $(13,619,926) $(11,732,334)
- --------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (6,950,398) $(7,954,906) $(13,150,442) $(11,748,736)
- --------------------------------------------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------------------------------------------
At beginning of year $108,642,204 $80,822,850 $120,142,773 $143,105,792
- --------------------------------------------------------------------------------------------------------------------------
At end of year $101,691,806 $72,867,944 $106,992,331 $131,357,056
- --------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of) net investment income
included in net assets
- --------------------------------------------------------------------------------------------------------------------------
At end of year $ 46,257 $ (6,242) $ 97,070 $ (197,886)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
24
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1996
<TABLE>
<CAPTION>
Marathon Marathon Marathon Marathon
Increase (Decrease) in Net Assets Louisiana Fund Maryland Fund Missouri Fund North Carolina Fund
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 1,587,671 $ 5,061,585 $ 3,911,414 $ 8,179,093
Net realized gain (loss) on
investments and financial futures
contracts (338,256) 1,530,636 1,112,409 (47,113)
Change in unrealized appreciation
(depreciation) 266,047 (575,339) (1,048,081) 744,828
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,515,462 $ 6,016,882 $ 3,975,742 $ 8,876,808
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income $(1,600,291) $(5,239,668) $(3,911,414) $(8,215,663)
In excess of net investment income -- -- (27,998) (233,107)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $(1,600,291) $(5,239,668) $(3,939,412) $(8,448,770)
- --------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Note 3) --
Proceeds from sale of shares $ 3,990,498 $ 8,472,887 $ 3,803,859 $ 7,140,035
Net asset value of shares issued to shareholders
in payment of distributions declared 778,827 2,826,305 1,976,726 4,174,817
Cost of shares redeemed (3,526,815) (16,659,034) (13,242,423) (30,304,252)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Fund share transactions $ 1,242,510 $(5,359,842) $(7,461,838) $(18,989,400)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 1,157,681 $(4,582,628) $(7,425,508) $(18,561,362)
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
At beginning of year $31,835,838 $113,825,950 $89,810,716 $188,449,932
- --------------------------------------------------------------------------------------------------------------------------------
At end of year $32,993,519 $109,243,322 $82,385,208 $169,888,570
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of) net investment
income included in net assets
- --------------------------------------------------------------------------------------------------------------------------------
At end of year $ 29,440 $ 158,723 $ (28,094) $ (235,934)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
25
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1996
<TABLE>
<CAPTION>
Marathon Marathon Marathon Marathon
Increase (Decrease) in Net Assets Oregon Fund South Carolina Fund Tennessee Fund Virginia Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 6,037,800 $ 2,767,504 $ 2,524,350 $ 8,440,230
Net realized gain (loss) on investments and
financial futures contracts (926,072) 657,297 53,224 182,208
Change in unrealized appreciation (depreciation) 449,198 (482,418) 342,049 134,532
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 5,560,926 $ 2,942,383 $ 2,919,623 $ 8,756,970
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income $ (6,124,280) $(2,772,456) $(2,618,373) $ (8,440,230)
In excess of net investment income (35,444) -- (6,689) (112,564)
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (6,159,724) $(2,772,456) $(2,625,062) $ (8,552,794)
- ----------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares $ 5,131,313 $ 4,707,873 $ 3,438,193 $ 8,059,179
Net asset value of shares issued to
shareholders in payment of
distributions declared 3,457,570 1,214,658 1,338,936 4,376,528
Cost of shares redeemed (24,465,802) (8,830,561) (8,022,902) (26,256,727)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from Fund share
transactions $(15,876,919) $(2,908,030) $(3,245,773) $(13,821,020)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $(16,475,717) $(2,738,103) $(2,951,212) $(13,616,844)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
At beginning of year $145,055,760 $59,955,259 $57,483,772 $189,535,222
- ----------------------------------------------------------------------------------------------------------------------------------
At end of year $128,580,043 $57,217,156 $54,532,560 $175,918,378
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of) net investment
income included in net assets
- ----------------------------------------------------------------------------------------------------------------------------------
At end of year $ (35,444) $ 139,873 $ (6,689) $ (132,364)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
26
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon Alabama Fund
-----------------------------------------------------------------------------
Year Ended
Six Months ---------------------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ------------------------------------ -----------------------
(Unaudited) 1996 1995 1994*** 1993 1992**
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 10.460 $ 10.440 $ 10.210 $ 11.060 $10.340 $10.000
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.234 $ 0.470 $ 0.479 $ 0.425 $ 0.475 $ 0.208
Net realized and unrealized gain (loss) on
investments 0.246 0.030 0.244 (0.769) 0.837 0.385++
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.480 $ 0.500 $ 0.723 $ (0.344) $ 1.312 $ 0.593
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.230) $ (0.480) $ (0.479) $ (0.425) $(0.475) $(0.208)
In excess of net investment income -- -- (0.014) (0.081) (0.117) (0.045)
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.230) $ (0.480) $ (0.493) $ (0.506) $(0.592) $(0.253)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 10.710 $ 10.460 $ 10.440 $ 10.210 $11.060 $10.340
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.70% 4.85% 7.38% (3.18)% 13.09% 5.71%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $100,383 $101,692 $108,642 $105,553 $84,621 $21,105
Ratio of net expenses to average daily
net assets/(2)/(3)/ 1.62%+ 1.57% 1.51% 1.43%+ 1.37% 1.01%+
Ratio of net expenses to average daily net
assets, after custodian fee reduction/(2)/ 1.60%+ 1.52% -- -- -- --
Ratio of net investment income to average daily
net assets 4.45%+ 4.44% 4.74% 4.35%+ 4.30% 4.49%+
Portfolio Turnover/(4)/ -- -- -- -- 15% 13%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a reduction
of the Investment Advisor 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 (loss) per share would have been as follows:
<TABLE>
<CAPTION>
Ratios/Supplemental Data:
<S> <C> <C>
Expenses/(2)/ 1.49% 1.50%+
Net investment income 4.18% 4.00%+
Net investment income per share $ 0.462 $ 0.185
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period because of the timing of sales of Fund shares
and the amount of the per share realized and unrealized gains and losses
at such time.
** For the period from the start of business, May 1, 1992, to September 30,
1992.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
27
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon Arkansas Fund
--------------------------------------------------------------------
Year Ended
Six Months ----------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 -------------------------------------- -----------
(Unaudited) 1996 1995 1994*** 1993**
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $10.190 $10.250 $10.140 $10.910 $10.000
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.222 $ 0.450 $ 0.460 $ 0.431 $ 0.471
Net realized and unrealized gain (loss) on investments 0.191 (0.038) 0.132 (0.703) 1.025
- ---------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.413 $ 0.412 $ 0.592 $(0.272) $ 1.496
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.222) $(0.471) $(0.460) $(0.431) $(0.471)
In excess of net investment income (0.001) (0.001) (0.022) (0.067) (0.115)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.223) $(0.472) $(0.482) $(0.498) $(0.586)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $10.380 $10.190 $10.250 $10.140 $10.910
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.15% 4.05% 6.15% (2.53)% 15.00%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $67,577 $72,868 $80,823 $82,436 $59,205
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net expenses to average daily net assets/(2)//(3)/ 1.63%+ 1.56% 1.50% 1.17%+ 0.88%+
Ratio of net expenses to average daily net assets, after
custodian fee reduction/(2)/ 1.63%+ 1.54% -- -- --
Ratio of net investment income to average daily net assets 4.34%+ 4.34% 4.67% 4.47%+ 4.27%+
Portfolio Turnover/(4)/ -- -- -- 5% 13%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have been
as follows:
<TABLE>
<CAPTION>
Ratios/Supplemental Data:
<S> <C> <C>
Expenses/(2)/ 1.40% 1.42%+
Net investment income 4.24% 3.73%+
Net investment income per share $ 0.409 $ 0.411
</TABLE>
+ Annualized.
** For the period from the start of business, October 2, 1992, to September
30, 1993.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
28
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon Georgia Fund
------------------------------------------------------------------------------
Year Ended
Six Months ---------------------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ---------------------------------- -------------------------
(Unaudited) 1996 1995 1994*** 1993 1992**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value-- Beginning of period $ 9.810 $ 9.790 $ 9.800 $ 10.750 $ 10.120 $10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.225 $ 0.451 $ 0.450 $ 0.413 $ 0.459 $ 0.380
Net realized and unrealized gain (loss) on
investments 0.220 0.024 0.007+ (0.841) 0.776 0.215
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.445 $ 0.475 $ 0.457 $ (0.428) $ 1.235 $ 0.595
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.225) $ (0.455) $ (0.450) $ (0.413) $ (0.459) $(0.380)
In excess of net investment income -- -- (0.017) (0.065) (0.129) (0.095)
From net realized gain on investments -- -- -- -- (0.017) --
In excess of net realized gain on investments -- -- -- (0.044) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.225) $ (0.455) $ (0.467) $ (0.522) $ (0.605) $(0.475)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of period $10.030 $ 9.810 $ 9.790 $ 9.800 $ 10.750 $10.120
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return /(1)/ 4.75% 4.91% 4.90% (4.08)% 12.60% 5.85%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $99,383 $106,992 $120,143 $134,481 $120,043 $42,156
Ratio of net expenses to average daily net assets
/(2)/(3)/ 1.59%+ 1.58% 1.49% 1.41%+ 1.52% 1.13%+
Ratio of net expenses to average daily net assets,
after custodian fee reduction /(2)/ 1.58%+ 1.52% -- -- -- --
Ratio of net investment income to average daily net
assets 4.55%+ 4.55% 4.72% 4.39%+ 4.27% 4.72%+
Portfolio Turnover /(4)/ -- -- -- -- 20% 33%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have been
as follows:
<TABLE>
<CAPTION>
Ratios/Supplemental Data:
<S> <C>
Expenses /(2)/ 1.61%+
Net investment income 4.24%+
Net investment income per share $ 0.341
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period because of the timing of sales of Fund shares
and the amount of the per share realized and unrealized gains and losses
at such time.
** For the period from the start of business, December 23, 1991, to September
30, 1992.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
29
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon Kentucky Fund
-------------------------------------------------------------------------------
Year Ended
Six Months ----------------------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ------------------------------------ -----------------------
(Unaudited) 1996 1995 1994*** 1993 1992**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.970 $ 9.990 $ 9.850 $ 10.780 $ 10.090 $10.000
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.228 $ 0.450 $ 0.458 $ 0.415 $ 0.462 $ 0.363
Net realized and unrealized gain (loss) on
investments 0.255 (0.009)++ 0.163 (0.811) 0.820 0.192
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.483 $ 0.441 $ 0.621 $ (0.396) $ 1.282 $ 0.555
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income (0.223) $ (0.450) $ (0.458) $ (0.415) $ (0.462) $(0.363)
In excess of net investment income -- (0.011) (0.023) (0.075) (0.125) (0.102)
From net realized gain on investments -- -- -- -- (0.005) --
In excess of net realized gain on investments -- -- -- (0.044) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.223) $ (0.461) $ (0.481) $ (0.534) $ (0.592) $(0.465)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 10.230 $ 9.970 $ 9.990 $ 9.850 $ 10.780 $10.090
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.96% 4.45% 6.61% (3.78)% 13.05% 5.45%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $126,250 $131,357 $143,106 $141,994 $120,093 $46,835
Ratio of net expenses to average daily net
assets/(2)(3)/ 1.58%+ 1.57% 1.52% 1.44%+ 1.50% 1.44%+
Ratio of net expenses to average daily net
assets, after custodian fee reduction/(2)/ 1.56%+ 1.54% -- -- -- --
Ratio of net investment income to average daily
net assets 4.55%+ 4.45% 4.74% 4.39%+ 4.29% 4.56%+
Portfolio Turnover/(4)/ -- -- -- -- 21% 64%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have
been as follows:
<TABLE>
<CAPTION>
Ratios/Supplemental Data:
<S> <C>
Expenses/(2)/ 1.52%+
Net investment income 4.48%+
Net investment income per share $ 0.357
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period because of the timing of sales of Fund shares
and the amount of the per share realized and unrealized gains and losses
at such time.
** For the period from the start of business, December 23, 1991, to
September 30, 1992.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
30
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon Lousiana Fund
-----------------------------------------------------------------------
Six Months Year Ended
Ended ---------------------------------------------------------
Feb. 28, 1997 August 31, Sept. 30,
----------------------------------------- -------------
(Unaudited) 1996 1995 1994*** 1993**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.960 $ 9.980 $10.010 $11.130 $10.000
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ 0.243 $ 0.486 $ 0.487 $ 0.447 $ 0.478
Net realized and unrealized gain (loss) on investments 0.236 (0.016) (0.006)++ (0.937) 1.234
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.479 $ 0.470 $ 0.481 $(0.490) $ 1.712
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.239) $(0.490) $(0.487) $(0.447) $(0.478)
In excess of net investment income -- -- (0.024) (0.074) (0.104)
In excess of net realized gain on investments -- -- -- (0.109) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.239) $(0.490) $(0.511) $(0.630) $(0.582)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $10.200 $ 9.960 $ 9.980 $10.010 $11.130
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.92% 4.77% 5.08% (4.56)% 17.26%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $32,769 $32,994 $31,836 $29,020 $17,935
Ratio of net expenses to average daily net assets/(2)//(3)/ 1.51%+ 1.41% 1.31% 1.08%+ 1.07%+
Ratio of net expenses to average daily net assets, after
custodian fee reduction/(2)/ 1.49%+ 1.34% -- -- --
Ratio of net investment income to average daily net assets 4.82%+ 4.82% 4.97% 4.62%+ 4.27%+
Portfolio Turnover/(4)/ -- -- -- 14% 86%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have
been as follows :
<TABLE>
<CAPTION>
Ratios/Supplemental Data:
<S> <C> <C> <C> <C> <C>
Expenses /(2)//(3)/ 1.60%+ 1.53% 1.42% 1.44%+ 1.76%+
Expenses after custodian fee reduction /(2)/ 1.58%+ 1.45% -- -- --
Net investment income 4.73%+ 4.70% 4.86% 4.26%+ 3.58%+
Net investment income per share $ 0.239 $ 0.474 $ 0.470 $ 0.412 $ 0.401
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period because of the timing of sales of Fund shares
and the amount of the per share realized and unrealized gains and losses
at such time.
** For the period from the start of business, October 2, 1992, to
September 30, 1993.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
31
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon Maryland Fund
-------------------------------------------------------------------------------
Year Ended
Six Months --------------------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ----------------------------------- -----------------------
(Unaudited) 1996 1995 1994*** 1993 1992**
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 10.300 $ 10.230 $ 10.070 $ 11.070 $10.290 $10.000
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ 0.228 $ 0.464 $ 0.476 $ 0.428 $ 0.466 $ 0.303
Net realized and unrealized gain (loss) on
investments 0.231 0.086 0.169 (0.922) 0.890 0.375++
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.459 $ 0.550 $ 0.645 $ (0.494) $ 1.356 $ 0.678
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.229) $ (0.480) $ (0.476) $ (0.428) $(0.466) $ 0.303
In excess of net investment income -- -- (0.009) (0.070) (0.110) (0.085)
In excess of net realized gain on investments -- -- -- (0.008) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.229) $ (0.480) $ (0.485) $ (0.506) $(0.576) $(0.388)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 10.530 $ 10.300 $ 10.230 $ 10.070 $11.070 $10.290
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.56% 5.44% 6.71% (4.56)% 13.61% 6.65%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $108,261 $109,243 $113,826 $116,721 $95,226 $29,180
Ratio of net expenses to average daily
net assets/(2)//(3)/ 1.58%+ 1.57% 1.50% 1.43%+ 1.43% 1.30%+
Ratio of net expenses to average daily net
assets, after custodian fee reduction/(2)/ 1.55%+ 1.55% -- -- -- --
Ratio of net investment income to average daily
net assets 4.39%+ 4.46% 4.82% 4.44%+ 4.28% 4.25%+
Portfolio Turnover/(4)/ -- -- -- -- 12% 3%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have been
as follows:
<TABLE>
<CAPTION>
Ratios/Supplemental Data:
<S> <C> <C>
Expenses/(2)/ 1.48% 1.62%+
Net investment income 4.23% 3.93%+
Net investment income per share $ 0.461 $ 0.280
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period because of the timing of sales of Fund shares
and the amount of the per share realized and unrealized gains and losses
at such time.
** For the period from the start of business, February 3, 1992, to September
30, 1992.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
32
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon Missouri Fund
---------------------------------------------------------------------------
Year Ended
Six Months ----------------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 -------------------------------- ----------------------
(Unaudited) 1996 1995 1994*** 1993 1992**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $10.510 $10.510 $10.240 $11.250 $10.400 $10.000
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.239 $ 0.476 $ 0.477 $ 0.423 $ 0.470 $ 0.200
Net realized and unrealized gain (loss) on investments 0.295 0.003 0.289 (0.904) 1.005 0.455
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.534 $ 0.479 $ 0.766 $(0.481) $ 1.475 $ 0.655
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.234) $(0.476) $(0.477) $(0.423) $(0.470) $(0.200)
In excess of net investment income -- (0.003) (0.019) (0.084) (0.128) (0.055)
In excess of net realized gain on investments -- -- -- (0.022) (0.027) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.234) $(0.479) $(0.496) $(0.529) $(0.625) $(0.255)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $10.810 $10.510 $10.510 $10.240 $11.250 $10.400
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 5.18% 4.60% 7.82% (4.33)% 14.66% 6.33%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data/*/
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $79,212 $82,385 $89,811 $91,227 $76,653 $25,225
Ratio of net expenses to average daily net assets/(2)(3)/ 1.60%+ 1.56% 1.53% 1.49%+ 1.52% 1.32%+
Ratio of net expenses to average daily net assets, after
custodian fee reduction/(2)/ 1.59%+ 1.54% -- -- -- --
Ratio of net investment income to average daily net
assets 4.48%+ 4.47% 4.72% 4.30%+ 4.23% 4.31%+
Portfolio Turnover/(4)/ -- -- -- -- 14% 21%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have been
as follows:
<TABLE>
<CAPTION>
Ratios/Supplemental Data:
<S> <C> <C>
Expenses/(2)/ 1.55% 1.49%+
Net investment income 4.20% 4.14%+
Net investment income per share $ 0.467 $ 0.192
</TABLE>
+ Annualized.
** For the period from the start of business, May 1, 1992, to September 30,
1992.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
33
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon North Carolina Fund
------------------------------------------------------------------------------
Year Ended
Six Months ---------------------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ----------------------------------- ---------------------
(Unaudited) 1996 1995 1994*** 1993 1992**
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 9.970 $ 9.960 $ 9.970 $ 10.940 $ 10.300 $10.000
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.227 $ 0.452 $ 0.466 $ 0.423 $ 0.468 $ 0.456
Net realized and unrealized gain (loss) on
investments 0.191 0.026 0.011++ (0.895) 0.794 0.423++
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.418 $ 0.478 $ 0.477 $ (0.472) $ 1.262 $ 0.879
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.228) $ (0.455) $ (0.466) $ (0.423) $ (0.468) $(0.456)
In excess of net investment income -- (0.013) (0.021) (0.075) (0.120) (0.123)
In excess of net realized gain on investments -- -- -- -- (0.034) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.228) $ (0.468) $ (0.487) $ (0.498) $ (0.622) $(0.579)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 10.160 $ 9.970 $ 9.960 $ 9.970 $ 10.940 $10.300
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.29% 4.83% 5.03% (4.40)% 12.69% 8.75%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $163,219 $169,889 $188,450 $192,667 $173,828 $71,733
Ratio of net expenses to average daily net
assets/(2)(3)/ 1.60%+ 1.59% 1.51% 1.42%+ 1.52% 1.35%+
Ratio of net expenses to average daily net
assets, after custodian fee reduction/(2)/ 1.57%+ 1.54% -- -- -- --
Ratio of net investment income to average daily
net assets 4.54%+ 4.47% 4.78% 4.43%+ 4.34% 4.54%+
Portfolio Turnover/(4)/ -- -- -- -- 16% 52%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have
been as follows:
<TABLE>
<CAPTION>
<S> <C>
Ratios/Supplemental Data:
Expenses/(2)/ 1.57%+
Net investment income 4.32%+
Net investment income per share $ 0.434
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period because of the timing of sales of Fund shares
and the amount of the per share realized and unrealized gains and losses
at such time.
** For the period from the start of business, October 23, 1991, to
September 30, 1992.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
34
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon Oregon Fund
-----------------------------------------------------------------------------
Year Ended
Six Months ---------------------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ---------------------------------- -------------------------
(Unaudited) 1996 1995 1994*** 1993 1992**
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 10.240 $ 10.310 $ 10.090 $ 11.130 $ 10.270 $ 10.000
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.228 $ 0.450 $ 0.455 $ 0.415 $ 0.459 $ 0.351
Net realized and unrealized gain (loss) on
investments 0.136 (0.061) 0.241 (0.869) 0.983 0.368
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.364 $ 0.389 $ 0.696 $ (0.454) $ 1.442 $ 0.719
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.224) $ (0.457) $ (0.455) $ (0.415) $ (0.459) $ (0.351)
In excess of net investment income -- (0.002) (0.021) (0.078) (0.117) (0.098)
From net realized gain on investments -- -- -- (0.093) (0.006) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.224) $ (0.459) $ (0.476) $ (0.586) $ (0.582) $ (0.449)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 10.380 $ 10.240 $ 10.310 $ 10.090 $ 11.130 $ 10.270
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return /(1)/ 3.65% 3.80% 7.22% (4.21)% 14.47% 7.10%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $121,180 $128,580 $145,056 $151,127 $128,229 $ 41,703
Ratio of net expenses to average daily net
assets /(2)/(3)/ 1.69%+ 1.56% 1.53% 1.43%+ 1.55% 1.47%+
Ratio of net expenses to average daily net
assets, after custodian fee reduction /(2)/ 1.67%+ 1.53% -- -- -- --
Ratio of net investment income to average daily
net assets 4.44%+ 4.33% 4.59% 4.28%+ 4.22% 4.27%+
Portfolio Turnover /(4)/ -- -- -- -- 23% 44%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have
been as follows:
<TABLE>
<CAPTION>
Ratios/Supplemental Data:
<S> <C>
Expenses /(2)/ 1.63%+
Net investment income 4.11%+
Net investment income per share $ 0.338
</TABLE>
+ Annualized.
** For the period from the start of business, December 24, 1991, to
September 30, 1992.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
35
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon South Carolina Fund
----------------------------------------------------------------------
Year Ended
Six Months --------------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 --------------------------------------- --------------
(Unaudited) 1996 1995 1994*** 1993**
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value--Beginning of period $10.020 $10.000 $ 9.940 $10.890 $10.000
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.232 $ 0.467 $ 0.460 $ 0.408 $ 0.461
Net realized and unrealized gain (loss) on investments 0.250 0.021 0.071 (0.870) 0.986
- ---------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.482 $ 0.488 $ 0.531 $(0.462) $ 1.447
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.232) $(0.468) $(0.460) $(0.408) $(0.461)
In excess of net investment income -- -- (0.011) (0.080) (0.096)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.232) $(0.468) $(0.471) $(0.488) $(0.557)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $10.270 $10.020 $10.000 $ 9.940 $10.890
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.91% 4.92% 5.64% (4.33)% 14.50%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $55,978 $57,217 $59,955 $59,878 $43,169
Ratio of net expenses to average daily net assets/(2)(3)/ 1.60%+ 1.60% 1.49% 1.36%+ 1.07%+
Ratio of net expenses to average daily net assets, after
custodian fee reduction/(2)/ 1.58%+ 1.58% -- -- --
Ratio of net investment income to average daily net assets 4.56%+ 4.60% 4.77% 4.27%+ 4.22%+
Portfolio Turnover/(4)/ -- -- -- 3% 13%
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have
been as follows:
Ratios/Supplemental Data:
<S> <C>
Expenses/(2)/ 1.44%+
Net investment income 3.85%+
Net investment income per share $ 0.421
</TABLE>
+ Annualized.
** For the period from the start of business, October 2, 1992, to September
30, 1993.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
36
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon Tennessee Fund
--------------------------------------------------------------------------
Year Ended
Six Months ------------------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ------------------------------ --------------------------
(Unaudited) 1996 1995 1994*** 1993 1992**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $10.150 $10.110 $10.020 $11.070 $10.010 $10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.226 $ 0.457 $ 0.468 $ 0.426 $ 0.466 $ 0.040
Net realized and unrealized gain (loss) on investments 0.244 0.059 0.115 (0.848) 1.158 0.027++
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.470 $ 0.516 $ 0.583 $(0.422) $ 1.624 $ 0.067
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.226) $(0.475) $(0.468) $(0.426) $(0.466) $(0.040)
In excess of net investment income (0.004) (0.001) (0.025) (0.071) (0.098) (0.017)
From net realized gain on investments -- -- -- (0.094) -- --
In excess of net realized gain on investments -- -- -- (0.037) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.230) $(0.476) $(0.493) $(0.628) $(0.564) $(0.057)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $10.390 $10.150 $10.110 $10.020 $11.070 $10.010
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.74% 5.16% 6.12% (3.93)% 16.97% 0.01%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $53,432 $54,533 $57,484 $55,379 $39,648 $ 3,475
Ratio of net expenses to average daily
net assets/(2)(3)/ 1.58%+ 1.53% 1.47% 1.37%+ 1.30% 1.00%+
Ratio of net expenses to average daily net assets, after
custodian fee reduction/(2)/ 1.56%+ 1.51% -- -- -- --
Ratio of net investment income to average daily net
assets 4.43%+ 4.45% 4.77% 4.44%+ 4.24% 2.91%
Portfolio Turnover/(4)/ -- -- -- -- 28% 0%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have
been as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Ratios/Supplemental Data:
Expenses/(2)/ 1.61% 2.10%+
Net investment income 3.93% 1.81%+
Net investment income per share $ 0.432 $ 0.025
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period because of the timing of sales of Fund shares
and the amount of the per share realized and unrealized gains and losses
at such time.
** For the period from the start of business, August 25, 1992, to
September 30, 1992.
*** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
37
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Marathon Virginia Fund
-------------------------------------------------------------------------
Year Ended
Six Months ----------------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 -------------------------------- ---------------------
(Unaudited) 1996 1995 1994*** 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 10.260 $ 10.260 $ 10.120 $ 11.060 $10.460 $10.200
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.235 $ 0.471 $ 0.479 $ 0.438 $ 0.483 $ 0.526
Net realized and unrealized gain (loss) on
investments 0.206 0.006 0.161 (0.864) 0.762 0.385
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.441 $ 0.477 $ 0.640 $ (0.426) $ 1.245 $ 0.911
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.231) $ (0.471) $ (0.479) $ (0.438) $(0.483) $(0.526)
In excess of net investment income -- (0.006) (0.021) (0.076) (0.130) (0.120)
From net realized gain on investments -- -- -- -- (0.022) (0.005)
In excess of net realized gain on investments -- -- -- -- (0.010) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.231) $ (0.477) $ (0.500) $ (0.514) $(0.645) $(0.651)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 10.470 $ 10.260 $ 10.260 $ 10.120 $11.060 $10.460
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.40% 4.67% 6.62% (3.95)% 12.33% 9.16%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $169,665 $175,918 $189,535 $193,420 $175,426 $72,629
Ratio of net expenses to average
daily net assets/(2)(3)/ 1.61%+ 1.56% 1.50% 1.44%+ 1.52% 1.36%
Ratio of net expenses to average daily net assets,
after custodian fee reduction/(2)/ 1.59%+ 1.53% -- -- -- --
Ratio of net investment income to average daily net
assets 4.54%+ 4.52% 4.81% 4.51%+ 4.42% 4.86%
Portfolio Turnover/(4)/ -- -- -- -- 27% 85%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Advisor 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 (loss) per share would have
been as follows:
<TABLE>
<CAPTION>
<S> <C>
Ratios/Supplemental Data:
Expenses/(2)/ 1.59%
Net investment income 4.63%
Net investment income per share $ 0.501
</TABLE>
+ Annualized.
** For the eleven months ended August 31, 1994.
/(1)/ Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect
of any expense offset arrangements with its service providers. The expense
ratios for each of the prior periods have not been adjusted to reflect
this change.
/(4)/ Portfolio turnover represents the rate of portfolio activity for the
period while the Funds were making investments directly in securities. The
portfolio turnover rate for the period since the Funds transferred
substantially all of their investable assets to their respective
Portfolios is shown in the Portfolios' financial statements which are
included elsewhere in this report.
See notes to financial statements
38
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
- --------------------------------------------------------------------------------
Eaton Vance Municipals Trust (the Trust) is an entity of the type commonly
known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end investment
management company. The Trust presently consists of sixty Funds, twelve of
the non-diversified funds are included in these financial statements. They
include EV Marathon Alabama Municipals Fund ("Marathon Alabama Fund"), EV
Marathon Arkansas Municipals Fund ("Marathon Arkansas Fund"), EV Marathon
Georgia Municipals Fund ("Marathon Georgia Fund"), EV Marathon Kentucky
Municipals Fund ("Marathon Kentucky Fund"), EV Marathon Louisiana Municipals
Fund ("Marathon Louisiana Fund"), EV Marathon Maryland Municipals Fund
("Marathon Maryland Fund"), EV Marathon Missouri Municipals Fund ("Marathon
Missouri Fund"), EV Marathon North Carolina Municipals Fund ("Marathon North
Carolina Fund"), EV Marathon Oregon Municipals Fund ("Marathon Oregon
Fund"), EV Marathon South Carolina Municipals Fund ("Marathon South Carolina
Fund"), EV Marathon Tennessee Municipals Fund ("Marathon Tennessee Fund")
and EV Marathon Virginia Municipals Fund ("Marathon Virginia Fund"). Each
Fund invests all of its investable assets in interests in a separate
corresponding open-end management investment company (a "Portfolio"), a New
York Trust, having the same investment objective as its corresponding Fund.
The Marathon Alabama Fund invests its assets in the Alabama Municipals
Portfolio, the Marathon Arkansas Fund invests its assets in the Arkansas
Municipals Portfolio, the Marathon Georgia Fund invests its assets in the
Georgia Municipals Portfolio, the Marathon Kentucky Fund invests its assets
in the Kentucky Municipals Portfolio, the Marathon Louisiana Fund invests
its assets in the Louisiana Municipals Portfolio, the Marathon Maryland Fund
invests its assets in the Maryland Municipals Portfolio, the Marathon
Missouri Fund invests its assets in the Missouri Municipals Portfolio, the
Marathon North Carolina Fund invests its assets in the North Carolina
Municipals Portfolio, the Marathon Oregon Fund invests its assets in the
Oregon Municipals Portfolio, the Marathon South Carolina Fund invests its
assets in the South Carolina Municipals Portfolio, the Marathon Tennessee
Fund invests its assets in the Tennessee Municipals Portfolio and the
Marathon 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 (94.5%, 98.6%, 98.2%, 99.2%, 94.2%, 99.4%, 97.4%, 91.5%,
99.0%, 97.9%, 96.6%, and 99.3% at February 28, 1997 for the Marathon Alabama
Fund, Marathon Arkansas Fund, Marathon Georgia Fund, Marathon Kentucky Fund,
Marathon Louisiana Fund, Marathon Maryland Fund, Marathon Missouri Fund,
Marathon North Carolina Fund, Marathon Oregon Fund, Marathon South Carolina
Fund, Marathon Tennessee Fund and Marathon Virginia Fund, respectively). The
performance of each Fund is directly affected by the performance of its
corresponding Portfolio. The financial statements of each Portfolio,
including the portfolio of investments, are included elsewhere in this
report and should be read in conjunction with each Fund's financial
statements. The following is a summary of significant accounting policies
consistently followed by the Trust in the preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles.
A Investment Valuations -- 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, 1996,
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. Additionally, at August 31, 1996, net capital
losses of $980,152, $207,394 and $608,261 for the Marathon Kentucky Fund,
Marathon Louisiana Fund and Marathon Oregon Fund, respectively, attributable
to security transactions incurred after October 31, 1995, are treated as
arising on the first day of the Funds' current taxable year.
39
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
C Federal Taxes (continued) -- Dividends paid by each Fund from net interest
on tax-exempt municipal bonds allocated from its corresponding Portfolio are
not able to be included 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. The amounts and expiration dates of the capital loss
carryovers are as follows:
<TABLE>
<CAPTION>
Fund Amount Expires
- --------------------------------------------------------------------------------
<S> <C> <C>
Marathon Alabama Fund $ 826,540 August 31, 2004
1,877,237 August 31, 2003
362,951 August 31, 2002
1,050 September 30, 2000
Marathon Arkansas Fund 1,802,164 August 31, 2004
561,676 August 31, 2003
241,061 August 31, 2002
Marathon Georgia Fund 6,622,861 August 31, 2004
1,197,263 August 31, 2003
151,432 August 31, 2002
Marathon Kentucky Fund 2,909,053 August 31, 2004
1,058,248 August 31, 2003
Marathon Louisiana Fund 1,622,700 August 31, 2004
278,670 August 31, 2003
Marathon Maryland Fund 1,308,929 August 31, 2004
1,208,914 August 31, 2003
Marathon Missouri Fund 1,702,533 August 31, 2004
435,519 August 31, 2003
Marathon North Carolina Fund 8,163,670 August 31, 2004
4,191,384 August 31, 2003
451,305 August 31, 2002
63,556 September 30, 2001
Marathon Oregon Fund 4,197,676 August 31, 2004
468,881 August 31, 2003
Marathon South Carolina Fund 2,757,057 August 31, 2004
1,317,687 August 31, 2003
74,010 August 31, 2002
Marathon Tennessee Fund 1,694,580 August 31, 2004
195,240 August 31, 2003
Marathon Virginia Fund 7,497,842 August 31, 2004
2,423,778 August 31, 2003
</TABLE>
D Deferred Organization Expenses -- Costs incurred by the Funds in
connection with their 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.
H Interim Financial Information -- The interim financial statements relating
to February 28, 1997 and for the six months then ended have not been audited
by independent certified public accountant, but in the opinion of the Fund's
management, reflect all adjustments, consisting of normal recurring
adjustments, necessary for the fair presentation of the financial
statements.
40
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
NOTES TO FIANCIAL STATEMENTS (Unaudited) CONT'D
2 Distributions to Shareholders
- --------------------------------------------------------------------------------
The net income of each Fund is determined daily and substantially all of the
net income so determined is declared as a dividend to shareholders of record
at the time of declaration. Distributions are paid monthly. Distributions of
allocated realized capital gains, if any, are made at least annually.
Shareholders may reinvest income and capital gain distributions in
additional shares of the Fund at the net asset value as of the ex-dividend
date. Distributions are paid in the form of additional shares or, at the
election of the shareholder, in cash. The Funds distinguish between
distributions on a tax basis and a financial reporting basis. Generally
accepted accounting principles require that only distributions in excess of
tax basis earnings and profits be reported in the financial statements as a
return of capital. Differences in the recognition or classification of
income between the financial statements and tax earnings and profits which
result in temporary over distributions for financial statement purposes are
classified as distributions in excess of net investment income or
accumulated net realized gains.
Permanent differences between book and tax accounting relating to
distributions are reclassified to paid-in capital. The tax treatment of
distributions for the calendar year will be reported to shareholders prior
to February 1, 1998 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). Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Marathon Alabama Fund
-----------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales 168,773 391,938
Issued to shareholders electing
to receive payments of distributions
in Fund shares 106,237 241,707
Redemptions (621,750) (1,321,649)
- --------------------------------------------------------------------------------
Net decrease (346,740) (688,004)
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Marathon Arkansas Fund
-----------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales 72,453 274,418
Issued to shareholders electing to
receive payments of distributions
in Fund shares 69,708 159,265
Redemptions (782,993) (1,168,773)
- --------------------------------------------------------------------------------
Net decrease (640,832) (735,090)
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Marathon Georgia Fund
------------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales 216,167 373,857
Issued to shareholders electing
to receive payments of distributions
in Fund shares 101,332 244,086
Redemptions (1,316,179) (1,990,386)
- --------------------------------------------------------------------------------
Net decrease (998,680) (1,372,443)
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Marathon Kentucky Fund
----------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales 211,798 561,028
Issued to shareholders electing
to receive payments of distributions
in Fund shares 149,533 332,092
Redemptions (1,192,813) (2,048,388)
- --------------------------------------------------------------------------------
Net decrease (831,482) (1,155,268)
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Marathon Louisiana Fund
-----------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales 82,442 395,341
Issued to shareholders electing
to receive payments of distributions
in Fund shares 34,826 77,363
Redemptions (214,807) (350,233)
- --------------------------------------------------------------------------------
Net decrease (97,539) 122,471
- --------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Marathon Maryland Fund
------------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
------------------------------------------------------------------------
<S> <C> <C>
Sales 278,488 812,572
Issued to shareholders electing
to receive payments of
distributions in Fund shares 121,688 271,666
Redemptions (723,039) (1,603,403)
------------------------------------------------------------------------
Net decrease (322,863) (519,165)
------------------------------------------------------------------------
<CAPTION>
Marathon Missouri Fund
------------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
------------------------------------------------------------------------
<S> <C> <C>
Sales 103,653 356,070
Issued to shareholders electing
to receive payments of
distributions in Fund shares 83,768 185,830
Redemptions (696,013) (1,244,942)
------------------------------------------------------------------------
Net decrease (508,592) (703,042)
------------------------------------------------------------------------
<CAPTION>
Marathon North Carolina Fund
------------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
------------------------------------------------------------------------
<S> <C> <C>
Sales 246,960 703,283
Issued to shareholders electing
to receive payments of
distributions in Fund shares 185,297 412,501
Redemptions (1,417,702) (2,988,053)
------------------------------------------------------------------------
Net decrease (985,445) (1,872,269)
------------------------------------------------------------------------
<CAPTION>
Marathon Oregon Fund
------------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
------------------------------------------------------------------------
<S> <C> <C>
Sales 314,145 490,291
Issued to shareholders electing
to receive payments of
distributions in Fund shares 150,167 332,112
Redemptions (1,338,175) (2,346,208)
------------------------------------------------------------------------
Net decrease (873,863) (1,523,805)
------------------------------------------------------------------------
<CAPTION>
Marathon South Carolina Fund
------------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
------------------------------------------------------------------------
<S> <C> <C>
Sales 143,937 462,452
Issued to shareholders electing
to receive payments of
distributions in Fund shares 55,842 119,696
Redemptions (457,666) (870,124)
------------------------------------------------------------------------
Net decrease (257,887) (287,976)
------------------------------------------------------------------------
<CAPTION>
Marathon Tennessee Fund
------------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
------------------------------------------------------------------------
<S> <C> <C>
Sales 129,788 334,666
Issued to shareholders electing
to receive payments of
distributions in Fund shares 59,566 130,351
Redemptions (416,129) (779,131)
------------------------------------------------------------------------
Net decrease (226,775) (314,114)
------------------------------------------------------------------------
<CAPTION>
Marathon Virginia Fund
------------------------------------------
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
------------------------------------------------------------------------
<S> <C> <C>
Sales 346,331 770,506
Issued to shareholders electing
to receive payments of
distributions in Fund shares 185,627 419,968
Redemptions (1,470,910) (2,518,984)
------------------------------------------------------------------------
Net decrease (938,952) (1,328,510)
------------------------------------------------------------------------
</TABLE>
4 Transactions with Affiliates
------------------------------------------------------------------------------
Eaton Vance Management (EVM) serves as the Administrator of each Fund, but
receives no compensation. Each of the Portfolios have engaged Boston
Management and Research (BMR), a subsidiary of EVM, to render investment
advisory services. See Note 2 of the Portfolios' Notes to Financial
Statements which are included elsewhere in this report. Certain of the
officers and Trustees of the Funds and Portfolios are officers and
directors/trustees of the above organizations. Except as to Trustees of the
Funds and Portfolios who are not members of EVM's or BMR's organization,
officers and Trustees receive remuneration for their services to each fund
out of the investment advisor fee earned by BMR.
42
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
5 Distribution Plan
------------------------------------------------------------------------------
Each Fund has adopted a distribution plan (the Plans) pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plans require the Funds to pay
the principal underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal
to 1/365 of 0.75% of each Fund's daily net assets, for providing ongoing
distribution services and facilities to the respective Fund. A Fund will
automatically discontinue payments to EVD during any period in which there are
no outstanding Uncovered Distribution Charges, which are equivalent to the sum
of (i) 5% of the aggregate amount received by the Fund for shares sold plus
(ii) distribution fees calculated by applying the rate of 1% over the
prevailing prime rate to the outstanding balance of Uncovered Distribution
Charges of EVD reduced by the aggregate amount of contingent deferred sales
charges (Note 6) and amounts therefore paid to EVD. The amount payable to EVD
with respect to each day is accrued on such day as a liability of each Fund
and, accordingly, reduces the Fund's net assets. For the six month period
ended February 28, 1997, Marathon Alabama Fund, Marathon Arkansas Fund,
Marathon Georgia Fund, Marathon Kentucky Fund, Marathon Louisiana Fund,
Marathon Maryland Fund, Marathon Missouri Fund, Marathon North Carolina Fund,
Marathon Oregon Fund, Marathon South Carolina Fund, Marathon Tennessee Fund
and Marathon Virginia Fund, paid $377,312, $262,613, $386,919, $481,634,
$122,552, $408,080, $303,015, $623,646, $467,135, $211,712, $201,810 and
$648,274, respectively, to EVD, representing 0.75% of average daily net
assets. At February 28, 1997, the amount of Uncovered Distribution Charges of
EVD calculated under the Plans for Marathon Alabama Fund, Marathon Arkansas
Fund, Marathon Georgia Fund, Marathon Kentucky Fund, Marathon Louisiana Fund,
Marathon Maryland Fund, Marathon Missouri Fund, Marathon North Carolina Fund,
Marathon Oregon Fund, Marathon South Carolina Fund, Marathon Tennessee Fund
and Marathon Virginia Fund were approximately $3,340,000, $2,424,000,
$3,340,000, $4,049,000, $1,279,000, $3,684,000, $2,538,000, $5,355,000,
$4,019,000, $2,059,0001, $1,857,000, and $5,363,000, respectively.
In addition, the Plans authorize the Funds to make payments of service fees to
the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of each Fund's average daily net assets for any fiscal year.
The Trustees have initially implemented the Plans by authorizing the Funds to
make quarterly service fee payments to the Principal Underwriter and
Authorized Firms in amounts not expected to exceed 0.20% per annum of each
Fund's average daily net assets based on the value of Fund shares sold by such
persons and remaining outstanding for at least one year. For the six month
period ended February 28, 1997 , Marathon Alabama Fund, Marathon Arkansas
Fund, Marathon Georgia Fund, Marathon Kentucky Fund, Marathon Louisiana Fund,
Marathon Maryland Fund, Marathon Missouri Fund, Marathon North Carolina Fund,
Marathon Oregon Fund, Marathon South Carolina Fund, Marathon Tennessee Fund
and Marathon Virginia Fund paid or accrued service fees to or payable to EVD
in the amount of $90,555, $62,626, $92,860, $120,586, $27,292, $97,937,
$72,723, $147,990, $110,309, $47,988, $47,084 and $160,285, respectively.
Service fee payments are made for personal services and/or maintenance of
shareholder accounts. Service fees paid to EVD and authorized firms are
separate and distinct from the sales commissions and distribution fees payable
by each Fund to EVD, and as such are not subject to automatic discontinuance
when there are no outstanding Uncovered Distribution Charges of EVD. Certain
officers and Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
------------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon
the lower of the net asset value at date of redemption or date of purchase. No
charge is levied on shares acquired by reinvestment of dividends or capital
gains distributions. The CDSC is imposed at declining rates that begin at 5%
in the case of redemptions in the first and second year after purchase,
declining one percentage point each subsequent year. No CDSC is levied on
shares which have been sold to EVD or its affiliates or to their respective
employees. CDSC charges are paid to EVD to reduce the amount of Uncovered
Distribution Charges calculated under each Fund's Distribution Plan (See Note
5). CDSC charges received when no Uncovered Distribution Charges exist will be
credited to the Fund. EVD received approximately $141,000, $192,000, $270,000,
$243,000, $52,000, $151,000, $152,000, $255,000, $271,000, $113,000, $85,000,
and $266,000 of CDSC paid by shareholders of Marathon Alabama Fund, Marathon
Arkansas Fund, Marathon Georgia Fund, Marathon Kentucky Fund, Marathon
Louisiana Fund, Marathon Maryland Fund, Marathon Missouri Fund, Marathon North
Carolina Fund, Marathon Oregon Fund, Marathon South Carolina Fund, Marathon
Tennessee Fund and Marathon Virginia Fund, respectively, for the six month
period ended February 28, 1997.
43
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
7 Investment Transactions
------------------------------------------------------------------------------
Increases and decreases in each Fund's investment in its corresponding
Portfolio for the six months ended February 28, 1997 were as follows:
<TABLE>
<CAPTION>
Marathon Alabama Fund
------------------------------------------------------------------------------
<S> <C>
Increases $ 2,148,201
Decreases 8,898,466
Marathon Arkansas Fund
------------------------------------------------------------------------------
Increases $ 855,097
Decreases 9,401,851
Marathon Georgia Fund
------------------------------------------------------------------------------
Increases $ 2,304,830
Decreases 15,194,962
Marathon Kentucky Fund
------------------------------------------------------------------------------
Increases $ 2,343,218
Decreases 14,375,297
Marathon Louisiana Fund
------------------------------------------------------------------------------
Increases $ 1,081,216
Decreases 3,041,306
Marathon Maryland Fund
------------------------------------------------------------------------------
Increases $ 3,058,955
Decreases 9,414,689
Marathon Missouri Fund
------------------------------------------------------------------------------
Increases $ 1,162,157
Decreases 9,062,551
Marathon North Carolina Fund
------------------------------------------------------------------------------
Increases $ 2,689,320
Decreases 17,469,596
Marathon Oregon Fund
------------------------------------------------------------------------------
Increases $ 3,363,896
Decreases 15,537,618
Marathon South Carolina Fund
------------------------------------------------------------------------------
Increases $ 1,637,063
Decreases 5,981,588
Marathon Tennessee Fund
------------------------------------------------------------------------------
Increases $ 1,231,246
Decreases 5,153,173
Marathon Virginia Fund
------------------------------------------------------------------------------
Increases $ 3,811,803
Decreases 18,688,417
</TABLE>
44
<PAGE>
Alabama Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Electric Utilities -- 0.7%
- --------------------------------------------------------------------------------
Baa1 BBB+ $ 500 Puerto Rico Electric Power
Authority, 6.38%, 7/1/24 $ 528,775
Baa1 BBB+ 180 Puerto Rico Electric Power
Authority, 7.00%, 7/1/07 193,543
- --------------------------------------------------------------------------------
$ 722,318
- --------------------------------------------------------------------------------
Escrowed/Prerefunded -- 4.8%
- --------------------------------------------------------------------------------
NR BBB $ 350 Gadsen East, AL Medical
Clinic Board (Baptist
Hospital), 7.60%, 11/1/08 $ 400,379
NR BBB 2,000 Gadsen East, AL Medical
Clinic Board (Baptist
Hospital), 7.80%, 11/1/21 2,304,020
A A- 255 Montgomery, AL (Jackson
Hospital), 7.00%, 3/1/15 278,289
Baa1 BBB+ 320 Puerto Rico Electric Power
Authority, 7.00%, 7/1/07 345,347
A1 NR 1,600 University of Alabama
Birmingham Medical and
Educational Foundation
Housing, 7.00%, 12/1/19 1,747,488
- --------------------------------------------------------------------------------
$ 5,075,523
- --------------------------------------------------------------------------------
General Obligations -- 0.6%
- --------------------------------------------------------------------------------
A1 AA $ 650 Birmingham, AL U.T.G.O.,
5.75%, 6/1/16 $ 656,708
- --------------------------------------------------------------------------------
$ 656,708
- --------------------------------------------------------------------------------
Hospitals -- 12.8%
- --------------------------------------------------------------------------------
Aa AA $1,250 Alabama Special Care
(Daughters of Charity),
5.00%, 11/1/25 $ 1,126,213
NR BBB 3,000 Alexander City, AL Special
Care (Russell Hospital),
6.00%, 12/1/22 2,902,380
Baa BBB- 1,000 Baldwin County, AL (Thomas
Hospital), 6.75%, 4/1/21 1,034,240
Baa3 NR 1,000 Cullman, AL Medical Clinic
Board (Cullman Regional
Medical Center), 6.50%,
2/15/23 1,007,680
Baa1 NR 3,550 Jasper, AL Medical Clinic
Board (Walker Regional
Medical Center), 6.38%,
7/1/18/(1)/ 3,578,542
Baa1 NR 1,000 Jasper, AL Medical Clinic
Board (Walker Regional
Medical Center), 6.40%,
7/1/11 1,015,370
- --------------------------------------------------------------------------------
Hospitals (continued)
- --------------------------------------------------------------------------------
Baa-3 BBB $2,000 Marshall, AL
(Boaz-Albertville Medical
Center), 7.00%, 1/1/20 $ 2,106,240
A A- 745 Montgomery, AL Medical
Clinic Board (Jackson
Hospital), 7.00%, 3/1/15 789,506
- --------------------------------------------------------------------------------
$ 13,560,171
- --------------------------------------------------------------------------------
Industrial Development Revenue/Pollution Control Revenue -- 13.3%
- --------------------------------------------------------------------------------
A2 NR $1,000 Commonwealth of Puerto
Rico Industrial Medical
and Environmental
Pollution Control Facility
Finance Authority
(American Home Products),
5.10%, 12/1/18 $ 925,050
Baa3 BB+ 1,000 Commonwealth of Puerto
Rico Port Authority
(American Airlines),
(AMT), 6.30%, 6/1/23 1,023,570
Baa1 BBB 1,200 Courtland, AL (Champion
International
Corporation), 7.20%,
12/1/13 1,305,576
Baa1 BBB 2,000 Courtland, AL (Champion
International Corporation)
(AMT), 6.50%, 9/1/25 2,024,880
Baa1 BBB 800 Courtland, AL (Champion
International Corporation)
(AMT), 7.00%, 6/1/22 840,520
Baa3 BBB- 2,000 Mobile, AL (Mobile
Energy), 6.95%, 1/1/20 2,126,620
Baa3 BB+ 2,780 Puerto Rico Port Authority
(American Airlines),
(AMT), 6.25%, 6/1/26 2,862,816
A3 A- 1,000 Selma, AL Solid Waste
Disposal (AMT), 6.00%,
12/1/17 990,180
A2 A+ 2,000 Tallahassee, AL (United
Tech), 6.10%, 8/1/14 2,072,100
- --------------------------------------------------------------------------------
$ 14,171,312
- --------------------------------------------------------------------------------
Insured Education -- 8.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Alabama A&M University
(MBIA), 6.38%, 11/1/09 $ 1,075,800
Aaa AAA 1,000 Alabama State University
Tuition and Fee (MBIA),
5.80%, 12/1/20 1,013,880
Aaa AAA 4,000 University of Alabama
Student Housing (MBIA),
5.00%, 6/1/16 3,752,640
Aaa AAA 2,770 University of South
Alabama Tuition (AMBAC),
5.00%, 11/15/15 2,632,470
- --------------------------------------------------------------------------------
$ 8,474,790
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
45
<PAGE>
Alabama Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insured Electric Utilities -- 9.9%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Athens, AL Electric
(MBIA), 6.00%, 6/1/25 $ 1,551,510
Aaa AAA 2,000 Columbia, AL (AL Power)
(AMBAC), 6.50%, 9/1/23 2,116,180
Aaa AAA 250 Commonwealth of Puerto
Rico Electric Power
Authority STRIPES (FSA),
Variable, 7/1/03/(2)/ 276,250
Aaa AAA 2,500 Dekalb and Cherokee
County, AL Gas District
(AMBAC), 5.50%, 3/1/21 2,449,425
Aaa AAA 2,000 Tuskegee, AL Utilities
Board (AMBAC), 5.50%,
2/1/22 1,948,320
Aaa AAA 2,000 Wilsonville, AL Pollution
Control Board (MBIA),
6.75%, 2/1/15 2,160,280
- --------------------------------------------------------------------------------
$ 10,501,965
- --------------------------------------------------------------------------------
Insured General Obligations -- 8.4%
- --------------------------------------------------------------------------------
Aaa AAA $ 250 Fairfield City, AL
(AMBAC), 6.30%, 6/1/22 $ 265,728
Aaa AAA 1,400 Greenville, AL (AMBAC),
5.25%, 12/1/21 1,330,168
Aaa AAA 2,065 Hoover, AL (AMBAC), 5.00%,
3/1/20 1,887,142
Aaa AAA 3,250 Madison, AL School
Warrants (MBIA), 6.00%,
2/1/24 3,352,830
Aaa AAA 1,535 North Port, AL (AMBAC),
5.70%, 3/1/21 1,541,846
Aaa AAA 500 Troy City, AL (CAPG),
6.60%, 6/1/12 552,165
- --------------------------------------------------------------------------------
$ 8,929,879
- --------------------------------------------------------------------------------
Insured Hospitals -- 5.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,810 Bessemer, AL Medical
Clinic Board (MBIA),
6.00%, 5/15/19 $ 1,846,091
Aaa AAA 2,000 Huntsville, AL Health Care
Facilities (MBIA), 6.50%,
6/1/13 2,178,960
Aaa AAA 1,500 University of Alabama
Hospital Revenue -
Birmingham (MBIA), 5.00%,
10/1/14 1,428,240
- --------------------------------------------------------------------------------
$ 5,453,291
- --------------------------------------------------------------------------------
Insured Miscellaneous -- 4.9%
- --------------------------------------------------------------------------------
Aaa AAA $4,500 Alabama State Docks
Department (MBIA) (AMT),
6.30%, 10/1/21 $ 4,705,064
Aaa AAA $1,825 Birmingham Jefferson, AL
Civic Center Authority
(MBIA), 0%, 9/1/18 $ 542,919
- --------------------------------------------------------------------------------
$ 5,247,983
- --------------------------------------------------------------------------------
Insured Solid Waste -- 4.4%
- --------------------------------------------------------------------------------
Aaa AAA $ 350 Huntsville, AL Solid Waste
Disposal (FGIC) (AMT),
7.00%, 10/1/08 $ 378,774
Aaa AAA 4,000 Huntsville, AL Solid Waste
Disposal (FGIC) (AMT),
7.00%, 10/1/14 4,322,000
- --------------------------------------------------------------------------------
$ 4,700,774
- --------------------------------------------------------------------------------
Insured Transportation -- 1.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Huntsville-Madison County
Airport, AL (AMT) (MBIA),
5.40%, 7/1/19/(3)/ $ 1,424,370
- --------------------------------------------------------------------------------
$ 1,424,370
- --------------------------------------------------------------------------------
Insured Water and Sewer -- 20.6%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Alabama Water Pollution
Control Authority (AMBAC),
5.00%, 8/15/15 $ 1,402,125
Aaa AAA 2,000 Bessemer, AL Water
(AMBAC), 5.75%, 7/1/26 2,015,580
Aaa AAA 2,000 Chilton, AL Water
Authority (AMBAC), 5.50%,
4/1/21 1,959,380
Aaa AAA 1,000 Fort Payne, AL Waterworks
Board (MBIA), 5.25%, 7/1/26 946,350
Aaa AAA 2,500 Jefferson County, AL Sewer
Revenue (FGIC), 5.38%,
2/1/27 2,392,475
Aaa AAA 3,075 Prichard, AL Water and
Sewer (AMBAC), 6.13%,
11/15/14 3,242,680
Aaa AAA 1,400 Satsuma, AL Waterworks and
Sewer (MBIA), 6.00%, 7/1/25 1,448,384
Aaa AAA 6,000 Scottsboro, AL Water,
Sewer and Gas (AMBAC),
6.50%, 12/1/14/(4)/ 6,554,399
Aaa AAA 750 West Morgan-East Lawrence,
AL Water Authority (FGIC),
6.00%, 5/1/22 762,495
Aaa AAA 1,000 West Morgan-East Lawrence,
AL Water Authority (FSA),
6.85%, 8/15/25 1,152,330
- --------------------------------------------------------------------------------
$ 21,876,198
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
46
<PAGE>
Alabama Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lease Revenue / Certificates of Participation -- 0.5%
- --------------------------------------------------------------------------------
NR BBB $ 500 Puerto Rico (Guaynabo
Municipal Government
Center Lease), 5.63%,
7/1/22 $ 472,280
- --------------------------------------------------------------------------------
$ 472,280
- --------------------------------------------------------------------------------
Miscellaneous -- 0.1%
- --------------------------------------------------------------------------------
NR A $ 100 Tennessee Valley, AL
Exhibit Commission, 6.70%,
6/1/10 $ 109,869
- --------------------------------------------------------------------------------
$ 109,869
- --------------------------------------------------------------------------------
Nursing Homes -- 0.9%
- --------------------------------------------------------------------------------
NR NR $ 325 Fairhope, AL Midtown
Medical Clinic Board
(Beverly Enterprises),
6.38%, 6/1/09 $ 319,491
NR NR 670 Mobile, AL Midtown Medical
Clinic Board (Beverly
Enterprises), 7.00%, 4/1/07 677,759
- --------------------------------------------------------------------------------
$ 997,250
- --------------------------------------------------------------------------------
Special Tax Revenue -- 0.3%
- --------------------------------------------------------------------------------
NR NR $ 250 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 $ 270,778
- --------------------------------------------------------------------------------
$ 270,778
- --------------------------------------------------------------------------------
Transportation -- 2.0%
- --------------------------------------------------------------------------------
NR BBB $2,000 Guam Airport Authority
(AMT), 6.70%, 10/1/23 $ 2,070,400
- --------------------------------------------------------------------------------
$ 2,070,400
- --------------------------------------------------------------------------------
Water and Sewer -- 1.4%
- --------------------------------------------------------------------------------
NR NR $1,500 Moulton City, AL Water,
6.30%, 1/1/18 $ 1,513,215
- --------------------------------------------------------------------------------
$ 1,513,215
- --------------------------------------------------------------------------------
Total Tax Exempt Investments -- 100.0%
(identified cost $100,675,836) $106,229,074
- --------------------------------------------------------------------------------
</TABLE>
/(1)/ Security 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 has been segregated to cover when-issued securities.
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Alabama
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1997, 62.6% 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 0.5% to 27.6% of total investments.
See notes to financial statements
47
<PAGE>
Arkansas Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Colleges and Universities -- 3.0%
<S> <C> <C> <C> <C>
NR A+ $2,000 Conway, AR Public
Facilities Board Capital
Improvement (Hendrix
College), 6.00%, 10/1/26 $ 2,038,560
- --------------------------------------------------------------------------
$ 2,038,560
- --------------------------------------------------------------------------
Electric Utilities -- 8.7%
- --------------------------------------------------------------------------
A NR $1,750 Conway, AR Electric,
5.70%, 8/1/09 $ 1,785,665
NR BBB 1,250 Guam Power Authority,
5.25%, 10/1/23 1,110,238
Baa2 BBB 1,000 Independence, AR Pollution
Control (AR Power and
Light), 6.25%, 1/1/21 1,017,370
Baa2 BBB- 750 Jefferson, AR Pollution
Control (AR Power and
Light), 6.13%, 10/1/07 750,090
Baa2 BBB 550 Jefferson, AR Pollution
Control (AR Power and
Light), 6.30%, 6/1/18 565,422
Baa2 BBB 500 Pope County, AR Pollution
Control (AR Power and
Light), 6.30%, 12/1/16 514,020
Baa1 BBB+ 500 Puerto Rico Electric Power
Authority, 0%, 7/1/17 156,085
- --------------------------------------------------------------------------
$ 5,898,890
- --------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.7%
- --------------------------------------------------------------------------
Aaa AAA $ 500 Arkansas Development
Finance Authority
Wastewater System (MBIA),
7.00%, 6/1/14 $ 554,605
Aaa AAA 500 Harrison, AR Residential
Housing Facility Board
Single Family Mortgage
(FGIC), 7.40%, 9/1/11 606,215
- --------------------------------------------------------------------------
$ 1,160,820
- --------------------------------------------------------------------------
General Obligations -- 3.2%
- ----------------------------------------------------------------
Aa AA $1,000 Arkansas State Capital
Appreciation College, 0%,
6/1/14 $ 387,460
Aa AA 750 Arkansas State College
Savings, 0%, 6/1/13 309,443
Aa AA 2,750 Arkansas State College
Savings, 0%, 6/1/14 1,065,515
Aa AA 1,000 Arkansas State College
Savings, 0%, 6/1/14 387,460
- --------------------------------------------------------------------------
$ 2,149,878
- --------------------------------------------------------------------------
Hospitals -- 17.4%
- --------------------------------------------------------------------------
Aa NR $2,750 Arkansas Development
Finance Authority Health
Care Facilities (Sisters of
Mercy), 5.00%, 6/1/19 $ 2,562,807
Baa NR 700 Baxter, AR Hospital
Improvement, 7.25%, 9/1/07 750,057
Baa NR 750 Baxter, AR Hospital
Improvement, 7.50%, 9/1/21 804,353
NR A 1,000 Little Rock, AR Health
Facilities Board (Baptist
Medical Center-Parkway
Village), 7.00%, 10/1/17 1,077,000
NR A+ 1,500 Little Rock, AR Health
Facilities Board Healthcare
(Baptist Medical Center),
5.50%, 9/1/15 1,463,445
NR A+ 1,125 Little Rock, AR Health
Facilities Board Hospital
(Baptist Medical Center),
6.80%, 11/1/05 /(2)/ 1,263,994
NR BBB 1,500 Paragould, AR Hospital,
6.38%, 10/1/17 1,523,850
NR A- 2,250 Pulaski County, AR
Hospitals (Children's
Hospital), 6.20%, 3/1/22 2,301,930
- --------------------------------------------------------------------------
$11,747,436
- --------------------------------------------------------------------------
Housing -- 10.2%
- --------------------------------------------------------------------------
A NR $3,000 Arkansas Development
Finance Authority Compound
Accretion, 0%, 12/1/11 $ 1,012,500
NR AAA 1,295 Arkansas Development
Finance Authority Single
Family Mortgage (GNMA)
(AMT), 5.80%, 6/1/25 1,284,200
NR AAA 1,000 Arkansas Development
Finance Authority Single
Family Mortgage (GNMA)
(AMT), 7.45%, 1/1/27 1,086,010
NR AAA 3,395 Arkansas Development
Finance Authority Single
Family Mortgage (GNMA/FNMA)
(AMT), 6.70%, 7/1/27 3,515,725
- --------------------------------------------------------------------------
$ 6,898,435
- --------------------------------------------------------------------------
Industrial Development Revenue / Pollution
Control Revenue -- 17.5%
- --------------------------------------------------------------------------
NR A- $ 750 Arkansas State Development
Finance Authority Economic
Development, 6.00%, 10/1/11 $ 761,693
Baa2 BBB 2,350 Baxter, AR (Aeroquip
Corporation), 5.80%, 10/1/13 2,360,317
</TABLE>
See notes to financial statements
48
<PAGE>
Arkansas Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control
Revenue (continued)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A1 AA- $2,500 Blytheville, AR Solid Waste
Recycling and Sewer
Treatment (Nucor
Corporation) (AMT), 6.90%,
12/1/21 $ 2,663,649
A2 NR 750 Commonwealth of Puerto Rico
Industrial Medical and
Environmental Pollution
Control Facility Finance
Authority (American Home
Products), 5.10%, 12/1/18 693,788
Baa3 BB+ 2,740 Commonwealth of Puerto Rico
Port Authority (American
Airlines), (AMT), 6.30%,
6/1/23 2,804,581
A3 A- 735 Gurdon, AR Pollution
Control (International
Paper), 5.75%, 2/1/08 735,044
A1 AA- 1,000 Jonesboro, AR
(Anheuser-Busch), 6.50%,
11/15/12 1,066,410
A3 A- 775 Pine Bluff, AR Solid Waste
Disposal (International
Paper) (AMT), 5.55%, 10/1/17 744,380
- --------------------------------------------------------------------------
$11,829,862
- --------------------------------------------------------------------------
Insured Education -- 0.8%
- --------------------------------------------------------------------------
Aaa AAA $ 500 University of Central
Arkansas (AMBAC), 6.13%,
4/1/26 $ 527,150
- --------------------------------------------------------------------------
$ 527,150
- --------------------------------------------------------------------------
Insured Electric Utilities -- 8.5%
- --------------------------------------------------------------------------
Aaa AAA $ 450 Commonwealth of Puerto Rico
Electric Power Authority
STRIPES (FSA), Variable,
7/1/03/(1)/ $ 497,250
Aaa AAA 250 North Little Rock, AR
Electric System (MBIA),
6.50%, 7/1/10 283,425
Aaa AAA 3,390 North Little Rock, AR
Electric System (MBIA),
6.50%, 7/1/15 3,856,734
Aaa AAA 1,000 West Memphis, AR Public
Utilities System (MBIA),
6.60%, 1/1/09 1,108,390
- --------------------------------------------------------------------------
$ 5,745,799
- --------------------------------------------------------------------------
Insured General Obligations -- 1.7%
- --------------------------------------------------------------------------
Aaa AAA $ 750 Lincoln, AR School District
(MBIA), 5.00%, 2/1/18 $ 702,368
Aaa AAA 500 Springdale, AR School
District (AMBAC), 5.13%,
6/1/16 474,160
- --------------------------------------------------------------------------
$ 1,176,528
- --------------------------------------------------------------------------
Insured Hospitals -- 5.3%
- --------------------------------------------------------------------------
Aaa AAA $2,610 Jonesboro, AR Residential
Housing and Health Care
Facilities Board Hospital
(Saint Bernard Regional
Medical Center) (AMBAC),
5.90%, 7/1/16 $ 2,671,543
Aaa AAA 400 Saline County, AR
Retirement Housing and
Healthcare Facilities Board
(Evan Lutheran Good
Samaritan) (AMBAC), 5.80%,
6/1/11 413,552
Aaa AAA 500 Saline County, AR
Retirement Housing and
Healthcare Facilities Board
(Evan Lutheran Good
Samaritan) (AMBAC), 6.00%,
6/1/18 513,530
- --------------------------------------------------------------------------
$ 3,598,625
- --------------------------------------------------------------------------
Insured Transportation -- 0.8%
- --------------------------------------------------------------------------
Aaa AAA $ 500 Little Rock, AR Municipal
Airport (MBIA), 6.00%,
11/1/14 $ 515,805
- --------------------------------------------------------------------------
$ 515,805
- --------------------------------------------------------------------------
Insured Water and Sewer -- 5.8%
- --------------------------------------------------------------------------
Aaa AAA $2,000 Arkansas Development
Finance Authority
Wastewater System (MBIA),
5.00%, 6/1/15 $ 1,902,120
Aaa AAA 1,250 Arkansas Development
Finance Authority
Wastewater System (MBIA),
5.40%, 12/1/15 1,240,138
Aaa AAA 300 Beaver, AR Water District
(MBIA), 5.85%, 11/15/08 314,895
Aaa AAA 500 Jonesboro, AR Water and
Light (AMBAC), 5.25%,
12/1/13 491,485
- --------------------------------------------------------------------------
$ 3,948,638
- --------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 0.3%
- --------------------------------------------------------------------------
NR BBB $ 250 Puerto Rico (Guaynabo
Municipal Government Center
Lease), 5.63%, 7/1/22 $ 236,140
- --------------------------------------------------------------------------
$ 236,140
- --------------------------------------------------------------------------
Pooled Loans -- 2.5%
- --------------------------------------------------------------------------
A NR $1,000 Arkansas State Student Loan
Authority (AMT), 6.25%,
6/1/10 $ 1,020,650
A NR 610 Arkansas State Student Loan
Authority (AMT), 7.25%,
6/1/09 667,371
- --------------------------------------------------------------------------
$ 1,688,021
- --------------------------------------------------------------------------
</TABLE>
See notes to financial statements
49
<PAGE>
Arkansas Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Special Tax Revenue -- 4.8%
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A NR $2,000 Little Rock, AR Hotel and
Restaurant Gross Receipts
Tax, 7.38%, 8/1/15 $ 2,403,360
NR NR 750 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 812,333
- --------------------------------------------------------------------------
$ 3,215,693
- --------------------------------------------------------------------------
Water and Sewer -- 7.8%
- --------------------------------------------------------------------------
NR NR $1,250 Cross, AR Rural Water,
5.75%, 4/1/18 $ 1,246,900
A1 NR 2,500 Little Rock, AR Sewer,
5.50%, 8/1/14 2,501,750
NR NR 1,500 South Sebastian County, AR
Water Users Association,
6.15%, 6/1/23 1,532,190
- --------------------------------------------------------------------------
$ 5,280,840
- --------------------------------------------------------------------------
Total Tax Exempt Investments -- 100.0%
(identified cost $65,038,418) $67,657,120
- --------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ Security has been segregated to cover margin requirements on open
financial futures contracts.
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Arkansas
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1997, 22.9% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.7% to 15.5% of total investments.
See notes to financial statements
50
<PAGE>
Georgia Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 12.9%
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A1 A $ 2,000 Burke County, Development
Authority Pollution Control
(Georgia Power), 6.38%,
8/1/24 $ 2,048,820
A A 1,000 Georgia Municipal Electric
Power Authority, 0%, 1/1/12 425,560
A A 2,000 Georgia Municipal Electric
Power Authority, 8.25%,
1/1/11 2,522,260
A1 A+ 1,000 Monroe County, Development
Authority Pollution Control
(Gulf Power Scherer),
6.30%, 9/1/24 1,024,430
A3 A+ 1,000 Monroe County, Development
Authority Pollution Control
(Ogelthorpe Power), 6.70%,
1/1/09 1,124,690
A3 A+ 1,000 Monroe County, Development
Authority Pollution Control
(Ogelthorpe Power), 6.80%,
1/1/12 1,133,900
A3 A+ 4,000 Monroe County, Development
Authority Pollution Control
(Ogelthorpe Power), 6.55%,
1/1/06 4,387,440
Baa1 BBB+ 665 Puerto Rico Electric Power
Authority, 0%, 7/1/17 207,593
- --------------------------------------------------------------------------------
$12,874,693
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 305 Chatham County, Memorial
Medical Center, (MBIA),
6.85%, 1/1/21 $ 336,799
Aaa AAA 675 Chatham County, Memorial
Medical Center, (MBIA),
7.00%, 1/1/21 748,919
- --------------------------------------------------------------------------------
$ 1,085,718
- --------------------------------------------------------------------------------
General Obligations -- 7.8%
- --------------------------------------------------------------------------------
Aa AA- $ 300 City of Alpharetta, 6.50%,
5/1/10/(1)/ $ 340,683
Aa AA 2,000 City of Atlanta, 6.13%,
12/1/23 2,087,840
Baa1 A 1,875 Commonwealth of Puerto Rico
Aqueduct and Sewer
Authority, 5.00%, 7/1/19 1,702,500
Baa1 A 1,000 Commonwealth of Puerto Rico
Aqueduct and Sewer
Authority, 6.25%, 7/1/12 1,092,750
Aa1 AA+ 1,480 Gwinnett County, Water and
Sewer, 6.50%, 8/1/06 1,483,594
A A 450 Paulding County School
District, 6.63%, 2/1/08 511,979
Aaa AA+ $ 500 State of Georgia, 6.30%,
3/1/08/(1)/ $ 560,595
- --------------------------------------------------------------------------------
$ 7,779,941
- --------------------------------------------------------------------------------
Hospitals -- 12.5%
- --------------------------------------------------------------------------------
A2 NR $ 4,500 City of Savannah (Saint
Josephs Hospital Project),
6.20%, 7/1/23 $ 4,556,475
Baa1 NR 3,500 Fulco County, Georgia
Baptist Health, 6.38%,
9/1/22 3,552,640
NR BBB 1,785 Toombs County, GA (Dr. John
M. Meadows Memorial),
7.00%, 12/1/17 1,861,077
NR BBB+ 2,450 Tri City Hospital
Authority, 6.38%, 7/1/16 2,452,867
- --------------------------------------------------------------------------------
$12,423,059
- --------------------------------------------------------------------------------
Housing -- 11.4%
- --------------------------------------------------------------------------------
Aa NR $ 1,450 Georgia Housing and Finance
Authority, (AMT), 6.88%,
12/1/20 $ 1,509,755
Aa AA+ 3,985 Georgia Housing and Finance
Authority, Single Family
Mortgage, (AMT), 6.55%,
12/1/27 4,114,831
Aa AA+ 2,395 Georgia Housing and Finance
Authority, Single Family
Mortgage, (AMT), 6.70%,
12/1/25 2,488,764
Aa AA+ 1,500 Georgia Housing and Finance
Authority, Single Family
Mortgage, (FHA), (AMT),
7.05%, 12/1/20 1,587,615
Aa AA+ 1,555 Georgia Housing and Finance
Authority, Single Family
Mortgage, (FHA), (AMT),
7.12%, 12/1/26 1,632,221
- --------------------------------------------------------------------------------
$11,333,186
- --------------------------------------------------------------------------------
Industrial Development Revenue/Pollution
Control Revenue -- 9.4%
- --------------------------------------------------------------------------------
A1 AA- $ 1,000 Cartersville Development
Authority,
(Anheuser-Busch), (AMT),
7.38%, 5/1/09 $ 1,175,140
A2 NR 1,245 Commonwealth of Puerto Rico
Industrial Medical and
Environmental Pollution
Control Facility Finance
Authority (American Home
Products), 5.10%, 12/1/18 1,151,687
Baa3 BB+ 2,250 Commonwealth of Puerto Rico
Port Authority (American
Airlines) (AMT), 6.25%,
6/1/26 2,317,028
</TABLE>
See notes to financial statements
51
<PAGE>
Georgia Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Industrial Development Revenue/
Pollution Control Revenue (continued)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR AA- $ 500 Savannah Economic
Development Authority
(Hershey Foods), 6.60%,
6/1/12 $ 541,255
NR NR 1,250 Savannah Economic
Development Authority
(Savannah Incorporated)
(AMT), 9.00%, 1/1/15 1,333,550
A1 A- 750 Savannah Economic
Development Authority
(Union Camp Corporation),
6.80%, 2/1/12 808,035
NR AA- 2,000 Vienna Water and Sewer
(Cargill Project) (AMT),
6.00%, 9/1/14 2,065,440
- --------------------------------------------------------------------------------
$ 9,392,135
- --------------------------------------------------------------------------------
Insured Electric Utilities -- 6.6%
- --------------------------------------------------------------------------------
Aaa AAA $ 900 Commonwealth of Puerto Rico
Electric Power Authority
STRIPES (FSA), Variable,
7/1/03/(2)/ $ 994,500
Aaa AAA 1,000 Cordele Public Utility
Authority, (MBIA), 6.50%,
11/1/19 1,091,810
Aaa AAA 750 Georgia Municipal Electric
Power Authority (BIGI), 0%,
1/1/07 459,090
Aaa AAA 1,000 Georgia Municipal Electric
Power Authority (FGIC),
5.50%, 1/1/12 1,011,570
Aaa AAA 3,000 Georgia Municipal Electric
Power Authority, (MBIA),
5.50%, 1/1/20 2,990,100
- --------------------------------------------------------------------------------
$ 6,547,070
- --------------------------------------------------------------------------------
Insured General Obligations -- 0.5%
- --------------------------------------------------------------------------------
NR AAA $ 500 Commonwealth of Puerto
Rico, Public Improvement
Bonds, (AMBAC), Variable, $ 518,750
7/1/15/(2)/
- --------------------------------------------------------------------------------
$ 518,750
- --------------------------------------------------------------------------------
Insured Hospitals -- 18.4%
- --------------------------------------------------------------------------------
Aaa AAA $ 1,000 Chatham County (MBIA),
5.50%, 1/1/21 $ 970,850
Aaa AAA 1,000 Clarke County, Hospital
Authority (MBIA), 5.00%,
1/1/27 904,700
Aaa AAA 1,300 Cobb County, Hospital
Authority, Kennestone
Hospital, (MBIA), 5.00%,
4/1/24 1,170,975
Aaa AAA 2,000 Fulco County, Northside,
(MBIA), 5.13%, 10/1/16 1,879,820
Aaa AAA 2,225 Gainsville and Hall County,
(North East Healthcare),
(MBIA), 6.00%, 10/1/25 2,276,509
Aaa AAA 1,500 Gwinnett County, Gwinnett
Hospital, (AMBAC), 5.00%,
9/1/13 1,425,555
Aaa AAA 2,000 Liberty County (MBIA),
5.25%, 8/1/21 1,885,800
Aaa AAA 2,500 Macon-Bibb County, Medical
Center of Central Georgia,
(FGIC), 5.00%, 8/1/14 2,367,625
Aaa AAA 1,500 Medical Center Hospital
Authority Floats (MBIA),
Variable, 8/1/10/(2)/ 1,708,125
Aaa AAA 2,000 Medical Center, Columbus
Regional Healthcare,
(MBIA), 6.40%, 8/1/06 2,176,560
Aaa AAA 1,375 Walker, Dade and Catoosa
Counties Hospital, (FGIC),
7.00%, 10/1/10 1,521,878
- --------------------------------------------------------------------------------
$18,288,397
- --------------------------------------------------------------------------------
Insured Lease Revenue / Certificates of
Participation -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 1,000 East Point Building
Authority, (FGIC), 6.00%,
2/1/10 $ 1,055,400
- --------------------------------------------------------------------------------
$ 1,055,400
- --------------------------------------------------------------------------------
Insured Special Tax Revenue -- 4.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 1,000 City of Atlanta and Fulton
County, Recreation
Authority (MBIA), 5.38%,
12/1/26 $ 961,200
Aaa AAA 1,000 Metropolitan Atlanta Rapid
Transit Authority, (AMBAC),
5.13%, 7/1/19 933,160
Aaa AAA 1,000 Metropolitan Atlanta Rapid
Transit Authority, (AMBAC),
6.25%, 7/1/11 1,104,600
Aaa AAA 1,000 Metropolitan Atlanta Rapid
Transit Authority, (AMBAC),
6.25%, 7/1/20 1,097,140
- --------------------------------------------------------------------------------
$ 4,096,100
- --------------------------------------------------------------------------------
Insured Water and Sewer -- 4.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 1,975 Cherokee County, Water and
Sewer Authority (MBIA),
6.88%, 8/1/13 $ 2,179,808
Aaa AAA 2,700 City of Atlanta, Water and
Sewer (FGIC), 5.00%, 1/1/15 2,554,929
- --------------------------------------------------------------------------------
$ 4,734,737
- --------------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 1.1%
- --------------------------------------------------------------------------------
Aa AA $ 2,300 Fulton County, Building
Authority, Judicial Center,
0%, 1/1/10 $ 1,153,036
- --------------------------------------------------------------------------------
$ 1,153,036
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
52
<PAGE>
Georgia Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Life Care -- 1.6%
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR NR $ 1,500 De Kalb County, Private
Hospital Authority (Atlanta
Incorporated), 8.50%, 3/1/25 $ 1,561,770
- --------------------------------------------------------------------------------
$ 1,561,770
- --------------------------------------------------------------------------------
Miscellaneous -- 1.0%
- --------------------------------------------------------------------------------
NR NR $ 1,000 City of Atlanta, Downtown
Development Authority
Childcare Facilities
(Central Atlanta
Hospitality Childcare,
Incorporated), 8.00%, 1/1/26 $ 979,240
- --------------------------------------------------------------------------------
$ 979,240
- --------------------------------------------------------------------------------
Solid Waste -- 1.1%
- --------------------------------------------------------------------------------
A1 A+ 1,000 Savannah Resource Recovery
(Savannah Energy Systems
Company), 6.30%, 12/1/06 $ 1,055,310
- --------------------------------------------------------------------------------
$ 1,055,310
- --------------------------------------------------------------------------------
Special Tax Revenue -- 4.7%
- --------------------------------------------------------------------------------
Baa1 A $ 2,250 Commonwealth of Puerto Rico
Highway and Transportation
Authority, 5.00%, 7/1/36 $ 1,999,013
Baa1 A 1,250 Commonwealth of Puerto Rico
Highway and Transportation
Authority, 5.50%, 7/1/36 1,200,450
NR NR 1,400 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 1,516,354
- --------------------------------------------------------------------------------
$ 4,715,817
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $94,112,523) $99,594,359
- --------------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been segregated to cover margin requirements on open
financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Georgia
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1997, 35.4% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 1.0% to 19.9% of total investments.
See notes to financial statements
53
<PAGE>
Kentucky Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education -- 2.7%
- -----------------------------------------------------------------------------
A1 AA- $ 500 University of Kentucky
Consolidated Educational
Buildings, 6.40%, 5/1/09 $ 533,405
A1 AA- 785 University of Kentucky
Consolidated Educational
Buildings, 6.40%, 5/1/11 833,066
A1 AA- 1,000 University of Louisville
Consolidated Educational
Buildings, 5.40%, 5/1/08 1,020,380
A1 AA- 1,000 University of Louisville
Consolidated Educational
Buildings, 5.40%, 5/1/11 1,004,310
- -----------------------------------------------------------------------------
$ 3,391,161
- -----------------------------------------------------------------------------
Electric Utilities -- 6.9%
- -----------------------------------------------------------------------------
Aa2 AA- $3,450 Carroll County, KY
Collateralized Solid Waste
Disposal Facilities
(Kentucky Utilities
Company), 5.75%, 12/1/23 $ 3,463,662
NR BBB 400 Guam Power Authority,
5.25%, 10/1/23 355,276
Aa2 AA- 1,000 Muhlenburg County, KY
Collateralized Pollution
Control, Utilities
Company, 6.25%, 2/1/18 1,048,340
Baa1 BBB+ 3,500 Puerto Rico Electric Power
Authority, 0%, 7/1/17 1,092,595
Baa1 BBB+ 500 Puerto Rico Electric Power
Authority, 5.50%, 7/1/25 475,550
Baa1 BBB+ 2,250 Puerto Rico Electric Power
Authority, 6.38%, 7/1/24 2,379,488
- -----------------------------------------------------------------------------
$ 8,814,911
- -----------------------------------------------------------------------------
Escrowed / Prerefunded -- 5.1%
- -----------------------------------------------------------------------------
NR NR $ 190 Kentucky Development
Finance Authority, Saint
Claire Medical Center,
7.12%, 9/1/21 $ 212,015
Aaa NR 510 Lexington-Fayette County,
KY Government Public
Facilities, 6.40%, 4/1/12 562,622
Aaa AAA 4,155 Puerto Rico Highway and
Transportation Authority -
Highway Revenue, 6.63%,
7/1/18 4,656,798
Aaa A 1,000 University of Puerto Rico
Revenue, 6.50%, 6/1/13 1,035,650
- -----------------------------------------------------------------------------
$ 6,467,085
- -----------------------------------------------------------------------------
General Obligations -- 1.2%
- -----------------------------------------------------------------------------
Baa1 A $ 500 Commonwealth of Puerto
Rico, 5.40%, 7/1/25 $ 474,625
NR A+ 1,030 Kentucky League of Cities
Funding Trust Floating
Indebtedness Certificates
of Participation, 6.15%,
8/1/13 1,082,468
- -----------------------------------------------------------------------------
$ 1,557,093
- -----------------------------------------------------------------------------
Hospitals -- 0.9%
- -----------------------------------------------------------------------------
Baa1 BBB $ 975 Russell County, KY
Franciscan Sisters of the
Poor Health System, 8.10%,
7/1/15 $ 1,100,902
- -----------------------------------------------------------------------------
$ 1,100,902
- -----------------------------------------------------------------------------
Housing -- 3.7%
- -----------------------------------------------------------------------------
NR AAA $1,470 Boone County, KY
Multifamily Housing
Mortgage, Walnut Creek
Apartments, (FHA), 7.00%,
1/1/27 $ 1,529,623
Aaa AAA 2,500 Kentucky Housing
Corporation, Multifamily
Mortgage, 6.30%, 1/1/28 2,540,250
Aaa AAA 680 Kentucky Housing
Corporation, Single Family
Mortgage, (FHA), (AMT),
7.45%, 1/1/23 714,456
- -----------------------------------------------------------------------------
$ 4,784,329
- -----------------------------------------------------------------------------
Industrial Development Revenue/Pollution
Control Revenue -- 21.0%
- -----------------------------------------------------------------------------
Baa1 NR $2,425 Ashland, KY Sewerage and
Solid Waste Disposal
(AMT), 7.12%, 2/1/22 $ 2,627,197
NR NR 1,000 City of Elsmmere, KY,
6.75%, 4/1/10 1,034,210
A2 NR 1,190 Commonwealth of Puerto
Rico Industrial Medical
and Environmental
Pollution Control Facility
Finance Authority
(American Home Products),
5.10%, 12/1/18 1,100,810
Baa3 BB+ 500 Commonwealth of Puerto
Rico Port Authority
(American Airlines),
(AMT), 6.30%, 6/1/23 511,785
NR NR 3,075 Fulton County, KY
Industrial Building,
H.I.S. - Chic Jeans,
(AMT), 7.50%, 2/1/10 3,146,186
NR A- 2,370 Hancock County, KY Soild
Waste Disposal
(Williamette Corporation)
(AMT), 6.60%, 5/1/26 2,459,681
</TABLE>
See notes to financial statements
54
<PAGE>
Kentucky Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Industrial Development Revenue/
Pollution Control Revenue (continued)
- -----------------------------------------------------------------------------
NR NR $1,500 Hancock County, KY Solid
Waste Disposal (Southwire
Company) (AMT), 7.75%,
7/1/26 $ 1,551,945
Baa2 BBB- 3,000 Henderson County, KY Solid
Waste Disposal (MacMillan
Bloedel) (AMT), 7.00%,
3/1/25 3,181,320
Aa3 AA- 1,000 Jefferson County, KY
Pollution Control (E.I. du
Pont de Nemours), 6.30%,
7/1/12 1,078,490
Aa NR 3,000 Kenton County, KY (FHA),
6.95%, 12/1/26/(4)/ 3,249,810
NR BB- 985 Owensboro County, KY
(KMart Corporation),
6.80%, 12/1/07 998,268
NR NR 1,500 Perry County, Solid Waste
Disposal (TJI International),
6.80%, 5/1/26 1,547,685
NR BB- 915 Powderly, KY (KMart
Corporation), 6.90%, 3/1/07 932,257
A1 A 2,820 Wickliffe, KY Solid Waste
Disposal (Westvaco
Corporation) (AMT), 6.38%,
4/1/26 2,922,140
Baa3 NR 500 Winchester County, KY
(Kroger Corporation),
6.90%, 7/1/01 512,695
- -----------------------------------------------------------------------------
$ 26,854,479
- -----------------------------------------------------------------------------
Industrial Development Revenue/Pollution
Control Revenue -- 2.0%
- -----------------------------------------------------------------------------
Baa1 BBB $2,355 Ashland, KY Solid Waste
Disposal (AMT), 7.20%,
10/1/20 $ 2,507,180
- -----------------------------------------------------------------------------
$ 2,507,180
- -----------------------------------------------------------------------------
Insured Education -- 0.6%
- -----------------------------------------------------------------------------
Aaa AAA $ 700 Northern, KY University
Educational Buildings
(AMBAC), 6.25%, 5/1/12 $ 743,155
- -----------------------------------------------------------------------------
$ 743,155
- -----------------------------------------------------------------------------
Insured Electric Utilities -- 2.0%
- -----------------------------------------------------------------------------
Aaa AAA $1,000 Boone County, KY Pollution
Control, (MBIA), 5.50%,
1/1/24/(1)/ $ 963,950
Aaa AAA 1,600 Commonwealth of Puerto
Rico, Telephone Authority,
(MBIA), Variable,
1/16/15/(2)/ 1,548,000
- -----------------------------------------------------------------------------
$ 2,511,950
- -----------------------------------------------------------------------------
Insured General Obligations -- 2.0%
- -----------------------------------------------------------------------------
Aaa AAA $1,695 Jefferson County, KY
School District Finance
Corporation, (FSA), 5.13%,
11/1/15 $ 1,639,302
Aaa AAA 1,000 Jefferson County, KY
School District Finance
Corporation, (MBIA),
4.88%, 1/1/13 936,910
- -----------------------------------------------------------------------------
$ 2,576,212
- -----------------------------------------------------------------------------
Insured Hospitals -- 10.3%
- -----------------------------------------------------------------------------
Aaa AAA $2,500 Daviess County, KY ODCH
Incorporated, (MBIA),
6.25%, 8/1/22/(4)/ $ 2,630,800
Aaa AAA 2,500 Jefferson County, KY
Health Facilities (AMBAC),
6.50%, 5/1/15 2,697,525
Aaa AAA 1,750 Jefferson County, KY
Health Facilities (AMBAC),
6.55%, 5/1/22 1,892,205
Aaa AAA 4,000 Kentucky Development
Finance Authority (Saint
Luke's Hospital) (MBIA),
7.00%, 10/1/21 4,420,280
Aaa AAA 1,750 Kentucky Economic
Development Finance
Authority (Baptist
Healthcare) (MBIA), 5.00%,
8/15/24 1,579,830
- -----------------------------------------------------------------------------
$ 13,220,640
- -----------------------------------------------------------------------------
Insured Transportation -- 5.9%
- -----------------------------------------------------------------------------
Aaa AAA $3,550 Kenton County, KY Airport,
6.30%, 3/1/15/(4)/ $ 3,808,511
Aaa AAA 1,195 Kenton County, KY Airport
Revenue Board, (MBIA)
(AMT), 6.45%, 3/1/15/(3)/ 1,220,454
Aaa AAA 1,000 Kenton County, KY
Cincinnati/Northern
Kentucky Airport, (FSA),
(AMT), 6.30%, 3/1/15 1,046,020
Aaa AAA 1,000 Kentucky Economic
Development Authority,
State Turnpike
Revitalization, (AMBAC),
5.50%, 7/1/11 1,008,240
Aaa AAA 1,000 Kenton Economic
Development Authority,
State Turnpike
Revitalization, (FGIC),
0%, 7/1/10 507,630
- -----------------------------------------------------------------------------
$ 7,590,855
- -----------------------------------------------------------------------------
</TABLE>
See notes to finacial statements
55
<PAGE>
Kentucky Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insured Water and Sewer -- 6.1%
- -----------------------------------------------------------------------------
Aaa AAA $2,000 Kenton County, KY Water
District Waterworks,
(FGIC), 6.00%, 2/1/17 $ 2,092,400
Aaa AAA 800 Kenton County, KY Water
District Waterworks,
(FGIC), 6.38%, 2/1/17 858,800
Aaa AAA 500 Lexington-Fayette County,
KY Government Sewer
System, (MBIA), 6.38%,
7/1/12 535,985
Aaa AAA 1,000 Louisville and Jefferson
County, KY Sewer District,
(AMBAC), 6.75%, 5/15/19 1,119,990
Aaa AAA 2,000 Louisville and Jefferson
County, KY Sewer District,
(AMBAC), 6.75%, 5/15/25 2,239,980
Aaa AAA 1,000 Louisville and Jefferson
County, KY Sewer District,
(FGIC), 5.20%, 5/15/26 940,660
- -----------------------------------------------------------------------------
$ 7,787,815
- -----------------------------------------------------------------------------
Lease Revenue/Certificates of Participation -- 19.0%
- -----------------------------------------------------------------------------
A A $1,300 Boone County, KY School
District, 6.75%, 9/1/11 $ 1,423,968
A1 A+ 1,200 Fayette County, KY School
District Finance
Corporation, 5.38%, 1/1/15 1,183,668
A1 A+ 2,315 Fayette County, KY School
District Finance
Corporation, 5.38%, 1/1/17 2,267,820
A1 A+ 4,990 Jefferson County, KY
Capital Projects
Corporation, 0.00%, 8/15/15 1,696,301
A1 A+ 905 Jefferson County, KY
School District Finance
Corporation, 4.88%, 1/1/11 859,460
A1 A+ 1,250 Jefferson County, KY
School District Finance
Corporation, 4.88%, 1/1/12 1,179,225
A A 1,000 Jessamine County, KY
School District Finance
Corporation, 5.38%, 1/1/17 978,440
A A+ 1,500 Kentucky State Property
and Buildings Commission,
5.00%, 9/1/13 1,410,780
A A+ 2,500 Kentucky State Property
and Buildings Commission,
6.00%, 9/1/14 2,603,800
A A- 1,000 Louisville, KY Public
Property Corporation,
6.80%, 12/1/22 1,098,510
A NR 1,000 Meade County, KY School
District, 5.70%, 7/1/15 1,014,020
- -----------------------------------------------------------------------------
Lease Revenue/Certificates of
Participation (continued)
- -----------------------------------------------------------------------------
Aa NR $2,000 Mount Sterling, KY Lease,
6.15%, 3/1/13 $ 2,036,000
Aa NR 4,500 Mount Sterling, KY Lease,
6.20%, 3/1/18 4,592,339
A NR 2,000 Owensboro County, KY
Airport Lease, 5.88%,
6/1/15 2,007,440
- -----------------------------------------------------------------------------
$ 24,351,771
- -----------------------------------------------------------------------------
Life Care -- 0.8%
- -----------------------------------------------------------------------------
NR A- $1,000 Christian County, KY
Hospital, 6.00%, 7/1/17 $ 1,015,110
- -----------------------------------------------------------------------------
$ 1,015,110
- -----------------------------------------------------------------------------
Nursing Homes -- 0.7%
- -----------------------------------------------------------------------------
NR NR $ 835 Jefferson County, KY
Health Facilities, Beverly
Enterprises, 9.75%, 8/1/07 $ 914,910
- -----------------------------------------------------------------------------
$ 914,910
- -----------------------------------------------------------------------------
Special Tax Revenue -- 0.4%
- -----------------------------------------------------------------------------
NR NR $ 500 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 $ 541,555
- -----------------------------------------------------------------------------
$ 541,555
- -----------------------------------------------------------------------------
Transportation -- 6.9%
- -----------------------------------------------------------------------------
NR BBB $3,000 Guam Airport Authority
(AMT), 6.70%, 10/1/23 $ 3,105,600
Baa3 BB+ 500 Kenton County, KY Airport
(Delta Airlines) (AMT),
7.50%, 2/1/20 541,175
Baa3 BB+ 3,400 Kenton County, KY Airport
(Delta Airlines) (AMT),
6.13%, 2/1/22 3,342,676
Baa3 BB+ 1,500 Kenton County, KY Airport
(Delta Airlines) (AMT),
7.12%, 2/1/21 1,597,140
Baa3 BB+ 250 Kenton County, KY Airport
(Delta Airlines) (AMT),
7.50%, 2/1/12 270,698
- -----------------------------------------------------------------------------
$ 8,857,289
- -----------------------------------------------------------------------------
</TABLE>
See notes to financial statements
56
<PAGE>
Kentucky Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Water and Sewer -- 1.8%
- -----------------------------------------------------------------------------
NR A $1,500 Campbell County, KY Water
District, 6.60%, 12/1/11 $ 1,635,615
A NR 650 Harden County, KY Water
District, 6.50%, 9/1/12 694,070
- -----------------------------------------------------------------------------
$ 2,329,685
- -----------------------------------------------------------------------------
Total Tax Exempt Investments -- 100.0%
(identified cost $121,126,820) $ 127,918,087
- -----------------------------------------------------------------------------
</TABLE>
/(1)/ Security 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 has been segregated to cover when-issued securities.
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 Kentucky
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1997, 26.9% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 2.1% to 13.8% of total investments.
See notes to financial statements
57
<PAGE>
Louisiana Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------------
Education -- 0.8%
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa NR $ 150 Louisiana Public Facilities
Authority, Guaranteed
Student Loan Revenue Bonds,
(AMT), 6.75%, 9/1/06 $ 158,714
A NR 100 Louisiana Public Facilities
Authority, Student Loan
Revenue Bonds (AMT), 7.00%,
9/1/06 105,757
- --------------------------------------------------------------------------------
$ 264,471
- --------------------------------------------------------------------------------
Electric Utilities -- 1.9%
- --------------------------------------------------------------------------------
Ba1 BB+ $ 150 Pointe Coupe Parish, LA
(Gulf States Utilities
Company), 6.70%, 3/1/13 $ 153,465
Baa2 BBB 500 Saint Charles Parish, LA
Power and Light (AMT),
6.20%, 5/1/23 501,945
- --------------------------------------------------------------------------------
$ 655,410
- --------------------------------------------------------------------------------
Hospitals -- 5.9%
- --------------------------------------------------------------------------------
Baa1 NR $1,000 Lafourche Parish, LA
Hospital Service District,
6.00%, 10/1/23 $ 973,400
NR A- 750 Saint Tammany Parish, LA
Hospital Service District,
6.50%, 7/1/17 777,105
NR A- 250 Saint Tammany Parish, LA
Hospital Service District,
6.50%, 7/1/22 256,788
- --------------------------------------------------------------------------------
$ 2,007,293
- --------------------------------------------------------------------------------
Housing -- 31.1%
- --------------------------------------------------------------------------------
Aaa NR $ 95 East Baton Rouge Mortgage
Finance Authority, Single
Family (AMT), (GNMA),
7.88%, 12/1/21 $ 100,767
Aaa NR 235 East Baton Rouge Mortgage
Finance Authority, Single
Family (AMT), (GNMA/FNMA),
7.10%, 10/1/24 247,244
Aaa NR 745 East Baton Rouge Mortgage
Finance Authority, Single
Family (GNMA/FNMA), 7.00%,
4/1/32 776,387
Aaa NR 500 Louisiana Housing Finance
Agency, 6.38%, 12/1/27 510,520
NR AAA 150 Louisiana Housing Finance
Authority, Multifamily
Housing (Westview Apartment
II) (AMT), (FHA), 7.95%,
1/1/32 159,837
NR AAA 620 Louisiana Housing Finance
Authority, Multifamily,
(FHA), 6.95%, 7/1/16 639,040
Aaa NR $ 600 Louisiana Housing Finance
Authority, Single Family,
(AMT), (GNMA), 6.30%,
12/1/27 608,622
Aaa NR 1,250 Louisiana Housing Finance
Authority, Single Family,
(AMT), (GNMA), 8.00%, 3/1/25 1,403,738
Aaa NR 655 Louisiana Housing Finance
Authority, Single Family,
(AMT), (GNMA/FNMA), 6.55%,
12/1/26 672,678
NR AAA 250 Louisiana Public Facilities
Authority, 6.05%, 1/1/26 249,638
NR A 1,000 Louisiana Public Facilities
Authority, Multifamily
Housing - Windsor Housing,
6.25%, 1/1/26 1,009,270
Aaa NR 1,900 New Orleans Home Mortgage
Authority, Single Family,
(AMT), (GNMA/FNMA), 6.30%,
6/1/28 1,918,334
NR AAA 1,850 Parish of Jefferson, Home
Mortgage Authority, (AMT),
(GNMA/FNMA), 7.35%, 12/1/16 2,025,250
A NR 350 Shreveport Housing Finance
Authority, Multifamily
(Goodman Plaza), 6.10%,
8/1/19 349,979
- --------------------------------------------------------------------------------
$10,671,304
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 11.5%
- --------------------------------------------------------------------------------
A3 A- $1,750 City of Bastrop, LA
(International Paper
Company) (AMT), 6.60%,
3/1/19 $ 1,853,389
Baa3 BB+ 900 Commonwealth of Puerto Rico
Port Authority (American
Airlines) (AMT), 6.25%,
6/1/26 926,811
A-3 A- 750 De Soto Parish, LA
(International Paper
Company) (AMT), 7.70%,
11/1/18 857,258
Aa3 NR 150 De Soto Parish, LA
(Southwestern Electric
Power Company), 7.60%,
1/1/19 169,553
Baa1 BBB+ 150 South Louisiana Port
Commission (GATX Terminals
Corporation), 7.00%, 3/1/23 157,263
- --------------------------------------------------------------------------------
$ 3,964,274
- --------------------------------------------------------------------------------
Insured Education -- 4.8%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Louisiana Public Facilities
Authority (Tulane
University) (AMBAC), 6.05%,
10/1/25 $ 519,180
</TABLE>
See notes to financial statements
58
<PAGE>
Louisiana Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------------
Insured Education (continued)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA $1,100 Louisiana State University
and Agricultural and
Mechanical College (FGIC),
5.75%, 7/1/14 $ 1,114,971
- --------------------------------------------------------------------------------
$ 1,634,151
- --------------------------------------------------------------------------------
Insured Electric Utilities -- 0.5%
- --------------------------------------------------------------------------------
Aaa AAA $ 150 City of Alexandria, Utility
Revenue Bonds, (FGIC),
6.00%, 5/1/06 $ 159,465
- --------------------------------------------------------------------------------
$ 159,465
- --------------------------------------------------------------------------------
Insured General Obligations -- 3.8%
- --------------------------------------------------------------------------------
NR AAA $ 250 Commonwealth of Puerto
Rico, Public Improvement
Bonds, (AMBAC), Variable,
7/1/15(1) $ 259,375
Aaa AAA 3,000 New Orleans, (AMBAC), 0%,
9/1/15 1,063,950
- --------------------------------------------------------------------------------
$ 1,323,325
- --------------------------------------------------------------------------------
Insured Hospitals -- 4.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 100 Louisiana Public Facilities
Authority Hospital (MBIA),
Variable, 12/1/14/(1)/ $ 108,125
Aaa AAA 1,500 Ouachita Parish, Glenwood
Medical Center, (FSA),
5.75%, 5/15/21 1,504,680
- --------------------------------------------------------------------------------
$ 1,612,805
- --------------------------------------------------------------------------------
Insured Housing -- 0.2%
- --------------------------------------------------------------------------------
Aaa AAA $ 610 East Baton Rouge Mortgage
Finance Authority, Single
Family (MBIA) (GNMA/FNMA),
0%, 10/1/15 $ 87,999
- --------------------------------------------------------------------------------
$ 87,999
- --------------------------------------------------------------------------------
Insured Special Tax Revenue -- 9.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 1,000 Louisiana Stadium and
Exposition District, Hotel
Occupancy Tax and Stadium
Revenue (FGIC), 6.00%,
7/1/24 $ 1,029,070
Aaa AAA 2,000 Orleans Levee District,
(FSA), 5.95%, 11/1/14 2,081,019
- --------------------------------------------------------------------------------
$ 3,110,089
- --------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 4.4%
- --------------------------------------------------------------------------------
Aa2 AA $ 1,500 Saint Bernard Parish (Mobil
Oil), 5.90%, 11/1/26 $ 1,505,760
- --------------------------------------------------------------------------------
$ 1,505,760
- --------------------------------------------------------------------------------
Life Care -- 16.1%
- --------------------------------------------------------------------------------
NR NR $ 500 Louisiana Housing Finance
Agency (HCC Assisted Living
Group) (AMT), 9.00%, 3/1/25 530,495
NR AAA 500 Louisiana Housing Finance
Agency (Saint Dominic
Assisted Care Facility)
(GNMA), 6.85%, 9/1/25 535,945
Aaa AAA 2,000 Louisiana Housing Finance
Agency (Saint Joseph's
Manor Retirement Center)
(GNMA), 7.80%, 12/1/35 2,227,299
NR BBB 1,150 Louisiana Public Facilities
Authority (Glen Retirement
System), 6.70%, 12/1/25 1,165,146
NR BBB 750 Louisiana Public Facilities
Authority, General Health
System, 6.80%, 11/1/16 765,353
NR NR 300 Saint Tammany, LA Public
Trust Financing Authority,
9.00%, 11/15/25 319,584
- --------------------------------------------------------------------------------
$ 5,543,822
- --------------------------------------------------------------------------------
Special Tax Revenue -- 3.6%
- --------------------------------------------------------------------------------
Baa1 A $ 1,375 Commonwealth of Puerto Rico
Highway and Transportation
Authority, 5.00%, 7/1/22 $ 1,227,270
- --------------------------------------------------------------------------------
$ 1,227,270
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
59
<PAGE>
Louisiana Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Transportation -- 1.6%
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A A- $ 500 Mississippi River Bridge
Authority, Bridge Revenue,
6.75%, 11/1/12/(2)/ $ 545,735
- --------------------------------------------------------------------------------
$ 545,735
- --------------------------------------------------------------------------------
Total Tax Exempt Investments -- 100.0%
(identified cost $32,863,537) $34,313,173
- --------------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ Security has been segregated to cover margin requirements on open
financial futures contracts.
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Louisiana
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1997, 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 0.6% to 10.4% of total investments.
See notes to financial statements
60
<PAGE>
Maryland Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------------
Cogeneration -- 1.2%
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR NR $1,250 Maryland Energy Cogeneration,
AES Warrior Run Project
(AMT), 7.40%,
9/1/19 $ 1,321,913
- -------------------------------------------------------------------------------
$ 1,321,913
- -------------------------------------------------------------------------------
Education -- 1.0%
- -------------------------------------------------------------------------------
Aa3 AA+ $1,000 University of Maryland
Auxiliary Facilities and
Tuition, 6.30%,
2/1/10 $ 1,073,920
- -------------------------------------------------------------------------------
$ 1,073,920
- -------------------------------------------------------------------------------
Electric Utilities -- 6.4%
- -------------------------------------------------------------------------------
A2 A $1,500 Calvert, MD Pollution
Control Revenue (Baltimore
Gas and Electric Company),
5.55%,7/15/14 $ 1,498,245
NR BBB 2,500 Guam Power Authority
Revenue Bonds, 5.25%,
10/1/13 2,305,775
NR BBB 750 Guam Power Authority
Revenue Bonds, 6.63%,
10/1/14 782,370
A1 A 2,225 Prince Georges, MD
Pollution Control Revenue
(Potomac Electric), 6.38%,
1/15/23 2,359,501
- -------------------------------------------------------------------------------
$ 6,945,891
- -------------------------------------------------------------------------------
Escrowed / Prerefunded -- 6.0%
- -------------------------------------------------------------------------------
Aaa NR $1,125 Baltimore, MD Single
Family Mortgage (Inner
Harbor), 8.00%, 12/1/10 $ 1,430,420
NR AAA 1,000 Commonwealth of Puerto
Rico Public Improvement,
6.80%, 7/1/21 1,128,780
Aaa AAA 500 Maryland Health and Higher
Educational (University of
Maryland) (FGIC), 6.50%,
7/1/21 541,360
Aaa AAA 1,500 Puerto Rico Public
Buildings Authority,
6.88%, 7/1/21 1,698,480
NR AAA 1,000 University of Maryland
System Auxiliary Facility
and Tuition, 6.50%, 4/1/11 1,084,940
NR AAA 175 University of Maryland
System Auxiliary Facility
and Tuition, 6.50%, 4/1/12 195,731
Aa NR 310 Worcester, MD Sanitary
District, 6.55%, 8/15/17 345,706
- -------------------------------------------------------------------------------
$ 6,425,417
- -------------------------------------------------------------------------------
General Obligations -- 2.3%
- -------------------------------------------------------------------------------
Aa AA- $ 750 Harford, MD, 4.90%, 12/1/10 $ 727,095
Aa1 AA 1,000 Washington, MD Suburban
Sanitary District, 5.63%,
6/1/21 1,002,050
Aa1 AA 500 Washington, MD Suburban
Sanitary District, 6.20%,
6/1/11 536,190
Aa NR 190 Worcester, MD Sanitary
District, 6.55%, 8/15/17 205,071
- -------------------------------------------------------------------------------
$ 2,470,406
- -------------------------------------------------------------------------------
Hospitals -- 17.9%
- -------------------------------------------------------------------------------
NR NR $ 485 Berlin, MD (Atlantic
General Hospital), 8.38%,
6/1/22 $ 503,042
A1 A 3,500 Maryland Health and Higher
Educational (Good Samaritan
Hospital), 5.75%, 7/1/19 3,510,045
Baa1 BBB 1,250 Maryland Health and Higher
Educational (Howard County
General Hospital), 5.50%,
7/1/25 1,153,588
A1 A+ 2,200 Maryland Health and Higher
Educational (Suburban
Hospital), 5.13%, 7/1/21 2,027,608
Baa1 NR 2,500 Maryland Health and Higher
Educational (Union Hospital
of Cecil), 6.70%, 7/1/22 2,583,700
A NR 4,000 Prince Georges, MD
(Dimensions Health),
5.30%, 7/1/24 3,683,480
Baa3 NR 1,355 Prince Georges, MD
(Greater SouthEast
Healthcare System), 6.38%,
1/1/13 1,350,176
Baa3 NR 4,500 Prince Georges, MD
(Greater SouthEast
Healthcare System), 6.38%,
1/1/23 4,423,994
- -------------------------------------------------------------------------------
$ 19,235,633
- -------------------------------------------------------------------------------
Housing -- 7.8%
- -------------------------------------------------------------------------------
Aa NR $1,810 Maryland Community
Development Administration
Multifamily (FHA), 6.70%,
5/15/27 $ 1,884,174
Aa NR 1,000 Maryland Community
Development Administration
Multifamily (FHA) (AMT),
6.70%, 5/15/36 1,039,600
Aa NR 245 Maryland Community
Development Administration
Single Family, 6.85%,
4/1/11 256,748
Aa NR 3,000 Maryland Community
Development Administration
Single Family (AMT),
6.75%, 4/1/26 3,132,210
</TABLE>
See notes to financial statements
61
<PAGE>
Maryland Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------------
Housing (continued)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa NR $ 945 Maryland Community
Development Administration
Single Family (AMT),
6.80%, 4/1/22 $ 980,579
Aa NR 745 Maryland Community
Development Administration
Single Family (AMT),
6.80%, 4/1/24 773,049
NR A 300 Prince Georges, MD
(Antoinette Gardens
Apartments) (FHA), 7.00%,
3/1/28 312,264
- -------------------------------------------------------------------------------
$ 8,378,624
- -------------------------------------------------------------------------------
Industrial Development Revenue / Pollution
Control Revenue -- 11.7%
- -------------------------------------------------------------------------------
A1 A $ 1,350 Allegany, MD Pollution
Control Revenue (Westvaco
Corporation), 6.20%, 1/1/08 $ 1,459,580
NR NR 1,350 Baltimore, MD Pollution
Control Revenue (Bethlehem
Steel Corporation), 7.50%,
6/1/15 1,431,243
Aa3 AA- 2,000 Baltimore, MD Port
Facilities (Consolidated
Coal Sales Company - E.I.
du Pont de Nemours),
6.50%, 10/1/11 2,187,440
A2 NR 2,600 Commonwealth of Puerto
Rico Industrial Medical
and Environmental
Pollution Control Facility
Finance Authority
(American Home Products),
5.10%, 12/1/18 2,405,130
Baa3 BB+ 2,000 Commonwealth of Puerto
Rico Port Authority
(American Airlines) (AMT),
6.25%, 6/1/26 2,059,580
Baa3 BB+ 1,500 Commonwealth of Puerto
Rico Port Authority
(American Airlines),
(AMT), 6.30%, 6/1/23 1,535,355
NR AA- 1,425 Frederick, MD Economic
Development Authority
(Cargill, Incorporated),
6.30%, 11/1/09/(1)/ 1,534,269
- -------------------------------------------------------------------------------
$ 12,612,597
- -------------------------------------------------------------------------------
Insured Colleges and Universities -- 4.1%
- -------------------------------------------------------------------------------
Aaa AAA $ 4,500 Maryland Health and Higher
Educational (Loyola
College) (MBIA), 5.38%,
10/1/26 $ 4,376,385
- -------------------------------------------------------------------------------
$ 4,376,385
- -------------------------------------------------------------------------------
Insured Education -- 1.2%
- -------------------------------------------------------------------------------
Aaa AAA $ 1,200 Morgan State University,
Maryland Academic and
Facilities (MBIA), 6.10%,
7/1/20 $ 1,299,720
- -------------------------------------------------------------------------------
$ 1,299,720
- -------------------------------------------------------------------------------
Insured Electric Utilities -- 2.7%
- -------------------------------------------------------------------------------
Aaa AAA $ 250 Commonwealth of Puerto
Rico Electric Power
Authority STRIPES (FSA),
Variable, 7/1/03/(2)/ $ 276,250
Aaa AAA 2,750 Montgomery County, MD
Pollution Control Revenue
(MBIA), 5.38%, 2/15/24 2,611,263
- -------------------------------------------------------------------------------
$ 2,887,513
- -------------------------------------------------------------------------------
Insured Hospitals -- 8.2%
- -------------------------------------------------------------------------------
A A $ 250 Maryland Health and Higher
Educational (Anne Arundel
Hospital) (AMBAC), 5.00%,
7/1/23 $ 224,543
Aaa AAA 4,000 Maryland Health and Higher
Educational (Johns
Hopkins) (AMBAC), 5.25%,
7/1/27 3,793,680
Aaa AAA 1,365 Maryland Health and Higher
Educational (Washington
Community Hospital)
(AMBAC), 6.38%, 7/1/22 1,453,998
Aaa AAA 3,150 Puerto Rico Industrial
Medical and Environmental
Pollution Control
Facilities Financing
Authority (MBIA), 6.25%,
7/1/24 3,340,953
- -------------------------------------------------------------------------------
$ 8,813,174
- -------------------------------------------------------------------------------
Insured Housing -- 0.5%
- -------------------------------------------------------------------------------
Aaa AAA $ 500 Prince Georges, MD
(Keystone Apartments)
(FHA) (MBIA), 6.80%, 7/1/25 $ 521,840
- -------------------------------------------------------------------------------
$ 521,840
- -------------------------------------------------------------------------------
Insured Industrial Development Revenue /
Pollution Control Revenue -- 2.0%
- -------------------------------------------------------------------------------
Aa2 AA- $ 2,000 Baltimore, MD Port
Facilities (Consolidated
Coal Sales Company - E.I.
du Pont de Nemours),
6.50%, 12/1/10 $ 2,183,000
- -------------------------------------------------------------------------------
$ 2,183,000
- -------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
62
<PAGE>
Maryland Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------------
Insured Miscellaneous -- 1.9%
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA $1,000 Maryland Stadium Authority
(AMBAC), 5.60%, 3/1/14 $ 1,011,680
Aaa AAA 1,000 Maryland Stadium Authority
(AMBAC), 5.80%, 3/1/26 1,009,440
- -------------------------------------------------------------------------------
$ 2,021,120
- -------------------------------------------------------------------------------
Insured Solid Waste -- 4.9%
- -------------------------------------------------------------------------------
Aaa AAA $5,000 NE Maryland Solid Waste
Disposal (MBIA) (AMT),
6.30%, 7/1/16 $ 5,225,199
- -------------------------------------------------------------------------------
$ 5,225,199
- -------------------------------------------------------------------------------
Insured Transportation -- 6.3%
- -------------------------------------------------------------------------------
Aaa AAA $2,000 Baltimore, MD
International Airport
(AMT) (FGIC), 6.25%, 7/1/14 $ 2,116,500
Aaa AAA 4,750 Washington, D.C. Metro
Area Transportation
(FGIC), 5.25%, 7/1/14 4,615,384
- -------------------------------------------------------------------------------
$ 6,731,884
- -------------------------------------------------------------------------------
Insured Water and Sewer -- 8.6%
- -------------------------------------------------------------------------------
Aaa AAA $1,500 Baltimore, MD Sewer
(FGIC), 5.50%, 7/1/26 $ 1,470,975
Aaa AAA 2,550 Baltimore, MD Wastewater
(FGIC), 5.00%, 7/1/22 2,374,968
Aaa AAA 2,000 Baltimore, MD Wastewater
(MBIA), 5.65%, 7/1/20 2,015,360
Aaa AAA 500 Baltimore, MD Water
(FGIC), 5.00%, 7/1/24 465,155
Aaa AAA 3,000 Baltimore, MD Water
(FGIC), 5.50%, 7/1/26 2,941,950
- -------------------------------------------------------------------------------
$ 9,268,408
- -------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 1.1%
- -------------------------------------------------------------------------------
NR BBB $1,250 Puerto Rico (Guaynabo
Municipal Government
Center Lease), 5.63%,
7/1/22 $ 1,180,700
- -------------------------------------------------------------------------------
$ 1,180,700
- -------------------------------------------------------------------------------
Miscellaneous -- 0.9%
- -------------------------------------------------------------------------------
A NR $1,000 Baltimore, MD Revenue
Authority, 5.38%, 7/1/18 $ 966,670
- -------------------------------------------------------------------------------
$ 966,670
- -------------------------------------------------------------------------------
Special Tax Revenue -- 0.7%
- -------------------------------------------------------------------------------
NR NR $ 750 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 $ 812,333
- -------------------------------------------------------------------------------
$ 812,333
- -------------------------------------------------------------------------------
Transportation -- 1.6%
- -------------------------------------------------------------------------------
NR BBB $1,700 Guam Airport Authority
(AMT), 6.70%, 10/1/23 $ 1,759,840
- -------------------------------------------------------------------------------
$ 1,759,840
- -------------------------------------------------------------------------------
Water and Sewer -- 1.0%
- -------------------------------------------------------------------------------
Aa2 AA $1,000 Maryland Water Quality
Financing Administration
Revolving Loan Fund,
6.55%, 9/1/14 $ 1,079,190
- -------------------------------------------------------------------------------
$ 1,079,190
- -------------------------------------------------------------------------------
Total Tax Exempt Investments -- 100.0%
(identified cost $103,997,044) $107,591,377
- -------------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been segregated to cover margin requirements on open
financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
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 Maryland
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1997, 40.4% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.3% to 18.0% of total investments.
See notes to financial statements
63
<PAGE>
Missouri Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited) Principal
- --------------------
Amount
Standard 000
Moody's & Poor's (omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 3.3%
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR BBB $1,010 Guam Power Authority
Revenue Bonds, 6.30%,
10/1/22 $ 1,024,198
Baa1 BBB+ 1,500 Puerto Rico Electric Power
Authority, 6.38%, 7/1/24 1,586,325
- --------------------------------------------------------------------------------
$ 2,610,523
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 3.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 City of Sikeston, Electric
System (MBIA), 6.25%,
6/1/22/(1)/ $ 1,098,610
Aaa AAA 575 Missouri Health and
Education Authority (Saint
Louis Children's) (MBIA),
0%, 5/15/08 321,575
NR AAA 1,000 Saint Louis County,
Mortgage Revenue, (GNMA),
5.40%, 1/1/16 965,320
- --------------------------------------------------------------------------------
$ 2,385,505
- --------------------------------------------------------------------------------
General Obligations -- 0.8%
- --------------------------------------------------------------------------------
Baa1 A $ 700 Commonwealth of Puerto
Rico, 5.00%, 7/1/21 $ 626,143
- --------------------------------------------------------------------------------
$ 626,143
- --------------------------------------------------------------------------------
Hospitals -- 12.0%
- --------------------------------------------------------------------------------
Aa AA $3,250 Missouri Health and
Education Authority (Barnes
Jewish Christian), 5.25%,
5/15/14 $ 3,140,768
Baa NR 1,900 Missouri Health and
Education Authority
(Jefferson Memorial
Hospital), 6.80%, 5/15/25 1,954,663
Baa NR 2,000 Missouri Health and
Education Authority
(Jefferson Memorial),
6.00%, 8/15/23 1,916,940
NR BBB+ 1,500 Missouri Health and
Education Authority (Lake
of the Ozarks), 6.50%,
2/15/21 1,532,970
Aa2 AA 1,000 Missouri Health and
Education Authority
(Sisters of Mercy), 6.25%,
6/1/15 1,045,200
- --------------------------------------------------------------------------------
$ 9,590,541
- --------------------------------------------------------------------------------
Housing -- 3.2%
- --------------------------------------------------------------------------------
NR AAA $ 535 Missouri Housing
Development Authority,
Single Family Mortgage
Revenue (AMT), (GNMA),
6.75%, 6/1/24 $ 556,352
NR AAA 915 Missouri Housing
Development Authority,
Single Family Mortgage
Revenue (AMT), (GNMA),
7.25%, 9/1/26 1,007,781
NR AAA 1,000 Missouri Housing
Development Authority,
Single Family Mortgage
Revenue (GNMA), 6.45%,
9/1/27 1,025,640
- --------------------------------------------------------------------------------
$ 2,589,773
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution
Control Revenue -- 13.8%
- --------------------------------------------------------------------------------
A2 NR $1,000 Commonwealth of Puerto Rico
Industrial Medical and
Environmental Pollution
Control Facility Finance
Authority (American Home
Products), 5.10%, 12/1/18 $ 925,050
Baa3 BB+ 2,500 Commonwealth of Puerto Rico
Port Authority (American
Airlines) (AMT), 6.25%,
6/1/26 2,574,475
NR BB- 1,055 Jefferson County (Kmart
Corporation), 6.40%, 8/1/08 1,038,764
NR NR 1,300 Kansas City, Industrial
Development Authority
(Airline Cargo Facilities),
8.50%, 1/1/17 1,424,228
A3 NR 1,200 Missouri Environmental
Improvement and Energy
Resources Authority
(American Cyanamid
Company), 5.80%, 9/1/09 1,261,764
A1 AA- 3,750 Saint Louis Industrial
Development Authority
(Anheuser-Busch) (AMT),
5.88%, 11/1/26 3,779,813
- --------------------------------------------------------------------------------
$11,004,094
- --------------------------------------------------------------------------------
Insured Education -- 2.9%
- --------------------------------------------------------------------------------
Aaa AAA $2,500 Missouri Health and
Education (Saint Louis
University) (AMBAC), 5.20%,
10/1/26 $ 2,361,300
- --------------------------------------------------------------------------------
$ 2,361,300
- --------------------------------------------------------------------------------
Insured Electric Utilities -- 8.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 City of Sikeston, Electric
System, (MBIA), 5.00%,
6/1/22 $ 917,430
</TABLE>
See notes to financial statements
64
<PAGE>
Missouri Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited) Principal
- --------------------
Amount
Standard 000
Moody's & Poor's (omitted) Security Value
- --------------------------------------------------------------------------------
Insured Electric Utilities (continued)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA $ 700 Commonwealth of Puerto Rico
Electric Power Authority
STRIPES (FSA), Variable,
7/1/03/(2)/ $ 773,500
Aaa AAA 5,000 Missouri Environmental
Improvement and Energy
Resources Authority (Union
Electric) (AMT), (AMBAC),
5.45%, 10/1/28 4,737,200
- --------------------------------------------------------------------------------
$ 6,428,130
- --------------------------------------------------------------------------------
Insured General Obligations -- 1.3%
- --------------------------------------------------------------------------------
NR AAA $ 500 Commonwealth of Puerto
Rico, Public Improvement
Bonds, (AMBAC), Variable,
7/1/15/(2)/ $ 518,750
Aaa AAA 500 Commonwealth of Puerto
Rico, Public Improvement
Residual Interest Tax
Exempt Securities (FSA),
Variable, 7/1/22/(2)/ 523,750
- --------------------------------------------------------------------------------
$ 1,042,500
- --------------------------------------------------------------------------------
Insured Hospitals -- 14.9%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Jackson County, Saint
Joseph's Health System,
(MBIA), 6.50%, 7/1/12 $ 1,078,720
Aaa AAA 800 Jackson County, Saint
Joseph's Health System,
(MBIA), 6.50%, 7/1/19 857,536
Aaa AAA 1,500 Missouri Health and
Education Authority
(AMBAC), 6.35%, 11/15/17 1,597,050
Aaa AAA 9,500 Missouri Health and
Education Authority (Lester
Cox Medical Center) (MBIA),
0.00%, 9/1/20 2,515,030
Aaa AAA 2,900 Missouri Health and
Education Authority (Lester
Cox Medical Center) (MBIA),
5.35%, 6/1/10 2,940,223
Aaa AAA 2,000 Missouri Health and
Education Authority (Saint
Luke's Health System)
(MBIA), 5.13%, 11/15/19 1,845,980
Aaa AAA 1,000 Missouri Health and
Education Authority
(Sisters of Saint Mary)
(MBIA), 6.25%, 6/1/16 1,051,300
- -------------------------------------------------------------------------------
$11,885,839
- -------------------------------------------------------------------------------
Insured Housing -- 2.0%
- -------------------------------------------------------------------------------
Aaa AAA $1,500 SCA Multifamily Mortgage
Revenue Receipts,
Springfield, MO (FSA),
7.10%, 1/1/30 $ 1,626,885
- -------------------------------------------------------------------------------
$ 1,626,885
- -------------------------------------------------------------------------------
Insured Lease Revenue / Certificates of
Participation -- 5.0%
- -------------------------------------------------------------------------------
Aaa AAA $1,750 Kansas City Municipal
Assistance Corporation,
Bartle Hall Convention,
(AMBAC), 5.00%, 4/15/20 $ 1,619,975
Aaa AAA 1,250 Kansas City School
District, (FGIC), 5.00%,
2/1/14 1,192,925
Aaa AAA 600 Kansas City School
District, Building
Corporation, (FGIC), 6.50%,
2/1/08 650,412
Aaa AAA 500 Saint Charles County,
Public Facilities
Authority, (FGIC), 6.38%,
3/15/07 543,370
- -------------------------------------------------------------------------------
$ 4,006,682
- -------------------------------------------------------------------------------
Insured Water and Sewer -- 2.0%
- -------------------------------------------------------------------------------
Aaa AAA $1,500 City of Saint Louis,
(FGIC), 6.00%, 7/1/14 $ 1,564,665
- -------------------------------------------------------------------------------
$ 1,564,665
- -------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 9.5%
- -------------------------------------------------------------------------------
NR NR $1,500 City of Saint Louis,
Regional Convention and
Sports Complex Authority,
7.90%, 8/15/21 $ 1,771,740
A BBB+ 3,000 Saint Louis County,
Regional Convention and
Sports Complex Authority,
5.50%, 8/15/13 2,906,820
A BBB+ 1,000 Saint Louis County,
Regional Convention and
Sports Complex Authority,
5.75%, 8/15/21 980,040
A1 A+ 2,000 State of Missouri, Regional
Convention and Sports
Complex Authority, 5.50%,
8/15/21 1,928,360
- -------------------------------------------------------------------------------
$ 7,586,960
- -------------------------------------------------------------------------------
Life Care -- 4.2%
- -------------------------------------------------------------------------------
Baa1 NR $ 300 Cass County, Fox Springs
Living Center, 7.38%,
10/1/22 $ 322,053
NR NR 950 Kansas City, Industrial
Development Authority,
Retirement Facilities,
Kingswood United Methodist,
9.00%, 11/15/13 1,034,075
NR NR 2,000 Missouri Health and
Education Authority
(Lutheran Hospital), 6.38%,
2/1/27 2,030,520
- -------------------------------------------------------------------------------
$ 3,386,648
- -------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
65
<PAGE>
Missouri Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited) Principal
- --------------------
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nursing Homes -- 3.3%
- -------------------------------------------------------------------------------
NR NR $1,000 Kansas City, Industrial
Development Authority
(Beverly Enterprises),
8.00%, 12/1/02 $ 1,050,270
NR NR 500 Missouri Health and
Education Authority
(Bethesda Health Group),
6.63%, 8/15/05 513,585
NR NR 1,000 Missouri Health and
Education Authority
(Bethesda Health Group),
7.50%, 8/15/12 1,069,320
- -------------------------------------------------------------------------------
$ 2,633,175
- -------------------------------------------------------------------------------
Pooled Loans -- 3.4%
- -------------------------------------------------------------------------------
A NR $2,750 Missouri Higher Education
Loan Authority, Student
Loan, (AMT), 5.45%, 2/15/09 $ 2,696,953
- -------------------------------------------------------------------------------
$ 2,696,953
- -------------------------------------------------------------------------------
Special Tax Revenue -- 2.2%
- -------------------------------------------------------------------------------
Baa1 A $1,000 Commonwealth of Puerto
Rico, Highway and
Transportation Authority,
6.63%, 7/1/12 $ 1,076,790
NR NR 650 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 704,022
- -------------------------------------------------------------------------------
$ 1,780,812
- -------------------------------------------------------------------------------
Transportation -- 1.2%
- -------------------------------------------------------------------------------
NR NR $1,000 Lake of The Ozarks
Community Bridge
Corporation, 6.40%, 12/1/25 $ 991,040
- -------------------------------------------------------------------------------
$ 991,040
- -------------------------------------------------------------------------------
Water and Sewer -- 4.0%
- -------------------------------------------------------------------------------
Aa2 NR $1,000 Missouri Environmental
Improvement and Energy
Resources Authority, 0%,
1/1/14 $ 385,540
Aa2 NR 500 Missouri Environmental
Improvement and Energy
Resources Authority, 6.55%,
7/1/14 535,900
Aa2 NR 800 Missouri Environmental
Improvement and Energy
Resources Authority, 6.88%,
6/1/14 865,648
Aa2 NR 1,250 Missouri Environmental
Improvement and Energy
Resources Authority, 7.20%,
7/1/16 1,406,950
- -------------------------------------------------------------------------------
$ 3,194,038
- -------------------------------------------------------------------------------
Total Tax Exempt Investments -- 100.0%
(identified cost $75,521,959) $79,992,206
- -------------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been segregated to cover margin requirements on open
financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Missouri
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28,1997, 45.6% 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 3.7% to 17.8% of total investments.
See notes to financial statements
66
<PAGE>
North Carolina Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 3.5%
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa1 AA+ $1,000 North Carolina Educational
Facilities Finance Agency
(Duke University),
6.75%, 10/1/21 $ 1,090,120
Aa AA 1,935 University of North Carolina
at Chapel Hill, 5.00%, 2/15/29 1,753,807
Aa AA 3,530 University of North Carolina
at Chapel Hill, 5.25%, 2/15/29 3,336,980
- --------------------------------------------------------------------------------
$ 6,180,907
- --------------------------------------------------------------------------------
Electric Utilities -- 8.5%
- --------------------------------------------------------------------------------
A2 A $1,015 Chatham County Industrial
Facilities and Pollution
(Carolina Power and
Light), 6.30%, 6/15/14 $ 1,070,003
NR BBB 1,000 Guam Power Authority Revenue
Bonds, 5.25%, 10/1/13/(1)/ 922,310
A A- 550 North Carolina Municipal
Power Authority (Catawba
Electric), 7.00%, 1/1/16 569,437
Baa1 BBB 5,000 North Carolina Municipal
Power Authority (Eastern
Power), 6.13%, 1/1/09 5,185,100
Baa1 BBB+ 2,000 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 624,340
Baa1 BBB+ 1,000 Puerto Rico Electric Power
Authority, 5.25%, 7/1/21 924,380
Baa1 BBB+ 3,000 Puerto Rico Electric Power
Authority, 5.50%, 7/1/25 2,853,300
Baa1 BBB+ 2,000 Puerto Rico Electric Power
Authority, 6.00%, 7/1/16 2,026,200
Baa1 BBB+ 365 Puerto Rico Electric Power
Authority, 7.12%, 7/1/14 391,860
NR NR 250 Virgin Islands Water and
Power Authority, 7.40%,
7/1/11 266,303
- --------------------------------------------------------------------------------
$ 14,833,233
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 2.1%
- --------------------------------------------------------------------------------
Aaa AA- $2,450 Pitt County Memorial
Hospital, Prerefunded to
12/1/01, 6.90%, 12/1/21 $ 2,750,566
Baa1 AAA 635 Puerto Rico Electric Power
Authority, Prerefunded to
7/1/99, 7.12%, 7/1/14 689,439
NR AAA 150 Puerto Rico General
Obligations, Prerefunded
to 7/1/00, 7.30%, 7/1/20 167,531
- --------------------------------------------------------------------------------
$ 3,607,536
- --------------------------------------------------------------------------------
General Obligations -- 2.8%
- --------------------------------------------------------------------------------
Baa1 A $1,500 Commonwealth of Puerto
Rico Aqueduct and Sewer
Authority, 5.00%, 7/1/19 $ 1,362,000
A A- 175 Eden, Water and Sewer
Bonds, (AMT), 6.75%, 6/1/08 189,614
Aaa AAA 3,550 North Carolina Capital
Improvements, 4.75%, 2/1/12 3,355,460
- --------------------------------------------------------------------------------
$ 4,907,074
- --------------------------------------------------------------------------------
Hospitals -- 19.9%
- --------------------------------------------------------------------------------
Aa3 AA $2,090 Charlotte-Mecklenberg
Hospital, 0.00%, 1/1/06 $ 1,345,897
Aa3 AA 6,380 Charlotte-Mecklenberg
Hospital, 5.88%, 1/15/26 6,445,904
Aa3 AA 3,500 North Carolina Medical
Care Commission, 0.00%,
6/1/09 1,787,310
A1 A+ 5,000 North Carolina Medical
Care Commission (Rex
Hospital), 6.13%, 6/1/10 5,109,850
NR BBB+ 2,500 North Carolina Medical
Care Commission
(Roanoke-Chowan Hospital),
7.75%, 10/1/19 2,635,350
Aa3 AA 2,000 North Carolina Medical
Care Commission Hospital
Revenue, 5.25%, 6/1/21 1,881,060
Aa3 AA 1,700 North Carolina Medical
Care Commission, Carolina
Medicorp, 6.00%, 5/1/21 1,708,840
NR NR 5,500 North Carolina Medical
Care Commission, Mercy
Hospital, 6.50%, 8/1/08 6,068,864
Aa AA 2,000 North Carolina Medical
Care Commission, North
Carolina Baptist Hospital,
6.00%, 6/1/22 2,020,260
Aa AA 1,700 North Carolina Medical
Care Commission,
Presbyterian Health
Services, 6.00%, 10/1/24 1,717,935
Aa3 AA- 4,430 Pitt County Memorial
Hospital, 5.25%, 12/1/21 4,192,109
- --------------------------------------------------------------------------------
$ 34,913,379
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
67
<PAGE>
North Carolina Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- ---------------------
Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Housing -- 12.5%
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR AAA $2,300 Charlotte Housing
Authority, Double Oaks,
(FHA), (FNMA), 7.35%, $ 2,064,293
5/15/26
Aa AA 2,250 North Carolina Housing
Finance Agency, 6.70%,
1/1/26 2,356,245
Aa AA 1,500 North Carolina Housing
Finance Agency , Single
Family Mortgage Revenue,
(AMT), 6.30%, 3/1/26 1,523,790
Aa AA 1,970 North Carolina Housing
Finance Agency,
Multifamily Mortgage
Revenue, 6.45%, 9/1/27 2,016,748
Aa AA 4,395 North Carolina Housing
Finance Agency,
Multifamily Mortgage
Revenue, 6.85%, 7/1/13 4,653,822
Aa AA 825 North Carolina Housing
Finance Agency, Single
Family Mortgage Revenue,
6.95%, 3/1/17 874,137
Aa AA 1,250 North Carolina Housing
Finance Agency, Single
Family Mortgage Revenue,
(AMT), 6.20%, 9/1/27 1,259,250
Aa AA 2,085 North Carolina Housing
Finance Agency, Single
Family Mortgage Revenue,
(AMT), 6.60%, 9/1/26 2,159,372
Aa AA 3,880 North Carolina Housing
Finance Agency, Single
Family Mortgage Revenue,
(AMT), 6.70%, 9/1/26 4,036,752
Aa AA 850 North Carolina Housing
Finance Agency, Single
Family Mortgage Revenue,
(AMT), 7.05%, 9/1/20 892,033
Aaa AAA 125 Puerto Rico Housing
Finance Corporation,
Single Family Mortgage
Revenue (GNMA), 6.85%,
10/15/23 131,278
- --------------------------------------------------------------------------------
$ 21,967,720
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution
Control Revenue -- 14.5%
- --------------------------------------------------------------------------------
A3 A- $5,000 Columbus Industrial
Facilities and Pollution
Control Financing
Authority
(International Paper),
5.85%, 12/1/20 $ 4,934,400
Baa3 BB+ 5,355 Commonwealth of Puerto
Rico Port Authority
(American Airlines) (AMT),
6.25%, 6/1/26 5,514,524
Baa1 NR 1,000 Haywood County Industrial
Development Authority
(Champion International
Corporation), 6.00%, 3/1/20 1,005,260
Baa1 BBB 3,200 Haywood County Industrial
Development Authority
(Champion International
Corporation) (AMT), 5.50%,
10/1/18 3,013,440
Baa1 BBB 1,500 Haywood County Industrial
Development Authority
(Champion International
Corporation) (AMT), 5.75%,
12/1/25 1,451,940
Baa1 NR 1,350 Haywood County Industrial
Development Authority
(Champion International
Corporation) (AMT), 6.25%,
9/1/25 1,371,290
A2 A 4,250 Martin County Industrial
Development Authority
(Weyerhaeuser Company)
(AMT), 6.80%, 5/1/24 4,595,780
Baa2 BBB 2,500 New Hanover County
(Occidental Petroleum
Corporation), 6.70%, 7/1/19 2,615,550
NR A-1+ 850 Robeson County, Industrial
Facilities and Pollution
Control Financing
Authority (Campbell Soup
Company), 6.40%, 12/1/06 932,119
- --------------------------------------------------------------------------------
$ 25,434,303
- --------------------------------------------------------------------------------
Insured Electric Utilities -- 8.8%
- --------------------------------------------------------------------------------
Aaa AAA $2,970 North Carolina Eastern
Municipal Power Agency
Power Systems (MBIA),
5.63%, 1/1/24 $ 2,932,073
Aaa AAA 1,500 North Carolina Eastern
Municipal Power Authority
(FSA), Variable, 1/1/19/(2)/ 1,470,000
Aaa AAA 5,500 North Carolina Municipal
Power Authority (Catawba
Electric) (AMBAC), 5.75%,
1/1/15 5,546,969
Aaa AAA 4,000 North Carolina Municipal
Power Authority (Catawba
Electric) (MBIA),
Variable, 1/1/12/(1)//(2)/ 3,895,000
Aaa AAA 1,400 Puerto Rico Electric Power
Authority STRIPES (FSA)
Variable 7/1/02/(2)/ 1,526,000
- --------------------------------------------------------------------------------
$ 15,370,042
- --------------------------------------------------------------------------------
Insured General Obligations -- 2.7%
- --------------------------------------------------------------------------------
NR AAA $1,000 Commonwealth of Puerto
Rico, Public Improvement
Bonds, (AMBAC), Variable,
7/1/15/(2)/ $ 1,037,500
</TABLE>
See notes to financial statements
68
<PAGE>
North Carolina Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- ---------------------
Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured General Obligations (continued)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA $ 3,500 Commonwealth of Puerto
Rico, Public Improvement
Residual Interest Tax
Exempt Securities (FSA),
Variable, 7/1/22/(2)/ $ 3,666,250
- --------------------------------------------------------------------------------
$ 4,703,750
- --------------------------------------------------------------------------------
Insured Hospitals -- 7.9%
- --------------------------------------------------------------------------------
Aaa AAA $ 2,000 Catawba County Hospital
(AMBAC), 6.20%, 10/1/17 $ 2,132,400
Aaa AAA 500 Cumberland County
Hospital, (MBIA), 0.00%,
10/1/09 255,930
Aaa AAA 2,250 North Carolina Medical
Care Commission (AMBAC),
5.25%, 11/1/20 2,131,718
Aaa AAA 1,500 North Carolina Medical
Care Commission, (AMBAC),
0.00%, 11/1/15 525,120
Aaa AAA 935 North Carolina Medical
Care Commission, Memorial
Mission Hospital (FSA),
0.00%, 10/1/06 566,647
Aaa AAA 3,750 North Carolina Medical
Care Commission, Moore
Regional Hospital (FGIC),
5.00%, 10/1/18 3,419,625
Aaa AAA 5,000 North Carolina Medical
Care Commission, Saint
Joseph's Medical Center
(AMBAC), 5.10%, 10/1/14 4,811,550
- --------------------------------------------------------------------------------
$ 13,842,990
- --------------------------------------------------------------------------------
Insured Lease Revenue/
Certificates of Participation -- 4.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 4,500 Charlotte, Convention
Facility, (AMBAC), 5.25%,
12/1/13 $ 4,423,365
Aaa AAA 1,575 Franklin, (FGIC), 6.63%,
6/1/14 1,737,351
Aaa AAA 1,000 Mooresville School
District, (AMBAC), 6.35%,
10/1/14 1,074,930
- --------------------------------------------------------------------------------
$ 7,235,646
- --------------------------------------------------------------------------------
Lease Revenue/
Certificates of Participation -- 3.8%
- --------------------------------------------------------------------------------
A1 A- $2,065 Buncombe County, 6.63%,
12/1/10 $ 2,183,861
NR AA 825 Durham County, 6.10%,
7/15/07 864,056
Aa NR 985 Durham County, 6.75%,
12/1/11 1,101,368
A1 AA 2,400 Greensboro, Greensboro
Coliseum Arena, 6.75%,
12/1/09 2,580,264
- --------------------------------------------------------------------------------
$ 6,729,549
- --------------------------------------------------------------------------------
Special Tax Revenue -- 6.3%
- --------------------------------------------------------------------------------
Baa1 A $ 4,000 Commonwealth of Puerto
Rico Highway and
Transportation Authority,
5.25%, 7/1/20 $ 3,713,000
Baa1 BBB+ 200 Puerto Rico Finance
Authority, 7.90%, 7/1/07 213,498
Baa1 A 1,490 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/15 1,483,921
Baa1 A 3,000 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/26 2,871,540
NR NR 2,550 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 2,761,931
- --------------------------------------------------------------------------------
$ 11,043,890
- --------------------------------------------------------------------------------
Transportation -- 1.5%
- --------------------------------------------------------------------------------
NR BBB $ 1,000 Guam Airport Authority
(AMT), 6.70%, 10/1/23 $ 1,035,200
Baa3 BB+ 1,500 Raleigh-Durham Airport
Authority (American
Airlines), 9.40%, 11/1/00 1,679,205
- --------------------------------------------------------------------------------
$ 2,714,405
- --------------------------------------------------------------------------------
Water and Sewer -- 1.1%
- --------------------------------------------------------------------------------
Aa AA $ 2,000 Orange County, Water and
Sewer, 5.20%, 7/1/16 $ 1,920,900
- --------------------------------------------------------------------------------
$ 1,920,900
- --------------------------------------------------------------------------------
Total Tax Exempt Investments -- 100.0%
(identified cost $164,910,428) $ 175,405,324
- --------------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been segregated to cover margin requirements on open
financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
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 February 28,1997, 23.5% of the securities in the
portfolio of investments are backed by bond insurance of various financial
institutions and financial guaranty assurance agencies. The aggregate
percentage by financial institution ranged from 2.9% to 12.4% of total
investments.
See notes to financial statements
69
<PAGE>
Oregon Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cogeneration -- 1.7%
- --------------------------------------------------------------------------
NR NR $2,000 Western Generation Agency
(Wauna Cogeneration)
(AMT), 7.40%, 1/1/16 $ 2,105,580
- --------------------------------------------------------------------------
$ 2,105,580
- --------------------------------------------------------------------------
Education -- 3.0%
- --------------------------------------------------------------------------
A2 NR $1,000 City of Salem, Educational
Facilities (Willamette
University), 6.10%, 4/1/14 $ 1,027,660
NR A+ 2,750 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority (Reed College),
5.38%, 7/1/25 2,637,910
- --------------------------------------------------------------------------
$ 3,665,570
- --------------------------------------------------------------------------
Electric Utilities -- 6.9%
- --------------------------------------------------------------------------
A1 AA $1,055 City of Eugene, Electric
Utility System, 5.75%,
8/1/16 $ 1,062,955
A1 AA 1,500 City of Eugene, Electric
Utility System, 6.00%,
8/1/11 1,544,955
Aa1 AA- 4,000 City of Eugene, Trojan
Nuclear Power, 5.90%,
9/1/09/(1)/ 4,021,079
A A+ 500 Commonwealth of Puerto
Rico, Telephone Authority,
Variable, 1/1/20/(2)/ 532,500
Aa1 AA- 1,500 Northern Wasco County,
McNary Dam Fishway
Hydroelectric, Bonneville
Power Administration,
5.20%, 12/1/24 1,404,840
- --------------------------------------------------------------------------
$ 8,566,329
- --------------------------------------------------------------------------
Escrowed / Prerefunded -- 2.9%
- --------------------------------------------------------------------------
A1 AAA $2,000 City of Medford, Rogue
Valley Memorial Hospital,
6.25%, 12/1/07 $ 2,226,160
NR A+ 1,250 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority (Reed College),
6.75%, 7/1/21 1,386,863
- --------------------------------------------------------------------------
$ 3,613,023
- --------------------------------------------------------------------------
General Obligations -- 12.3%
- --------------------------------------------------------------------------
Aa NR $2,000 Lane County, City of
Eugene, School District,
5.38%, 7/1/13 $ 1,979,480
Baa1 A 2,000 Puerto Rico Public
Building Authority,
Guaranteed Public
Education and Health
Facilities, 5.75%, 7/1/15 1,994,220
Aa AA 1,000 State of Oregon, Board of
Higher Education, 6.00%,
10/15/18 1,028,970
Aa AA 1,250 State of Oregon, Elderly
and Disabled Housing,
6.38%, 8/1/24 1,332,313
Aa AA 5,110 State of Oregon, Elderly
and Disabled Housing,
(AMT), 5.65%, 8/1/26 5,026,962
Aa AA 1,225 State of Oregon, Veterans'
Welfare Bonds, 5.85%,
10/1/15 1,249,635
Aa AA 1,500 State of Oregon, Veterans'
Welfare Bonds, 5.88%,
10/1/18 1,528,335
Aa AA+ 1,000 Tri-County Metropolitan
Transportation District,
Light Rail Extension,
6.00%, 7/1/12 1,035,840
- --------------------------------------------------------------------------
$ 15,175,755
- --------------------------------------------------------------------------
Hospitals -- 1.7%
- --------------------------------------------------------------------------
NR A $1,000 Benton County, Good
Samaritan Hospital
Corvallis, 6.25%, 10/1/09 $ 1,023,860
- --------------------------------------------------------------------------
Aa3 AA 1,000 Clackamas County, Kaiser
Permanente, 6.25%, 4/1/21 1,047,000
- --------------------------------------------------------------------------
$ 2,070,860
- --------------------------------------------------------------------------
Housing -- 20.7%
- --------------------------------------------------------------------------
Aaa NR $2,875 City of Portland Housing
Authority, Multifamily
Mortgage Revenue, Cherry
Blossom Apartments, (AMT),
6.20%, 12/20/36 $ 2,910,190
NR A 1,750 City of Portland Housing
Authority, Multifamily
Mortgage Revenue,
Riverwood, 6.00%, 1/1/19 1,758,173
Aa NR 1,500 Oregon Housing and
Commerce Service
Manufacturer, 6.20%, 7/1/28 1,519,350
Aa NR 3,000 Oregon State Housing and
Community Services
Department, 6.00%, 7/1/27 3,007,050
NR A 1,000 Portland Oregon Housing
Authority, 6.00%, 1/1/27 1,005,070
Aa NR 2,500 State of Oregon Housing
and Community Services
Department, Multifamily
Mortgage Revenue, 6.88%,
7/1/28 2,660,900
</TABLE>
See notes to financial statements
70
<PAGE>
Oregon Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Housing (continued)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aa NR $1,455 State of Oregon Housing
and Community Services
Department, Single Family
Mortgage Revenue, 5.38%,
7/1/17 $ 1,411,990
Aa NR 2,000 State of Oregon Housing
and Community Services
Department, Single Family
Mortgage Revenue, (AMT),
6.20%, 7/1/27 2,024,160
Aa NR 3,500 State of Oregon Housing
and Community Services
Department, Single Family
Mortgage Revenue, (AMT),
6.38%, 7/1/27 3,571,855
Aa NR 2,000 State of Oregon Housing
and Community Services
Department, Single Family
Mortgage Revenue, (AMT),
6.40%, 7/1/26 2,042,240
Aa NR 2,500 State of Oregon Housing
and Community Services
Department, Single Family
Mortgage Revenue, (AMT),
6.45%, 7/1/26 2,564,200
Aa NR 1,055 State of Oregon Housing
and Community Services
Department, Single Family
Mortgage Revenue, (AMT),
6.80%, 7/1/27 1,096,525
- --------------------------------------------------------------------------
$ 25,571,703
- --------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control
Revenue -- 8.5%
- --------------------------------------------------------------------------
Baa2 BBB- $3,500 Oregon Economic
Developments Authority,
Georgia Pacific, (AMT),
6.35%, 8/1/25 $ 3,574,304
NR BBB- 5,000 Port of Astoria, Pollution
Control Revenue, James
River 6.55%, 2/1/15/(1)/ 5,111,749
NR NR 750 Port of Portland, Ash
Grove Cement Company,
7.25%, 10/1/09 793,290
NR NR 1,000 Port of Portland, North
Portland Crown Zellerbach
Corporation, 6.13%, 5/15/08 1,000,320
- --------------------------------------------------------------------------
$ 10,479,663
- --------------------------------------------------------------------------
Insured Education -- 2.1%
- --------------------------------------------------------------------------
Aaa AAA $1,000 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority (Lewis and Clark
College) (MBIA), 6.00%,
10/1/13 $ 1,052,430
Aaa AAA $1,500 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority (Lewis and Clark
College) (MBIA), 6.13%,
10/1/24 $ 1,569,630
- --------------------------------------------------------------------------
$ 2,622,060
- --------------------------------------------------------------------------
Insured Electric Utilities -- 4.1%
- --------------------------------------------------------------------------
Aaa AAA $1,000 City of Eugene, Electric
Utility Revenue, (FSA),
5.60%, 8/1/16 $ 1,002,490
Aaa AAA 1,000 City of Eugene, Electric
Utility Revenue, (MBIA),
5.80%, 8/1/22 1,019,210
Aaa AAA 500 Commonwealth of Puerto
Rico Electric Power
Authority STRIPES (FSA),
Variable, 7/1/03/(2)/ 552,500
Aaa AAA 1,600 Commonwealth of Puerto
Rico, Telephone Authority,
(MBIA), Variable,
1/16/15/(2)/ 1,548,000
Aaa AAA 1,000 Emerald People's Utility
District, Electric System,
(AMBAC), 5.75%, 11/1/16 1,014,460
- --------------------------------------------------------------------------
$ 5,136,660
- --------------------------------------------------------------------------
Insured General Obligations -- 3.3%
- --------------------------------------------------------------------------
Aaa AAA $2,000 Commonwealth of Puerto
Rico, Public Improvement
Bonds, (AMBAC), Variable,
7/1/15/(2)/ $ 2,075,000
Aaa AAA 1,000 Multnomah County, Parkrose
School District, (FGIC),
5.70%, 12/1/09 1,040,220
Aaa AAA 1,000 Yamhill, Clackamas and
Washington Counties,
Newberg School District,
(FSA), 5.50%, 6/1/10 1,018,770
- --------------------------------------------------------------------------
$ 4,133,990
- --------------------------------------------------------------------------
Insured Hospitals -- 1.6%
- --------------------------------------------------------------------------
Aaa AAA $3,630 Oregon Health Science
University, Capital
Appreciation, (MBIA), 0%,
7/1/21 $ 915,486
Aaa AAA 1,000 Western Lane Hospital
District Authority,
Sisters of Saint Joseph of
Peace, (MBIA), 5.75%,
8/1/19 1,007,540
- --------------------------------------------------------------------------
$ 1,923,026
- --------------------------------------------------------------------------
</TABLE>
See notes to financial statements
71
<PAGE>
Oregon Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Insured Lease Revenue / Certificates of Participation -- 6.2%
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA $2,000 Oregon State Department of
Administration Services
Certificates, 5.75%, 5/1/17 $ 2,026,720
Aaa AAA 1,700 State of Oregon,
Department of
Administration, (MBIA),
5.50%, 11/1/20 1,676,608
Aaa AAA 1,000 State of Oregon,
Department of
Administration, (MBIA),
5.70%, 5/1/16 1,013,860
Aaa AAA 1,250 State of Oregon,
Department of General
Services, Real Property
Financing Program,
(AMBAC), 6.25%, 9/1/15 1,318,213
Aaa AAA 1,500 State of Oregon,
Department of General
Services, Real Property
Financing Program, (MBIA),
6.25%, 11/1/19/(1)/ 1,578,180
- --------------------------------------------------------------------------
$ 7,613,581
- --------------------------------------------------------------------------
Insured Special Tax Revenue -- 0.2%
- --------------------------------------------------------------------------
Aaa AAA $1,000 City of Portland, Arena
Natural Gas Tax Revenue
(AMBAC), 0.00%, 6/1/17 $ 302,270
- --------------------------------------------------------------------------
$ 302,270
- --------------------------------------------------------------------------
Insured Transportation -- 5.4%
- --------------------------------------------------------------------------
Aaa AAA $1,500 Oregon Department of
Transportation, Westside
Light Rail, (MBIA), 6.25%,
6/1/09 $ 1,626,615
Aaa AAA 1,000 Port of Portland, Portland
International Airport,
(AMBAC), (AMT), 6.25%,
7/1/18 1,039,880
Aaa AAA 1,250 Port of Portland, Portland
International Airport,
(AMT), (FGIC), 5.75%,
7/1/25 1,242,100
Aaa AAA 2,750 Port of Portland, Portland
International Airport,
(AMT), (FGIC), 6.00%,
7/1/23 2,790,948
- --------------------------------------------------------------------------
$ 6,699,543
- --------------------------------------------------------------------------
Insured Water and Sewer -- 5.4%
- --------------------------------------------------------------------------
Aaa AAA $1,000 City of Beaverton,
Washington County, Water
Revenue, (FSA), 6.13%,
6/1/14 $ 1,053,140
Aaa AAA 1,500 City of Portland, Sewer
System, (FGIC), 6.00%,
10/1/12 1,570,095
Aaa AAA $1,000 South Fork Water Board,
First Lien Water Revenue,
(FSA), 6.00%, 2/1/14 $ 1,044,390
Aaa AAA 1,500 Washington County, Unified
Sewerage Agency, (AMBAC),
6.13%, 10/1/12 1,581,705
Aaa AAA 1,375 Washington County, Unified
Sewerage Agency, Senior
Lien, (AMBAC), 6.13%,
10/1/12 1,449,896
- --------------------------------------------------------------------------
$ 6,699,226
- --------------------------------------------------------------------------
Lease Revenue/Certificates of Participation -- 1.2%
- --------------------------------------------------------------------------
Aa A $1,500 Mulmomah County, Juvenile
Justice Complex, 6.00%,
8/1/12 $ 1,539,645
- --------------------------------------------------------------------------
$ 1,539,645
- --------------------------------------------------------------------------
Pooled Loans -- 1.2%
- --------------------------------------------------------------------------
A1 NR $1,500 State of Oregon Health,
Housing, Educational and
Cultural Facilities
Authority (Oregon Coast
Aquarium), 5.25%, 10/1/13 $ 1,458,660
- --------------------------------------------------------------------------
$ 1,458,660
- --------------------------------------------------------------------------
Special Tax Revenue -- 7.5%
- --------------------------------------------------------------------------
A NR $1,000 City of Portland, Urban
Renewal and Redevelopment
Bonds Downtown Waterfront,
6.40%, 6/1/08 $ 1,061,800
Baa1 A 1,250 Commonwealth of Puerto
Rico Highway and
Transportation Authority,
5.00%, 7/1/36 1,110,563
Baa1 A 1,720 Commonwealth of Puerto
Rico Highway and
Transportation Authority,
5.25%, 7/1/20 1,596,590
Baa1 A 500 Commonwealth of Puerto
Rico Highway and
Transportation Authority,
6.38%, 7/1/08 534,080
Baa1 A 2,000 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/17 1,929,860
A1 AA+ 3,000 Tri-County Metropolitan
Transportation District,
Limited Tax Pledge, 5.70%,
8/1/13 3,027,930
- --------------------------------------------------------------------------
$ 9,260,823
- --------------------------------------------------------------------------
</TABLE>
See notes to financial statements
72
<PAGE>
Oregon Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------
Transportation -- 1.2%
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa3 BB+ $1,500 Port of Portland, Special
Obligation Revenue Bonds
(Delta Airlines
Incorporated) (AMT),
6.20%, 9/1/22 $ 1,497,885
- --------------------------------------------------------------------------
$ 1,497,885
- --------------------------------------------------------------------------
Water and Sewer -- 2.9%
- --------------------------------------------------------------------------
A A+ $1,500 City of Gresham, Water
Revenue, 5.20%, 11/1/10 $ 1,488,300
NR A+ 2,000 Clackamus County, Water
Revenue, 6.38%, 10/1/14 2,129,740
- --------------------------------------------------------------------------
$ 3,618,040
- --------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $118,050,031) $ 123,753,892
- --------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been segregated to cover margin requirements on open
financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Oregon
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1997, 28.3% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 4.0% to 12.1% of total investments.
See notes to financial statements
73
<PAGE>
South Carolina Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Education -- 2.7%
- -------------------------------------------------------------------------
NR A $1,500 South Carolina Education
Authority, Student Loan,
(AMT), 6.30%, 9/1/08 $ 1,536,150
- -------------------------------------------------------------------------
$ 1,536,150
- -------------------------------------------------------------------------
Electric Utilities -- 10.5%
- -------------------------------------------------------------------------
A1 A-1+ $1,650 Berkeley County, SC
Electric and Gas Company,
6.50%, 10/1/14 $ 1,777,578
Aa A+ 1,000 South Carolina Public
Service Authority, 5.13%,
1/1/32 901,480
Baa1 BBB+ 4,000 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 1,248,680
Baa1 BBB+ 1,400 Puerto Rico Electric Power
Authority, 6.25%, 7/1/17 1,456,168
Baa1 BBB+ 500 Puerto Rico Electric Power
Authority, 6.38%, 7/1/24 528,775
- -------------------------------------------------------------------------
$ 5,912,681
- -------------------------------------------------------------------------
Hospitals -- 5.3%
- -------------------------------------------------------------------------
Aa AA- $1,500 Greenville, SC Hospital
System (Board of Trustees),
5.25%, 5/1/17 $ 1,432,530
Baa1 NR 1,500 Horry County, SC (Conway
Hospital), 6.75%, 7/1/12 1,551,030
- -------------------------------------------------------------------------
$ 2,983,560
- -------------------------------------------------------------------------
Housing -- 14.0%
- -------------------------------------------------------------------------
NR AA- $1,780 South Carolina Housing
Finance Authority ,
Multifamily Mortgage
Revenue (Runaway Bay
Apartment), 6.20%, 12/1/20 $ 1,789,505
NR BBB+ 1,000 South Carolina Housing
Finance Authority,
Multifamily Mortgage
Revenue (Hunting Ridge)
(AMT), 6.75%, 6/1/25 1,035,850
NR AA 980 South Carolina Housing
Finance Authority,
Multifamily Mortgage
Revenue (Westbury Place),
6.05%, 7/1/27 985,370
Aa AA 1,500 South Carolina Housing
Finance Authority, Single
Family Mortgage Revenue,
6.38%, 7/1/16 1,540,710
Aa NR 1,500 South Carolina Housing
Finance Authority, Single
Family Mortgage Revenue,
6.45%, 7/1/17 1,549,755
Aa NR $1,000 South Carolina Housing
Finance Authority, Single
Family Mortgage Revenue,
(AMT), 6.75%, 7/1/26 1,038,450
- -------------------------------------------------------------------------
$ 7,939,640
- -------------------------------------------------------------------------
Industrial Development Revenue / Pollution
Control Revenue -- 30.5%
- -------------------------------------------------------------------------
Baa2 BBB $1,890 Aiken County, SC Industrial
Development Board (Beloit
Corporation), 6.00%, 12/1/11 $ 1,944,356
NR BBB+ 1,500 Chester County, SC, 7.35%,
2/1/14 1,596,135
A2 A 2,500 Darlington County, SC,
6.00%, 4/1/26 2,526,875
A1 AA- 1,500 Darlington County, SC
(Nucor Corporation) (AMT),
5.75%, 8/1/23 1,504,590
A2 A 500 Darlington County, SC
(Sonoco Products) (AMT),
6.13%, 6/1/25 512,340
A2 A-1+ 1,500 Darlington County, SC Power
and Light Company, 6.60%,
11/1/10 1,638,030
Aa3 AA- 500 Florence County, SC (E.I.
du Pont de Nemours), 6.35%,
7/1/22 530,835
NR NR 565 Florence County, SC (Stone
Container Company), 7.38%,
2/1/07 593,753
A1 A- 2,665 Richland County, SC (Union
Camp Corporation) (AMT),
6.75%, 5/1/22 2,823,941
NR NR 1,500 Spartanburg County, SC
Solid Waste (Bavarian Motor
Works Corporation) (AMT),
7.55%, 11/1/24 1,639,230
A2 A+ 2,000 York County, SC (Hoechst
Celanese Corporation)
(AMT), 5.70%, 1/1/24 1,966,620
- -------------------------------------------------------------------------
$17,276,705
- -------------------------------------------------------------------------
Insured Electric Utilities -- 10.0%
- -------------------------------------------------------------------------
Aaa AAA $ 300 Piedmont Municipal Power
Agency, (MBIA), 6.25%,
1/1/09 $ 331,626
Aaa AAA 1,000 Piedmont Municipal Power
Agency, (MBIA), 6.30%,
1/1/14 1,062,410
Aaa AAA 1,000 South Carolina Public
Service Authority, 6.25%,
1/1/22 1,061,810
Aaa AAA 1,250 South Carolina Public
Service Authority (AMBAC),
6.38%, 7/1/21 1,332,713
Aaa AAA 1,000 South Carolina Public
Service Authority (MBIA),
5.13%, 1/1/32 907,000
Aaa AAA 1,000 South Carolina Public
Service Authority (Santee
Cooper) (AMBAC), 5.00%,
1/1/14 947,050
- -------------------------------------------------------------------------
$ 5,642,609
- -------------------------------------------------------------------------
</TABLE>
See notes to financial statements
74
<PAGE>
South Carolina Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insured General Obligations -- 1.9%
- -------------------------------------------------------------------------
Aaa AAA $1,000 Berkeley County, SC School
District, (AMBAC), 6.30%,
2/1/16 $ 1,072,900
- -------------------------------------------------------------------------
$ 1,072,900
- -------------------------------------------------------------------------
Insured Hospitals -- 13.4%
- -------------------------------------------------------------------------
Aaa AAA $1,000 Florence County, SC (McLeod
Medical Center) (FGIC),
5.25%, 11/1/09 $ 999,920
Aaa AAA 1,500 Greenwood County, Self
Memorial Hospital, (FGIC),
5.88%, 10/1/17 1,517,040
Aaa AAA 300 Lexington County Health
Services District (FSA),
6.75%, 10/1/18 327,426
Aaa AAA 3,000 South Carolina Jobs
Economic Development
Authority (Anderson Area
Medical Center) (MBIA),
5.25%, 2/1/26 2,811,630
Aaa AAA 1,000 South Carolina Jobs
Economic Development
Authority (Baptist
Hospital) (AMBAC),
Variable, 8/1/15 /(1)/ 930,000
NR AAA 1,000 South Carolina Jobs
Economic Development,
Oconee Memorial Hospital
(CLI), 6.15%, 3/1/25 1,023,620
- -------------------------------------------------------------------------
$ 7,609,636
- -------------------------------------------------------------------------
Insured Lease Revenue / Certificates of
Participation -- 6.5%
- -------------------------------------------------------------------------
Aaa AAA $ 955 Charleston County, SC
(MBIA), 7.00%, 6/1/19 $ 1,109,691
Aaa AAA 500 Charleston County, SC,
(MBIA), 6.10%, 6/1/11 528,135
Aaa AAA 45 Charleston County, SC,
(MBIA), 7.00%, 6/1/19 50,709
Aaa AAA 1,000 Florence County, SC Law
Center, (AMBAC), 6.00%,
3/1/14 1,037,600
Aaa AAA 900 North Charleston, SC
(Coliseum Capital
Improvements) (FGIC),
6.00%, 1/1/11 941,391
- -------------------------------------------------------------------------
$ 3,667,526
- -------------------------------------------------------------------------
Lease Revenue/Certificates of Participation -- 4.6%
- -------------------------------------------------------------------------
Baa NR $ 750 Lexington School District,
6.90%, 7/1/08 $ 815,355
Baa1 BBB+ 1,750 Myrtle Beach Convention
Center, 6.88%, 7/1/17 1,813,945
- -------------------------------------------------------------------------
$ 2,629,300
- -------------------------------------------------------------------------
Pooled Loans -- 0.6%
- -------------------------------------------------------------------------
NR A+ $ 300 South Carolina Resource
Authority, Local Government
Program, 7.00%, 4/1/13 $ 311,184
- -------------------------------------------------------------------------
$ 311,184
- -------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $53,154,856) $56,581,891
- -------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been issued as an inverse floater bond.
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by South Carolina
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at February 28, 1997, 31.8% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.6% to 14.7% of total investments.
See notes to financial statements
75
<PAGE>
Tennessee Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education -- 1.9%
- ------------------------------------------------------------------------
Baa3 NR $1,000 Nashville and Davidson County
(Belmont University), 6.40%,
12/1/19 $ 1,019,860
- ------------------------------------------------------------------------
$ 1,019,860
- ------------------------------------------------------------------------
Escrowed/Prerefunded -- 2.8%
- ------------------------------------------------------------------------
Aaa AAA $1,500 Shelby County (Lebonheur
Children's Hospital)
(MBIA), 5.50%, 8/15/12 $1,548,675
- ------------------------------------------------------------------------
$ 1,548,675
- ------------------------------------------------------------------------
General Obligations -- 5.3%
- ------------------------------------------------------------------------
Aa AA $1,000 Metropolitan Government
Nashville and Davidson
County, 5.88%, 5/15/21 $ 1,019,650
Baa1 A 1,000 Puerto Rico Aqueduct and
Sewer Authority, 5.00%,
7/1/15 923,600
Aa AA+ 1,000 Shelby County, 5.13%, 3/1/16 958,850
- ------------------------------------------------------------------------
$ 2,902,100
- ------------------------------------------------------------------------
Hospitals -- 4.4%
- ------------------------------------------------------------------------
Baa1 NR $ 500 City of Clarksville,
Clarksville Memorial,
6.25%, 7/1/08 $ 515,235
Baa1 NR 500 City of Clarksville,
Clarksville Memorial,
6.38%, 7/1/18 506,390
Baa1 BBB+ 250 Knox County (East Tennessee
Children's), 6.50%, 10/1/12 255,225
NR A- 1,000 Sumner County, Sumner
Regional Health Systems,
7.50%, 11/1/14 1,109,970
- ------------------------------------------------------------------------
$ 2,386,820
- ------------------------------------------------------------------------
Housing -- 15.0%
- ------------------------------------------------------------------------
NR A $ 750 Knoxville Community
Development Corporation
(Clinton Towers), 6.65%,
10/15/10 $ 778,035
NR AAA 500 Knoxville Community
Development Corporation
(Morningside Gardens)
(GNMA), 6.10%, 7/20/20 505,520
NR A 1,500 Nashville and Davidson
County (The Park at
Hermitage), 5.90%, 2/1/19 1,472,790
Aa2 AA 445 Tennessee Housing
Development Agency,
Homeownership Program,
6.80%, 7/1/17 465,305
Aa AA $1,000 Tennessee Housing
Development Agency,
Homeownership Program,
(AMT), 5.75%, 7/1/24 $ 978,340
A1 A+ 2,000 Tennessee Housing
Development Agency,
Mortgage Finance Program,
5.85%, 7/1/13 2,019,120
A1 A+ 2,000 Tennessee Housing
Development Agency,
Mortgage Finance Program,
5.95%, 7/1/28 2,014,180
- ------------------------------------------------------------------------
$ 8,233,290
- ------------------------------------------------------------------------
Industrial Development Revenue/Pollution
Control Revenue -- 25.8%
- ------------------------------------------------------------------------
Aa3 AA $1,000 City of Chattanooga, (E.I.
du Pont de Nemours and
Company), 6.35%, 7/1/22 $ 1,068,340
Baa3 BB+ 1,250 Commonwealth of Puerto Rico
Port Authority (American
Airlines) (AMT), 6.25%,
6/1/26 1,287,238
Aa3 AA- 1,000 Humphreys County, (E.I. du
Pont de Nemours and
Company), (AMT), 6.70%,
5/1/24 1,075,530
Aa2 AA 2,000 Loudon County
(Kimberly-Clark
Corporation) (AMT), 6.20%,
2/1/23/(1)/ 2,044,660
A3 A- 2,750 Maury County (Saturn
Corporation), 6.50%, 9/1/24 2,899,242
Baa1 BBB 1,500 McMinn County (Calhoun
Newsprint Company) (AMT),
7.40%, 12/1/22 1,620,525
Baa2 BBB 1,500 Memphis-Shelby County
Airport Authority (Federal
Express Corporation),
6.75%, 9/1/12 1,601,595
Baa2 BBB 1,000 Memphis-Shelby County
Airport Authority (Federal
Express Corporation) (AMT),
6.20%, 7/1/14 1,011,500
NR BBB+ 500 Nashville and Davidson
County (Osco Treatment
Systems) (AMT), 6.00%,
5/1/03 511,240
A3 NR 1,000 South Fulton County,
Foods Company), 6.40%,
10/1/20 1,027,560
- ------------------------------------------------------------------------
$14,147,430
- ------------------------------------------------------------------------
Insured Education -- 8.6%
- ------------------------------------------------------------------------
Aaa AAA $1,500 Jackson, TN Health,
Education and Housing
(Lambuth University) (FSA),
5.90%, 9/1/20 $ 1,511,085
Aaa AAA 1,000 Metropolitan Nashville
Health and Education
(Meharry Medical College)
(AMBAC), 5.00%, 12/1/24 913,930
</TABLE>
See notes to financial statements
76
<PAGE>
Tennessee Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insured Education (continued)
- ------------------------------------------------------------------------
Aaa AAA $1,230 Metropolitan Nashville
Health and Education
(Meharry Medical College)
(AMBAC), 6.00%, 12/1/19 $ 1,306,678
Aaa AAA 1,000 Tennessee State School Bond
Authority, (MBIA), 5.50%,
5/1/26 975,100
- ------------------------------------------------------------------------
$ 4,706,793
- ------------------------------------------------------------------------
Insured Electric Utilities -- 7.7%
- ------------------------------------------------------------------------
Aaa AAA $ 750 City of Dickson, Electric
System Revenues (MBIA),
5.50%, 9/1/16 $ 738,975
Aaa AAA 1,000 City of Lawrenceburg
Electric Revenues (MBIA),
5.50%, 7/1/26 975,050
Aaa AAA 1,000 City of Lawrenceburg
Electric Revenues (MBIA),
6.63%, 7/1/18 1,143,620
Aaa AAA 400 Commonwealth of Puerto Rico
Electric Power Authority
STRIPES (FSA), Variable,
7/1/03 /(2)/ 442,000
Aaa AAA 1,000 Madison County Suburban
Utility District, (MBIA),
5.00%, 2/1/19 928,900
- ------------------------------------------------------------------------
$ 4,228,545
- ------------------------------------------------------------------------
Insured General Obligations -- 0.6%
- ------------------------------------------------------------------------
NR AAA $ 300 Commonwealth of Puerto
Rico, Public Improvement
Bonds, (AMBAC), Variable,
7/1/15 /(2)/ $ 311,250
- ------------------------------------------------------------------------
$ 311,250
- ------------------------------------------------------------------------
Insured Hospitals -- 7.6%
- ------------------------------------------------------------------------
Aaa AAA $ 500 City of Bristol, Bristol
Memorial, (FGIC), 6.75%,
9/1/10 $ 573,750
Aaa AAA 250 City of Chattanooga,
Memorial Hospital, (MBIA),
6.63%, 9/1/09 284,315
Aaa AAA 1,500 City of Johnson, Johnson
City Medical Center,
(MBIA), 5.00%, 7/1/13 1,439,220
Aaa AAA 2,000 Knox County, Fort Sanders
Alliance Obligated Group,
(MBIA), 5.25%, 1/1/23 1,867,380
- ------------------------------------------------------------------------
$ 4,164,665
- ------------------------------------------------------------------------
Insured Housing -- 2.0%
- ------------------------------------------------------------------------
Aaa AAA $1,000 Knox County, SCA Realty
Multifamily Mortgage
Receipts, (FSA), 7.12%,
1/1/30 $ 1,086,160
- ------------------------------------------------------------------------
$ 1,086,160
- ------------------------------------------------------------------------
Insured Special Tax Revenue -- 2.0%
- ------------------------------------------------------------------------
Aaa AAA $1,000 City of Johnson, School
District Sales Tax, (AMBAC),
6.70%, 5/1/21 $ 1,111,730
- ------------------------------------------------------------------------
$ 1,111,730
- ------------------------------------------------------------------------
Insured Transportation -- 2.0%
- ------------------------------------------------------------------------
Aaa AAA $1,000 Memphis-Shelby County
Airport Authority (MBIA)
(AMT), 6.50%, 2/15/08 $ 1,108,110
- ------------------------------------------------------------------------
$ 1,108,110
- ------------------------------------------------------------------------
Insured Water and Sewer -- 2.5%
- ------------------------------------------------------------------------
Aaa AAA $ 350 Nashville and Davidson
County, Water System
(AMBAC), Variable,
1/1/22/(2)/ $ 364,000
Aaa AAA 1,000 Nashville and Davidson
County, Water System,
(FGIC), 5.20%, 1/1/13 992,150
- ------------------------------------------------------------------------
$ 1,356,150
- ------------------------------------------------------------------------
Miscellaneous -- 0.9%
- ------------------------------------------------------------------------
NR NR $ 500 Hardeman County,
Correctional Facilities
Corporation, 7.75%, 8/1/17 $ 499,700
- ------------------------------------------------------------------------
$ 499,700
- ------------------------------------------------------------------------
Nursing Homes -- 1.9%
- ------------------------------------------------------------------------
NR A+ $1,000 Tennessee State Veterans'
Homes Board, Humboldt,
6.65%, 2/1/14 $ 1,063,440
- ------------------------------------------------------------------------
$ 1,063,440
- ------------------------------------------------------------------------
Pooled Loans -- 3.5%
- ------------------------------------------------------------------------
NR A- $1,200 Tennessee Local Development
Authority, Community
Provider, 6.55%, 10/1/23 $ 1,252,416
A AA- 700 Tennessee Local Development
Authority, State Loan
Program, 5.00%, 3/1/15 657,650
- ------------------------------------------------------------------------
$ 1,910,066
- ------------------------------------------------------------------------
Special Tax Revenue -- 2.6%
- ------------------------------------------------------------------------
Baa1 A $1,575 Commonwealth of Puerto Rico
Highway and Transportation
Authority, 5.00%, 7/1/36 $ 1,399,309
- ------------------------------------------------------------------------
$ 1,399,309
- ------------------------------------------------------------------------
</TABLE>
See notes to financial statements
77
<PAGE>
Tennessee Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------
Transportation -- 1.9%
- ------------------------------------------------------------------------
NR BBB $1,000 Guam Airport Authority
(AMT), 6.70%, 10/1/23 $ 1,035,200
- ------------------------------------------------------------------------
$ 1,035,200
- ------------------------------------------------------------------------
Water and Sewer -- 1.0%
- ------------------------------------------------------------------------
NR BBB+ $ 250 Hamilton County, Eastside
Utility District, 6.50%,
11/1/05 $ 265,155
NR BBB+ 250 Hamilton County, Eastside
Utility District, 6.75%,
11/1/11 262,893
- ------------------------------------------------------------------------
$ 528,048
- ------------------------------------------------------------------------
Total Tax Exempt Investments -- 100.0%
(identified cost $52,515,401) $54,747,341
- ------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been segregated to cover margin requirements on open
financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
AMT - Interest earned from these securities may be considered a
tax preference item for purposes of the Federal Alternative
Minimum Tax.
The Portfolio invests primarily in debt securities issued by Tennessee
municipalities. The ability of the issuers of the debt securities to
meet their obligations may be affected by economic developments in a
specific industry or municipality. In order to reduce the risk
associated with such economic developments, at February 28, 1997, 33.0%
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 2.9% to 20.1% of total investments.
See notes to financial statements
78
<PAGE>
Virginia Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited) Principal
- --------------------
Amount
Standard 000
Moody's & Poor's (omitted) Security Value
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education -- 6.4%
- ---------------------------------------------------------------------------
NR A- $2,000 City of Lynchburgh
(Randolph-Macon Woman's
College), 5.88%, 9/1/23 $ 2,013,280
Baa2 NR 2,220 Rockingham County,
Industrial Development
Authority, (Bridgewater
College), 5.95%, 10/1/13 2,188,809
NR A- 1,570 Virginia College Building
Authority, (Hampden-Sydney
College), 6.60%, 9/1/16 1,664,326
NR A+ 1,000 Virginia College Building
Authority, (Hampton
University), 5.75%, 4/1/14 1,005,400
NR A+ 400 Virginia College Building
Authority, (Hampton
University), 6.50%, 4/1/08 429,788
NR BBB- 1,150 Virginia College Building
Authority, (Marymount
University), 7.00%, 7/1/12 1,218,402
NR BBB- 2,200 Virginia College Building
Authority, (Marymount
University), 7.00%, 7/1/22 2,324,190
- ---------------------------------------------------------------------------
$ 10,844,195
- ---------------------------------------------------------------------------
Electric Utilities -- 1.2%
- ---------------------------------------------------------------------------
Baa1 BBB+ $3,000 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 $ 936,510
NR NR 1,000 Virgin Islands Water and
Power Authority, 7.40%,
7/1/11 1,065,210
- ---------------------------------------------------------------------------
$ 2,001,720
- ---------------------------------------------------------------------------
Escrowed / Prerefunded -- 2.1%
- ---------------------------------------------------------------------------
Aaa NR $1,000 Arlington County,
Industrial Development
Authority, (Arlington
Hospital), 7.12%, 9/1/21 $ 1,125,890
A NR 500 Augusta County, Industrial
Development Authority
(Augusta Hospital), 7.00%,
9/1/21 558,130
NR A+ 1,700 City of Virginia Beach,
Water and Sewer System,
6.63%, 2/1/17 1,885,232
- ---------------------------------------------------------------------------
$ 3,569,252
- ---------------------------------------------------------------------------
General Obligations -- 1.3%
- ---------------------------------------------------------------------------
Baa1 A $ 350 Commonwealth of Puerto
Rico, 0%, 7/1/04 $ 246,194
Aaa AAA $1,000 Fairfax County, 5.63%,
6/1/14 $ 1,018,080
Aa AA 1,000 Roanoke County, VA, 5.00%,
6/1/21 922,700
- ---------------------------------------------------------------------------
$ 2,186,974
- ---------------------------------------------------------------------------
Hospitals -- 17.5%
- ---------------------------------------------------------------------------
A NR $3,800 Albermarle County,
Industrial Development
Authority, (Martha
Jefferson Hospital),
5.50%, 10/1/20 $ 3,642,452
A2 NR 315 Chesapeake Hospital
Authority (Chesapeake
General Hospital), 7.60%,
7/1/00 338,285
A2 A 1,250 City of Martinsville
(Memorial Hospital of
Martinsville and Henry
County), 7.00%, 1/1/06 1,314,675
Aa2 AA 2,910 Faifax County, Industrial
Development Authority,
(Inova Health System
Hospitals), 5.00%, 8/15/14 2,763,598
Aa2 AA 2,000 Faifax County, Industrial
Development Authority,
(Inova Health System
Hospitals), 5.00%, 8/15/15 1,889,340
Aa2 AA 2,500 Faifax County, Industrial
Development Authority,
(Inova Health System
Hospitals), 5.00%, 8/15/23 2,286,150
Aa2 AA 1,000 Faifax County, Industrial
Development Authority,
(Inova Health System
Hospitals), 6.00%, 8/15/26 1,011,960
NR A- 2,000 Medical College of Hampton
Roads, 6.88%, 11/15/11 2,147,460
Aa2 AA 3,000 Norfolk County, Industrial
Development Authority,
(Sentara Health System),
5.00%, 11/1/20 2,734,170
Aa2 AA- 3,500 Peninsula Ports Authority
of Virginia, (Riverside
Health System), 6.63%,
7/1/10 3,763,375
A2 NR 2,400 Prince William County,
Industrial Development
Authority, (Potomac
Hospital), 6.85%, 10/1/25 2,566,776
Aa2 AA 3,000 Virginia Beach Development
Authority, Sentara Bayside
Hospital, 6.60%, 11/1/09 3,203,100
A3 NR 1,000 Washington County,
Industrial Development
Authority, (Johnston
Memorial Hospital), 6.00%,
7/1/14 1,009,490
</TABLE>
See notes to financial statements
79
<PAGE>
Virginia Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hospitals (continued)
- ---------------------------------------------------------------------------
A3 NR $1,060 Washington County,
Industrial Development
Authority, (Johnston
Memorial Hospital), 7.00%,
7/1/22 $ 1,137,528
- ---------------------------------------------------------------------------
$ 29,808,359
- ---------------------------------------------------------------------------
Housing -- 10.8%
- ---------------------------------------------------------------------------
NR AA $ 770 Fairfax County
Redevelopment and Housing
Authority, 5.50%, 6/1/17 $ 754,731
NR AAA 1,250 Fairfax County
Redevelopment and Housing
Authority, Multifamily
Mortgage Revenue (FHA),
7.00%, 5/1/26 1,325,838
NR AAA 1,000 Hampton Redevelopment and
Housing Authority, Senior
Living, (GNMA), 6.00%,
1/20/26 1,011,800
NR AAA 1,800 Suffolk Redevelopment and
Housing Authority (Prince
Williams Commons), (FNMA),
6.45%, 6/1/19 1,846,026
Aa1 AA+ 3,500 Virginia Housing
Development Authority,
Multifamily Mortgage
Revenue, 7.05%, 5/1/18 3,711,330
Aa AA+ 5,000 Virginia Housing
Development Authority,
Multifamily Mortgage
Revenue, (AMT), 6.75%,
7/1/21 5,198,849
Aa NR 1,900 Virginia Housing
Development Authority,
Single Family Mortgage
Revenue, Variable,
7/1/04 /(1)/ 1,890,500
Aa1 AA+ 2,500 Virginia Housing
Development Authority,
Single Family Mortgage
Revenue, 6.85%, 1/1/15 2,627,550
- ---------------------------------------------------------------------------
$ 18,366,624
- ---------------------------------------------------------------------------
Industrial Development Revenue/Pollution
Control Revenue -- 12.3%
- ---------------------------------------------------------------------------
Aa3 AA- $2,190 City of Chesapeake
(Cargill Incorporated),
5.88%, 3/1/13 $ 2,242,648
A2 A+ 2,000 City of Giles (Hoechst
Celanese Corporation),
6.45%, 5/1/26 2,093,880
A2 A+ 1,500 City of Giles (Hoechst
Celanese Corporation),
(AMT), 5.95%, 12/1/25 1,522,695
A2 A+ 1,000 City of Giles (Hoechst
Celanese Corporation),
(AMT), 6.63%, 12/1/22 1,053,520
Baa3 BB+ 1,000 Commonwealth of Puerto
Rico Port Authority
(American Airlines) (AMT),
6.25%, 6/1/26 1,029,790
A3 A $2,000 Henrico County (Browning
Ferris Incorporated),
(AMT), 5.45%, 1/1/14 /(2)/ $ 1,992,000
A1 A- 4,000 Isle of Wright County,
Industrial Development
Authority (Union Camp
Corporation), (AMT),
6.55%, 4/1/24 4,237,520
Baa3 BBB 980 West Point (Chesapeake
Corporation), 6.25%, 3/1/19 1,002,736
Baa3 BBB 5,520 West Point (Chesapeake
Corporation), (AMT),
6.38%, 3/1/19 5,647,014
- ---------------------------------------------------------------------------
$ 20,821,803
- ---------------------------------------------------------------------------
Insured Electric Utilities -- 0.5%
- ---------------------------------------------------------------------------
Aaa AAA $ 900 Commonwealth of Puerto
Rico, Telephone Authority,
(MBIA), Variable,
1/16/15 /(1)/ $ 870,750
- ---------------------------------------------------------------------------
$ 870,750
- ---------------------------------------------------------------------------
Insured General Obligations -- 4.5%
- ---------------------------------------------------------------------------
Aaa AAA $8,350 City of Richmond, (FGIC),
5.00%, 1/15/21 $ 7,688,930
- ---------------------------------------------------------------------------
$ 7,688,930
- ---------------------------------------------------------------------------
Insured Hospitals -- 12.3%
- ---------------------------------------------------------------------------
Aaa AAA $1,665 Arlington County,
Industrial Development
Authority (The Arlington
Hospital), (AMBAC), 5.00%,
9/1/21 $ 1,492,889
Aaa AAA 5,000 Augusta County, Industrial
Development Authority
(Augusta Hospital
Corporation), (AMBAC),
5.13%, 9/1/21 4,582,749
Aaa AAA 2,500 Chesapeake Hospital
Authority (Chesapeake
General Hospital), (MBIA),
5.25%, 7/1/18 2,337,050
Aaa AAA 1,500 City of Fredericksburg,
Industrial Development
Authority, (AMBAC), 5.25%,
6/15/23 1,407,495
Aaa AAA 1,000 City of Roanoke (Franklin
Memorial Hospital and
Saint Albans Psychiatric
Hospital), (MBIA), 5.25%,
7/1/25 923,200
Aaa AAA 5,000 City of Virginia Beach
(Virginia Beach Memorial
Hospital), (AMBAC), 5.13%,
2/15/18 4,676,849
</TABLE>
See notes to financial statements
80
<PAGE>
Virginia Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insured Hospitals (continued)
- ---------------------------------------------------------------------------
Aaa AAA $2,000 City of Winchester,
Industrial Development
Authority (Winchester
Medical Center), (AMBAC),
Variable, 1/21/14 /(1)/ $ 2,312,500
Aaa AAA 1,500 Henrico County (Bon Secour
Health Systems), (MBIA),
6.25%, 8/15/20 1,641,990
Aaa AAA 1,800 Roanoke County, VA
Industrial Development
Authority, (MBIA), 5.00%,
7/1/24 1,606,968
- ---------------------------------------------------------------------------
$ 20,981,690
- ---------------------------------------------------------------------------
Insured Transportation -- 3.3%
- ---------------------------------------------------------------------------
Aaa AAA $4,625 Metropolitan Washington
Airports Authority,
(MBIA), (AMT), 5.75%,
10/1/20 $ 4,580,554
Aaa AAA 1,000 Richmond Metropolitan
Authority Expressway,
(FGIC), 6.38%, 7/15/16 1,071,830
- ---------------------------------------------------------------------------
$ 5,652,384
- ---------------------------------------------------------------------------
Insured Water and Sewer -- 5.7%
- ---------------------------------------------------------------------------
Aaa AAA $1,000 Loudoun County Sanitation
Authority, (FGIC), 5.13%,
1/1/30 $ 924,010
Aaa AAA 2,000 Loudoun County Sanitation
Authority, (MBIA), 5.25%,
1/1/30 1,846,060
Aaa AAA 1,000 Norfolk County Water and
Sewer Authority, (AMBAC),
5.25%, 11/1/13 979,800
Aaa AAA 1,000 Roanoke County, VA Water
and Sewer Authority,
(FGIC), 5.00%, 7/1/21 901,700
Aaa AAA 1,750 Upper Occoquan Sewage
Authority, (FGIC), 5.00%,
7/1/15 1,646,698
Aaa AAA 1,000 Upper Occoquan Sewage
Authority, (MBIA), 5.00%,
7/1/25 913,200
Aaa AAA 2,700 Upper Occoquan Sewage
Authority, (MBIA), 5.15%,
7/1/20 2,527,605
- ---------------------------------------------------------------------------
$ 9,739,073
- ---------------------------------------------------------------------------
Lease Revenue/Certificates of Participation -- 7.8%
- ---------------------------------------------------------------------------
Aa AA $2,250 Fairfax County Economic
Development Authority,
Lease, Government Center
Properties, 5.25%, 11/15/18 $ 2,128,613
Aa AA $2,000 Fairfax County Economic
Development Authority,
Lease, Government Center
Properties, 5.50%, 5/15/14 $ 1,968,140
Aa AA 2,000 Henrico County, Industrial
Development Authority,
Lease, 7.00%, 8/1/13 2,259,380
Aa AA 2,250 Henrico County, Industrial
Development Authority,
Lease, 7.12%, 8/1/21 2,560,748
NR NR 1,250 King George County, Lease,
7.00%, 12/15/12 1,294,700
A NR 3,000 Rockingham and
Harrisonburg Counties,
Harrisonburg Redevelopment
and Housing Authority,
6.50%, 9/1/14 3,103,230
- ---------------------------------------------------------------------------
$ 13,314,811
- ---------------------------------------------------------------------------
Life Care -- 1.3%
- ---------------------------------------------------------------------------
NR NR $2,000 Loudoun County, Industrial
Development Authority
(Falcons Landing), 8.75%,
11/1/24 $ 2,113,600
- ---------------------------------------------------------------------------
$ 2,113,600
- ---------------------------------------------------------------------------
Nursing Homes -- 0.2%
- ---------------------------------------------------------------------------
NR NR $ 325 Covington-Allegheny
County, Industrial
Development Authority,
(Beverly Enterprise),
9.38%, 9/1/01 $ 359,291
- ---------------------------------------------------------------------------
$ 359,291
- ---------------------------------------------------------------------------
Solid Waste -- 1.9%
- ---------------------------------------------------------------------------
A1 A+ $ 915 Fairfax County Economic
Development Authority,
(Ogden Martin Systems of
Fairfax Incorporated),
(AMT), 7.75%, 2/1/11 $ 983,469
Baa1 A- 2,250 Southeastern Public
Service Authority, Solid
Waste Systems, (AMT),
6.00%, 7/1/13 2,256,368
- ---------------------------------------------------------------------------
$ 3,239,837
- ---------------------------------------------------------------------------
</TABLE>
See notes to financial statements
81
<PAGE>
Virginia Municipals Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Special Tax Revenue -- 4.3%
- ---------------------------------------------------------------------------
Baa1 A $ 500 Commonwealth of Puerto
Rico Highway and
Transportation Authority,
5.00%, 7/1/22 $ 446,280
Baa1 A 1,500 Commonwealth of Puerto
Rico Highway and
Transportation Authority,
5.00%, 7/1/36 1,332,675
NR NR 4,000 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 4,332,440
Aa AA 1,000 Virginia State
Transportation Board
Revenue, Route 28,
Variable, 4/1/18 /(1)/ 1,138,750
- ---------------------------------------------------------------------------
$ 7,250,145
- ---------------------------------------------------------------------------
Transportation -- 1.0%
- ---------------------------------------------------------------------------
NR BBB $ 400 Charlottesville-Albermarle
VA Airport Authority,
(AMT), 6.13%, 12/1/13 $ 394,192
- ---------------------------------------------------------------------------
Aa A+ 1,250 Virginia Port Authority
(AMT), 5.90%, 7/1/16 1,265,875
- ---------------------------------------------------------------------------
$ 1,660,067
- ---------------------------------------------------------------------------
Water and Sewer -- 5.6%
- ---------------------------------------------------------------------------
Aa AA- $3,595 Fairfax County, VA Water
Authority, 5.00%, 4/1/16 $ 3,377,934
- ---------------------------------------------------------------------------
Aa AA- 2,000 Fairfax County, VA Water
Authority, 5.75%, 4/1/29 1,986,820
- ---------------------------------------------------------------------------
Aa AA- 1,000 Fairfax County, VA Water
Authority, Variable,
4/1/29 /(1)/ 990,000
- ---------------------------------------------------------------------------
NR AA 1,630 Virginia Resource
Authority (Campbell
Utilities), 5.13%, 10/1/19 1,542,127
- ---------------------------------------------------------------------------
NR AA 1,655 Virginia Resource
Authority (Hopewell Waste
Water), (AMT), 6.00%,
10/1/25 1,668,439
- ---------------------------------------------------------------------------
$ 9,565,320
- ---------------------------------------------------------------------------
Total Tax Exempt Investments -- 100.0%
(identified cost $159,487,477) $170,034,825
- ---------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ Security has been segregated to cover margin requirements on open
financial futures contracts.
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Virginia
municipalities. The ability of the issuers of the debt securities to meet
their obligations may be affected by economic developments in a specific
industry or municipality. In order to reduce the risk associated with such
economic developments, at February 28, 1997, 26.3% of the securities in
the portfolio of investments are backed by bond insurance of various
financial institutions and financial guaranty assurance agencies. The
aggregate percentage by financial institution ranged from 7.2% to 10.1% of
total investments.
See notes to financial statements
82
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited)
Statements of Assets and Liabilities
As of February 28, 1997
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Kentucky
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments --
Identified cost $100,675,836 $65,038,418 $ 94,112,523 $ 121,126,820
Unrealized appreciation 5,553,238 2,618,702 5,481,836 6,791,267
- ------------------------------------------------------------------------------------------------------------------------------------
Investment at value (Note 1A) $106,229,074 $67,657,120 $ 99,594,359 $ 127,918,087
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 535 $ 26 $ 1,054,410 $ 353
Receivable for investments sold -- 155,000 -- --
Interest receivable 1,715,665 1,028,258 1,408,661 1,975,225
Deferred organization expenses (Note 1D) 1,407 2,923 2,224 1,177
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $107,946,681 $68,843,327 $ 102,059,654 $ 129,894,842
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased $ 1,429,275 $ -- $ 484,541 $ 1,225,595
Demand note payable (Note 5) 17,000 122,000 -- 1,013,000
Payable for variation margin on open financial
futures contracts (Note 1E) 12,656 8,438 11,875 11,719
Payable to affiliate for Trustees' fees (Note 2) 1,500 1,500 1,500 1,500
Accrued expenses 9,670 9,184 10,304 8,240
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 1,470,101 $ 141,122 $ 508,220 $ 2,260,054
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest in
Portfolio $106,476,580 $68,702,205 $ 101,551,434 $ 127,634,788
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $100,978,608 $66,120,347 $ 95,901,568 $ 120,536,911
Net unrealized appreciation of investments and
financial futures contracts (computed on the
basis of identified cost) 5,497,972 2,581,858 5,649,866 7,097,877
- ------------------------------------------------------------------------------------------------------------------------------------
Total $106,476,580 $68,702,205 $ 101,551,434 $ 127,634,788
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
83
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Assets and Liabilities
As of February 28, 1997
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments --
Identified cost $32,863,537 $ 103,997,044 $ 75,521,959 $ 164,910,428
Unrealized appreciation 1,449,636 3,594,333 4,470,247 10,494,896
- ------------------------------------------------------------------------------------------------------------------------------------
Investment at value (Note 1A) $34,313,173 $ 107,591,377 $ 79,992,206 $ 175,405,324
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 700 $ 671,400 $ 476,794 $ 1,749,061
Receivable for investments sold -- -- -- 3,646,464
Interest receivable 635,079 1,541,326 1,045,247 2,689,273
Deferred organization expenses (Note 1D) 2,668 1,589 1,258 3,279
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $34,951,620 $ 109,805,692 $ 81,515,505 $ 183,493,401
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased $ -- $ -- $ -- $ 4,607,560
Demand note payable (Note 5) 68,000 -- -- --
Payable for variation margin on open financial
futures contracts(Note1E) 2,344 13,125 9,844 14,063
Payable to affiliate for Trustees' fees (Note 2) 263 1,500 1,187 1,930
Accrued expenses 4,349 4,463 10,414 7,482
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 74,956 $ 19,088 $ 21,445 $ 4,631,035
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest in
Portfolio $34,876,664 $ 109,786,604 $ 81,494,060 $ 178,862,366
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $33,422,594 $ 106,249,585 $ 76,879,170 $ 168,322,738
Net unrealized appreciation of investments and
financial futures contracts (computed on the
basis of identified cost) 1,454,070 3,537,019 4,614,890 10,539,628
- ------------------------------------------------------------------------------------------------------------------------------------
Total $34,876,664 $ 109,786,604 $ 81,494,060 $ 178,862,366
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
84
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Assets and Liabilities
As of February 28, 1997
<TABLE>
<CAPTION>
Oregon South Carolina Tennessee Virginia
Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Investments --
<S> <C> <C> <C> <C>
Identified cost $118,050,031 $53,154,856 $ 52,515,401 $ 159,487,477
Unrealized appreciation 5,703,861 3,427,035 2,231,940 10,547,348
- ------------------------------------------------------------------------------------------------------------------------------------
Investment at value (Note 1A) $123,753,892 $56,581,891 $ 54,747,341 $ 170,034,825
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 95 $ 125 $ 888 $ 800
Receivable for investments sold -- 1,463,426 -- --
Interest receivable 1,710,233 805,296 849,290 2,813,355
Deferred organization expenses (Note 1D) 1,902 2,817 2,273 2,651
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $125,466,122 $58,853,555 $ 55,599,792 $ 172,851,631
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Demand note payable (Note 5) $ 2,768,000 $ 1,581,000 $ 150,000 $ 1,595,000
Payable for variation margin on open financial
futures contracts (Note 1E) 31,250 5,469 6,563 20,625
Payable to affiliate for Trustees' fees (Note 2) 1,504 1,190 1,187 1,930
Accrued expenses 23,673 9,658 7,145 10,262
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 2,824,427 $ 1,597,317 $ 164,895 $ 1,627,817
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest in
Portfolio $122,641,695 $57,256,238 $ 55,434,897 $ 171,223,814
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $117,096,348 $53,765,993 $ 53,106,528 $ 160,766,530
Net unrealized appreciation of investments and
financial futures contracts (computed on the
basis of identified cost) 5,545,347 3,490,245 2,328,369 10,457,284
- ------------------------------------------------------------------------------------------------------------------------------------
Total $122,641,695 $57,256,238 $ 55,434,897 $ 171,223,814
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
85
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
For the Six Months Ended February 28, 1997
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Kentucky
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $3,217,867 $2,120,180 $3,209,742 $ 3,961,023
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 208,824 $ 123,119 $ 206,002 $ 265,628
Compensation of Trustees not members of the
Administrator's organization (Note 2) 4,341 3,696 4,341 4,340
Custodian fee (Note 1J) 30,634 19,474 25,695 25,631
Legal and accounting services 20,842 18,867 20,867 20,867
Bond pricing 3,931 3,690 3,943 4,669
Amortization of organization expenses (Note 1D) 778 746 1,088 655
Registration fees 416 70 400 --
Interest expense -- 13,498 -- --
Miscellaneous 6,537 1,906 4,256 6,399
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 276,303 $ 185,066 $ 266,592 $ 328,189
- ------------------------------------------------------------------------------------------------------------------------------------
Less Allocations --
Reduction of custodian fee (Note 1J) $ 9,900 $ -- $ 6,240 $ 17,774
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 9,900 $ -- $ 6,240 $ 17,774
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 266,403 $ 185,066 $ 260,352 $ 310,415
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $2,951,464 $1,935,114 $2,949,390 $ 3,650,608
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 504,064 $ 291,870 $ 611,678 $ 521,024
Financial futures contracts (727,615) (485,077) (636,666) (1,049,096)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized loss on investment transactions $ (223,551) $ (193,207) $ (24,988) $ (528,072)
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $2,855,149 $1,650,459 $2,440,115 $ 3,458,697
Financial futures contracts (156,966) (104,642) 13,798 339,687
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments $2,698,183 $1,545,817 $2,453,913 $ 3,798,384
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $2,474,632 $1,352,610 $2,428,925 $ 3,270,312
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $5,426,096 $3,287,724 $5,378,315 $ 6,920,920
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
86
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
For the Six Months Ended February 28, 1997
<TABLE>
<CAPTION>
North Carolina
Louisiana Portfolio Maryland Portfolio Missouri Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income $1,093,909 $3,262,795 $2,519,158 $5,592,432
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 40,486 $ 215,602 $ 152,918 $ 395,003
Compensation of Trustees not members of the
Administrator's organization (Note 2) 802 4,340 4,512 5,631
Custodian fee (Note 1J) 11,073 18,683 26,186 47,991
Legal and accounting services 18,567 20,867 18,567 24,981
Bond pricing 2,862 4,251 3,555 4,856
Amortization of organization expenses (Note 1D) 672 753 697 1,669
Miscellaneous 1,941 6,923 2,723 10,989
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 76,403 $ 271,419 $ 209,158 $ 491,120
- ------------------------------------------------------------------------------------------------------------------------------------
Less Allocations --
Reduction of custodian fee (Note 1J) $ 3,302 $ 13,132 $ 5,884 $ 24,213
Preliminary reduction of investment adviser fee
(Note 2) 14,936 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 18,238 $ 13,132 $ 5,884 $ 24,213
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 58,165 $ 258,287 $ 203,274 $ 466,907
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,035,744 $3,004,508 $2,315,884 $5,125,525
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (Identified cost basis) $ 69,768 $ 957,102 $ 473,848 $1,943,891
Financial futures contracts (199,945) (720,149) (536,967) (824,832)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions $ (130,177) $ 236,953 $ (63,119) $1,119,059
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (Identified cost basis) $ 945,859 $2,356,908 $2,349,342 $2,593,092
Financial futures contracts (27,604) (159,010) 16,117 (77,317)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments $ 918,255 $2,197,898 $2,365,459 $2,515,775
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 788,078 $2,434,851 $2,302,340 $3,634,834
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $1,823,822 $5,439,359 $4,618,224 $8,760,359
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
87
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Operations
For the Six Months Ended February 28, 1997
<TABLE>
<CAPTION>
South Carolina
Oregon Portfolio Portfolio Tennessee Portfolio Virginia Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income $3,828,477 $1,768,275 $1,662,646 $5,330,864
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 255,298 $ 91,676 $ 85,483 $ 373,632
Compensation of Trustees not members of the
Administrator's organization (Note 2) 4,355 3,386 3,391 5,631
Custodian fee (Note 1J) 33,876 17,211 14,722 44,380
Legal and accounting services 20,567 18,867 18,567 25,022
Bond pricing 4,216 2,730 3,122 5,093
Amortization of organization expenses (Note 1D) 1,038 715 1,169 1,369
Registration fees -- 50 -- 160
Interest expense 58,238 7,105 -- --
Miscellaneous 3,116 1,624 2,142 11,838
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 380,704 $ 143,364 $ 128,596 $ 467,125
- ------------------------------------------------------------------------------------------------------------------------------------
Less Allocations --
Reduction of custodian fee (Note 1J) $ 11,888 $ 4,759 $ 4,890 $ 25,244
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 11,888 $ 4,759 $ 4,890 $ 25,244
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 368,816 $ 138,605 $ 123,706 $ 441,881
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,459,661 $1,629,670 $1,538,940 $4,888,983
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (Identified cost basis) $ 123,114 $ 179,315 $ 147,300 $1,565,769
Financial futures contracts (943,560) (373,966) (325,909) (984,859)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions $ (820,446) $ (194,651) $ (178,609) $ 580,910
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (Identified cost basis) $2,567,269 $1,551,117 $1,453,636 $2,959,294
Financial futures contracts (124,517) 63,210 19,314 (45,042)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments $2,442,752 $1,614,327 $1,472,950 $2,914,252
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $1,622,306 $1,419,676 $1,294,341 $3,495,162
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $5,081,967 $3,049,346 $2,833,281 $8,384,145
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
88
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 1997
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Kentucky
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 2,951,464 $ 1,935,114 $ 2,949,390 $ 3,650,608
Net realized loss on investments and
financial futures contracts (223,551) (193,207) (24,988) (528,072)
Change in unrealized appreciation
(depreciation) 2,698,183 1,545,817 2,453,913 3,798,384
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 5,426,096 $ 3,287,724 $ 5,378,315 $ 6,920,920
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 2,373,337 $ 897,078 $ 2,605,777 $ 2,466,500
Withdrawals (9,866,403) (9,585,814) (15,406,953) (14,770,085)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (7,493,066) $ (8,688,736) $ (12,801,176) $ (12,303,585)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (2,066,970) $ (5,401,012) $ (7,422,861) $ (5,382,665)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of period $108,543,550 $ 74,103,217 $ 108,974,295 $ 133,017,453
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $106,476,580 $ 68,702,205 $ 101,551,434 $ 127,634,788
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
89
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 1997
<TABLE>
<CAPTION>
North Carolina
Increase (Decrease) in Net Assets Louisiana Portfolio Maryland Portfolio Missouri Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 1,035,744 $ 3,004,508 $ 2,315,884 $ 5,125,525
Net realized gain (loss) on investments and
financial futures contracts (130,177) 236,953 (63,119) 1,119,059
Change in unrealized appreciation
(depreciation) 918,255 2,197,898 2,365,459 2,515,775
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,823,822 $ 5,439,359 $ 4,618,224 $ 8,760,359
- -----------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 1,215,986 $ 3,224,739 $ 1,252,604 $ 2,978,480
Withdrawals (3,211,815) (9,465,839) (9,539,131) (19,920,858)
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $(1,995,829) $ (6,241,100) $(8,286,527) $(16,942,378)
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (172,007) $ (801,741) $(3,668,303) $ (8,182,019)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
At beginning of period $35,048,671 $110,588,345 $85,162,363 $187,044,385
- -----------------------------------------------------------------------------------------------------------------------------------
At end of period $34,876,664 $109,786,604 $81,494,060 $178,862,366
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
90
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended February 28, 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 $ 3,459,661 $ 1,629,670 $ 1,538,940 $ 4,888,983
Net realized gain (loss) on investments and
financial futures contracts (820,446) (194,651) (178,609) 580,910
Change in unrealized appreciation
(depreciation) 2,442,752 1,614,327 1,472,950 2,914,252
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 5,081,967 $ 3,049,346 $ 2,833,281 $ 8,384,145
- ------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 3,450,714 $ 1,963,020 $ 1,779,091 $ 4,060,173
Withdrawals (15,649,641) (6,074,275) (5,242,828) (18,864,825)
- ------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $(12,198,927) $(4,111,255) $ (3,463,737) $ (14,804,652)
- ------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (7,116,960) $(1,061,909) $ (630,456) $ (6,420,507)
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
At beginning of period $129,758,655 $58,318,147 $ 56,065,353 $ 177,644,321
- ------------------------------------------------------------------------------------------------------------------------------
At end of period $122,641,695 $57,256,238 $ 55,434,897 $ 171,223,814
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
91
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1996
<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 $ 6,332,868 $ 4,255,703 $ 6,613,729 $ 7,720,705
Net realized gain (loss) on investments and
financial futures contracts 1,487,745 286,243 760,070 (1,218,558)
Change in unrealized appreciation
(depreciation) (1,006,618) (463,593) (233,422 ) 1,370,567
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 6,813,995 $ 4,078,353 $ 7,140,377 $ 7,872,714
- ----------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,435,768 $ 3,573,437 $ 4,580,164 $ 6,532,846
Withdrawals (22,192,266) (15,083,575) (25,694,913) (26,656,733)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $(16,756,498) $ (11,510,138) $(21,114,749) $ (20,123,887)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (9,942,503) $ (7,431,785) $(13,974,372) $(12,251,173)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
At beginning of year $118,486,053 $ 81,535,002 $122,948,667 $145,268,626
- ----------------------------------------------------------------------------------------------------------------------------------
At end of year $108,543,550 $ 74,103,217 $108,974,295 $133,017,453
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
92
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended August 31, 1996
Louisiana Maryland Missouri North Carolina
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 2,080,783 $ 6,315,616 $ 5,007,538 $ 10,663,105
Net realized gain (loss) on investments and
financial futures contracts (353,485) 1,533,760 1,101,913 (138,749)
Change in unrealized appreciation
(depreciation) 290,155 (570,744) (1,026,029) 742,696
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 2,017,453 $ 7,278,632 $ 5,083,422 $ 11,267,052
- ----------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 4,634,958 $ 9,198,950 $ 4,159,884 $ 19,433,725
Withdrawals (5,912,419) (20,893,413) (17,243,046) (38,835,116)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (1,277,461) $ (11,694,463) $(13,083,162) $ (19,401,391)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 739,992 $ (4,415,831) $ (7,999,740) $ (8,134,339)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 34,308,679 $ 115,004,176 $ 93,162,103 $ 195,178,724
- ----------------------------------------------------------------------------------------------------------------------------------
At end of year $ 35,048,671 $ 110,588,345 $ 85,162,363 $ 187,044,385
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
93
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1996
<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 $ 7,559,303 $ 3,474,069 $ 3,197,243 $ 10,483,462
Net realized gain (loss) on investments and
financial futures contracts (969,132) 659,386 41,366 178,747
Change in unrealized appreciation
(depreciation) 492,083 (468,193) 360,970 148,870
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 7,082,254 $ 3,665,262 $ 3,599,579 $ 10,811,079
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,697,262 $ 5,386,887 $ 4,078,787 $ 9,068,306
Withdrawals (29,411,782) (12,145,670) (10,286,316) (33,982,986)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital transactions $(23,714,520) $ (6,758,783) $ (6,207,529) $ (24,914,680)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $(16,632,266) $ (3,093,521) $ (2,607,950) $ (14,103,601)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $146,390,921 $ 61,411,668 $ 58,673,303 $ 191,747,922
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $129,758,655 $ 58,318,147 $ 56,065,353 $ 177,644,321
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
94
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Alabama Portfolio Arkansas Portfolio
------------------------------------------------------- -------------------------------------------
Year Ended
Six Months ------------------------------------------ Six Months
Ended August 31, Sept. 30, Ended Year Ended August 31,
Feb. 28, 1997 ------------------------------ --------- Feb. 28, 1997 ---------------------------
(Unaudited) 1996 1995 1994* 1993** (Unaudited) 1996 1995 1994***
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios to average
daily net assets++:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses /(1)/ 0.52%+ 0.49% 0.47% 0.44%+ 0.25%+ 0.52%+ 0.48% 0.46% 0.24%+
Net expenses, after
custodian fee reduction 0.50%+ 0.45% -- -- -- 0.52%+ 0.46% -- --
Net investment income 5.53%+ 5.50% 5.77% 5.37%+ 5.52%+ 5.43%+ 5.40% 5.69% 5.60%+
Portfolio Turnover 11% 52% 51% 26% 10% 11% 11% 23% 16%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(000s omitted) $106,477 $108,544 $118,486 $117,163 $83,628 $68,702 $74,103 $81,535 $82,917
</TABLE>
++ The operating expenses of the Portfolios may reflect a reduction of the
Investment Adviser fee and/or an allocation of expenses to the Investment
Adviser. Had such action not been taken, the annualized ratios would have
been as follows:
<TABLE>
<S> <C> <C>
Expenses /(1)/ 0.35%+ 0.43%+
Net investment income 5.42%+ 5.41%+
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
*** For the seven months ended August 31, 1994.
/(1)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
See notes to financial statements
95
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Georgia Portfolio
-------------------------------------------------------
Year Ended
Six Months -----------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ------------------------------- ---------
(Unaudited) 1996 1995 1994* 1993**
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average
daily net assets:
- -----------------------------------------------------------------------------------------------------------------
Expenses /(1)/ 0.51%+ 0.50% 0.46% 0.44%+ 0.40%+
Net expenses, after
custodian fee reduction 0.50%+ 0.45% -- -- --
Net investment income 5.61%+ 5.59% 5.73% 5.37%+ 5.37%+
Portfolio Turnover 8% 21% 48% 45% 35%
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $101,551 $108,974 $122,949 $137,724 $119,311
<CAPTION>
Kentucky Portfolio
-------------------------------------------------------
Year Ended
Six Months -----------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ------------------------------- ---------
(Unaudited) 1996 1995 1994* 1993**
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average
daily net assets:
- -----------------------------------------------------------------------------------------------------------------
Expenses /(1)/ 0.50%+ 0.53% 0.49% 0.46%+ 0.40%+
Net expenses, after
custodian fee reduction 0.48%+ 0.50% -- -- --
Net investment income 5.61%+ 5.49% 5.75% 5.39%+ 5.40%+
Portfolio Turnover 13% 28% 30% 21% 11%
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $127,635 $133,017 $145,269 $145,210 $117,936
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to
September 30, 1993.
/(1)/The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Portfolio to
increase its expense ratio by the effect of any expense offset arrangements
with its service providers. The expense ratios for each of the prior
periods have not been adjusted to reflect this change.
See notes to financial statements
96
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Louisiana Portfolio Maryland Portfolio
--------------------------------------- --------------------------------------------------------
Year Ended
Six Months Six Months -----------------------------------------
Ended Year Ended August 31, Ended August 31, Sept. 30,
Feb. 28, 1997 ----------------------- Feb. 28, 1997 -------------------------- ---------
(Unaudited) 1996 1995 1994*** (Unaudited) 1996 1995 1994* 1993**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios to average
daily net assets++:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses /(1)/ 0.35%+ 0.30% 0.22% 0.14%+ 0.49%+ 0.51% 0.47% 0.44%+ 0.36%+
Net expenses, after
custodian fee reduction 0.33%+ 0.23% -- -- 0.47%+ 0.48% -- -- --
Net investment income 5.95%+ 5.90% 6.06% 5.86%+ 5.45%+ 5.50% 5.79% 5.44%+ 5.41%+
Portfolio Turnover 12% 99% 46% 21% 13% 33% 30% 41% 34%
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(000s omitted) $34,877 $35,049 $34,309 $31,423 $109,787 $110,588 $115,004 $117,856 $94,213
</TABLE>
++ The operating expenses of the Portfolios may reflect a reduction of the
Investment Adviser fee and/or an allocation of expenses to the Investment
Adviser. Had such action not been taken, the annualized ratios would have
been as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
Expenses /(1)/ 0.44%+ 0.41% 0.33% 0.33%+ 0.38%+
Expenses after custodian
fee reduction 0.42%+ 0.35% -- -- --
Net investment income 5.86%+ 5.79% 5.95% 5.67%+ 5.39%+
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
*** For the seven months ended August 31, 1994.
/(1)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
See notes to financial statements
97
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Missouri Portfolio
------------------------------------------------------------
Six Months Year Ended,
Ended ---------------------------------------------
Feb. 28, August 31, Sept. 30,
1997 ---------------------------- ------------
(Unaudited) 1996 1995 1994* 1993**
- -------------------------------------------------------------------------------------------------------
Ratios to average
daily net assets:
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses /(1)/ 0.50%+ 0.49% 0.48% 0.45%+ 0.40%+
Net expenses, after
custodian fee reduction 0.49%+ 0.47% -- -- --
Net investment income 5.56%+ 5.52% 5.76% 5.36%+ 5.36%+
Portfolio Turnover 2% 36% 24% 28% 6%
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $81,494 $85,162 $93,162 $95,167 $75,273
</TABLE>
<TABLE>
<CAPTION>
North Carolina Portfolio
------------------------------------------------------------
Six Months Year Ended,
Ended ---------------------------------------------
Feb. 28, August 31, Sept. 30,
1997 ----------------------------- ------------
(Unaudited) 1996 1995 1994* 1993**
- -------------------------------------------------------------------------------------------------------
Ratios to average
daily net assets:
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses/(1)/ 0.54%+ 0.52% 0.48% 0.46%+ 0.43%+
Net expenses, after
custodian fee reduction 0.51%+ 0.48% -- -- --
Net investment income 5.58%+ 5.51% 5.78% 5.40%+ 5.43%+
Portfolio Turnover 18% 54% 33% 37% 21%
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $178,862 $187,044 $195,179 $199,772 $172,534
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
/(1)/The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the periods ended on or before August 31, 1995 have not been adjusted to
reflect this change.
See notes to financial statements
98
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Oregon Portfolio
---------------------------------------------------------------
Year Ended,
Six Months ------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 --------------------------------- ------------
(Unaudited) 1996 1995 1994* 1993**
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average
daily net assets:
- -----------------------------------------------------------------------------------------------------------
Expenses /(1)/ 0.61%+ 0.50% 0.50% 0.46%+ 0.43%+
Net expenses, after
custodian fee reduction 0.59%+ 0.47% -- -- --
Net investment income 5.50%+ 5.37% 5.60% 5.26%+ 5.30%+
Portfolio Turnover 7% 28% 22% 15% 32%
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period (000s
omitted) $122,642 $129,759 $146,391 $153,119 $127,497
</TABLE>
<TABLE>
<CAPTION>
South Carolina Portfolio
----------------------------------------------
Six Months
Ended Year Ended August 31,
Feb. 28, 1997 --------------------------------
(Unaudited) 1996 1995 1994***
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ratios to average
daily net assets:
- --------------------------------------------------------------------------------------------------
Expenses /(1)/ 0.50%+ 0.53% 0.44% 0.37%+
Net expenses, after
custodian fee reduction 0.48%+ 0.51% -- --
Net investment income 5.64%+ 5.65% 5.81% 5.47%+
Portfolio Turnover 2% 36% 75% 23%
- -------------------------------------------------------------------------------------------------
Net assets, end of period (000s
omitted) $57,256 $58,318 $61,412 $62,265
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to September
30, 1993.
*** For the seven months ended August 31, 1994.
/(1)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
See notes to financial statements
99
<PAGE>
EV Municipals Portfolios as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Tennessee Portfolio
----------------------------------------------------------------
Year Ended
Six Months ------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ---------------------------------- -----------
(Unaudited) 1996 1995 1994* 1993**
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average
daily net assets:
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses /(1)/ 0.46%+ 0.45% 0.41% 0.36%+ 0.08%+
Net expenses, after
custodian fee reduction 0.44%+ 0.43% -- -- --
Net investment income 5.53%+ 5.52% 5.81% 5.49%+ 5.60%+
Portfolio Turnover 3% 39% 20% 10% 69%
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $55,435 $56,065 $58,673 $56,496 $39,266
</TABLE>
<TABLE>
<CAPTION>
Virginia Portfolio
-----------------------------------------------------------------
Year Ended
Six Months ------------------------------------------------
Ended August 31, Sept. 30,
Feb. 28, 1997 ---------------------------------- -----------
(Unaudited) 1996 1995 1994* 1993**
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average
daily net assets:
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses /(1)/ 0.53%+ 0.51% 0.48% 0.46%+ 0.43%+
Net expenses, after
custodian fee reduction 0.51%+ 0.48% -- -- --
Net investment income 5.60%+ 5.55% 5.81% 5.49%+ 5.49%+
Portfolio Turnover 9% 30% 38% 48% 29%
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $171,224 $177,644 $191,748 $194,519 $174,260
</TABLE>
+ Annualized.
* For the eleven months ended August 31, 1994.
** For the period from the start of business, February 1, 1993, to
September 30, 1993.
/(1)/ The expense ratios for the reporting periods ended August 31, 1996 and
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
See notes to financial statements
100
<PAGE>
EV Municipals Portfolios as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
-------------------------------------------------------------------------
Alabama Municipals Portfolio (Alabama Portfolio), Arkansas Municipals
Portfolio (Arkansas Portfolio), Georgia Municipals Portfolio (Georgia
Portfolio), Kentucky Municipals Portfolio (Kentucky Portfolio), Louisiana
Municipals Portfolio (Louisiana Portfolio), Maryland Municipals Portfolio
(Maryland Portfolio), Missouri Municipals Portfolio (Missouri Portfolio),
North Carolina Municipals Portfolio (North Carolina Portfolio), Oregon
Municipals Portfolio (Oregon Portfolio), South Carolina Municipals
Portfolio (South Carolina Portfolio), Tennessee Municipals Portfolio
(Tennessee Portfolio) and Virginia Municipals Portfolio (Virginia
Portfolio), collectively the Portfolios, are registered under the
Investment Company Act of 1940, as amended, as non-diversified open-end
investment management 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 consistently followed by the
Portfolios in the preparation of their financial statements. The policies
are in conformity with generally accepted accounting principles.
A Investment Valuations -- Municipal bonds are normally valued on the basis
of valuations furnished by a pricing service. Taxable obligations, if any,
for which price quotations are readily available are normally valued at the
mean between the latest bid and asked prices. Futures contracts and options
on financial futures contracts listed on commodity exchanges are valued at
closing settlement prices. Over-the-counter options on financial futures
are normally valued at the mean between the latest bid and asked price.
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
transaction, a Portfolio will realize a gain or loss depending on whether
the sales 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.
101
<PAGE>
EV Municipals Portfolios as of February 28, 1997
NOETS TO FINANCIAL STATEMENTS (Unaudited) CONT'D
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 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.
I Other -- Investment transactions are accounted for on a trade date basis.
J Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolios. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by the credits which are determined
based on the average daily cash balances each Portfolio maintains with IBT.
All significant credit balances used to reduce the Portfolios' custodian
fees are reflected as a reduction of operating expense on the statement of
operations.
K Interim Financial Information -- The interim financial statements
relating to February 28, 1997 and for the six months then ended have not
been audited by independent certified public accountants, but in the
opinion of the Portfolio's management reflect all adjustments, consisting
only of normal recurring adjustments, necessary for the fair presentation
of the financial statements.
2 Investment Adviser Fee and Other Transactions
with Affiliates
------------------------------------------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to each Portfolio.
The fee is based upon a percentage of average daily net assets plus a
percentage of gross income (i.e., income other than gains from the sale of
securities).
For the six months ended February 28, 1997, the Portfolios paid advisory
fees as follows:
<TABLE>
<CAPTION>
Portfolio Amount Effective Rate*
- --------------------------------------------------------------------
<S> <C> <C>
Alabama $ 208,824 0.42%
Arkansas 123,119 0.35%
Georgia 206,002 0.39%
Kentucky 265,628 0.41%
Louisiana 40,486 0.23%
Maryland 215,602 0.39%
Missouri 152,918 0.37%
North Carolina 395,003 0.43%
Oregon 255,298 0.41%
South Carolina 91,676 0.32%
Tennessee 85,483 0.31%
Virginia 373,632 0.43%
</TABLE>
* Advisory fees paid as a percentage of average daily net assets
(annualized).
To enhance the net income of the Louisiana Portfolio, BMR made a
preliminary reduction of its fee in the amount of $14,936 for the six
months ended February 28, 1997.
Except as to Trustees of the Portfolios who are not members of EVM's or
BMR's organization, officers and Trustees receive remuneration for their
services to the Portfolios out of such investment adviser fee.
Trustees of the Portfolios that are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of the Trustees Deferred Compensation
Plan. For the six month period ended February 28, 1997, no significant
amounts have been deferred.
Certain of the officers and Trustees of the Portfolios are officers and
directors/trustees of EVM and/or BMR.
102
<PAGE>
EV Municipals Portfolios as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
3 Investments
-----------------------------------------------------------------------------
Purchases and Sales of investments, other than U.S. Government securities,
put option transactions and short-term obligations, for the six months ended
February 28, 1997 were as follows:
<S> <C>
Alabama Portfolio
-----------------------------------------------------------------------------
Purchases $ 11,395,250
Sales 14,827,971
Arkansas Portfolio
-----------------------------------------------------------------------------
Purchases $ 8,157,962
Sales 16,234,531
Georgia Portfolio
-----------------------------------------------------------------------------
Purchases $ 8,028,825
Sales 19,675,801
Kentucky Portfolio
-----------------------------------------------------------------------------
Purchases $ 17,197,274
Sales 22,803,428
Louisiana Portfolio
-----------------------------------------------------------------------------
Purchases $ 4,156,026
Sales 5,705,070
Maryland Portfolio
-----------------------------------------------------------------------------
Purchases $ 13,789,340
Sales 18,085,195
Missouri Portfolio
-----------------------------------------------------------------------------
Purchases $ 1,512,765
Sales 10,227,909
North Carolina Portfolio
-----------------------------------------------------------------------------
Purchases $ 33,485,395
Sales 44,681,024
Oregon Portfolio
-----------------------------------------------------------------------------
Purchases $ 8,874,830
Sales 13,527,875
South Carolina Portfolio
-----------------------------------------------------------------------------
Purchases $ 1,052,350
Sales 3,050,765
Tennessee Portfolio
-----------------------------------------------------------------------------
Purchases $ 1,478,560
Sales 4,594,575
Virginia Portfolio
-----------------------------------------------------------------------------
Purchases $ 15,446,753
Sales 24,235,198
4 Federal Income Tax Basis of Investments
-----------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned by each Portfolio at February 28, 1997, as computed on a
federal income tax basis, are as follows:
Alabama Portfolio
-----------------------------------------------------------------------------
Aggregate Cost $100,675,836
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 5,682,821
Gross unrealized depreciation (129,583)
-----------------------------------------------------------------------------
Net unrealized appreciation $ 5,553,238
-----------------------------------------------------------------------------
Arkansas Portfolio
-----------------------------------------------------------------------------
Aggregate Cost $ 65,038,418
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 2,715,870
Gross unrealized depreciation (97,168)
-----------------------------------------------------------------------------
Net unrealized appreciation $ 2,618,702
-----------------------------------------------------------------------------
Georgia Portfolio
-----------------------------------------------------------------------------
Aggregate Cost $ 94,112,523
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 5,642,282
Gross unrealized depreciation (160,446)
-----------------------------------------------------------------------------
Net unrealized appreciation $ 5,481,836
-----------------------------------------------------------------------------
</TABLE>
103
<PAGE>
EV Municipals Portfolios as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
<S> <C>
Kentucky Portfolio
- -------------------------------------------------------------------------------
Aggregate Cost $121,126,820
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 6,854,895
Gross unrealized depreciation (63,628)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 6,791,267
- -------------------------------------------------------------------------------
Louisiana Portfolio
- -------------------------------------------------------------------------------
Aggregate Cost $ 32,863,537
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 1,466,963
Gross unrealized depreciation (17,327)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 1,449,636
- -------------------------------------------------------------------------------
Maryland Portfolio
- -------------------------------------------------------------------------------
Aggregate Cost $103,997,044
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 3,838,537
Gross unrealized depreciation (244,204)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 3,594,333
- -------------------------------------------------------------------------------
Missouri Portfolio
- -------------------------------------------------------------------------------
Aggregate Cost $ 75,521,959
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 4,546,070
Gross unrealized depreciation (75,823)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 4,470,247
- -------------------------------------------------------------------------------
North Carolina Portfolio
- -------------------------------------------------------------------------------
Aggregate Cost $164,910,428
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 10,564,610
Gross unrealized depreciation (69,714)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 10,494,896
- -------------------------------------------------------------------------------
Oregan Portfolio
- -------------------------------------------------------------------------------
Aggregate Cost $118,050,031
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 5,820,017
Gross unrealized depreciation (116,156)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 5,703,861
- -------------------------------------------------------------------------------
South Carolina Portfolio
- -------------------------------------------------------------------------------
Aggregate Cost $ 53,154,856
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 3,428,940
Gross unrealized depreciation (1,905)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 3,427,035
- -------------------------------------------------------------------------------
Tennessee Portfolio
- -------------------------------------------------------------------------------
Aggregate Cost $ 52,515,401
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 2,295,048
Gross unrealized depreciation (63,108)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 2,231,940
- -------------------------------------------------------------------------------
Virginia Portfolio
- -------------------------------------------------------------------------------
Aggregate Cost $159,487,477
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 10,599,313
Gross unrealized depreciation (51,965)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 10,547,348
- -------------------------------------------------------------------------------
</TABLE>
104
<PAGE>
EV Municipals Portfolios as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
5 Line of Credit
------------------------------------------------------------------------------
The Portfolios participate with other portfolios and funds managed by BMR and
EVM and its affiliates in a $120 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 the bank's base rate or at an amount above either the bank's
adjusted certificate of deposit rate, Eurodollar rate or federal funds
effective rate. In addition, a fee computed at an annual rate of 0.15% on the
daily unused portion of the facility is allocated among the participating
portfolios and funds at the end of each quarter. At February 28, 1997, the
Alabama Portfolio, Arkansas Portfolio, Kentucky Portfolio, Louisiana
Portfolio, Oregon Portfolio, South Carolina Portfolio, Tennessee Portfolio and
Virginia Portfolio had balances outstanding pursuant to this line of credit of
$17,000, $122,000, $1,013,000, $68,000, $2,768,000, $1,581,000, $150,000, and
$1,595,000, respectively. The Portfolios did not have any significant
borrowings or allocated fees during the six months ended February 28, 1997.
6 Financial Instruments
-----------------------------------------------------------------------------
The Portfolios regularly trade in financial instruments with off-balance
sheet risk in the normal course of their investing activities to assist in
managing exposure to various market risks. These financial instruments
include written options and futures contracts and may involve, to a varying
degree, elements of risk in excess of the amounts recognized for financial
statement purposes.
The notional or contractual amounts of these instruments represent the
investment a Portfolio has in particular classes of financial instruments
and does not necessarily represent the amounts potentially subject to risk.
The measurement of the risks associated with these instruments is meaningful
only when all related and offsetting transactions are considered.
A summary of obligations under these financial instruments at February 28,
1997, is as follows:
<TABLE>
<CAPTION>
Futures
Contracts Net Unrealized
Expiration Appreciation
Portfolio Date Contracts Position (Depreciation)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama 3/97 81 U.S. Treasury Bonds Short $(55,267)
- --------------------------------------------------------------------------------------------------
Arkansas 3/97 54 U.S. Treasury Bonds Short $(36,844)
- --------------------------------------------------------------------------------------------------
Georgia 3/97 76 U.S. Treasury Bonds Short $168,031
- --------------------------------------------------------------------------------------------------
Kentucky 3/97 75 U.S. Treasury Bonds Short $306,610
- --------------------------------------------------------------------------------------------------
Louisiana 3/97 15 U.S. Treasury Bonds Short $4,434
- --------------------------------------------------------------------------------------------------
Maryland 3/97 84 U.S. Treasury Bonds Short $(57,313)
- --------------------------------------------------------------------------------------------------
Missouri 3/97 63 U.S. Treasury Bonds Short $144,643
- --------------------------------------------------------------------------------------------------
North
Carolina 3/97 90 U.S. Treasury Bonds Short $44,732
- --------------------------------------------------------------------------------------------------
Oregon 3/97 200 U.S. Treasury Bonds Short $(158,514)
- --------------------------------------------------------------------------------------------------
Tennessee 3/97 42 U.S. Treasury Bonds Short $96,429
- --------------------------------------------------------------------------------------------------
South
Carolina 3/97 35 U.S. Treasury Bonds Short $(5,469)
- --------------------------------------------------------------------------------------------------
</TABLE>
105
<PAGE>
EV Marathon Municipals Funds as of February 28, 1997
INVESTMENT MANAGEMENT
<TABLE>
<CAPTION>
EV Marathon Municipals Funds
<S> <C>
Officers Independent Trustees
Thomas J. Fetter Donald R. Dwight
President President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
James B. Hawkes
Vice President and Trustee Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Robert B. MacIntosh Banking, Harvard University Graduate
Vice President School of Business Administration
James L. O'Connor Norton H. Reamer
Treasurer President and Director, United Asset
Management Corporation
Thomas Otis
Secretary John L. Thorndike
Formerly Director, Fiduciary Company
Incorporated
Jack L. Treynor
Investment Adviser and Consultant
</TABLE>
<TABLE>
<CAPTION>
Municipals Portfolios
<S> <C>
Officers Independent Trustees
Thomas J. Fetter Donald R. Dwight
President and Portfolio President, Dwight Partners, Inc.
Manager of South Carolina Chairman, Newspapers of New England, Inc.
Municipals Portfolio
Samuel L. Hayes, III
James B. Hawkes Jacob H. Schiff Professor of Investment
Vice President and Trustee Banking, Harvard University Graduate
School of Business Administration
Robert B. MacIntosh
Vice President and Portfolio Manager Norton H. Reamer
of Louisiana and North Carolina President and Director, United Asset
Municipals Portfolios Management Corporation
Timothy T. Browse John L. Thorndike
Vice President and Portfolio Manager Formerly Director, Fiduciary Company Incorporated
of Alabama, Arkansas, Maryland and
Virginia Municipals Portfolios Jack L. Treynor
Investment Adviser and Consultant
Cynthia J. Clemson
Vice President and Portfolio Manager
of Georgia, Missouri, and Tennessee
Municipals Portfolios
Nicole Anderes
Vice President and Portfolio Manager
of Kentucky Municipals Portfolio
Thomas M. Metzold
Vice President and Portfolio Manager of
Oregon Municipals Portfolio
</TABLE>
106
