<PAGE>
Alabama Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 1.7%
- --------------------------------------------------------------------------------
A3 NR $1,500 Birmingham-Southern
College, 5.35%, 12/1/19 $ 1,552,170
- --------------------------------------------------------------------------------
$ 1,552,170
- --------------------------------------------------------------------------------
Electric Utilities -- 0.6%
- --------------------------------------------------------------------------------
Baa1 BBB+ $ 500 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 $ 570,690
- --------------------------------------------------------------------------------
$ 570,690
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 8.4%
- --------------------------------------------------------------------------------
NR BBB $ 350 Gadsen East Medical Clinic
Board, (Baptist Hospital),
Prerefunded to 11/1/01,
7.60%, 11/1/08 $ 395,122
NR BBB 2,000 Gadsen East Medical Clinic
Board, (Baptist Hospital),
Prerefunded to 11/1/01,
7.80%, 11/1/21 2,269,660
Aaa AAA 2,000 Huntsville, Health Care
Facilities, (MBIA),
Prerefunded to 6/1/04,
6.50%, 6/1/13 2,284,600
A1 NR 1,600 University of Alabama,
Birmingham Medical and
Educational Foundation
Housing, Prerefunded to
12/1/99, 7.00%, 12/1/19 1,698,560
Aaa AAA 1,000 West Morgan-East Lawrence,
Water Authority, (FSA),
Prerefunded to 8/15/04,
6.85%, 8/15/25 1,166,350
- --------------------------------------------------------------------------------
$ 7,814,292
- --------------------------------------------------------------------------------
General Obligations -- 1.5%
- --------------------------------------------------------------------------------
Baa1 A $1,100 Puerto Rico Aqueduct and
Sewer Authority, 5.00%, 7/1/19 $ 1,089,385
Baa1 A 650 Puerto Rico, Public
Improvement, 0.00%, 7/1/15 285,864
- --------------------------------------------------------------------------------
$ 1,375,249
- --------------------------------------------------------------------------------
Hospitals -- 14.1%
- --------------------------------------------------------------------------------
NR BBB $3,000 Alexander City, Special
Care, (Russell Hospital),
6.00%, 12/1/22 $ 3,137,190
Baa3 BBB- 1,000 Baldwin County, (Thomas
Hospital), 6.75%, 4/1/21 1,097,370
Baa3 NR 1,000 Cullman Medical Clinic
Board, (Cullman Regional
Medical Center), 6.50%, 2/15/23 1,070,500
A3 NR 3,550 Jasper Medical Clinic Board,
(Walker Regional Medical
Center), 6.375%, 7/1/18/(1)/ 3,754,479
A3 NR 1,000 Jasper Medical Clinic Board,
(Walker Regional Medical
Center), 6.40%, 7/1/11 1,062,410
Baa3 BBB 2,000 Marshall, (Boaz-Albertville
Medical Center), 7.00%, 1/1/20 2,223,720
A A- 745 Montgomery, Medical Clinic
Board, (Jackson Hospital),
7.00%, 3/1/15 790,661
- --------------------------------------------------------------------------------
$13,136,330
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 11.4%
- --------------------------------------------------------------------------------
Baa1 BBB $1,200 Courtland, (Champion
International Corp.),
7.20%, 12/1/13 $ 1,331,712
Baa1 BBB 2,000 Courtland, (Champion
International Corp.),
(AMT), 6.50%, 9/1/25 2,180,700
Baa1 BBB 550 Courtland, (Champion
International Corp.),
(AMT), 7.00%, 6/1/22 601,519
Baa3 BBB- 3,020 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 3,289,777
A3 A- 1,000 Selma, Solid Waste
Disposal, (International
Paper), (AMT), 6.00%, 12/1/17 1,054,070
A2 A+ 2,000 Tallahassee, (United Tech),
6.10%, 8/1/14 2,190,000
- --------------------------------------------------------------------------------
$10,647,778
- --------------------------------------------------------------------------------
Insured-Education -- 8.4%
- --------------------------------------------------------------------------------
AAA AAA $2,000 Alabama Agricultural and
Mechanical University,
(MBIA), 5.00%, 11/1/25 $ 1,980,780
Aaa AAA 1,330 Alabama State Board of
Education, (AMBAC), 5.25%, 9/1/17 1,352,796
Aaa AAA 2,500 University of Alabama,
Student Housing, (MBIA),
5.00%, 6/1/16 2,508,575
See notes to financial statements
56
<PAGE>
Alabama Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Education (continued)
- --------------------------------------------------------------------------------
Aaa AAA $2,000 University of South
Alabama, Tuition, (AMBAC),
5.00%, 11/15/15 $ 2,025,180
- --------------------------------------------------------------------------------
$ 7,867,331
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 2.5%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Columbia, (Alabama Power),
(AMBAC), 6.50%, 9/1/23 $ 2,088,620
Aaa AAA 250 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(2)/ 288,438
- --------------------------------------------------------------------------------
$ 2,377,058
- --------------------------------------------------------------------------------
Insured-General Obligations -- 10.3%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Daphne, (AMBAC),
5.125%, 4/1/17 $ 506,625
Aaa AAA 250 Fairfield City, (AMBAC),
6.30%, 6/1/22 276,208
Aaa AAA 1,000 Greenville, (AMBAC),
5.25%, 12/1/21 1,015,370
Aaa AAA 2,000 Madison, Warrants (MBIA),
5.00%, 9/1/27/(3)/ 1,977,360
Aaa AAA 3,250 Madison, Warrants, (MBIA),
6.00%, 2/1/24 3,540,355
AAA AAA 4,000 Mobile, (MBIA),
0.00%, 8/15/20 1,269,480
Aaa AAA 500 North Port, (AMBAC),
5.70%, 3/1/21 533,810
Aaa AAA 500 Troy City, (CAPG),
6.60%, 6/1/12 555,975
- --------------------------------------------------------------------------------
$ 9,675,183
- --------------------------------------------------------------------------------
Insured-Hospitals -- 6.7%
- --------------------------------------------------------------------------------
AAA AAA $2,000 Anniston Regional Medical
Center Board, (AMBAC),
5.125%, 6/1/28 $ 1,997,420
Aaa AAA 1,810 Bessemer, Medical Clinic
Board, (MBIA), 6.00%, 5/15/19 1,980,249
Aaa AAA 750 Montgomery, Special Tax
Care Facilities Authority,
(Baptist Medical Center),
(AMBAC), 5.00%, 5/1/20 739,695
Aaa AAA 1,500 University of Alabama, Hospital
Revenue - Birmingham, (MBIA),
5.00%, 10/1/14 1,509,270
- --------------------------------------------------------------------------------
$ 6,226,634
- --------------------------------------------------------------------------------
Insured-Miscellaneous -- 6.1%
- --------------------------------------------------------------------------------
Aaa AAA $4,500 Alabama State Docks
Department, (MBIA), (AMT),
6.30%, 10/1/21 $ 5,026,634
Aaa AAA 1,825 Birmingham Jefferson, Civic
Center Authority, (MBIA),
0.00%, 9/1/18 683,682
- --------------------------------------------------------------------------------
$ 5,710,316
- --------------------------------------------------------------------------------
Insured-Solid Waste -- 4.9%
- --------------------------------------------------------------------------------
Aaa AAA $ 250 Huntsville, Solid Waste
Disposal, (FGIC), (AMT),
7.00%, 10/1/08 $ 269,075
Aaa AAA 4,000 Huntsville, Solid Waste
Disposal, (FGIC), (AMT),
7.00%, 10/1/14 4,303,959
- --------------------------------------------------------------------------------
$ 4,573,034
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 1.6%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Puerto Rico Financing
Authority, (AMBAC),
5.00%, 7/1/28 $ 1,496,430
- --------------------------------------------------------------------------------
$ 1,496,430
- --------------------------------------------------------------------------------
Insured-Transportation -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Huntsville-Madison County
Airport, (AMT), (MBIA),
5.40%, 7/1/19 $ 1,028,240
- --------------------------------------------------------------------------------
$ 1,028,240
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 14.4%
- --------------------------------------------------------------------------------
Aaa AAA $2,050 Bessemer, Water, (AMBAC),
5.75%, 7/1/26 $ 2,205,247
AAA NR 1,000 Limestone County Water and
Sewer Authority, (AMBAC),
5.00%, 12/1/24 994,860
Aaa AAA 3,075 Prichard Water and Sewer,
(AMBAC), 6.125%, 11/15/14 3,434,652
Aaa AAA 6,000 Scottsboro, Water, Sewer and
Gas, (AMBAC),
6.50%, 12/1/14/(4)/ 6,777,659
- --------------------------------------------------------------------------------
$13,412,418
- --------------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 0.5%
- --------------------------------------------------------------------------------
NR BBB $ 500 Puerto Rico, (Guaynabo Municipal
Government Center Lease),
5.625%, 7/1/22 $ 519,085
- --------------------------------------------------------------------------------
$ 519,085
- --------------------------------------------------------------------------------
See notes to financial statements
57
<PAGE>
Alabama Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Miscellaneous -- 0.1%
- --------------------------------------------------------------------------------
A A $ 100 Tennessee Valley, Exhibit
Commission, 6.70%, 6/1/10 $ 110,680
- --------------------------------------------------------------------------------
$ 110,680
- --------------------------------------------------------------------------------
Nursing Homes -- 1.1%
- --------------------------------------------------------------------------------
NR NR $ 325 Fairhope Midtown Medical
Clinic Board, (Beverly
Enterprises), 6.375%, 6/1/09 $ 327,308
NR NR 670 Mobile, Midtown Medical Clinic
Board, (Beverly Enterprises),
7.00%, 4/1/07 682,663
- --------------------------------------------------------------------------------
$ 1,009,971
- --------------------------------------------------------------------------------
Transportation -- 2.9%
- --------------------------------------------------------------------------------
Baa1 A $1,000 Puerto Rico Highway and
Transportation Authority,
4.75%, 7/1/38 $ 969,520
BAA A- 800 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/22 790,616
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/38 983,810
- --------------------------------------------------------------------------------
$ 2,743,946
- --------------------------------------------------------------------------------
Water and Sewer -- 1.7%
- --------------------------------------------------------------------------------
NR NR $1,500 Moulton City, Water,
6.30%, 1/1/18 $ 1,570,245
- --------------------------------------------------------------------------------
$ 1,570,245
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $85,220,338) $93,417,080
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Alabama
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at August 31, 1998, 59.8% of securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.6% to 27.2% of total investments.
/(1)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
/(3)/ When-issued security.
/(4)/ Security (or a portion thereof) has been segregated to cover when-issued
securities.
See notes to financial statements
58
<PAGE>
Arkansas Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 7.1%
- --------------------------------------------------------------------------------
NR A+ $2,750 Conway, Public Facilities Board
Capital Improvement, (Hendrix
College), 6.00%, 10/1/26 $ 2,937,467
A1 NR 1,000 University of Arkansas, 5.00%,
9/1/17 1,007,570
- --------------------------------------------------------------------------------
$ 3,945,037
- --------------------------------------------------------------------------------
Electric Utilities -- 2.4%
- --------------------------------------------------------------------------------
Baa2 BBB+ $ 550 Jefferson, Pollution Control,
(Arkansas Power and Light),
6.30%, 6/1/18 $ 595,590
Baa2 BBB+ 500 Pope County, Pollution Control,
(Arkansas Power and Light), 6.30%,
12/1/16 542,625
Baa1 BBB+ 500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 200,550
- --------------------------------------------------------------------------------
$ 1,338,765
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Harrison, Residential Housing
Facility Board, Single Family
Mortgage, (FGIC), Escrowed to
Maturity, 7.40%, 9/1/11 $ 637,835
- --------------------------------------------------------------------------------
$ 637,835
- --------------------------------------------------------------------------------
General Obligations -- 3.0%
- --------------------------------------------------------------------------------
Aa3 AA $2,750 Arkansas State College Savings,
0.00%, 6/1/14 $ 1,277,045
Baa1 A 500 Puerto Rico, 0.00%, 7/1/16 209,055
Baa1 A 500 Puerto Rico, 0.00%, 7/1/18 188,850
- --------------------------------------------------------------------------------
$ 1,674,950
- --------------------------------------------------------------------------------
Hospitals -- 13.4%
- --------------------------------------------------------------------------------
Baa1 NR $ 700 Baxter, Hospital Improvement,
7.25%, 9/1/07 $ 772,114
Baa1 NR 750 Baxter, Hospital Improvement,
7.50%, 9/1/21 829,245
NR A+ 550 Little Rock, Health Facilities
Board Healthcare, (Baptist Medical
Center), 5.50%, 9/1/15 569,536
NR A+ 1,125 Little Rock, Health Facilities
Board, (Baptist Medical Center),
6.80%, 11/1/05 1,305,000
NR BBB 1,500 Paragould, Hospital, 6.375%,
10/1/17 1,619,760
NR A- 2,250 Pulaski County, (Children's
Hospital), 6.20%, 3/1/22 2,379,803
- --------------------------------------------------------------------------------
$ 7,475,458
- --------------------------------------------------------------------------------
Housing -- 12.8%
- --------------------------------------------------------------------------------
A NR $3,000 Arkansas Development Finance
Authority, Compound Accretion,
0.00%, 12/1/11 $ 1,218,000
NR AAA 1,205 Arkansas Development Finance
Authority, Single Family Mortgage,
(GNMA), (AMT), 5.80%, 6/1/25 1,238,571
NR AAA 990 Arkansas Development Finance
Authority, Single Family Mortgage,
(GNMA), (AMT), 7.45%, 1/1/27 1,100,058
NR AAA 3,270 Arkansas Development Finance
Authority, Single Family Mortgage,
(GNMA/FNMA), (AMT), 6.70%, 7/1/27 3,537,779
- --------------------------------------------------------------------------------
$ 7,094,408
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 18.0%
- --------------------------------------------------------------------------------
NR A- $ 750 Arkansas Development Finance
Authority, Economic Development,
(AMT), 6.00%, 10/1/11 $ 785,400
Baa2 BBB+ 2,350 Baxter, (Aeroquip Corp.), 5.80%,
10/1/13 2,573,015
A1 AA- 2,500 Blytheville, Solid Waste Recycling
and Sewer Treatment, (Nucor Corp.),
(AMT), 6.90%, 12/1/21 2,717,600
A1 A+ 1,000 Jonesboro, (Anheuser-Busch),
6.50%, 11/15/12 1,094,580
Baa2 NR 2,000 Little River County, (Georgia-
Pacific Corp.), (AMT), 5.60%,
10/1/26 2,025,100
A3 A- 775 Pine Bluff, Solid Waste Disposal,
(International Paper), (AMT),
5.55%, 10/1/17 796,406
- --------------------------------------------------------------------------------
$ 9,992,101
- --------------------------------------------------------------------------------
See notes to financial statements
59
<PAGE>
Arkansas Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Education -- 1.0%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 University of Central Arkansas,
(AMBAC), 6.125%, 4/1/26 $ 552,190
- --------------------------------------------------------------------------------
$ 552,190
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 8.8%
- --------------------------------------------------------------------------------
Aaa AAA $ 250 North Little Rock, Electric
System, (MBIA), 6.50%, 7/1/10 $ 297,243
Aaa AAA 3,390 North Little Rock, Electric
System, (MBIA), 6.50%, 7/1/15/(1)/ 4,080,779
Aaa AAA 450 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7.526%, 7/1/03/(2)/ 519,188
- --------------------------------------------------------------------------------
$ 4,897,210
- --------------------------------------------------------------------------------
Insured-General Obligations -- 0.3%
- --------------------------------------------------------------------------------
AAA AAA $ 500 Arkansas State College Savings,
(FGIC), 0.00%, 6/1/17 $ 195,910
- --------------------------------------------------------------------------------
$ 195,910
- --------------------------------------------------------------------------------
Insured-Hospitals -- 6.9%
- --------------------------------------------------------------------------------
Aaa AAA $2,610 Jonesboro, Residential Housing
and Health Care Facilities Board
Hospital, (Saint Bernard Regional
Medical Center), (AMBAC), 5.90%,
7/1/16 $ 2,835,530
Aaa AAA 400 Saline County, Retirement Housing
and Healthcare Facilities Board,
(Evan Lutheran Good Samaritan),
(AMBAC), 5.80%, 5/1/11 436,244
Aaa AAA 500 Saline County, Retirement Housing
and Healthcare Facilities Board,
(Evan Lutheran Good Samaritan),
(AMBAC), 6.00%, 6/1/18 543,285
- --------------------------------------------------------------------------------
$ 3,815,059
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 5.5%
- --------------------------------------------------------------------------------
Aaa AAA $1,250 Arkansas Development Finance
Authority, Wastewater System,
(MBIA), 5.00%, 6/1/15 $ 1,263,113
Aaa AAA 1,250 Arkansas Development Finance
Authority, Wastewater System,
(MBIA), 5.40%, 12/1/15 1,297,500
Aaa NR 500 Texarkana, Water and Sewer,
(FGIC), 5.40%, 9/1/15 524,065
- --------------------------------------------------------------------------------
$ 3,084,678
- --------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 0.5%
- --------------------------------------------------------------------------------
NR BBB $ 250 Puerto Rico, (Guaynabo Municipal
Government Center Lease),
5.625%, 7/1/22 $ 259,543
- --------------------------------------------------------------------------------
$ 259,543
- --------------------------------------------------------------------------------
Nursing Homes -- 2.0%
- --------------------------------------------------------------------------------
NR A $1,000 Little Rock, Health Facilities
Board, (Baptist Medical Center-
Parkway Village), 7.00%, 10/1/17 $ 1,091,750
- --------------------------------------------------------------------------------
$ 1,091,750
- --------------------------------------------------------------------------------
Pooled Loans -- 5.0%
- --------------------------------------------------------------------------------
A2 NR $1,000 Arkansas State Student Loan
Authority, (AMT), 5.60%, 6/1/14 $ 1,027,380
A NR 1,000 Arkansas State Student Loan
Authority, (AMT), 6.25%, 6/1/10 1,056,060
A NR 610 Arkansas State Student Loan
Authority, (AMT), 7.25%, 6/1/09 702,940
- --------------------------------------------------------------------------------
$ 2,786,380
- --------------------------------------------------------------------------------
Special Tax Revenue -- 4.6%
- --------------------------------------------------------------------------------
A NR $2,000 Little Rock, Hotel and Restaurant
Gross Receipts Tax, 7.375%,
8/1/15 $ 2,555,260
- --------------------------------------------------------------------------------
$ 2,555,260
- --------------------------------------------------------------------------------
Transportation -- 2.0%
- --------------------------------------------------------------------------------
NR NR $ 750 Northwest Arkansas Regional
Airport Authority, (AMT),
7.625%, 2/1/27 $ 866,505
Baa1 A 250 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 251,010
- --------------------------------------------------------------------------------
$ 1,117,515
- --------------------------------------------------------------------------------
See notes to financial statements
60
<PAGE>
Arkansas Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------ Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Water and Sewer -- 5.6%
- --------------------------------------------------------------------------------
A1 NR $1,500 Little Rock, Sewer, 5.50%, 8/1/14 $ 1,542,015
NR NR 1,500 South Sebastian County, Water
Users Association, 6.15%, 6/1/23 1,565,880
- --------------------------------------------------------------------------------
$ 3,107,895
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $51,057,516) $55,621,944
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Arkansas
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at August 31, 1998, 23.7% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.9% to 12.5% of total investments.
/(1)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
See notes to financial statements
61
<PAGE>
Georgia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 14.2%
- --------------------------------------------------------------------------------
A1 A $2,000 Burke County Development
Authority Pollution Control
(Georgia Power),
6.375%, 8/1/24 $ 2,066,940
A3 A 1,000 Georgia Municipal Electric
Power Authority,
0.00%, 1/1/12 498,490
A3 A 2,000 Georgia Municipal Electric
Power Authority,
8.25%, 1/1/11 2,637,560
A1 A+ 1,000 Monroe County, Development
Authority Pollution
Control, (Gulf Power
Scherer), 6.30%, 9/1/24 1,035,340
A3 A 4,000 Monroe County, Development
Authority Pollution
Control, (Ogelthorpe
Power), 6.55%, 1/1/06 4,540,999
A3 A 1,000 Monroe County, Development
Authority Pollution
Control, (Ogelthorpe
Power), 6.80%, 1/1/12 1,204,120
Baa1 BBB+ 665 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 266,732
- --------------------------------------------------------------------------------
$12,250,181
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 3.3%
- --------------------------------------------------------------------------------
Baa1 NR $2,000 Fulco County, Georgia
Baptist Health, Prerefunded
to 9/1/02, 6.375%, 9/1/22 $ 2,217,160
NR AAA 500 Puerto Rico, "RIBS",
(AMBAC), Variable Rate,
Prerefunded to 7/1/02,
7.544%, 7/1/15/(1)(2)/ 586,115
- --------------------------------------------------------------------------------
$ 2,803,275
- --------------------------------------------------------------------------------
General Obligations -- 3.0%
- --------------------------------------------------------------------------------
Aa AA- $ 300 Alpharetta, 6.50%,
5/1/10/(3)/ $ 357,744
Aaa AAA 500 Georgia State, 6.30%,
3/1/08/(3)/ 583,050
A2 A 450 Paulding County School
District, 6.625%, 2/1/08 528,201
Baa1 A 1,000 Puerto Rico Aqueduct and
Sewer Authority, 6.25%,
7/1/12 1,159,040
- --------------------------------------------------------------------------------
$ 2,628,035
- --------------------------------------------------------------------------------
Hospitals -- 9.0%
- --------------------------------------------------------------------------------
NR BBB $1,000 Baldwin County, (Oconee
Regional Medical Center),
5.375%, 12/1/28 $ 995,470
A2 NR 4,500 Savannah, (Saint Josephs
Hospital), 6.20%, 7/1/23 4,796,819
NR BBB 1,785 Toombs County, (Dr. John M.
Meadows Memorial),
7.00%, 12/1/17 1,943,901
- --------------------------------------------------------------------------------
$ 7,736,190
- --------------------------------------------------------------------------------
Housing -- 14.3%
- --------------------------------------------------------------------------------
NR NR $ 875 Atlanta Urban Residential
Finance Authority, (New
Community John Hope),
7.25%, 6/1/07 $ 882,175
Aa2 AA+ 2,000 Georgia Housing and Finance
Authority, (AMT),
5.85%, 12/1/28 2,090,740
Aa2 NR 1,450 Georgia Housing and
Finance Authority, (AMT),
6.875%, 12/1/20 1,544,294
Aa2 AA+ 3,985 Georgia Housing and Finance
Authority, Single Family
Mortgage, FHA, (AMT),
6.55%, 12/1/27 4,294,355
Aa2 AA+ 2,395 Georgia Housing and Finance
Authority, Single Family
Mortgage, FHA, (AMT),
6.70%, 12/1/25 2,583,726
Aa2 AA+ 885 Georgia Housing and Finance
Authority, Single Family
Mortgage, FHA, (AMT),
7.05%, 12/1/20 954,092
- --------------------------------------------------------------------------------
$12,349,382
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 13.5%
- --------------------------------------------------------------------------------
BAA-2 NR $1,000 Brunswick and Glynn County
Development Authority,
(Georgia-Pacific Corp.),
5.55%, 3/1/26 $ 1,015,300
A1 A+ 1,000 Cartersville Development
Authority, (Anheuser-Busch),
(AMT), 6.125%, 5/1/27 1,085,070
A1 A+ 1,000 Cartersville Development
Authority, (Anheuser-Busch),
(AMT), 7.375%, 5/1/09 1,235,790
Baa2 BBB- 1,500 Effingham County, Solid
Waste Disposal, (Fort
James), (AMT),
5.625%, 7/1/18 1,517,850
Baa3 BBB- 1,750 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 1,906,328
See notes to financial statements
62
<PAGE>
Georgia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue (continued)
- --------------------------------------------------------------------------------
NR A+ $ 500 Savannah Economic
Development Authority,
(Hershey Foods),
6.60%, 6/1/12 $ 544,100
A1 A- 750 Savannah Economic
Development Authority,
(Union Camp Corp.),
6.80%, 2/1/12 819,293
NR NR 1,220 Savannah EDA,
(Intercat-Savannah, Inc.),
(AMT), 9.00%, 1/1/15 1,356,079
NR AA- 2,000 Vienna Water and Sewer,
(Cargill), (AMT),
6.00%, 9/1/14 2,124,720
- --------------------------------------------------------------------------------
$11,604,530
- --------------------------------------------------------------------------------
Insured-Education -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Fulton County, Development
Authority, (Georgia
Technology Research
Corp.-Series B), (MBIA),
5.00%, 9/1/27 $ 990,180
- --------------------------------------------------------------------------------
$ 990,180
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 7.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Georgia Municipal Electric
Power Authority, (FGIC),
5.50%, 1/1/12 $ 1,087,330
Aaa AAA 750 Georgia Municipal Electric
Power Authority, (MBIA),
0.00%, 1/1/07 523,553
Aaa AAA 3,100 Georgia Municipal Electric
Power Authority, (MBIA),
5.50%, 1/1/20 3,350,666
Aaa AAA 900 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03/(2)/ 1,038,375
- --------------------------------------------------------------------------------
$ 5,999,924
- --------------------------------------------------------------------------------
Insured-Hospitals -- 9.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Clarke County, Hospital
Authority, (MBIA),
5.00%, 1/1/27 $ 985,770
Aaa AAA 1,000 Fulco, Hospital Authority,
(Catholic Health East),
(MBIA), 5.00%, 11/15/28 985,360
Aaa AAA 2,225 Gainsville and Hall County,
(North East Healthcare),
(MBIA),6.00%, 10/1/25 2,427,364
Aaa AAA 2,000 Medical Center, Columbus
Regional Healthcare,
(MBIA), 6.40%, 8/1/06 2,202,760
Aaa AAA 1,500 Medical Center, Hospital
Authority Floats, (MBIA),
Variable Rate, 8/1/10/(2)/ $ 1,773,750
- --------------------------------------------------------------------------------
$ 8,375,004
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of
Participation -- 1.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 East Point Building
Authority, (FGIC),
6.00%, 2/1/10 $ 1,097,720
- --------------------------------------------------------------------------------
$ 1,097,720
- --------------------------------------------------------------------------------
Insured-Pooled Loans -- 1.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 George L. Smith, (Georgia
World Congress Center-Domed
Stadium), (MBIA), (AMT),
5.50%, 7/1/20/(4)/ $ 994,840
- --------------------------------------------------------------------------------
$ 994,840
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 2.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Metropolitan Atlanta Rapid
Transit Authority, (AMBAC),
6.25%, 7/1/11 $ 1,171,260
Aaa AAA 1,000 Metropolitan Atlanta Rapid
Transit Authority, (AMBAC),
6.25%, 7/1/20 1,185,680
- --------------------------------------------------------------------------------
$ 2,356,940
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 7.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,975 Cherokee County, Water and
Sewer Authority, (MBIA),
6.875%, 8/1/13 $ 2,166,674
Aaa AAA 4,500 Henry County, Water and
Sewer Authority, (AMBAC),
5.00%, 2/1/26/(5)/ 4,463,279
- --------------------------------------------------------------------------------
$ 6,629,953
- --------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 1.6%
- --------------------------------------------------------------------------------
Aa AA $2,300 Fulton County, Building
Authority, Judicial Center,
0.00%, 1/1/10 $ 1,376,711
- --------------------------------------------------------------------------------
$ 1,376,711
- --------------------------------------------------------------------------------
See notes to financial statements
63
<PAGE>
Georgia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Life Care -- 1.3%
- --------------------------------------------------------------------------------
NR NR $1,485 De Kalb County, Private
Hospital Authority,
(Atlanta, Inc.),
8.50%, 3/1/25/(5)/ $ 1,113,750
- --------------------------------------------------------------------------------
$ 1,113,750
- --------------------------------------------------------------------------------
Miscellaneous -- 1.3%
- --------------------------------------------------------------------------------
NR NR $1,000 Atlanta, Downtown
Development Authority,
Childcare Facilities,
(Central Atlanta
Hospitality Childcare
Inc.), 8.00%, 1/1/26 $ 1,124,780
- --------------------------------------------------------------------------------
$ 1,124,780
- --------------------------------------------------------------------------------
Solid Waste -- 1.2%
- --------------------------------------------------------------------------------
A1 A+ $1,000 Savannah Resource Recovery,
(Savannah Energy Systems
Co.), 6.30%, 12/1/06 $ 1,074,990
- --------------------------------------------------------------------------------
$ 1,074,990
- --------------------------------------------------------------------------------
Transportation -- 6.6%
- --------------------------------------------------------------------------------
Baa1 A $3,750 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 $ 3,765,150
Baa1 A 2,000 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/38 1,967,600
- --------------------------------------------------------------------------------
$ 5,732,750
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
- --------------------------------------------------------------------------------
(identified cost $78,904,810) $86,239,135
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
- ----------------------------------------------------------------------------
The Portfolio invests primarily in debt securities issued by Georgia
municipalities. The ability of the issuers of the debt securities to meet
their obligations may be affected by economic developments in a specific
industry or municipality. In order to reduce the risk associated with
such economic developments, at August 31, 1998, 31.3% of securities in the
portfolio of investments are backed by bond insurance of various financial
institutions and financial guaranty assurance agencies. The aggregate
percentage by financial institution ranged from 1.2% to 19.0% of total
investments.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $586,115 or 0.7% of the
Portfolio's net assets.
/(2)/ Security has been issued as an inverse floater bond.
/(3)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(4)/ When-issued security.
/(5)/ Security (or a portion thereof) has been segregated to cover when-issued
securities.
See notes to financial statements
64
<PAGE>
Kentucky Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Assisted Living -- 3.1%
- --------------------------------------------------------------------------------
Aa NR $3,000 Kenton County, (Highland
Terrace), FHA, 6.95%, 12/1/26 $ 3,423,570
- --------------------------------------------------------------------------------
$ 3,423,570
- --------------------------------------------------------------------------------
Education -- 1.3%
- --------------------------------------------------------------------------------
A1 AA- $ 500 University of Kentucky,
Consolidated Educational
Buildings, 6.40%, 5/1/09 $ 547,995
A1 AA- 785 University of Kentucky,
Consolidated Educational
Buildings, 6.40%, 5/1/11 860,352
- --------------------------------------------------------------------------------
$ 1,408,347
- --------------------------------------------------------------------------------
Electric Utilities -- 4.0%
- --------------------------------------------------------------------------------
Aa2 AA- $1,000 Muhlenburg County, (Kentucky
Utilities Co.), 6.25%, 2/1/18 $ 1,072,150
Baa1 BBB+ 3,500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 1,403,850
Baa1 BBB+ 500 Puerto Rico Electric Power
Authority, 5.50%, 7/1/25 514,140
Baa1 BBB+ 1,250 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 1,426,725
- --------------------------------------------------------------------------------
$ 4,416,865
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Louisville and Jefferson County,
Metropolitan Sewer District,
(AMBAC), Prerefunded to 11/15/04,
6.75%, 5/15/19 $ 1,166,870
NR NR 545 Russell, Health Systems,
Prerefunded to 7/1/06,
8.10%, 7/1/15 695,949
- --------------------------------------------------------------------------------
$ 1,862,819
- --------------------------------------------------------------------------------
General Obligations -- 0.4%
- --------------------------------------------------------------------------------
Baa1 A $1,125 Puerto Rico, 0.00%, 7/1/17 $ 447,109
- --------------------------------------------------------------------------------
$ 447,109
- --------------------------------------------------------------------------------
Hospitals -- 0.5%
- --------------------------------------------------------------------------------
Baa1 BBB $ 430 Russell, Health Systems,
8.10%, 7/1/15 $ 526,045
- --------------------------------------------------------------------------------
$ 526,045
- --------------------------------------------------------------------------------
Housing -- 7.5%
- --------------------------------------------------------------------------------
NR AAA $1,435 Boone County, Multifamily Housing
Mortgage, (Walnut Creek
Apartments), FHA, 7.00%, 1/1/27 $ 1,519,048
NR NR 1,200 Florence, Housing Facilities,
(Blue Grass Housing),
7.625%, 5/1/27 1,323,900
Aaa AAA 2,500 Kentucky Housing Corp., MFMR,
6.30%, 1/1/28 2,704,950
Aaa AAA 535 Kentucky Housing Corp., SFMR,
FHA, (AMT), 7.45%, 1/1/23 570,273
Aaa AAA 2,000 Kentucky Housing Corp., SFMR,
Series 97B, 6.25%, 7/1/28 2,147,200
- --------------------------------------------------------------------------------
$ 8,265,371
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 23.9%
- --------------------------------------------------------------------------------
Baa1 NR $2,425 Ashland, Solid Waste Disposal,
(Ashland Oil), (AMT),
7.125%, 2/1/22 $ 2,756,595
Baa1 BBB 2,355 Ashland, Solid Waste Disposal,
(Ashland Oil), (AMT),
7.20%, 10/1/20 2,569,258
NR NR 1,000 Elsmmere, (Courtaulds Pkg, Inc.),
6.75%, 4/1/10 1,084,680
NR NR 3,075 Fulton County, Industrial
Building, (Chic Jeans), (AMT),
7.50%, 2/1/10 3,213,437
NR NR 1,500 Hancock County, (Southwire Co.),
(AMT), 7.75%, 7/1/26 1,634,265
NR A- 2,370 Hancock County, Solid Waste
Disposal, (Williamette Corp.),
(AMT), 6.60%, 5/1/26 2,665,539
Baa2 BBB- 3,000 Henderson County, Solid Waste
Disposal, (MacMillan Bloedel),
(AMT), 7.00%, 3/1/25 3,270,360
Aa3 AA- 1,000 Jefferson County, Pollution
Control, (E.I. du Pont de
Nemours), 6.30%, 7/1/12 1,102,220
NR BB- 985 Owensboro County, (KMart Corp.),
6.80%, 12/1/07 1,066,873
See notes to financial statements
65
<PAGE>
Kentucky Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue (continued)
- --------------------------------------------------------------------------------
NR NR $1,500 Perry County, Solid Waste
Disposal, (TJI International),
6.80%, 5/1/26 $ 1,683,960
NR BB- 915 Powderly, (KMart Corp.),
6.90%, 3/1/07 990,506
Baa3 BBB- 500 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.30%, 6/1/23 537,685
A1 A 2,820 Wickliffe, Solid Waste Disposal,
(Westvaco Corp.), (AMT),
6.375%, 4/1/26 3,115,959
Baa3 NR 500 Winchester County, (Kroger Corp.),
6.90%, 7/1/01 511,380
- --------------------------------------------------------------------------------
$26,202,717
- --------------------------------------------------------------------------------
Insured-Education -- 0.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 700 Northern Kentucky University
Educational Buildings, (AMBAC),
6.25%, 5/1/12 $ 762,895
- --------------------------------------------------------------------------------
$ 762,895
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 1.6%
- --------------------------------------------------------------------------------
Aaa AAA $1,600 Puerto Rico Telephone Authority,
(MBIA), Variable Rate,
1/16/15/(1)/ $ 1,726,000
- --------------------------------------------------------------------------------
$ 1,726,000
- --------------------------------------------------------------------------------
Insured-General Obligations -- 1.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Puerto Rico Public Building
Authority, (AMBAC),
5.00%, 7/1/27 $ 1,496,490
- --------------------------------------------------------------------------------
$ 1,496,490
- --------------------------------------------------------------------------------
Insured-Hospitals -- 13.7%
- --------------------------------------------------------------------------------
Aaa AAA $2,500 Daviess County, (ODCH, Inc.),
(MBIA), 6.25%, 8/1/22 $ 2,726,175
Aaa AAA 500 Jefferson County, Health
Facilities Authority, (University
Medical Center), (MBIA),
5.25%, 7/1/22 507,605
Aaa AAA 2,500 Jefferson County, Health
Facilities, (Jewish Hospital),
(AMBAC), 6.50%, 5/1/15 2,727,775
Aaa AAA 750 Jefferson County, Health
Facilities, (Jewish Hospital),
(AMBAC), 6.55%, 5/1/22 819,593
Aaa AAA 3,000 Jefferson County, Health
Facilities, (MBIA),
5.125%, 10/1/27 3,004,890
Aaa AAA 3,000 Kentucky Development Finance
Authority (Saint Luke's Hospital)
(MBIA), 7.00%, 10/1/21 3,337,110
AAA AAA 1,000 Kentucky EDA, (Ashland Hospital
Corp.), (FSA), 5.00%, 2/1/28 984,060
Aaa AAA 1,000 Warren County, Hospital
Facilities, (Bowling Green-Warren
County Hospital), (FSA),
5.00%, 4/1/17 1,000,390
- --------------------------------------------------------------------------------
$15,107,598
- --------------------------------------------------------------------------------
Insured-Transportation -- 9.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Kenton County Airport, (FSA),
(AMT), 6.30%, 3/1/15 $ 1,072,120
Aaa AAA 3,550 Kenton County Airport, (MBIA),
6.30%, 3/1/15 3,958,924
Aaa AAA 1,195 Kenton County, Airport Revenue
Board, (MBIA), (AMT),
6.45%, 3/1/15 1,357,771
Aaa AAA 1,000 Kentucky EDA, (State Turnpike
Revitalization), (FGIC),
0.00%, 7/1/10 598,570
AAA AAA 1,300 Louisville and Jefferson County,
Regional Airport Authority,
(MBIA), (AMT), 5.00%, 7/1/25 1,272,648
Aaa AAA 5,000 Puerto Rico Highway and
Transportation Authority, (AMBAC),
0.00%, 7/1/18 1,944,100
- --------------------------------------------------------------------------------
$10,204,133
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 9.0%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Kenton County, Water District
Waterworks, (FGIC),
6.00%, 2/1/17 $ 2,156,560
Aaa AAA 500 Lexington-Fayette County,
Government Sewer System, (MBIA),
6.375%, 7/1/12 548,590
AAA AAA 1,000 Louisville and Jefferson County,
(Metropolitan District Sewer and
Drainage System), (FGIC), 5.00%,
5/15/22 995,110
See notes to financial statements
66
<PAGE>
Kentucky Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Water and Sewer (continued)
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Louisville and Jefferson County,
Metropolitan Sewer District,
(AMBAC), 6.75%, 5/15/25 $ 2,333,740
Aaa AAA 3,415 Louisville and Jefferson County,
Metropolitan Sewer District,
(MBIA), 6.25%, 5/15/26 3,823,809
- --------------------------------------------------------------------------------
$ 9,857,809
- --------------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 12.2%
- --------------------------------------------------------------------------------
A1 A+ $4,990 Jefferson County, (Capital
Projects Corp.), 0.00%, 8/15/15 $ 2,145,700
A1 NR 1,000 Kenton County, (Public Properties
Corp.), 5.00%, 3/1/29 979,310
NR A+ 1,030 Kentucky, League of Cities Funding
Trust, Floating Indebtedness
Certificates of Participation,
6.15%, 8/1/13 1,128,417
A A- 1,000 Louisville, (Public Property
Corp.), 6.80%, 12/1/22 1,130,090
Aa NR 2,000 Mount Sterling, Lease,
6.15%, 3/1/13 2,132,460
Aa NR 3,500 Mount Sterling, Lease,
6.20%, 3/1/18/(2)/ 3,721,234
A NR 2,000 Owensboro County, Airport Lease,
5.875%, 6/1/15 2,117,540
- --------------------------------------------------------------------------------
$ 13,354,751
- --------------------------------------------------------------------------------
Nursing Homes -- 0.7%
- --------------------------------------------------------------------------------
NR NR $ 765 Jefferson County, Health
Facilities, (Beverly Enterprises),
9.75%, 8/1/07 $ 814,235
- --------------------------------------------------------------------------------
$ 814,235
- --------------------------------------------------------------------------------
Solid Waste -- 1.2%
- --------------------------------------------------------------------------------
NR NR $1,200 Morgantown, Solid Waste Revenue,
7.45%, 5/1/22 $ 1,288,008
- --------------------------------------------------------------------------------
$ 1,288,008
- --------------------------------------------------------------------------------
Transportation -- 7.2%
- --------------------------------------------------------------------------------
Baa3 BB+ $3,400 Kenton County Airport, (Delta
Airlines), (AMT), 6.125%, 2/1/22 $ 3,496,049
Baa3 BB+ 1,500 Kenton County Airport, (Delta
Airlines), (AMT), 7.125%, 2/1/21 1,633,635
Baa3 BB+ 250 Kenton County Airport, (Delta
Airlines), (AMT), 7.50%, 2/1/12 275,610
Baa3 BB+ 500 Kenton County Airport, (Delta
Airlines), (AMT), 7.50%, 2/1/20 552,555
Baa1 A 2,000 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/38 1,962,580
- --------------------------------------------------------------------------------
$ 7,920,429
- --------------------------------------------------------------------------------
Water and Sewer -- 0.6%
- --------------------------------------------------------------------------------
A NR $ 650 Harden County, Water District,
6.50%, 9/1/12 $ 706,433
- --------------------------------------------------------------------------------
$ 706,433
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $100,259,833) $109,791,624
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Kentucky
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at August 31, 1998, 36.7% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 2.8% to 20.3% of total investments.
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
67
<PAGE>
Louisiana Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 2.8%
- --------------------------------------------------------------------------------
Baa1 BBB+ $2,500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 $ 1,002,750
- --------------------------------------------------------------------------------
$ 1,002,750
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 4.7%
- --------------------------------------------------------------------------------
Aaa AAA $2,475 Jefferson Parish, Home Mortgage
Authority, Single Family, (FGIC),
Escrowed to Maturity,
0.00%, 5/1/17 $ 991,708
NR AAA 250 Puerto Rico, "RIBS", (AMBAC),
Variable Rate, Prerefunded to
7/1/02, 7.544%, 7/1/15/(1)(2)/ 293,058
NR NR 300 Saint Tammany, Public Finance,
(Christwood), Prerefunded to
5/15/05, 9.00%, 11/15/25 395,040
- --------------------------------------------------------------------------------
$ 1,679,806
- --------------------------------------------------------------------------------
Hospitals -- 6.0%
- --------------------------------------------------------------------------------
A3 NR $1,000 Lafourche Parish, Hospital
Service District, 6.00%,
10/1/23/(3)/ $ 1,036,660
NR BBB 750 Louisiana Public Facilities
Authority, (General Health
Systems), 6.80%, 11/1/16 836,160
NR A- 250 Saint Tammany Parish,
Hospital Service District,
6.50%, 7/1/22 265,653
- --------------------------------------------------------------------------------
$ 2,138,473
- --------------------------------------------------------------------------------
Housing -- 19.3%
- --------------------------------------------------------------------------------
Aaa NR $ 575 East Baton Rouge Mortgage Finance
Authority, Single Family,
(GNMA/FNMA), 7.00%, 4/1/32 $ 608,091
NR AAA 300 Guam Housing Corp., Single
Family, 5.75%, 9/1/31 323,406
Aaa NR 480 Louisiana HFA, Single
Family, 6.375%, 12/1/27 515,640
Aaa NR 585 Louisiana HFA, Single Family,
(GNMA), (AMT), 6.30%, 12/1/27 623,990
Aaa NR 1,165 Louisiana HFA, Single Family,
(GNMA), (AMT), 8.00%, 3/1/25 1,359,404
Aaa NR 615 Louisiana HFA, Single Family,
(GNMA/FNMA), (AMT), 6.55%,
12/1/26 660,184
NR D 1,000 Louisiana Public Facilities
Authority, Multifamily, (Windsor
Housing), 6.25%, 1/1/26 750,000
Aaa NR 1,890 New Orleans Home Mortgage
Authority, Single Family,
(GNMA/FNMA), (AMT), 6.30%, 6/1/28 2,043,751
- --------------------------------------------------------------------------------
$ 6,884,466
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 17.5%
- --------------------------------------------------------------------------------
A3 BBB+ $1,750 Bastrop, (International Paper
Co.), (AMT), 6.60%, 3/1/19 $ 1,946,193
A3 BBB+ 750 De Soto Parish, (International
Paper Co.), (AMT), 7.70%, 11/1/18 878,895
Baa2 NR 1,000 East Baton Rouge Parish,
(Georgia-Pacific Corp.), (AMT),
5.35%, 9/1/11 1,005,980
A3 A 800 Louisiana Offshore Terminal
Authority, Deepwater Port Revenue,
(Loop, LLC), 5.20%, 10/1/18 802,768
Aa2 AA 1,000 Saint Bernard Parish, (Mobil
Oil), 5.90%, 11/1/26 1,083,000
Aa3 NR 500 South Louisiana Port Commission,
(Cargill, Inc.), 5.85%, 4/1/17 534,830
- --------------------------------------------------------------------------------
$ 6,251,666
- --------------------------------------------------------------------------------
Insured-Education -- 5.2%
- --------------------------------------------------------------------------------
Aaa AAA $ 450 Louisiana Public Facilities
Authority, (Dillard University),
(AMBAC), 5.00%, 2/1/28 $ 444,177
Aaa AAA 250 Louisiana Public Facilities
Authority, (Tulane University),
(MBIA), 5.00%, 11/15/27 248,273
Aaa AAA 1,100 Louisiana State University,
(FGIC), 5.75%, 7/1/14 1,176,483
- --------------------------------------------------------------------------------
$ 1,868,933
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 2.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,750 Puerto Rico Electric Power
Authority, (MBIA), (IBC),
0.00%, 7/1/17 $ 714,945
- --------------------------------------------------------------------------------
$ 714,945
- --------------------------------------------------------------------------------
See notes to financial statements
68
<PAGE>
Louisiana Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-General Obligations -- 9.7%
- --------------------------------------------------------------------------------
Aaa AAA $3,000 New Orleans, (AMBAC), 0.00%,
9/1/15 $ 1,268,100
Aaa AAA 4,000 New Orleans, (AMBAC), 0.00%,
9/1/16 1,604,440
Aaa AAA 1,500 New Orleans, (AMBAC), 0.00%,
9/1/17 570,840
- --------------------------------------------------------------------------------
$ 3,443,380
- --------------------------------------------------------------------------------
Insured-Hospitals -- 6.3%
- --------------------------------------------------------------------------------
Aaa AAA $ 100 Louisiana Public Facilities
Authority, (MBIA), Variable Rate,
12/1/14/(2)/ $ 115,250
Aaa AAA 1,500 Ouachita Parish, Glenwood
Medical Center, (FSA), 5.75%,
5/15/21 1,614,510
Aaa AAA 500 Terrebonne Parish, Hospital
Service District No. 1,
(Terrebonne General Medical
Center), (AMBAC), 5.375%, 4/1/28 513,875
- --------------------------------------------------------------------------------
$ 2,243,635
- --------------------------------------------------------------------------------
Insured-Housing -- 0.2%
- --------------------------------------------------------------------------------
Aaa AAA $ 345 East Baton Rouge Mortgage Finance
Authority, Single Family, (MBIA),
(GNMA/FNMA), 0.00%, 10/1/15 $ 58,281
- --------------------------------------------------------------------------------
$ 58,281
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 5.0%
- --------------------------------------------------------------------------------
Aaa AAA $ 345 Baton Rouge, Public Improvement,
(FGIC), 4.75%, 8/1/17 $ 336,368
Aaa AAA 1,000 Ernest N. Morial-New Orleans,
Exhibition Hall Authority,
(MBIA), 5.00%, 7/15/27 985,660
Aaa AAA 500 Lafayette Parish, School District,
(FGIC), 4.60%, 4/1/18 476,930
- --------------------------------------------------------------------------------
$ 1,798,958
- --------------------------------------------------------------------------------
Life Care -- 12.9%
- --------------------------------------------------------------------------------
NR NR $ 500 Louisiana HFA, (HCC Assisted
Living Group 1), (AMT), 9.00%,
3/1/25 $ 566,310
NR AAA 500 Louisiana HFA, (Saint Dominic
Assisted Care Facility), (GNMA),
6.85%, 9/1/25 556,765
NR AAA 1,995 Louisiana HFA, (Saint Joseph's
Manor Retirement Center), (GNMA),
7.80%, 12/1/35 2,240,284
NR BBB 1,150 Louisiana Public Facilities
Authority, (Glen Retirement
System), 6.70%, 12/1/25 1,256,030
- --------------------------------------------------------------------------------
$ 4,619,389
- --------------------------------------------------------------------------------
Transportation -- 8.4%
- --------------------------------------------------------------------------------
A A- $ 500 Mississippi River Bridge
Authority, Bridge Revenue, 6.75%,
11/1/12/(3)/ $ 555,120
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority, 4.75%,
7/1/38 969,520
Baa1 A 1,500 Puerto Rico Highway and
Transportation Authority, 5.00%,
7/1/38 1,475,700
- --------------------------------------------------------------------------------
$ 3,000,340
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $33,307,126) $35,705,022
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Louisiana
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at August 31, 1998, 32.0% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 4.5% to 13.1% of total investments.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $293,058 or 0.8% of the
Portfolio's net assets.
/(2)/ Security has been issued as an inverse floater bond.
/(3)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
69
<PAGE>
Maryland Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Cogeneration -- 1.3%
- --------------------------------------------------------------------------------
NR NR $1,250 Maryland Energy, AES, (Warrior
Run), (AMT), 7.40%, 9/1/19 $ 1,392,888
- --------------------------------------------------------------------------------
$ 1,392,888
- --------------------------------------------------------------------------------
Education -- 3.3%
- --------------------------------------------------------------------------------
NR BBB+ $1,500 Annapolis, Economic Development
Revenue, (Saint Johns College),
5.50%, 10/1/23 $ 1,531,935
NR BBB 500 Montgomery County, EDA,
5.60%, 11/1/18 516,595
NR BBB 350 Montgomery County, EDA,
5.60%, 11/1/22 361,337
Aa3 AA+ 1,000 University of Maryland
Auxiliary Facilities and
Tuition, 6.30%, 2/1/10 1,076,760
- --------------------------------------------------------------------------------
$ 3,486,627
- --------------------------------------------------------------------------------
Electric Utilities -- 8.1%
- --------------------------------------------------------------------------------
A2 A $1,500 Calvert, Pollution Control
Revenue, (Baltimore Gas and
Electric Co.), 5.55%, 7/15/14 $ 1,582,290
NR BBB 2,500 Guam Power Authority,
5.25%, 10/1/13 2,522,675
NR BBB 750 Guam Power Authority,
6.625%, 10/1/14 835,410
A1 A 2,225 Prince George's County,
Pollution Control Revenue,
(Potomac Electric), 6.375%,
1/15/23 2,412,901
Baa1 BBB+ 1,250 Puerto Rico Electric Power
Authority, Series DD, 5.00%,
7/1/28 1,233,688
- --------------------------------------------------------------------------------
$ 8,586,964
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 8.2%
- ----------------------------------------------------------------------------
Aaa NR $1,125 Baltimore, SFMR, (Inner
Harbor), Escrowed to Matuity,
8.00%, 12/1/10 $ 1,497,598
Baa1 BBB 1,250 Maryland HEFA, (Howard County
General Hospital), Escrowed to
Maturity, 5.50%, 7/1/25 1,308,125
Aaa AAA 500 Maryland HEFA, (University of
Maryland), (FGIC), Prerefunded
to 7/1/01, 6.50%, 7/1/21 537,090
Aaa AAA 1,365 Maryland HEFA, (Washington
Community Hospital), (AMBAC),
Prerefunded to 7/1/02,
6.375%, 7/1/22 1,512,570
NR AAA 1,000 Puerto Rico Public Improvement,
Prerefunded to 7/1/02,
6.80%, 7/1/21 1,120,710
NR AAA 1,000 University of Maryland System
Auxiliary Facility and Tuition,
Prerefunded to 4/1/00,
6.50%, 4/1/11 1,063,190
NR AAA 175 University of Maryland System
Auxiliary Facility and Tuition,
Prerefunded to 4/1/02,
6.50%, 4/1/12 195,675
NR NR 750 Virgin Islands Public Finance
Authority, Prerefunded to
10/1/02, 7.25%, 10/1/18 859,380
Aa1 AA 500 Washington, Suburban Sanitary
District, Prerefunded to
6/1/02, 6.20%, 6/1/11 549,575
- --------------------------------------------------------------------------------
$ 8,643,913
- --------------------------------------------------------------------------------
General Obligations -- 2.5%
- --------------------------------------------------------------------------------
Aaa AAA $ 600 Howard County, 4.75%, 2/15/27 $ 584,004
Baa1 A 600 Puerto Rico, 0.00%, 7/1/16 250,866
Baa1 A 500 Puerto Rico, 0.00%, 7/1/18 188,850
Baa1 A 1,000 Puerto Rico, 4.50%, 7/1/23 924,590
Aa1 AA 500 Washington, Suburban Sanitary
District, 5.625%, 6/1/21 525,240
Aa NR 190 Worcester, Sanitary District,
6.55%, 8/15/17 210,108
- --------------------------------------------------------------------------------
$ 2,683,658
- --------------------------------------------------------------------------------
Hospitals -- 15.2%
- --------------------------------------------------------------------------------
NR NR $ 475 Berlin, (Atlantic General),
8.375%, 6/1/22 $ 517,850
A2 NR 1,200 Maryland HEFA, (Calvert
Memorial Hospital), 5.00%, 7/1/28 1,175,316
A1 A 1,175 Maryland HEFA, (Good Samaritan
Hospital), 5.75%, 7/1/19 1,242,445
See notes to financial statements
70
<PAGE>
Maryland Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Hospitals (continued)
- --------------------------------------------------------------------------------
Baa1 NR $1,000 Maryland HEFA, (Kennedy Krieger
Issue), 5.125%, 7/1/22 $ 990,560
Baa1 NR 2,500 Maryland HEFA, (Union Hospital
of Cecil), 6.70%, 7/1/22 2,704,150
A NR 4,000 Prince George's County,
(Dimensions Health), 5.30%, 7/1/24 4,023,879
Baa3 NR 1,355 Prince George's County,
(Greater SouthEast Healthcare
System), 6.375%, 1/1/13 1,334,255
Baa3 NR 4,250 Prince George's County,
(Greater SouthEast Healthcare
System), 6.375%, 1/1/23 4,065,209
- --------------------------------------------------------------------------------
$16,053,664
- --------------------------------------------------------------------------------
Housing -- 10.9%
- --------------------------------------------------------------------------------
Aa NR $1,000 Maryland Community Development
Administration Multifamily,
FHA, (AMT), 6.70%, 5/15/36 $ 1,084,440
Aa NR 245 Maryland Community Development
Administration Single Family,
6.85%, 4/1/11 258,992
Aa NR 3,000 Maryland Community Development
Administration Single Family,
(AMT), 6.75%, 4/1/26 3,232,860
Aa NR 885 Maryland Community Development
Administration Single Family,
(AMT), 6.80%, 4/1/22 949,269
Aa NR 745 Maryland Community Development
Administration Single Family,
(AMT), 6.80%, 4/1/24 799,102
Aa2 NR 1,000 Montgomery County, Housing
Opportunities Commission, SFMR,
0.00%, 7/1/28 196,610
Aa2 NR 2,525 Montgomery County, SFMR, (AMT),
6.05%, 7/1/27 2,683,646
NR A 40 Prince George's County,
(Antoinette Gardens
Apartments), FHA, 7.00%, 3/1/28 40,235
NR AAA 2,160 Prince George's County, Housing
Authority, (Langely Gardens),
(AMT), 5.875%, 2/20/39 2,265,084
- --------------------------------------------------------------------------------
$11,510,238
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 8.5%
- --------------------------------------------------------------------------------
A1 A $1,350 Allegany, Pollution Control
Revenue, (Westvaco Corp.),
6.20%, 1/1/08 $ 1,499,108
NR NR 1,350 Baltimore, Pollution Control
Revenue, (Bethlehem Steel Corp.),
7.50%, 6/1/15/(1)/ 1,509,314
Aa3 AA- 2,000 Baltimore, Port Facilities,
(Consolidated Coal Sales Co.-
E.I. du Pont de Nemours),
6.50%, 12/1/10 2,209,460
Aa3 AA- 2,000 Baltimore, Port Facilities,
(Consolidated Coal Sales Co.-
E.I. du Pont de Nemours),
6.50%, 10/1/11/(1)/ 2,199,980
NR AA- 1,425 Frederick, EDA, (Cargill, Inc.),
6.30%, 11/1/09/(2)/ 1,572,103
- --------------------------------------------------------------------------------
$ 8,989,965
- --------------------------------------------------------------------------------
Insured-Education -- 5.8%
- --------------------------------------------------------------------------------
Aaa AAA $4,600 Maryland HEFA, (Loyola College),
(MBIA), 5.375%, 10/1/26/(1)/ $ 4,773,879
Aaa AAA 1,200 Morgan State University,
Maryland Academic and
Facilities, (MBIA), 6.10%, 7/1/20 1,406,460
- --------------------------------------------------------------------------------
$ 6,180,339
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 1.9%
- --------------------------------------------------------------------------------
Aaa AAA $1,700 Montgomery County, Pollution
Control Revenue, (Potomac
Electric Power Co.), (MBIA),
5.375%, 2/15/24 $ 1,748,280
Aaa AAA 250 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(3)/ 288,438
- --------------------------------------------------------------------------------
$ 2,036,718
- --------------------------------------------------------------------------------
Insured-Hospitals -- 9.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 750 Calvert, EDA, (Asbury -
Solomon), (MBIA), 5.00%, 1/1/27 $ 746,010
Aaa AAA 3,000 Maryland HEFA, (Helix Health
Issue), (AMBAC), 5.00%, 7/1/27 2,983,920
See notes to financial statements
71
<PAGE>
Maryland Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Hospitals (continued)
- --------------------------------------------------------------------------------
Aaa AAA $3,000 Maryland HEFA, (Johns Hopkins
Medicine-Howard County General
Hospital Acquisition), (MBIA),
5.00%, 7/1/29 $ 2,983,440
Aaa AAA 3,150 Puerto Rico ITEM & EC, (Auxilio
Mutuo), (MBIA), 6.25%, 7/1/24 3,536,221
- --------------------------------------------------------------------------------
$ 10,249,591
- --------------------------------------------------------------------------------
Insured-Housing -- 0.5%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Prince George's County,
(Keystone Apartments), FHA,
(MBIA), 6.80%, 7/1/25 $ 534,320
- --------------------------------------------------------------------------------
$ 534,320
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 5.6%
- --------------------------------------------------------------------------------
Aaa AAA $3,460 Baltimore, Certificates of
Participation (Board of
Education Administration), (MBIA),
5.00%, 4/1/13/(4)/ $ 3,414,397
Aaa AAA 1,000 Maryland Stadium Authority,
(AMBAC), 5.60%, 3/1/14 1,070,500
Aaa AAA 1,300 Maryland Stadium Authority,
(AMBAC), 5.80%, 3/1/26 1,393,145
- --------------------------------------------------------------------------------
$ 5,878,042
- --------------------------------------------------------------------------------
Insured-Solid Waste -- 5.2%
- --------------------------------------------------------------------------------
Aaa AAA $5,000 NE Maryland Solid Waste
Disposal, (MBIA), (AMT),
6.30%, 7/1/16 $ 5,462,049
- --------------------------------------------------------------------------------
$ 5,462,049
- --------------------------------------------------------------------------------
Insured-Transportation -- 3.8%
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Baltimore, International
Airport, (FGIC), (AMT),
6.25%, 7/1/14 $ 2,196,060
Aaa AAA 1,750 Washington, D.C., Metro Area
Transportation, (FGIC),
5.25%, 7/1/14 1,808,450
- --------------------------------------------------------------------------------
$ 4,004,510
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 6.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Baltimore, Sewer, (FGIC),
5.50%, 7/1/26 $ 1,051,080
Aaa AAA 1,000 Baltimore, Wastewater, (FGIC),
5.00%, 7/1/22 1,023,130
Aaa AAA 2,000 Baltimore, Wastewater, (MBIA),
5.65%, 7/1/20 2,219,580
Aaa AAA 2,100 Baltimore, Water, (FGIC),
5.50%, 7/1/26 2,207,268
- --------------------------------------------------------------------------------
$ 6,501,058
- --------------------------------------------------------------------------------
Transportation -- 2.3%
- --------------------------------------------------------------------------------
Baa1 A $ 500 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 $ 502,020
Baa1 A 2,000 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/38 1,967,600
- --------------------------------------------------------------------------------
$ 2,469,620
- --------------------------------------------------------------------------------
Water and Sewer -- 1.0%
- --------------------------------------------------------------------------------
Aa2 AA $1,000 Maryland Water Quality
Financing Administration
Revolving Loan Fund,
6.55%, 9/1/14 $ 1,102,130
- --------------------------------------------------------------------------------
$ 1,102,130
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $98,601,792) $105,766,294
- --------------------------------------------------------------------------------
AMT-Interest earned from these securities may be considered a tax preference
item for the purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Maryland
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at August 31, 1998, 40.6% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.3% to 25.4% of total investments.
/(1)/ Security (or a portion thereof) has been segregated to cover when-issued
securities.
/(2)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(3)/ Security has been issued as an inverse floater bond.
/(4)/ When-issued security.
See notes to financial statements
72
<PAGE>
Missouri Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 2.7%
- --------------------------------------------------------------------------------
NR BBB $1,010 Guam Power Authority,
6.30%, 10/1/22 $ 1,077,317
Baa1 BBB+ 750 Puerto Rico Electric Power
Authority, 6.375%, 7/1/24 856,035
- --------------------------------------------------------------------------------
$ 1,933,352
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 4.4%
- --------------------------------------------------------------------------------
NR NR $1,000 Lake of The Ozarks,
(Community Bridge Corp.),
Prerefunded to 12/1/06,
6.40%, 12/1/25/(1)/ $ 1,175,000
Aaa AAA 575 Missouri HEFA, (Saint Louis
Children's), (MBIA),
Escrowed to Maturity,
0.00%, 5/15/08 374,394
NR AAA 500 Puerto Rico, "RIBS",
(AMBAC), Variable Rate,
Prerefunded to 7/1/02,
7.544%, 7/1/15/(2)(3)/ 586,115
NR AAA 1,000 Saint Louis County,
Mortgage Revenue, (GNMA),
(AMT), Escrowed to
Maturity, 5.40%, 1/1/16 1,052,480
- --------------------------------------------------------------------------------
$ 3,187,989
- --------------------------------------------------------------------------------
Hospitals -- 19.7%
- --------------------------------------------------------------------------------
Aa2 AA $3,250 Missouri HEFA, (Barnes
Jewish Christian), 5.25%, 5/15/14 $ 3,400,637
NR A+ 1,500 Missouri HEFA, (Childrens
Mercy Hospital), 5.30%, 5/15/28 1,513,170
NR BBB+ 1,000 Missouri HEFA, (Freeman
Health Systems), 5.25%, 2/15/18 991,070
Baa NR 2,000 Missouri HEFA, (Jefferson
Memorial Hospital), 6.00%, 8/15/23 2,090,560
Baa NR 1,900 Missouri HEFA, (Jefferson
Memorial Hospital), 6.80%, 5/15/25 2,093,572
NR BBB+ 1,500 Missouri HEFA, (Lake of the
Ozarks General Hospital),
6.50%, 2/15/21 1,642,110
NR BBB+ 1,250 Taney County IDA, (The
Skaggs Community Hospital
Association), 5.30%, 5/15/18 1,250,438
NR BBB- 1,250 West Plains IDA, (Ozarks
Medical Center), 5.65%, 11/15/22 1,275,375
- --------------------------------------------------------------------------------
$14,256,932
- --------------------------------------------------------------------------------
Housing -- 3.6%
- --------------------------------------------------------------------------------
NR AAA $ 905 Missouri Housing
Development Authority,
SFMR, (GNMA), 6.45%, 9/1/27 $ 971,898
NR AAA 535 Missouri Housing
Development Authority, SFMR,
(GNMA), (AMT), 6.75%, 6/1/24 568,491
NR AAA 915 Missouri Housing Development
Authority, SFMR, (GNMA), (AMT),
7.25%, 9/1/26 1,034,655
- --------------------------------------------------------------------------------
$ 2,575,044
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 14.3%
- --------------------------------------------------------------------------------
NR BB- $1,035 Jefferson County, (Kmart
Corp.), 6.40%, 8/1/08 $ 1,104,221
NR NR 1,280 Kansas City IDA, (Airline
Cargo Facilities), 8.50%, 1/1/17 1,460,429
A3 NR 1,200 Missouri Environmental
Improvement and Energy
Resources Authority,
(American Cyanamid
Company), 5.80%, 9/1/09 1,345,812
Baa3 BBB- 2,250 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 2,450,993
A1 A+ 3,750 Saint Louis IDA, (Anheuser-Busch),
(AMT), 5.875%, 11/1/26 4,011,412
- --------------------------------------------------------------------------------
$10,372,867
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 8.9%
- --------------------------------------------------------------------------------
Aaa AAA $4,500 Missouri Environmental
Improvement and Energy
Resources Authority, (Union
Electric), (AMBAC), (AMT),
5.45%, 10/1/28 $ 4,667,309
Aaa AAA 700 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(3)/ 807,625
Aaa AAA 1,000 Sikeston, Electric System,
(MBIA), 5.00%, 6/1/22 992,370
- --------------------------------------------------------------------------------
$ 6,467,304
- --------------------------------------------------------------------------------
Insured-General Obligations -- 1.9%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Puerto Rico, (FSA),
Variable Rate, 7/1/22/(2)(3)/ $ 573,750
See notes to financial statements
73
<PAGE>
Missouri Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------ Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-General Obligations (continued)
- --------------------------------------------------------------------------------
Aaa AAA $2,000 Saint Charles County, (Francis
Howell School District), (FGIC),
5.25%, 3/1/16 $ 835,580
- --------------------------------------------------------------------------------
$ 1,409,330
- --------------------------------------------------------------------------------
Insured-Hospitals -- 11.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Jackson County, (Saint Joseph's
Health System), (MBIA),
6.50%, 7/1/12 $ 1,092,230
Aaa AAA 800 Jackson County, (Saint Joseph's
Health System), (MBIA),
6.50%, 7/1/19 875,272
Aaa AAA 1,500 Missouri HEFA, (Heartland
Health), (AMBAC), 6.35%, 11/15/17 1,648,515
Aaa AAA 9,500 Missouri HEFA, (Lester Cox
Medical Center), (MBIA), 0.00%,
9/1/20 3,226,009
Aaa AAA 1,500 Missouri HEFA, (Lester Cox
Medical Center), (MBIA), 5.35%,
6/1/10 1,626,675
- --------------------------------------------------------------------------------
$ 8,468,701
- --------------------------------------------------------------------------------
Insured-Housing -- 2.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 SCA, MFMR Receipts, Springfield,
(FSA), 7.10%, 1/1/30 $ 1,649,115
- --------------------------------------------------------------------------------
$ 1,649,115
- --------------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 2.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Kansas City Municipal Assistance
Corp., Bartle Hall Convention,
(AMBAC), 5.00%, 4/15/20 $ 995,360
Aaa AAA 500 Saint Charles County, PFA,
(FGIC), 6.375%, 3/15/07 546,985
- --------------------------------------------------------------------------------
$ 1,542,345
- --------------------------------------------------------------------------------
Insured-Transportation -- 1.4%
- --------------------------------------------------------------------------------
Aaa AAA $ 910 Saint Louis, Airport Revenue,
(Lambert International Airport),
(FGIC), 6.00%, 7/1/14 $ 1,033,887
- --------------------------------------------------------------------------------
$ 1,033,887
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 750 Saint Louis Water, (FGIC),
6.00%, 7/1/14 $ 829,073
- --------------------------------------------------------------------------------
$ 829,073
- --------------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 8.5%
- --------------------------------------------------------------------------------
A1 A+ $2,000 Missouri Regional Convention and
Sports Complex Authority,
5.50%, 8/15/21 $ 2,063,420
A BBB+ 3,000 Saint Louis County, Regional
Convention and Sports Complex
Authority, 5.50%, 8/15/13 3,086,250
A BBB+ 1,000 Saint Louis County, Regional
Convention and Sports Complex
Authority, 5.75%, 8/15/21 1,039,120
- --------------------------------------------------------------------------------
$ 6,188,790
- --------------------------------------------------------------------------------
Life Care -- 4.9%
- --------------------------------------------------------------------------------
Baa1 NR $ 300 Cass County, (Fox Springs Living
Center), 7.375%, 10/1/22 $ 331,026
NR NR 915 Kansas City IDA, (Kingswood
United Methodist Manor),
9.00%, 11/15/13 1,061,821
NR NR 2,000 Missouri HEFA, (Lutheran Senior
Services), 6.375%, 2/1/27 2,134,140
- --------------------------------------------------------------------------------
$ 3,526,987
- --------------------------------------------------------------------------------
Nursing Homes -- 3.8%
- --------------------------------------------------------------------------------
NR NR $1,000 Kansas City IDA, (Beverly
Enterprises), 8.00%, 12/1/02 $ 1,082,660
NR NR 500 Missouri HEFA, (Bethesda Health
Group of Saint Louis, Inc.),
6.625%, 8/15/05 536,005
NR NR 1,000 Missouri HEFA, (Bethesda Health
Group of Saint Louis, Inc.),
7.50%, 8/15/12 1,127,090
- --------------------------------------------------------------------------------
$ 2,745,755
- --------------------------------------------------------------------------------
Pooled Loans -- 3.8%
- --------------------------------------------------------------------------------
A NR $2,750 Missouri Higher Education Loan
Authority, Student Loan, (AMT),
5.45%, 2/15/09 $ 2,787,730
- --------------------------------------------------------------------------------
$ 2,787,730
- --------------------------------------------------------------------------------
Transportation -- 1.5%
- --------------------------------------------------------------------------------
Baa1 A $1,000 Puerto Rico Highway and
Transportation Authority,
6.625%, 7/1/12 $ 1,098,690
- --------------------------------------------------------------------------------
$ 1,098,690
- --------------------------------------------------------------------------------
See notes to financial statements
74
<PAGE>
Missouri Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Water and Sewer -- 3.4%
- --------------------------------------------------------------------------------
Aa1 NR $1,000 Missouri Environmental
Improvement and Energy Resources
Authority, 0.00%, 1/1/14 $ 476,740
Aa1 NR 500 Missouri Environmental
Improvement and Energy Resources
Authority, 6.55%, 7/1/14 547,175
Aa1 NR 1,250 Missouri Environmental
Improvement and Energy Resources
Authority, 7.20%, 7/1/16 1,440,300
- --------------------------------------------------------------------------------
$ 2,464,215
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $64,892,579) $72,538,106
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Missouri
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at August 31, 1998, 30.8% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 4.2% to 11.3% of total investments.
/(1)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(2)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $1,159,865 or 1.6% of the
Portfolio's net assets.
/(3)/ Security has been issued as an inverse floater bond.
See notes to financial statements
75
<PAGE>
North Carolina Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 5.5%
- --------------------------------------------------------------------------------
Aa1 AA+ $1,000 North Carolina Educational
Facilities Finance Agency,
(Duke University), 6.75%,
10/1/21 $ 1,093,780
Aa2 AA 2,000 University of North
Carolina at Chapel Hill,
0.00%, 8/1/17 798,960
Aa2 AA 2,500 University of North
Carolina at Chapel Hill,
0.00%, 8/1/19 904,525
Aa3 AA 5,685 University of North
Carolina at Chapel Hill,
5.00%, 2/15/29 5,627,808
- --------------------------------------------------------------------------------
$ 8,425,073
- --------------------------------------------------------------------------------
Electric Utilities -- 5.1%
- --------------------------------------------------------------------------------
Baa1 BBB $5,000 North Carolina Municipal
Power Authority, (Eastern
Power),
6.125%, 1/1/09 $ 5,547,299
Baa1 BBB+ 2,000 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 802,200
Baa1 BBB+ 2,000 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 802,200
Baa1 BBB+ 365 Puerto Rico Electric Power
Authority, 7.125%, 7/1/14 380,341
NR NR 230 Virgin Islands Water and
Power Authority, 7.40%,
7/1/11 253,490
- --------------------------------------------------------------------------------
$ 7,785,530
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 2.5%
- --------------------------------------------------------------------------------
Baa1 AAA $ 635 Puerto Rico Electric Power
Authority, Prerefunded to
7/1/99,
7.125%, 7/1/14 $ 663,442
NR AAA 150 Puerto Rico General
Obligations, Prerefunded
to 7/1/00,
7.30%, 7/1/20 162,570
NR AAA 1,000 Puerto Rico, "RIBS",
(AMBAC), Variable Rate,
Prerefunded to 7/1/02,
7.544%, 7/1/15/(1)(2)/ 1,172,230
NR NR 1,550 Virgin Islands Public
Finance Authority,
Prerefunded to 10/1/02,
7.25%, 10/1/18 1,776,052
- --------------------------------------------------------------------------------
$ 3,774,294
- --------------------------------------------------------------------------------
General Obligations -- 3.8%
- --------------------------------------------------------------------------------
Aa1 AAA $ 700 Durham, Public
Improvement, 4.70%, 3/1/17 $ 690,046
A A- 175 Eden, Water and Sewer
Bonds, (AMT), 6.75%, 6/1/08 192,640
Aaa AAA 3,550 North Carolina Capital
Improvements, 4.75%, 2/1/12 3,629,556
Baa1 A 500 Puerto Rico, 0.00%, 7/1/17 198,715
Baa1 A 1,000 Puerto Rico Public
Buildings Authority,
5.25%, 7/1/21 1,010,220
- --------------------------------------------------------------------------------
$ 5,721,177
- --------------------------------------------------------------------------------
Hospitals -- 16.4%
- --------------------------------------------------------------------------------
Aa3 AA $2,090 Charlotte-Mecklenberg
Hospital, 0.00%, 1/1/06 $ 1,534,248
Aa3 AA 4,000 Charlotte-Mecklenberg
Hospital, 5.125%,
1/15/22/(3)/ 4,012,520
Aa3 AA 2,000 Charlotte-Mecklenberg
Hospital, 5.875%, 1/15/26 2,164,780
Baa3 NR 1,500 North Carolina Medical
Care Commission, (Annie
Penn Memorial Hospital),
5.375%, 1/1/22 1,497,900
Aa3 AA 3,400 North Carolina Medical
Care Commission, (Duke
University Hospital),
0.00%, 6/1/09 2,077,774
Aa3 AA 1,000 North Carolina Medical
Care Commission, (Duke
University Hospital),
5.25%, 6/1/21 1,013,570
A1 A+ 1,000 North Carolina Medical
Care Commission, (Gaston
Health Care), 5.00%, 965,860
2/15/29
Aa3 AA 2,000 North Carolina Medical
Care Commission, (North
Carolina Baptist
Hospital), 6.00%, 6/1/22 2,130,060
Aa3 AA- 2,750 North Carolina Medical
Care Commission, (Pitt
County Memorial Hospital),
4.75%, 12/1/28/(4)/ 2,600,208
Aa3 AA 1,700 North Carolina Medical
Care Commission,
(Presbyterian Health
Services), 6.00%, 10/1/24 1,864,220
NR BBB+ 2,500 North Carolina Medical
Care Commission,
(Roanoke-Chowan Hospital),
7.75%, 10/1/19 2,622,250
Aa3 AA- 2,500 Pitt County Memorial
Hospital, 5.25%, 12/1/21 2,537,300
- --------------------------------------------------------------------------------
$ 25,020,690
- --------------------------------------------------------------------------------
See notes to financial statements
76
<PAGE>
North Carolina Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Housing -- 11.7%
NR AAA $1,900 Charlotte Housing
Authority,
Double Oaks, FHA, (FNMA),
7.35%, 5/15/26 $ 2,123,364
NR AAA 1,000 Guam Housing Corp., Single
Family, 5.75%, 9/1/31 1,078,020
Aa2 AA 2,250 North Carolina HFA, MFMR,
6.70%, 1/1/26 2,445,165
Aa2 AA 1,945 North Carolina HFA, MFMR,
(AMT), 6.45%, 9/1/27 2,090,739
Aa AA 1,250 North Carolina HFA, SFMR,
(AMT), 6.20%, 9/1/27 1,320,063
Aa2 AA 1,500 North Carolina HFA, SFMR,
(AMT), 6.30%, 3/1/26 1,600,455
Aa AA 2,080 North Carolina HFA, SFMR,
(AMT), 6.60%, 9/1/26 2,230,051
Aa2 AA 3,880 North Carolina HFA, SFMR,
(AMT), 6.70%, 9/1/26 4,163,667
Aa AA 755 North Carolina HFA, SFMR,
(AMT), 7.05%, 9/1/20 805,034
- --------------------------------------------------------------------------------
$ 17,856,558
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 13.9%
- --------------------------------------------------------------------------------
A2 A $1,015 Chatham County Industrial
Facilities and Pollution,
(Carolina Power and
Light), 6.30%, 6/15/14 $ 1,094,028
Baa1 BBB 2,750 Haywood County IDA,
(Champion International
Corp.), (AMT), 2,821,005
5.50%, 10/1/18
Baa1 BBB 1,500 Haywood County IDA,
(Champion International
Corp.), (AMT),
5.75%, 12/1/25 1,560,390
A2 A 3,750 Martin County IDA,
(Weyerhaeuser Co.), (AMT),
6.80%, 5/1/24 4,176,263
Baa2 BBB 2,500 New Hanover County,
(Occidental Petroleum
Corp.), 6.70%, 7/1/19 2,696,200
Baa3 BBB- 6,155 Puerto Rico Port
Authority,
(American Airlines),
(AMT),
6.25%, 6/1/26/(3)/ 6,704,825
Baa3 BBB- 1,150 Puerto Rico Port
Authority, (American
Airlines), (AMT), 6.30%,
6/1/23 1,236,676
NR AA- 850 Robeson County, Industrial
Facilities and Pollution
Control Financing
Authority, (Campbell Soup
Co.), 6.40%, 12/1/06 975,673
- --------------------------------------------------------------------------------
$ 21,265,060
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 6.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 North Carolina Eastern
Municipal Power Authority,
(FSA), Variable Rate,
1/1/19/(1)(2)/ $ 1,605,120
Aaa AAA 2,000 North Carolina Eastern
Municipal Power Authority,
(MBIA),
5.375%, 1/1/24 2,080,840
Aaa AAA 4,000 North Carolina Municipal
Power Authority, (Catawba
Electric), (MBIA),
Variable Rate, 1/1/12/(2)/ 4,375,000
Aaa AAA 1,400 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/02/(2)/ 1,569,750
- --------------------------------------------------------------------------------
$ 9,630,710
- --------------------------------------------------------------------------------
Insured-General Obligations -- 2.6%
- --------------------------------------------------------------------------------
Aaa AAA $3,500 Puerto Rico, (FSA),
Variable
Rate, 7/1/22/(2)/ $ 4,016,250
- --------------------------------------------------------------------------------
$ 4,016,250
- --------------------------------------------------------------------------------
Insured-Hospitals -- 9.2%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Cumberland County
Hospital, (MBIA), 0.00%,
10/1/09 $ 305,990
Aaa AAA 935 North Carolina Medical
Care Commission, (Memorial
Mission Hospital), (FSA),
0.00%, 10/1/06 665,019
Aaa AAA 2,125 North Carolina Medical
Care Commission, (Rex
Healthcare), (AMBAC), 2,096,610
5.00%, 6/1/23
Aaa AAA 5,000 North Carolina Medical
Care Commission, (Saint
Joseph's Medical Center),
(AMBAC),
5.10%, 10/1/14 5,113,750
Aaa AAA 5,000 North Carolina Medical
Care Commission, (Wake
County Hospital), (MBIA),
5.375%, 10/1/26 5,185,849
Aaa AAA 1,500 North Carolina Medical
Care Commission, (Wilson
Memorial Hospital),
(AMBAC),
0.00%, 11/1/15 654,495
- --------------------------------------------------------------------------------
$ 14,021,713
- --------------------------------------------------------------------------------
See notes to financial statements
77
<PAGE>
North Carolina Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Lease Revenue /
Certificates of Participation -- 3.3%
Aaa AAA $2,150 Charlotte, Convention
Facility, (AMBAC), 5.25%,
12/1/13 $ 2,230,475
Aaa AAA 1,575 Franklin, County Jail,
(FGIC), 6.625%, 6/1/14 1,771,859
Aaa AAA 1,000 Mooresville School
District, (AMBAC), 6.35%,
10/1/14 1,100,910
- --------------------------------------------------------------------------------
$ 5,103,244
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 0.8%
- --------------------------------------------------------------------------------
Aaa AAA $1,250 Centennial Authority,
Hotel Tax Revenue,
(Arena), (FSA),
5.125%, 9/1/19 $ 1,255,225
- --------------------------------------------------------------------------------
$ 1,255,225
- --------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 8.9%
- --------------------------------------------------------------------------------
A1 A $2,065 Buncombe County,
6.625%, 12/1/10 $ 2,323,951
A3 A- 6,000 Columbus County,
Industrial Facility and
Pollution Control
Financing, (International
Paper Co.), (AMT), 6.15%,
4/1/21 6,563,819
NR AA 825 Durham County, 6.10%,
7/15/07 897,427
Aa3 NR 985 Durham County, 6.75%,
12/1/11 1,092,168
A1 AA 2,400 Greensboro, Greensboro
Coliseum Arena, 6.75%,
12/1/09 2,623,920
- --------------------------------------------------------------------------------
$ 13,501,285
- --------------------------------------------------------------------------------
Transportation -- 8.7%
- --------------------------------------------------------------------------------
Baa1 A $4,450 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 $ 4,467,978
Baa1 A 4,000 Puerto Rico Highway and
Transportation Authority,
5.25%, 7/1/20 4,042,000
Baa1 A 1,490 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/15 1,608,500
Baa1 A $2,925 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/36 $ 3,133,699
- --------------------------------------------------------------------------------
$ 13,252,177
- --------------------------------------------------------------------------------
Water and Sewer -- 1.3%
- --------------------------------------------------------------------------------
Aa2 AA $2,000 Orange County, Water and
Sewer, 5.20%, 7/1/16 $ 2,039,580
- --------------------------------------------------------------------------------
$ 2,039,580
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $137,336,031) $152,668,566
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by North Carolina
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at August 31, 1998, 23.1% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 1.2% to 8.1% of total investments.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $2,777,350 or 1.8% of the
Portfolio's net assets.
/(2)/ Security has been issued as an inverse floater bond.
/(3)/ Security (or a portion thereof) has been segregated to cover when-issued
securities.
/(4)/ When-issued security.
See notes to financial statements
78
<PAGE>
Oregon Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Cogeneration -- 2.2%
- --------------------------------------------------------------------------------
NR NR $2,000 Western Generation Agency,
(Wauna Cogeneration),
(AMT), 7.40%, 1/1/16 $ 2,209,180
- --------------------------------------------------------------------------------
$ 2,209,180
- --------------------------------------------------------------------------------
Education -- 1.1%
- --------------------------------------------------------------------------------
A2 NR $1,000 Salem EFA, (Willamette
University), 6.10%, 4/1/14 $ 1,074,960
- --------------------------------------------------------------------------------
$ 1,074,960
- --------------------------------------------------------------------------------
Electric Utilities -- 5.4%
- --------------------------------------------------------------------------------
Aa1 AA- $4,000 Eugene, Trojan Nuclear
Power, 5.90%, 9/1/09 $ 4,006,200
Aa1 AA- 1,000 Northern Wasco County,
(Bonneville Power
Administration), 5.20%,
12/1/24 1,007,420
A A+ 500 Puerto Rico Telephone
Authority, Variable
Rate, 1/1/20/(1)/(2)/ 557,420
- --------------------------------------------------------------------------------
$ 5,571,040
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 5.8%
- --------------------------------------------------------------------------------
A1 AAA $2,000 Medford, Rogue Valley
Memorial Hospital,
Escrowed to Maturity,
6.25%, 12/1/07 $ 2,223,500
NR A+ 1,250 Oregon State, Health,
Housing, Educational and
Cultural Facilities
Authority, (Reed College),
Prerefunded to 7/1/02,
6.75%, 7/1/21 1,371,088
NR AAA 2,000 Puerto Rico, "RIBS",
(AMBAC), Variable Rate,
Prerefunded to 7/1/02,
7.544%, 7/1/15/(1)/(2)/ 2,344,460
- --------------------------------------------------------------------------------
$ 5,939,048
- --------------------------------------------------------------------------------
General Obligations -- 13.3%
- --------------------------------------------------------------------------------
Aa NR $1,000 Lane County, Eugene School
District, 5.375%, 7/1/13 $ 1,030,780
Aa2 AA 1,000 Oregon State, Board of
Higher Education, 6.00%,
10/15/18 1,072,320
Aa2 AA $1,250 Oregon State, Elderly and
Disabled Housing, 6.375%,
8/1/24 $ 1,367,250
Aa2 AA 4,610 Oregon State, Elderly and
Disabled Housing, (AMT),
5.65%, 8/1/26 4,889,597
Aa2 AA 1,190 Oregon State, Veterans
Welfare, 5.85%, 10/1/15 1,251,535
Aa2 AA 500 Oregon State, Veterans
Welfare, 5.875%, 10/1/18 524,900
Aa2 AA 1,500 Oregon State, Veterans
Welfare, 5.90%, 10/1/17 1,595,865
Baa1 A 4,850 Puerto Rico, 0.00%, 7/1/17 1,927,536
- --------------------------------------------------------------------------------
$ 13,659,783
- --------------------------------------------------------------------------------
Hospitals -- 1.0%
- --------------------------------------------------------------------------------
A2 A+ $1,000 Clackamas County, (Kaiser
Permanente), 6.25%, 4/1/21 $ 1,059,630
- --------------------------------------------------------------------------------
$ 1,059,630
- --------------------------------------------------------------------------------
Housing -- 35.4%
- --------------------------------------------------------------------------------
NR NR $2,105 Hood River County, Health
Facility Authority,
Elderly Housing Revenue,
(Down Manor Project),
6.50%, 1/1/17 $ 2,216,144
Aa2 NR 2,500 Oregon State, Housing and
Community Services
Department, MFMR, (AMT),
5.70%, 7/1/29 2,587,675
Aa2 NR 1,500 Oregon State, Housing and
Community Services
Department, MFMR, (AMT),
6.20%, 7/1/28 1,605,855
Aa2 NR 1,975 Oregon State, Housing and
Community Services
Department, SFMR, (AMT),
6.20%, 7/1/27 2,108,135
Aa2 NR 4,700 Oregon State, Housing and
Community Services
Department, SFMR, (AMT),
6.20%, 7/1/27 5,032,807
Aa2 NR 3,500 Oregon State, Housing and
Community Services
Department, SFMR, (AMT),
6.375%, 7/1/27 3,776,780
Aa2 NR 1,985 Oregon State, Housing and
Community Services
Department, SFMR, (AMT),
6.40%, 7/1/26 2,137,587
Aa2 NR 2,500 Oregon State, Housing and
Community Services
Department, SFMR, (AMT),
6.45%, 7/1/26 2,693,275
See notes to financial statements
79
<PAGE>
Oregon Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Housing (continued)
- --------------------------------------------------------------------------------
NR A $1,000 Portland Housing
Authority,
6.00%, 1/1/27 $ 1,034,330
Aa3 NR 4,810 Portland Housing
Authority, MFMR, (Berry
Ridge), (AMT),
6.30%, 5/1/29 5,147,276
Aaa NR 2,875 Portland Housing
Authority, MFMR, (Cherry
Blossom), (AMT),
6.20%, 12/20/36 3,074,956
NR A 1,750 Portland Housing
Authority, MFMR,
(Riverwood), 6.00%, 1/1/19 1,826,720
Aa3 NR 1,000 Washington County Housing
Authority, MFMR, (Bethany
Meadows), (AMT),
5.75%, 9/1/17 1,039,690
Aa3 NR 2,000 Washington County Housing
Authority, MFMR, (Bethany
Meadows), (AMT),
5.85%, 9/1/27 2,078,960
- --------------------------------------------------------------------------------
$ 36,360,190
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 10.7%
- --------------------------------------------------------------------------------
Baa2 BBB- $3,500 Oregon EDA, (Georgia
Pacific), (AMT), 6.35%,
8/1/25 $ 3,757,565
NR BBB- 5,000 Port of Astoria, Pollution
Control Revenue, (James
River Corp.), 6.55%, 2/1/15 5,356,699
NR NR 750 Port of Portland, (Ash
Grove Cement Co.), 7.25%,
10/1/09 811,613
NR NR 1,000 Port of Portland, (North
Portland Crown Zellerbach
Corp.),
6.125%, 5/15/08 1,002,850
- --------------------------------------------------------------------------------
$ 10,928,727
- --------------------------------------------------------------------------------
Insured-Colleges and Universities -- 1.5%
- --------------------------------------------------------------------------------
Aaa AAA $4,850 Oregon Health Science
University, Capital
Appreciation (MBIA),
0.00%, 7/1/21 $ 1,577,075
- --------------------------------------------------------------------------------
$ 1,577,075
- --------------------------------------------------------------------------------
Insured-Education -- 2.7%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Oregon State, Health,
Housing, Educational and
Cultural Facilities
Authority, (Lewis and
Clark College), (MBIA),
6.00%, 10/1/13 $ 1,108,670
Aaa AAA $1,500 Oregon State, Health,
Housing, Educational and
Cultural Facilities
Authority, (Lewis and
Clark College), (MBIA),
6.125%, 10/1/24 $ 1,655,085
- --------------------------------------------------------------------------------
$ 2,763,755
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 5.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Emerald People's Utility
District, Electric System,
(AMBAC),
5.75%, 11/1/16 $ 1,059,430
Aaa AAA 500 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03/(2)/ 576,875
Aaa AAA 5,300 Puerto Rico Electric Power
Authority, (MBIA), (IBC),
0.00%, 7/1/17 2,165,262
Aaa AAA 1,600 Puerto Rico Telephone
Authority, (MBIA),
Variable
Rate, 1/16/15/(2)/ 1,726,000
- --------------------------------------------------------------------------------
$ 5,527,567
- --------------------------------------------------------------------------------
Insured-Lease Revenue /
Certificates of Participation -- 1.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,250 Oregon State, Department
of General Services, Real
Property Financing
Program, (AMBAC), 6.25%,
9/1/15 $ 1,354,275
- --------------------------------------------------------------------------------
$ 1,354,275
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 0.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Portland, Arena Natural
Gas Tax Revenue (AMBAC),
0.00%, 6/1/17 $ 348,920
- --------------------------------------------------------------------------------
$ 348,920
- --------------------------------------------------------------------------------
Insured-Transportation -- 5.5%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Oregon Department of
Transportation, (Westside
Light Rail), (MBIA),
6.25%, 6/1/09 $ 1,680,780
Aaa AAA 1,000 Port of Portland, Portland
International Airport,
(AMBAC), (AMT), 6.25%,
7/1/18 1,073,460
See notes to financial statements
80
<PAGE>
Oregon Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Transportation (continued)
- --------------------------------------------------------------------------------
Aaa AAA $2,750 Port of Portland, Portland
International Airport,
(AMT), (FGIC), 6.00%,
7/1/23 $ 2,925,450
- --------------------------------------------------------------------------------
$ 5,679,690
- --------------------------------------------------------------------------------
Special Tax Revenue -- 4.1%
- --------------------------------------------------------------------------------
A NR $1,000 Portland, Urban Renewal
and Redevelopment Bonds,
(Downtown Waterfront),
6.40%, 6/1/08 $ 1,074,260
A1 AA+ 3,000 Tri-County Metropolitan
Transportation District,
Limited Tax Pledge, 5.70%,
8/1/13 3,160,200
- --------------------------------------------------------------------------------
$ 4,234,460
- --------------------------------------------------------------------------------
Transportation -- 2.1%
- --------------------------------------------------------------------------------
Baa3 BBB- $1,500 Port of Portland, Special
Obligation Revenue Bonds,
(Delta Airlines Inc.),
(AMT), 6.20%, 9/1/22 $ 1,576,080
Baa1 A 500 Puerto Rico Highway and
Transportation Authority,
6.375%, 7/1/08 542,180
- --------------------------------------------------------------------------------
$ 2,118,260
- --------------------------------------------------------------------------------
Water and Sewer -- 2.2%
- --------------------------------------------------------------------------------
NR A+ $2,000 Clackamas County, Water
Revenue, 6.375%, 10/1/14 $ 2,233,720
- --------------------------------------------------------------------------------
$ 2,233,720
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $94,764,463) $102,640,280
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Oregon
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at August 31, 1998, 19.1% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 0.6% to 9.7% of total investments.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $2,901,880 or 2.8% of the
Portfolio's net assets.
/(2)/ Security has been issued as an inverse floater bond.
See notes to financial statements
81
<PAGE>
South Carolina Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 8.7%
- --------------------------------------------------------------------------------
A1 A- $1,650 Berkeley County, (South
Carolina Electric and Gas
Co.), 6.50%, 10/1/14 $ 1,810,116
Baa1 BBB+ 1,400 Puerto Rico Electric Power
Authority, 6.25%, 7/1/17 1,537,004
Aa2 AA- 1,000 South Carolina Public
Service Authority, 5.125%,
1/1/32 992,030
- --------------------------------------------------------------------------------
$ 4,339,150
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 0.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 300 Piedmont Municipal Power
Agency, (MBIA), Escrowed to
Maturity, 6.25%, 1/1/09 $ 349,326
- --------------------------------------------------------------------------------
$ 349,326
- --------------------------------------------------------------------------------
General Obligations -- 0.4%
- --------------------------------------------------------------------------------
Baa1 A $ 500 Puerto Rico, 0.00%, 7/1/18 $ 188,850
- --------------------------------------------------------------------------------
$ 188,850
- --------------------------------------------------------------------------------
Hospitals -- 3.1%
- --------------------------------------------------------------------------------
A3 NR $1,440 Horry County, (Conway
Hospital), 6.75%, 7/1/12 $ 1,566,706
- --------------------------------------------------------------------------------
$ 1,566,706
- --------------------------------------------------------------------------------
Housing -- 10.2%
- --------------------------------------------------------------------------------
NR AA- $1,780 South Carolina Housing
Finance Authority, MFMR,
(Runaway Bay Apartments),
6.20%, 12/1/20 $ 1,850,897
Aa AA 1,500 South Carolina Housing
Finance Authority, SFMR,
6.375%, 7/1/16 1,607,460
Aa2 NR 1,500 South Carolina Housing
Finance Authority, SFMR,
6.45%, 7/1/17 1,609,125
- --------------------------------------------------------------------------------
$ 5,067,482
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 29.1%
- --------------------------------------------------------------------------------
Baa2 BBB $1,890 Aiken County, (Beloit
Corp.), 6.00%, 12/1/11 $ 2,023,944
NR BBB+ $1,500 Chester County, (Spring
Industries), 7.35%, 2/1/14 $ 1,636,350
A2 A-1 1,150 Darlington County,
(Carolina Power and Light
Co.), 6.60%, 11/1/10 1,276,385
A1 AA- 1,500 Darlington County, (Nucor
Corp.), (AMT), 5.75%, 8/1/23 1,568,145
A2 A 2,500 Darlington County, (Sonoco
Products), 6.00%, 4/1/26 2,683,474
A2 A 500 Darlington County, (Sonoco
Products), (AMT), 6.125%,
6/1/25 539,610
NR NR 515 Florence County, (Stone
Container Co.), 7.375%,
2/1/07 556,313
A3 A- 1,000 Georgetown County,
Environmental Improvement
Revenue, (International
Paper Co.), 5.70%, 10/1/21 1,040,390
A1 A- 1,000 Richland County, (Union
Camp Corp.), (AMT), 6.75%,
5/1/22 1,094,140
A2 A+ 2,000 York County, (Hoechst
Celanese Corp.), (AMT),
5.70%, 1/1/24 2,063,240
- --------------------------------------------------------------------------------
$14,481,991
- --------------------------------------------------------------------------------
Insured-Education -- 1.5%
- --------------------------------------------------------------------------------
Baa2 AA $ 750 Richland County EFA,
(Benedict College), (AGR),
5.125%, 1/1/28 $ 738,750
- --------------------------------------------------------------------------------
$ 738,750
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 8.7%
- --------------------------------------------------------------------------------
Aaa NR $ 500 Edgefield County, Water and
Sewer Authority, (FGIC),
5.00%, 1/1/28 $ 495,030
Aaa AAA 250 Hilton Head Public Service
District
No. 1, (FSA), 5.00%, 12/1/23 247,680
Aaa AAA 195 Piedmont Municipal Power
Agency, Electric Revenue,
(MBIA), 6.30%, 1/1/14 213,621
Aaa AAA 2,500 Puerto Rico Electric Power
Authority, (MBIA), (IBC),
0.00%, 7/1/17 1,021,350
Aaa AAA 1,250 South Carolina Public
Service Authority, (AMBAC),
6.375%, 7/1/21 1,371,475
Aaa AAA 1,000 South Carolina State Public
Service Authority, (MBIA),
5.00%, 1/1/29 989,910
- --------------------------------------------------------------------------------
$ 4,339,066
- --------------------------------------------------------------------------------
See notes to financial statements
82
<PAGE>
South Carolina Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-General Obligations -- 2.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Berkeley County, School
District, (AMBAC), 6.30%,
2/1/16 $ 1,109,260
- --------------------------------------------------------------------------------
$ 1,109,260
- --------------------------------------------------------------------------------
Insured-Hospitals -- 14.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,500 Greenwood County, (Self
Memorial Hospital), (FGIC),
5.875%, 10/1/17 $ 1,593,480
Aaa AAA 750 Horry County, (Conway
Hospital), (AMBAC), 5.00%,
7/1/28 737,948
Aaa AAA 1,500 South Carolina Jobs
Economic Development
Authority, (Anderson Area
Medical Center), (MBIA),
5.25%, 2/1/26 1,518,270
Aaa AAA 1,000 South Carolina Jobs
Economic Development
Authority, (Baptist
Hospital), (AMBAC),
5.45%, 8/1/15 1,036,020
Aaa AAA 1,000 South Carolina Jobs
Economic Development
Authority, (Baptist
Hospital), (AMBAC),
Variable Rate, 8/1/15/(1)/ 1,071,250
NR AAA 1,000 South Carolina Jobs
Economic Development
Authority, (Oconee Memorial
Hospital), (CLEE),
6.15%, 3/1/25 1,099,040
- --------------------------------------------------------------------------------
$ 7,056,008
- --------------------------------------------------------------------------------
Insured-Housing -- 2.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 South Carolina Housing
Finance and Development
Authority, SFMR, (AMBAC),
(AMT), 5.95%, 7/1/29 $ 1,054,860
- --------------------------------------------------------------------------------
$ 1,054,860
- --------------------------------------------------------------------------------
Insured-Lease Revenue /
Certificates of Participation -- 3.3%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Charleston County,
(Charleston PFC), (MBIA),
6.10%, 6/1/11 $ 551,995
Aaa AAA 1,000 Florence County, (Law
Enforcement Center),
(AMBAC), 6.00%, 3/1/14 1,092,500
- --------------------------------------------------------------------------------
$ 1,644,495
- --------------------------------------------------------------------------------
Insured-Life Care -- 2.0%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Florence County, Hospital
Revenue, (McLeod Regional
Medical Center), (MBIA),
5.00%, 11/1/20 $ 986,090
- --------------------------------------------------------------------------------
$ 986,090
- --------------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 5.6%
- --------------------------------------------------------------------------------
Baa NR $ 750 Lexington County School
District, 6.90%, 7/1/08 $ 838,785
A3 BBB+ 1,750 Myrtle Beach Convention
Center, 6.875%, 7/1/17 1,965,443
- --------------------------------------------------------------------------------
$ 2,804,228
- --------------------------------------------------------------------------------
Pooled Loans -- 3.2%
- --------------------------------------------------------------------------------
NR A $1,500 South Carolina Education
Authority, Student Loan,
(AMT), 6.30%, 9/1/08 $ 1,605,135
- --------------------------------------------------------------------------------
$ 1,605,135
- --------------------------------------------------------------------------------
Solid Waste -- 3.5%
- --------------------------------------------------------------------------------
NR NR $1,500 Spartanburg County, Solid
Waste, (Bavarian Motor
Works Corp.), (AMT), 7.55%,
11/1/24 $ 1,736,265
- --------------------------------------------------------------------------------
$ 1,736,265
- --------------------------------------------------------------------------------
Transportation -- 1.5%
- --------------------------------------------------------------------------------
Baa1 A $ 750 Puerto Rico Highway and
Transportation Authority,
4.75%, 7/1/38 $ 727,140
- --------------------------------------------------------------------------------
$ 727,140
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $45,182,640) $49,794,802
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by South
Carolina municipalities. The ability of the issuers of the debt
securities to meet their obligations may be affected by economic
developments in a specific industry or municipality. In order to reduce
the risk associated with such economic developments, at August 31, 1998,
34.7% of the securities in the portfolio of investments are backed by bond
insurance of various financial institutions and financial guaranty
assurance. The aggregate percentage by financial institution ranged from
0.5% to 15.0% of total investments.
/(1)/ Security has been issued as an inverse floater bond.
See notes to financial statements
83
<PAGE>
Tennessee Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 4.9%
- --------------------------------------------------------------------------------
Aa3 AA $1,500 Metropolitan Government
Nashville and Davidson
County, (Vanderbilt
University), 5.00%, 10/1/28 $ 1,484,955
Baa2 NR 1,000 Nashville and Davidson
County, (Belmont
University),
6.40%, 12/1/19 1,079,140
- --------------------------------------------------------------------------------
$ 2,564,095
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 3.7%
- --------------------------------------------------------------------------------
NR AAA $ 300 Puerto Rico, "RIBS",
(AMBAC), Variable Rate,
Prerefunded to 7/1/02,
7.544%, 7/1/15/(1)//(2)/ $ 351,669
Aaa AAA 1,500 Shelby County, (Lebonheur
Children's Hospital),
(MBIA), Escrowed to
Maturity, 5.50%, 8/15/12 1,594,755
- --------------------------------------------------------------------------------
$ 1,946,424
- --------------------------------------------------------------------------------
General Obligations -- 4.0%
- --------------------------------------------------------------------------------
Aa2 AA $1,000 Metropolitan Government
Nashville and Davidson
County, 5.875%, 5/15/21 $ 1,087,880
Aa2 AA+ 1,000 Shelby County, 5.125%,
3/1/16 1,013,450
- --------------------------------------------------------------------------------
$ 2,101,330
- --------------------------------------------------------------------------------
Hospitals -- 6.6%
- --------------------------------------------------------------------------------
Baa1 NR $ 500 Clarksville, (Clarksville
Memorial), 6.25%, 7/1/08 $ 535,605
Baa1 NR 500 Clarksville, (Clarksville
Memorial), 6.375%, 7/1/18 533,360
Baa1 BBB+ 250 Knox County, (East
Tennessee Children's),
6.50%, 10/1/12 267,003
Baa2 BBB 1,000 Montgomery County,
(Clarksville Regional
Health System),
5.375%, 1/1/28 990,450
NR A- 1,000 Sumner County, (Sumner
Regional Health Systems),
7.50%, 11/1/14 1,147,930
- --------------------------------------------------------------------------------
$ 3,474,348
- --------------------------------------------------------------------------------
Housing -- 15.2%
- --------------------------------------------------------------------------------
NR A $ 750 Knoxville Community
Development Corp., (Clinton
Towers), 6.65%, 10/15/10 $ 793,928
NR AAA 500 Knoxville Community
Development Corp.,
(Morningside Gardens),
(GNMA), 6.10%, 7/20/20 521,300
NR A 1,500 Nashville and Davidson
County, (The Park at
Hermitage), 5.90%, 2/1/19 1,532,400
Aa2 AA 1,000 Tennessee Housing
Development Agency,
5.375%, 7/1/23 1,009,960
A1 A+ 1,000 Tennessee Housing
Development Agency,
5.85%, 7/1/13 1,043,320
A1 A+ 2,000 Tennessee Housing
Development Agency,
5.95%, 7/1/28 2,080,520
Aa AA 1,000 Tennessee Housing
Development Agency, (AMT),
5.75%, 7/1/24 1,026,010
- --------------------------------------------------------------------------------
$ 8,007,438
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 27.0%
- --------------------------------------------------------------------------------
Aa3 AA- $1,000 Chattanooga, (E.I. du Pont
de Nemours and Co.),
6.35%, 7/1/22 $ 1,097,470
Aa3 AA- 1,000 Humphreys County, (E.I. du
Pont de Nemours and Co.),
(AMT), 6.70%, 5/1/24 1,114,040
Aa2 AA 2,000 Loudon County,
(Kimberly-Clark Corp.),
(AMT), 6.20%, 2/1/23/(3)/ 2,152,139
A3 A 2,250 Maury County, (Saturn
Corp.), 6.50%, 9/1/24 2,474,414
Baa1 BBB 1,500 McMinn County, (Calhoun
Newsprint Co. - Bowater
Inc.), (AMT), 7.40%, 12/1/22 1,677,000
Baa2 BBB 1,500 Memphis-Shelby County
Airport Authority, (Federal
Express Corp.), 6.75%, 9/1/12 1,644,510
Baa2 BBB 1,000 Memphis-Shelby County
Airport Authority, (Federal
Express Corp.), (AMT),
6.20%, 7/1/14 1,059,170
NR BBB+ 500 Nashville and Davidson
County, (Osco Treatment
Systems), (AMT), 6.00%, 5/1/03 526,765
Baa3 BBB- 1,250 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 1,361,663
A3 NR 1,000 South Fulton County, (Tyson
Foods Co.), (AMT),
6.40%, 10/1/20 1,097,510
- --------------------------------------------------------------------------------
$14,204,681
- --------------------------------------------------------------------------------
See notes to financial statements
84
<PAGE>
Tennessee Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Education -- 4.6%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Metropolitan Nashville
HEFA, (Meharry Medical
College), (AMBAC), 5.00%,
12/1/24 $ 984,830
Aaa AAA 1,230 Metropolitan Nashville
HEFA, (Meharry Medical
College), (AMBAC), 6.00%,
12/1/19 1,415,300
- --------------------------------------------------------------------------------
$ 2,400,130
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 5.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Lawrenceburg, Electric
Revenues, (MBIA), 6.625%,
7/1/18 $ 1,227,760
Aaa AAA 1,000 Madison County Suburban
Utility District, (MBIA),
5.00%, 2/1/19 998,050
Aaa AAA 400 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03/(2)/ 461,500
- --------------------------------------------------------------------------------
$ 2,687,310
- --------------------------------------------------------------------------------
Insured-Hospitals -- 5.0%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Bristol, (Bristol Memorial
Hospital), (FGIC), 6.75%,
9/1/10 $ 607,075
Aaa AAA 250 Chattanooga, (Memorial
Hospital), (MBIA), 6.625%,
9/1/09 299,425
Aaa AAA 1,500 Chattanooga-Hamilton
County, (Erlanger Medical
Center), (MBIA), 5.00%,
10/1/28 1,471,335
Aaa AAA 250 Shelby County, (Methodist
Care), (MBIA), 5.00%, 4/1/18 249,525
- --------------------------------------------------------------------------------
$ 2,627,360
- --------------------------------------------------------------------------------
Insured-Housing -- 2.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Knox County, SCA Realty,
MFMR, (FSA), 7.125%, 1/1/30 $ 1,100,750
- --------------------------------------------------------------------------------
$ 1,100,750
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 2.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Johnson, School District
Sales Tax, (AMBAC), 6.70%,
5/1/21 $ 1,171,290
- --------------------------------------------------------------------------------
$ 1,171,290
- --------------------------------------------------------------------------------
Insured-Transportation -- 4.1%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Memphis-Shelby County
Airport Authority, (MBIA),
(AMT), 6.50%, 2/15/09 $ 1,166,690
Aaa AAA 1,000 Puerto Rico Highway and
Transportation Authority,
(MBIA), (IBC), 5.00%, 7/1/38 997,360
- --------------------------------------------------------------------------------
$ 2,164,050
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 2.8%
- --------------------------------------------------------------------------------
Aaa AAA $ 350 Nashville and Davidson
County, Water System,
(AMBAC), Variable
Rate, 1/1/22/(2)/ $ 409,063
Aaa AAA 1,000 Nashville and Davidson
County, Water System,
(FGIC), 5.20%, 1/1/13 1,060,780
- --------------------------------------------------------------------------------
$ 1,469,843
- --------------------------------------------------------------------------------
Miscellaneous -- 1.1%
- --------------------------------------------------------------------------------
NR NR $ 500 Hardeman County,
(Correctional Facilities
Corp.), 7.75%, 8/1/17 $ 566,990
- --------------------------------------------------------------------------------
$ 566,990
- --------------------------------------------------------------------------------
Nursing Homes -- 2.2%
- --------------------------------------------------------------------------------
NR A+ $1,000 Tennessee State Veterans'
Homes Board, (Humboldt),
6.65%, 2/1/14 $ 1,130,670
- --------------------------------------------------------------------------------
$ 1,130,670
- --------------------------------------------------------------------------------
Pooled Loans -- 3.5%
- --------------------------------------------------------------------------------
NR A- $1,200 Tennessee Local Development
Authority, Community
Provider, 6.55%, 10/1/23 $ 1,315,236
A2 AA- 500 Tennessee Local Development
Authority, State Loan
Program, 5.00%, 3/1/15 500,000
- --------------------------------------------------------------------------------
$ 1,815,236
- --------------------------------------------------------------------------------
See notes to financial
85
<PAGE>
Tennessee Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Transportation -- 5.9%
- --------------------------------------------------------------------------------
NR NR $ 900 Memphis-Shelby County
Airport Authority, 6.125%,
12/1/16 $ 931,959
Baa1 A 1,575 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 1,581,363
Baa1 A 600 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/38 588,774
- --------------------------------------------------------------------------------
$ 3,102,096
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $48,278,492) $52,534,041
- --------------------------------------------------------------------------------
AMT- Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Tennessee
municipalities. The ability of the issuers of the debt securities to meet
their obligations may be affected by economic developments in a specific
industry or municipality. In order to reduce the risk associated with
such economic developments, at August 31, 1998, 29.6% of the securities in
the portfolio of investments are backed by bond insurance of various
financial institutions and financial guaranty assurance agencies. The
aggregate percentage by financial institution ranged from 3.0% to 15.2% of total
investments.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $351,669 or 0.7% of the
Portfolio's net assets.
/(2)/ Security has been issued as an inverse floater bond.
/(3)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
86
<PAGE>
Virginia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Education -- 5.7%
- --------------------------------------------------------------------------------
NR A- $2,000 Lynchburgh, (Randolph-Macon
Woman's College), 5.875%, 9/1/23 $ 2,092,080
NR A- 2,000 Medical College of Hampton
Roads, 6.875%, 11/15/11 2,168,260
Baa3 NR 1,000 Rockingham County IDA,
(Bridgewater College),
5.95%, 10/1/13 1,046,630
NR A- 1,570 Virginia College Building
Authority, (Hampden-Sydney
College), 6.60%, 9/1/16 1,721,348
NR A+ 1,000 Virginia College Building
Authority, (Hampton
University), 5.75%, 4/1/14 1,060,450
NR A+ 400 Virginia College Building
Authority, (Hampton
University), 6.50%, 4/1/08 436,136
- --------------------------------------------------------------------------------
$ 8,524,904
- --------------------------------------------------------------------------------
Electric Utilities -- 0.7%
- --------------------------------------------------------------------------------
NR NR $ 925 Virgin Islands Water and
Power Authority, 7.40%, 7/1/11 $ 1,019,470
- --------------------------------------------------------------------------------
$ 1,019,470
- --------------------------------------------------------------------------------
Escrowed / Prerefunded -- 11.9%
- --------------------------------------------------------------------------------
Aaa AAA $1,665 Arlington County IDA,
(AMBAC), Prerefunded to
9/1/03, 5.00%, 9/1/21 $ 1,637,078
Aaa NR 1,000 Arlington County IDA,
(Arlington Hospital),
Prerefunded to 9/1/01,
7.125%, 9/1/21 1,112,210
A NR 500 Augusta County IDA,
(Augusta Hospital),
Prerefunded to 9/1/01,
7.00%, 9/1/21 553,520
Aaa AAA 2,000 Loudoun County IDA,
(Falcons Landing),
Prerefunded to 11/1/04,
8.75%, 11/1/24 2,560,820
A2 NR 1,250 Martinsville, (Memorial
Hospital of Martinsville
and Henry County),
Prerefunded to 1/1/01,
7.00%, 1/1/06 1,337,700
A2 NR 2,400 Prince William County IDA
(Potomac Hospital),
Prerefunded to 10/1/05,
6.85%, 10/1/25 2,847,072
Aaa AAA 1,000 Richmond Metropolitan
Authority Expressway
(FGIC), Prerefunded to
7/15/02, 6.375%, 7/15/16 1,108,190
NR NR 4,000 Virgin Islands Public
Finance Authority,
Prerefunded to 10/1/02,
7.25%, 10/1/18 4,583,360
NR A+ 1,700 Virginia Beach, Water and
Sewer System, Prerefunded
to 2/1/02, 6.625%, 2/1/17 1,876,868
- --------------------------------------------------------------------------------
$17,616,818
- --------------------------------------------------------------------------------
General Obligations -- 2.2%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Fairfax County, 5.625%, 6/1/14 $ 1,067,270
Baa1 A 350 Puerto Rico, 0.00%, 7/1/04 275,429
Baa1 A 2,000 Puerto Rico, 4.50%, 7/1/23 1,849,180
- --------------------------------------------------------------------------------
$ 3,191,879
- --------------------------------------------------------------------------------
Hospitals -- 13.5%
- --------------------------------------------------------------------------------
A2 NR $3,800 Albermarle County IDA,
(Martha Jefferson Hospital),
5.50%, 10/1/20 $ 3,904,006
A2 NR 170 Chesapeake Hospital
Authority, (Chesapeake
General Hospital), 7.60%, 7/1/00 177,968
Aa2 AA 2,910 Fairfax County IDA, (Inova
Health System Hospitals),
5.00%, 8/15/14 2,972,652
Aa2 AA 2,000 Fairfax County IDA, (Inova
Health System Hospitals),
5.00%, 8/15/15 2,033,200
Aa2 AA 1,000 Fairfax County IDA, (Inova
Health System Hospitals),
6.00%, 8/15/26 1,091,920
NR A 400 Halifax County IDA,
(Halifax Regional
Hospital, Inc.), 5.25%, 9/1/17 402,676
Aa2 AA- 3,500 Peninsula Ports Authority
of Virginia, (Riverside
Health System), 6.625%, 7/1/10 3,828,965
See notes to financial statements
87
<PAGE>
Virginia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Hospitals (continued)
- --------------------------------------------------------------------------------
Aa2 AA $3,000 Virginia Beach Development
Authority, (Sentara Bayside
Hospital), 6.60%, 11/1/09 $ 3,280,680
A3 NR 1,000 Washington County IDA,
(Johnston Memorial
Hospital), 6.00%, 7/1/14 1,124,450
A3 NR 1,060 Washington County IDA,
(Johnston Memorial
Hospital), 7.00%, 7/1/22 1,194,366
- --------------------------------------------------------------------------------
$20,010,883
- --------------------------------------------------------------------------------
Housing -- 11.1%
- --------------------------------------------------------------------------------
NR AAA $1,250 Fairfax County Redevelopment
and Housing Authority MFMR,
FHA, 7.00%, 5/1/26 $ 1,338,300
NR AAA 960 Hampton Redevelopment and
Housing Authority, Senior
Living, (GNMA), 6.00%, 1/20/26 1,010,726
NR AAA 1,000 Newport News Redevelopment
and Housing Authority,
MFMR, 5.85%, 12/20/30 1,049,170
NR AAA 1,800 Suffolk Redevelopment and
Housing Authority, (Prince
Williams Commons), (FNMA),
6.45%, 6/1/19 1,962,612
Aa1 AA+ 3,500 Virginia Housing
Development Authority,
MFMR, 7.05%, 5/1/18 3,771,285
Aa AA+ 5,000 Virginia Housing
Development Authority,
MFMR, (AMT), 6.75%, 7/1/21 5,272,499
Aa NR 1,900 Virginia Housing
Development Authority,
SFMR, Variable Rate, 7/1/04/(1)/ 2,030,625
- --------------------------------------------------------------------------------
$16,435,217
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 19.7%
- --------------------------------------------------------------------------------
Baa2 NR $4,500 Bedford County, (Nekoosa
Packaging), (AMT),
5.60%, 12/1/25 $ 4,571,910
Aa3 AA- 2,190 Chesapeake, (Cargill,
Inc.), 5.875%, 3/1/13 2,344,789
A2 A+ 1,500 Giles, (Hoechst Celanese
Corp.), (AMT), 5.95%, 12/1/25 1,592,385
A2 A+ 2,000 Giles, (Hoechst Celanese
Corp.), (AMT), 6.45%, 5/1/26 2,229,020
A2 A+ 500 Giles, (Hoechst Celanese
Corp.), (AMT), 6.625%, 12/1/22 544,345
A3 A 2,000 Henrico County, (Browning
Ferris, Inc.), (AMT),
5.45%, 1/1/14/(2)/ 2,114,160
A1 A- 4,000 Isle of Wright County IDA,
(Union Camp Corp.), (AMT),
6.55%, 4/1/24 4,405,640
A1 A+ 2,000 James City County IDA,
(Anheuser Busch), (AMT),
6.00%, 4/1/32 2,163,560
Baa3 BBB- 1,000 Puerto Rico Port
Authority, (American
Airlines), (AMT), 6.25%, 6/1/26 1,089,330
Baa3 BBB- 1,000 Puerto Rico Port
Authority, (American
Airlines), (AMT), 6.30%, 6/1/23 1,075,370
Baa3 BBB 980 West Point, (Chesapeake
Corp.), 6.25%, 3/1/19 1,052,726
Baa3 BBB 5,520 West Point, (Chesapeake
Corp.), (AMT), 6.375%, 3/1/19 5,958,563
- --------------------------------------------------------------------------------
$29,141,798
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 0.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 900 Puerto Rico Telephone
Authority, (MBIA),
Variable Rate, 1/16/15/(1)/ $ 970,875
- --------------------------------------------------------------------------------
$ 970,875
- --------------------------------------------------------------------------------
Insured-General Obligations -- 3.5%
- --------------------------------------------------------------------------------
Aaa AAA $5,250 Richmond, (FGIC),
5.00%, 1/15/21 $ 5,204,325
- --------------------------------------------------------------------------------
$ 5,204,325
- --------------------------------------------------------------------------------
Insured-Hospitals -- 8.8%
- --------------------------------------------------------------------------------
Aaa AAA $3,585 Fredericksburg IDA,
(Medicorp Health),
(AMBAC), 5.25%, 6/15/23 $ 3,639,313
Aaa AAA 1,500 Henrico County, (Bon
Secour Health Systems), (MBIA),
6.25%, 8/15/20 1,772,700
See notes to financial statements
88
<PAGE>
Virginia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Hospitals (continued)
- --------------------------------------------------------------------------------
Aaa AAA $5,000 Virginia Beach, (Virginia
Beach Memorial Hospital),
(AMBAC), 5.125%, 2/15/18 $ 5,117,800
Aaa AAA 2,000 Winchester IDA, (Winchester
Medical Center), (AMBAC),
Variable Rate, 1/21/14/(1)/ 2,552,500
- --------------------------------------------------------------------------------
$13,082,313
- --------------------------------------------------------------------------------
Insured-Transportation -- 1.9%
- --------------------------------------------------------------------------------
Aaa AAA $1,650 Chesapeake Bay Bridge and
Tunnel Dist., (MBIA),
5.00%, 7/1/22 $ 1,632,890
Aaa AAA 1,105 Metropolitan Washington
Airports Authority,
(MBIA), (AMT), 5.75%, 10/1/20 1,164,383
- --------------------------------------------------------------------------------
$ 2,797,273
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 4.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Prince William County
Service Authority, (FGIC),
4.75%, 7/1/29 $ 959,320
Aaa AAA 4,635 Upper Occoquan Sewage
Authority, (MBIA), 5.00%, 7/1/25 4,590,736
Aaa AAA 1,000 Upper Occoquan Sewage
Authority, (MBIA), 5.15%, 7/1/20 1,043,500
- --------------------------------------------------------------------------------
$ 6,593,556
- --------------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 6.4%
- --------------------------------------------------------------------------------
Aa2 AA $2,000 Henrico County IDA, Lease,
7.00%, 8/1/13 $ 2,343,920
Aa2 AA 2,250 Henrico County IDA, Lease,
7.125%, 8/1/21 2,646,158
NR NR 1,250 King George County, Lease,
7.00%, 12/15/12 1,336,525
A NR 3,000 Rockingham and Harrisonburg
Counties, Harrisonburg
Redevelopment and Housing
Authority, 6.50%, 9/1/14 3,227,190
- --------------------------------------------------------------------------------
$ 9,553,793
- --------------------------------------------------------------------------------
Nursing Homes -- 0.2%
- --------------------------------------------------------------------------------
NR NR $ 215 Covington-Allegheny County
IDA, (Beverly Enterprises),
9.375%, 9/1/01 $ 229,846
- --------------------------------------------------------------------------------
$ 229,846
- --------------------------------------------------------------------------------
Solid Waste -- 2.2%
- --------------------------------------------------------------------------------
A1 A+ $ 915 Fairfax County EDA, (Ogden
Martin Systems of Fairfax,
Inc.), (AMT), 7.75%, 2/1/11 $ 956,742
Baa1 A- 2,250 Southeastern Public Service
Authority, Solid Waste Systems,
(AMT), 6.00%, 7/1/13 2,362,118
- --------------------------------------------------------------------------------
$ 3,318,860
- --------------------------------------------------------------------------------
Special Tax Revenue -- 1.8%
- --------------------------------------------------------------------------------
NR NR $1,500 Dulles Community Development
Authority, (Dulles Town Center),
6.25%, 3/1/26 $ 1,532,085
Aa AA 1,000 Virginia State Transportation
Board Revenue, Route 28,
Variable Rate, 4/1/18/(1)/ 1,183,730
- --------------------------------------------------------------------------------
$ 2,715,815
- --------------------------------------------------------------------------------
Transportation -- 2.2%
- --------------------------------------------------------------------------------
NR BBB $ 400 Charlottesville-Albermarle,
Airport Authority, (AMT),
6.125%, 12/1/13 $ 422,396
Baa1 A 1,500 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/36 1,506,060
Aa2 AA 1,250 Virginia Port Authority,
(AMT), 5.90%, 7/1/16 1,347,850
- --------------------------------------------------------------------------------
$ 3,276,306
- --------------------------------------------------------------------------------
Water and Sewer -- 3.1%
- --------------------------------------------------------------------------------
Aa2 AA $1,500 Fairfax County Water
Authority, 5.00%, 4/1/21 $ 1,531,650
Aa2 AA 805 Fairfax County Water
Authority, 6.00%, 4/1/22 891,103
See notes to financial statements
89
<PAGE>
Virginia Municipals Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Water and Sewer (continued)
- --------------------------------------------------------------------------------
Aa2 AA- $1,000 Fairfax County Water Authority,
Variable Rate, 4/1/29/(1)(3)/ $ 1,097,170
NR AA 1,000 Virginia Resource Authority,
(Hopewell Waste Water), (AMT),
6.00%, 1/1/25 1,084,640
- --------------------------------------------------------------------------------
$ 4,604,563
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $134,024,968) $148,288,494
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Virginia
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at August 31, 1998, 21.2% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 4.9% to 8.7% of total investments.
/(1)/ Security has been issued as an inverse floater bond.
/(2)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(3)/ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1998, the value of these securities amounted to $1,097,170 or 0.7% of the
Portfolio's net assets.
See notes to financial statements
90
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
As of August 31, 1998
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Kentucky
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments --
Identified cost $85,220,338 $51,057,516 $78,904,810 $100,259,833
Unrealized appreciation 8,196,742 4,564,428 7,334,325 9,531,791
- ------------------------------------------------------------------------------------------------------------------------------------
Investments, at value $93,417,080 $55,621,944 $86,239,135 $109,791,624
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 2,691,379 $ 181 $ 919,365 $ 3,121,864
Receivable for investments sold 1,004,372 -- -- --
Interest receivable 1,398,455 841,648 1,077,404 1,719,202
Deferred organization expenses -- 747 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $98,511,286 $56,464,520 $88,235,904 $114,632,690
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased $ 1,776,119 $ -- $ -- $ 1,966,224
Payable for when-issued securities 1,940,976 -- 958,690 --
Demand note payable -- 194,000 -- --
Payable for daily variation margin on open
financial futures contracts 7,719 8,750 14,250 17,812
Payable to affiliate for Trustees' fees 713 775 620 837
Other accrued expenses 9,056 5,951 11,070 12,537
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 3,734,583 $ 209,476 $ 984,630 $ 1,997,410
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest
in Portfolio $94,776,703 $56,255,044 $87,251,274 $112,635,280
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $86,623,101 $51,735,985 $80,053,905 $103,274,919
Net unrealized appreciation (computed on the
basis of identified cost) 8,153,602 4,519,059 7,197,369 9,360,361
- ------------------------------------------------------------------------------------------------------------------------------------
Total $94,776,703 $56,255,044 $87,251,274 $112,635,280
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
91
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Assets and Liabilities
As of August 31, 1998
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments --
Identified cost $33,307,126 $ 98,601,792 $64,892,579 $137,336,031
Unrealized appreciation 2,397,896 7,164,502 7,645,527 15,332,535
- ------------------------------------------------------------------------------------------------------------------------------------
Investments, at value $35,705,022 $105,766,294 $72,538,106 $152,668,566
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 129,539 $1,329,282 $ 1,004,800 $ 697,467
Receivable for investments sold 85,000 -- 30,000 --
Interest receivable 596,721 1,365,345 846,902 2,156,141
Deferred organization expenses 701 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $36,516,983 $108,460,921 $74,419,808 $155,522,174
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for when-issued securities $ -- $ 3,289,180 $ -- $ 2,576,011
Payable for daily variation margin on open
financial futures contracts 3,562 16,250 11,875 --
Payable to affiliate for Trustees' fees -- 806 -- 1,085
Other accrued expenses 3,648 2,432 9,936 14,954
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 7,210 $ 3,308,668 $ 21,811 $ 2,592,050
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors'
interest in Portfolio $36,509,773 $105,152,253 $74,397,997 $152,930,124
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $34,145,005 $ 98,072,007 $66,866,653 $137,597,589
Net unrealized appreciation (computed on
the basis of identified cost) 2,364,768 7,080,246 7,531,344 15,332,535
- ------------------------------------------------------------------------------------------------------------------------------------
Total $36,509,773 $105,152,253 $74,397,997 $152,930,124
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
92
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Assets and Liabilities
As of August 31, 1998
<TABLE>
<CAPTION>
South
Oregon Portfolio Carolina Portfolio Tennessee Portfolio Virginia Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments --
Identified cost $ 94,764,463 $45,182,640 $48,278,492 $134,024,968
Unrealized appreciation 7,875,817 4,612,162 4,255,549 14,263,526
- ------------------------------------------------------------------------------------------------------------------------------------
Investments, at value $102,640,280 $49,794,802 $52,534,041 $148,288,494
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 27 $ 816 $ 1,036,567 $ 650,298
Receivable for investments sold -- -- -- 55,000
Interest receivable 1,312,130 673,947 742,249 2,307,324
Deferred organization expenses -- 703 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $103,952,437 $50,470,268 $54,312,857 $151,301,116
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased $ -- $ -- $ 589,867 $ --
Demand note payable 186,000 344,000 -- --
Payable for daily variation margin on open financial
futures contracts -- -- 8,313 25,000
Payable to affiliate for Trustees' fees -- 3,124 -- 1,085
Other accrued expenses 11,340 6,071 5,970 17,561
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 197,340 $ 353,195 $ 604,150 $ 43,646
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors'
interest in Portfolio $103,755,097 $50,117,073 $53,708,707 $151,257,470
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $95,879,280 $45,504,911 $49,533,180 $137,123,569
Net unrealized appreciation (computed on the basis of
identified cost) 7,875,817 4,612,162 4,175,527 14,133,901
- ------------------------------------------------------------------------------------------------------------------------------------
Total $103,755,097 $50,117,073 $53,708,707 $151,257,470
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
93
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Kentucky
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest $5,550,375 $3,354,995 $5,222,856 $6,945,303
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income $5,550,375 $3,354,995 $5,222,856 $6,945,303
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee $ 366,055 $ 185,589 $ 333,875 $ 470,058
Trustees fees and expenses 6,956 728 6,231 8,324
Custodian fee 60,119 38,254 59,098 71,520
Legal and accounting services 23,398 21,298 21,298 23,398
Amortization of organization expenses 615 1,418 1,118 511
Miscellaneous 18,863 16,251 12,638 11,787
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 476,006 $ 263,538 $ 434,258 $ 585,598
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 20,874 $ 8,807 $ 12,724 $ 15,409
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 20,874 $ 8,807 $ 12,724 $ 15,409
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 455,132 $ 254,731 $ 421,534 $ 570,189
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $5,095,243 $3,100,264 $4,801,322 $6,375,114
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost
basis) $1,047,057 $ 929,883 $1,803,386 $2,152,959
Financial futures contracts (760,313) (407,915) (593,119) (704,097)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain $ 286,744 $ 521,968 $1,210,267 $1,448,862
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments (identified cost basis) $1,509,871 $1,197,152 $1,229,882 $1,520,361
Financial futures contracts (15,222) (58,565) (98,301) (135,459)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) $1,494,649 $1,138,587 $1,131,581 $1,384,902
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain $1,781,393 $1,660,555 $2,341,848 $2,833,764
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $6,876,636 $4,760,819 $7,143,170 $9,208,878
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
94
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest $1,950,541 $5,865,329 $4,490,817 $ 9,153,114
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income $1,950,541 $5,865,329 $4,490,817 $ 9,153,114
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee $ 78,185 $ 401,391 $ 272,984 $ 655,565
Trustees fees and expenses 1,978 10,741 7,635 11,916
Custodian fee 28,922 60,589 51,709 89,096
Legal and accounting services 17,417 23,598 20,516 23,398
Amortization of organization expenses 1,347 824 549 1,583
Miscellaneous 7,194 13,796 11,867 22,843
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 135,043 $ 510,939 $ 365,260 $ 804,401
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 16,445 $ 46,452 $ 11,275 $ 39,369
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 16,445 $ 46,452 $ 11,275 $ 39,369
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 118,598 $ 464,487 $ 353,985 $ 765,032
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,831,943 $5,400,842 $4,136,832 $ 8,388,082
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost
basis) $ 620,522 $1,505,418 $1,449,475 $ 3,440,718
Financial futures contracts (265,977) (680,515) (493,314) (1,648,96)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain $ 354,545 $ 824,903 $ 956,161 $ 1,791,750
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 691,789 $2,080,471 $1,654,309 $ 2,817,631
Financial futures contracts (12,727) (104,783) (81,970) 112,744
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) $ 679,062 $1,975,688 $1,572,339 $ 2,930,375
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain $1,033,607 $2,800,591 $2,528,500 $ 4,722,125
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $2,865,550 $8,201,433 $6,665,332 $13,110,207
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
95
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Oregon South Carolina Tennessee Virginia
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest $6,246,608 $3,042,537 $3,047,857 $ 9,013,940
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income $6,246,608 $3,042,537 $3,047,857 $ 9,013,940
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee $ 419,629 $ 154,671 $ 161,125 $ 647,387
Trustees fees and expenses 9,691 3,077 7,316 11,916
Custodian fee 55,385 32,919 40,090 94,759
Legal and accounting services 22,716 22,187 20,717 23,398
Amortization of organization expenses 848 1,388 1,084 1,258
Miscellaneous 15,175 16,108 7,184 27,326
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 523,444 $ 230,350 $ 237,516 $ 806,044
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ -- $ 6,924 $ 11,162 $ 31,170
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ -- $ 6,924 $ 11,162 $ 31,170
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 523,444 $ 223,426 $ 226,354 $ 774,874
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $5,723,164 $2,819,111 $2,821,503 $ 8,239,066
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost $1,898,448 $1,166,828 $ 814,847 $ 3,098,693
basis)
Financial futures contracts (327,438) 8,668 (351,492) (1,061,43)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain $1,571,010 $1,175,496 $ 463,355 $ 2,037,263
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $1,487,017 $ 554,107 $ 955,175 $ 2,634,984
Financial futures contracts (50,937) -- (57,473) (161,882)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation $1,436,080 $ 554,107 $ 897,702 $ 2,473,102
(depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain $3,007,090 $1,729,603 $1,361,057 $ 4,510,365
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $8,730,254 $4,548,714 $4,182,560 $12,749,431
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
96
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Kentucky
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 5,095,243 $ 3,100,264 $ 4,801,322 $ 6,375,114
Net realized gain 286,744 521,968 1,210,267 1,448,862
Net change in unrealized appreciation
(depreciation) 1,494,649 1,138,587 1,131,581 1,384,902
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 6,876,636 $ 4,760,819 $ 7,143,170 $ 9,208,878
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,971,850 $ 3,190,175 $ 5,270,754 $ 5,929,474
Withdrawals (20,427,780) (14,381,768) (20,324,717) (25,613,276)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (14,455,930) $(11,191,593) $(15,053,963) $ (19,683,802)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (7,579,294) $ (6,430,774) $ (7,910,793) $ (10,474,924)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 102,355,997 $ 62,685,818 $ 95,162,067 $ 123,110,204
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 94,776,703 $ 56,255,044 $ 87,251,274 $ 112,635,280
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
97
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Louisiana Maryland Missouri North Carolina
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 1,831,943 $ 5,400,842 $ 4,136,832 $ 8,388,082
Net realized gain 354,545 824,903 956,161 1,791,750
Net change in unrealized appreciation
(depreciation) 679,062 1,975,688 1,572,339 2,930,375
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 2,865,550 $ 8,201,433 $ 6,665,332 $ 13,110,207
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,706,360 $ 8,581,280 $ 4,493,837 $ 9,214,460
Withdrawals (6,494,266) (19,031,547) (16,642,888) (36,965,507)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (787,906) $(10,450,267) $(12,149,051) $ (27,751,047)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 2,077,644 $ (2,248,834) $ (5,483,719) $ (14,640,840)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $34,432,129 $107,401,087 $ 79,881,716 $ 167,570,964
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $36,509,773 $105,152,253 $ 74,397,997 $ 152,930,124
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
98
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Oregon South Carolina Tennessee Virginia
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 5,723,164 $ 2,819,111 $ 2,821,503 $ 8,239,066
Net realized gain 1,571,010 1,175,496 463,355 2,037,263
Net change in unrealized
appreciation (depreciation) 1,436,080 554,107 897,702 2,473,102
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 8,730,254 $ 4,548,714 $ 4,182,560 $ 12,749,431
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 3,763,506 $ 2,733,381 $ 5,452,717 $ 7,893,877
Withdrawals (22,431,429) (11,134,947) (10,088,250) (31,043,370)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (18,667,923) $ (8,401,566) $ (4,635,533) $ (23,149,493)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (9,937,669) $ (3,852,852) $ (452,973) $ (10,400,062)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 113,692,766 $ 53,969,925 $ 54,161,680 $ 161,657,532
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 103,755,097 $ 50,117,073 $ 53,708,707 $ 151,257,470
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
99
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1997
<TABLE>
<CAPTION>
Increase (Decrease) in Net Assets Alabama Arkansas Georgia Kentucky
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 5,801,367 $ 3,707,520 $ 5,659,411 $ 7,114,833
Net realized gain (loss) 36,452 (196,863) 619,588 790,878
Net change in unrealized appreciation
(depreciation) 3,859,164 2,344,431 2,869,835 4,675,966
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 9,696,983 $ 5,855,088 $ 9,148,834 $ 12,581,677
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 4,814,194 $ 1,860,201 $ 5,129,603 $ 4,738,142
Withdrawals (20,698,730) (19,132,688) (28,090,665) (27,227,068)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $(15,884,536) $(17,272,487) $ (22,961,062) $ (22,488,926)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (6,187,553) $(11,417,399) $ (13,812,228) $ (9,907,249)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $108,543,550 $ 74,103,217 $ 108,974,295 $ 133,017,453
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $102,355,997 $ 62,685,818 $ 95,162,067 $ 123,110,204
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
100
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1997
<TABLE>
<CAPTION>
Increase (Decrease) in Net Assets Louisiana Maryland Missouri North Carolina
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 2,044,687 $ 5,868,209 $ 4,530,872 $ 9,890,637
Net realized gain 17,105 583,641 47,598 2,200,237
Net change in unrealized appreciation
(depreciation) 1,149,891 3,765,437 3,709,574 4,378,307
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 3,211,683 $ 10,217,287 $ 8,288,044 $ 16,469,181
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 2,993,205 $ 6,463,344 $ 2,387,301 $ 5,496,793
Withdrawals (6,821,430) (19,867,889) (15,955,992) (41,439,395)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $(3,828,225) $(13,404,545) $(13,568,691) $ (35,942,602)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (616,542) $ (3,187,258) $ (5,280,647) $ (19,473,421)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $35,048,671 $110,588,345 $ 85,162,363 $ 187,044,385
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $34,432,129 $107,401,087 $ 79,881,716 $ 167,570,964
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
101
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended August 31, 1997
<TABLE>
<CAPTION>
Oregon South Carolina Tennessee Virginia
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations --
Net investment income $ 6,643,900 $ 3,172,029 $ 3,029,119 $ 9,461,124
Net realized gain (loss) (379,737) (187,278) (147,294) 1,844,132
Net change in unrealized appreciation
(depreciation) 3,337,142 2,182,137 2,422,406 4,117,767
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 9,601,305 $ 5,166,888 $ 5,304,231 $ 15,423,023
- -----------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,759,540 $ 2,536,482 $ 3,539,000 $ 7,439,212
Withdrawals (31,426,734) (12,051,592) (10,746,904) (38,849,024)
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions $ (25,667,194) $ (9,515,110) $ (7,207,904) $ (31,409,812)
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets $ (16,065,889) $ (4,348,222) $ (1,903,673) $ (15,986,789)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 129,758,655 $ 58,318,147 $ 56,065,353 $ 177,644,321
- -----------------------------------------------------------------------------------------------------------------------------------
At end of year $ 113,692,766 $ 53,969,925 $ 54,161,680 $ 161,657,532
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
102
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Alabama Portfolio
---------------------------------------------------------------------
Year Ended
---------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------ -------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- --------------------------------------------------------------------------------------------------------------------------
Net expenses/(3)/ 0.49% 0.50% 0.49% 0.47% 0.44%/(4)/ 0.25%/(4)/
Net expenses after custodian fee reduction 0.47% 0.49% 0.45% -- -- --
Net investment income 5.21% 5.47% 5.50% 5.77% 5.37%/(4)/ 5.52%/(4)/
Portfolio Turnover 23% 23% 52% 51% 26% 10%
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $94,777 $102,356 $108,544 $118,486 $117,163 $83,628
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ The operating expenses of the Portfolio may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Investment Adviser,
or both. Had such action not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C>
Expenses/(3)/ 0.35%/(4)/
Net investment income 5.42%/(4)/
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(3)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(4)/ Annualized.
See notes to financial statements
103
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Arkansas Portfolio
------------------------------------------------------
Year Ended
------------------------------------------------------
August 31,
------------------------------------------------------
1998 1997 1996 1995 1994/(1)/
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- -----------------------------------------------------------------------------------------------------------------------
Net expenses/(2)/ 0.44% 0.49% 0.48% 0.46% 0.24%/(3)/
Net expenses after custodian fee reduction 0.43% 0.48% 0.46% -- --
Net investment income 5.22% 5.40% 5.40% 5.69% 5.60%/(3)/
Portfolio Turnover 13% 17% 11% 23% 16%
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $56,255 $62,686 $74,103 $81,535 $82,917
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
+ The operating expenses of the Portfolio may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Investment Adviser,
or both. Had such action not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C>
Expenses/(2)/ 0.43%/(3)/
Net investment income 5.41%/(3)/
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the period from the start of business, February 1, 1994, to August 31,
1994.
/(2)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(3)/ Annualized.
See notes to financial statements
104
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Georgia Portfolio
-----------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------ ---------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
Expenses/(3)/ 0.48% 0.49% 0.50% 0.46% 0.44%/(4)/ 0.40%/(4)/
Expenses after custodian fee reduction 0.47% 0.47% 0.45% -- -- --
Net investment income 5.29% 5.55% 5.59% 5.73% 5.37%/(4)/ 5.37%/(4)/
Portfolio Turnover 19% 13% 21% 48% 45% 35%
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $87,251 $95,162 $108,974 $122,949 $137,724 $119,311
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(3)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(4)/ Annualized.
See notes to financial statements
105
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Kentucky Portfolio
-------------------------------------------------------------------------------
Year Ended
-------------------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------------------- ------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average daily net assets:
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expenses/(3)/ 0.49% 0.51% 0.53% 0.49% 0.46%/(4)/ 0.40%/(4)/
Expenses after custodian fee reduction 0.48% 0.48% 0.50% -- -- --
Net investment income 5.38% 5.56% 5.49% 5.75% 5.39%/(4)/ 5.40%/(4)/
Portfolio Turnover 15% 28% 28% 30% 21% 11%
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $112,635 $123,110 $133,017 $145,269 $145,210 $117,936
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(3)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(4)/ Annualized.
See notes to financial statements
106
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Louisiana Portfolio
------------------------------------------------------
Year Ended
------------------------------------------------------
August 31,
------------------------------------------------------
1998 1997 1996 1995 1994/(1)/
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- -----------------------------------------------------------------------------------------------------------------------
Net expenses/(2)/ 0.39% 0.40% 0.30% 0.22% 0.14%/(3)/
Net expenses after custodian fee reduction 0.34% 0.38% 0.23% -- --
Net investment income 5.25% 5.85% 5.90% 6.06% 5.86%/(3)/
Portfolio Turnover 43% 27% 99% 46% 21%
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $36,510 $34,432 $35,049 $34,309 $31,423
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
+ The operating expenses of the Portfolio may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Investment Adviser,
or both. Had such action not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C> <C> <C>
Expenses /(2)/ 0.41% 0.33% 0.33%/(3)/
Expenses after custodian fee reduction 0.35% -- --
Net investment income 5.79% 5.95% 5.67%/(3)/
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the period from the start of business, February 1, 1994, to August 31,
1994.
/(2)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(3)/ Annualized.
See notes to financial statements
107
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Maryland Portfolio
------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------- --------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- ----------------------------------------------------------------------------------------------------------------------------
Net expenses/(3)/ 0.48% 0.48% 0.51% 0.47% 0.44%/(4)/ 0.36%/(4)/
Net expenses after custodian fee reduction 0.44% 0.45% 0.48% -- -- --
Net investment income 5.11% 5.38% 5.50% 5.79% 5.44%/(4)/ 5.41%/(4)/
Portfolio Turnover 30% 30% 33% 30% 41% 34%
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $105,152 $107,401 $110,588 $115,004 $117,856 $94,213
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ The operating expenses of the Portfolio may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Investment Adviser,
or both. Had such action not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C>
Expenses/(3)/ 0.38%/(4)/
Net investment income 5.39%/(4)/
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(3)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(4)/ Annualized.
See notes to financial statements
108
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Missouri Portfolio
------------------------------------------------------------------
Year Ended
------------------------------------------------------------------
August 31, Sept. 30,
-------------------------------------------------- ---------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ---------------------------------------------------------------------------------------------------------------------------
Expenses/(3)/ 0.47% 0.47% 0.49% 0.48% 0.45%/(4)/ 0.40%/(4)/
Expenses after custodian fee reduction 0.45% 0.46% 0.47% -- -- --
Net investment income 5.31% 5.52% 5.52% 5.76% 5.36%/(4)/ 5.36%/(4)/
Portfolio Turnover 11% 5% 36% 24% 28% 6%
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $74,398 $79,882 $85,162 $93,162 $95,167 $75,273
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(3)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(4)/ Annualized.
See notes to financial statements
109
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
North Carolina Portfolio
------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------- ---------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ----------------------------------------------------------------------------------------------------------------------------
Expenses/(3)/ 0.51% 0.52% 0.52% 0.48% 0.46%/(4)/ 0.43%/(4)/
Expenses after custodian fee reduction 0.48% 0.50% 0.48% -- -- --
Net investment income 5.31% 5.53% 5.51% 5.78% 5.40%/(4)/ 5.43%/(4)/
Portfolio Turnover 26% 42% 54% 33% 37% 21%
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $152,930 $167,571 $187,044 $195,179 $199,772 $172,534
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(3)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(4)/ Annualized.
See notes to financial statements
110
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Oregon Portfolio
--------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------
August 31, Sept. 30,
----------------------------------------------------- -----------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ------------------------------------------------------------------------------------------------------------------------
Expenses/(3)/ 0.48% 0.56% 0.50% 0.50% 0.46%/(4)/ 0.43%/(4)/
Expenses after custodian fee reduction 0.48% 0.55% 0.47% -- -- --
Net investment income 5.28% 5.46% 5.37% 5.60% 5.26%/(4)/ 5.30%/(4)/
Portfolio Turnover 9% 22% 28% 22% 15% 32%
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $103,755 $113,693 $129,759 $146,391 $153,119 $127,497
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(3)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(4)/ Annualized.
See notes to financial statements
111
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
South Carolina Portfolio
-----------------------------------------------------
Year Ended
-----------------------------------------------------
August 31,
-----------------------------------------------------
1998 1997 1996 1995 1994/(1)/
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets:
- ----------------------------------------------------------------------------------------------------------------------
Expenses/(2)/ 0.44% 0.51% 0.53% 0.44% 0.37%/(3)/
Expenses after custodian fee reduction 0.43% 0.50% 0.51% -- --
Net investment income 5.37% 5.59% 5.65% 5.81% 5.47%/(3)/
Portfolio Turnover 21% 8% 36% 75% 23%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $50,117 $53,970 $58,318 $61,412 $62,265
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the period from the start of business, February 1, 1994, to August 31,
1994.
/(2)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(3)/ Annualized.
See notes to financial statements
112
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Tennessee Portfolio
-----------------------------------------------------------------
Year Ended
-----------------------------------------------------------------
August 31, Sept. 30,
-------------------------------------------------- -------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- --------------------------------------------------------------------------------------------------------------------------
Net Expenses/(3)/ 0.44% 0.43% 0.45% 0.41% 0.36%/(4)/ 0.08%/(4)/
Net Expenses after custodian fee reduction 0.42% 0.42% 0.43% -- -- --
Net investment income 5.20% 5.48% 5.52% 5.81% 5.49%/(4)/ 5.60%/(4)/
Portfolio Turnover 21% 3% 39% 20% 10% 69%
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $53,709 $54,162 $56,065 $58,673 $56,496 $39,266
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ The operating expenses of the Portfolios may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Investment Adviser,
or both. Had such action not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C>
Expenses/(3)/ 0.31%/(4)/
Net investment income 5.37%/(4)/
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(3)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(4)/ Annualized.
See notes to financial statements
113
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Virginia Portfolio
-------------------------------------------------------------------------
Year Ended
-------------------------------------------------------------------------
August 31, Sept. 30,
------------------------------------------------------- -------------
1998 1997 1996 1995 1994/(1)/ 1993/(2)/
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average daily net assets:
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expenses/(3)/ 0.52% 0.52% 0.51% 0.48% 0.46%/(4)/ 0.43%/(4)/
Expenses after custodian fee reduction 0.50% 0.49% 0.48% -- -- --
Net investment income 5.27% 5.53% 5.55% 5.81% 5.49%/(4)/ 5.49%/(4)/
Portfolio Turnover 8% 25% 30% 38% 48% 29%
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $151,257 $161,658 $177,644 $191,748 $194,519 $174,260
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the eleven month period ended August 31, 1994.
/(2)/ For the period from the start of business, February 1, 1993, to September
30, 1993.
/(3)/ The expense ratios for the year ended August 31, 1996, and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
/(4)/ Annualized.
See notes to financial statements
114
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-----------------------------------------------------------------------------
Alabama Municipals Portfolio (Alabama Portfolio), Arkansas Municipals
Portfolio (Arkansas Portfolio), Georgia Municipals Portfolio (Georgia
Portfolio), Kentucky Municipals Portfolio (Kentucky Portfolio), Louisiana
Municipals Portfolio (Louisiana Portfolio), Maryland Municipals Portfolio
(Maryland Portfolio), Missouri Municipals Portfolio (Missouri Portfolio),
North Carolina Municipals Portfolio (North Carolina Portfolio), Oregon
Municipals Portfolio (Oregon Portfolio), South Carolina Municipals Portfolio
(South Carolina Portfolio), Tennessee Municipals Portfolio (Tennessee
Portfolio) and Virginia Municipals Portfolio (Virginia Portfolio),
collectively the Portfolios, are registered under the Investment Company Act
of 1940, as amended, as non-diversified open-end management investment
companies which were organized as trusts under the laws of the State of New
York on May 1, 1992. The Declarations of Trust permit the Trustees to issue
interests in the Portfolios. The following is a summary of significant
accounting policies of the Portfolios. The policies are in conformity with
generally accepted accounting principles.
A Investment Valuations -- Municipal bonds are normally valued on the basis
of valuations furnished by a pricing service. Taxable obligations, if any,
for which price quotations are readily available are normally valued at the
mean between the latest bid and asked prices. Financial futures contracts and
options on financial futures contracts listed on commodity exchanges are
valued at closing settlement prices. Over-the-counter options on financial
futures contracts are normally valued at the mean between the latest bid and
asked prices. Short-term obligations, maturing in sixty days or less, are
valued at amortized cost, which approximates value. Investments for which
valuations or market quotations are unavailable are valued at fair value
using methods determined in good faith by or at the direction of the
Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for Federal
income tax purposes.
C Federal Taxes -- The Portfolios are treated as partnerships for Federal tax
purposes. No provision is made by the Portfolios for federal or state taxes
on any taxable income of the Portfolios because each investor in
the Portfolios is ultimately responsible for the payment of any taxes. Since
some of the Portfolios' investors are regulated investment companies that
invest all or substantially all of their assets in the Portfolios, the
Portfolios normally must satisfy the applicable source of income and
diversification requirements (under the Internal Revenue Code) in order for
their respective investors to satisfy them. The Portfolios will allocate at
least annually among their respective investors each investor's distributive
share of the Portfolios' net taxable (if any) and tax-exempt investment
income, net realized capital gains, and any other items of income, gain,
loss, deduction or credit. Interest income received by the Portfolios on
investments in municipal bonds, which is excludable from gross income under
the Internal Revenue Code, will retain its status as income exempt from
federal income tax when allocated to each Portfolio's investors. The portion
of such interest, if any, earned on private activity bonds issued after
August 7, 1986, may be considered a tax preference item for investors.
D Deferred Organization Expenses -- Costs incurred by a Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E Financial Futures Contracts -- Upon the entering of a financial futures
contract, a Portfolio is required to deposit ("initial margin") either in
cash or securities an amount equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
made or received by a Portfolio ("margin maintenance") each day, dependent on
the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized gains or losses by a Portfolio. A
Portfolio's investment in financial futures contracts is designed only to
hedge against anticipated future changes in interest rates. Should interest
rates move unexpectedly, a Portfolio may not achieve the anticipated benefits
of the financial futures contracts and may realize a loss.
F Options on Financial Futures Contracts -- Upon purchase of a put option on
a financial futures contract by a Portfolio, the premium paid is recorded as
an investment, the value of which is marked-to-market daily. When a purchased
option expires, a Portfolio will realize a loss in the amount of the cost of
the option. When a Portfolio enters into a closing sale transaction, the
Portfolio will realize a gain or loss depending on whether the sales
115
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
proceeds from the closing sale transaction are greater or less than the
cost of the option. When a Portfolio exercises a put option, settlement is
made in cash. The risk associated with purchasing options is limited to the
premium originally paid.
G When-issued and Delayed Delivery Transactions -- The Portfolios may
engage in when-issued and delayed delivery transactions. The Portfolios
record when-issued securities on trade date and maintain security positions
such that sufficient liquid assets will be available to make payments for
the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked-to-market daily and begin earning interest on
settlement date.
H Other -- Investment transactions are accounted for on a trade date basis.
I Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolios. Pursuant to the custodian agreements, IBT
receives a fee reduced by credits which are determined based on the average
daily cash balances each Portfolio maintains with IBT. All significant
credit balances used to reduce each Portfolio's custodian fees are reported
as a reduction of expenses in the Statement of Operations.
J Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expense during the reporting
period. Actual results could differ from those estimates.
2 Investment Adviser Fee and Other Transactions with Affiliates
---------------------------------------------------------------------------
The investment adviser fee is earned by Boston Management and Research
(BMR), a wholly-owned subsidiary of Eaton Vance Management (EVM), as
compensation for management and investment advisory services rendered to
each Portfolio. The fee is based upon a percentage of average daily net
assets plus a percentage of gross income (i.e., income other than gains
from the sale of securities). For the year ended August 31, 1998, the
Portfolios paid advisory fees as follows:
Portfolio Amount Effective Rate*
----------------------------------------------------------------------
Alabama $ 366,055 0.37%
Arkansas 185,589 0.31%
Georgia 333,875 0.37%
Kentucky 470,058 0.40%
Louisiana 78,185 0.22%
Maryland 401,391 0.38%
Missouri 272,984 0.35%
North Carolina 655,565 0.42%
Oregon 419,629 0.39%
South Carolina 154,671 0.29%
Tennessee 161,125 0.30%
Virginia 647,387 0.41%
* Advisory fees paid as a percentage of average daily net assets.
Except as to Trustees of the Portfolios who are not members of EVM's or
BMR's organization, officers and Trustees receive remuneration for their
services to the Portfolios out of such investment adviser fee.
Trustees of the Portfolios that are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of the Trustees Deferred Compensation
Plan. For the year ended August 31, 1998, no significant amounts have been
deferred.
Certain of the officers and Trustees of the Portfolios are officers and
directors/trustees of the above organizations.
116
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
3 Investments
---------------------------------------------------------------------------
Purchases and sales of investments, other than U.S. Government securities,
purchased options and short-term obligations, for the year ended August 31,
1998, were as follows:
Alabama Portfolio
---------------------------------------------------------------------------
Purchases $21,784,632
Sales 32,173,115
Arkansas Portfolio
---------------------------------------------------------------------------
Purchases $ 7,621,246
Sales 16,574,805
Georgia Portfolio
---------------------------------------------------------------------------
Purchases $17,164,501
Sales 27,720,456
Kentucky Portfolio
---------------------------------------------------------------------------
Purchases $18,137,971
Sales 35,627,636
Louisiana Portfolio
---------------------------------------------------------------------------
Purchases $15,255,613
Sales 14,927,613
Maryland Portfolio
---------------------------------------------------------------------------
Purchases $31,862,511
Sales 36,187,295
Missouri Portfolio
---------------------------------------------------------------------------
Purchases $ 8,449,775
Sales 18,846,885
North Carolina Portfolio
---------------------------------------------------------------------------
Purchases $40,027,788
Sales 60,615,562
Oregon Portfolio
---------------------------------------------------------------------------
Purchases $ 9,245,962
Sales 24,639,514
South Carolina Portfolio
---------------------------------------------------------------------------
Purchases $10,666,059
Sales 16,868,417
Tennessee Portfolio
---------------------------------------------------------------------------
Purchases $11,162,049
Sales 13,198,582
Virginia Portfolio
---------------------------------------------------------------------------
Purchases $11,615,157
Sales 31,360,371
4 Federal Income Tax Basis of Investments
---------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned by each Portfolio at August 31, 1998, as computed on a
federal income tax basis, are as follows:
Alabama Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 85,220,338
---------------------------------------------------------------------------
Gross unrealized appreciation $ 8,198,632
Gross unrealized depreciation (1,890)
---------------------------------------------------------------------------
Net unrealized appreciation $ 8,196,742
---------------------------------------------------------------------------
Arkansas Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 51,057,516
---------------------------------------------------------------------------
Gross unrealized appreciation $ 4,565,898
Gross unrealized depreciation (1,470)
---------------------------------------------------------------------------
Net unrealized appreciation $ 4,564,428
---------------------------------------------------------------------------
Georgia Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 78,904,810
---------------------------------------------------------------------------
Gross unrealized appreciation $ 7,631,954
Gross unrealized depreciation (297,629)
---------------------------------------------------------------------------
Net unrealized appreciation $ 7,334,325
---------------------------------------------------------------------------
Kentucky Portfolio
---------------------------------------------------------------------------
Aggregate Cost $100,259,833
---------------------------------------------------------------------------
Gross unrealized appreciation $ 9,532,622
Gross unrealized depreciation (831)
---------------------------------------------------------------------------
Net unrealized appreciation $ 9,531,791
---------------------------------------------------------------------------
117
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
Louisiana Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 33,307,126
---------------------------------------------------------------------------
Gross unrealized appreciation $ 2,666,822
Gross unrealized depreciation (268,926)
---------------------------------------------------------------------------
Net unrealized appreciation $ 2,397,896
---------------------------------------------------------------------------
Maryland Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 98,601,792
---------------------------------------------------------------------------
Gross unrealized appreciation $ 7,407,800
Gross unrealized depreciation (243,298)
---------------------------------------------------------------------------
Net unrealized appreciation $ 7,164,502
---------------------------------------------------------------------------
Missouri Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 64,892,579
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Gross unrealized appreciation $ 7,645,527
Gross unrealized depreciation --
---------------------------------------------------------------------------
Net unrealized appreciation $ 7,645,527
---------------------------------------------------------------------------
North Carolina Portfolio
---------------------------------------------------------------------------
Aggregate Cost $137,336,894
---------------------------------------------------------------------------
Gross unrealized appreciation $ 15,332,041
Gross unrealized depreciation (369)
---------------------------------------------------------------------------
Net unrealized appreciation $ 15,331,672
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Oregon Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 94,764,463
---------------------------------------------------------------------------
Gross unrealized appreciation $ 7,875,817
Gross unrealized depreciation --
---------------------------------------------------------------------------
Net unrealized appreciation $ 7,875,817
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South Carolina Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 45,182,640
---------------------------------------------------------------------------
Gross unrealized appreciation $ 4,612,897
Gross unrealized depreciation (735)
---------------------------------------------------------------------------
Net unrealized appreciation $ 4,612,162
---------------------------------------------------------------------------
Tennessee Portfolio
---------------------------------------------------------------------------
Aggregate Cost $ 48,278,492
---------------------------------------------------------------------------
Gross unrealized appreciation $ 4,255,549
Gross unrealized depreciation --
---------------------------------------------------------------------------
Net unrealized appreciation $ 4,255,549
---------------------------------------------------------------------------
Virginia Portfolio
---------------------------------------------------------------------------
Aggregate Cost $134,052,511
---------------------------------------------------------------------------
Gross unrealized appreciation $ 14,237,351
Gross unrealized depreciation (1,368)
---------------------------------------------------------------------------
Net unrealized appreciation $ 14,235,983
---------------------------------------------------------------------------
5 Line of Credit
---------------------------------------------------------------------------
The Portfolios participate with other portfolios and funds managed by BMR
and EVM and its affiliates in a $100 million unsecured line of credit
agreement with a group of banks. Borrowings will be made by the portfolios
or funds solely to facilitate the handling of unusual and/or unanticipated
short-term cash requirements. Interest is charged to each portfolio or fund
based on its borrowings at an amount above either the Eurodollar rate or
Federal Funds effective rate. In addition, a fee computed at an annual rate
of 0.10% on the daily unused portion of the facility is allocated among the
participating portfolios and funds at the end of each quarter. At August
31, 1998, the Arkansas Portfolio, Oregon Portfolio and South Carolina
Portfolio had balances outstanding pursuant to this line of credit of
$194,000, $186,000 and $344,000 respectively. The Portfolios did not have
any significant borrowings or allocated fees during the year ended August
31, 1998.
118
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
6 Financial Instruments
-----------------------------------------------------------------------------
The Portfolios regularly trade in financial instruments with off-balance
sheet risk in the normal course of their investing activities to assist in
managing exposure to various market risks. These financial instruments
include futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment a Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
A summary of obligations under these financial instruments at August 31,
1998, is as follows:
Futures
Contracts Net Unrealized
Expiration Appreciation
Portfolio Date Contracts Position (Depreciation)
----------------------------------------------------------------------------
Alabama 9/98 13 U.S. Treasury Bonds Short $ (43,140)
----------------------------------------------------------------------------
Arkansas 9/98 7 U.S. Treasury Bonds Short $ (40,948)
12/98 7 U.S. Treasury Bonds Short $ (4,421)
----------------------------------------------------------------------------
Georgia 9/98 24 U.S. Treasury Bonds Short $ (136,956)
----------------------------------------------------------------------------
Kentucky 9/98 30 U.S. Treasury Bonds Short $ (171,430)
----------------------------------------------------------------------------
Louisiana 9/98 6 U.S. Treasury Bonds Short $ (33,128)
----------------------------------------------------------------------------
Maryland 9/98 13 U.S. Treasury Bonds Short $ (76,046)
12/98 13 U.S. Treasury Bonds Short $ (8,210)
----------------------------------------------------------------------------
Missouri 9/98 20 U.S. Treasury Bonds Short $ (114,183)
----------------------------------------------------------------------------
Tennessee 9/98 14 U.S. Treasury Bonds Short $ (80,022)
----------------------------------------------------------------------------
Virginia 9/98 20 U.S. Treasury Bonds Short $ (116,995)
12/98 20 U.S. Treasury Bonds Short $ (12,630)
----------------------------------------------------------------------------
At August 31, 1998, the Portfolios had sufficient cash and/or securities
segregated to cover margin requirements on open futures contracts.
119
<PAGE>
Eaton Vance Municipals Portfolios as of August 31, 1998
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of Alabama Municipals Portfolio, Arkansas
Municipals Portfolio, Georgia Municipals Portfolio, Kentucky Municipals
Portfolio, Louisiana Municipals Portfolio, Maryland Municipals Portfolio,
Missouri Municipals Portfolio, North Carolina Municipals Portfolio, Oregon
Municipals Portfolio, South Carolina Municipals Portfolio, Tennessee Municipals
Portfolio and Virginia Municipals Portfolio:
- --------------------------------------------------------------------------------
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Alabama Municipals Portfolio, Arkansas
Municipals Portfolio, Georgia Municipals Portfolio, Kentucky Municipals
Portfolio, Louisiana Municipals Portfolio, Maryland Municipals Portfolio,
Missouri Municipals Portfolio, North Carolina Municipals Portfolio, Oregon
Municipals Portfolio, South Carolina Municipals Portfolio, Tennessee Municipals
Portfolio and Virginia Municipals Portfolio (the Portfolios) as of August 31,
1998, the related statements of operations for the year then ended, the
statements of changes in net assets for the years ended August 31, 1998 and
1997, and supplementary data for each of the years in the four year period ended
August 31, 1998, the period ended August 31, 1994, and for the period from the
start of business February 1, 1993, to September 30, 1993. These financial
statements and supplementary data are the responsibility of the Trusts'
management. Our responsibility is to express an opinion on the financial
statements and supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at August
31, 1998, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other audit procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of the aforementioned
Portfolios at August 31, 1998, the results of their operations, the changes in
their net assets and their supplementary data for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 2, 1998
120
<PAGE>
Municipals Portfolio as of August 31, 1998
INVESTMENT MANAGEMENT
Municipals Portfolios
Officers
Thomas J. Fetter
President and Portfolio
Manager of South Carolina
Municipals Portfolio
James B. Hawkes
Vice President and Trustee
William H. Ahern, Jr.
Vice President and Portfolio Manager of Alabama Municipals Portfolio
Robert B. MacIntosh
Vice President and Portfolio Manager of Louisiana and North Carolina
Municipals Portfolios
Timothy T. Browse
Vice President and Portfolio Manager of Arkansas, Maryland and Virginia
Municipals Portfolios
Cynthia J. Clemson
Vice President and Portfolio Manager of Georgia, Kentucky, Missouri, and
Tennessee Municipals Portfolios
Thomas M. Metzold
Vice President and Portfolio Manager of Oregon Municipals Portfolio
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer, United Asset Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
121
