<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 99.3%
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- -----------------------------------------------------------------------------
Assisted Living -- 5.2%
- -----------------------------------------------------------------------------
$ 2,500 Arizona Health Facilities Authority,
(Care Institute, Inc. - Mesa),
7.625%, 1/1/26 $ 2,332,125
1,000 Chester, PA, IDA, (Senior Life-Choice of
Kimberton), (AMT), 8.50%, 9/1/25 1,063,330
1,970 Chester, PA, IDA, (Senior Life-Choice of
Paoli L.P.), 8.05%, 1/1/24 2,053,607
1,585 Delaware, PA, IDA, (Glen Riddle), (AMT),
8.625%, 9/1/25 1,697,614
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 1/1/13 292,580
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 7/1/13 277,920
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 1/1/14 263,910
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 7/1/14 250,820
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 1/1/15 238,220
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 7/1/15 226,340
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 1/1/16 215,040
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 7/1/16 204,260
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 1/1/17 193,960
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 7/1/17 184,290
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 1/1/18 175,080
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 7/1/18 166,300
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 1/1/19 158,030
1,000 Glen Cove, NY, IDA, (The Regency at Glen
Cove), 0.00%, 7/1/19 150,120
3,740 Illinois Development Finance Authority,
(Care Institute, Inc.), 7.80%, 6/1/25 3,810,948
3,500 New Jersey EDA, (Chelsea at East
Brunswick), (AMT), 8.25%, 10/1/20 3,580,710
- -----------------------------------------------------------------------------
$ 17,535,204
- -----------------------------------------------------------------------------
Certificates of Participation -- 0.5%
- -----------------------------------------------------------------------------
$ 2,500 Cape Canaveral, FL, Hospital District,
5.25%, 1/1/28 $ 1,800,875
- -----------------------------------------------------------------------------
$ 1,800,875
- -----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- -----------------------------------------------------------------------------
Cogeneration -- 4.4%
- -----------------------------------------------------------------------------
$ 7,000 Maryland Energy Cogeneration, (AES
Warrior Run), (AMT), 7.40%, 9/1/19 $ 7,153,720
3,500 Palm Beach County, FL, (Okeelanta
Power), (AMT), 6.85%, 2/15/21(1) 1,960,000
4,000 Palm Beach County, FL, (Osceola Power),
(AMT), 6.95%, 1/1/22(1) 2,200,000
1,000 Pennsylvania EDA, (Northampton
Generating), Junior Liens, (AMT),
6.875%, 1/1/11 995,150
1,500 Robbins, Cook County, IL, (Robbins
Resource Recovery Partners, L.P.),
8.375%, 10/15/10(2) 780,000
3,500 Robbins, IL, Resource Recovery, (AMT),
8.375%, 10/15/16(2) 1,820,000
- -----------------------------------------------------------------------------
$ 14,908,870
- -----------------------------------------------------------------------------
Education -- 0.6%
- -----------------------------------------------------------------------------
$ 2,000 New Hampshire HEFA, (Colby-Sawyer
College), 7.50%, 6/1/26 $ 2,062,680
- -----------------------------------------------------------------------------
$ 2,062,680
- -----------------------------------------------------------------------------
Electric Utilities -- 2.6%
- -----------------------------------------------------------------------------
$ 1,250 Connecticut Development Authority,
(Connecticut Light and Power), Variable
Rate, 9/1/28(3)(4) $ 939,500
2,500 Connecticut Development Authority,
(Western Mass Electric), Variable Rate,
9/1/28(3)(4) 1,784,975
3,500 Intermountain Power Agency, UT,
Variable Rate, 7/1/11(3) 3,377,500
4,000 Salt River, AZ, Agricultural Improvement
and Power District Electric, Residual
Certificates,
Variable Rate, 1/1/25(3)(4) 2,661,360
- -----------------------------------------------------------------------------
$ 8,763,335
- -----------------------------------------------------------------------------
Escrowed / Prerefunded -- 2.4%
- -----------------------------------------------------------------------------
$12,115 Colorado Health Facilities Authority,
(Liberty Heights),
Escrowed to Maturity, 0.00%, 7/15/24 $ 2,297,731
11,195 Colorado HFA, (Liberty Heights),
Escrowed to Maturity, 0.00%, 7/15/22 2,432,450
10,000 Dawson Ridge, CO, Metropolitan District
#1, Escrowed to Maturity,
0.00%, 10/1/22 2,086,300
3,500 Dawson Ridge, CO, Metropolitan District
#1, Escrowed to Maturity,
0.00%, 10/1/22 730,205
3,295 Illinois Development Finance Authority,
(Regency Park), Escrowed to Maturity,
0.00%, 7/15/25 539,688
- -----------------------------------------------------------------------------
$ 8,086,374
- -----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- -----------------------------------------------------------------------------
Gas Utilities -- 0.6%
- -----------------------------------------------------------------------------
$ 2,000 Southern California Public Power
Authority, Variable Rate, 7/1/12(3) $ 2,082,500
- -----------------------------------------------------------------------------
$ 2,082,500
- -----------------------------------------------------------------------------
General Obligations -- 1.6%
- -----------------------------------------------------------------------------
$ 2,290 Bell Mountain Ranch, CO, Metropolitan
District, 6.625%, 11/15/25 $ 2,052,252
3,450 Bell Mountain Ranch, CO, Metropolitan
District, 7.375%, 11/15/19 3,365,475
- -----------------------------------------------------------------------------
$ 5,417,727
- -----------------------------------------------------------------------------
Health Care-Miscellaneous -- 7.1%
- -----------------------------------------------------------------------------
$ 2,845 Illinois Development Finance Authority,
(Community Rehabilitation Providers),
5.60%, 7/1/19 $ 2,329,145
5,000 Muni Mae Tax Revenue Exempt Bond, (AMT),
Variable Rate, 6/30/09 4,887,400
1,965 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Certificates),
8.81%, 12/1/36 2,098,656
2,535 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 6.75%, 12/1/36 2,461,981
1,307 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 7.00%, 12/1/36 1,301,782
1,081 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 7.00%, 12/1/36 1,076,662
2,358 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 7.75%, 12/1/36 2,326,346
1,983 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 7.90%, 12/1/36 1,976,184
372 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 8.25%, 12/1/36 382,130
845 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 8.375%, 12/1/36 877,137
2,341 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 8.50%, 12/1/36 2,448,145
983 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 8.70%, 12/1/36 1,042,420
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- -----------------------------------------------------------------------------
Health Care-Miscellaneous (continued)
- -----------------------------------------------------------------------------
$ 590 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 8.875%, 12/1/36 $ 627,256
- -----------------------------------------------------------------------------
$ 23,835,244
- -----------------------------------------------------------------------------
Hospital -- 11.1%
- -----------------------------------------------------------------------------
$ 2,500 California Health Facilities Financing
Authority, (Cedars-Sinai Medical
Center), Variable Rate, 12/1/34(3)(4) $ 2,274,325
2,250 Chautauqua County, NY, IDA, (Women's
Christian Association), 6.40%, 11/15/29 1,915,762
10,000 Colorado Health Facilities Authority,
(Rocky Mountain Adventist),
6.625%, 2/1/22 8,469,500
3,685 Forsyth County, GA, Hospital Authority
Revenue, (Georgia Baptist Health Care
System), 6.25%, 10/1/18 3,177,833
3,700 Forsyth County, GA, Hospital Authority
Revenue, (Georgia Baptist Health Care
System), 6.375%, 10/1/28 3,126,537
1,000 Halifax Hospital Medical Center,
7.25%, 10/1/24 923,650
2,500 Hidalgo County, TX, (Health Services
Corp., Mission Hospital, Inc.),
6.875%, 8/15/26 2,383,075
2,825 Louisiana Public Facilities Authority,
(General Health Systems),
6.80%, 11/1/16 2,783,020
400 Monroeville, PA, Hospital Authority,
(Forbes Health System), 5.75%, 10/1/05 376,876
1,000 Monroeville, PA, Hospital Authority,
(Forbes Health System), 6.25%, 10/1/15 894,250
2,000 New Hampshire HEFA, (Littleton Hospital
Assn.), 6.00%, 5/1/28 1,604,640
1,500 New Jersey Health Care Facilities
Financing Authority, (Trinitas Hospital
Obligated Group), 7.50%, 7/1/30 1,459,665
2,205 Philadelphia, PA, HEFA, (Graduate Health
System), 6.625%, 7/1/21(1) 796,556
3,170 Philadelphia, PA, HEFA, (Graduate Health
System), 7.00%, 7/1/05(1) 1,145,162
875 Prince George's County, MD, (Greater
Southeast Healthcare System),
6.375%, 1/1/13(1) 360,937
5,900 Prince George's County, MD, (Greater
Southeast Healthcare System),
6.375%, 1/1/23(1) 2,433,750
1,785 San Gorgonio, CA, (Memorial Health Care
District), 5.75%, 5/1/20 1,450,919
500 Tomball Hospital Authority, (Tomball
Regional Hospital), 6.00%, 7/1/29 411,930
1,500 Wells County, IN, (Caylor-Nickel Medical
Center), 8.75%, 4/15/12 1,698,420
- -----------------------------------------------------------------------------
$ 37,686,807
- -----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- -----------------------------------------------------------------------------
Housing -- 8.2%
- -----------------------------------------------------------------------------
$ 1,680 Atlanta, GA, Urban Residential Finance
Authority, (John Hope), 7.25%, 6/1/07 $ 1,613,522
4,000 Charter Mac Equity, TN, (AMT),
6.625%, 6/30/09 3,868,600
2,405 Cuyahoga County, OH, (Rolling Hills
Apartment), (AMT), 8.00%, 1/1/28 2,262,552
500 Jefferson County, MO, IDA, Multifamily
Revenue, (Riverview Bend Apartments),
(AMT), 7.125%, 11/1/29 483,185
1,900 Jefferson County, MO, IDA, Multifamily,
(Riverview Bend Apartments), (AMT),
6.75%, 11/1/29 1,833,728
1,000 Lake Creek, CO, Affordable Housing
Corp., Multifamily, 7.00%, 12/1/23 918,880
3,695 Lucas County, OH, (Country Creek),
(AMT), 8.00%, 7/1/26 3,400,213
4,305 Maricopa County, AZ, IDA, (National
Health Facilities II), 6.375%, 1/1/19 3,932,531
1,500 Maricopa County, AZ, IDA, (National
Health Facilities II), 6.625%, 7/1/33 1,353,240
2,400 Maricopa County, AZ, IDA, (National
Health Facilities), 8.00%, 1/1/34 2,129,184
1,680 Minneapolis, MN, Community Development
Agengy, Multifamily Housing, (Lindsay
Brothers), 6.60%, 12/1/18 1,606,685
3,400 Oregon Health Authority, (Trillium
Affordable Housing), 6.75%, 8/15/29 3,072,954
1,500 Oregon Health Authority, (Trillium
Affordable Housing), (AMT),
6.75%, 2/15/29 1,355,715
- -----------------------------------------------------------------------------
$ 27,830,989
- -----------------------------------------------------------------------------
Industrial Development Revenue -- 20.8%
- -----------------------------------------------------------------------------
$ 2,440 Abia Development Corp., TX, (Austin
Cargoport Development), (AMT),
6.50%, 10/1/24 $ 2,224,353
2,815 Abia Development Corp., TX, (Austin
Cargoport Development, L.L.C.), (AMT),
9.25%, 10/1/21 2,958,537
2,000 Camden County, NJ, (Holt Hauling),
(AMT), 9.875%, 1/1/21 2,270,460
3,900 Carbon County, UT, (Laidlaw
Environmental Services Inc.), (AMT),
7.45%, 7/1/17 3,880,851
4,000 Charleston County, SC, IDA, (Zeigler
Coal Holding), 6.95%, 8/10/28 3,285,720
5,000 Clark County, NV, (Nevada Power), RITES,
(AMT), Variable Rate, 10/1/30(3) 3,485,900
1,390 Florence County, SC, (Stone Container
Co.), 7.375%, 2/1/07 1,395,282
2,700 Hancock County, KY, (Southwire Co.),
(AMT), 7.75%, 7/1/26 2,751,408
3,715 Iowa Finance Authority, (Southbridge
Mall), 6.375%, 12/1/13 3,510,266
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- -----------------------------------------------------------------------------
Industrial Development Revenue (continued)
- -----------------------------------------------------------------------------
$ 3,880 Kansas City, MO, IDA, (Airline Cargo
Facilities), (AMT), 8.50%, 1/1/17 $ 4,123,936
2,970 Kimball, NE, EDA, (Clean Harbors, Inc.),
10.75%, 9/1/26 3,056,457
2,730 Maryland EDA, (AFCO Cargo),
6.50%, 7/1/24 2,523,312
1,700 Michigan Strategic Fund, (Crown Paper),
(AMT), 6.50%, 8/1/21 1,334,500
3,500 Michigan Strategic Fund, (S.D. Warren
Co.), (AMT), 7.375%, 1/15/22 3,607,030
1,095 New Albany, IN, IDA, (K-Mart Co.),
7.40%, 6/1/06 1,118,871
2,750 New Hampshire Business Finance
Authority, (Crown Paper Co.), (AMT),
7.875%, 7/1/26 2,377,182
2,500 New Jersey EDA, (Continental Airlines),
(AMT), Variable Rate, 9/15/29(3)(4) 1,898,925
500 New Jersey EDA, (Holt Hauling),
8.95%, 12/15/18 531,420
4,000 New Jersey EDA, (Holt Hauling), (AMT),
7.90%, 3/1/27 4,239,720
4,000 Ohio Solid Waste Revenue, (Republic
Engineered Steels, Inc.), (AMT),
9.00%, 6/1/21 2,001,120
2,000 Perry County, KY, (TJ International,
Inc.), (AMT), 6.55%, 4/15/27 1,966,100
500 Philadelphia, PA, IDA, (Refrigerated
Enterprises), (AMT), 9.05%, 12/1/19 535,945
3,500 Riverdale Village, IL, (ACME Metals,
Inc.), (AMT), 7.90%, 4/1/24(2) 3,001,250
3,345 Riverdale Village, IL, (ACME Metals,
Inc.), (AMT), 7.95%, 4/1/25(2) 2,868,337
3,148 Santa Fe, NM, (1st Interstate Plaza),
8.00%, 7/1/13 3,221,817
3,300 Santa Fe, NM, (Crow Hobbs),
8.50%, 9/1/16 3,455,034
3,000 Skowhegan, ME, (S.D. Warren Co.), (AMT),
6.65%, 10/15/15 2,876,280
- -----------------------------------------------------------------------------
$ 70,500,013
- -----------------------------------------------------------------------------
Insured-Hospital -- 0.6%
- -----------------------------------------------------------------------------
$ 2,415 California Statewide Communities
Development Authority, (Sutter Health)
Residual Certificates, (FSA),
Variable Rate, 8/15/27(4)(5) $ 2,052,678
- -----------------------------------------------------------------------------
$ 2,052,678
- -----------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 0.3%
- -----------------------------------------------------------------------------
$ 1,500 San Mateo County, CA, Joint Powers
Financing Authority, Residual
Certificates, (FSA),
Variable Rate, 7/15/29(3)(4) $ 1,013,610
- -----------------------------------------------------------------------------
$ 1,013,610
- -----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- -----------------------------------------------------------------------------
Insured-Special Tax Revenue -- 0.4%
- -----------------------------------------------------------------------------
$ 2,500 Pennsylvania Turnpike Commission Oil
Franchise, (AMBAC),
Variable Rate, 12/1/27(3)(4) $ 1,441,850
- -----------------------------------------------------------------------------
$ 1,441,850
- -----------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 1.2%
- -----------------------------------------------------------------------------
$ 4,000 Hardeman County, TN, (Correctional
Facilities Corp.), 7.75%, 8/1/17 $ 4,166,240
- -----------------------------------------------------------------------------
$ 4,166,240
- -----------------------------------------------------------------------------
Miscellaneous -- 2.9%
- -----------------------------------------------------------------------------
$ 3,755 Atlanta, GA, Downtown Development
Authority, (Central Atlanta Hospitality
Childcare, Inc.), 8.00%, 1/1/26 $ 3,864,083
3,000 Colorado River Indian Tribe,
6.25%, 8/1/04 2,913,510
1,320 Pittsfield Township, MI, (Arbor
Hospice), 8.125%, 8/15/17 1,322,614
1,900 Union, OR, Facility Revenue, (Buffalo
Peak Golf Club), 6.75%, 7/1/24 1,807,850
- -----------------------------------------------------------------------------
$ 9,908,057
- -----------------------------------------------------------------------------
Nursing Home -- 7.3%
- -----------------------------------------------------------------------------
$ 3,410 Clovis, NM, IDR, (Retirement Ranches,
Inc.), 7.75%, 4/1/19 $ 3,413,103
1,100 Colorado HFA, Residential Care
Facilities, (Volunteers of America),
6.00%, 7/1/29 897,424
2,000 Grove City, PA, Area Hospital Health
Facilities Authority, (Grove Manor),
6.625%, 8/15/29 1,718,900
2,175 Kansas City, MO, IDA, (Beverly
Enterprises, Inc.), 8.00%, 12/1/02 2,218,543
2,500 Massachusetts IFA, (Age Institute of
Massachusetts), 8.05%, 11/1/25 2,587,575
3,200 Minneapolis, MN, (Walker Methodist
Senior Services), 6.00%, 11/15/28 2,573,312
1,200 Mississippi Business Finance Corp.,
(Magnolia Healthcare), 7.99%, 7/1/25 1,188,288
7,500 Tarrant County, TX, Health Facilities,
(3927 Foundation), 10.25%, 9/1/19 6,586,425
3,415 Westmoreland, PA, (Highland Health
Systems, Inc.), 9.25%, 6/1/22 3,652,616
- -----------------------------------------------------------------------------
$ 24,836,186
- -----------------------------------------------------------------------------
Pooled Loans -- 1.1%
- -----------------------------------------------------------------------------
$ 3,500 Osceola County, FL, IDA, Community
Pooled Loan-93, 7.75%, 7/1/17 $ 3,565,975
- -----------------------------------------------------------------------------
$ 3,565,975
- -----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- -----------------------------------------------------------------------------
Senior Living / Life Care -- 11.5%
- -----------------------------------------------------------------------------
$ 8,000 Albuquerque, NM, Retirement Facilities,
(La Vida Liena Retirement Center),
6.60%, 12/15/28 $ 6,851,040
2,300 Colorado HFA, Revenue, (Volunteers of
America), 5.75%, 7/1/20 1,869,187
3,600 Colorado HFA, Revenue, (Volunteers of
America), 5.875%, 7/1/28 2,891,232
3,500 Delaware County, PA, (White Horse
Village), 7.30%, 7/1/14 3,470,495
7,500 Kansas City, MO, IDA, (Kingswood United
Methodist Manor), 5.875%, 11/15/29 6,010,650
3,545 Louisiana HFA, (HCC Assisted Living
Group 1), (AMT), 9.00%, 3/1/25 3,717,252
5,355 Massachusetts IFA, (Forge Hill), (AMT),
6.75%, 4/1/30 4,427,568
5,240 North Miami, FL, Health Care Facilities,
(Imperial Club), 8.00%, 1/1/33 4,594,642
2,000 Ohio HFA, Retirement Rental Housing,
(Encore Retirement Partners),
6.75%, 3/1/19 1,725,040
3,790 Wisconsin HEFA, (Wisconsin Illinois
Senior Housing), 7.00%, 8/1/29 3,488,695
- -----------------------------------------------------------------------------
$ 39,045,801
- -----------------------------------------------------------------------------
Solid Waste -- 1.0%
- -----------------------------------------------------------------------------
$ 3,400 Morgantown, KY, (IMCO Recycling, Inc.),
7.45%, 5/1/22 $ 3,374,602
- -----------------------------------------------------------------------------
$ 3,374,602
- -----------------------------------------------------------------------------
Special Tax Revenue -- 2.7%
- -----------------------------------------------------------------------------
$ 3,800 Cottonwood, CO, Water and Sanitation
District, 7.75%, 12/1/20 $ 3,861,180
1,500 Dulles, VA, Community Development
Authority, (Dulles Town Center),
6.25%, 3/1/26 1,385,220
4,250 Frederick County, MD, Urbana Community
Development Authority, 6.625%, 7/1/25 3,950,163
- -----------------------------------------------------------------------------
$ 9,196,563
- -----------------------------------------------------------------------------
Transportation -- 4.7%
- -----------------------------------------------------------------------------
$ 500 Eagle County, CO, (Airport Terminal),
(AMT), 7.50%, 5/1/21 $ 506,785
2,985 Monroe County, NY, Airport Authority
Revenue, DRIVERS, (AMT),
8.364%, 1/1/18(3)(4) 2,961,717
5,000 New Jersey Transportation Authority,
Variable Rate, 6/15/17(3)(4) 3,984,200
3,750 Niagara, NY, Frontier Airport Authority,
(AMT), Variable Rate, 4/1/29(3)(4) 3,045,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- -----------------------------------------------------------------------------
Transportation (continued)
- -----------------------------------------------------------------------------
$ 5,250 Northwest Arkansas Regional Airport
Authority, (AMT), 7.625%, 2/1/27 $ 5,297,198
- -----------------------------------------------------------------------------
$ 15,794,900
- -----------------------------------------------------------------------------
Water and Sewer -- 0.5%
- -----------------------------------------------------------------------------
$ 3,000 Metropolitan Water District, (Southern
California Waterworks),
Variable Rate, 7/1/27(4)(5) $ 1,545,960
- -----------------------------------------------------------------------------
$ 1,545,960
- -----------------------------------------------------------------------------
Total Tax-Exempt Investments -- 99.3%
(identified cost $371,511,589) $336,453,040
- -----------------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.7% $ 2,471,856
- -----------------------------------------------------------------------------
Net Assets -- 100.0% $338,924,896
- -----------------------------------------------------------------------------
</TABLE>
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
At January 31, 2000, the concentration of the Portfolio's investments in the
various states, determined as a percentage of net assets, is as follows:
<TABLE>
<S> <C>
Colorado 10.4%
Others, representing less than 10% individually 88.9%
</TABLE>
(1) Non-income producing security.
(2) The Portfolio is accruing only partial interest on this security.
(3) Security has been issued as an inverse floater bond.
(4) 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.
(5) Security has been issued as a leveraged inverse floater bond.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF JANUARY 31, 2000
<S> <C>
Assets
- ------------------------------------------------------
Investments, at value
(identified cost, $371,511,589) $336,453,040
Cash 50,351
Receivable for investments sold 180,000
Interest receivable 6,871,974
- ------------------------------------------------------
TOTAL ASSETS $343,555,365
- ------------------------------------------------------
Liabilities
- ------------------------------------------------------
Demand note payable $ 4,600,000
Accrued expenses 30,469
- ------------------------------------------------------
TOTAL LIABILITIES $ 4,630,469
- ------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $338,924,896
- ------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $373,983,445
Net unrealized depreciation (computed on
the basis of identified cost) (35,058,549)
- ------------------------------------------------------
TOTAL $338,924,896
- ------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
JANUARY 31, 2000
<S> <C>
Investment Income
- ------------------------------------------------------
Interest $ 27,169,367
- ------------------------------------------------------
TOTAL INVESTMENT INCOME $ 27,169,367
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Investment adviser fee $ 2,323,971
Trustees fees and expenses 29,737
Custodian fee 189,385
Legal and accounting services 40,290
Amortization of organization expenses 1,423
Miscellaneous 90,638
- ------------------------------------------------------
TOTAL EXPENSES $ 2,675,444
- ------------------------------------------------------
Deduct --
Reduction of custodian fee $ 41,790
- ------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 41,790
- ------------------------------------------------------
NET EXPENSES $ 2,633,654
- ------------------------------------------------------
NET INVESTMENT INCOME $ 24,535,713
- ------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ (2,634,340)
Financial futures contracts (59,828)
- ------------------------------------------------------
NET REALIZED LOSS $ (2,694,168)
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $(54,986,374)
- ------------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $(54,986,374)
- ------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS $(57,680,542)
- ------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
OPERATIONS $(33,144,829)
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS JANUARY 31, 2000 JANUARY 31, 1999
<S> <C> <C>
- ----------------------------------------------------------------------------
From operations --
Net investment income $ 24,535,713 $ 20,697,182
Net realized gain (loss) (2,694,168) 2,027,824
Net change in unrealized
appreciation (depreciation) (54,986,374) (7,608,338)
- ----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ (33,144,829) $ 15,116,668
- ----------------------------------------------------------------------------
Capital transactions --
Contributions $ 114,068,297 $ 141,274,518
Withdrawals (132,907,536) (68,691,387)
- ----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL TRANSACTIONS $ (18,839,239) $ 72,583,131
- ----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS $ (51,984,068) $ 87,699,799
- ----------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------
At beginning of year $ 390,908,964 $ 303,209,165
- ----------------------------------------------------------------------------
AT END OF YEAR $ 338,924,896 $ 390,908,964
- ----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
---------------------------------------------------
2000 1999 1998 1997 1996(1)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Ratios to average daily net assets+
- -----------------------------------------------------------------------------------
Net expenses 0.68% 0.67% 0.68% 0.34% 0.06%(2)
Net expenses after custodian
fee reduction 0.67% 0.66% 0.66% 0.30% 0.06%(2)
Net investment income 6.25% 5.88% 6.43% 6.96% 6.95%(2)
Portfolio Turnover 58% 25% 8% 41% 32%
- -----------------------------------------------------------------------------------
NET ASSETS, END OF YEAR
(000'S OMITTED) $338,925 $390,909 $303,209 $180,700 $72,077
- -----------------------------------------------------------------------------------
+ The operating expenses of the Portfolio may reflect a reduction of the investment
adviser fee, an allocation of expenses to the Investment Adviser, or both. Had
such actions not been taken, the ratios would have been as follows:
Expenses 0.71% 0.71%(2)
Expenses after custodian fee
reduction 0.67% 0.71%(2)
Net investment income 6.59% 6.30%(2)
- -----------------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, August 7, 1995, to
January 31, 1996.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
High Yield Municipals Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940, as a diversified open-end management
investment company. The Portfolio, which was organized as a trust under the
laws of the State of New York on May 1, 1995, seeks to provide high current
income exempt from regular federal income tax. The Declaration of Trust
permits the Trustees to issue interests in the Portfolio. The following is a
summary of significant accounting policies of the Portfolio. The policies are
in conformity with generally accepted accounting principles.
A Investment Valuation -- Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts listed on
commodity exchanges are valued at closing settlement prices. Short-term
obligations maturing in sixty days or less are valued at amortized cost which
approximates value. Investments for which valuations or market quotations are
unavailable are valued at fair value using methods determined in good faith
by or at the direction of the Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes.
C Income Taxes -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally
must satisfy the applicable source of income and diversification requirements
(under the Internal Revenue Code) in order for its investors to satisfy them.
The Portfolio will allocate at least annually among its investors each
investor's distributive share of the Portfolio's net taxable (if any) and
tax-exempt investment income, net realized capital gains, and any other items
of income, gain, loss, deduction or credit. Interest income received by the
Portfolio on investments in municipal bonds, which is excludable from gross
income under the Internal Revenue Code, will retain its status as income
exempt from Federal income tax when allocated to the Portfolio's investors.
The portion of such interest, if any, earned on private activity bonds issued
after August 7, 1986 may be considered a tax preference item for investors.
D Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E Financial Futures Contracts -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit ("initial margin") either in
cash or securities an amount equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
made or received by the Portfolio ("margin maintenance") each day, dependent
on the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized gains or losses by the Portfolio.
The Portfolio's investment in financial futures contracts is designed only to
hedge against anticipated futures changes in interest rates. Should interest
rates move unexpectedly, the Portfolio may not achieve the anticipated
benefits of the financial futures contracts and may realize a loss.
F Legal Fees -- Legal fees and other related expenses incurred as part of
negotiations of the terms and requirements of capital infusions, or that are
expected to result in the restructuring of or a plan of reorganization for an
investment are recorded as realized losses. Ongoing expenditures to protect
or enhance an investment are treated as operating expenses.
G When-issued and Delayed Delivery Transactions -- The Portfolio may engage in
when-issued and delayed delivery transactions. The Portfolio records
when-issued securities on trade date and maintains security positions such
that sufficient liquid assets will be available to make payments for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked-to-market daily and begin accruing interest on
settlement date.
H Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash
balances the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reported as a reduction of
operating expenses on the Statement of Operations.
23
<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
I 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 income and expense during the reporting period. Actual results could
differ from those estimates.
J Other -- Investment transactions are accounted for on a trade date basis.
2 Investment Adviser Fee and Other Transactions with Affiliates
- -------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to the Portfolio.
The fee is based upon a percentage of average daily net assets plus a
percentage of gross income (i.e. income other than gains from the sales of
securities). For the year ended January 31, 2000, the fee was equivalent to
0.59% of the Portfolio's average net assets for such period and amounted to
$2,323,971. Except as to Trustees of the Portfolio who are not members of
EVM's or BMR's organization, officers and Trustees receive remuneration for
their services to the Portfolio out of such investment adviser fee. Certain
officers and Trustees of the Portfolio are officers of the above
organizations. Trustees of the Portfolio 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 January 31, 2000, no significant
amounts have been deferred.
3 Investments
- -------------------------------------------
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $225,988,879 and $223,139,093,
respectively, for the year ended January 31, 2000.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at January 31, 2000 as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $371,755,737
------------------------------------------------------
Gross unrealized appreciation $ 4,024,611
Gross unrealized depreciation (39,327,308)
------------------------------------------------------
NET UNREALIZED DEPRECIATION $(35,302,697)
------------------------------------------------------
</TABLE>
5 Line of Credit
- -------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $150 million unsecured line of credit agreement
with a group of banks. Borrowings will be made by the Portfolio solely to
facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Interest is charged to each participating portfolio or fund
based on its borrowings at an amount above either the Eurodollar rate or
federal funds rate. In addition, a fee computed at an annual rate of 0.10% on
the daily unused portion of the line of credit is allocated among the
participating portfolios and funds at the end of each quarter. At
January 31, 2000, the Portfolio had a balance outstanding pursuant to this
line of credit of $4,600,000. The Portfolio did not have any significant
borrowings or allocated fees during the year ended January 31, 2000.
6 Financial Instruments
- -------------------------------------------
The Portfolio regularly trades in financial instruments with off-balance
sheet risk in the normal course of its investing activities to assist in
managing exposure to various market risks. These financial instruments
include futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments
and do 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. At January 31,
2000, the Portfolio had no open futures contracts.
24
<PAGE>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND INVESTORS
OF HIGH YIELD MUNICIPALS PORTFOLIO:
- ---------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of High Yield Municipals Portfolio as of
January 31, 2000, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended January 31, 2000 and
1999 and the supplementary data for the four years ended January 31, 2000 and
for the period from the start of business, August 7, 1995, to January 31, 1996.
These financial statements and supplementary data are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
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 as of
January 31, 2000 by correspondence with the custodian. 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 High Yield Municipals
Portfolio at January 31, 2000, the results of its operations, the changes in its
net assets and its supplementary data for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 3, 2000
25
<PAGE>
EATON VANCE HIGH YIELD MUNICIPALS FUND AS OF JANUARY 31, 2000
INVESTMENT MANAGEMENT
HIGH YIELD MUNICIPALS PORTFOLIO
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and Trustee
Thomas Metzold
Vice President and
Portfolio Manager
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate School of
Business Adminstration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
26
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