<PAGE> 1
EATON VANCE MUNICIPALS TRUST II
FOR THE FUND:
- EV Traditional Florida Insured Tax Free Fund
- --------------------------------------------------------------------------------
[GRAPHIC]
- --------------------------------------------------------------------------------
SEMI-ANNUAL SHAREHOLDER REPORT
JULY 31, 1995
<PAGE> 2
To Shareholders
In the six months ending July 31, 1995, EV Traditional Florida Insured Tax Free
Fund paid its shareholders monthly income dividends of $0.29 per share.
Based on the most recent dividend and the net asset value of $10.68 on July 31,
1995, the Fund's annualized distribution rate was 5.48 percent. To equal that
rate in a taxable investment, a couple in the combined 36 percent tax bracket
would have to earn 8.46 percent.
The global economy continues to demonstrate a pattern of slow growth with low
inflation. The U.S. economy is no exception, as Gross Domestic Product should
grow only modestly during 1995 at between 2 and 3 percent, with inflation of
less than 3 percent. These characteristics bode well for all capital markets and
particularly fixed-income markets, including municipal bonds.
Indeed, municipal bonds performed well during the first half of 1995 by
realizing strong capital appreciation as a result of this favorable investment
environment. However, during this period the municipal market underperformed the
taxable market because of concern about the potential passage of major tax
reform (e.g., flat tax, value added tax or consumption tax) legislation.
[Chart entitled "Despite tax policy uncertainty, tax-exempt bonds yield more
than 88% of Treasury yields"
This is a bar chart. The first of two bars shows the yield for 30-year AA-rated
General Obligation (GO) bonds as 6.05%.
Below that bar is a second bar, showing the yield of 30-year Treasury bonds as
6.90%.
Extending to the right of the upper bar--the one describing general obligation
yield--is an additional bar labeled 9.45% - Taxable equivalent yield of
investment for couple in 35% tax bracket.
An asterisk after "30-year AA General Obligation (GO) bonds" refers to the
following footnote: "Source: Bloomberg, L.P. GO yield is a compilation of a
representative variety of general obligation bonds and is not necessarily
represented by the Fund's yield."
Other footnotes:
Principal and interest payments of Treasury securities are guaranteed by the
U.S. government. Statistics as of July 31, 1995. Past performance is no
guarantee of future results.
Were major tax reform to become law, municipal bonds likely would be
underperformers relative to taxable bonds because the current tax-advantaged
status of municipal bonds would likely be eliminated.
However, we at Eaton Vance believe there is little chance of major tax reform
legislation being enacted. Many factors have led us to this conclusion. For
example, the inherent regressivity of the various flat tax proposals will
provoke much opposition, as will proposals to eliminate such tax breaks as
deductions for mortgage interest and state and local taxes. Also, such proposals
could seriously depress entire sectors of the U.S. economy.
Accordingly, we view this recent underperformance by municipal bonds (because of
fears of tax reform) as a potential buying opportunity. Municipal bonds could
represent an attractive asset class at these current relative trading
relationships, with the potential for future outperformance for those investors
willing to adopt a patient, long-term investment horizon.
In addition, proposals are now circulating in both Congress and the White House
to reduce the nation's budget deficit by severely cutting expenditures over the
next decade. If enacted, such a concept would drastically reduce the federal
government's borrowing needs and, as a result, would exert a meaningful downward
influence on interest rates across the entire yield curve. All fixed income
instruments, including municipal bonds, would benefit.
We will continue to monitor changes in economic and political conditions and to
pursue the goal of your Fund: to provide you with a competitive rate of tax-free
income from a portfolio of quality municipal bonds.+
Sincerely,
/s/ Thomas J. Fetter
- ----------------------
Thomas J. Fetter
President
September 20, 1995
+ A portion of the Portfolios' income could be subject to Federal alternative
minimum tax.
2
<PAGE> 3
EV Traditional Florida Insured Tax Free Fund
The Florida economy can be generally characterized as moving from a reliance on
seasonal tourism and agriculture to a substantial base in the service and trade
sectors. The state has been able to rely on continual business expansion in
recent years, as well as more year-round tourism.
During the six months ending July 31, 1995, the Florida economy continued to
grow. The state's economic recovery continues to be among the strongest in its
region, with solid employment gains. It is estimated that the unemployment rate
through 1995 will be 6.1 percent, a significant drop from 8.2 percent at the
peak of the recession in 1992.
During 1995, Florida's residential construction industry has been hampered by
higher interest rates, with the number of private housing starts falling during
the period.
The 1995 legislative session ended with approval of budget appropriations which,
adjusted for inflation, represent the smallest increase in state spending in
more than 10 years. Despite the need for substantial state expenditures to
accommodate its continuing growth, Florida is considered to have a moderate
level of debt and a stable economy.
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PORTFOLIO OVERVIEW
Based on market value as of July 31, 1995
<TABLE>
<S> <C>
Number of issues .................................. 39
Average quality ................................... AAA
Investment grade .................................. 100.0%
Effective maturity (years) ........................ 19.85
Largest sectors:
Insured special tax revenue ............................ 20.9%*
Insured water and sewer ................................ 17.5*
Housing ................................................ 13.7
Insured transportation ................................. 10.1*
Insured pollution control .............................. 7.1*
</TABLE>
* Private insurance does not remove the risk of loss of principal due to changes
in market conditions that is associated with these investments.
- --------------------------------------------------------------------------------
YOUR INVESTMENT AT WORK
Dade Public Health
Jackson Memorial [GRAPHIC]
Hospital
These bonds, issued in 1993, were used for several purposes, all related to
Jackson Memorial Hospital, a large hospital owned by Dade County and
located near downtown Miami.
In addition to refunding a portion of a 1988 bond issue, the proceeds were used
to build the hospital's new primary care facility in Sweetwater, and for
additional parking, office and retail space near the Medical Center Campus in
Miami. The funds also were used to consolidate the hospital's Mental Health
Institute facilities and to build a new Diagnostic Imaging Center.
In addition, because of increased demand in the northern part of Dade County,
the hospital used some of the money to consolidate the Jackson North Maternity
Center and the NorthDade Health Center into a more comprehensive health care
facility.
Based on the number of admissions to a single facility, Jackson Memorial is
considered one of the nation's busiest medical centers.
- --------------------------------------------------------------------------------
FROM THE PORTFOLIO MANAGER
"The Florida health care market has been somewhat in disarray because of health
care reform. Through our proprietary research, we have been able to buy
high-quality hospital bonds at very attractive prices.
"We continue to look for "story" (or research-driven) bonds that we can have
secondarily insured to add yield and insurance protection to the Portfolio.
"We are still very positive on the Florida economy and continue to look for
discount coupon bonds that add attractive characteristics to the Portfolio."
- Thomas J. Fetter, Portfolio Manager
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3
<PAGE> 4
EV Traditional Florida Insured Tax Free Fund
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
July 31, 1995 (Unaudited)
- ----------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investment in Florida Insured Tax Free Portfolio -
Identified cost $1,299,580
Unrealized appreciation 65,723
----------
Total investment in Florida Insured Tax Free Portfolio, at value (Note 1A) $1,365,303
Receivable from the Administrator (Note 4) 9,315
Deferred organization expenses (Note 1D) 9,249
----------
Total assets $1,383,867
----------
LIABILITIES:
Dividends payable $ 5,477
Payable to affiliate-
Custodian fee 84
Accrued expenses 794
----------
Total liabilities $ 6,355
----------
NET ASSETS $1,377,512
==========
SOURCES OF NET ASSETS:
Paid-in capital $1,346,891
Accumulated net realized loss on investment and financial futures
transactions (computed on the basis of identified cost) (34,827)
Accumulated distributions in excess of net investment income (275)
Unrealized appreciation of investments and financial futures contracts
from Portfolio (computed on the basis of identified cost) 65,723
----------
Total $1,377,512
==========
SHARES OF BENEFICIAL INTEREST OUTSTANDING (Note 3) 129,026
==========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(net assets / shares of beneficial interest outstanding) $ 10.68
==========
COMPUTATION OF OFFERING PRICE
(100 / 96.25 of net asset value per share) $ 11.10
==========
</TABLE>
On sales of $50,000 or more, the offering price is reduced.
See notes to financial statements
4
<PAGE> 5
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
For the Six Months Ended July 31, 1995 (Unaudited)
- ----------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 39,862
Expenses allocated from Portfolio (20)
--------
Net investment income from Portfolio $ 39,842
--------
Expenses-
Distribution costs (Note 5) $ 126
Custodian fees 101
Printing and postage 7,054
Legal and accounting services 3,310
Amortization of organizational expenses (Note 1D) 1,256
Transfer and dividend disbursing agent fees 677
Registration costs 78
Miscellaneous 420
--------
Total expenses $ 13,022
Deduct preliminary allocation of expenses to the Administrator (Note 4) 9,315
--------
Net expenses $ 3,707
--------
Net investment income $ 36,135
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from Portfolio --
Investment transactions (identified cost basis) $ 802
Financial futures contracts (28,076)
--------
Net realized loss on investments $(27,274)
Change in unrealized appreciation of investments 57,214
--------
Net realized and unrealized gain $ 29,940
--------
Net increase in net assets from operations $ 66,075
========
</TABLE>
See notes to financial statements
5
<PAGE> 6
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------- ----------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED JULY 31, 1995 ENDED JANUARY 31,
(UNAUDITED) 1995*
------------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income $ 36,135 $ 32,082
Net realized loss on investments (27,274) (7,553)
Change in unrealized appreciation of investments 57,214 8,509
---------- ----------
Net increase in net assets from operations $ 66,075 $ 33,038
---------- ----------
Distributions to shareholders (Note 2) -
From net investment income $ (36,104) $ (32,082)
In excess of net investment income -- (306)
---------- ----------
Total distributions to shareholders $ (36,104) $ (32,388)
---------- ----------
Transactions in shares of beneficial interest (Note 3) -
Proceeds from sales of shares $ 503,388 $1,247,667
Net asset value of shares issued to shareholders in payment
of distributions declared 6,335 5,083
Cost of shares redeemed (375,579) (40,013)
---------- ----------
Increase in net assets from Fund share transactions $ 134,144 $1,212,737
---------- ----------
Net increase in net assets $ 164,115 $1,213,387
NET ASSETS:
At beginning of period 1,213,397 10
---------- ----------
At end of period $1,377,512 $1,213,397
========== ==========
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME INCLUDED IN NET ASSETS AT END OF PERIOD $ (275) $ (306)
========== ==========
</TABLE>
*For the period from the start of business, March 3, 1994 to January 31, 1995.
See notes to financial statements
6
<PAGE> 7
FINANCIAL HIGHLIGHTS
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<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED JULY 31, 1995 ENDED JANUARY 31,
(UNAUDITED) 1995**
------------------- -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.430 $10.000
------- -------
INCOME FROM OPERATIONS:
Net investment income $ 0.290 $ 0.509
Net realized and unrealized gain on investments 0.250 0.435
------- -------
Total income from operations $ 0.540 $ 0.944
------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.290) $(0.509)
In excess of net investment income -- (0.005)
------- -------
Total distributions $(0.290) $(0.514)
------- -------
NET ASSET VALUE, END OF PERIOD $10.680 $10.430
======= =======
TOTAL RETURN (2) 5.19% 9.18%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of period (000 omitted) $ 1,378 $ 1,213
Ratio of net expenses to average daily net assets (1) 0.56%+ 0.01%+
Ratio of net investment income to average daily net assets 5.46%+ 5.37%+
</TABLE>
* For the six months ended July 31, 1995 and for the period from the start of
business, March 3, 1994 to January 31, 1995, the operating expenses of the Fund
and the Portfolio reflect a reduction of expenses by the Administrator or
Investment Adviser. Had such actions not been taken, net investment income per
share and the ratios would have been as follows:
<TABLE>
<S> <C> <C>
NET INVESTMENT INCOME PER SHARE $ 0.192 $ 0.226
======= =======
RATIOS (As a percentage of average daily net assets):
Expenses (1) 2.41%+ 3.00%+
Net investment income 3.61%+ 2.38%+
</TABLE>
+ Annualized.
(1) Includes the Fund's share of its Portfolio's allocated expenses
(2) Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of each period
reported. Dividends and distributions, if any, are assumed to be reinvested
at the net asset value on the payable date, computed on a non-annualized
basis.
** For the period from the start of business March 3, 1994, to January
31, 1995.
See notes to financial statements
7
<PAGE> 8
Notes to Financial Statements
(Unaudited)
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(1) SIGNIFICANT ACCOUNTING POLICIES
EV Traditional Florida Insured Tax Free Fund (the Fund) is a non-diversified
series of Eaton Vance Municipal Trust II (the Trust). The Trust is an entity of
the type commonly known as a Massachusetts business trust and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund invests all of its investable assets in interests
in the Florida Insured Tax Free Portfolio (the Portfolio), a New York Trust,
having the same investment objective as the Fund. The value of the Fund's
investment in the Portfolio reflects the Fund's proportionate interest in the
net assets of the Portfolio (7.9% at July 31, 1995). The performance of the Fund
is directly affected by the performance of the Portfolio. The financial
statements of the Portfolio, including the portfolio of investments, are
included elsewhere in this report and should be read in conjunction with the
Fund's financial statements. The following is a summary of significant
accounting policies consistently followed by the Trust in the preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles.
A. INVESTMENT VALUATIONS - Valuation of securities by the Portfolio is discussed
in Note 1 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. INCOME - The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with generally accepted accounting
principles.
C. FEDERAL TAXES - The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable and tax-exempt income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is necessary. At January 31, 1995, the Fund, for
federal income tax purposes had a capital loss carryover of $518, which will
reduce the taxable income arising from future net realized gains on investments,
if any, to the extent permitted by the Internal Revenue Code, and thus will
reduce the amount of the distributions to shareholders which would otherwise be
necessary to relieve the Fund of any liability for federal income or excise tax.
Such capital loss carryover will expire on January 31, 2003. In addition, at
January 31, 1995, net capital losses of $6,759 attributable to security
transactions incurred after October 31, 1994 are treated as arising on the first
day of the Fund's current taxable year. Dividends paid by the Fund from net
interest on tax-exempt municipal bonds allocated from the Portfolio are not
includable by shareholders as gross income for federal income tax purposes
because the Fund and Portfolio intend to meet certain requirements of the
Internal Revenue Code applicable to regulated investment companies which will
enable the Fund to pay exempt-interest dividends. The portion of such interest,
if any, earned on private activity bonds issued after August 7, 1986, may be
considered a tax preference item to shareholders.
D. DEFERRED ORGANIZATION EXPENSES - Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on the
straight-line basis over five years.
E. OTHER - Investment transactions are accounted for on a trade date basis.
F. INTERIM FINANCIAL INFORMATION - The interim financial statements relating to
July 31, 1995 and for the six month period then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
- --------------------------------------------------------------------------------
(2) DISTRIBUTIONS TO SHAREHOLDERS
The net income of the Fund is determined daily and substantially all of the net
income so determined is declared as a dividend to shareholders of record at the
time of declaration. Distributions are paid monthly. Distributions of allocated
realized capital gains, if any, are made at least annually. Shareholders may
reinvest capital gain distributions in additional shares of the Fund at the net
asset value as of the ex-dividend date. Distributions are paid in the form of
additional shares or, at the election of the shareholder, in cash. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis. Generally accepted accounting principles require that only distributions
in excess of tax basis earnings and profits be reported in the financial
statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result in temporary over distributions for financial statements
purposes are classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital.
8
<PAGE> 9
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JULY 31, 1995 YEAR ENDED
(UNAUDITED) JANUARY 31, 1995*
------------- -----------------
<S> <C> <C>
Sales 46,840 119,622
Issued to shareholders electing to receive
payments of distributions in Fund shares 591 496
Redemptions (34,777) (3,747)
------- -------
Net increase 12,654 116,371
======= =======
</TABLE>
* The Fund share activity is for the period from the start of business March 3,
1994 to January 31, 1995.
- --------------------------------------------------------------------------------
(4) TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves as the administrator of Fund, but receives
no compensation. The Portfolio has engaged Boston Management and Research (BMR),
a subsidiary of EVM, to render investment advisory services. See Note 2 of the
Portfolio's Notes to Financial Statements which are included elsewhere in this
report. To enhance the net income of the Fund, $9,315 of expenses related to the
operation of the Fund were allocated, on a preliminary basis, to EVM. Except as
to Trustees of the Fund and the Portfolio who are not members of EVM's or BMR's
organization, officers and Trustees receive remuneration for their services to
the Fund out of such investment adviser fee. Investors Bank & Trust Company
(IB&T), an affiliate of EVM, serves as custodian to the Fund and the Portfolio.
Pursuant to the respective custodian agreements, IB&T receives a fee reduced by
credits which are determined based on the average cash balances the Fund or the
Portfolio maintains with IB&T. Certain of the officers and Trustees of the Fund
and of the Portfolio are officers and directors/trustees of the above
organizations (Note 5).
- --------------------------------------------------------------------------------
(5) SERVICE PLAN
The Fund has adopted a Service Plan designed to meet the requirements of Rule
12b-1 under the Investment Company Act of 1940 and the service fee requirements
of the revised sales charge rule of The National Association of Securities
Dealers, Inc. The Service Plan provides that the Fund may make service fee
payments to the Principal Underwriter, Eaton Vance Distributors, Inc. (EVD), a
subsidiary of Eaton Vance Management, Authorized Firms or other persons in
amounts not exceeding 0.25% of the Fund's average daily net assets for any
fiscal year. The Trustees have initially implemented the Plan by authorizing the
Fund to make quarterly service fee payments to the Principal Underwriter and
Authorized Firms in amounts not exceeding 0.20% of the Fund's average daily net
assets for any fiscal year which is attributable to shares of the Fund sold by
such persons and remaining outstanding for at least one year. Service fee
payments are made for personal services and/or the maintenance of shareholder
accounts. During the six months ended July 31, 1995, the Fund paid or accrued
service fees to or payable to EVD in the amount of $126.
Certain of the officers and Trustees of the Funds are officers or directors
of EVD.
- --------------------------------------------------------------------------------
(6) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio for the six
months ended July 31, 1995 aggregated $522,208 and $425,740, respectively.
9
<PAGE> 10
Florida Insured Tax Free Portfolio
Portfolio of Investments - July 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS- 100%
- --------------------------------------------------------------------------------------------------------------------
RATINGS (UNAUDITED) PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ESCROWED - 3.9%
Aaa AAA $500 Gainesville Florida
Utility System, 8.125%,
10/1/14 $ 640,190
-----------
HOUSING - 13.7%
Aaa AAA $500 Duval County HFA
SFMR (GNMA Backed),
6.70%, 10/1/26 (AMT) $ 503,845
Aaa NR 750 Escambia HFA SFMR
(GNMA Backed), 7.00%,
4/1/28 (AMT) 772,193
NR AAA 1,000 Pinellas County HFA
SFMR (GNMA Backed),
6.70%, 2/1/28 (AMT)
1,009,560
-----------
$ 2,285,598
-----------
INSURED EDUCATION - 2.3%
Aaa AAA $400 University of Florida
(MBIA), 5.50%, 7/1/23 $ 380,828
-----------
INSURED GENERAL
OBLIGATION - 4.0%
Aaa AAA $750 Puerto Rico (MBIA),
5.00%, 7/1/21 $ 670,020
-----------
INSURED HEALTHCARE - 6.4%
Aaa AAA $1,200 Tampa Allegany Health
System- St. Joseph's
(MBIA), 5.125%,
12/1/23 $ 1,062,132
-----------
INSURED HOSPITAL - 3.9%
Aaa AAA $450 Dade Florida Public
Facilities, Jackson
Memorial Hospital, (MBIA), 5.625%,
6/1/18 $ 430,200
Aaa AAA 200 Dade Florida Public
Facilities, Jackson Memorial
Hospital, (MBIA), 4.875%,
6/1/15 174,096
Aaa AAA 50 Hillsborough County
Hospital Authority, Tampa
General Hospital (FSA),
6.375%, 10/1/13 51,836
-----------
$ 656,132
-----------
INSURED HOUSING - 3.1%
Aaa Aaa $500 FL HFA Maitland Club
Apartments Project
(AMBAC), 6.875%,
8/1/26 (AMT) $ 513,385
-----------
INSURED POLLUTION
CONTROL REVENUE - 7.1%
Aaa AAA $445 Citrus County
FL Power & Light
(MBIA), 6.35%, 2/1/22 $ 462,279
Aaa AAA 750 Escambia County
Gulf Power (MBIA),
5.80%, 6/1/23 723,855
-----------
$ 1,186,134
-----------
INSURED SOLID WASTE - 0.6%
Aaa AAA $100 Broward County Solid
Waste System (MBIA),
6.00%, 7/1/13 (AMT) $ 100,215
-----------
INSURED SPECIAL
TAX REVENUES - 20.9%
Aaa AAA $450 Escambia County (FGIC),
5.80%, 1/1/15 $ 441,752
Aaa AAA 150 Florida State Department
of Natural Resources
(FSA), 5.80%, 7/1/13 148,182
Aaa AAA 1,225 Florida State Department of
Environmental Preservation
(MBIA), 4.75%, 7/1/09 1,127,466
Aaa AAA 745 Jacksonville Florida Sales
Tax, River City Project
(FGIC), 5.375%, 10/1/18 688,812
</TABLE>
10
<PAGE> 11
FLORIDA INSURED TAX FREE PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------------------------------------------
RATINGS (UNAUDITED) PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED SPECIAL
TAX REVENUES - (CONTINUED)
Aaa AAA 250 Orange County Florida
Tourist Development
(MBIA), 6.00%, 10/1/24 247,258
Aaa AAA 795 St. Petersburg Excise Tax
(FGIC), 5.00%, 10/1/16 711,740
Aaa AAA 340 Sunrise Florida Public
Facilities (MBIA), 0%,
10/1/15 101,434
-----------
$ 3,466,644
-----------
INSURED TRANSPORTATION - 10.1%
Aaa AAA $700 Florida State Turnpike
Authority (FGIC), 5.00%,
7/1/19 $ 614,089
Aaa AAA 50 Greater Orlando Aviation
Authority (FGIC), 6.375%,
10/1/21 (AMT) 51,196
Aaa AAA 1,000 Lee County Florida
Transportation Facilities
(MBIA), 5.75%, 10/1/22 970,510
Aaa AAA 50 Orlando & Orange County
Expressway Authority Junior
Lien (FGIC), 5.125%,
7/1/20 44,436
-----------
$ 1,680,231
-----------
INSURED UTILITIES - 6.5%
Aaa AAA $895 FL Municipal Power Authority,
Stanton II Project (AMBAC),
4.50%, 10/1/27 $ 700,400
Aaa AAA 50 Key West Florida Utility
(AMBAC), 6.75%,
10/1/13 53,831
Aaa AAA 305 New Smyrna Beach Florida
Utility System (FGIC),
5.00%, 10/1/19 268,086
Aaa AAA 50 Puerto Rico Electric
Power Authority Revenue
Bonds-Stripes, (FSA),
Variable, 7/1/02 (1) 54,165
-----------
$ 1,076,482
-----------
INSURED WATER & SEWER - 17.5%
Aaa AAA $50 Broward County Water
and Sewer Utility (AMBAC),
5.00%, 10/1/18 $ 44,468
Aaa AAA 75 City of Cocoa Water and
Sewer System (AMBAC),
5.00%, 10/1/23 65,778
Aaa AAA 735 Enterprise Community
Water & Sewer (MBIA),
6.125%, 5/1/24 740,542
Aaa AAA 75 City of Key West Sewer
(FGIC), 5.70%, 10/1/26 71,735
Aaa AAA 70 City of North Port Utility
System (FGIC), 6.25%,
10/1/17 71,758
Aaa AAA 500 City of North Port Utility
System (FGIC), 6.25%,
10/1/22 510,780
Aaa AAA 155 Sanford Florida Water &
Sewer (AMBAC), 4.50%,
10/1/21 125,012
Aaa AAA 400 Titusville Florida Water &
Sewer (MBIA), 6.00%,
10/1/24 401,572
Aaa AAA 1,000 Vero Beach Water &
Sewer (FGIC), 5.00%,
12/1/21 877,960
-----------
$ 2,909,605
-----------
TOTAL TAX-EXEMPT INVESTMENTS
(IDENTIFIED COST $15,731,571) $16,627,596
===========
</TABLE>
11
<PAGE> 12
FLORIDA INSURED TAX FREE PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------------------------------------------
RATINGS (UNAUDITED) PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(1) The above designated securities have been issued as inverse floater bonds
The Portfolio invests primarily in debt securities issued by Florida
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 July 31, 1995, 82.4% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentages by financial
institution were as follows at July 31, 1995:
AMBAC, Inc. (AMBAC) 9.0%
Financial Guaranty Insurance Corp. (FGIC) 26.3%
Financial Security Insurance Inc. (FSA) 1.5%
Municipal Bond Investors Assurance Corp. (MBIA) 45.6%
-----------
82.4%
===========
</TABLE>
See notes to financial statements
12
<PAGE> 13
Florida Insured Tax Free Portfolio
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
- ----------------------------------------------------------------------------------------------
July 31, 1995 (Unaudited)
- ----------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments -
Identified cost $15,731,571
Unrealized appreciation 896,025
-----------
Total investments, at value (Note 1A) $16,627,596
Cash 321,485
Receivable from the Investment Adviser (Note 2) 21,272
Interest receivable 266,451
Deferred organization expenses (Note 1D) 8,700
-----------
Total assets $17,245,504
-----------
LIABILITIES:
Payable to affiliate -
Trustee fees $ 14
Accrued expenses 1,081
-----------
Total liabilities $ 1,095
-----------
NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $17,244,409
===========
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $16,348,384
Unrealized appreciation of investments and financial futures contracts
(computed on the basis of identified cost) 896,025
-----------
Total $17,244,409
===========
</TABLE>
See notes to financial statements
13
<PAGE> 14
STATEMENT OF OPERATIONS
<TABLE>
- ---------------------------------------------------------------------------------------------------
For the Six Months Ended July 31, 1995 (Unaudited)
- ---------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest income $ 475,072
---------
EXPENSES:
Investment adviser fee (Note 2) $ 12,606
Compensation of Trustees not members of the Investment Adviser's organization 83
Legal and accounting services 16,033
Interest expense (Note 5) 2,571
Bond pricing 1,481
Amortation of organization expenses (Note 1D) 1,202
Miscellaneous 125
---------
Total expenses $ 34,101
---------
DEDUCT:
Preliminary reduction of investment adviser fee (Note 2) $ 12,606
Preliminary allocation of expenses to the Investment Adviser (Note 2) 21,272
---------
Total $ 33,878
---------
Net expenses $ 223
---------
Net investment income $ 474,849
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)-
Investment transactions (identified cost basis) $ 10,440
Financial futures contracts (342,335)
---------
Net realized loss on investments $(331,895)
---------
Change in unrealized appreciation of investments $ 667,784
---------
Net realized and unrealized gain $ 335,889
---------
Net increase in net asset from operations $ 810,738
=========
</TABLE>
See notes to financial statements
14
<PAGE> 15
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED JULY 31, 1995 ENDED JANUARY 31,
(UNAUDITED) 1995*
------------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income $ 474,849 $ 307,971
Net realized loss on investments (331,895) (57,512)
Change in unrealized appreciation of investments 667,784 228,241
------------ ------------
Net increase in net assets from operations $ 810,738 $ 478,700
------------ ------------
Capital transactions (Note 2) -
Contributions $ 3,524,863 $ 16,016,246
Withdrawals (1,491,143) (2,195,015)
------------ ------------
Increase in net assets resulting from capital transactions $ 2,033,720 $ 13,821,231
------------ ------------
Total increase in net assets $ 2,844,458 $ 14,299,931
NET ASSETS:
At beginning of period 14,399,951 100,020
------------ ------------
At end of period $ 17,244,409 $ 14,399,951
============ ============
</TABLE>
* For the period from the start of business, March 2, 1994, to January 31, 1995.
See notes to financial statements
15
<PAGE> 16
<TABLE>
SUPPLEMENTARY DATA
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED JULY 31, 1995 ENDED JANUARY 31,
(UNAUDITED) 1995*
------------------- -----------------
<S> <C> <C>
RATIOS (As a percentage of average daily net assets):**
Net expenses 0.00%+ 0.01%+
Net investment income 6.03%+ 5.73%+
PORTFOLIO TURNOVER 14% 33%
NET ASSETS, end of period
(000 Omitted) $17,244 $14,400
** The operating expenses of the Portfolio reflects a reduction of the
investment adviser fee and/or allocation of expenses to the Investment Adviser.
Had such actions not been taken, the ratios would have been as follows:
RATIOS (As a percentage of average daily net assets):
Expenses 0.43%+ 0.41%+
Net investment income 5.60%+ 5.33%+
</TABLE>
+ Annualized.
* For the period from the start of business, March 2, 1994 to January 31, 1995.
See notes to financial statements
16
<PAGE> 17
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Florida Insured Tax Free Portfolio ("Florida Insured Portfolio") is registered
under the Investment Company Act of 1940 as a non-diversified open-end
management investment company which was organized as a trust under the laws of
the State of New York on October 25, 1993. The Declaration of Trust permits the
Trustees to issue interests in the Portfolio. The following is a summary of
significant accounting policies of the Portfolio. The policies are in conformity
with generally accepted accounting principles.
A. INVESTMENT VALUATIONS - Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts listed on commodity
exchanges are valued at closing settlement prices. Short-term obligations,
maturing in sixty days or less, are valued at amortized cost, which approximates
value. Investments for which valuations or market quotations are unavailable are
valued at fair value using methods determined in good faith by or at the
direction of the Trustees.
B. INCOME - Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes.
C. INCOME TAXES - The Portfolio is treated as a partnership for Federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally must
satisfy the applicable source of income and diversification requirements (under
the Internal Revenue Code) in order for their respective investors to satisfy
them. The Portfolio will allocate at least annually among its respective
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, deductions or credit. Interest income received by
the Portfolio on investments in municipal bonds, which is excludable from gross
income under the Internal Revenue Code, will retain its status as income exempt
from federal income tax when allocated to the Portfolio's investors. The portion
of such interest, if any, earned on private activity bonds issued after August
7, 1986, may be considered a tax preference item for investors.
D. DEFERRED ORGANIZATION EXPENSES - Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line basis
over five years.
E. FINANCIAL FUTURES CONTRACTS - Upon the entering of a financial futures
contract, the Portfolio is required to deposit ("initial margin") either in cash
or securities an amount equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by the Portfolio ("margin maintenance") each day, dependent on the
daily fluctuations in the value of the underlying security, and are recorded for
book purposes as unrealized gains or losses by the Portfolio. The Portfolio's
investment in financial futures contracts is designed only to hedge against
anticipated future changes in interest rates. Should interest rates move
unexpectedly, the Portfolio may not achieve the anticipated benefits of the
financial futures contracts and may realize a loss.
F. OTHER - Investment transactions are accounted for on a trade date basis.
G. INTERIM FINANCIAL INFORMATION - The interim financial statements relating to
July 31, 1995 and for the six-month period then ended have not been audited by
independent certified public accountants, but in the opinion of the Portfolio's
management, reflect all adjustments, consisting only of normal recurring
adjustments necessary for the fair presentation of the financial statements.
17
<PAGE> 18
- --------------------------------------------------------------------------------
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to the Portfolio. The fee
is based upon a percentage of average daily net assets plus a percentage of
gross income (i.e., income other than gains from the sale of securities). For
the six-month period ended July 31, 1995, the fee for the Florida Insured
Portfolio was equivalent to 0.16% (annualized) of the Portfolio's average net
assets for such period and amounted to $12,606. To enhance the net income of the
Florida Insured Portfolio, BMR made a preliminary reduction of its fee in the
amount of $12,606, and $21,272 of expenses related to the operation of the
Portfolio were allocated to BMR. 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. Investors Bank & Trust Company (IB&T), an affiliate of EVM and BMR, serves
as custodian of the Portfolio. Pursuant to the respective custodian agreements,
IB&T receives a fee reduced by credits which are determined based on the average
daily cash balances the Portfolio maintains with IB&T. Certain of the officers
and Trustees of the Portfolio are officers and directors/trustees of the above
organizations. Trustees of the Portfolio that are not affiliated with the
Investment Adviser may elect to defer receipt of all or a portion of their
annual fees in accordance with the terms of the Trustees Deferred Compensation
Plan. For the period ended July 31, 1995, no significant amounts have been
deferred.
- --------------------------------------------------------------------------------
(3) INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $3,867,422 and $2,105,500, respectively.
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned by the Portfolio at July 31, 1995, as computed on a federal income tax
basis, are as follows:
<TABLE>
<CAPTION>
<S> <C>
Aggregate Cost $15,731,571
===========
Gross unrealized appreciation $ 935,785
Gross unrealized depreciation 39,760
-----------
Net unrealized appreciation $ 896,025
===========
</TABLE>
- --------------------------------------------------------------------------------
(5) Line of Credit
The Portfolio participates with other portfolios and funds managed by BMR and
EVM in a $120 million unsecured line of credit agreement with a bank. The line
of credit consists of a $20 million committed facility and a $100 million
discretionary facility. The Portfolio may temporarily borrow up to 5% of its
total assets to satisfy redemption requests or settle securities transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above either the bank's adjusted certificate of deposit rate, a variable
adjusted certificate of deposit rate, or a federal funds effective rate. In
addition, a fee computed at an annual rate of 1/4 of 1% on the $20 million
committed facility and on the daily unused portion of the $100 million
discretionary facility is allocated among the participating funds and portfolios
at the end of each quarter. For the six month period ended July 31, 1995, the
average daily balance outstanding pursuant to this line of credit for the
Portfolio was $315,250 and the average interest rate was 7.54%. The maximum
borrowings outstanding during the period ended July 31,1995 was $819,000.
18
<PAGE> 19
- --------------------------------------------------------------------------------
(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 written
options and futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
The Portfolio had no such obligations open at July 31, 1995.
19
<PAGE> 20
- --------------------------------------------------------------------------------
Investment Management
EV TRADITIONAL
FLORIDA INSURED
TAX FREE FUND
24 Federal Street
Boston, MA 02110
OFFICERS
THOMAS J. FETTER
President
JAMES B. HAWKES
Vice President, Trustee
ROBERT B. MACINTOSH
Vice President
JAMES L. O'CONNOR
Treasurer
THOMAS OTIS
Secretary
INDEPENDENT TRUSTEES
DONALD R. DWIGHT
President, Dwight Partners, Inc.
Chairman, Newspaper of New England, Inc.
SAMUEL L. HAYES, III
Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate
School of Business Administration
NORTON H. REAMER
President and Director, United Asset
Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
- --------------------------------------------------------------------------------
FLORIDA
INSURED TAX
FREE PORTFOLIO
24 Federal Street
Boston, MA 02110
OFFICERS
THOMAS J. FETTER
President and Portfolio Manager of Florida
Insured Tax Free Portfolio
JAMES B. HAWKES
Vice President, Trustee
ROBERT B. MACINTOSH
Vice President
JAMES L. O'CONNOR
Treasurer
THOMAS OTIS
Secretary
INDEPENDENT TRUSTEES
DONALD R. DWIGHT
President, Dwight Partners, Inc.
Chairman, Newspaper of New England, Inc.
SAMUEL L. HAYES, III
Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate
School of Business Administration
NORTON H. REAMER
President and Director, United Asset
Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
20
<PAGE> 21
PORTFOLIO INVESTMENT ADVISER
Boston Management and Research
24 Federal Street
Boston, MA 02110
FUND ADMINISTRATOR
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
21
<PAGE> 22
(THIS SPACE INTENTIONALLY LEFT BLANK.)
22
<PAGE> 23
(THIS SPACE INTENTIONALLY LEFT BLANK.)
23
<PAGE> 24
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Funds, including distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
EV TRADITIONAL FLORIDA INSURED TAX FREE FUND
24 FEDERAL STREET
BOSTON, MA 02110
