EATON VANCE MUNICIPALS TRUST II, N-30D, 1995-04-03

EATON VANCE MUNICIPALS TRUST II
N-30D, 1995-04-03

Previous: EATON VANCE MUNICIPALS TRUST II, N-30D, 1995-04-03

Next: PROTECTIVE INVESTMENT CO, 485BPOS, 1995-04-03

<PAGE> 1
EATON VANCE MUNICIPALS TRUST II

FOR THE FUNDS:

* EV Classic Florida Insured Tax Free Fund

* EV Classic Hawaii Tax Free Fund

* EV Classic Kansas Tax Free Fund

- --------------------------------------------------------------------------------

[GRAPHIC]

- --------------------------------------------------------------------------------

ANNUAL SHAREHOLDER REPORT
JANUARY 31, 1995
<PAGE> 2
To Shareholders

To say that 1994 was a difficult time for fixed-income markets would be an
understatement. According to several reports, 1994 was the worst single year
for bond markets since at least 1927.

Put simply, the troubles experienced by fixed-income markets were the result of
an economy that remained stronger than most observers had anticipated at the
start of the year. In response to this persistent economic strength and in an
attempt to keep inflation in check, the Federal Reserve raised short-term
interest rates a total of six times during the year, thereby depressing bond
prices.

Since the end of the year, the Fed already has raised interest rates once
again.It's expected that economists and market observers alike will continue to
watch closely both the Fed's actions and the economic indicators, to ensure
that inflation is in check.

But the market slide was not the only investment news during 1994. Many
shareholders also may have heard about the problems affecting the investments
of Orange County,CA, and may have wondered whether those problems have affected
their investment in non-California Funds. While Orange County bonds were
affected, the market realized that this was an isolated situation and other
bonds have not been affected.

Despite the difficulties that beset the market in 1994, we feel optimistic
about prospects for 1995. The market now appears convinced that the Federal
Reserve is, in fact, keeping a tight watch on inflation. Core inflation was 2.7
percent for 1994. Also, the changes in Washington that resulted from the
November elections could be positive for financial markets.

No matter what the economic environment, the goal of your Fund remains the
same: to continue to hold a portfolio of high-quality bonds that provides a
competitive distribution of tax-exempt income.

For this most recent report, please note that we have made some changes in the
way we describe the individual Funds and their Portfolios. On the following
pages, each of the funds will be described using a Portfolio Overview, which is
a brief description of each Portfolio's contents as well as some observations
from each portfolio manager. Of course, we continue to provide a detailed
description of the contents of each Portfolio in the back of this report. For
the first time, we also are including a profile of a specific bond held in
eachPortfolio. This information will help you understand the investments that
we make with your money.

I hope that you find this additional information useful.

[PHOTO] Sincerely,

[SIGNATURE]

Thomas J.Fetter
President
March 20, 1995

RESULTS FOR THE FISCAL YEAR THAT ENDED JANUARY 31, 1995
FOR THE FOLLOWING FUNDS...

<TABLE>
<CAPTION>
DIVIDENDS NAV FUND'S If Your You Would Federal
PAID Per Share DISTRIBU- Combined Need An Income
BY FUND at TION Federal After-Tax Tax
(DURING 1/31/95 RATE AT and Equivalent Inform-
FISCAL YEAR) 1/31/95 State Tax Yield Of... ation*
Rate Is...
<S> <C> <C> <C> <C> <C> <C>
EV Classic Florida Insured
Tax Free Fund $0.323 $9.75 5.10% 36.00% 7.97% 98.61%

EV Classic Hawaii
Tax Free Fund $0.434 $9.04 5.14% 43.68% 9.13% 99.29%

EV Classic Kansas
Tax Free Fund $0.443 $9.54 4.84% 39.20% 7.96% 99.25%
</TABLE>

* Percentages represent the amounts of the total dividends paid by the Funds,
from net investment income during the year that ended January 31, 1995, that
have been designated as tax-exempt interest dividends. Tax legislation
eliminated the exception to the market discount rules applicable to
tax-exempt obligations. As a result, certain tax-exempt obligations acquired
by the Portfolio at market discounts may generate a small amount of ordinary
taxable income.

2
<PAGE> 3
EV Classic Florida Insured Tax Free Fund

[GRAPHIC]

PORTFOLIO OVERVIEW
Based on market value as of Jan. 31, 1995

<TABLE>
<S> <C>
Number of issues . . . . . . . . . . . . . . . . . . . . . . . . . 41
Average quality . . . . . . . . . . . . . . . . . . . . . . . . . Aaa
Investment grade . . . . . . . . . . . . . . . . . . . . . . . 100.0%
Effective maturity (years) . . . . . . . . . . . . . . . . . . 23.09

Largest sectors:
Insured water and sewer . . . . . . . . . . . . . . . . . . . 23.6%*
Insured special tax revenue . . . . . . . . . . . . . . . . . 18.6*
Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
Insured industrial development . . . . . . . . . . . . . . . . 8.0*
Insured health care . . . . . . . . . . . . . . . . . . . . . 7.0*
</TABLE>

* Private insurance does not remove the market risks associated with this
investment.

FROM THE PORTFOLIO MANAGER

"With the Florida economy improving overall during 1994, the state's economic
outlook appears to be positive. We're pleased to be able to provide investors
with high-quality tax exempt investments that contribute to the economic
success of the state of Florida.(+)"

(+) A portion of the Fund's income could be subject to Federal alternative
minimum tax.

FLORIDA IN 1994

The Florida economy turned in generally positive results during the year, with
an improving labor market, as demonstrated by a lower unemployment rate and an
improved housing market.

The state's important tourism industry, while experiencing a slight decrease in
visitors in 1994, was more stable than in recent years because of the improved
national economy. Analysts expect population growth to continue to be healthy
in coming years, with Florida maintaining its position as the fourth-largest
state in terms of population.

BOND PORTFOLIO: YOUR MONEY AT WORK

Florida Department of Environmental Protection

[GRAPHIC]

These bonds are a significant holding in the Portfolio. The state uses the
money to acquire land that is in danger of development and that will help
protect Florida's groundwater.

Some recent projects that have used this money include Silver Springs, a large
wooded reserve near Ocala that had been privately held. Now it is a state
forest protected from development. Other money is being used to restructure the
Kissimmee River to increase water flow into the Everglades.

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV CLASSIC FLORIDA
INSURED TAX FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL
BOND INDEX
From June 30, 1994 through January 31, 1995

<TABLE>
<CAPTION>
CUMULATIVE Life Value of
TOTAL RETURN of Fund(*) Investment at 1/31
- ------------ ---------- ------------------
<S> <C> <C>
With CDSC -0.2% $10,126
Without CDSC 0.8% $10,225
</TABLE>

<TABLE>
<CAPTION>
Classic
Florida Insured Lehman Bros.
Date Tax Free Fund Muni Tax Fund
<S> <C> <C>
6/94 10,000 10,000
7/94 10,282 10,180
8/94 10,250 10,216
9/94 10,043 10,066
10/94 9,763 9,887
11/94 9,532 9,708
12/94 9,866 9,922
1/95 10,225 10,206

<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
(*) Investment operations commenced 6/15/94.
(+) Index performance is available only at month-end, therefore, the line
comparison begins at the next month-end following the commencement of the Fund's
investment operations.
</TABLE>

To the left is a performance chart comparing your Fund's total return with that
of a broad-based securities market index. The lines on the chart represent the
total returns of $10,000 hypothetical investments in the Fund and the unmanaged
Lehman Brothers Municipal Bond Index.

The solid line on the chart represents the Fund's performance. The Fund's total
return figure reflects Fund expenses and portfolio transaction costs, and
assumes the reinvestment of income dividends and capital gain distributions.
The second dollar amount listed for the Fund reflects the Fund's applicable 1%
contingent deferred sales charge (CDSC), deducted for redemptions made within
the first 12 months of purchase.

The dotted line represents the performance of the Lehman Brothers Municipal
Bond Index, a broad-based, widely recognized unmanaged index of municipal
bonds. Whereas the Fund's portfolio principally comprises Florida bonds, the
Index is composed of bonds from all 50 states and many jurisdictions. The
Index's total return does not reflect any commissions or expenses that would be
incurred if an investor individually purchased or sold the securities
represented in the Index.

3
<PAGE> 4

EV Classic Hawaii Tax Free Fund

[GRAPHIC]

PORTFOLIO OVERVIEW
Based on market value as of Jan. 31, 1995

<TABLE>
<S> <C>
Number of issues . . . . . . . . . . . . . . . . . . . . . . . . . 33
Average quality . . . . . . . . . . . . . . . . . . . . . . . . . . AA
Investment grade . . . . . . . . . . . . . . . . . . . . . . . 97.6%
Effective maturity (years) . . . . . . . . . . . . . . . . . . 19.75

Largest sectors:
General obligation . . . . . . . . . . . . . . . . . . . . . . 20.0%
Insured general obligation . . . . . . . . . . . . . . . . . . 14.4*
Insured transportation . . . . . . . . . . . . . . . . . . . . 14.0*
Industrial development/pollution control . . . . . . . . . . . 11.7
Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5
</TABLE>

* Private insurance does not remove the market risks associated with this
investment.

FROM THE PORTFOLIO MANAGER

[PHOTO of Robert B. Macintosh]

"Tourism is making a comeback and the state did the things it needed to do to
maintain its AA rating during the difficult times. The world economy continues
to strengthen, which should continue to help Hawaii's tourism industry."(+)

(+) A portion of the Fund's income could be subject to Federal alternative
minimum tax.

HAWAII IN 1994

Tourism in Hawaii staged a comeback in 1994. That's good new, because the
state's economy relies heavily on tourism dollars, and had experienced three
consecutive years of declines in the number of visitors. The recovery is being
attributed in part to a stronger U.S. economy.

The state benefits from a very stable military presence. Because of its
strategic geographic position, Hawaii will experience few military cutbacks.

Because the state has assumed many financial burdens that other states leave to
local government, Hawaii's state debt burden is high, but state finances are
regarded as strong.

BOND PROFILE: YOUR MONEY AT WORK
Hawaii Airport System

[GRAPHIC]

One bond in the Portfolio is a 7.5% coupon bond maturing in 2020. Money from it
and others in its series, issued in 1990, is being used to finance improvements
at state airports. Among the specific projects financed with this money are
construction of a new Inter-Island Terminal at Honolulu International Airport
and new terminal facilities at Kahului Airport on Maui. While this is an
insured bond, private insurance does not remove the market risks associated
with an investment in the Fund.

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV CLASSIC HAWAII TAX
FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
From March 31, 1994, through January 31, 1995

<TABLE>
<CAPTION>
CUMULATIVE Life Value of
TOTAL RETURN of Fund(*) Investment at 1/31
<S> <C> <C>
With CDSC -6.1% $9,818
Without CDSC -5.2% $9,913
</TABLE>

Lehman Brothers Municipal Bond Index: $10,321
EV Classic Hawaii Tax Free Fund: $9,913

Classic Hawaiian Lehman Bros.
Date Tax Free Fund Muni Bond Index
<S> <C> <C>
3/94 10,000 10,000
4/94 9,985 10,085
5/94 10,074 10,172
6/94 9,918 10,113
7/94 10,081 10,295
8/94 10,119 10,331
9/94 9,931 10,180
10/94 9,669 9,999
11/94 9,423 9,818
12/94 9,639 10,034
1/95 9,913 10,321

<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
(*)Investment operations commenced 3/14/94.
(+)Index information is available only at month-end, therefore, the line
comparison begins at the next month-end following the commencement of the
Fund's investment operations.
</TABLE>

The dotted line represents the performance of the Lehman Brothers Municipal
Bond Index, a broad-based, widely recognized unmanaged index of municipal
bonds. Whereas the Fund's portfolio principally comprises Hawaii bonds, the
Index is composed of bonds from all 50 states and many jurisdictions. The
Index's total return does not reflect any commissions or expenses that would be
incurred if an investor individually purchased or sold the securities
represented in the Index.

4
<PAGE> 5
EV Classic Kansas Tax Free Fund

[GRAPHIC]

PORTFOLIO OVERVIEW
Based on market value as of Jan. 31, 1995

<TABLE>
<S> <C>
Number of issues . . . . . . . . . . . . . . . . . . . . . . . . . 45
Average quality . . . . . . . . . . . . . . . . . . . . . . . . . AA+
Investment grade . . . . . . . . . . . . . . . . . . . . . . . 100.0%
Effective maturity (years) . . . . . . . . . . . . . . . . . . 18.56

Largest sectors:
Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.4%
Insured general obligation, school districts . . . . . . . . . 13.7*
General obligation, school districts . . . . . . . . . . . . . 13.2
Transportation . . . . . . . . . . . . . . . . . . . . . . . . 11.1
Insured general obligation . . . . . . . . . . . . . . . . . . 10.7*
</TABLE>

* Private insurance does not remove the market risks associated with this
investment.

FROM THE PORTFOLIO MANAGER

[PHOTO of Nicole Anderes]

"While the municipal market typically views Kansas as a high quality "plain
vanilla" state, the Kansas municipal market still offers us opportunities to
maximize tax-exempt yield for our shareholders while preserving credit
quality."(+)

(+) A portion of the Fund's income could be subject to Federal alternative
minimum tax.

KANSAS IN 1994

The performance of the Kansas economy was better in 1994 than in the previous
year but still lagged behind the nation in economic growth. The aftermath of
severe flooding in 1993 combined with continued downsizing in the airplane
manufacturing industry to dampen the state's historically strong economic
results.

Employment grew 2.2 percent in 1994 compared to 1.2 percent in 1993 and to 2.6
nationwide in 1994. The metropolitan Topeka area was the brightest spot among
the state's regional economies.

Prospects for 1995 continue to be muted, with the state expected to turn in
1995 results similar to 1994's.

BOND PROFILE: YOUR MONEY AT WORK
Sedgwick County Mortgage Loan

This AAA-rated bond is due in 2010 and offers the Portfolio exceptional value
considering its excellent credit quality. Money from this and other bonds is
used to provide mortgage loans to moderate-income residents, thereby increasing
the number of people who can become homeowners.

The bonds themselves are AAA-rated because of their insurance, but their
underlying credit quality is very strong as well because the home mortgages
that are in the pool backing the bonds are collateralized by GNMA.

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV CLASSIC KANSAS TAX
FREE FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
From March 31, 1994, through January 31, 1995

<TABLE>
<CAPTION>
CUMULATIVE Life Value of
TOTAL RETURN of Fund(*) Investment at 1/31
<S> <C> <C>
With CDSC -1.1% $10,116
Without CDSC -0.1% $10,214
</TABLE>

Lehman Brothers Municipal Bond Index: $10,321
EV Classic Kansas Tax Free Fund: $10,214

Classic Kansas Lehman Bros.
Date Tax Free Fund Muni Bond Index
<S> <C> <C>
3/94 10,000 10,000
4/94 10,112 10,085
5/94 10,248 10,172
6/94 10,124 10,113
7/94 10,336 10,295
8/94 10,352 10,331
9/94 10,147 10,180
10/94 9,891 9,999
11/94 9,619 9,818
12/94 9,872 10,034
1/95 10,214 10,321

<FN>
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
(*) Investment operations commenced 3/3/94.
(+) Index information is available only at month-end, therefore, the line
comparison begins at the next month-end following the commencement of the
Fund's investment operations.
</TABLE>

The dotted line represents the performance of the Lehman Brothers Municipal
Bond Index, a broad-based, widely recognized unmanaged index of municipal
bonds. Whereas the Fund's portfolio principally comprises Kansas bonds, the
Index is composed of bonds from all 50 states and many jurisdictions. The
Index's total return does not reflect any commissions or expenses that would be
incurred if an investor individually purchased or sold the securities
represented in the Index.

5
<PAGE> 6
EV Classic Tax Free Funds
Financial Statements

STATEMENT OF ASSETS AND LIABILITIES

January 31, 1995

<TABLE>
<CAPTION>
CLASSIC CLASSIC CLASSIC
FLORIDA INSURED HAWAII KANSAS
--------------- --------- ----------
<S> <C> <C> <C>
ASSETS:
Investment in Portfolio -
Identified cost $ 1,436,425 $ 259,596 $ 667,660
Unrealized appreciation (depreciation) 49,556 (3,400) (26,369)
----------- --------- ----------
Total investment in Portfolio, at value (Note 1A) $ 1,485,981 $ 256,196 $ 641,291
Receivable from the Administrator (Note 4) 8,481 12,533 13,344
Deferred organization expenses (Note 1D) 9,825 17,189 15,355
----------- --------- ----------
Total assets $ 1,504,287 $ 285,918 $ 669,990
=========== ========= ==========

LIABILITIES:
Dividends payable $ 1,430 $ 318 $ 717
Payable for shares redeemed - 24,700 -
Payable to Affiliate -
Custodian fee 84 84 84
Accrued expenses 16,000 3,992 4,305
----------- --------- ----------
Total liabilities $ 17,514 $ 29,094 $ 5,106
----------- --------- ----------
NET ASSETS $ 1,486,773 $ 256,824 $ 664,884
=========== ========= ==========

SOURCES OF NET ASSETS:
Paid-in capital $ 1,438,301 $ 273,076 $ 695,418
Accumulated net realized gain (loss) on investment and
financial futures transactions (computed on the basis
of identified cost) 409 (11,983) (2,723)
Accumulated distributions in excess of net investment
income (1,493) (869) (1,442)
Unrealized appreciation (depreciation) of investments and
financial futures contracts from Portfolio (computed
on the basis of identified cost) 49,556 (3,400) (26,369)
----------- --------- ----------
Total $ 1,486,773 $ 256,824 $ 664,884
=========== ========= ==========

SHARES OF BENEFICIAL INTEREST OUTSTANDING 152,551 28,416 69,712
=========== ========= ==========

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 7) (net assets / shares of beneficial
interest outstanding) $ 9.75 $ 9.04 $ 9.54
=========== ========= ==========
</TABLE>

See notes to financial statements

6
<PAGE> 7
STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
CLASSIC CLASSIC CLASSIC
FLORIDA INSURED(*) HAWAII(*) KANSAS(*)
------------------ ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 15,239 $ 11,481 $ 29,446
Expenses allocated from Portfolio (5) (135) (35)
-------- ---------- ----------
Net investment income from Portfolio $ 15,234 $ 11,346 $ 29,411
-------- ---------- ----------

Expenses-
Distribution costs (Note 5) $ 2,696 $ 1,993 $ 5,289
Custodian fees (Note 4) 986 2,634 2,226
Transfer and dividend distributing agent fees 111 117 231
Legal and accounting services 244 100 207
Amortization of organization expenses (Note 1D) 1,442 3,708 3,455
Printing and postage 5,022 5,382 6,175
Registration costs 501 99 747
Miscellaneous 175 493 303
-------- ---------- ----------
Total expenses $ 11,177 $ 14,526 $ 18,633
Deduct allocation of expenses to the Administrator
(Note 4) 8,481 12,533 13,344
-------- ---------- ----------
Net expenses $ 2,696 $ 1,993 $ 5,289
-------- ---------- ----------
Net investment income $ 12,538 $ 9,353 $ 24,122
-------- ---------- ----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from Portfolio -
Investment transactions (identified cost basis) $ 625 $ (11,592) $ (1,978)
Financial futures contracts (216) (391) (745)
-------- ---------- ----------
Net realized gain (loss) on investments $ 409 $ (11,983) $ (2,723)
Unrealized appreciation (depreciation) of
investments 49,556 (3,400) (26,369)
-------- ---------- ----------
Net realized and unrealized gain (loss) on
investments $ 49,965 $ (15,383) $ (29,092)
-------- ---------- ----------
Net increase (decrease) in net assets from
operations $ 62,503 $ (6,030) $ (4,970)
======== ========== ==========
</TABLE>

* For the Classic Florida Insured, Classic Hawaii, and Classic Kansas Funds,
the Statement of Operations is for the period from the commencement of
operations, June 15, 1994, March 14, 1994, and March 3, 1994, respectively,
to January 31, 1995.

See notes to financial statements

7
<PAGE> 8
STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
CLASSIC CLASSIC CLASSIC
FLORIDA INSURED(*) HAWAII(*) KANSAS(*)
------------------ ---------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income $ 12,538 $ 9,353 $ 24,122
Net realized gain (loss) on investments 409 (11,983) (2,723)
Unrealized appreciation (depreciation) of investments 49,556 (3,400) (26,369)
----------- ---------- -----------
Net increase (decrease) in net assets from operations $ 62,503 $ (6,030) $ (4,970)
----------- ---------- -----------
Distributions to shareholders (Note 2) -
From net investment income $ (12,538) $ (9,353) $ (24,122)
In excess of net investment income (2,220) (2,050) (4,680)
----------- ---------- -----------
Total distributions to shareholders $ (14,758) $ (11,403) $ (28,802)
----------- ---------- -----------
Transactions in shares of beneficial interest (Note 3) -
Proceeds from sales of shares $ 1,940,001 $ 295,825 $ 1,176,813
Net asset value of shares issued to shareholders in
payment of distributions declared 9,039 11,053 25,508
Cost of shares redeemed (510,022) (32,631) (503,675)
----------- ---------- -----------
Increase in net assets from Fund share transactions $ 1,439,018 $ 274,247 $ 698,646
----------- ---------- -----------
Net increase in net assets $ 1,486,763 $ 256,814 $ 664,874

NET ASSETS:
At beginning of period 10 10 10
----------- ---------- -----------
At end of period $ 1,486,773 $ 256,824 $ 664,884
=========== ========== ===========
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME INCLUDED IN NET ASSETS AT END OF YEAR $ (1,493) $ (869) $ (1,442)
=========== ========== ===========
</TABLE>

* For the Classic Florida Insured, Classic Hawaii, and Classic Kansas Funds,
the Statement of Changes in Net Assets is for the period from the commencement
of operations, June 15, 1994, March 14, 1994, and March 3, 1994, respectively,
to January 31, 1995.

See notes to financial statements

8
<PAGE> 9
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CLASSIC CLASSIC CLASSIC
FLORIDA INSURED(*) HAWAII(*) KANSAS(*)
------------------ --------- ---------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.000 $ 10.000 $ 10.000
--------- --------- ---------
INCOME(LOSS) FROM OPERATIONS:
Net investment income $ 0.281 $ 0.365 $ 0.379
Net realized and unrealized loss on investments++ (0.200) (0.880) (0.386)
--------- --------- ---------
Total income (loss) from operations $ 0.081 $ (0.515) $ (0.007)
--------- --------- ---------

LESS DISTRIBUTIONS:
From net investment income $ (0.281) $ (0.365) $ (0.379)
In excess of net investment income (0.050) (0.080) (0.074)
--------- --------- ---------
Total distributions $ (0.331) $ (0.445) $ (0.453)
--------- --------- ---------

NET ASSET VALUE, END OF PERIOD $ 9.750 $ 9.040 $ 9.540
========= ========= =========

TOTAL RETURN (2) 0.82% (5.23%) (0.11%)
RATIOS/SUPPLEMENTAL DATA(**):
Net assets, end of period (000 omitted) $ 1,487 $ 257 $ 665
Ratio of net expenses to average daily net assets (1) 0.95%(+) 1.01%(+) 0.95%(+)
Ratio of net investment income to average daily net
assets 4.37%(+) 4.44%(+) 4.32%(+)

(**) For the period from the start of business, June 15, 1994, March 14, 1994 and March 3, 1994, respectively,
to January 31, 1995, the operating expenses of the Funds and the Portfolios may reflect reductions of
expenses by the Administrator or Investment Advisor. Had such actions not been taken, net investment income
per share and the ratios would have been as follows:

NET INVESTMENT INCOME (LOSS) PER SHARE $ 0.085 $ (0.153) $ 0.139
========= ========= =========

RATIOS (As a percentage of average daily net assets):
Expenses (1) 4.00%(+) 7.31%(+) 3.68%(+)
Net investment income (loss) 1.32%(+) (1.86%)(+) 1.59%(+)
</TABLE>

(1) Includes the Fund's share of its corresponding 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.
(+) Computed on an annualized basis.
(++) Per share amount is not in accord with the net realized and unrealized
gain for the period because of the timing of sales of Fund shares and the
amount of per share realized and unrealized gains and losses at such time.
(*) For the Classic Florida Insured, Classic Hawaii, and Classic Kansas Funds,
the Financial Highlights are for the period from the commencement of
operations, June 15, 1994, March 14, 1994, and March 3, 1994, respectively,
to January 31, 1995.

See notes to financial statements

9
<PAGE> 10
Notes to Financial Statements

- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES

Eaton Vance Municipal Trust II (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 Trust presently consists of seven Funds, three of which are included in
these financial statements. They include EV Classic Florida Insured Tax Free
Fund, ("Classic Florida Insured Fund"), EV Classic Hawaii Tax Free Fund
("Classic Hawaii Fund") and EV Classic Kansas Tax Free Fund ("Classic Kansas
Fund"). Each Fund invests all of its investable assets in interests in a
separate corresponding open-end management investment company (a "Portfolio"),
a New York Trust, having the same investment objective as its corresponding
Fund. The Classic Florida Insured Fund invests its assets in the Florida
Insured Tax Free Portfolio, the Classic Hawaii Fund invests its assets in the
Hawaii Tax Free Portfolio and the Classic Kansas Fund invests its assets in the
Kansas Tax Free Portfolio. The value of each Fund's investment in its
corresponding Portfolio reflects the Fund's proportionate interest in the net
assets of that Portfolio (10.3%, 2.0% and 7.7% at January 31, 1995 for the
Classic Florida Insured Fund, Classic Hawaii Fund and Classic Kansas Fund,
respectively). The performance of each Fund is directly affected by the
performance of its corresponding Portfolio. The financial statements of each
Portfolio, including the portfolio of investments, are included elsewhere in
this report and should be read in conjunction with each Fund's financial
statements. The following is a summary of significant accounting policies
consistently followed by the Trust in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.

A. INVESTMENT VALUATIONS -- Valuation of securities by the Portfolios is
discussed in Note 1 of the Portfolios' Notes to Financial Statements which are
included elsewhere in this report.

B. INCOME -- Each Fund's net investment income consists of the Fund's pro rata
share of the net investment income of its corresponding Portfolio, less all
actual and accrued expenses of each Fund determined in accordance with
generally accepted accounting principles.

C. FEDERAL TAXES -- Each Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable and tax-exempt income,
including any net realized gain on investments.

Accordingly, no provision for federal income or excise tax is necessary. At
January 31, 1995, the Classic Florida Insured Fund, Classic Hawaii Fund and
Classic Kansas Fund, for federal income tax purposes had capital loss
carryovers of $216, $1,941 and $745 respectively, which will reduce taxable
income arising from future net realized gain on investments, if any, to the
extent permitted by the Internal Revenue Code, and this will reduce the amount
of the distributions to shareholders which would otherwise be necessary to
relieve the Funds of any liability for federal income or excise tax. Such
capital loss carryovers will expire on January 31, 2003. In addition at January
31, 1995, Classic Florida Insured Fund, Classic Hawaii Fund and Classic Kansas
Fund had net capital losses of $796, $10,344, and $2,598, respectively,
attributable to security transactions incurred after October 31, 1994 are
treated as arising on the first day of the Funds' next taxable year. Dividends
paid by each Fund from net interest on tax-exempt municipal bonds allocated
from its corresponding Portfolio are not included by shareholders as gross
income for federal income tax purposes because each Fund and Portfolio intend
to meet certain requirements of the Internal Revenue Code applicable to
regulated investment companies which will enable the Funds to pay
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 a Fund in connection
with its organization, including registration costs, are being amortized on the
straight-line basis over five years beginning on the date each Fund commenced
operations.

E. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale of a
Fund's shares and other distribution costs are charged to operations. For tax
purposes, commissions paid were charged to paid-in capital prior to November
23, 1994 and subsequently charged to operations. The change in the tax
accounting practice was prompted by a recent Internal Revenue Service Ruling
and has no effect on either the Funds' current yield or total return (Notes 2
and 5).

F. OTHER -- Investment transactions are accounted for on a trade date basis.

10
<PAGE> 11
- --------------------------------------------------------------------------------
(2) DISTRIBUTIONS TO STOCKHOLDERS

The net income of a 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 a Fund at the net
asset value as of the ex-dividend date. Distributions are paid in the form of
additional shares or, at the election of the shareholder, in cash.

The Funds distinguish between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result in temporary overdistributions for financial statement
purposes are classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital.
During the period from the start of business to November 22, 1994, $727,
$1,181, and $3,238 were reclassified from distributions in excess of net
investment income to paid-in capital, due to permanent differences between book
and tax accounting for distribution costs for the Classic Florida Insured Fund,
Classic Hawaii Fund and Classic Kansas Fund, respectively. Net investment
income, net realized gains and net assets were not affected by these
reclassifications.

- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST

The Fund's 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 for the period from the start of business
to January 31, 1995, were as follows:

<TABLE>
<CAPTION>
CLASSIC FLORIDA CLASSIC CLASSIC
INSURED FUND HAWAII FUND KANSAS FUND
--------------- ----------- -----------
<S> <C> <C> <C>
Sales 203,693 30,797 119,503
Issued to shareholders electing to receive payments
of distributions in Fund shares 942 1,210 2,666
Redemptions (52,085) (3,592) (52,458)
-------- ------- --------
Net increase 152,550 28,415 69,711
======== ======= ========
</TABLE>

- --------------------------------------------------------------------------------
(4) TRANSACTIONS WITH AFFILIATES

Eaton Vance Management (EVM) serves as the administrator of each Fund, but
receives no compensation. Each of the Portfolios have engaged Boston Management
and Research (BMR), a subsidiary of EVM, to render investment advisory
services. See Note 2 of the Portfolios' Notes to Financial Statements which are
included elsewhere in this report. To enhance the net income of the Funds,
$8,481, $12,533 and $13,344 of expenses related to the operation of the Classic
Florida Insured Fund, Classic Hawaii Fund and Classic Kansas Fund,
respectively, were allocated to EVM. Except as to Trustees of the Funds and the
Portfolios who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to each Fund out of such
investment adviser fee. Investors Bank & Trust Company (IB&T), an affiliate of
EVM, serves as custodian to the Funds and the Portfolios. Pursuant to the
respective custodian agreements, IB&T receives a fee reduced by credits which
are determined based on the average cash balances the Funds or the Portfolios
maintain with IB&T. Certain of the officers and Trustees of the Funds and
Portfolios are officers and directors/trustees of the above organizations (Note
5).

11
<PAGE> 12
- --------------------------------------------------------------------------------
(5) DISTRIBUTION PLAN

Each Fund has adopted a distribution plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, and effective January 30, 1995 an amended
Distribution Plan (the Plan). The Plans require each of the Funds to pay the
principal underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to
1/365th of 0.75% of a Funds daily net assets, for providing ongoing
distribution services and facilities to a Fund. A Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
Uncovered Distribution Charges, which are equivalent to the sum of (i) 6.25% of
the aggregate amount received by the Fund for shares sold plus (ii)
distribution fees calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of EVD,
reduced by the aggregate amount of contingent deferred sales charges (see Note
6) and amounts theretofore paid to EVD. The amount payable to EVD with respect
to each day is accrued on such day as a liability of each Fund and,
accordingly, reduces the Fund's net assets. For the period ended January 31,
1995, Classic Florida Insured Fund, Classic Hawaii Fund and Classic Kansas
Fund, paid or accrued $2,128, $1,573 and $4,176, respectively, to or payable to
EVD representing 0.75% (annualized) of average daily net assets. At January 31,
1995, the amount of Uncovered Distribution Charges of EVD calculated under the
Plans for Classic Florida Insured Fund, Classic Hawaii Fund and Classic Kansas
Fund were approximately $106,000, $18,000 and $73,400, respectively.

In addition, the Plans permit the Funds to make monthly payments of service
fees to the Principal Underwriter, in amounts not expected to exceed 0.25% of
each Fund's average daily net assets for any fiscal year. The Trustees have
initially implemented the Plans by authorizing the Funds to make monthly
service fee payments to the Principal Underwriter in amounts not expected to
exceed 0.20% of each Fund's average daily net assets for any fiscal year. For
the period ended January 31, 1995, Classic Florida Insured Fund, Classic Hawaii
Fund and Classic Kansas Fund paid or accrued service fees to or payable to EVD
in the amount of $568, $420 and $1,113, respectively. Pursuant to the Amended
Distribution Plan, on sales made prior to January 30, 1995, EVD makes monthly
service fee payments to Authorized Firms in amounts anticipated to be
equivalent to 0.20%, annualized, of the assets maintained in each Fund by their
customers. For shares sold on January 30, 1995 and thereafter, EVD currently
expects to pay to an Authorized Firm a service fee at the time of sale equal to
0.20% of the purchase price of the shares sold by such Firm and monthly
payments of service fees in amounts not expected to exceed 0.20% per annum of
the Funds' average daily net assets based on the value of Fund shares sold by
such Firm and remaining outstanding for at least one year. During the first
year after a purchase of Fund shares, EVD will retain the service fee as
reimbursement for the service fee payment made to the Authorized Firm at the
time of sale. Service fee payments are made for personal services and/or
maintenance of shareholder accounts. Service fees paid to EVD and Authorized
Firms are separate and distinct from the sales commissions and distribution
fees payable by a Fund to EVD, and as such are not subject to automatic
discontinuance when there are no outstanding Uncovered Distribution Charges of
EVD. Certain of the officers and Trustees of the Funds are officers or
directors of EVD.

- --------------------------------------------------------------------------------
(6) INVESTMENT TRANSACTIONS

Increases and decreases in each Fund's investment in its corresponding
Portfolio for the period from the start of business to January 31, 1995 were as
follows:

<TABLE>
<CAPTION>
CLASSIC FLORIDA CLASSIC CLASSIC
INSURED FUND HAWAII FUND KANSAS FUND
--------------- ----------- -----------
<S> <C> <C> <C>
Increases $ 1,940,001 $ 295,825 $ 1,176,813
Decreases $ 519,230 $ 35,603 $ 535,850
</TABLE>

- --------------------------------------------------------------------------------
(7) CONTINGENT DEFERRED SALES CHARGES

For shares purchased on or after January 30, 1995, a contingent deferred sales
charge (CDSC) of 1% is imposed on any redemption of Fund shares made within one
year of purchase. The CDSC is based upon the lower of the net asset value at
date of redemption or date of purchase. No charge is levied on shares acquired
by reinvestment of dividends or capital gains distributions. No CDSC is levied
on shares which have been sold to EVD or its affiliates or to their respective
employees or clients. Distribution charges are paid to EVD to reduce the amount
of Uncovered Distribution Charges calculated under the Funds' Distribution
Plans. CDSC received when no Uncovered Distribution Charges exist will be
credited to the Funds. For the period ended January 31, 1995, EVD received no
CDSC paid by shareholders.

12
<PAGE> 13
INDEPENDENT AUDITORS' REPORT

To the Trustees and Shareholders of
Eaton Vance Municipals Trust II:

We have audited the accompanying statement of assets and liabilities of EV
Classic Florida Insured Tax Free Fund, EV Classic Hawaii Tax Free Fund and
EV Classic Kansas Tax Free Fund (certain of the series constituting Eaton Vance
Municipals Trust II) as of January 31, 1995 and the related statement of
operations, the statement of changes in net assets and the financial highlights
for the period from the start of business to January 31, 1995. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. 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 provides a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the aforementioned
funds of Eaton Vance Municipals Trust II at January 31, 1995, the results of
their operations, the changes in their net assets, and their financial
highlights for the period from the start of business to January 31, 1995 in
conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
March 2, 1995

13
<PAGE> 14
Florida Insured Tax Free Portfolio
Portfolio of Investments - January 31, 1995

- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
RATINGS (UNAUDITED) PRINCIPAL
AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ESCROWED -- 4.2%

Aaa AAA $500 Gainesville Florida Utility
System, 8.125%, 10/1/14 $595,615
-----------

HOUSING -- 12.2%

Aaa NR $500 Broward County HFA
(GNMA Backed), 6.55%,
8/1/19 (AMT) $489,260

Aaa NR 750 Escambia HFA SFMR
(GNMA Backed), 7.00%,
4/1/28 (2) 756,007

Aaa AAA 500 Duval County HFA
SFMR (GNMA Backed),
6.70%, 10/1/26 (AMT) 487,765
-----------
$1,733,032
-----------

INSURED EDUCATION -- 2.5%

Aaa AAA $400 University of Florida
(MBIA), 5.50%, 7/1/23 $355,976
-----------

INSURED GENERAL
OBLIGATIONS -- 4.3%

Aaa AAA $750 Puerto Rico (MBIA),
5.00%, 7/1/21 $616,163
-----------

INSURED HEALTHCARE -- 7.0%

Aaa AAA $1,200 Tampa Allegany Health
System - St. Joseph's
(MBIA), 5.125%,
12/1/23 (3) $994,296
-----------

INSURED HOSPITALS -- 5.5%

Aaa AAA $450 Dade Florida Public
Facilities, Jackson Memorial
Hospital, (MBIA), 5.625,
6/1/18 $405,994

Aaa AAA 200 Dade Florida Public
Facilities, Jackson Memorial
Hospital, (MBIA),
4.875%, 6/1/15 162,838

Aaa AAA 50 Hillsborough County Hospital
Authority, Tampa General
Hospital (FSA), 6.375%,
10/1/13 50,227

Aaa AAA 75 Lakeland Hospital System
Regional Medical Center
(FGIC), 5.75%, 11/15/15 69,676

Aaa AAA 75 Palm Beach Florida Health
Facilities Authority, JFK
Medical Center, (FSA),
5.80%, 12/1/18 69,357
-----------
$758,092
-----------

INSURED HOUSING -- 6.2%

Aaa AAA $410 Dade County Florida Housing
Finance Authority, Lincoln
Fields Apartments (MBIA),
6.25%, 7/1/24 $384,404

Aaa Aaa 500 Florida HFA Maitland
Club Apartments Project
(AMBAC), 6.875%,
8/1/26 (2) 502,210
-----------
$886,614
-----------

INSURED INDUSTRIAL
DEVELOPMENT REVENUE -- 8.0%

Aaa AAA $445 Citrus County PCR- FL
Power & Light (MBIA),
6.35%, 2/1/22 $447,189

Aaa AAA 750 Escambia County PCR-
Gulf Power (MBIA),
5.80%, 6/1/23 689,588
-----------
$1,136,777
-----------

INSURED SOLID WASTE -- 0.7%

Aaa AAA $100 Broward County Solid
Waste System (MBIA),
6.00%, 7/1/13 (AMT) $95,495
-----------
</TABLE>

14
<PAGE> 15
FLORIDA INSURED TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------

Aaa AAA $450 Escambia County (FGIC),
5.80%, 1/1/15 $420,300

Aaa AAA 150 Florida State Department
of Natural Resources (FSA),
5.80%, 7/1/13 141,264

Aaa AAA 1,225 Florida State Department
of Environmental Preserva-
tion (MBIA), 4.75%,
7/1/09 1,058,400

Aaa AAA 250 Orange County Florida
Tourist Development
(MBIA), 6.00%, 10/1/24 239,962

Aaa AAA 795 St. Petersburg Excise Tax
(FGIC), 5.00%, 10/1/16 670,408

Aaa AAA 340 Sunrise Florida Public
Facilities (MBIA), 0%,
10/1/15 92,208
-----------
$2,622,542
-----------

INSURED TRANSPORTATION -- 4.7%

Aaa AAA $700 Florida State Turnpike
Authority (FGIC), 5.00%,
7/1/19 $576,765

Aaa AAA 50 Greater Orlando Aviation
Authority (FGIC), 6.375%,
10/1/21 (AMT) 49,395

Aaa AAA 50 Orlando & Orange County
Expressway Authority Junior
Lien (FGIC), 5.125%,
7/1/20 41,937
-----------
$668,097
-----------

INSURED UTILITIES -- 2.5%

Aaa AAA $305 New Smyrna Beach Florida
Utility System (FGIC),
5.00%, 10/1/19 $251,723

Aaa AAA 50 Key West Florida Utility
(AMBAC), 6.75%, 10/1/13 51,746

Aaa AAA 50 Puerto Rico Electric Power
Authority Revenue Bonds-
Stripes, (FSA), Variable,
7/1/02 (1) 50,619
-----------
$354,088
-----------

INSURED WATER & SEWER -- 23.6%

Aaa AAA $50 Broward County Water
and Sewer Utility
(AMBAC), 5.00%,
10/1/18 $41,576

Aaa AAA 75 City of Cocoa Water and
Sewer System (AMBAC),
5.00%, 10/1/23 60,951

Aaa AAA 500 Englewood Water District
Utility System (FSA),
6.00%, 10/1/19 477,095

Aaa AAA 735 Enterprise Community
Water & Sewer (MBIA),
6.125%, 5/1/24 (3) 715,912

Aaa AAA 75 City of Key West Sewer
(FGIC), 5.70%, 10/1/26 67,534

Aaa AAA 70 City of North Port Utility
System (FGIC), 6.25%,
10/1/17 69,992

Aaa AAA 500 City of North Port Utility
System (FGIC), 6.25%,
10/1/22 (3) 496,690

Aaa AAA 65 City of Palm Bay Utility
System (MBIA), 5.00%,
10/1/19 53,646

Aaa AAA 50 Reedy Creek Florida
Utility (MBIA), 5.00%,
10/1/19 41,426

Aaa AAA 155 Sanford Florida Water
& Sewer (AMBC),
4.50%, 10/1/21 116,918

Aaa AAA 400 Titusville Florida Water
& Sewer (MBIA),
6.00%, 10/1/24 385,496
</TABLE>

15
<PAGE> 16
FLORIDA INSURED TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------

Aaa AAA 1,000 Vero Beach Water &
Sewer (FGIC), 5.00%,
12/1/21 822,640
-----------
$3,349,876
-----------
TOTAL TAX-EXEMPT INVESTMENTS
(IDENTIFIED COST, $13,938,422) $14,166,663
===========

(1) The above designated securities have been issued as inverse floater bonds.
(2) When-issued security
(3) At January 31, 1995, the market value of securities segregated to cover when-
issued securities amounted to $2,206,898.

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 January 31, 1995,
83.7% of the securities in the portfolio of investments are backed by bond insurance
of various financial institutions and financial guaranty assurance agencies. The
aggregate percentages by financial institution were as follows at January 31, 1995:

AMBAC, Inc. (AMBAC) 5.5%
Financial Guaranty Insurance Corp. (FGIC) 25.0%
Financial Security Assurance Inc. (FSA) 5.6%
Municipal Bond Investors Assurance Corp. (MBIA) 47.6%
-----
83.7%
=====
</TABLE>

See notes to financial statements

16
<PAGE> 17
Hawaii Tax Free Portfolio
Portfolio of Investments - January 31, 1995

- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS- 100%
- --------------------------------------------------------------------------------

Aa AA $140 State of Hawaii, 5.75%,
1/1/11 $135,047

Aa AA 1,000 State of Hawaii, 5.25%,
6/1/13 886,740

Aa AA 750 City and County of
Honolulu, Hawaii, 4.75%,
9/1/17 599,475

Baa1 A 100 Commonwealth of Puerto
Rico Public Improvement,
5.25%, 7/1/18 84,223

NR BBB 340 Government of Guam,
5.375%, 11/15/13 283,655

Baa1 A 500 Puerto Rico Public Buildings
Authority, Public Education
and Health Facilities, 5.50%,
7/1/21 433,310

Baa1 A 100 Commonwealth of Puerto
Rico Aqueduct and Sewer
Authority, 7.00%, 7/1/19 102,101
-----------
$2,524,551
-----------

HOSPITALS -- 7.2%

Aa2 AA $400 State of Hawaii Department
of Budget and Finance,
Kaiser Permanente,
6.25%, 3/1/21 $381,236

A A 600 State of Hawaii Department
of Budget and Finance,
Kapiolani Health System,
6.00%, 7/1/19 530,862
-----------
$912,098
-----------

HOUSING -- 8.5%

Aa A $1,000 State of Hawaii Housing
Finance and Development
Single Family Mortgage
Bonds, 5.90%, 7/1/27 (2) $883,910

Aa A 215 State of Hawaii Housing
Finance and Development
Single Family Mortgage
Bonds, 6.00%, 7/1/26 189,280
-----------
$1,073,190
-----------

INDUSTRIAL DEVELOPMENT/
POLLUTION CONTROL -- 11.7%

NR BBB- $500 Puerto Rico Industrial,
Tourist, Educational, Medical
and Environmental Control
Authority, Polytechnic
University, 6.50%,
8/1/24 $468,970

Aaa NR 550 Puerto Rico Industrial,
Tourist, Educational,
Medical and Environmental
Control Authority, Upjohn
Company Project, 7.50%,
12/1/23 586,383

Aa3 AA- 400 Puerto Rico Industrial,
Tourist, Educational, Medical
and Environmental Control
Authority, Motorola Inc.
Project, 6.75%, 1/1/14 417,500
-----------
$1,472,853
-----------

INSURED EDUCATION -- 3.7%

Aaa AAA $500 University of Hawaii Board
of Regents, University
System, (AMBAC), 5.65%,
10/1/12 $458,160

INSURED GENERAL
OBLIGATION -- 14.4%

Aaa AAA $700 County of Hawaii, Hawaii,
(FGIC), 5.55%, 5/1/10 $655,487

Aaa AAA 305 County of Kauai, Hawaii,
(MBIA), 5.90%, 2/1/14 291,595

Aaa AAA 250 County of Maui, Hawaii,
(FGIC), 5.75%, 1/1/11 238,710
</TABLE>

17
<PAGE> 18
HAWAII TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------

Aaa AAA 250 County of Maui, Hawaii,
(FGIC), 5.125%,
12/15/13 214,138

Aaa AAA 500 Commonwealth of Puerto
Rico, (MBIA), 5.00%,
7/1/21 410,775
-----------
$1,810,705
-----------

INSURED HOSPITALS -- 6.1%

Aaa AAA $100 State of Hawaii Depart-
ment of Budget and
Finance Queen's Medical
Center, (FGIC), 6.50%,
7/1/12 $100,474

Aaa AAA 600 State of Hawaii Depart-
ment of Budget and
Finance Queen's Medical
Center, (FGIC), 6.20%,
7/1/22 574,104

Aaa AAA 100 State of Hawaii Depart-
ment of Budget and
Finance St. Francis Medical
Centers, (CGIC), 6.50%,
7/1/22 98,857
-----------
$773,435

INSURED HOUSING -- 4.2%

Aaa AAA $500 Honolulu Hawaii City &
County Mortgage Revenue
Bonds, Smith Beretania
Project, (MBIA), 7.80%,
7/1/24 $527,310
-----------

INSURED TRANSPORTATION -- 14.0%

Aaa AAA $500 State of Hawaii Airports
System, (FGIC), 7.50%,
7/1/20 $526,260

Aaa AAA 100 State of Hawaii Airports
System, (MBIA), 6.90%,
7/1/12 104,763

Aaa AAA 245 State of Hawaii Airports
System, (MBIA), 7.00%,
7/1/18 250,586

Aaa AAA 250 State of Hawaii Harbor
Revenue, (MBIA), 7.00%,
7/1/17 256,050

Aaa AAA 650 State of Hawaii Harbor
Revenue, (FGIC), 6.375%,
7/1/24 632,710
-----------
1,770,369
-----------

INSURED UTILITIES -- 4.7%

Aaa AAA $500 State of Hawaii Depart-
ment of Budget and
Finance, Hawaiian Electric
Company, Inc., (MBIA),
6.60%, 1/1/25 $495,445

Aaa AAA 100 Puerto Rico Electric Power
Authority "Stripes", Variable,
7/1/03 (1) 101,503

$596,948
-----------

SPECIAL TAX -- 2.4%

NR NR $300 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 $302,438
-----------

TRANSPORTATION -- 3.1%

Aa AA $450 State of Hawaii Highway
Revenue, 5.00%, 7/1/11 $386,563
-----------

TOTAL TAX-EXEMPT INVESTMENTS -----------
(IDENTIFIED COST, $12,713,247) $12,608,620
===========
</TABLE>

(1) The above designated securities have been issued as inverse floater
bonds.

(2) At January 31, 1995, the market value of securities segregated to cover
open financial futures amounted to $883,910.

The Portfolio invests primarily in debt securities issued by Hawaii
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 January 31, 1995, 46.3% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies.

The aggregate percentage by financial institution ranged from 3.6% to 23.3% of
total investments.

See notes to financial statements

18
<PAGE> 19
Kansas Tax Free Portfolio
Portfolio of Investments - January 31, 1995

- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------

NR BBB- $100 Puerto Rico Industrial,
Tourist, Educational, Medical
and Higher Education Bonds,
(Polytechnic University),
5.70%, 8/1/13 $86,355
----------

ELECTRIC UTILITIES -- 2.8%

NR BBB $100 Guam Power Authority
Revenue Bonds, 5.25%,
10/1/13 $82,825

NR BBB 150 Guam Power Authority
Revenue Bonds, 6.625%,
10/1/14 147,798
----------
$230,623
----------

GENERAL OBLIGATIONS
(LOCAL) -- 5.0%

Aa NR $150 Shawnee County, Kansas,
5.75%, 9/1/13 $142,134

Aa AA 170 City of Witchita, Kansas,
4.00%, 9/1/09 136,141

A1 AA- 50 City of Olathe, Johnson
County, Kansas, 5.00%,
10/1/06 44,916

Baa1 A 100 Puerto Rico Public Building
Authority Bonds, 5.50%,
7/1/21 86,662
----------
$409,853
----------

GENERAL OBLIGATIONS
(SCHOOL DISTRICTS) -- 13.2%

Aa NR $400 Douglas County, Kansas
(Lawrence), USD No. 497,
6.00%, 9/1/15 $393,484

Aaa AAA 350 Johnson County, Kansas
(Olathe), USD No. 233,
5.625%, 9/1/11 329,672

Aa AA 100 Johnson and Miami Counties,
Kansas (Blue Valley), USD
No. 229, 5.125%, 10/1/13 88,205

Aa1 AA+ 200 Johnson County, Kansas
(Shawnee Mission), USD
No. 512, 5.75%, 10/1/16 189,790

Aa NR 100 Riley County, Kansas
(Manhattan), USD No. 383,
5.50%, 11/1/14 92,296
$1,093,447
----------

HOSPITALS -- 7.6%

A NR $250 City of Lawrence, Kansas
(Lawrence Memorial),
Hospital Revenue Bonds,
6.20%, 7/1/19 $235,058

Aa NR 500 Shawnee County, Kansas,
(Sisters of Charity), Revenue
Bonds, 5.00%, 12/1/23 394,190
----------
$629,248
----------

HOUSING -- 24.4%

Aaa AAA $230 City of Kansas City, Kansas,
Multifamily Housing Revenue
Bonds, (FHA Insured-Rain-
bow Towers), 6.70%,
7/1/23 $223,726

NR AAA 250 City of Olathe, Kansas,
Multifamily Housing
Revenue Bonds (FNMA
Program Deerfield Apart-
ments), 6.45%, 6/1/19 243,983

Aaa NR 215 Cities of Olathe and of
Labette, Kansas, Collateral-
ized Single Family Mortgage
Revenue Bonds (GNMA),
8.10%, 8/1/23 231,467

NR AA 250 Puerto Rico Housing
Finance Corporation, Multi-
family Mortgage Revenue
Bonds, 7.50%, 4/1/22 260,895
</TABLE>

<PAGE> 20
KANSAS TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------

Aaa AAA 100 Sedgwick and Shawnee
Counties, Kansas, Collateral-
ized Single Family Mortgage
Revenue Bonds (GNMA),
7.50%, 12/1/09 102,637

Aaa AAA 140 Sedgwick and Shawnee
Counties, Kansas, Collateral-
ized Single Family Mortgage
Revenue Bonds (GNMA),
7.50%, 12/1/10 143,692

Aaa NR 240 Sedgwick and Shawnee
Counties, Kansas, Collateral-
ized Single Family Mortgage
Revenue Bonds (GNMA),
7.75%, 11/1/24 (2) 259,800

Aaa NR 500 Sedgwick and Shawnee
Counties, Kansas, Collateral-
ized Single Family Mortgage
Revenue Bonds (GNMA),
8.00%, 11/1/24 553,230
-----------
$2,019,429
-----------

INDUSTRIAL DEVELOPMENT
REVENUE -- 1.0%

Aaa NR $100 Puerto Rico I.M.E.
(American Home Products),
5.10%, 12/1/18 $81,080

INSURED ELECTRIC -- 1.2%

Aaa AAA $100 Puerto Rico Electric Power
Authority, Power Revenue
Bonds (FSA), Residual
Interest Bonds, Variable
Rate, 7/1/02 (1) $101,237

INSURED GENERAL
OBLIGATIONS -- 10.7%

Aaa AAA $200 City of Burlington, Kansas,
PCR (Kansas Gas & Electric
Co.) (MBIA), 7.00%,
6/1/31 (2) $207,710

Aaa AAA 200 City of Emporia, Kansas,
Water System Revenue
Bonds (AMBAC), 5.875%,
12/1/14 189,568

Aaa AAA 150 City of Garnett, Kansas,
Combined Utility Revenue
Bonds (MBIA), 6.00%,
10/1/17 143,205

Aaa AAA 200 City of Kansas City, Kansas,
Utility System Revenue
Bonds (FGIC), 6.375%,
9/1/23 200,068

Aaa AAA 150 Kansas Development
Finance Authority, Revenue
Bonds (MBIA), 5.90%,
10/1/09 145,835
-----------
$886,386
-----------

INSURED GENERAL OBLIGATIONS
(SCHOOL DISTRICTS) -- 13.7%

Aaa AAA $200 Johnson and Miami
Counties, Kansas (Blue
Valley), USD No. 229,
(FGIC), 4.90%, 9/01/10 $173,364

Aaa AAA 235 McPherson County, Kansas
(McPherson), USD No. 418,
(CGIC), 6.00%, 9/1/11 228,742

Aaa AAA 200 Sedgwick County, Kansas,
USD No. 266, (FGIC),
5.25%, 9/1/13 177,996

Aaa AAA 250 Sedgwick County, Kansas,
USD No. 267, (AMBAC),
6.15%, 11/1/09 252,710

Aaa AAA 165 Shawnee County, Kansas
(Seaman), USD No. 345,
(MBIA), 5.75%, 9/1/11 158,029

Aaa AAA 150 Sumner County, Kansas
(Belle Plaine), USD
No. 357, (AMBAC),
5.55%, 9/1/13 138,087
-----------
$1,128,928
-----------
</TABLE>

20
<PAGE> 21
KANSAS TAX FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------

Aaa AAA $200 City of Olathe, Kansas, Health
Facilities Revenue Bonds,
(Olathe Medical Ctr)
(AMBAC), 6.00%,
9/1/11 $194,674

Aaa AAA 200 City of Olathe, Kansas,
Health Facilities Revenue
Bonds, (Evangelical Lutheran
Good Samaritan Society)
(AMBAC), 6.00%,
5/1/19 191,138
-----------
$385,812
-----------

INSURED TOLLS &
TURNPIKES -- 0.5%

Aaa AAA $50 Kansas Turnpike Authority
Turnpike Revenue Bonds
(AMBAC), 5.25%,
9/1/17 $43,022
-----------

INSURED WATER & SEWER -- 0.9%

Aaa AAA $80 City of Salina, Kansas, Water
and Sewage Systems, Revenue
Bonds, 5.25%, 9/1/12 $70,914
-----------

TRANSPORTATION -- 11.1%

NR BBB $100 Guam Airport Authority
General Revenue Bonds,
6.50%, 10/1/23 $95,500

Aa AA 480 State of Kansas Dept. of Trans-
portation Highway Revenue
Bonds, 5.375%, 3/1/13 429,619

Aa AA 110 State of Kansas Dept. of Trans-
portation Highway Revenue
Bonds, 4.625%, 9/1/06 95,594

Baa3 BB+ 100 Puerto Rico Port Authority,
(American Airlines),
6.30%, 6/1/23 88,194

Baa1 A 250 Puerto Rico Highway and
Transportation Authority,
Highway Revenue Bonds,
5.25%, 7/1/20 207,608
-----------
$916,515
-----------

WATER & SEWER -- 2.2%

Aa AA+ $200 Water District No. 1 of
Johnson County, Kansas,
Water Revenue Bonds,
5.75%, 12/1/19 $186,216
-----------

TOTAL TAX-EXEMPT INVESTMENTS
(IDENTIFIED COST, $8,379,180) $8,269,065
===========
</TABLE>

(1) The above designated securities have been issued as inverse floater
bonds.
(2) At January 31, 1995, the market value of securities segregated to cover
open financial futures contracts amounted to $467,510.

The Portfolio invests primarily in debt securities issued by Kansas
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 January 31, 1995, 31.7% 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 6.6% to 16.1% of
total investments.

See notes to financial statements

21
<PAGE> 22

Tax Free Portfolios
Financial Statements

STATEMENTS OF ASSETS AND LIABILITIES
January 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
FLORIDA INSURED HAWAII KANSAS
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------ -----------
<S> <C> <C> <C>
ASSETS:
Investments-
Identified cost $ 13,938,422 $ 12,713,247 $ 8,379,180
Unrealized appreciation (depreciation) 228,241 (104,627) (110,115)
------------ ------------ -----------
Total investments, at value (Note 1A) $ 14,166,663 $ 12,608,620 $ 8,269,065
Cash 1,284,005 105,379 470,032
Receivable from investments sold - - 203,441
Receivable from the Investment Adviser (Note 2) 13,139 13,430 12,847
Interest receivable 194,758 134,887 164,759
Deferred organization expenses (Note 1D) 9,902 9,056 8,956
Total assets $ 15,668,467 $ 12,871,372 $ 9,129,100
------------ ------------ -----------

LIABILITIES:
Payable for investments purchased $ - $ - $ 818,054
Payable for when-issued securities (Note 1F) 1,265,667 - -
Payable for daily variation margin on open financial
futures contracts (Note 1E) - 3,750 1,875
Payable to affiliates -
Trustee fees 13 13 13
Custodian fees 250 250 250
Accrued expenses 2,586 2,820 2,880
------------ ------------ -----------
Total liabilities $ 1,268,516 $ 6,833 $ 823,072
------------ ------------ -----------
Net assets applicable to investors' interest in Portfolio $ 14,399,951 $ 12,864,539 $ 8,306,028
============ ============ ===========

SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $ 14,171,710 $ 12,984,517 $ 8,423,756
Unrealized appreciation(depreciation) of investments
(computed on the basis of identified cost) 228,241 (119,978) (117,728)
------------ ------------ -----------
Total $ 14,399,951 $ 12,864,539 $ 8,306,028
============ ============ ===========
</TABLE>

See notes to financial statements

<PAGE> 23
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FLORIDA INSURED HAWAII KANSAS
PORTFOLIO* PORTFOLIO* PORTFOLIO*
--------------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $308,363 $501,917 $275,594
--------- ---------- ----------
Expenses-
Investment adviser fee (Note 2) $8,420 $13,231 $7,589
Compensation of Trustees not members
of the Investment Advisors organization 53 94 53
Custodian fees (Note 2) 3,818 3,834 3,363
Interest expense - 4,998 374
Bond pricing 2,986 3,397 3,100
Printing 2,592 2,592 2,592
Amortization of organization expenses (Note 1D) 2,227 2,027 2,011
Legal and accounting fees 1,126 1,128 1,127
Miscellaneous 729 265 601
--------- ---------- ----------
Total expenses $21,951 $31,566 $20,810
--------- ---------- ----------
Deduct-
Reduction of investment adviser fee (Note 2) $8,420 $13,231 $7,589
Allocation of expenses to the Investment Adviser (Note 2) 13,139 13,430 12,847
--------- ---------- ----------
Total $21,559 $26,661 $20,436
--------- ---------- ----------

Net expenses $392 $4,905 374
--------- ---------- ----------

Net investment income $307,971 $497,012 $275,220
--------- ---------- ----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) -
Investment transactions (identified cost basis) $(54,985) $(493,864) $(15,988)
Financial futures contracts (2,527) (13,578) (6,794)
--------- ---------- ----------
Net realized loss on investments $(57,512) $(507,442) $(22,782)
--------- ---------- ----------

Unrealized appreciation(depreciation) -
Investments $228,241 $(104,627) $(110,115)
Financial futures contracts - (15,351) (7,613)
--------- ---------- ----------
Net unrealized appreciation (depreciation) of investments $228,241 $(119,978) $(117,728)
--------- ---------- ----------
Net realized and unrealized gain (loss) on investments $170,729 $(627,420) $(140,510)
--------- ---------- ----------
Net increase (decrease) in net assets from operations $478,700 $(130,408) $134,710
========= ========== ==========
</TABLE>

* For the period from the start of business, March 2, 1994, to January 31,
1995.

See notes to financial statements

23
<PAGE> 24

STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FLORIDA INSURED HAWAII KANSAS
PORTFOLIO(*) PORTFOLIO(*) PORTFOLIO(*)
--------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income $ 307,971 $ 497,012 $ 275,220
Net realized loss on investment transactions (57,512) (507,442) (22,782)
Unrealized appreciation (depreciation) of investments 228,241 (119,978) (117,728)
------------- ------------ -----------
Net increase (decrease) in net assets from operations $ 478,700 $ (130,408) $ 134,710
------------- ------------ -----------

Capital transactions -
Contributions $ 16,016,246 $ 13,464,081 $ 9,002,789
Withdrawals (2,195,015) (569,154) (931,491)
------------- ------------ -----------
Increase in net assets resulting from capital transactions $ 13,821,231 $ 12,894,927 $ 8,071,298
------------- ------------ -----------
Total increase in net assets $ 14,299,931 $ 12,764,519 $ 8,206,008
NET ASSETS:
At beginning of period 100,020 100,020 100,020
------------- ------------ -----------
At end of period $ 14,399,951 $ 12,864,539 $ 8,306,028
============= ============ ===========
</TABLE>

(*) For the period from the start of business, March 2, 1994, to January 31,
1995

SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
FLORIDA INSURED HAWAII KANSAS
PORTFOLIO(*) PORTFOLIO(*) PORTFOLIO(*)
--------------- ------------ ------------
<S> <C> <C> <C>
Ratios (As a percentage of average daily net assets)(**):
Net expenses 0.01%(+) 0.06%(+) 0.01%(+)
Net investment income 5.73%(+) 6.03%(+) 5.68%(+)

PORTFOLIO TURNOVER 33% 66% 12%
</TABLE>

(**) The operating expenses of the Portfolios may reflect 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:

<TABLE>
<S> <C> <C> <C>
RATIOS (As a percentage of average daily net assets):
Expenses 0.41%(+) 0.38%(+) 0.43%(+)
Net investment income 5.33%(+) 5.70%(+) 5.26%(+)
</TABLE>

(+) Annualized.
(*) For the period from the start of business, March 2, 1994, to January 31,
1995.

See notes to financial statements

24
<PAGE> 25
Notes to Financial Statements

- -------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES

Florida Insured Tax Free Portfolio ("Florida Insured Portfolio"), Hawaii Tax
Free Portfolio ("Hawaii Portfolio") and Kansas Tax Free Portfolio ("Kansas
Portfolio"), collectively the Portfolios, are registered under the Investment
Company Act of 1940 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 for the Hawaii Portfolio and October 25, 1993 for the Florida Insured
Portfolio and Kansas Portfolio. 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. 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 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, deductions 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 beginning on the date each Portfolio commenced
operations.

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. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Portfolios may engage
in when-issued or 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 payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin accruing interest on settlement date.

G. OTHER -- Investment transactions are accounted for on a trade date basis.

25
<PAGE> 26
- -------------------------------------------------------------------------------
(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 period ended January 31, 1995, the fee for the Florida Insured Portfolio,
Hawaii Portfolio and Kansas Portfolio was equivalent to 0.16%, 0.16% and 0.16%
(annualized), respectively, of each Portfolio's average net assets for such
period and amounted to $8,420, $13,231, and $7,589, respectively. To enhance
the net income of the Florida Insured Portfolio, Hawaii Portfolio and Kansas
Portfolio, BMR made a reduction of its fee in the amount of $8,420, $13,231 and
$7,589, respectively, and $13,139, $13,430 and $12,847, respectively, of
expenses related to the operation of the Portfolios were allocated, to BMR.
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. Investors Bank & Trust
Company (IB&T), an affiliate of EVM and BMR, serves as custodian of the
Portfolios. Pursuant to the respective custodian agreements, IB&T receives a
fee reduced by credits which are determined based on the average daily cash
balances each Portfolio maintains with IB&T. Certain of the officers and
Trustees of the Portfolios are officers and directors/trustees of the above
organizations. Trustees of the Portfolios 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 from the start of business of each Portfolio to January
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, for the period from the start of business, March 2,
1994, to January 31, 1995, were as follows:

<TABLE>
<CAPTION>
FLORIDA INSURED PORTFOLIO HAWAII PORTFOLIO KANSAS PORTFOLIO
------------------------- ---------------- ----------------
<S> <C> <C> <C>
Purchases $ 15,828,032 $ 19,368,230 $ 8,772,482
Sales $ 1,844,032 $ 6,161,493 $ 381,284

</TABLE>
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS

The cost and unrealized appreciation (depreciation) in value of the investments
owned by each Portfolio at January 31, 1995, as computed on a federal income
tax basis, are as follows:

<TABLE>
<CAPTION>
FLORIDA INSURED PORTFOLIO HAWAII PORTFOLIO KANSAS PORTFOLIO
------------------------- ---------------- ----------------
<S> <C> <C> <C>
Aggregate Cost $ 13,938,422 $ 12,713,247 $ 8,379,180
============== ============== =============
Gross unrealized appreciation $ 330,938 $ 195,418 $ 45,850
Gross unrealized depreciation (102,697) (300,045) (155,965)
-------------- -------------- -------------
Net unrealized appreciation (depreciation) $ 228,241 $ (104,627) $ (110,115)
============== ============== =============
</TABLE>
- --------------------------------------------------------------------------------
(5) LINE OF CREDIT

The Portfolios participate with other portfolios and funds managed by BMR and
EVM in a $120 million unsecured line of credit agreement with a bank. The line
of credit consists of a $20 million committed facility and a $100 million
discretionary facility. Borrowings will be made by the Portfolios solely to
facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Interest is charged to each Portfolio or fund based on its
borrowings at an amount above either the bank's adjusted certificate of deposit
rate, a variable adjusted certificate of deposit rate, or a federal funds
effective rate. In addition, a fee computed at an annual rate of 1/4 of 1% on
the $20 million committed facility and on the daily unused portion of the $100
million discretionary facility is allocated among the participating funds and
portfolios at the end of each quarter. The Florida Insured Portfolio and the
Kansas Portfolio did not have any significant borrowings or allocated fees
during the period. For the Hawaii Portfolio, the average daily loan balance for
the period from the start of business, March 2, 1994, to January 31, 1995 was
$247,000 and the average interest rate was 5.82%. The maximum borrowings
outstanding for the Hawaii Portfolio at any month end during the period from
the start of business, March 2, 1994, to January 31, 1995 was $790,000.

26
<PAGE> 27
(6) FINANCIAL INSTRUMENTS

The Portfolios regularly trade in financial instruments with off-balance sheet
risk in the normal course of their investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options and futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes.

The notional or contractual amounts of these instruments represent the
investment a Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.

A summary of obligations under these financial instruments at January 31, 1995
is as follows:

<TABLE>
<CAPTION>
FUTURES CONTRACTS NET UNREALIZED
PORTFOLIO EXPIRATION DATE CONTRACTS POSITION DEPRECIATION
- --------- --------------- --------- -------- ------------
<S> <C> <C> <C> <C>
Florida Insured - - - -
Hawaii 3/95 8 U.S. Treasury Short $ 15,351
Kansas 3/95 4 U.S. Treasury Short $ 7,613
</TABLE>

At January 31, 1995 each Portfolio had sufficient cash and/or securities to
cover margin requirements on open futures contracts.

27
<PAGE> 28
INDEPENDENT AUDITORS' REPORT

To the Trustees and Shareholders of:
Florida Insured Tax Free Portfolio
Hawaii Tax Free Portfolio
Kansas Tax Free Portfolio

We have audited the accompanying statements of assets and liabilities including
the portfolio of investments of Florida Insured Tax Free Portfolio, Hawaii Tax
Free Portfolio and Kansas Tax Free Portfolio as of January 31, 1995 and the
related statements of operations, the statements of changes in net assets and
supplementary data for the period from the start of business, March 2, 1994, to
January 31, 1995. These financial statements and supplementary data are the
responsibility of each 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. These standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and
supplementary data are free of material misstatement. Our procedures included
comfirmation of securities owned at January 31, 1995 by correspondence with the
custodian and brokers. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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 Florida Insured Tax
Free Portfolio, Hawaii Tax Free Portfolio, and Kansas Tax Free Portfolio at
January 31, 1995, the results of their operations, the changes in their net
assets, and their supplementary data for the period from the start of business,
March 2, 1994, to January 31, 1995 in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
March 2, 1995

28
<PAGE> 29
Investment Management
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
FUNDS OFFICERS INDEPENDENT TRUSTEES

THOMAS J. FETTER DONALD R. DWIGHT
President President, Dwight Partners, Inc.
Chairman, Newspaper of New England, Inc.
JAMES B. HAWKES
Vice President, Trustee SAMUEL L. HAYES, III
Jacob H. Schiff Professor of Investment Banking, Harvard
ROBERT MACINTOSH University Graduate School of Business Administration
Vice President
NORTON H. REAMER
JAMES L. O'CONNOR President and Director, United Asset Management Corporation
Treasurer
JOHN L. THORNDIKE
BARBARA E. CAMPBELL Director, Fiduciary Trust Company
Assistant Treasurer
JACK L. TREYNOR
DOUGLAS C. MILLER Investment Adviser and Consultant
Assistant Treasurer

THOMAS OTIS
Secretary

JANET E. SANDERS
Assistant Treasurer and
Assistant Secretary

- -----------------------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OFFICERS INDEPENDENT TRUSTEES

THOMAS J. FETTER DONALD R. DWIGHT
President and Portfolio Manager of Florida President, Dwight Partners, Inc.
Insured Tax Free Portfolio Chairman, Newspaper of New England, Inc.

JAMES B. HAWKES SAMUEL L. HAYES, III
Vice President, Trustee Jacob H. Schiff Professor of Investment Banking, Harvard
University Graduate School of Business Administration
ROBERT MACINTOSH
Vice President and Portfolio Manager of NORTON H. REAMER
Hawaii Tax Free Portfolio President and Director, United Asset Management Corporation

NICOLE ANDERES JOHN L. THORNDIKE
Portfolio Manager of Director, Fiduciary Trust Company
Kansas Tax Free Portfolio
JACK L. TREYNOR
JAMES L. O'CONNOR Investment Adviser and Consultant
Treasurer

BARBARA E. CAMPBELL
Assistant Treasurer

THOMAS OTIS
Secretary

JANET E. SANDERS
Assistant Treasurer and
Assistant Secretary
</TABLE>

29
<PAGE> 30
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

INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110

30
<PAGE> 31
(THIS SPACE INTENTIONALLY LEFT BLANK.)

31
<PAGE> 32
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.

EATON VANCE MUNICIPALS TRUST II
24 FEDERAL STREET
BOSTON, MA 02110

C-3CSRC