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[LOGO OF EATON VANCE MUTUAL FUNDS APPEARS HERE]
[PHOTO OF BRICK WALL WITH
"EDUCATION" SIGN APPEARS HERE]
Annual Report January 31, 1999
Eaton Vance
[PHOTO OF HIGHWAY AT Municipals Florida Insured
NIGHT APPEARS HERE] Trust II
Hawaii
Kansas
[PHOTO OF SUSPENSION BRIDGE APPEARS HERE]
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Eaton Vance Municipals Funds as of January 31, 1999
Letter to Shareholders
[PHOTO OF APPEARS HERE]
Thomas J. Fetter, President
1998 was another favorable year for the municipal bond market. Continued low
inflation and a declining interest rate environment helped provide positive
returns for the tax-exempt sector. U.S. economic growth was more robust than
expected in the fourth quarter. Gross Domestic Product (GDP) grew 6.1%, the
fastest quarterly pace in nearly 15 years, making the GDP growth rate 4.3% for
all of 1998. The economy's strong performance at year-end was attributed to
vigorous consumer spending and a shrinking trade deficit.
Municipal bonds again trailed the Treasury market, which rallied strongly as
foreign and domestic investors sought quality in an uncertain global economic
outlook. In addition, a heavy new issue calendar produced supply pressures for
the tax-exempt market. More than $300 billion in new municipal issues came to
market in 1998. Nonetheless, the tax-exempt market performed well, with the
Lehman Brothers Municipal Bond Index- a widely recognized, unmanaged index of
municipal bonds - posting a return of 6.6% for the year.*
Municipal bonds are now among the most undervalued asset classes...
As the year ended, municipal bonds represented one of the most undervalued asset
classes in the financial markets. Historically, municipal bond yields have
averaged around 85% of Treasury bond yields. However, in the flight to
Treasuries that characterized the bond market in late 1998, that ratio has been
skewed dramatically. At December 31, 1998, representative 30-year tax-exempt
bonds were yielding 5.06%, or nearly 100% of 30-year Treasury yields!
Considering their tax-exemption, that is one of the true market anomalies of the
decade. By any measure of historical valuation, municipal bonds today represent
a remarkable bargain.
*It is not possible to invest directly in an Index.
[BAR CHART APPEARS HERE]
Municipal bonds yield nearly 100% of Treasury yields
30-Year AAA rated Taxable equivalent yield
General Obligation (60) Bonds* in 36% tax bracket
5.06% 2.91%
30-Year Treasury bond
5.09%
Principal and interest payments of Treasury securities are guaranteed by the
U.S. government.
*60 yields are a compilation of a representative variety of general obligations
and are not necessarily representative of the Fund's yield. Statistics as of
January 31, 1999.
Past performance is no guarantee of future results.
Source: Bloomberg L.P.
Taxes remain high, while tax reform is again stalled in Congress...
The election year promises of tax cuts appear to have been all but forgotten in
Washington. Meanwhile, it is estimated that the average American worked until
May 10 to pay his or her taxes in 1998, according to the Tax Foundation. That
poses an enormous financial burden - and an increasing challenge for those who
may be simultaneously paying for college tuition, caring for elderly parents, or
trying to plan for their own retirement.
Amid low inflation and growing federal budget surpluses, we believe that the
outlook for bonds remains favorable. At their recent levels, municipal bonds are
especially attractive. Moreover, municipal bonds remain an excellent
fixed-income alternative - to diversify one's investment portfolio and to help
lower one's tax burden.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
President
March 9, 1999
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Mutual fund shares are not insured by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
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2
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Eaton Vance Florida Insured Municipals Fund as of January 31, 1999
INVESTMENT UPDATE
[PHOTO APPEARS HERE]
Cynthia J. Clemson
Portfolio Manager
The Economy
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. Florida registered strong job growth in 1998. During the past three years, the
state has added more than 300,000 jobs to service sector payrolls, with
especially strong growth in hotel, motel, and recreational services. The
health care sector also benefited from continuing strong demand.
. While last summer's brushfires caused a temporary setback to the Florida
tourism industry, theme park and convention center expansions are expected to
generate new momentum in 1999. The Orlando area, home to nine full-scale theme
parks, will receive a major boost from its $3 billion airport expansion.
. Florida's trade sector has suffered with the weakness in Asia and Latin
America. Continuing recession in Japan has resulted in significantly lower
exports of citrus fruit and chemicals, while the perilous financial condition
of Brazil, the state's largest trade market, continues to pose a risk to Latin
America-bound exports.
The Fund
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. During the year ended January 31, 1999, the Fund's Class A and Class B shares
had total returns of 6.5% and 5.8%, respectively.1 For Class A, this return
resulted from an increase in net asset value (NAV) per share to $11.54 on
January 31, 1999 from $11.37 on January 31, 1998, and the reinvestment of
$0.552 per share in tax-free income.2 For Class B, this return resulted from
an increase in NAV to $11.40 from $11.23, and the reinvestment of $0.468 per
share in tax-free income.2
. Based on the Fund's most recent dividends and NAVs on January 31, 1999 of
$11.54 per share for Class A and $11.40 for Class B, the distribution rates
were 4.68% and 3.90%, respectively.3
. The SEC 30-day yields for Class A and B shares at January 31 were 3.93% and
3.34%, respectively.4
Management Update
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. Management maintained a barbell strategy during the year. A portion of the
Portfolio consisted of lower and current coupon, insured bonds+ for liquidity
and performance. Another portion, of higher-coupon issues, provided a good
income component.
. In 1998, the municipal market was again marked by a significant calling of
higher-coupon bonds. For that reason, the Portfolio continued to emphasize
call protection and trading short call bonds for those with longer call dates.
. At January 31, the Portfolio was 98.1% invested in issues rated AAA. Given the
narrow yield differentials between municipals and Treasury bonds, the Fund
offered unusually good value for tax-conscious shareholders.
Your Investment at Work
- ----------------------------------------------------------[GRAPHIC APPEARS HERE]
Miami-Dade County
School District Bonds
. The Miami Dade County School District Authority oversees public elementary and
secondary education in Dade County, the most populous county in Florida.
. The proceeds of the 1998 bonds were used to pre-refund a previous,
higher-coupon issue of the Authority.
. The bond represented an insured+ general obligation with an attractive 5.375%
coupon. The bonds were additionally attractive because they are non-callable.
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/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares. /2/ A portion of the Fund's income could be subject to federal
income tax and/or alternative minimum tax. /3/ The Fund's distribution rate
represents actual distributions paid to shareholders and is calculated by
dividing the last distribution per share (annualized) by the net asset
value. /4/ The Fund's SEC yield is calculated by dividing the net investment
income per share for the 30-day period by the offering price at the end of
the period and annualizing the result. /5/ Returns are historical and are
calculated by determining the percentage change in net asset value with all
distributions reinvested. SEC returns for Class A reflect the maximum 4.75%
sales charge. SEC returns for Class B reflect applicable CDSC based on the
following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year;
2% -5th year; 1% - 6th year. +Private insurance does not decrease the risk
of loss of principal associated with this investment.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information
as of January 31, 1999
Performance/5/ Class A Class B
Average Annual Total Returns (at net asset value)
One Year 6.5% 5.8%
Life of Fund++ 8.4 7.5
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
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One Year 1.4% 0.8%
Life of Fund++ 7.3 7.1
++Inception date: Class A: 3/3/94; Class B: 3/2/94
Comparison of Change in Value of a $10,000 Investment in
Eaton Vance Florida Insured Municipals Fund, Class B vs.
Lehman Brothers Municipal Bond Index
Date Fund/NAV LBMBI
---- -------- -----
3/31/94 $10,000 $10,000
4/30/94 $10,403 $10,085
5/31/94 $10,561 $10,172
6/30/94 $10,456 $10,113
7/31/94 $10,696 $10,295
8/31/94 $10,666 $10,331
9/30/94 $10,471 $10,180
10/31/94 $10,194 $9,999
11/30/94 $9,975 $9,818
12/31/94 $10,319 $10,034
1/31/95 $10,710 $10,321
2/28/95 $11,120 $10,621
3/31/95 $11,172 $10,743
4/30/95 $11,167 $10,756
5/31/95 $11,441 $11,099
6/30/95 $11,190 $11,002
7/31/95 $11,259 $11,106
8/31/95 $11,336 $11,247
9/30/95 $11,404 $11,318
10/31/95 $11,634 $11,483
11/30/95 $11,940 $11,673
12/31/95 $12,128 $11,785
1/31/96 $12,143 $11,874
2/28/96 $11,981 $11,794
3/31/96 $11,751 $11,644
4/30/96 $11,710 $11,610
5/31/96 $11,711 $11,606
6/30/96 $11,828 $11,733
7/31/96 $11,937 $11,839
8/31/96 $11,915 $11,836
9/30/96 $12,121 $12,001
10/31/96 $12,188 $12,137
11/30/96 $12,383 $12,359
12/31/96 $12,294 $12,307
1/31/97 $12,282 $12,331
2/28/97 $12,414 $12,444
3/31/97 $12,213 $12,278
4/30/97 $12,292 $12,381
5/31/97 $12,500 $12,567
6/30/97 $12,630 $12,701
7/31/97 $12,991 $13,053
8/31/97 $12,792 $12,930
9/30/97 $12,958 $13,084
10/31/97 $13,076 $13,168
11/30/97 $13,163 $13,245
12/31/97 $13,374 $13,439
1/31/98 $13,458 $13,577
2/28/98 $13,474 $13,581
3/31/98 $13,468 $13,593
4/30/98 $13,395 $13,532
5/31/98 $13,612 $13,746
6/30/98 $13,674 $13,800
7/31/98 $13,710 $13,835
8/31/98 $13,935 $14,049
9/30/98 $14,093 $14,224
10/31/98 $14,027 $14,223
11/30/98 $14,088 $14,273
12/31/98 $14,081 $14,309
1/31/99 $14,241 $14,479
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
3/2/94. Index information is available only at month-end; therefore, the line
comparison begins at the next month following the commencement of the Fund's
investment operations. The chart compares the total return of the Fund's Class
B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 3/31/94 at net asset value would have grown to $14,838 on January
31, 1999; $14,131, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
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Federal income tax information on distributions. For federal income tax
purposes, 99.17% of the total dividends paid by the Fund from net investment
income during the year ended January 31, 1999 was designated as an
exempt-interest dividend.
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3
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Eaton Vance Hawaii Municipals Fund as of January 31, 1999
INVESTMENT UPDATE
[PHOTO APPEARS HERE]
Robert B. MacIntosh
Portfolio Manager
The Economy
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. Hawaii's economy remained weak in the final months of 1998. For the year,
state gross product grew just 1.5%, a significantly slower pace than that of
the nation. The weakness of the Asian economies and the weak Japanese yen
continues to have a dampening effect on the Hawaiian economy.
. The tourism industry, hurt by the continuing recession in Japan, posted
another weak showing in 1998. Total visitor arrivals were down 1.5% for the
year. The Big Island proved an exception to this trend, as its new, expanded
Kona runway attracted rising tourist volumes.
. Interestingly, despite the weakness in industries that depend upon external
money inflow, the local economy has mounted a modest comeback. Personal income
rose 2.0% in 1998 and neighborhood retailers reported stronger sales. Small
business and self-employed workers are increasingly accounting for job growth
in a slowly diversifying economy.
The Fund
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. During the year ended January 31, 1999, the Fund's Class A and Class B shares
had total returns of 6.3% and 5.3%, respectively./1/ For Class A, this return
resulted from an increase in net asset value (NAV) per share to $10.05 on
January 31, 1999 from $9.93 on January 31, 1998, and the reinvestment of
$0.492 per share in tax-free income./2/ For Class B, this return resulted from
an increase in NAV to $10.20 from $10.13, and the reinvestment of $0.452 per
share in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on January 31, 1999 of
$10.05 per share for Class A and $10.20 for Class B, the distribution rates
were 4.96% and 4.26%, respectively./3/
. The SEC 30-day yields for Class A and B shares at January 31 were 4.38% and
3.87%, respectively./4/
Management Update
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. Amid a shortage of Hawaii bonds, we sought opportunities to purchase
attractive coupons. One such issue was a 5.625% industrial development bond
for Continental Airlines. The passenger carrier is trying to expand its
foothold in the lucrative Hawaii market.
. Given a sluggish Hawaiian economy, the Portfolio underweighted Hawaii general
obligations (GOs). Hawaii GOs were downgraded in mid-1998 and have remained
under the close scrutiny of ratings agencies.
. The Portfolio has increasingly emphasized insured+ bonds, which offered
quality, liquidity, and performance. We also continued to upgrade call
protection, thereby adding potential for capital appreciation without
sacrificing yield.
Your Investment at Work
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Hawaii State Housing
Development Corp. [GRAPHIC APPEARS HERE]
University of Hawaii
. The Housing Development Authority was created to finance the construction of
public, housing-related projects, including educational facilities for the
University of Hawaii.
. The proceeds of these bonds were used to finance construction and renovation
projects for University dormitories and ongoing maintenance.
. The insured+ bonds have a 5.65% coupon and represent a very liquid investment
in a well-known issuer. In addition, the bonds provide excellent call
protection.
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/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares. /2/ A portion of the Fund's income could be subject to federal and
state income tax and/or alternative minimum tax. /3/ The Fund's distribution
rate represents actual distributions paid to shareholders and is calculated
by dividing the last distribution per share (annualized) by the net asset
value./4/ The Fund's SEC yield is calculated by dividing the net investment
income per share for the 30-day period by the offering price at the end of
the period and annualizing the result. /5/ Returns are historical and are
calculated by determining the percentage change in net asset value with all
distributions reinvested. SEC returns for Class A reflect the maximum 4.75%
sales charge. SEC returns for Class B reflect applicable CDSC based on the
following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year;
2% -5th year; 1% - 6th year. +Private insurance does not decrease the risk
of loss of principal associated with this investment.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
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Fund Information
as of January 31, 1999
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 6.3% 5.3%
Life of Fund++ 5.3 5.4
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 1.3% 0.3%
Life of Fund+ 4.3 5.1
++Inception date: Class A: 3/14/94; Class B: 3/2/94
Comparison of Change in Value of a $10,000 Investment
in Eaton Vance Hawaii Municipals Fund, Class B vs.
Lehman Brothers Municipal Bond Index
Date Fund/NAV LBMBI
---- -------- -----
3/31/94 $10,000 $10,000
4/30/94 $10,023 $10,085
5/31/94 $10,101 $10,172
6/30/94 $9,949 $10,113
7/31/94 $10,134 $10,295
8/31/94 $10,152 $10,331
9/30/94 $9,968 $10,180
10/31/94 $9,668 $9,999
11/30/94 $9,394 $9,818
12/31/94 $9,631 $10,034
1/31/95 $9,926 $10,321
2/28/95 $10,285 $10,621
3/31/95 $10,413 $10,743
4/30/95 $10,395 $10,756
5/31/95 $10,689 $11,099
6/30/95 $10,514 $11,002
7/31/95 $10,606 $11,106
8/31/95 $10,694 $11,247
9/30/95 $10,785 $11,318
10/31/95 $10,944 $11,483
11/30/95 $11,159 $11,673
12/31/95 $11,307 $11,785
1/31/96 $11,389 $11,874
2/28/96 $11,274 $11,794
3/31/96 $11,100 $11,644
4/30/96 $11,066 $11,610
5/31/96 $11,029 $11,606
6/30/96 $11,161 $11,733
7/31/96 $11,262 $11,839
8/31/96 $11,238 $11,836
9/30/96 $11,404 $12,001
10/31/96 $11,520 $12,137
11/30/96 $11,710 $12,359
12/31/96 $11,663 $12,307
1/31/97 $11,662 $12,331
2/28/97 $11,761 $12,444
3/31/97 $11,585 $12,278
4/30/97 $11,690 $12,381
5/31/97 $11,857 $12,567
6/30/97 $11,955 $12,701
7/31/97 $12,293 $13,053
8/31/97 $12,157 $12,930
9/30/97 $12,267 $13,084
10/31/97 $12,351 $13,168
11/30/97 $12,416 $13,245
12/31/97 $12,609 $13,439
1/31/98 $12,720 $13,577
2/28/98 $12,709 $13,581
3/31/98 $12,702 $13,593
4/30/98 $12,585 $13,532
5/31/98 $12,811 $13,746
6/30/98 $12,835 $13,800
7/31/98 $12,858 $13,835
8/31/98 $13,091 $14,049
9/30/98 $13,255 $14,224
10/31/98 $13,198 $14,223
11/30/98 $13,247 $14,273
12/31/98 $13,240 $14,309
1/31/99 $13,393 $14,479
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
3/2/94. Index information is available only at month-end; therefore, the line
comparison begins at the next month following the commencement of the Fund's
investment operations.The chart compares the total return of the Fund's Class
B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 3/31/94 at net asset value would have grown to $13,492 on January
31, 1999; $12,847, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
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Federal income tax information on distributions. For federal income tax
purposes, 98.96% of the total dividends paid by the Fund from net investment
income during the year ended January 31, 1999 was designated as an
exempt-interest dividend.
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4
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Eaton Vance Kansas Municipals Fund as of January 31, 1999
INVESTMENT UPDATE
[PHOTO APPEARS HERE]
Timothy T. Browse
Portfolio Manager
The Economy
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. The Kansas economy turned in another strong showing in 1998, registering
employment growth for the year of around 2.8%. Kansans' personal income, which
rose a robust 6.4% in 1997, climbed a healthy 4.9% in 1998. The state had a
3.7% unemployment rate in January, up slightly from the 3.6% rate of a year
earlier, but still well below the national rate.
. Job growth was especially strong in durable goods manufacturing, due to
large-scale hiring in the aircraft industry. The construction, transportation,
and utilities sectors were also responsible for significant job creation.
. Consistent with a trend toward a more diversified state economy, employment in
the finance, insurance and real estate industries is expected to increase
steadily in Kansas in coming years.
The Fund
- --------------------------------------------------------------------------------
. During the year ended January 31, 1999, the Fund's Class A and Class B shares
had total returns of 5.8% and 5.0%, respectively.1 For Class A, this return
resulted from an increase in net asset value (NAV) per share to $10.47 on
January 31, 1999 from $10.46 on January 31, 1998, and the reinvestment of
$0.522 per share in tax-free income.2 For Class B, this return resulted from a
decline in NAV to $10.37 from $10.38, and the reinvestment of $0.456 per share
in tax-free income./2/
. Based on the Fund's most recent dividends and NAVs on January 31, 1999 of
$10.47 per share for Class A and $10.37 for Class B, the distribution rates
were 5.04% and 4.27%, respectively./3/
. The SEC 30-day yields for Class A and B shares at January 31 were 4.24% and
3.68%, respectively./4/
Management Update
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. In a quiet Kansas municipal market, the Portfolio was characterized by
relatively little trading activity. The Portfolio maintained a barbell
strategy, balancing high-coupon issues for yield with discount issues for
performance.
. Housing bonds provided above-market yields for the Portfolio. Because they are
subject to periodic calls, they may be less sensitive to interest rate
fluctuations.
. The Portfolio remained very selective with respect to hospital bonds. The
hospital sector continues to struggle with a changing health care climate,
made increasingly difficult by newly implemented Medicare and Medicaid
reimbursement policies.
Your Investment at Work
- ----------------------------------------------------------[GRAPHIC APPEARS HERE]
County of Johnson, KS
Unified School District #231
. Johnson County, Kansas, which includes a portion of the Kansas City
metropolitan statistical area, has been among the state's leading counties in
population growth over the last decade.
. The proceeds of these bonds financed activities in the school district that
includes the towns of Gardner, Edgerton, and Antioch.
. These insured general obligations provide excellent quality for the
Portfolio.+ In addition to their attractive 6.0% coupon, the bonds offered the
Portfolio very good call protection.
/1/ These returns do not include the 4.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B shares. /2/ A portion of the Fund's income could be subject to federal and
state income tax and/or alternative minimum tax. /3/ The Fund's distribution
rate represents actual distributions paid to shareholders and is calculated
by dividing the last distribution per share (annualized) by the net asset
value./4/ The Fund's SEC yield is calculated by dividing the net investment
income per share for the 30-day period by the offering price at the end of
the period and annualizing the result. /5/ Returns are historical and are
calculated by determining the percentage change in net asset value with all
distributions reinvested. SEC returns for Class A reflect the maximum 4.75%
sales charge. SEC returns for Class B reflect applicable CDSC based on the
following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year;
2% -5th year; 1% - 6th year. +Private insurance does not decrease the risk
of loss of principal associated with this investment.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
- --------------------------------------------------------------------------------
Fund Information as of January 31, 1999
Performance/5/ Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
One Year 5.8% 5.0%
Life of Fund++ 6.2 5.9
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 0.8% 0.0%
Life of Fund++ 5.2 5.6
++Inception date: Class A: 3/3/94 Class B: 3/2/94
Comparison of Change in Value of a $10,000 Investment
in Eaton Vance Kansas Municipals Fund, Class B vs.
Lehman Brothers Municipal Bond Index
Date Fund/NAV LBMBI
---- -------- -----
3/31/94 $10,000 $10,000
4/30/94 $10,136 $10,085
5/31/94 $10,275 $10,172
6/30/94 $10,162 $10,113
7/31/94 $10,375 $10,295
8/31/94 $10,393 $10,331
9/30/94 $10,179 $10,180
10/31/94 $9,933 $9,999
11/30/94 $9,662 $9,818
12/31/94 $9,928 $10,034
1/31/95 $10,273 $10,321
2/28/95 $10,617 $10,621
3/31/95 $10,711 $10,743
4/30/95 $10,704 $10,756
5/31/95 $10,962 $11,099
6/30/95 $10,809 $11,002
7/31/95 $10,877 $11,106
8/31/95 $10,998 $11,247
9/30/95 $11,076 $11,318
10/31/95 $11,266 $11,483
11/30/95 $11,455 $11,673
12/31/95 $11,567 $11,785
1/31/96 $11,636 $11,874
2/28/96 $11,523 $11,794
3/31/96 $11,351 $11,644
4/30/96 $11,328 $11,610
5/31/96 $11,326 $11,606
6/30/96 $11,421 $11,733
7/31/96 $11,533 $11,839
8/31/96 $11,544 $11,836
9/30/96 $11,719 $12,001
10/31/96 $11,821 $12,137
11/30/96 $12,032 $12,359
12/31/96 $11,947 $12,307
1/31/97 $11,922 $12,331
2/28/97 $12,033 $12,444
3/31/97 $11,895 $12,278
4/30/97 $12,011 $12,381
5/31/97 $12,164 $12,567
6/30/97 $12,284 $12,701
7/31/97 $12,618 $13,053
8/31/97 $12,472 $12,930
9/30/97 $12,617 $13,084
10/31/97 $12,664 $13,168
11/30/97 $12,740 $13,245
12/31/97 $12,907 $13,439
1/31/98 $12,980 $13,577
2/28/98 $12,970 $13,581
3/31/98 $12,987 $13,593
4/30/98 $12,922 $13,532
5/31/98 $13,122 $13,746
6/30/98 $13,133 $13,800
7/31/98 $13,169 $13,835
8/31/98 $13,351 $14,049
9/30/98 $13,475 $14,224
10/31/98 $13,445 $14,223
11/30/98 $13,482 $14,273
12/31/98 $13,482 $14,309
1/31/99 $13,624 $14,479
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced on
3/2/94. Index information is available only at month-end; therefore, the line
comparison begins at the next month following the commencement of the Fund's
investment operations. The chart compares the total return of the Fund's Class
B with that of the Lehman Brothers Municipal Bond Index, a broad-based,
unmanaged market index. Returns are calculated by determining the percentage
change in net asset value (NAV) with all distributions reinvested. The lines
on the chart represent total returns of $10,000 hypothetical investments in
the Fund and the Lehman Brothers Municipal Bond Index. An investment in Class
A shares on 3/31/94 at net asset value would have grown to $13,766 on January
31, 1999; $13,109, including the 4.75% sales charge. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For federal income tax
purposes, 99.88% of the total dividends paid by the Fund from net investment
income during the year ended January 31, 1999 was designated as an
exempt-interest dividend.
- --------------------------------------------------------------------------------
5
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
As of January 31, 1999
<TABLE>
<CAPTION>
Florida
Insured Hawaii Kansas
Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------
Investment in Portfolio --
Identified cost $ 25,881,459 $ 18,773,526 $ 12,103,909
Unrealized appreciation 2,107,932 1,480,598 637,291
- ----------------------------------------------------------------------------------------------------------------
Total investment in Portfolio, at value $ 27,989,391 $ 20,254,124 $ 12,741,200
- ----------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 1,000,005 7,000 102,000
Deferred organization expenses 500 895 616
- ----------------------------------------------------------------------------------------------------------------
Total assets $ 28,989,896 $ 20,262,019 $ 12,843,816
- ----------------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------------
Dividends payable $ 50,222 $ 37,737 $ 23,699
Payable for Fund shares redeemed 122,468 104,251 29,451
Payable to affiliate for Trustees' fees 65 65 63
Other accrued expenses 10,711 12,830 6,429
- ----------------------------------------------------------------------------------------------------------------
Total liabilities $ 183,466 $ 154,883 $ 59,642
- ----------------------------------------------------------------------------------------------------------------
Net Assets $ 28,806,430 $ 20,107,136 $ 12,784,174
- ----------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ----------------------------------------------------------------------------------------------------------------
Paid-in capital $ 26,644,069 $ 18,939,510 $ 12,118,918
Accumulated net realized gain (loss) from Portfolio
(computed on the basis of identified cost) 31,053 (275,235) 51,664
Accumulated undistributed (distributions in excess of)
net investment income 23,376 (37,737) (23,699)
Net unrealized appreciation from Portfolio
(computed on the basis of identified cost) 2,107,932 1,480,598 637,291
- ----------------------------------------------------------------------------------------------------------------
Total $ 28,806,430 $ 20,107,136 $ 12,784,174
- ----------------------------------------------------------------------------------------------------------------
Class A Shares
- ----------------------------------------------------------------------------------------------------------------
Net Assets $ 5,904,971 $ 259,320 $ 1,560,956
Shares Outstanding 511,589 25,794 149,060
Net Asset Value and Redemption Price Per Share
(net assets / shares of beneficial interest outstanding) $ 11.54 $ 10.05 $ 10.47
Maximum Offering Price Per Share
(100 / 95.25 of net asset value per share) $ 12.12 $ 10.55 $ 10.99
- ----------------------------------------------------------------------------------------------------------------
Class B Shares
- ----------------------------------------------------------------------------------------------------------------
Net Assets $ 22,901,459 $ 19,847,816 $ 11,223,218
Shares Outstanding 2,009,543 1,946,615 1,082,065
Net Asset Value, Offering Price and Redemption Price Per Share
(net assets / shares of beneficial interest outstanding) $ 11.40 $ 10.20 $ 10.37
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
On sales of $25,000 or more, the offering price of Class A shares is reduced.
See notes to financial statements
6
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended January 31, 1999
<TABLE>
<CAPTION>
Florida
Insured Hawaii Kansas
Fund Fund Fund
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------
Interest allocated from Portfolios $ 1,367,721 $ 1,062,814 $ 634,586
Expenses allocated from Portfolios (27,297) -- --
- ------------------------------------------------------------------------------------------------------
Net investment income from Portfolios $ 1,340,424 $ 1,062,814 $ 634,586
- ------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------
Trustees fees and expenses $ 320 $ 320 $ 318
Distribution and service fees
Class A 4,244 607 1,792
Class B 199,995 175,319 96,663
Transfer and dividend disbursing agent fees 18,775 15,289 10,037
Printing and postage 7,980 9,376 6,508
Amortization of organization expenses 6,053 8,740 7,189
Legal and accounting services 3,186 3,028 4,826
Custodian fee 2,827 3,739 3,639
Registration fees 13 836 --
Miscellaneous 3,395 3,565 2,642
- ------------------------------------------------------------------------------------------------------
Total expenses $ 246,788 $ 220,819 $ 133,614
- ------------------------------------------------------------------------------------------------------
Net investment income $ 1,093,636 $ 841,995 $ 500,972
- ------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolios
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 74,815 $ 294,016 $ 101,133
Financial futures contracts 12,130 (28,796) (27,682)
- ------------------------------------------------------------------------------------------------------
Net realized gain $ 86,945 $ 265,220 $ 73,451
- ------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments $ 419,684 $ (101,113) $ 15,410
Financial futures contracts 12,843 12,205 5,497
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $ 432,527 $ (88,908) $ 20,907
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain $ 519,472 $ 176,312 $ 94,358
- ------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,613,108 $ 1,018,307 $ 595,330
- ------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
7
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended January 31, 1999
<TABLE>
<CAPTION>
Florida
Insured Hawaii Kansas
Increase (Decrease) in Net Assets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
From operations--
Net investment income $ 1,093,636 $ 841,995 $ 500,972
Net realized gain 86,945 265,220 73,451
Net change in unrealized appreciation (depreciation) 432,527 (88,908) 20,907
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,613,108 $ 1,018,307 $ 595,330
- ------------------------------------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (176,713) $ (16,646) $ (64,105)
Class B (912,251) (824,101) (436,867)
In excess of net investment income
Class A -- -- (1,487)
Class B -- (38,387) (21,739)
From net realized gain
Class A -- -- (8,732)
Class B -- -- (62,972)
- ------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (1,088,964) $ (879,134) $ (595,902)
- ------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 3,726,286 $ 68,224 $ 519,968
Class B 3,463,956 2,096,709 1,638,898
Issued in reorganization of EV Traditional
Municipals Funds
Class A 2,748,790 300,865 1,223,080
Net asset value of shares issued
to shareholders in payment of
distributions declared
Class A 56,951 14,016 51,968
Class B 358,409 370,407 293,314
Cost of shares redeemed
Class A (832,835) (127,811) (234,770)
Class B (3,212,340) (2,155,033) (757,439)
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions $ 6,309,217 $ 567,377 $ 2,735,019
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets $ 6,833,361 $ 706,550 $ 2,734,447
- ------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------
At beginning of year $ 21,973,069 $ 19,400,586 $ 10,049,727
- ------------------------------------------------------------------------------------------------------------
At end of year $ 28,806,430 $ 20,107,136 $ 12,784,174
- ------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- ------------------------------------------------------------------------------------------------------------
At end of year $ 23,376 $ (37,737) $ (23,699)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
8
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended January 31, 1998
<TABLE>
<CAPTION>
Florida
Increase (Decrease) in Net Assets Insured Fund Hawaii Fund Kansas Fund
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
From operations--
Net investment income $ 945,505 $ 789,252 $ 457,124
Net realized gain 281,348 261,432 78,752
Net change in unrealized appreciation (depreciation) 716,394 503,020 338,048
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,943,247 $ 1,553,704 $ 873,924
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income $ (927,338) $ (789,252) $ (461,231)
In excess of net investment income -- (32,067) (473)
From net realized gain -- -- (105,309)
- ---------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders $ (927,338) $ (821,319) $ (567,013)
- ---------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares $ 4,059,139 $ 4,672,367 $ 1,127,364
Net asset value of shares issued
to shareholders in payment of
distributions declared 380,352 338,412 318,497
Cost of shares redeemed (5,198,944) (1,894,316) (2,195,014)
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions $ (759,453) $ 3,116,463 $ (749,153)
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 256,456 $ 3,848,848 $ (442,242)
- ---------------------------------------------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------------------------------------------
At beginning of year $ 21,716,613 $ 15,551,738 $ 10,491,969
- ---------------------------------------------------------------------------------------------------------------------
At end of year $ 21,973,069 $ 19,400,586 $ 10,049,727
- ---------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- ---------------------------------------------------------------------------------------------------------------------
At end of year $ 23,427 $ (38,550) $ (473)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
9
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Florida Insured Fund
----------------------------------------------------------------------
Year Ended January 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995(1)
----------------------------------------------------------------------
Class A Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of year $11.370 $11.230 $10.710 $11.090 $10.260 $10.000
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.569 $ 0.467 $ 0.488 $ 0.499 $ 0.512 $ 0.456
Net realized and unrealized gain (loss) 0.153 0.170 0.511 (0.385) 0.832 0.304
- ------------------------------------------------------------------------------------------------------------------------------
Total income from operations $ 0.722 $ 0.637 $ 0.999 $ 0.114 $ 1.344 $ 0.760
- ------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.552) $(0.467) $(0.479) $(0.494) $(0.512) $(0.456)
In excess of net investment income -- -- -- -- (0.002) (0.044)
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.552) $(0.467) $(0.479) $(0.494) $(0.514) $(0.500)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $11.540 $11.400 $11.230 $10.710 $11.090 $10.260
- ------------------------------------------------------------------------------------------------------------------------------
Total Return(2) 6.52% 5.82% 9.57% 1.14% 13.39% 7.10%
- ------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $ 5,905 $22,901 $21,973 $21,717 $18,391 $11,596
Ratios (As a percentage of average daily net assets):
Net expenses(3)(4) 0.46% 1.25% 1.23% 1.21% 1.10% 0.75%(5)
Net expenses after custodian fee reduction(3) 0.39% 1.18% 1.16% 1.12% 1.00% --
Net investment income 4.86% 4.15% 4.50% 4.67% 4.76% 4.79%(5)
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
+ The operating expenses of the Fund and the Portfolio may reflect a reduction of the investment adviser fee, an allocation
of expenses to the Investment Adviser, or both. Had such actions not been taken, the ratios and net investment income per
share would have been as follows:
<S> <C> <C> <C> <C> <C> <C>
Ratios (As a percentage of average daily net
assets): 0.58% 1.37% 1.65% 1.51% 1.49% 1.62%(5)
Expenses(3)(4)
Expenses after custodian fee reduction (3) 0.51% 1.30% 1.58% 1.42% 1.39% --
Net investment income 4.74% 4.03% 4.08% 4.37% 4.37% 3.92%(5)
Net investment income per share $ 0.555 $ 0.453 $ 0.443 $ 0.467 $ 0.470 $ 0.374
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, March 2, 1994, to January 31,
1995.
(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 reinvested at the
net asset value on the reinvestment date. Total return is not computed on an
annualized basis.
(3) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
(4) The expense ratios for the year ended January 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting requirements.
The new reporting guidelines require the Fund, as well as its corresponding
Portfolio, to increase its expense ratios by the effect of any expense
offset arrangements with its service providers. The expense ratios for the
period ended January 31, 1995 have not been adjusted to reflect this change.
(5) Annualized.
See notes to financial statements
10
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Hawaii Fund
----------------------------------------------------------------------
Year Ended January 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995(1)
----------------------------------------------------------------------
Class A Class B Class B Class B Class B Class B
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of year $ 9.930 $10.130 $ 9.730 $ 9.980 $ 9.150 $10.000
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.534 $ 0.431 $ 0.441 $ 0.466 $ 0.484 $ 0.434
Net realized and unrealized gain (loss) 0.078 0.090 0.418 (0.241) 0.835 (0.805)
- ----------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.612 $ 0.521 $ 0.859 $ 0.225 $ 1.319 $(0.371)
- ----------------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.492) $(0.431) $(0.441) $(0.466) $(0.484) $(0.434)
In excess of net investment income -- (0.020) (0.018) (0.009) (0.005) (0.045)
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.492) $(0.451) $(0.459) $(0.475) $(0.489) $(0.479)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $10.050 $10.200 $10.130 $ 9.730 $ 9.980 $ 9.150
- ----------------------------------------------------------------------------------------------------------------------------
Total Return(2) 6.34% 5.29% 9.08% 2.40% 14.74% (4.01)%
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $ 259 $19,848 $19,401 $15,552 $15,126 $12,601
Ratios (As a percentage of average daily net assets):
Net expenses(3)(4) 0.45% 1.18% 1.27% 1.20% 1.05% 0.87%(5)
Net expenses after custodian fee reduction(3) 0.41% 1.14% 1.24% 1.15% 0.98% --
Net investment income 5.35% 4.27% 4.47% 4.81% 5.03% 5.03%(5)
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
+ The operating expenses of the Fund and the Portfolio may reflect a reduction of the investment adviser fee, an allocation
of expenses to the Investment Adviser, or both. Had such actions not been taken, the ratios and net investment income per
share would have been as follows:
<S> <C> <C> <C> <C> <C> <C>
Ratios (As a percentage of average daily net
assets): 0.69% 1.42% 1.70% 1.61% 1.53% 1.41%(5)
Expenses (3)(4)
Expenses after custodian fee reduction (3) 0.65% 1.38% 1.67% 1.56% 1.46% --
Net investment income 5.11% 4.03% 4.04% 4.40% 4.51% 4.49%(5)
Net investment income per share $ 0.510 $ 0.407 $ 0.399 $ 0.426 $ 0.434 $ 0.387
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, March 2, 1994, to January 31,
1995.
(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 reinvested at the
net asset value on the reinvestment date. Total return is not computed on an
annualized basis.
(3) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
(4) The expense ratios for the year ended January 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting requirements.
The new reporting guidelines require the Fund, as well as its corresponding
Portfolio, to increase its expense ratios by the effect of any expense
offset arrangements with its service providers. The expense ratios for the
period ended January 31, 1995 have not been adjusted to reflect this change.
(5) Annualized.
See notes to financial statements
11
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Kansas Fund
-------------------------------------------------------------------------
Year Ended January 31,
-------------------------------------------------------------------------
1999(1) 1998 1997 1996 1995(2)
-------------------------------------------------------------------------
Class A Class B Class B Class B Class B Class B
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of year $10.460 $10.380 $10.080 $10.320 $ 9.560 $10.000
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.505 $ 0.429 $ 0.458 $ 0.479 $ 0.481 $ 0.435
Net realized and unrealized gain (loss) 0.082 0.071 0.414 (0.238) 0.761 (0.393)
- ---------------------------------------------------------------------------------------------------------------------------------
Total income from operations $ 0.587 $ 0.500 $ 0.872 $ 0.241 $ 1.242 $ 0.042
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.505) $(0.429) $(0.462) $(0.473) $(0.481) $(0.435)
In excess of net investment income (0.012) (0.021) --(3) -- (0.001) (0.047)
From net realized gain (0.060) (0.060) (0.110) (0.008) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.577) $(0.510) $(0.572) $(0.481) $(0.482) $(0.482)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $10.470 $10.370 $10.380 $10.080 $10.320 $ 9.560
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return(4) 5.77% 4.96% 8.87% 2.46% 13.26% 0.16%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $ 1,561 $11,223 $10,050 $10,492 $10,782 $ 7,753
Ratios (As a percentage of average daily net assets):
Net expenses(5)(6) 0.49% 1.28% 1.38% 1.25% 1.20% 0.75%(7)
Net expenses after custodian fee reduction(5) 0.43% 1.22% 1.33% 1.15% 1.08% --
Net investment income 4.83% 4.14% 4.48% 4.77% 4.79% 4.81%(7)
- ---------------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio may reflect a reduction of the investment adviser fee, an allocation of
expenses to the Investment Adviser, or both. Had such actions not been taken, the ratios and net investment income per share
would have be en as follows:
Ratios (As a percentage of average daily net
assets):
Expenses(5)(6) 0.79% 1.58% 1.90% 1.68% 1.59% 1.60%(7)
Expenses after custodian fee reduction(5) 0.73% 1.52% 1.85% 1.58% 1.47% --
Net investment income 4.53% 3.84% 3.96% 4.34% 4.40% 3.96%(7)
Net investment income per share $ 0.474 $ 0.398 $ 0.405 $ 0.436 $ 0.442 $ 0.397
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) For the period from the start of business, March 2, 1994, to January 31,
1995.
(3) Distributions in excess of net investment income are less than $0.001 per
share.
(4) 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 reinvested at the
net asset value on the reinvestment date. Total return is not computed on an
annualized basis.
(5) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
(6) The expense ratios for the year ended January 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting requirements.
The new reporting guidelines require the Fund, as well as its corresponding
Portfolio, to increase its expense ratios by the effect of any expense
offset arrangements with its service providers. The expense ratios for the
period ended January 31, 1995 have not been adjusted to reflect this change.
(7) Annualized.
See notes to financial statements
12
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
------------------------------------------------------------------------------
Eaton Vance Municipals 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 four non-diversified Funds, three of which are
included in these financial statements. They include Eaton Vance Florida
Insured Municipals Fund ("Florida Insured Fund"), Eaton Vance Hawaii
Municipals Fund ("Hawaii Fund") and Eaton Vance Kansas Municipals Fund
("Kansas Fund"). The Funds offer two classes of shares. Class A shares are
sold subject to a sales charge imposed at the time of purchase. Class B shares
are sold at net asset value and are subject to a declining contingent deferred
sales charge (see Note 6). All classes of shares have equal rights to assets
and voting privileges. Realized and unrealized gains and losses are allocated
daily to each class of shares based on the relative net assets of each class
to the total net assets of the Fund. Net investment income, other than class
specific expenses, is allocated daily to each class of shares based upon the
ratio of the value of each class' paid shares to the total value of all paid
shares. Each class of shares differs in its distribution plan and certain
other class specific expenses. 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 Florida Insured Fund invests its
assets in the Florida Insured Municipals Portfolio, the Hawaii Fund invests
its assets in the Hawaii Municipals Portfolio and the Kansas Fund invests its
assets in the Kansas Municipals Portfolio. The value of each Fund's investment
in its corresponding Portfolio reflects the Fund's proportionate interest in
the net assets of that Portfolio (99.5%, 99.3% and 98.9% at January 31, 1999
for Eaton Vance Florida Insured Fund, Eaton Vance Hawaii Fund and Eaton Vance
Kansas Fund). The performance of each Fund is directly affected by the
performance of its corresponding Portfolio. The financial statements of each
Portfolio, including the portfolio of investments, are included elsewhere in
this report and should be read in conjunction with each Fund's financial
statements.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuations -- Valuation of securities by the Portfolios is
discussed in Note 1A of the Portfolios' Notes to Financial Statements which
are included elsewhere in this report.
B Income -- Each Fund's net investment income consists of each 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, 1999, the Hawaii
Fund, for federal income tax purposes, had capital loss carryovers which will
reduce taxable income arising from future net realized gain on investments, if
any, to the extent permitted by the Internal Revenue Code, and thus will
reduce the amount of distributions to shareholders which would otherwise be
necessary to relieve the Funds of any liability for federal income or excise
tax. The amounts and expiration dates of the capital loss carryovers are as
follows:
Fund Amount Expires
------------------------------------------------------------------------------
Hawaii Fund $ 26,381 January 31, 2005
$ 249,200 January 31, 2004
Dividends paid by each Fund from net interest on tax-exempt municipal bonds
allocated from its corresponding Portfolio are not includable 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. Pursuant to Section 852 of the Internal
Revenue Code, the Kansas Fund designated $5,681 of distributions from
tax-exempt income as a long-term capital gain distribution for its taxable
year ended January 31, 1999.
13
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
D Deferred Organization Expenses -- Costs incurred by each Fund in connection
with its organization, including registration costs, are being amortized on a
straight-line basis over five years.
E Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
F Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian to the Funds and the Portfolios. Pursuant to the respective
custodian agreements, IBT receives a fee reduced by credits which are
determined based on the average cash balances the Funds and Portfolios
maintain with IBT. All significant credit balances used to reduce each Fund's
custodian fees are reported as a reduction of operating expenses on the
statements of operations.
G Other -- Investment transactions are accounted for on a trade date basis.
2 Distributions to Shareholders
------------------------------------------------------------------------------
The net income of each Fund is determined daily and substantially all of the
net income so determined is declared as a dividend to shareholders of record
at the time of declaration. Distributions are paid monthly. Distributions of
allocated realized capital gains, if any, are made at least annually.
Shareholders may reinvest capital gain distributions in additional shares of
the Fund at the net asset value as of the ex-dividend date. Distributions are
paid in the form of additional shares or, at the election of the shareholder,
in cash.
The Funds distinguish between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result in temporary over distributions for financial statement
purposes are classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital.
During the year ended January 31, 1999, the Hawaii Fund reclassified $39,075
from accumulated distributions in excess of net investment income to paid-in
capital due to permanent differences between book and tax accounting for
distributions. Net investment income, net realized gains, and net assets were
not affected by these reclassifications.
3 Shares of Beneficial Interest
------------------------------------------------------------------------------
The Funds' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Florida Insured Fund
------------------------------------------------
Year Ended Year Ended
January 31, 1999 January 31, 1998
------------------------------------------------
Class A Class B Class B
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales 326,221 307,055 370,922
Issued to shareholders
electing to receive payments of
distributions in Fund shares 4,977 31,837 34,868
Redemptions (61,434) (285,458) (477,263)
Issued to EV Traditional
Florida Insured Fund
shareholders 241,825 -- --
- --------------------------------------------------------------------------------------
Net increase (decrease) 511,589 53,434 (71,473)
- --------------------------------------------------------------------------------------
<CAPTION>
Hawaii Fund
------------------------------------------------
Year Ended Year Ended
January 31, 1999 January 31, 1998
------------------------------------------------
Class A Class B Class B
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales 6,921 208,238 475,254
Issued to shareholders
electing to receive payments of
distributions in Fund shares 1,413 36,709 34,260
Redemptions (12,832) (214,065) (192,930)
Issued to EV Traditional
Hawaii Fund shareholders 30,292 -- --
- --------------------------------------------------------------------------------------
Net increase 25,794 30,882 316,584
- --------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
<TABLE>
<CAPTION>
Kansas Fund
------------------------------------------------
Year Ended Year Ended
January 31, 1999 January 31, 1998
------------------------------------------------
Class A Class B Class B
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales 49,650 158,523 110,259
Issued to shareholders
electing to receive payments of
distributions in Fund shares 4,982 28,367 30,986
Redemptions (22,527) (73,215) (213,928)
Issued to EV Traditional
Kansas Fund shareholders 116,955 -- --
- --------------------------------------------------------------------------------------
Net increase (decrease) 149,060 113,675 (72,683)
- --------------------------------------------------------------------------------------
</TABLE>
4 Transactions with Affiliates
------------------------------------------------------------------------------
Eaton Vance Management (EVM) serves as the Administrator of each Fund, but
receives no compensation. Each of the Portfolios has 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. Except as to Trustees of the Funds and
Portfolios who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to each fund out of the
investment adviser fee earned by BMR. Eaton Vance Distributors, Inc. (EVD), a
subsidiary of EVM and the Fund's principal underwriter, received $3,439, $142
and $1,250 as its portion of the sales charge on sales of Class A shares from
Florida Insured Fund, Hawaii Fund and Kansas Fund, respectively, for the year
ended January 31, 1999.
Certain of the officers and Trustees of the Funds and Portfolios are officers
and directors/trustees of the above organizations.
5 Distribution and Service Plans
-----------------------------------------------------------------------------
Each Fund has adopted a distribution plan (Class B Plan) pursuant to Rule
12b-1 under the Investment Company Act of 1940, and a service plan (Class A
Plan, the Plans). The Plans require the Class B shares to pay the principal
underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to 0.75% of
each Fund's Class B average daily net assets, for providing ongoing
distribution services and facilities to the respective Fund. A Fund's Class B
shares will automatically discontinue payments to EVD during any period in
which there are no outstanding Uncovered Distribution Charges, which are
equivalent to the sum of (i) 5% of the aggregate amount received by the Fund
for Class B shares sold plus (ii) interest 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 Class B and, accordingly, reduces the Class B's net assets.
For the year ended January 31, 1999, the Class B shares of the Florida Insured
Fund, Hawaii Fund and Kansas Fund paid $164,729, $144,679 and $78,822,
respectively, to EVD, representing 0.75% of each Fund's Class B average daily
net assets. For the year ended January 31, 1999, the amount of Uncovered
Distribution Charges of EVD calculated under the Class B Plans for Florida
Insured Fund, Hawaii Fund and Kansas Fund were approximately $688,000,
$682,000 and $371,000, respectively.
In addition, the Plans also authorize each class to make payments of service
fees to EVD, Authorized Firms and other persons in amounts not exceeding 0.25%
of each Fund's average daily net assets attributable to Class A and Class B
shares for any fiscal year. The Trustees have initially implemented the Plans
by authorizing each class to make quarterly payments of service fees to EVD
and Authorized Firms in amounts not expected to exceed 0.20% per annum of each
Fund's average daily net assets attributable to both Class A and Class B
shares based on the value of Fund shares sold by such persons and remaining
outstanding for at least one year. For the year ended January 31, 1999,
Florida Insured Fund, Hawaii Fund and Kansas Fund paid or accrued service fees
to or payable to EVD in the amount of $4,244, $607 and $1,792, respectively
for Class A shares, and $35,266, $30,640 and $17,841, respectively, for Class
B shares. Service fee payments will be made for personal services and/or the
maintenance of shareholder accounts. Service fees paid to EVD and Authorized
Firms are separate and distinct from the sales commissions and distribution
fees payable by each Fund to EVD, and as such are not subject to automatic
discontinuance when there are no outstanding Uncovered Distribution Charges of
EVD.
6 Contingent Deferred Sales Charge
------------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on any redemption of
Class B shares made within six years of purchase. Generally, the CDSC is based
upon the lower of
15
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
the net asset value at date of redemption or date of purchase. No charge is
levied on Class B shares acquired by reinvestment of dividends or capital
gains distributions. The CDSC is imposed at declining rates that begin at 5%
in the case of redemptions in the first and second year after purchase,
declining one percentage point each subsequent year. No CDSC is levied on
Class B shares which have been sold to EVM or its affiliates or to their
respective employees or clients. CDSC charges are paid to EVD to reduce the
amount of Uncovered Distribution Charges calculated under each Fund's Class B
Distribution Plan. CDSC charges received when no Uncovered Distribution
Charges exist will be credited to the Fund. EVD received approximately
$43,000, $55,000 and $15,000 of CDSC paid by Class B shareholders of Florida
Insured Fund, Hawaii Fund and Kansas Fund, respectively, for the year ended
January 31, 1999.
7 Investment Transactions
------------------------------------------------------------------------------
Increases and decreases in each Fund's investment in its corresponding
Portfolio for the year ended January 31, 1999 were as follows:
Florida Insured Fund
------------------------------------------------------------------------------
Increases $6,379,597
Decreases (4,827,198)
Hawaii Fund
------------------------------------------------------------------------------
Increases $2,231,345
Decreases (2,953,293)
Kansas Fund
------------------------------------------------------------------------------
Increases $2,114,772
Decreases (1,389,324)
8 Transfer of Net Assets
------------------------------------------------------------------------------
On February 1, 1998, EV Marathon Florida Insured Fund, EV Marathon Hawaii Fund
and EV Marathon Kansas Fund acquired the net assets of the EV Traditional
Florida Insured Fund, EV Traditional Hawaii Fund and EV Traditional Kansas
Fund, respectively, pursuant to an Agreement and Plan of Reorganization dated
June 23, 1997.
In accordance with the agreement, the Funds, at the closing, issued Class A
shares as follows:
Class A shares Aggregate value Net asset value
Fund issued of shares issued per share
------------------------------------------------------------------------------
Florida Insured Fund 241,825 $2,748,790 $11.37
Hawaii Fund 30,292 300,865 9.93
Kansas Fund 116,955 1,223,080 10.46
The transaction was structured for tax purposes to qualify as a tax free
reorganization under the Internal Revenue Code. The net assets acquired,
including unrealized appreciation at the date of the transaction were as
follows:
Fund Acquired net assets Unrealized appreciation
------------------------------------------------------------------------------
Florida Insured Fund $2,748,790 $160,660
Hawaii Fund 300,865 27,372
Kansas Fund 1,223,080 49,919
Directly after the merger, the combined net assets of the Funds and the net
asset value of Class A shares and Class B shares were as follows:
Class A Class B
net asset value net asset value
Fund Combined net assets per share per share
------------------------------------------------------------------------------
Florida Insured Fund $24,721,859 $11.37 $11.23
Hawaii Fund 19,701,451 9.93 10.13
Kansas Fund 11,272,807 10.46 10.38
9 Name Change
------------------------------------------------------------------------------
Effective February 1, 1998, EV Marathon Florida Insured Fund, EV Marathon
Hawaii Fund and EV Marathon Kansas Fund changed their names to Eaton Vance
Florida Insured Fund, Eaton Vance Hawaii Fund and Eaton Vance Kansas Fund,
respectively.
16
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of
Eaton Vance Municipals Trust II:
- --------------------------------------------------------------------------------
We have audited the accompanying statements of assets and liabilities of Eaton
Vance Florida Insured Municipals Fund, Eaton Vance Hawaii Municipals Fund and
Eaton Vance Kansas Municipals Fund (certain of the series constituting Eaton
Vance Municipals Trust II) as of January 31, 1999, the related statements of
operations for the year then ended, the statements of changes in net assets for
the years ended January 31, 1999 and 1998 and the financial highlights for each
of the years in the four-year period ended January 31, 1999 and for the period
from the start of business, March 2, 1994, 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and 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. 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 financial highlights referred to
above present fairly, in all material respects, the financial position of the
aforementioned funds of Eaton Vance Municipals Trust II at January 31, 1999, the
results of their operations, the changes in their net assets, and their
financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 5, 1999
17
<PAGE>
Florida Insured Municipals Portfolio as of January 31, 1999
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings(Unaudited) Principal
- ------------------ Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.8%
- -------------------------------------------------------------------------
Aaa AAA $1,160 Dade County, Professional
Sports Franchise, (MBIA),
Escrowed to Maturity,
0.00%, 10/1/19 $ 423,852
Aaa AAA 70 North Port, Utility
Revenue, (FGIC),
Prerefunded to 10/1/02,
6.25%, 10/1/17(1) 78,001
- -------------------------------------------------------------------------
$ 501,853
- -------------------------------------------------------------------------
Housing -- 13.7%
- -------------------------------------------------------------------------
Aaa NR $ 345 Duval County HFA, SFMR,
(GNMA), (AMT), 6.70%,
10/1/26 $ 371,555
Aaa AAA 750 Escambia County HFA, SFMR,
(GNMA), (AMT), 7.00%, 4/1/28 829,253
Aaa NR 715 Manatee County, HFA, SFMR,
(GNMA), (AMT), 6.875%,
11/1/26 804,754
Aaa NR 1,000 Pinellas County HFA, SFMR,
(AMT), 5.80%, 3/1/29 1,039,420
NR AAA 795 Pinellas County HFA, SFMR,
(GNMA), (AMT), 6.70%, 2/1/28 857,678
- -------------------------------------------------------------------------
$ 3,902,660
- -------------------------------------------------------------------------
Insured-Education -- 1.9%
- -------------------------------------------------------------------------
Aaa AAA $ 500 Florida A&M University,
(Student Apartment
Facilities), (MBIA),
5.625%, 7/1/25 $ 529,880
- -------------------------------------------------------------------------
$ 529,880
- -------------------------------------------------------------------------
Insured-Electric Utilities -- 8.3%
- -------------------------------------------------------------------------
Aaa AAA $ 445 Citrus County, PCR, (MBIA),
6.35%, 2/1/22 $ 488,094
Aaa AAA 895 Florida State Municipal
Power Agency, (Stanton),
(AMBAC), 4.50%, 10/1/27 835,554
Aaa AAA 1,000 Puerto Rico Electric Power
Authority, (MBIA), 5.50%,
7/1/25 1,043,580
- -------------------------------------------------------------------------
$ 2,367,228
- -------------------------------------------------------------------------
Insured-General Obligations -- 8.5%
- -------------------------------------------------------------------------
Aaa AAA $ 1,000 Florida Board of Education,
(Capital Outlay), (FGIC),
4.50%, 6/1/23(2) $ 944,120
Aaa AAA 1,000 Florida Board of Education,
(Capital Outlay), (MBIA),
4.50%, 6/1/24(2) 944,330
Aaa AAA 500 Miami-Dade County, School
District, (FSA), 5.375%,
8/1/15 547,210
- -------------------------------------------------------------------------
$ 2,435,660
- -------------------------------------------------------------------------
Insured-Hospital -- 2.6%
- -------------------------------------------------------------------------
Aaa AAA $ 200 Dade, Public Facilities
Revenue, (Jackson Memorial
Hospital), (MBIA), 4.875%,
6/1/15 $ 200,854
Aaa AAA 500 Sarasota County, Public
Hospital Board, (Sarasota
Memorial Hospital), (MBIA),
5.25%, 7/1/24 528,645
- -------------------------------------------------------------------------
$ 729,499
- -------------------------------------------------------------------------
Insured-Housing -- 11.3%
- -------------------------------------------------------------------------
NR A $ 500 Clearwater HFA, (Hamptons
at Clearwater), (ACA),
5.35%, 5/1/24 $ 508,955
Aaa AAA 500 Florida HFA, (Maitland Club
Apartments), (AMBAC),
(AMT), 6.875%, 8/1/26 551,985
Aaa AAA 1,000 Florida HFA, (Mariner Club
Apartments), (AMBAC),
(AMT), 6.375%, 9/1/36 1,087,710
Aaa AAA 500 Florida HFA, (MBIA), (AMT),
5.90%, 7/1/29 529,515
Aaa AAA 500 Florida HFA, (Spinnaker
Cove Apartments), (AMBAC),
(AMT), 6.50%, 7/1/36 547,060
- -------------------------------------------------------------------------
$ 3,225,225
- -------------------------------------------------------------------------
Insured-Industrial Development Revenue -- 1.9%
- ------------------------------------------------------------------------
Aaa AAA $ 500 Dade County Resources
Recovery Facilities,
(AMBAC), (AMT),
5.50%, 10/1/13(1) $ 537,000
- -------------------------------------------------------------------------
$ 537,000
- -------------------------------------------------------------------------
See notes to financial statements
18
<PAGE>
Florida Insured Municipals Portfolio as of January 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
Ratings(Unaudited) Principal
- ------------------ Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------
Insured-Miscellaneous -- 1.7%
- -------------------------------------------------------------------------
Aaa AAA $ 500 Jacksonville, Capital
Improvement Revenue,
(Stadium Project), (AMBAC),
4.75%, 10/1/25 $ 485,610
- -------------------------------------------------------------------------
$ 485,610
- -------------------------------------------------------------------------
Insured-Special Tax Revenue -- 16.8%
- -------------------------------------------------------------------------
Aaa AAA $ 500 Bradenton, Special Revenue
Sub-Lien, (FGIC), 5.00%,
10/1/15 $ 512,880
Aaa AAA 1,000 Jacksonville, Excise Taxes
Revenue, (FGIC), (AMT),
0.00%, 10/1/10 596,900
Aaa AAA 500 Jacksonville, Excise Taxes
Revenue, (FGIC), 5.00%,
10/1/16 510,370
Aaa AAA 1,000 Jacksonville, Excise Taxes
Revenue, (FGIC), (AMT),
5.70%, 10/1/09 1,058,670
Aaa AAA 250 Orange, Tourist Development
Tax, (MBIA), 6.00%, 10/1/24 284,260
Aaa AAA 505 St. Petersburg Excise Tax,
(FGIC), 5.00%, 10/1/16 511,807
Aaa AAA 340 Sunrise Public Facilities,
(MBIA), 0.00%, 10/1/15 154,683
Aaa AAA 500 Tampa, Occupational License
Tax Revenue, (FGIC), 5.50%,
10/1/27 528,975
Aaa AAA 2,000 Tampa, Utility Tax Revenue,
(AMBAC), 0.00%, 4/1/22(1) 632,540
- -------------------------------------------------------------------------
$ 4,791,085
- -------------------------------------------------------------------------
Insured-Transportation -- 10.8%
- -------------------------------------------------------------------------
Aaa AAA $1,000 Dade County Aviation
Facilities, (Miami
International Airport),
(FSA), (AMT), 5.125%,
10/1/22 $ 1,001,560
Aaa AAA 1,000 Dade County, Seaport
Revenue, (MBIA), 5.125%,
10/1/16 1,031,560
Aaa AAA 1,000 Florida Ports Financing
Commission, (State
Transportation Trust Fund),
(MBIA), (AMT), 5.375%,
6/1/27 1,027,880
- -------------------------------------------------------------------------
$ 3,061,000
- -------------------------------------------------------------------------
Insured-Water and Sewer -- 20.7%
- -------------------------------------------------------------------------
Aaa AAA $ 500 Dade County, Water And
Sewer System, (FGIC),
5.25%, 10/1/26 $ 515,005
Aaa AAA 325 Dade County, Water and
Sewer System, (FGIC),
5.375%, 10/1/16 344,484
Aaa AAA 735 Enterprise Community
Development District,
(MBIA), 6.125%, 5/1/24(1) 808,235
Aaa AAA 1,000 Jacksonville, (AMBAC),
(AMT), 6.35%, 8/1/25 1,130,120
Aaa AAA 1,000 Lee County IDA, (Bonita
Springs), (MBIA), (AMT),
6.05%, 11/1/20 1,080,580
Aaa AAA 500 North Port, Utility
Revenue, (FGIC), 6.25%,
10/1/22 557,150
Aaa AAA 400 Titisville, (MBIA), 6.00%,
10/1/24 454,816
Aaa AAA 1,000 Vero Beach, (FGIC),
5.00%, 12/1/21 1,001,850
- -------------------------------------------------------------------------
$ 5,892,240
- -------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100%
(identified cost $26,336,636) $28,458,940
- -------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a
tax preference item for purposes of the Federal Alternative Minimum
Tax.
The Portfolio primarily invests 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, 1999, 86.3% of the securities
in the portfolio of investments are backed by bond insurance of various
financial institutions and financial guaranty assurance agencies. At
January 31, 1999, the Portfolio's insured securities by financial institution
are as follows:
% of
Market Value Market Value
- -------------------------------------------------------------------------
American Capital Access (ACA) $ 508,955 1.8%
American Municipal Bond Assurance
Corp. (AMBAC) 5,807,579 20.4
Financial Guaranty Insurance
Corp. (FGIC) 7,160,212 25.2
Financial Security Assurance
(FSA) 1,548,770 5.4
Municipal Bond Insurance Assoc.
(MBIA) 9,530,764 33.5
- -------------------------------------------------------------------------
Total $24,556,280 86.3%
- -------------------------------------------------------------------------
(1) Security (or a portion thereof) has been segregated to cover when-issued
securities.
(2) When-issued security.
See notes to financial statements
19
<PAGE>
Hawaii Municipals Portfolio as of January 31, 1999
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------ Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------
Electric Utilities -- 3.1%
- -------------------------------------------------------------------------
Baa1 BBB+ $1,500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 $ 620,430
- -------------------------------------------------------------------------
$ 620,430
- -------------------------------------------------------------------------
General Obligations -- 5.1%
- -------------------------------------------------------------------------
A1 A+ $ 140 Hawaii State, 5.75%, 1/1/11 $ 157,868
Aa2 AA 750 Honolulu, 4.75%, 9/1/17 744,023
Baa1 A 285 Puerto Rico, Public
Improvement, 0.00%, 7/1/15 132,260
- -------------------------------------------------------------------------
$ 1,034,151
- -------------------------------------------------------------------------
Hospital -- 15.9%
- -------------------------------------------------------------------------
A3 A $ 200 Hawaii State Department of
Budget and Finance, (Kaiser
Permanente), 5.15%, 3/1/15 $ 202,308
A2 A 635 Hawaii State Department of
Budget and Finance,
(Kapiolani Health System),
6.00%, 7/1/19 675,964
A1 AA- 870 Hawaii State Department of
Budget and Finance, (Queens
Health System), 5.75%,
7/1/26 932,361
NR BB 750 Hawaii State Department of
Budget and Finance,
(Wahiawa General Hospital),
7.50%, 7/1/12 808,500
NR BBB+ 300 Hawaii State Department of
Budget and Finance, (Wilcox
Memorial Hospital), 5.35%,
7/1/18 291,519
NR BBB+ 300 Hawaii State Department of
Budget and Finance, (Wilcox
Memorial Hospital), 5.50%,
7/1/28 293,988
- -------------------------------------------------------------------------
$ 3,204,640
- -------------------------------------------------------------------------
Housing -- 7.0%
- -------------------------------------------------------------------------
NR AAA $ 200 Guam Housing Corp., Single
Family, 5.75%, 9/1/31 $ 218,510
Aa1 AA 1,000 Hawaii State Housing
Finance and Development,
Single Family, 5.90%, 7/1/27 1,048,869
Aa1 AA 145 Hawaii State Housing
Finance and Development,
Single Family, (AMT),
6.00%, 7/1/26 151,606
- -------------------------------------------------------------------------
$ 1,418,985
- -------------------------------------------------------------------------
Industrial Development Revenue -- 2.8%
- -------------------------------------------------------------------------
Ba2 BB $ 370 Hawaii State Department of
Transportation,
(Continental Airlines,
Inc.), (AMT), 5.625%,
11/15/27 $ 369,704
Baa3 BBB- 180 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.30%, 6/1/23 191,444
- -------------------------------------------------------------------------
$ 561,148
- -------------------------------------------------------------------------
Insured-Education -- 5.3%
- -------------------------------------------------------------------------
Aaa AAA $ 500 Hawaii State Housing
Development Corp.,
(University of Hawaii),
(AMBAC), 5.65%, 10/1/16 $ 533,320
Aaa AAA 500 University of Hawaii Board
of Regents, University
System, (AMBAC),
5.65%, 10/1/12 537,335
- -------------------------------------------------------------------------
$ 1,070,655
- -------------------------------------------------------------------------
Insured-Electric Utilities -- 8.6%
- -------------------------------------------------------------------------
Aaa AAA $1,000 Hawaii State Department of
Budget and Finance,
(Hawaiian Electric Co.),
(MBIA), (AMT), 5.65%,
10/1/27 $ 1,067,469
Aaa AAA 500 Hawaii State Department of
Budget and Finance,
(Hawaiian Electric Co.,
Inc.), (MBIA), (AMT),
6.60%, 1/1/25 560,230
Aaa AAA 100 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/03(1) 116,625
- -------------------------------------------------------------------------
$ 1,744,324
- -------------------------------------------------------------------------
Insured-General Obligations -- 14.9%
- -------------------------------------------------------------------------
Aaa AAA $ 350 Hawaii County, (FGIC),
5.55%, 5/1/10 $ 389,848
Aaa AAA 400 Hawaii State, (FGIC),
5.00%, 10/1/17 404,096
Aaa AAA 250 Honolulu, (FGIC),
5.00%, 11/1/16 254,883
Aaa AAA 305 Kauai County, (MBIA),
5.90%, 2/1/14 333,649
Aaa AAA 910 Maui County, (FGIC),
5.00%, 9/1/17 919,282
Aaa AAA 250 Maui County, (FGIC),
5.25%, 3/1/18 258,813
Aaa AAA 420 Maui County, (FGIC),
5.30%, 9/1/14 444,011
- -------------------------------------------------------------------------
$ 3,004,582
- -------------------------------------------------------------------------
See notes to financial statements
20
<PAGE>
Hawaii Municipals Portfolio as of January 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------ Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------
Insured-Hospital -- 3.0%
- -------------------------------------------------------------------------
Aaa AAA $ 500 Hawaii State Department of
Budget and Finance, (Queens
Health System), (MBIA),
5.00%, 7/1/28 $ 497,310
Aaa AAA 100 Hawaii State Department of
Budget and Finance, (St.
Francis Medical Center),
(FSA), 6.50%, 7/1/22 109,648
- -------------------------------------------------------------------------
$ 606,958
- -------------------------------------------------------------------------
Insured-Housing -- 2.5%
- -------------------------------------------------------------------------
Aaa AAA $ 480 Honolulu, Mortgage Revenue
Bonds, (Smith Beretania),
(FHA Insured) (MBIA),
7.80%, 7/1/24 $ 512,155
- -------------------------------------------------------------------------
$ 512,155
- -------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 1.2%
- -------------------------------------------------------------------------
Aaa AAA $ 250 Hawaii State, (Kapolei
State Office Building),
(AMBAC),
5.00%, 5/1/18 $ 250,313
- -------------------------------------------------------------------------
$ 250,313
- -------------------------------------------------------------------------
Insured-Transportation -- 8.1%
- -------------------------------------------------------------------------
Aaa AAA $ 500 Hawaii State Airports
System, (FGIC), (AMT),
7.50%, 7/1/20 $ 535,100
Aaa AAA 100 Hawaii State Airports
System, (MBIA), (AMT),
6.90%, 7/1/12 122,015
Aaa AAA 245 Hawaii State Airports
System, (MBIA), (AMT),
7.00%, 7/1/18 266,636
Aaa AAA 650 Hawaii State Harbor
Revenue, (FGIC), (AMT),
6.375%, 7/1/24 721,403
- -------------------------------------------------------------------------
$ 1,645,154
- -------------------------------------------------------------------------
Insured-Water and Sewer -- 5.3%
- -------------------------------------------------------------------------
Aaa AAA $1,000 Honolulu, City and County
Waste Water Systems,
(FGIC), 0.00%, 7/1/18 $ 380,320
Aaa AAA 730 Honolulu, City and County
Waterworks System Revenue,
(FGIC), 4.50%, 7/1/28 683,105
- -------------------------------------------------------------------------
$ 1,063,425
- -------------------------------------------------------------------------
Special Tax Revenue -- 2.8%
- -------------------------------------------------------------------------
NR AAA $ 300 Puerto Rico, Infrastructure
Financing Authority, $ 301,476
Variable Rate, 7/1/28(1)
NR BBB- 250 Virgin Islands PFA,
5.625%, 10/1/25 257,798
- -------------------------------------------------------------------------
$ 559,274
- -------------------------------------------------------------------------
Transportation -- 11.2%
- -------------------------------------------------------------------------
Aa3 AA $ 715 Hawaii State Highway
Revenue, 5.00%, 7/1/12 $ 734,520
Aa3 AA 250 Hawaii State Highway
Revenue, 5.50%, 7/1/18 271,770
Baa1 A 1,300 Puerto Rico Highway and
Transportation Authority,
4.75%, 7/1/38 1,260,544
- -------------------------------------------------------------------------
$ 2,266,834
- -------------------------------------------------------------------------
Water and Sewer -- 3.2%
- -------------------------------------------------------------------------
Aa3 AA $ 600 Honolulu, Water Supply
System, 5.80%, 7/1/16 $ 651,660
- -------------------------------------------------------------------------
$ 651,660
- -------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100%
(identified cost $18,724,580) $20,214,688
- -------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a
tax preference item for purposes of the Federal Alternative Minimum
Tax.
The portfolio invests primarily in debt securities issued by Hawaii
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by the economic developments in a specific industry
or municipality. In order to reduce the risk associated with such economic
developments, at January 31, 1999, 49.0% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage insured by
financial institutions ranged from 1.1% to 24.7% of total investments.
(1) Security has been issued as an inverse floater bond.
See notes to financial statements
21
<PAGE>
Kansas Municipals Portfolio as of January 31, 1999
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------
Electric Utilities -- 1.3%
- -------------------------------------------------------------------------
NR BBB $ 150 Guam Power Authority,
6.625%, 10/1/14 $ 166,484
- -------------------------------------------------------------------------
$ 166,484
- -------------------------------------------------------------------------
Escrowed / Prerefunded -- 5.0%
- -------------------------------------------------------------------------
Aaa A- $ 415 Labette County, SFMR,
Escrowed to Maturity,
0.00%, 12/1/14 $ 195,477
Aaa NR 1,000 Saline County, SFMR, 1983
Series A, Escrowed to
Maturity, 0.00%, 12/1/15 437,510
- -------------------------------------------------------------------------
$ 632,987
- -------------------------------------------------------------------------
General Obligations -- 12.2%
- -------------------------------------------------------------------------
Aa3 NR $ 400 Douglas County, Unified
School District #497,
6.00%, 9/1/15 $ 435,844
Aa1 AA 890 Johnson County, Unified
School District #229,
5.00%, 10/1/16 906,357
Baa1 A 500 Puerto Rico, 0.00%, 7/1/18 196,385
- -------------------------------------------------------------------------
$ 1,538,586
- -------------------------------------------------------------------------
Hospital -- 6.3%
- -------------------------------------------------------------------------
NR NR $ 225 Atchison, (Atchison
Hospital Assn.), 5.70%,
11/15/18 $ 227,502
A3 NR 250 Lawrence, (Lawrence
Memorial Hospital), 6.20%,
7/1/19 267,078
NR BBB- 300 Newton, (Newton Healthcare
Corp.), 5.75%, 11/15/24 303,330
- -------------------------------------------------------------------------
$ 797,910
- -------------------------------------------------------------------------
Housing -- 22.2%
- -------------------------------------------------------------------------
Aaa NR $ 65 Kansas City, Mortgage
Revenue, (GNMA), (AMT),
5.30%, 5/1/07 $ 67,851
Aaa NR 65 Kansas City, Mortgage
Revenue, (GNMA), (AMT),
5.30%, 11/1/07 67,991
Aaa NR 155 Kansas City, Mortgage
Revenue, (GNMA), (AMT),
5.90%, 11/1/27 162,993
NR AAA 345 Kansas City, Mortgage
Revenue, (GNMA), (AMT),
7.00%, 12/1/11 364,982
NR AAA 220 Kansas City, Multifamily,
(FHA), 6.70%, 7/1/23 228,116
Aa NR 100 Kansas Development
Authority, Single Family,
(FHA), (Martin Creek),
6.60%, 8/1/34 105,738
Aaa NR 110 Olathe and Labette County,
SFMR, (GNMA), (AMT), 8.10%,
8/1/23 124,099
NR AAA 170 Olathe, Mortgage Revenue,
(GNMA), (AMT), 7.60%, 3/1/07 178,779
NR AAA 250 Olathe, Multifamily,
(FNMA), 6.45%, 6/1/19 268,308
NR AA 210 Puerto Rico Housing Finance
Corp., 7.50%, 4/1/22 221,903
Aaa NR 195 Sedgwick and Shawnee
County, SFMR, (GNMA),
7.75%, 11/1/24(1) 221,586
Aaa NR 350 Sedgwick County, SFMR,
(GNMA), 8.00%, 5/1/25 396,365
Aaa NR 35 Sedgwick County, SFMR,
(GNMA), 8.20%, 5/1/14 39,516
NR AAA 350 Wichita, Multifamily,
(Broadmoor Chelsea
Apartments), (FNMA), (AMT),
5.65%, 7/1/16 364,735
- -------------------------------------------------------------------------
$ 2,812,962
- -------------------------------------------------------------------------
Industrial Development Revenue -- 1.3%
- -------------------------------------------------------------------------
NR NR $ 160 Topeka IDA, (Resers Fine
Foods, Inc.), (AMT), 5.40%,
4/1/05 $ 160,829
- -------------------------------------------------------------------------
$ 160,829
- -------------------------------------------------------------------------
Insured-Education -- 2.0%
- -------------------------------------------------------------------------
Aaa AAA $ 250 Johnson County Community
College, (Student Commons
and Parking Systems),
(MBIA), 5.05%, 11/15/21 $ 251,228
- -------------------------------------------------------------------------
$ 251,228
- -------------------------------------------------------------------------
Insured-Electric Utilities -- 11.0%
- -------------------------------------------------------------------------
Aaa AAA $ 345 Burlington PCR, (Kansas Gas
& Electric Co.), (MBIA),
7.00%, 6/1/31(1) $ 375,943
Aaa AAA 100 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable
Rate, 7/1/02(2) 113,125
Aaa AAA 500 Puerto Rico Electric Power
Authority, (FSA), 4.75%,
7/1/21 491,515
Aaa AAA 400 Wellington Electric
Waterworks and Authority
Revenue, (AMBAC),
5.20%, 5/1/23 409,560
- -------------------------------------------------------------------------
$ 1,390,143
- -------------------------------------------------------------------------
See notes to financial statements
22
<PAGE>
Kansas Municipals Portfolio as of January 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- ------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------
Insured-General Obligations -- 13.5%
- -------------------------------------------------------------------------
Aaa AAA $ 200 Harvey County, Unified
School District #373,
(FSA), 4.80%, 9/1/18 $ 199,212
Aaa AAA 200 Johnson County, Unified
School District #231,
(FGIC), 6.00%, 10/1/16 233,472
Aaa AAA 200 Kansas City, Utility
Systems, (FGIC),
6.375%, 9/1/23 226,614
Aaa AAA 500 Sedgwick County, Unified
School District #267,
(AMBAC), 5.00%, 11/1/19 502,650
Aaa AAA 250 Sedgwick County, Unified
School District #267,
(AMBAC), 6.15%, 11/1/09 286,220
Aaa AAA 230 Sedgwick County, Unified
School District #267,
(AMBAC), 6.15%, 11/1/10 263,322
- -------------------------------------------------------------------------
$ 1,711,490
- -------------------------------------------------------------------------
Insured-Hospital -- 12.2%
- -------------------------------------------------------------------------
Aaa NR $ 250 Kansas State DFA, (Medical
Center Inc.), (MBIA),
5.50%, 11/15/22 $ 261,230
Aaa AAA 500 Kansas State DFA, (St.
Luke's), (MBIA), 5.375%,
11/15/26 515,710
Aaa AAA 500 Kansas State DFA,
(Stormont-Vail) (MBIA),
5.80%, 11/15/11 551,035
Aaa AAA 200 Olathe, Health Facilities,
(Evangelical Lutheran Good
Samaritan Society),
(AMBAC), 6.00%, 5/1/19 219,670
- -------------------------------------------------------------------------
$ 1,547,645
- -------------------------------------------------------------------------
Insured-Housing -- 2.9%
- -------------------------------------------------------------------------
NR AA $ 100 Puerto Rico Housing Finance
Corp., (AMBAC), 7.50%,
10/1/11 $ 103,205
Aaa AAA 165 Sedgwick County, Mortgage
Loan Revenue, (MBIA),
(GNMA), (AMT), 7.50%,
12/1/09 170,996
Aaa AAA 85 Sedgwick County, Mortgage
Loan Revenue, (MBIA),
(GNMA), (AMT), 7.50%,
12/1/10 88,089
- -------------------------------------------------------------------------
$ 362,290
- -------------------------------------------------------------------------
Insured-Senior Living / Life Care -- 4.0%
- -------------------------------------------------------------------------
Aaa AAA $ 500 Kansas State DFA, (Sisters
Of Charity Leavenworth),
(MBIA), 5.00%, 12/1/25 $ 500,165
- -------------------------------------------------------------------------
$ 500,165
- -------------------------------------------------------------------------
Insured-Water and Sewer -- 3.0%
- -------------------------------------------------------------------------
Aaa AAA $ 400 Wyandotte County & Kansas
City, (MBIA), 4.50%, 9/1/28 $ 377,212
- -------------------------------------------------------------------------
$ 377,212
- -------------------------------------------------------------------------
Transportation -- 3.1%
- -------------------------------------------------------------------------
Baa1 A- $ 400 Puerto Rico Highway and
Transportation Authority,
5.00%, 7/1/22 $ 398,072
- -------------------------------------------------------------------------
$ 398,072
- -------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100%
(identified cost $12,002,845) $12,648,003
- -------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a
tax preference item for purposes of the Federal Alternative Minimum
Tax.
The Portfolio invests primarily in debt securities issued by 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, 1999, 48.5% of the securities
in the portfolio of investments are backed by bond insurance of various
financial institutions and financial guaranty assurance agencies. The
aggregate percentage by financial institution ranged from 3.6% to 24.4% of total
investments.
(1) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
(2) Security has been issued as an inverse floater bond.
See notes to financial statements
23
<PAGE>
Eaton Vance Municipals Portfolios as of January 31, 1999
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
As of January 31, 1999
<TABLE>
<CAPTION>
Florida
Insured Hawaii Kansas
Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
- -----------------------------------------------------------------------------------------------------------------
Investments --
Identified cost $26,336,636 $18,724,580 $12,002,845
Unrealized appreciation 2,122,304 1,490,108 645,158
- -----------------------------------------------------------------------------------------------------------------
Investments, at value $28,458,940 $20,214,688 $12,648,003
- -----------------------------------------------------------------------------------------------------------------
Cash $ 1,128,707 $ 868 $ 41,719
Receivable for investments sold -- -- 25,399
Interest receivable 420,328 188,551 150,226
Receivable from the Investment Adviser 3,403 17,604 17,654
Deferred organization expenses 201 331 184
- -----------------------------------------------------------------------------------------------------------------
Total assets $30,011,579 $20,422,042 $12,883,185
- -----------------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------------
Payable for when-issued securities $ 1,867,805 $ -- $ --
Demand note payable -- 30,000 --
Payable for daily variation margin on open financial futures contracts -- -- 187
Payable to affiliate for Trustees' fees -- 64 64
Other accrued expenses 4,158 2,430 1,656
- -----------------------------------------------------------------------------------------------------------------
Total liabilities $ 1,871,963 $ 32,494 $ 1,907
- -----------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $28,139,616 $20,389,548 $12,881,278
- -----------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $26,017,312 $18,899,440 $12,236,907
Net unrealized appreciation (computed on the basis of identified cost) 2,122,304 1,490,108 644,371
- -----------------------------------------------------------------------------------------------------------------
Total $28,139,616 $20,389,548 $12,881,278
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
24
<PAGE>
Eaton Vance Municipals Portfolios as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Statement of Operations
For the Year Ended January 31, 1999
<TABLE>
<CAPTION>
Florida Insured Hawaii Kansas
Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
- ------------------------------------------------------------------------------------------------
Interest $ 1,375,409 $ 1,069,839 $ 641,820
- ------------------------------------------------------------------------------------------------
Total investment income $ 1,375,409 $ 1,069,839 $ 641,820
- ------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------
Investment adviser fee $ 48,856 $ 30,797 $ 18,618
Trustees fees and expenses 1,887 319 319
Custodian fee 18,457 15,097 11,733
Legal and accounting services 1,134 1,132 4,690
Amortization of organization expenses 2,430 2,078 2,196
Miscellaneous 5,271 6,317 6,098
- ------------------------------------------------------------------------------------------------
Total expenses $ 78,035 $ 55,740 $ 43,654
- ------------------------------------------------------------------------------------------------
Deduct --
Reduction of investment adviser fee $ 28,821 $ 30,797 $ 18,618
Allocation of expenses to the Investment Adviser 3,403 17,604 17,654
Reduction of custodian fee 18,364 7,339 7,382
- ------------------------------------------------------------------------------------------------
Total expense reductions $ 50,588 $ 55,740 $ 43,654
- ------------------------------------------------------------------------------------------------
Net expenses $ 27,447 $ -- $ --
- ------------------------------------------------------------------------------------------------
Net investment income $ 1,347,962 $ 1,069,839 $ 641,820
- ------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 75,215 $ 295,989 $ 101,748
Financial futures contracts 12,205 (28,986) (28,004)
- ------------------------------------------------------------------------------------------------
Net realized gain $ 87,420 $ 267,003 $ 73,744
- ------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 288,779 $ (101,778) $ 16,060
Financial futures contracts 12,983 12,298 5,582
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $ 301,762 $ (89,480) $ 21,642
- ------------------------------------------------------------------------------------------------
Net realized and unrealized gain $ 389,182 $ 177,523 $ 95,386
- ------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,737,144 $ 1,247,362 $ 737,206
- ------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
25
<PAGE>
Eaton Vance Municipals Portfolios as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended January 31, 1999
<TABLE>
<CAPTION>
Florida Insured Hawaii Kansas
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
From operations --
Net investment income $ 1,347,962 $ 1,069,839 $ 641,820
Net realized gain 87,420 267,003 73,744
Net change in unrealized appreciation (depreciation) 301,762 (89,480) 21,642
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,737,144 $ 1,247,362 $ 737,206
- ---------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 6,379,597 $ 2,231,345 $ 2,114,772
Withdrawals (4,827,198) (2,953,293) (1,389,324)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital transactions $ 1,552,399 $ (721,948) $ 725,448
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets $ 3,289,543 $ 525,414 $ 1,462,654
- ---------------------------------------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------------------------------------
At beginning of year $ 24,850,073 $ 19,864,134 $ 11,418,624
- ---------------------------------------------------------------------------------------------------------------
At end of year $ 28,139,616 $ 20,389,548 $ 12,881,278
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
26
<PAGE>
Eaton Vance Municipals Portfolios as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended January 31, 1998
<TABLE>
<CAPTION>
Florida Insured Hawaii Kansas
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
From operations --
Net investment income $ 1,337,092 $ 1,031,743 $ 666,134
Net realized gain 301,794 269,040 86,194
Net change in unrealized appreciation (depreciation) 811,156 513,990 382,975
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 2,450,042 $ 1,814,773 $ 1,135,303
- ---------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,342,239 $ 4,723,447 $ 1,495,952
Withdrawals (7,146,067) (2,688,011) (2,948,351)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital transactions $ (1,803,828) $ 2,035,436 $ (1,452,399)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 646,214 $ 3,850,209 $ (317,096)
- ---------------------------------------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------------------------------------
At beginning of year $ 24,203,859 $ 16,013,925 $ 11,735,720
- ---------------------------------------------------------------------------------------------------------------
At end of year $ 24,850,073 $ 19,864,134 $ 11,418,624
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
27
<PAGE>
Eaton Vance Municipals Portfolios as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Florida Insured Portfolio
---------------------------------------------------
Year Ended January 31,
---------------------------------------------------
1999 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets+
- ----------------------------------------------------------------------------------------------
Net expenses(2) 0.18% 0.07% 0.09% 0.07% 0.01%(3)
Net expenses after custodian fee 0.11% 0.00% 0.02% 0.00% --
reduction
Net investment income 5.21% 5.63% 5.76% 5.82% 5.73%(3)
Portfolio Turnover 9% 34% 36% 32% 33%
- ----------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $28,140 $24,850 $24,204 $21,416 $14,400
- ----------------------------------------------------------------------------------------------
+ The operating expenses of the Portfolios may reflect a reduction of the investment adviser
fee, an allocation of expenses to the Investment Adviser, or both. Had such actions not been
taken, the ratios would have been as follows:
<CAPTION>
<S> <C> <C> <C> <C> <C>
Expenses(2) 0.30% 0.48% 0.39% 0.39% 0.41%(3)
Expenses after custodian fee 0.23% 0.41% 0.32% 0.32% --
reduction
Net investment income 5.09% 5.22% 5.46% 5.50% 5.33%(3)
- ----------------------------------------------------------------------------------------------
<CAPTION>
Hawaii Portfolio
---------------------------------------------------
Year Ended January 31,
---------------------------------------------------
1999 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets+
- ----------------------------------------------------------------------------------------------
Net expenses(2) 0.04% 0.03% 0.04% 0.06% 0.06%(3)
Net expenses after custodian fee 0.00% 0.00% 0.00% 0.00% --
reduction
Net investment income 5.39% 5.70% 5.96% 6.01% 6.03%(3)
Portfolio Turnover 29% 27% 21% 19% 66%
- ----------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $20,390 $19,864 $16,014 $15,578 $12,865
- ----------------------------------------------------------------------------------------------
+ The operating expenses of the Portfolios may reflect a reduction of the investment adviser
fee, an allocation of expenses to the Investment Adviser, or both. Had such actions not been
taken, the ratios would have been as follows:
<CAPTION>
<S> <C> <C> <C> <C> <C>
Expenses(2) 0.28% 0.46% 0.43% 0.41% 0.38%(3)
Expenses after custodian fee 0.24% 0.43% 0.39% 0.35% --
reduction
Net investment income 5.15% 5.27% 5.57% 5.66% 5.70%(3)
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, March 2, 1994, to January 31,
1995.
(2) The expense ratios for the year ended January 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting requirements.
The new reporting guidelines require the Portfolios to increase their
expense ratios by the effect of any expense offset arrangements with their
service providers. The expense ratios for each of the prior periods have not
been adjusted to reflect this change.
(3) Annualized.
See notes to financial statements
28
<PAGE>
Eaton Vance Municipals Portfolios as of January 31, 1999
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Kansas Portfolio
--------------------------------------------------------------------
Year Ended January 31,
--------------------------------------------------------------------
1999 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets+
- ----------------------------------------------------------------------------------------------------------------------
Net expenses(2) 0.06% 0.05% 0.08% 0.09% 0.01%(3)
Net expenses after custodian fee reduction 0.00% 0.00% 0.00% 0.00% --
Net investment income 5.34% 5.79% 5.91% 5.93% 5.68%(3)
Portfolio Turnover 33% 17% 49% 21% 12%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $12,881 $11,419 $11,736 $11,609 $8,306
- ----------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Portfolio may reflect a reduction of the investment adviser fee, an allocation of
expenses to the Investment Adviser, or both. Had such actions not been taken, the ratios would have been as follows:
<CAPTION>
<S> <C> <C> <C> <C> <C>
Expenses(2) 0.36% 0.57% 0.48% 0.50% 0.43%(3)
Expenses after custodian fee reduction 0.30% 0.52% 0.40% 0.41% --
Net investment income 5.04% 5.27% 5.51% 5.52% 5.26%(3)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, March 2, 1994, to January 31,
1995.
(2) The expense ratios for the year ended January 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting requirements.
The new reporting guidelines require the Portfolio to increase its expense
ratio by the effect of any expense offset arrangements with its service
providers. The expense ratios for the prior period have not been adjusted to
reflect this change.
(3) Annualized.
See notes to financial statements
29
<PAGE>
Eaton Vance Municipals Portfolios as of January 31, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
------------------------------------------------------------------------------
Florida Insured Municipals Portfolio ("Florida Insured Portfolio"), Hawaii
Municipals Portfolio ("Hawaii Portfolio") and Kansas Municipals Portfolio
("Kansas Portfolio"), collectively the Portfolios, are registered under the
Investment Company Act of 1940, as amended, as non-diversified open-end
management investment companies. The Portfolios 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 the Kansas Portfolio.
The Declarations of Trust permit the Trustees to issue interests in the
Portfolios. The following is a summary of significant accounting policies
consistently followed by the Portfolios in the preparation of their financial
statements. The policies are in conformity with generally accepted accounting
principles.
A Investment Valuations -- Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts and options on
financial futures contracts listed on commodity exchanges are valued at
closing settlement prices. Over-the-counter options on financial futures
contracts are normally valued at the mean between the latest bid and asked
prices. Short-term obligations, maturing in sixty days or less, are valued at
amortized cost, which approximates value. Investments for which valuations or
market quotations are unavailable are valued at fair value using methods
determined in good faith by or at the direction of the Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes.
C 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, deduction or credit. Interest
income received by the Portfolios on investments in municipal bonds, which is
excludable from gross income under the Internal Revenue Code, will retain its
status as income exempt from federal income tax when allocated to each
Portfolio's investors. The portion of such interest, if any, earned on private
activity bonds issued after August 7, 1986, may be considered a tax preference
item for investors.
D Deferred Organization Expenses -- Costs incurred by a Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E Financial Futures Contracts -- Upon the entering of a financial futures
contract, a Portfolio is required to deposit ("initial margin") either in cash
or securities an amount equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by a Portfolio ("margin maintenance") each day, dependent on the
daily fluctuations in the value of the underlying security, and are recorded
for book purposes as unrealized gains or losses by a Portfolio. A Portfolio's
investment in financial futures contracts is designed only to hedge against
anticipated future changes in interest rates. Should interest rates move
unexpectedly, a Portfolio may not achieve the anticipated benefits of the
financial futures contracts and may realize a loss.
F Options on Financial Futures Contracts -- Upon the purchase of a put option
on a financial futures contract by a Portfolio, the premium paid is recorded
as an investment, the value of which is marked-to-market daily. When a
purchased option expires, the Portfolio will realize a loss in the amount of
cost of the option. When a Portfolio enters into a closing sales transaction,
the Portfolio will realize a gain or loss depending on whether the sales
proceeds from the closing sale transaction are greater or less than the cost
of the option. When a Portfolio exercises a put option, settlement is made in
cash. The risk associated with purchasing options is limited to the premium
originally paid.
G 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
30
<PAGE>
Eaton Vance Municipals Portfolios as of January 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
available to make payments for the securities purchased. Securities purchased
on a when-issued or delayed delivery basis are marked-to-market daily and
begin accruing interest on settlement date.
H Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolios. Pursuant to the respective custodian agreements,
IBT receives a fee reduced by credits which are determined based on the
average daily cash balances each Portfolio maintains with IBT. All significant
credit balances used to reduce the Portfolios' custodian fees are reflected as
a reduction of expenses on the Statement of Operations.
I Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
J Other -- Investment transactions are accounted for on a trade date basis.
2 Investment Adviser Fee and Other Transactions with Affiliates
------------------------------------------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to each Portfolio. The
fee is based upon a percentage of average daily net assets plus a percentage
of gross income (i.e., income other than gains from the sale of securities).
For the year ended January 31, 1999, each Portfolio incurred advisory fees as
follows:
Portfolio Amount Effective Rate*
------------------------------------------------------------------------------
Florida Insured $48,856 0.19%
Hawaii 30,797 0.16%
Kansas 18,618 0.15%
* As a percentage of average daily net assets.
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
$28,821, $30,797 and $18,618, respectively, and $3,403, $17,604 and $17,654,
respectively, of expenses related to the operation of the Portfolios 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 Portfolios out of such investment adviser fee.
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 percentage of their annual fees in
accordance with the terms of the Trustees Deferred Compensation Plan. For the
year ended January 31, 1999, no significant amounts have been deferred.
3 Investments
------------------------------------------------------------------------------
Purchases and sales of investments, other than U.S. Government securities, put
option transactions and short-term obligations, for the year ended January 31,
1999 were as follows:
Florida Insured Portfolio
------------------------------------------------------------------------------
Purchases $ 5,967,242
Sales 2,370,428
Hawaii Portfolio
------------------------------------------------------------------------------
Purchases $ 6,349,648
Sales 5,697,572
Kansas Portfolio
------------------------------------------------------------------------------
Purchases $ 4,946,778
Sales 3,906,251
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, 1999, as computed on a
federal income tax basis, are as follows:
Florida Insured Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 26,336,636
------------------------------------------------------------------------------
Gross unrealized appreciation $ 2,147,073
Gross unrealized depreciation (24,769)
------------------------------------------------------------------------------
Net unrealized appreciation $ 2,122,304
------------------------------------------------------------------------------
31
<PAGE>
Eaton Vance Municipals Portfolios as of January 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
Hawaii Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 18,724,580
------------------------------------------------------------------------------
Gross unrealized appreciation $ 1,501,775
Gross unrealized depreciation (11,667)
------------------------------------------------------------------------------
Net unrealized appreciation $ 1,490,108
------------------------------------------------------------------------------
Kansas Portfolio
------------------------------------------------------------------------------
Aggregate Cost $ 12,002,845
------------------------------------------------------------------------------
Gross unrealized appreciation $ 645,158
Gross unrealized depreciation --
------------------------------------------------------------------------------
Net unrealized appreciation $ 645,158
------------------------------------------------------------------------------
5 Line of Credit
------------------------------------------------------------------------------
The Portfolios participate with other portfolios and funds managed by BMR and
EVM and its affiliates in a $130 million unsecured line of credit agreement
with a group of banks. The Portfolios may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above either the Eurodollar rate or federal funds rate. In addition, a
fee computed at an annual rate of 0.10% on the daily unused portion of the
line of credit is allocated among the participating portfolios and funds at
the end of each quarter. At January 31, 1999, the Hawaii Portfolio had a
balance outstanding pursuant to this line of credit of $30,000. The Portfolios
did not have any significant borrowings or allocated fees during the year
ended January 31, 1999.
6 Financial Instruments
------------------------------------------------------------------------------
The Portfolios regularly trade in financial instruments with off-balance sheet
risk in the normal course of their investing activities to assist in managing
exposure to various market risks. These financial instruments include futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment a Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
A summary of obligations under these financial instruments at January 31,
1999, is as follows:
Futures
Contracts
Expiration Net Unrealized
Portfolio Date Contracts Position Depreciation
------------------------------------------------------------------------------
Kansas 3/99 1 U.S. Treasury Bond Short $787
------------------------------------------------------------------------------
At January 31, 1999, the Portfolio had sufficient cash and/or securities to
cover margin requirements on open futures contracts.
32
<PAGE>
Eaton Vance Municipals Portfolios as of January 31, 1999
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of
Florida Insured Municipals Portfolio
Hawaii Municipals Portfolio
Kansas Municipals Portfolio:
- --------------------------------------------------------------------------------
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Florida Insured Municipals Portfolio, Hawaii
Municipals Portfolio and Kansas Municipals Portfolio as of January 31, 1999, the
related statements of operations for the year then ended, the statements of
changes in net assets for the years ended January 31, 1999 and 1998 and the
supplementary data for each of the four years in the period ended January 31,
1999 and 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. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities held as of
January 31, 1999 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other audit procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of Florida Insured Municipals
Portfolio, Hawaii Municipals Portfolio and Kansas Municipals Portfolio at
January 31, 1999, and the results of their operations, the changes in their net
assets, and their supplementary data for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 5, 1999
33
<PAGE>
Eaton Vance Municipals Funds as of January 31, 1999
INVESTMENT MANAGEMENT
Eaton Vance Municipals Funds
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and Trustee
Robert B. MacIntosh
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Jessica M. Bibliowicz
President and Chief Operating Officer,
John A. Levin & Co.
Director, Baker, Fentress & Company
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
Emeritus, Harvard University Graduate School of
Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
Municipals Portfolios
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and Trustee
Cynthia J. Clemson
Vice President
Portfolio Manager of Florida
Insured Municipals Portfolio
Robert B. MacIntosh
Vice President
Portfolio Manager of Hawaii
Municipals Portfolio
Timothy T. Browse
Vice President
Portfolio Manager of Kansas
Municipals Portfolio
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Jessica M. Bibliowicz
President and Chief Operating Officer,
John A. Levin & Co.
Director, Baker, Fentress & Company
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
Emeritus, Harvard University Graduate School of
Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
34
<PAGE>
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<PAGE>
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
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Independent Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
Eaton Vance Municipals Trust II
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
3CSRC-3/99
