<PAGE>
[EATON VANCE LOGO]
[PICTURE OF EDUCATION]
Annual Report January 31, 2000
EATON VANCE
[PICTURE OF FREEWAY] MUNICIPALS Florida Insured
TRUST II
[GRAPHIC] Hawaii
Kansas
[PICTURE OF BRIDGE]
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
LETTER TO SHAREHOLDERS
[PHOTO]
Thomas J. Fetter
President
The past year proved very challenging for bond investors, as a strong economy
led to higher interest rates and a difficult environment for fixed-income
vehicles. Amid a continuing robust economy, the Federal Reserve maintained a
watchful eye for any sign of inflation. On four occasions during the past twelve
months, the Fed has raised its Federal Funds rate - a key barometer of
short-term interest rates - in an attempt to reduce the potential for inflation.
The bond markets - including the municipal market - were on the defensive for
much of the year, and posted their worst showing since 1994.
In the wake of last year's bond market decline, municipal yields nearly equal
Treasury yields...
Rising interest rates pushed municipal bond yields significantly higher in 1999.
As a result, the ratio of municipal bond yields to Treasury yields was very high
by historical standards, reaching around 96% of Treasury yields at
January 31, 2000.
A growing budget surplus suggests a favorable long-term outlook for municipal
bonds...
A strong economy combined with low inflation has resulted in the first budget
surplus in a generation. Not surprisingly, the Treasury Department has announced
that it will start to selectively buy back outstanding debt issues. That could
well create a favorable long-term scenario for bonds. In addition, the forward
calendar of new MUNICIPAL issuance is significantly lighter than in recent
years. That should be a positive factor for municipal bonds because the market
should be less impacted by supply pressures.
MUNICIPAL BONDS YIELD 96% OF TREASURY YIELDS
<TABLE>
<S> <C>
6.25% 10.35%
30-YEAR AAA-RATED TAXABLE EQUIVALENT YIELD
GENERAL OBLIGATION (GO) BONDS* IN 39.6% TAX BRACKET
6.49%
30 YEAR TREASURY BOND
</TABLE>
PRINCIPAL AND INTEREST PAYMENTS OF TREASURY SECURITIES ARE GUARANTEED BY THE
U.S. GOVERNMENT.
*GO 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, 2000.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
SOURCE: BLOOMBERG, L.P.
Municipal bonds finance vital public projects while providing relief to
tax-weary investors...
Through their purchases of municipal bonds, investors provide financing for a
broad array of vital public works, including those for transportation
facilities, highway construction and industrial development. These projects not
only improve our quality of life, but also promote private enterprise and create
new jobs.
Adding to their unique role, municipal bonds are among the few tax-advantaged
vehicles remaining for investors. Eaton Vance Municipals Funds will continue
their traditional investment pursuit: maintaining a portfolio of primarily
high-quality bonds with competitive levels of tax-exempt income. Our goal
remains to provide excellent income opportunities for today's tax-burdened
investors.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
President
March 8, 2000
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
2
<PAGE>
EATON VANCE FLORIDA INSURED MUNICIPALS FUND AS OF JANUARY 31, 2000
INVESTMENT UPDATE
[PHOTO]
Cynthia J. Clemson
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
- - Florida achieved 3.6% job growth in 1999, compared to 2.3% for the Southeast
as a whole. The primary source of job creation was the service sector, aided
by continued growth in tourism and health care employment. The state's January
2000 jobless rate was 3.8%, down from 4.0% a year ago.
- - Florida's construction sector retained its momentum in 1999. Construction of
multifamily residential units was especially strong, exceeding 1998 levels by
a significant margin. The influx of retirees and new workers also encouraged
building activity in the commercial sector.
- - Florida's tourism sector remained robust, as domestic business made up for a
slight decline in Latin visitors. Central Florida's theme parks enjoyed very
strong volumes, aided by special events, such as Disney's year-long Millennium
Celebration.
The Fund
- --------------------------------------------------------------------------------
- - During the year ended January 31, 2000, the Fund's Class A and Class B shares
had total returns of -8.24% and -8.97%, respectively.(1) For Class A, this
return resulted from a decrease in net asset value (NAV) per share to $10.07
on January 31, 2000 from $11.54 on January 31, 1999, and the reinvestment of
$0.541 per share in tax-free income.(2) For Class B, this return resulted from
a decrease in NAV to $9.95 from $11.40, and the reinvestment of $0.449 per
share in tax-free income.(2)
- - Based on the Fund's most recent dividends and NAVs on January 31, 2000 of
$10.07 per share for Class A and $9.95 for Class B, the distribution rates
were 5.41% and 4.52%, respectively.(3) The distribution rates of Class A and
Class B are equivalent to taxable rates of 8.96% and 7.48%, respectively.(4)
- - The SEC 30-day yields for Class A and B shares at January 31 were 5.40% and
4.87%, respectively.(5) The SEC 30-day yields of Class A and Class B are
equivalent to taxable rates of 8.94% and 8.06%, respectively.(4)
Management Update
- --------------------------------------------------------------------------------
- - With Florida experiencing rapid population growth, the state's municipal
market was dominated by issues that finance infrastructure-related projects.
Manage-ment found opportunities in insured+ water and sewer, transportation
and special tax revenue bonds.
- - Management took advantage of the market decline by selectively establishing
tax losses to offset possible future gains. The proceeds of those sales were
used to buy bonds with more attractive yields and trading characteristics.
- - At January 31, 2000, the Portfolio was 98.9% invested in issues rated AAA.
Nearly 90% of the Portfolio's holdings were insured bonds, an important
consideration for quality-conscious Florida investors.+
Portfolio Distribution
- --------------------------------------------------------------------------------
[PIE CHART]
<TABLE>
<S> <C>
AAA 98.9%
Non-Rated 1.1%
</TABLE>
- --------------------------------------------------------------------------------
(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) After-tax rates assume maximum 39.6% federal income tax rate.
(5) 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. (6) 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, 2000
<TABLE>
<CAPTION>
Performance(6) Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C>
One Year -8.24% -8.97%
Five Years 4.51 3.89
Life of Fund+ 5.35 4.48
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year -12.64% -13.33%
Five Years 3.50 3.56
Life of Fund+ 4.48 4.35
</TABLE>
+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. the Lehman Brothers Municipal Bond Index*
[CHART]
<TABLE>
<CAPTION>
Fund/NAV LBMBI
<S> <C> <C>
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
2/28/99 $14,152 $14,416
3/31/99 $14,143 $14,436
4/30/99 $14,153 $14,472
5/31/99 $14,038 $14,388
6/30/99 $13,741 $14,181
7/31/99 $13,736 $14,233
8/31/99 $13,468 $14,119
9/30/99 $13,322 $14,125
10/31/99 $13,125 $13,972
11/30/99 $13,251 $14,120
12/31/99 $13,091 $14,015
1/31/00 $12,964 $13,954
</TABLE>
* 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 shares 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 3/3/94 at net asset value would
have grown to $13,614 on January 31, 2000; $12,966, 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.
** This figure reflects the Fund's maximum applicable contingent deferred
sales charge deducted at redemption as follows: 5% - 1st and 2nd years; 4%
- 3rd year; 3% - 4th year; 2% - 5th year; and 1% - 6th year.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS. For federal income tax
purposes, 99.25% of the total dividends paid by the Fund from net investment
income during the year ended January 31, 2000 was designated as an
exempt-interest dividend.
- --------------------------------------------------------------------------------
3
<PAGE>
EATON VANCE HAWAII MUNICIPALS FUND AS OF JANUARY 31, 2000
INVESTMENT UPDATE
[PHOTO]
Robert B. MacIntosh
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
- - Hawaii's economy improved in 1999, with job growth rising slightly, reversing
the losses of the previous year. Tourism grew somewhat, while retail sales
reflected the growing momentum within the local economy. The state's January
2000 jobless rate was 5.1%, down from 6.2% a year ago.
- - Hawaii's construction and real estate sectors expanded modestly in 1999,
following annual job losses of 6% from 1996 through 1998. Residential sales
have increased significantly, and recent trends suggest a firming in real
estate prices.
- - Hawaii enjoyed an increase in tourist visitor days in 1999, according to the
Hawaii Tourism Authority. While mainland U.S. visitors contributed most to the
increase, visits by Japanese tourists also increased, the result of a
rebounding Japanese economy.
The Fund
- --------------------------------------------------------------------------------
- - During the year ended January 31, 2000, the Fund's Class A and Class B shares
had total returns of -8.95% and -9.58%, respectively.1 For Class A, this
return resulted from a decrease in net asset value (NAV) per share to $8.69 on
January 31, 2000 from $10.05 on January 31, 1999, and the reinvestment of
$0.484 per share in tax-free income.(2) For Class B, this return resulted from
a decrease in NAV to $8.82 from $10.20, and the reinvestment of $0.426 per
share in tax-free income.(2)
- - Based on the Fund's most recent dividends and NAVs on January 31, 2000 of
$8.69 per share for Class A and $8.82 for Class B, the distribution rates were
5.39% and 4.59%, respectively.(3) The distribution rates of Class A and
Class B are equivalent to taxable rates of 8.92% and 7.60%, respectively.(4)
- - The SEC 30-day yields for Class A and B shares at January 31 were 5.36% and
4.90%, respectively.(5) The SEC 30-day yields of Class A and Class B are
equivalent to taxable rates of 8.87% and 8.11%, respectively.(4)
Management Update
- --------------------------------------------------------------------------------
- - Hospitals remained the Portfolio's largest weighting at January 31, 2000.
However, management has been very selective in recent months, as Hawaii's
overbedded hospital market has become increasingly competitive. Accordingly,
the Portfolio focused on premier institutions like Queen's Health System,
which is Hawaii's largest family of health care-related companies.
- - General obligations (GO) constitute a large portion of the Hawaii market. Amid
an improving Hawaii economy and increasing tax revenues, the Portfolio focused
on attractive local and state GO credits.
- - The Portfolio has pared its exposure to airline industrial development bonds.
Air carriers have been among the industries most hard-hit by the sharp rise in
fuel prices over the past year.
Portfolio Distribution
- --------------------------------------------------------------------------------
[PIE CHART]
<TABLE>
<S> <C>
AAA 58.9%
AA 16.7%
A 9.7%
BBB 8.2%
BB 1.8%
B 3.9%
Non-Rated 0.8%
</TABLE>
- --------------------------------------------------------------------------------
(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. Income may be subject to state
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) After-tax rates assume
maximum 39.6% federal income tax rate. (5) 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. (6) 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.
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, 2000
<TABLE>
<CAPTION>
Performance(6) Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C>
One Year -8.95% -9.58%
Five Years 4.38 4.06
Life of Fund+ 2.77 2.70
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year -13.27% -13.90%
Five Years 3.38 3.73
Life of Fund+ 1.92 2.57
</TABLE>
+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. the Lehman Brothers Municipal Bond Index*
[CHART]
<TABLE>
<CAPTION>
Fund/NAV LBMBI
<S> <C> <C>
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
2/28/99 $13,298 $14,416
3/31/99 $13,300 $14,436
4/30/99 $13,321 $14,472
5/31/99 $13,198 $14,388
6/30/99 $12,963 $14,181
7/31/99 $12,943 $14,233
8/31/99 $12,698 $14,119
9/30/99 $12,597 $14,125
10/31/99 $12,333 $13,972
11/30/99 $12,422 $14,120
12/31/99 $12,250 $14,015
1/31/00 $12,110 $13,954
</TABLE>
[FOOTNOTE ILLEGIBLE]
* 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 shares 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 3/14/94 at net asset value would have grown to $11,744 on
January 31, 2000; $11,185, 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, 99.05% of the total dividends paid by the Fund from net investment
income during the year ended January 31, 2000 was designated as an
exempt-interest dividend.
- --------------------------------------------------------------------------------
4
<PAGE>
EATON VANCE KANSAS MUNICIPALS FUND AS OF JANUARY 31, 2000
INVESTMENT UPDATE
[PHOTO]
Thomas M. Metzold
Portfolio Manager
The Economy
- --------------------------------------------------------------------------------
- - The Kansas economy moderated somewhat in 1999, with personal income and job
creation slowing from the rapid pace of recent years. Kansans' personal income
rose 4.5% for the year. Kansas had a 3.2% unemployment rate in January 2000,
up slightly from the 3.1% rate of a year ago.
- - The service sector, which has been among the fastest-growing sources of
employment in Kansas in recent years, continued to generate jobs in retail
trade, with merchandizing and food retailing especially strong.
- - Job growth in the durable goods manufacturing sector slowed in 1999 from the
robust rate of 1998. The slowdown was most keenly felt in transportation
equipment and machinery. Construction remained strong, exceeding the growth
rate in other areas.
The Fund
- --------------------------------------------------------------------------------
- - During the year ended January 31, 2000, the Fund's Class A and Class B shares
had total returns of -7.12% and -7.87%, respectively.(1) For Class A, this
return resulted from a decrease in net asset value (NAV) per share to $9.23 on
January 31, 2000 from $10.47 on January 31, 1999, and the reinvestment of
$0.514 per share in tax-free income.(2) For Class B, this return resulted from
a decrease in NAV to $9.14 from $10.37, and the reinvestment of $0.433 per
share in tax-free income.(2)
- - Based on the Fund's most recent dividends and NAVs on January 31, 2000 of
$9.23 per share for Class A and $9.14 for Class B, the distribution rates were
5.56% and 4.68%, respectively.(3) The distribution rates of Class A and Class
B are equivalent to taxable rates of 9.21% and 7.75%, respectively.(4)
- - The SEC 30-day yields for Class A and B shares at January 31 were 5.00% and
4.50%, respectively.(5) The SEC 30-day yields of Class A and Class B are
equivalent to taxable rates of 8.28% and 7.45%, respectively.(4)
Management Update
- --------------------------------------------------------------------------------
- - The Portfolio was characterized by relatively little turnover, as the Kansas
municipal market featured limited new issuance. Management maintained its
"barbell" strategy, complementing high-coupon issues for yield with discount
issues.
- - In a very dificult market environment, the Portfolio's housing bonds helped to
lessen slightly the effect of rising interest rates. The Portfolio's holdings
provided above-average coupons, which tended to provide defensive
characteristics in a declining market.
- - Call protection remained an important structural consideration. As interest
rates have declined, more bonds have reached early redemption dates.
Management increased call protection to improve the Portfolio's performance
characteristics.
Portfolio Distribution
- --------------------------------------------------------------------------------
[PIE CHART]
<TABLE>
<S> <C>
AAA 69.4%
AA 12.5%
A 10.2%
BBB 5.1%
Non-Rated 2.8%
</TABLE>
- --------------------------------------------------------------------------------
(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. Income may be subject to state
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) After-tax rates assume
maximum 39.6% federal income tax rate. (5) 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. (6) 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.
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, 2000
<TABLE>
<CAPTION>
Performance(6) Class A Class B
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C>
One Year -7.12% -7.87%
Five Years 4.59 4.09
Life of Fund+ 3.85 3.47
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year -11.52% -12.28%
Five Years 3.57 3.76
Life of Fund+ 2.99 3.34
</TABLE>
+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. the Lehman Brothers Municipal Bond Index*
[CHART]
<TABLE>
<CAPTION>
Fund/NAV LBMBI
<S> <C> <C>
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
2/28/99 $13,556 $14,416
3/31/99 $13,558 $14,436
4/30/99 $13,594 $14,472
5/31/99 $13,498 $14,388
6/30/99 $13,250 $14,181
7/31/99 $13,256 $14,233
8/31/99 $13,052 $14,119
9/30/99 $12,937 $14,125
10/31/99 $12,715 $13,972
11/30/99 $12,845 $14,120
12/31/99 $12,674 $14,015
1/31/00 $12,551 $13,954
</TABLE>
[FOOTNOTE ILLEGIBLE]
* 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 shares 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 3/3/94 at net asset value would have grown to $12,503 on January
31, 2000; $11,908, 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, 98.91% of the total dividends paid by the Fund from net investment
income during the year ended January 31, 2000 was designated as an
exempt-interest dividend.
- --------------------------------------------------------------------------------
5
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
AS OF JANUARY 31, 2000
<TABLE>
<CAPTION>
FLORIDA INSURED HAWAII KANSAS
FUND FUND FUND
<S> <C> <C> <C>
- --------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------
Investment in Portfolio --
Identified cost $27,176,163 $18,146,301 $12,976,476
Unrealized depreciation (1,554,184) (1,176,754) (907,269)
- --------------------------------------------------------------------------
TOTAL INVESTMENT IN PORTFOLIO,
AT VALUE $25,621,979 $16,969,547 $12,069,207
- --------------------------------------------------------------------------
Receivable for Fund shares
sold $ -- $ 8,151 $ 5,000
- --------------------------------------------------------------------------
TOTAL ASSETS $25,621,979 $16,977,698 $12,074,207
- --------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------
Payable for Fund shares
redeemed $ 20,905 $ 14,993 $ 27,248
Dividends payable 48,360 27,603 18,571
Accrued expenses 9,322 7,661 5,891
- --------------------------------------------------------------------------
TOTAL LIABILITIES $ 78,587 $ 50,257 $ 51,710
- --------------------------------------------------------------------------
NET ASSETS $25,543,392 $16,927,441 $12,022,497
- --------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------
Paid-in capital $27,216,668 $18,487,729 $12,997,605
Accumulated net realized loss
from Portfolio (computed on
the basis of identified
cost) (184,770) (363,620) (49,268)
Accumulated undistributed
(distributions in excess
of) net investment income 65,678 (19,914) (18,571)
Net unrealized depreciation
from Portfolio (computed on
the basis of identified
cost) (1,554,184) (1,176,754) (907,269)
- --------------------------------------------------------------------------
TOTAL $25,543,392 $16,927,441 $12,022,497
- --------------------------------------------------------------------------
Class A Shares
- --------------------------------------------------------------------------
NET ASSETS $ 5,629,322 $ 257,998 $ 2,454,735
SHARES OUTSTANDING 559,068 29,698 265,978
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE
(net assets DIVIDED BY shares
of beneficial interest
outstanding) $ 10.07 $ 8.69 $ 9.23
MAXIMUM OFFERING PRICE PER
SHARE
(100 DIVIDED BY 95.25 of
net asset value per
share) $ 10.57 $ 9.12 $ 9.69
- --------------------------------------------------------------------------
Class B Shares
- --------------------------------------------------------------------------
NET ASSETS $19,914,070 $16,669,443 $ 9,567,762
SHARES OUTSTANDING 2,001,248 1,890,790 1,046,419
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER SHARE
(net
assets DIVIDED BY shares
of beneficial interest
outstanding) $ 9.95 $ 8.82 $ 9.14
- --------------------------------------------------------------------------
On sales of $25,000 or more, the offering price
of Class A shares is reduced.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 2000
<TABLE>
<CAPTION>
FLORIDA INSURED HAWAII KANSAS
FUND FUND FUND
<S> <C> <C> <C>
- -------------------------------------------------------------------------
Investment Income
- -------------------------------------------------------------------------
Interest allocated from
Portfolio $ 1,597,297 $ 1,074,956 $ 712,301
Expenses allocated from
Portfolio (96,668) -- --
- -------------------------------------------------------------------------
NET INVESTMENT INCOME FROM
PORTFOLIO $ 1,500,629 $ 1,074,956 $ 712,301
- -------------------------------------------------------------------------
Expenses
- -------------------------------------------------------------------------
Trustees fees and expenses $ 173 $ 173 $ 181
Distribution and service fees
Class A 6,275 520 2,667
Class B 200,759 167,654 96,303
Legal and accounting services 16,474 16,350 15,757
Printing and postage 4,856 6,053 4,395
Custodian fee 6,473 6,905 6,270
Amortization of organization
expenses 500 895 616
Transfer and dividend
disbursing agent fees 22,048 15,180 11,022
Registration fees 1,012 70 930
Miscellaneous 6,563 7,531 7,002
- -------------------------------------------------------------------------
TOTAL EXPENSES $ 265,133 $ 221,331 $ 145,143
- -------------------------------------------------------------------------
NET INVESTMENT INCOME $ 1,235,496 $ 853,625 $ 567,158
- -------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from
Portfolio
- -------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions
(identified cost basis) $ (202,403) $ (135,036) $ (62,176)
Financial futures contracts 17,633 47,011 12,136
- -------------------------------------------------------------------------
NET REALIZED LOSS $ (184,770) $ (88,025) $ (50,040)
- -------------------------------------------------------------------------
Change in unrealized
appreciation (depreciation)
--
Investments $(3,662,116) $(2,657,352) $(1,545,292)
Financial futures contracts -- -- 732
- -------------------------------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $(3,662,116) $(2,657,352) $(1,544,560)
- -------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
LOSS $(3,846,886) $(2,745,377) $(1,594,600)
- -------------------------------------------------------------------------
NET DECREASE IN NET ASSETS
FROM OPERATIONS $(2,611,390) $(1,891,752) $(1,027,442)
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JANUARY 31, 2000
<TABLE>
<CAPTION>
FLORIDA INSURED HAWAII KANSAS
INCREASE (DECREASE) IN NET ASSETS FUND FUND FUND
<S> <C> <C> <C>
- ----------------------------------------------------------------------------
From operations --
Net investment income $ 1,235,496 $ 853,625 $ 567,158
Net realized loss (184,770) (88,025) (50,040)
Net change in unrealized
appreciation (depreciation) (3,662,116) (2,657,352) (1,544,560)
- ----------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
OPERATIONS $(2,611,390) $(1,891,752) $(1,027,442)
- ----------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (300,696) $ (14,670) $ (110,747)
Class B (922,489) (821,132) (456,136)
In excess of net investment
income
Class A -- -- (798)
In excess of net realized gain
Class A -- -- (847)
Class B -- -- (6,040)
- ----------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS $(1,223,185) $ (835,802) $ (574,568)
- ----------------------------------------------------------------------------
Transactions in shares of
beneficial interest --
Proceeds from sale of shares
Class A $ 1,414,481 $ 80,537 $ 1,237,633
Class B 3,990,518 1,554,149 1,144,398
Net asset value of shares
issued to shareholders in
payment of distributions
declared
Class A 113,679 10,916 85,355
Class B 350,904 362,455 261,592
Cost of shares redeemed
Class A (985,040) (51,218) (151,189)
Class B (4,313,005) (2,408,980) (1,737,456)
- ----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM FUND SHARE
TRANSACTIONS $ 571,537 $ (452,141) $ 840,333
- ----------------------------------------------------------------------------
NET DECREASE IN NET ASSETS $(3,263,038) $(3,179,695) $ (761,677)
- ----------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------
At beginning of year $28,806,430 $20,107,136 $12,784,174
- ----------------------------------------------------------------------------
AT END OF YEAR $25,543,392 $16,927,441 $12,022,497
- ----------------------------------------------------------------------------
Accumulated undistributed (distributions in excess
of)
net investment income included in net assets
- ----------------------------------------------------------------------------
AT END OF YEAR $ 65,678 $ (19,914) $ (18,571)
- ----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
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
9
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FLORIDA INSURED FUND -- CLASS A
--------------------------------
YEAR ENDED JANUARY 31,
--------------------------------
2000 1999
<S> <C> <C>
- ----------------------------------------------------------------
Net asset value -- Beginning
of year $11.540 $11.370
- ----------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------
Net investment income $ 0.541 $ 0.569
Net realized and unrealized
gain (loss) (1.470) 0.153
- ----------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $(0.929) $ 0.722
- ----------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------
From net investment income $(0.541) $(0.552)
- ----------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $10.070 $11.540
- ----------------------------------------------------------------
TOTAL RETURN(1) (8.24)% 6.52%
- ----------------------------------------------------------------
Ratios/Supplemental Data+
- ----------------------------------------------------------------
Net assets, end of year (000's
omitted) $ 5,629 $ 5,905
Ratios (As a percentage of
average daily net assets):
Net expenses(2) 0.69% 0.46%
Net expenses after
custodian fee
reduction(2) 0.65% 0.39%
Net investment income 5.02% 4.86%
Portfolio Turnover of the
Portfolio 34% 9%
- ----------------------------------------------------------------
+ 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:
Ratios (As a percentage of
average daily net assets):
Expenses(2) 0.58%
Expenses after custodian
fee reduction(2) 0.51%
Net investment income 4.74%
Net investment income per
share $ 0.555
- ----------------------------------------------------------------
</TABLE>
(1) 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.
(2) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FLORIDA INSURED FUND -- CLASS B
------------------------------------------------------------
YEAR ENDED JANUARY 31,
------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Net asset value -- Beginning
of year $11.400 $11.230 $10.710 $11.090 $10.260
- -----------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------
Net investment income $ 0.452 $ 0.467 $ 0.488 $ 0.499 $ 0.512
Net realized and unrealized
gain (loss) (1.456) 0.170 0.511 (0.385) 0.832
- -----------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $(1.004) $ 0.637 $ 0.999 $ 0.114 $ 1.344
- -----------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------
From net investment income $(0.446) $(0.467) $(0.479) $(0.494) $(0.512)
In excess of net investment
income -- -- -- -- (0.002)
- -----------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.446) $(0.467) $(0.479) $(0.494) $(0.514)
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 9.950 $11.400 $11.230 $10.710 $11.090
- -----------------------------------------------------------------------------------------------
TOTAL RETURN(1) (8.97)% 5.82% 9.57% 1.14% 13.39%
- -----------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- -----------------------------------------------------------------------------------------------
Net assets, end of year (000's
omitted) $19,914 $22,901 $21,973 $21,717 $18,391
Ratios (As a percentage of
average daily net assets):
Net expenses(2) 1.50% 1.25% 1.23% 1.21% 1.10%
Net expenses after
custodian fee
reduction(2) 1.46% 1.18% 1.16% 1.12% 1.00%
Net investment income 4.22% 4.15% 4.50% 4.67% 4.76%
Portfolio Turnover of the
Portfolio 34% 9% 34% 36% 32%
- -----------------------------------------------------------------------------------------------
+ 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:
Ratios (As a percentage of
average daily net assets):
Expenses(2) 1.37% 1.65% 1.51% 1.49%
Expenses after custodian
fee reduction(2) 1.30% 1.58% 1.42% 1.39%
Net investment income 4.03% 4.08% 4.37% 4.37%
Net investment income per
share $ 0.453 $ 0.443 $ 0.467 $ 0.470
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) 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.
(2) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
HAWAII FUND -- CLASS A
----------------------
YEAR ENDED JANUARY 31,
----------------------
2000 1999
<S> <C> <C>
- ------------------------------------------------------
Net asset value -- Beginning
of year $10.050 $ 9.930
- ------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------
Net investment income $ 0.487 $ 0.534
Net realized and unrealized
gain (loss) (1.362) 0.078
- ------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $(0.875) $ 0.612
- ------------------------------------------------------
Less distributions
- ------------------------------------------------------
From net investment income $(0.485) $(0.492)
- ------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 8.690 $10.050
- ------------------------------------------------------
TOTAL RETURN(1) (8.95)% 6.34%
- ------------------------------------------------------
Ratios/Supplemental Data+
- ------------------------------------------------------
Net assets, end of year (000's
omitted) $ 258 $ 259
Ratios (As a percentage of
average daily net assets):
Net expenses(2) 0.48% 0.45%
Net expenses after
custodian fee
reduction(2) 0.46% 0.41%
Net investment income 5.20% 5.35%
Portfolio Turnover of the
Portfolio 20% 29%
- ------------------------------------------------------
+ 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:
Ratios (As a percentage of
average daily net assets):
Expenses(2) 0.84% 0.69%
Expenses after custodian
fee reduction(2) 0.82% 0.65%
Net investment income 4.84% 5.11%
Net investment income per
share $ 0.453 $ 0.510
- ------------------------------------------------------
</TABLE>
(1) 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.
(2) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
HAWAII FUND -- CLASS B
------------------------------------------------------------
YEAR ENDED JANUARY 31,
------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Net asset value -- Beginning
of year $10.200 $10.130 $ 9.730 $ 9.980 $ 9.150
- -----------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------
Net investment income $ 0.430 $ 0.431 $ 0.441 $ 0.466 $ 0.484
Net realized and unrealized
gain (loss) (1.388) 0.090 0.418 (0.241) 0.835
- -----------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $(0.958) $ 0.521 $ 0.859 $ 0.225 $ 1.319
- -----------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------
From net investment income $(0.422) $(0.431) $(0.441) $(0.466) $(0.484)
In excess of net investment
income -- (0.020) (0.018) (0.009) (0.005)
- -----------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.422) $(0.451) $(0.459) $(0.475) $(0.489)
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 8.820 $10.200 $10.130 $ 9.730 $ 9.980
- -----------------------------------------------------------------------------------------------
TOTAL RETURN(1) (9.58)% 5.29% 9.08% 2.40% 14.74%
- -----------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- -----------------------------------------------------------------------------------------------
Net assets, end of year (000's
omitted) $16,669 $19,848 $19,401 $15,552 $15,126
Ratios (As a percentage of
average daily net assets):
Net expenses(2) 1.20% 1.18% 1.27% 1.20% 1.05%
Net expenses after
custodian fee
reduction(2) 1.18% 1.14% 1.24% 1.15% 0.98%
Net investment income 4.51% 4.27% 4.47% 4.81% 5.03%
Portfolio Turnover of the
Portfolio 20% 29% 27% 21% 19%
- -----------------------------------------------------------------------------------------------
+ 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:
Ratios (As a percentage of
average daily net assets):
Expenses(2) 1.56% 1.42% 1.70% 1.61% 1.53%
Expenses after custodian
fee reduction(2) 1.54% 1.38% 1.67% 1.56% 1.46%
Net investment income 4.15% 4.03% 4.04% 4.40% 4.51%
Net investment income per
share $ 0.396 $ 0.407 $ 0.399 $ 0.426 $ 0.434
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) 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.
(2) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KANSAS FUND -- CLASS A
------------------------
YEAR ENDED JANUARY 31,
------------------------
2000(1) 1999(1)
<S> <C> <C>
- --------------------------------------------------------
Net asset value -- Beginning
of year $10.470 $10.460
- --------------------------------------------------------
Income (loss) from operations
- --------------------------------------------------------
Net investment income $ 0.505 $ 0.505
Net realized and unrealized
gain (loss) (1.231) 0.082
- --------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $(0.726) $ 0.587
- --------------------------------------------------------
Less distributions
- --------------------------------------------------------
From net investment income $(0.505) $(0.505)
In excess of net investment
income (0.004) (0.012)
From net realized gain -- (0.060)
In excess of net realized gain (0.005) --
- --------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.514) $(0.577)
- --------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 9.230 $10.470
- --------------------------------------------------------
TOTAL RETURN(2) (7.12)% 5.77%
- --------------------------------------------------------
Ratios/Supplemental Data+
- --------------------------------------------------------
Net assets, end of year (000's
omitted) $ 2,455 $ 1,561
Ratios (As a percentage of
average daily net assets):
Net expenses(3) 0.53% 0.49%
Net expenses after
custodian fee
reduction(3) 0.48% 0.43%
Net investment income 5.12% 4.83%
Portfolio Turnover of the
Portfolio 24% 33%
- --------------------------------------------------------
+ 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:
Ratios (As a percentage of
average daily net assets):
Expenses(3) 0.97% 0.79%
Expenses after custodian
fee reduction(3) 0.92% 0.73%
Net investment income 4.68% 4.53%
Net investment income per
share $ 0.462 $ 0.474
- --------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(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.
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KANSAS FUND -- CLASS B
------------------------------------------------------------
YEAR ENDED JANUARY 31,
------------------------------------------------------------
2000(1) 1999(1) 1998 1997 1996
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Net asset value -- Beginning
of year $10.370 $10.380 $10.080 $10.320 $ 9.560
- -----------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------
Net investment income $ 0.424 $ 0.429 $ 0.458 $ 0.479 $ 0.481
Net realized and unrealized
gain (loss) (1.225) 0.071 0.414 (0.238) 0.761
- -----------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $(0.801) $ 0.500 $ 0.872 $ 0.241 $ 1.242
- -----------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------
From net investment income $(0.424) $(0.429) $(0.462) $(0.473) $(0.481)
In excess of net investment
income -- (0.021) --(2) -- (0.001)
From net realized gain -- (0.060) (0.110) (0.008) --
In excess of net realized gain (0.005) -- -- -- --
- -----------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.429) $(0.510) $(0.572) $(0.481) $(0.482)
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 9.140 $10.370 $10.380 $10.080 $10.320
- -----------------------------------------------------------------------------------------------
TOTAL RETURN(3) (7.87)% 4.96% 8.87% 2.46% 13.26%
- -----------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- -----------------------------------------------------------------------------------------------
Net assets, end of year (000's
omitted) $ 9,568 $11,223 $10,050 $10,492 $10,782
Ratios (As a percentage of
average daily net assets):
Net expenses(4) 1.33% 1.28% 1.38% 1.25% 1.20%
Net expenses after
custodian fee
reduction(4) 1.28% 1.22% 1.33% 1.15% 1.08%
Net investment income 4.32% 4.14% 4.48% 4.77% 4.79%
Portfolio Turnover of the
Portfolio 24% 33% 17% 49% 21%
- -----------------------------------------------------------------------------------------------
+ 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:
Ratios (As a percentage of
average daily net assets):
Expenses(4) 1.77% 1.58% 1.90% 1.68% 1.59%
Expenses after custodian
fee reduction(4) 1.72% 1.52% 1.85% 1.58% 1.47%
Net investment income 3.88% 3.84% 3.96% 4.34% 4.40%
Net investment income per
share $ 0.381 $ 0.398 $ 0.405 $ 0.436 $ 0.442
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) Distributions in excess of net investment income are less than $0.001
per share.
(3) 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.
(4) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
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 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
generally sold subject to a sales charge imposed at 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). Each class represents a pro
rata interest in the Fund, but votes separately on class-specific matters and
(as noted below) is subject to different expenses. 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, 2000 for Florida Insured Fund, Hawaii Fund and 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 are
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, 2000,
the Funds, 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 for each Fund are as follows:
<TABLE>
<CAPTION>
FUND AMOUNT EXPIRES
<S> <C> <C>
--------------------------------------------------------------------
Florida Insured Fund $120,174 January 31, 2008
Hawaii Fund 75,392 January 31, 2008
26,381 January 31, 2005
249,200 January 31, 2004
Kansas Fund 37,245 January 31, 2008
</TABLE>
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
designates $6,887 of distributions from tax-exempt income as a long-term
capital gain distribution for its taxable year ended January 31, 2000.
Additionally, at January 31, 2000, Florida Insured Fund, Hawaii Fund and
Kansas Fund had net capital losses of $64,596, $12,647 and $12,023,
respectively, attributable to security transactions incurred after
October 31, 1999. These net capital losses are treated as arising on the
first day of each Fund's next taxable year.
16
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
D Deferred Organization Expenses -- Costs incurred by each Fund in connection
with its organization, including registration costs, have been amortized on
the straight-line basis over five years and are fully amortized at
January 31, 2000.
E Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
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 the Funds custodian fees are
reported as a reduction of operating expenses in 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.
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). Such shares may be issued in a number of different series (such as
the Funds) and classes. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
FLORIDA INSURED FUND
----------------------
YEAR ENDED JANUARY 31,
----------------------
CLASS A 2000 1999
<S> <C> <C>
----------------------------------------------------------------
Sales 129,363 326,221
Issued to shareholders electing to
receive payments of distributions in
Fund shares 10,555 4,977
Redemptions (92,439) (61,434)
Issued to EV Traditional Florida Insured
Fund shareholders -- 241,825
----------------------------------------------------------------
NET INCREASE 47,479 511,589
----------------------------------------------------------------
<CAPTION>
FLORIDA INSURED FUND
----------------------
YEAR ENDED JANUARY 31,
----------------------
CLASS B 2000 1999
<S> <C> <C>
----------------------------------------------------------------
Sales 370,014 307,055
Issued to shareholders electing to
receive payments of distributions in
Fund shares 32,898 31,837
Redemptions (411,207) (285,458)
----------------------------------------------------------------
NET INCREASE (DECREASE) (8,295) 53,434
----------------------------------------------------------------
<CAPTION>
HAWAII FUND
----------------------
YEAR ENDED JANUARY 31,
----------------------
CLASS A 2000 1999
<S> <C> <C>
----------------------------------------------------------------
Sales 8,367 6,921
Issued to shareholders electing to
receive payments of distributions in
Fund shares 1,163 1,413
Redemptions (5,626) (12,832)
Issued to EV Traditional Hawaii
Fund shareholders -- 30,292
----------------------------------------------------------------
NET INCREASE 3,904 25,794
----------------------------------------------------------------
<CAPTION>
HAWAII FUND
----------------------
YEAR ENDED JANUARY 31,
----------------------
CLASS B 2000 1999
<S> <C> <C>
----------------------------------------------------------------
Sales 161,038 208,238
Issued to shareholders electing to
receive payments of distributions in
Fund shares 38,002 36,709
Redemptions (254,865) (214,065)
----------------------------------------------------------------
NET INCREASE (DECREASE) (55,825) 30,882
----------------------------------------------------------------
</TABLE>
17
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
<TABLE>
<CAPTION>
KANSAS FUND
----------------------
YEAR ENDED JANUARY 31,
----------------------
CLASS A 2000 1999
<S> <C> <C>
----------------------------------------------------------------
Sales 123,868 49,650
Issued to shareholders electing to
receive payments of distributions in
Fund shares 8,729 4,982
Redemptions (15,679) (22,527)
Issued to EV Traditional Kansas Fund
shareholders -- 116,955
----------------------------------------------------------------
NET INCREASE 116,918 149,060
----------------------------------------------------------------
<CAPTION>
KANSAS FUND
----------------------
YEAR ENDED JANUARY 31,
----------------------
CLASS B 2000 1999
<S> <C> <C>
----------------------------------------------------------------
Sales 117,585 158,523
Issued to shareholders electing to
receive payments of distributions in
Fund shares 26,745 28,367
Redemptions (179,976) (73,215)
----------------------------------------------------------------
NET INCREASE (DECREASE) (35,646) 113,675
----------------------------------------------------------------
</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. The Funds were
informed that Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM and
the Fund's principal underwriter, received $6,947, $162 and $1,900 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, 2000.
Certain officers and Trustees of the Funds and of the Portfolios are officers
of the above organizations.
5 Distribution and Service Plans
- -------------------------------------------
Each Fund has in effect a distribution plan for Class B (Class B Plans)
pursuant to Rule 12b-1 under the Investment Company Act of 1940, and a
service plan for Class A (Class A Plan), (collectively, the Plans). The
Class B Plan require each Fund to pay EVD amounts equal to 0.75% of each
Fund's average daily net assets attributable to Class B shares, for providing
ongoing distribution services and facilities to the respective Fund. Each
Fund will automatically discontinue payments to EVD during any period in
which there are no outstanding Uncovered Distribution Charges, which are
equivalent to the sum of (i) 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, 2000, the Class B shares of the Florida
Insured Fund, Hawaii Fund and Kansas Fund paid $166,007, $139,577 and
$79,214, respectively, to EVD, representing 0.75% of each Fund's Class B
average daily net assets. At January 31, 2000 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 $676,000,
$633,000 and $344,000, respectively.
The Plans authorize each Fund to make payments of service fees to EVD,
investment dealers 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 each fiscal year. The Trustees initially implemented the Plans by
authorizing each Fund to make quarterly payments of service fees to EVD and
investment dealers equal to 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. On October 4, 1999, the Trustees approved service fee payments equal to
0.20% per annum of each Fund's average daily net assets attributable to
Class A and Class B shares for any fiscal year on shares of the Fund sold on
or after October 12, 1999. Service fee payments will be made for personal
services and/or the maintenance of shareholder accounts. Service fees paid to
EVD and investment dealers 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. Service fee payments for the year
ended January 31, 2000 for the Florida Insured Fund, Hawaii Fund and Kansas
Fund amounted to $6,275, $520 and $2,667, respectively, for Class A shares,
and $34,752, $28,077 and $17,089, respectively, for Class B shares.
18
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
6 Contingent Deferred Sales Charge
- -------------------------------------------
A contingent deferred sales charge (CDSC) generally is imposed on redemptions
of Class B shares made within six years of purchase. Generally, the CDSC is
based upon the lower of the net asset value at date of redemption or date of
purchase. No charge is levied on 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 and may be waived
under certain other limited conditions. 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 $50,000, $34,000 and $17,000 of CDSC paid by Class B
shareholders of Florida Insured Fund, Hawaii Fund and Kansas Fund,
respectively, for the year ended January 31, 2000.
7 Investment Transactions
- -------------------------------------------
Increases and decreases in each Fund's investment in its corresponding
Portfolio for the year ended January 31, 2000 were as follows:
<TABLE>
<CAPTION>
FLORIDA INSURED FUND
<S> <C>
-----------------------------------------------------
Increases $ 6,405,002
Decreases 6,426,139
<CAPTION>
HAWAII FUND
<S> <C>
-----------------------------------------------------
Increases $ 1,633,534
Decreases 3,247,725
<CAPTION>
KANSAS FUND
<S> <C>
-----------------------------------------------------
Increases $ 2,479,031
Decreases 2,268,175
</TABLE>
8 Transfer of Net Assets
- -------------------------------------------
On February 1, 1998, Florida Insured Fund, Hawaii Fund and 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:
<TABLE>
<CAPTION>
CLASS A SHARES AGGREGATE VALUE NET ASSET VALUE
FUND ISSUED OF SHARES ISSUED PER SHARE
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------
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
</TABLE>
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:
<TABLE>
<CAPTION>
FUND ACQUIRED NET ASSETS UNREALIZED APPRECIATION
<S> <C> <C>
--------------------------------------------------------------------------------------
Florida Insured Fund $2,748,790 $160,660
Hawaii Fund 300,865 27,372
Kansas Fund 1,223,080 49,919
</TABLE>
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:
<TABLE>
<CAPTION>
CLASS A NET CLASS B NET
ASSET VALUE ASSET VALUE
FUND COMBINED NET ASSETS PER SHARE PER SHARE
<S> <C> <C> <C>
---------------------------------------------------------------------------------------
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
</TABLE>
19
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
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, 2000, the related statements of
operations for the year then ended, the statements of changes in net assets for
the years ended January 31, 2000 and 1999 and the financial highlights for each
of the years in the five-year period ended January 31, 2000. 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, 2000, 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 3, 2000
20
<PAGE>
FLORIDA INSURED MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 97.7%
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Escrowed / Prerefunded -- 6.1%
- ----------------------------------------------------------------------------
$1,160 Dade County, Professional Sports
Franchise, (MBIA), Escrowed to Maturity,
0.00%, 10/1/19 $ 345,460
500 North Port, Utility Revenue, (FGIC),
Prerefunded to 10/1/02, 6.25%, 10/1/22 528,005
250 Orange, Tourist Development Tax, (MBIA),
Prerefunded to 10/1/04, 6.00%, 10/1/24 265,155
400 Titusville Water & Sewer, (MBIA),
Prerefunded to 10/1/04, 6.00%, 10/1/24 424,248
- ----------------------------------------------------------------------------
$ 1,562,868
- ----------------------------------------------------------------------------
Housing -- 13.5%
- ----------------------------------------------------------------------------
$ 280 Duval County, HFA, SFMR, (GNMA), (AMT),
6.70%, 10/1/26 $ 284,771
750 Escambia County, HFA, SFMR, (GNMA),
(AMT), 7.00%, 4/1/28 782,887
650 Manatee County, HFA, SFMR, (GNMA),
(AMT), 6.875%, 11/1/26 679,341
995 Pinellas County, HFA, SFMR, (AMT),
5.80%, 3/1/29 919,042
795 Pinellas County, HFA, SFMR, (GNMA),
(AMT), 6.70%, 2/1/28 810,979
- ----------------------------------------------------------------------------
$ 3,477,020
- ----------------------------------------------------------------------------
Insured-Cogeneration -- 3.3%
- ----------------------------------------------------------------------------
$1,000 Tampa, Solid Waste System, (McKay Bay
Refuse to Energy), (AMBAC), (AMT),
5.00%, 10/1/21 $ 837,540
- ----------------------------------------------------------------------------
$ 837,540
- ----------------------------------------------------------------------------
Insured-Education -- 4.9%
- ----------------------------------------------------------------------------
$ 500 Florida A&M University, (Student
Apartment Facilties), (MBIA),
5.625%, 7/1/25 $ 468,575
1,000 Florida State University, System
Improvement Revenue, (AMBAC),
4.50%, 7/1/23 779,560
- ----------------------------------------------------------------------------
$ 1,248,135
- ----------------------------------------------------------------------------
Insured-Electric Utilities -- 7.2%
- ----------------------------------------------------------------------------
$ 445 Citrus County, PCR, (Florida Power
Corp.), (MBIA), 6.35%, 2/1/22 $ 450,033
895 Florida State Municipal Power Agency,
(Stanton), (AMBAC), 4.50%, 10/1/27 677,130
800 Puerto Rico Electric Power Authority,
(MBIA), 5.50%, 7/1/25 734,976
- ----------------------------------------------------------------------------
$ 1,862,139
- ----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Insured-General Obligations -- 3.9%
- ----------------------------------------------------------------------------
$1,000 Florida Board of Education, (MBIA),
4.50%, 6/1/24 $ 773,770
250 Miami-Dade County, School District,
(FSA), 5.375%, 8/1/15 241,462
- ----------------------------------------------------------------------------
$ 1,015,232
- ----------------------------------------------------------------------------
Insured-Hospital -- 2.4%
- ----------------------------------------------------------------------------
$ 200 Dade, Public Facilities Revenue,
(Jackson Memorial Hospital), (MBIA),
4.875%, 6/1/15 $ 174,090
500 Sarasota County, Public Hospital Board,
(Sarasota Memorial Hospital), (MBIA),
5.25%, 7/1/24 447,240
- ----------------------------------------------------------------------------
$ 621,330
- ----------------------------------------------------------------------------
Insured-Housing -- 9.8%
- ----------------------------------------------------------------------------
$ 500 Florida HFA, (Homeowner Mortgage),
(MBIA), (AMT), 5.90%, 7/1/29 $ 476,035
500 Florida HFA, (Maitland Club Apartments),
(AMBAC), (AMT), 6.875%, 8/1/26 520,370
1,000 Florida HFA, (Mariner Club Apartments),
(AMBAC), (AMT), 6.375%, 9/1/36 1,010,120
500 Florida HFA, (Spinnaker Cove
Apartments), (AMBAC), (AMT),
6.50%, 7/1/36 511,000
- ----------------------------------------------------------------------------
$ 2,517,525
- ----------------------------------------------------------------------------
Insured-Industrial Development Revenue -- 1.9%
- ----------------------------------------------------------------------------
$ 500 Dade County Resources Recovery
Facilities, (AMBAC), (AMT),
5.50%, 10/1/13 $ 488,465
- ----------------------------------------------------------------------------
$ 488,465
- ----------------------------------------------------------------------------
Insured-Special Tax Revenue -- 17.5%
- ----------------------------------------------------------------------------
$ 555 Celebration Community Development
District, (MBIA), 5.125%, 5/1/20 $ 482,911
625 Dade County, Special Obligation,
(AMBAC), Variable Rate, 10/1/35(1) 409,600
500 Jacksonville, Capital Improvement
Revenue, (Stadium), (AMBAC),
4.75%, 10/1/25 400,100
1,000 Jacksonville, Excise Taxes Revenue,
(FGIC), (AMT), 0.00%, 10/1/10 543,140
1,000 Jacksonville, Excise Taxes Revenue,
(FGIC), (AMT), 5.70%, 10/1/09 1,009,280
500 Miami-Dade County, Special Obligations,
(MBIA), 5.00%, 10/1/37 405,430
250 Puerto Rico Public Finance Corp.,
(AMBAC), Variable Rate, 6/1/26(1)(2) 172,855
505 St. Petersburg Excise Tax, (FGIC),
5.00%, 10/1/16 450,990
340 Sunrise Public Facilities, (MBIA),
0.00%, 10/1/15 133,134
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
FLORIDA INSURED MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Insured-Special Tax Revenue (continued)
- ----------------------------------------------------------------------------
$2,000 Tampa, Utility Tax Revenue, (AMBAC),
0.00%, 4/1/22 $ 500,840
- ----------------------------------------------------------------------------
$ 4,508,280
- ----------------------------------------------------------------------------
Insured-Transportation -- 10.1%
- ----------------------------------------------------------------------------
$1,000 Dade County Aviation Facilities, (Miami
International Airport), (FSA), (AMT),
5.125%, 10/1/22 $ 851,110
1,000 Dade County, Seaport Revenue, (MBIA),
5.125%, 10/1/16 913,940
750 Florida Turnpike Authority, (Department
of Transportation), (FGIC),
4.50%, 7/1/27 573,607
400 Greater Orlando, Aviation Authority,
(FGIC), Variable Rate, 10/1/18 274,228
- ----------------------------------------------------------------------------
$ 2,612,885
- ----------------------------------------------------------------------------
Insured-Utilities -- 0.8%
- ----------------------------------------------------------------------------
$ 250 Florida Government Utility Authority,
Utility Revenue, (Barefoot Bay),
(AMBAC), 5.00%, 10/1/29 $ 207,598
- ----------------------------------------------------------------------------
$ 207,598
- ----------------------------------------------------------------------------
Insured-Water and Sewer -- 16.3%
- ----------------------------------------------------------------------------
$ 500 Cocoa, Water and Sewer, (FGIC),
4.50%, 10/1/22 $ 391,870
735 Enterprise Community Development
District, Water and Sewer, (MBIA),
6.125%, 5/1/24 739,006
1,000 Jacksonville, Water and Sewer, (AMBAC),
(AMT), 6.35%, 8/1/25 1,013,010
1,000 Lee County, IDA, (Bonita Springs
Utilities), (MBIA), (AMT),
6.05%, 11/1/20 993,700
375 Tampa Bay, Water Utility System, (FGIC),
Variable Rate, 10/1/27(1)(2) 224,828
1,000 Vero Beach, Water and Sewer, (FGIC),
5.00%, 12/1/21 847,350
- ----------------------------------------------------------------------------
$ 4,209,764
- ----------------------------------------------------------------------------
Total Tax-Exempt Investments -- 97.7%
(identified cost $26,727,801) $25,168,781
- ----------------------------------------------------------------------------
Other Assets, Less Liabilities -- 2.3% $ 591,443
- ----------------------------------------------------------------------------
Net Assets -- 100.0% $25,760,224
- ----------------------------------------------------------------------------
</TABLE>
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 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, 2000, 86.1% 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, 2000, the Portfolio's insured securities by financial
institution are as follows:
<TABLE>
<CAPTION>
% OF
MARKET VALUE MARKET VALUE
<S> <C> <C>
- --------------------------------------------------------------------
American Municipal Bond Assurance Corp. $ 7,528,188 29.9%
(AMBAC)
Financial Guarantee Insurance Corp. 4,843,298 19.2%
(FGIC)
Financial Security Assurance (FSA) 1,092,572 4.3%
Municipal Bond Insurance Assoc. (MBIA) 8,227,703 32.7%
- --------------------------------------------------------------------
TOTAL $21,691,761 86.1%
- --------------------------------------------------------------------
</TABLE>
(1) Security has been issued as an inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
HAWAII MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 97.6%
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Electric Utilities -- 3.1%
- ----------------------------------------------------------------------------
$1,500 Puerto Rico Electric Power Authority,
0.00%, 7/1/17 $ 523,185
- ----------------------------------------------------------------------------
$ 523,185
- ----------------------------------------------------------------------------
General Obligations -- 4.4%
- ----------------------------------------------------------------------------
$ 750 Honolulu, 4.75%, 9/1/17 $ 640,597
285 Puerto Rico, Public Improvement,
0.00%, 7/1/15 113,196
- ----------------------------------------------------------------------------
$ 753,793
- ----------------------------------------------------------------------------
Hospital -- 15.3%
- ----------------------------------------------------------------------------
$ 200 Hawaii Department of Budget and Finance,
(Kaiser Permanente), 5.15%, 3/1/15 $ 167,380
635 Hawaii Department of Budget and Finance,
(Kapiolani Health System),
6.00%, 7/1/19 584,162
870 Hawaii Department of Budget and Finance,
(Queens Health System), 5.75%, 7/1/26 751,454
710 Hawaii Department of Budget and Finance,
(Wahiawa General Hospital),
7.50%, 7/1/12 652,043
300 Hawaii Department of Budget and Finance,
(Wilcox Memorial Hospital),
5.35%, 7/1/18 238,416
300 Hawaii Department of Budget and Finance,
(Wilcox Memorial Hospital),
5.50%, 7/1/28 229,569
- ----------------------------------------------------------------------------
$ 2,623,024
- ----------------------------------------------------------------------------
Housing -- 7.5%
- ----------------------------------------------------------------------------
$ 200 Guam Housing Corp., Single Family,
5.75%, 9/1/31 $ 187,294
1,000 Hawaii Housing Finance and Development,
Single Family, 5.90%, 7/1/27 950,780
145 Hawaii Housing Finance and Development,
Single Family, (AMT), 6.00%, 7/1/26 138,353
- ----------------------------------------------------------------------------
$ 1,276,427
- ----------------------------------------------------------------------------
Industrial Development Revenue -- 2.7%
- ----------------------------------------------------------------------------
$ 370 Hawaii Department of Transportation,
(Continental Airlines, Inc.), (AMT),
5.625%, 11/15/27 $ 293,347
180 Puerto Rico Port Authority, (American
Airlines), (AMT), 6.30%, 6/1/23 171,745
- ----------------------------------------------------------------------------
$ 465,092
- ----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Insured-Education -- 5.8%
- ----------------------------------------------------------------------------
$ 500 Hawaii State Housing Development Corp.,
(University of Hawaii), (AMBAC),
5.65%, 10/1/16 $ 483,260
500 University of Hawaii Board of Regents,
University System, (AMBAC),
5.65%, 10/1/12 499,730
- ----------------------------------------------------------------------------
$ 982,990
- ----------------------------------------------------------------------------
Insured-Electric Utilities -- 9.2%
- ----------------------------------------------------------------------------
$1,000 Hawaii Department of Budget and Finance,
(Hawaiian Electric Co.), (AMBAC), (AMT),
5.75%, 12/1/18 $ 951,900
500 Hawaii Department of Budget and Finance,
(Hawaiian Electric Co., Inc.), (MBIA),
(AMT), 6.60%, 1/1/25 513,950
100 Puerto Rico Electric Power Authority,
STRIPES, (FSA), Variable Rate, 7/1/03(1) 105,500
- ----------------------------------------------------------------------------
$ 1,571,350
- ----------------------------------------------------------------------------
Insured-General Obligations -- 13.8%
- ----------------------------------------------------------------------------
$ 350 Hawaii County, (FGIC), 5.55%, 5/1/10 $ 352,278
400 Hawaii, (FGIC), 5.00%, 10/1/17 348,676
150 Honolulu, City and County, (FGIC),
5.00%, 7/1/23 125,241
250 Honolulu, City and County, (FGIC),
5.00%, 4/1/24 208,158
305 Kauai County, (MBIA), 5.90%, 2/1/14 305,076
910 Maui County, (FGIC), 5.00%, 9/1/17 794,457
250 Maui County, (FGIC), 5.25%, 3/1/18 225,510
- ----------------------------------------------------------------------------
$ 2,359,396
- ----------------------------------------------------------------------------
Insured-Hospital -- 3.0%
- ----------------------------------------------------------------------------
$ 500 Hawaii Department of Budget and Finance,
(Queens Health System), (MBIA),
5.00%, 7/1/28 $ 402,780
100 Hawaii Department of Budget and Finance,
(St. Francis Medical Center), (FSA),
6.50%, 7/1/22 100,964
- ----------------------------------------------------------------------------
$ 503,744
- ----------------------------------------------------------------------------
Insured-Housing -- 2.9%
- ----------------------------------------------------------------------------
$ 480 Honolulu, Mortgage Revenue Bonds, (Smith
Beretania), (FHA Insured) (MBIA),
7.80%, 7/1/24 $ 497,208
- ----------------------------------------------------------------------------
$ 497,208
- ----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
HAWAII MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 1.2%
- ----------------------------------------------------------------------------
$ 250 Hawaii, (Kapolei State Office Building),
(AMBAC), 5.00%, 5/1/18 $ 212,013
- ----------------------------------------------------------------------------
$ 212,013
- ----------------------------------------------------------------------------
Insured-Special Tax Revenue -- 0.6%
- ----------------------------------------------------------------------------
$ 210 Puerto Rico Infrastructure Financing
Authority, (AMBAC), Variable Rate,
7/1/28(2) $ 108,803
- ----------------------------------------------------------------------------
$ 108,803
- ----------------------------------------------------------------------------
Insured-Transportation -- 14.9%
- ----------------------------------------------------------------------------
$ 500 Hawaii Airports System, (FGIC), (AMT),
7.50%, 7/1/20 $ 515,325
100 Hawaii Airports System, (MBIA), (AMT),
6.90%, 7/1/12 109,885
245 Hawaii Airports System, (MBIA), (AMT),
7.00%, 7/1/18 255,763
650 Hawaii Harbor Revenue, (FGIC), (AMT),
6.375%, 7/1/24 651,651
1,300 Puerto Rico Highway and Transportation
Authority, (FSA), 4.75%, 7/1/38 1,008,852
- ----------------------------------------------------------------------------
$ 2,541,476
- ----------------------------------------------------------------------------
Insured-Water and Sewer -- 5.0%
- ----------------------------------------------------------------------------
$1,000 Honolulu, City and County Waste Water
Systems, (FGIC), 0.00%, 7/1/18 $ 315,110
730 Honolulu, City and County Waterworks
System Revenue, (FGIC), 4.50%, 7/1/28 545,222
- ----------------------------------------------------------------------------
$ 860,332
- ----------------------------------------------------------------------------
Special Tax Revenue -- 2.0%
- ----------------------------------------------------------------------------
$ 200 Puerto Rico Infrastructure Financing
Authority, Variable Rate, 7/1/28(1)(3) $ 135,748
250 Virgin Islands Public Facilities
Authority, 5.625%, 10/1/25 212,325
- ----------------------------------------------------------------------------
$ 348,073
- ----------------------------------------------------------------------------
Transportation -- 2.7%
- ----------------------------------------------------------------------------
$ 250 Hawaii Highway Revenue, 5.00%, 7/1/12 $ 228,423
250 Hawaii Highway Revenue, 5.50%, 7/1/18 236,833
- ----------------------------------------------------------------------------
$ 465,256
- ----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Water and Sewer -- 3.5%
- ----------------------------------------------------------------------------
$ 600 Honolulu, Water Supply System,
5.80%, 7/1/16 $ 590,922
- ----------------------------------------------------------------------------
$ 590,922
- ----------------------------------------------------------------------------
Total Tax-Exempt Investments -- 97.6%
(identified cost $17,868,640) $16,683,084
- ----------------------------------------------------------------------------
Other Assets, Less Liabilities -- 2.4% $ 410,326
- ----------------------------------------------------------------------------
Net Assets -- 100.0% $17,093,410
- ----------------------------------------------------------------------------
</TABLE>
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 economic developments in a specific
industry or municipality. In order to reduce the risk associated with such
economic developments, at January 31, 2000, 57.8% of the securities in the
portfolio of investments are backed by bond insurance of various financial
institutions and financial guaranty assurance agencies. The aggregate
percentage insured by financial institutions ranged from 7.3% to 24.5% of
total investments.
(1) Security has been issued as an inverse floater bond.
(2) Security has been issued as a leveraged inverse floater bond.
(3) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
KANSAS MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 96.8%
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Electric Utilities -- 3.0%
- ----------------------------------------------------------------------------
$ 450 Puerto Rico Electric Power Authority,
5.00%, 7/1/28 $ 368,878
- ----------------------------------------------------------------------------
$ 368,878
- ----------------------------------------------------------------------------
Escrowed / Prerefunded -- 5.1%
- ----------------------------------------------------------------------------
$ 65 Kansas City, Utility System, (FGIC),
Prerefunded to 09/01/04, 6.375%, 9/1/23 $ 69,898
415 Labette County, SFMR, Escrowed to
Maturity, 0.00%, 12/1/14 171,183
1,000 Saline County, SFMR, Escrowed to
Maturity, 0.00%, 12/1/15 383,840
- ----------------------------------------------------------------------------
$ 624,921
- ----------------------------------------------------------------------------
General Obligations -- 7.8%
- ----------------------------------------------------------------------------
$ 890 Johnson County, Unified School District
#229, 5.00%, 10/1/16 $ 791,379
500 Puerto Rico, 0.00%, 7/1/18 161,540
- ----------------------------------------------------------------------------
$ 952,919
- ----------------------------------------------------------------------------
Hospital -- 9.2%
- ----------------------------------------------------------------------------
$ 225 Atchison, (Atchison Hospital Assn.),
5.70%, 11/15/18 $ 183,150
250 Lawrence, (Lawrence Memorial Hospital),
6.20%, 7/1/19 233,970
300 Newton, (Newton Healthcare Corp.),
5.75%, 11/15/24 235,389
500 Wichita, (Christi Health Systems, Inc.),
6.25%, 11/15/24 472,050
- ----------------------------------------------------------------------------
$ 1,124,559
- ----------------------------------------------------------------------------
Housing -- 15.4%
- ----------------------------------------------------------------------------
$ 55 Kansas City, Mortgage Revenue, (GNMA),
(AMT), 5.30%, 5/1/07 $ 54,013
65 Kansas City, Mortgage Revenue, (GNMA),
(AMT), 5.30%, 11/1/07 63,770
280 Kansas City, Mortgage Revenue, (GNMA),
(AMT), 7.00%, 12/1/11 284,967
215 Kansas City, Multifamily, (FHA),
6.70%, 7/1/23 217,116
100 Kansas Development Authority, SFMR,
(FHA), (Martin Creek), 6.60%, 8/1/34 101,099
70 Olathe and Labette County, SFMR, (GNMA),
(AMT), 8.10%, 8/1/23 75,004
110 Olathe, Mortgage Revenue, (GNMA), (AMT),
7.60%, 3/1/07 112,579
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Housing (continued)
- ----------------------------------------------------------------------------
$ 250 Olathe, Multifamily, (FNMA),
6.45%, 6/1/19 $ 254,907
210 Puerto Rico Housing Finance Corp.,
7.50%, 4/1/22 214,969
145 Sedgwick and Shawnee Counties, SFMR,
(GNMA), 7.75%, 11/1/24 155,517
280 Sedgwick County, SFMR, (GNMA),
8.00%, 5/1/25 302,109
35 Sedgwick County, SFMR, (GNMA),
8.20%, 5/1/14 37,645
- ----------------------------------------------------------------------------
$ 1,873,695
- ----------------------------------------------------------------------------
Industrial Development Revenue -- 1.3%
- ----------------------------------------------------------------------------
$ 160 Topeka, IDA, (Resers Fine Foods, Inc.)
(AMT), 5.40%, 4/1/05 $ 152,008
- ----------------------------------------------------------------------------
$ 152,008
- ----------------------------------------------------------------------------
Insured-Economic Development Revenue -- 1.9%
- ----------------------------------------------------------------------------
$ 250 Kansas Development Finance Authority,
(Administration -- 7th and Harrison
Project), 5.75%, 12/1/27 $ 236,410
- ----------------------------------------------------------------------------
$ 236,410
- ----------------------------------------------------------------------------
Insured-Education -- 5.8%
- ----------------------------------------------------------------------------
$ 250 Johnson County Community College,
(Student Commons and Parking Systems),
(MBIA), 5.05%, 11/15/21 $ 215,812
500 Washburn University, Topeka, (Living
Learning Center), (AMBAC),
6.125%, 7/1/29 497,265
- ----------------------------------------------------------------------------
$ 713,077
- ----------------------------------------------------------------------------
Insured-Electric Utilities -- 6.7%
- ----------------------------------------------------------------------------
$ 345 Burlington, PCR, (Kansas Gas & Electric
Co.), (MBIA), 7.00%, 6/1/31 $ 360,149
100 Puerto Rico Electric Power Authority,
STRIPES, (FSA), Variable Rate, 7/1/02(1) 104,000
400 Wellington Electric Waterworks and
Authority Revenue, (AMBAC),
5.20%, 5/1/23 349,136
- ----------------------------------------------------------------------------
$ 813,285
- ----------------------------------------------------------------------------
Insured-General Obligations -- 12.7%
- ----------------------------------------------------------------------------
$ 250 Butler and Sedgwick County, Unified
School District #385, (FSA),
5.40%, 9/1/18 $ 231,868
200 Harvey County, Unified School District
#373, (FSA), 4.80%, 9/1/18 167,582
200 Johnson County, Unified School District
#231, (FGIC), 6.00%, 10/1/16 205,404
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
25
<PAGE>
KANSAS MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Insured-General Obligations (continued)
- ----------------------------------------------------------------------------
$ 500 Sedgwick County, Unified School District
#267, (AMBAC), 5.00%, 11/1/19 $ 429,860
250 Sedgwick County, Unified School District
#267, (AMBAC), 6.15%, 11/1/09 264,895
230 Sedgwick County, Unified School District
#267, (AMBAC), 6.15%, 11/1/10 243,703
- ----------------------------------------------------------------------------
$ 1,543,312
- ----------------------------------------------------------------------------
Insured-Hospital -- 13.0%
- ----------------------------------------------------------------------------
$ 250 Kansas Development Finance Authority,
(Hays Medical Center Inc.), (MBIA),
5.50%, 11/15/22 $ 226,090
500 Kansas Development Finance Authority,
(St. Luke's/ Shawnee Mission), (MBIA),
5.375%, 11/15/26 436,695
500 Kansas Development Finance Authority,
(Stormont-Vail Healthcare) (MBIA),
5.80%, 11/15/11 503,430
200 Olathe, Health Facilities, (Evangelical
Lutheran Good Samaritan Society),
(AMBAC), 6.00%, 5/1/19 195,846
250 University of Kansas Hospital Authority,
Health Facility Revenue, (KU Health
System), (AMBAC), 5.65%, 9/1/29 226,978
- ----------------------------------------------------------------------------
$ 1,589,039
- ----------------------------------------------------------------------------
Insured-Housing -- 0.8%
- ----------------------------------------------------------------------------
$ 100 Puerto Rico Housing Finance Corp.,
(AMBAC), 7.50%, 10/1/11 $ 100,301
- ----------------------------------------------------------------------------
$ 100,301
- ----------------------------------------------------------------------------
Insured-Senior Living / Life Care -- 3.4%
- ----------------------------------------------------------------------------
$ 500 Kansas Development Finance Authority,
(Sisters Of Charity -- Leavenworth),
(MBIA), 5.00%, 12/1/25 $ 411,795
- ----------------------------------------------------------------------------
$ 411,795
- ----------------------------------------------------------------------------
Insured-Special Tax Revenue -- 0.7%
- ----------------------------------------------------------------------------
$ 175 Puerto Rico Infrastructure Financing
Authority, (AMBAC), Variable Rate,
7/1/28(2) $ 90,669
- ----------------------------------------------------------------------------
$ 90,669
- ----------------------------------------------------------------------------
Insured-Transportation -- 1.4%
- ----------------------------------------------------------------------------
$ 200 Puerto Rico Highway and Transportation
Authority, (AMBAC), 5.00%, 7/1/28 $ 167,642
- ----------------------------------------------------------------------------
$ 167,642
- ----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
Insured-Utilities -- 1.1%
- ----------------------------------------------------------------------------
$ 135 Kansas City, Utility System, (FGIC),
6.375%, 9/1/23 $ 136,593
- ----------------------------------------------------------------------------
$ 136,593
- ----------------------------------------------------------------------------
Insured-Water and Sewer -- 2.5%
- ----------------------------------------------------------------------------
$ 400 Wyandotte County & Kansas City, Utility
System, (MBIA), 4.50%, 9/1/28 $ 300,300
- ----------------------------------------------------------------------------
$ 300,300
- ----------------------------------------------------------------------------
Transportation -- 5.0%
- ----------------------------------------------------------------------------
$ 300 Kansas Highway Transportation
Department, 5.25%, 9/1/19 $ 269,646
400 Puerto Rico Highway and Transportation
Authority, 5.00%, 7/1/22 334,420
- ----------------------------------------------------------------------------
$ 604,066
- ----------------------------------------------------------------------------
Total Tax-Exempt Investments -- 96.8%
(identified cost $12,720,704) $11,803,469
- ----------------------------------------------------------------------------
Other Assets, Less Liabilities -- 3.2% $ 396,419
- ----------------------------------------------------------------------------
Net Assets -- 100.0% $12,199,888
- ----------------------------------------------------------------------------
</TABLE>
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, 2000, 52.3% of the securities in the
portfolio of investments are backed by bond insurance of various financial
institutions and financial guaranty assurance agencies. The aggregate
percentage insured by financial institutions ranged from 3.5% to 23.7% of
total investments.
(1) Security has been issued as an inverse floater bond.
(2) Security has been issued as a leveraged inverse floater bond.
SEE NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
AS OF JANUARY 31, 2000
<TABLE>
<CAPTION>
FLORIDA INSURED HAWAII KANSAS
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- -------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------
Investments --
Identified cost $26,727,801 $17,868,640 $12,720,704
Unrealized depreciation (1,559,020) (1,185,556) (917,235)
- -------------------------------------------------------------------------
INVESTMENTS, AT VALUE $25,168,781 $16,683,084 $11,803,469
- -------------------------------------------------------------------------
Cash $ 157,093 $ 209,177 $ 169,945
Interest receivable 438,826 166,348 192,095
Receivable from the Investment
Adviser -- 39,126 39,509
- -------------------------------------------------------------------------
TOTAL ASSETS $25,764,700 $17,097,735 $12,205,018
- -------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------
Accrued expenses $ 4,476 $ 4,325 $ 5,130
- -------------------------------------------------------------------------
TOTAL LIABILITIES $ 4,476 $ 4,325 $ 5,130
- -------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
INVESTORS' INTEREST IN
PORTFOLIO $25,760,224 $17,093,410 $12,199,888
- -------------------------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------------------------
Net proceeds from capital
contributions and
withdrawals $27,319,244 $18,278,966 $13,117,123
Net unrealized depreciation
(computed on the basis of
identified cost) (1,559,020) (1,185,556) (917,235)
- -------------------------------------------------------------------------
TOTAL $25,760,224 $17,093,410 $12,199,888
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
27
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 2000
<TABLE>
<CAPTION>
FLORIDA INSURED HAWAII KANSAS
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- --------------------------------------------------------------------------
Investment Income
- --------------------------------------------------------------------------
Interest $ 1,605,495 $ 1,082,364 $ 719,905
- --------------------------------------------------------------------------
TOTAL INVESTMENT INCOME $ 1,605,495 $ 1,082,364 $ 719,905
- --------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------
Investment adviser fee $ 57,216 $ 29,892 $ 16,685
Trustees fees and expenses 3,650 331 335
Legal and accounting services 17,122 16,985 16,306
Custodian fee 22,822 20,153 18,929
Amortization of organization
expenses 201 331 184
Miscellaneous 6,508 5,711 10,607
- --------------------------------------------------------------------------
TOTAL EXPENSES $ 107,519 $ 73,403 $ 63,046
- --------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 10,351 $ 4,385 $ 6,852
Reduction of investment
adviser fee -- 29,892 16,685
Allocation of expenses to
the Investment Adviser -- 39,126 39,509
- --------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 10,351 $ 73,403 $ 63,046
- --------------------------------------------------------------------------
NET EXPENSES $ 97,168 $ -- $ --
- --------------------------------------------------------------------------
NET INVESTMENT INCOME $ 1,508,327 $ 1,082,364 $ 719,905
- --------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- --------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions
(identified cost basis) $ (202,980) $ (135,979) $ (62,810)
Financial futures contracts 17,722 47,332 12,265
- --------------------------------------------------------------------------
NET REALIZED LOSS $ (185,258) $ (88,647) $ (50,545)
- --------------------------------------------------------------------------
Change in unrealized
appreciation (depreciation)
--
Investments (identified
cost basis) $(3,681,324) $(2,675,664) $(1,562,393)
Financial futures contracts -- -- 787
- --------------------------------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $(3,681,324) $(2,675,664) $(1,561,606)
- --------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
LOSS $(3,866,582) $(2,764,311) $(1,612,151)
- --------------------------------------------------------------------------
NET DECREASE IN NET ASSETS
FROM OPERATIONS $(2,358,255) $(1,681,947) $ (892,246)
- --------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JANUARY 31, 2000
<TABLE>
<CAPTION>
FLORIDA INSURED HAWAII KANSAS
INCREASE (DECREASE) IN NET ASSETS PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- ----------------------------------------------------------------------------
From operations --
Net investment income $ 1,508,327 $ 1,082,364 $ 719,905
Net realized loss (185,258) (88,647) (50,545)
Net change in unrealized
appreciation (depreciation) (3,681,324) (2,675,664) (1,561,606)
- ----------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
OPERATIONS $(2,358,255) $(1,681,947) $ (892,246)
- ----------------------------------------------------------------------------
Capital transactions --
Contributions $ 6,405,002 $ 1,633,534 $ 2,479,031
Withdrawals (6,426,139) (3,247,725) (2,268,175)
- ----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL
TRANSACTIONS $ (21,137) $(1,614,191) $ 210,856
- ----------------------------------------------------------------------------
NET DECREASE IN NET ASSETS $(2,379,392) $(3,296,138) $ (681,390)
- ----------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------
At beginning of year $28,139,616 $20,389,548 $12,881,278
- ----------------------------------------------------------------------------
AT END OF YEAR $25,760,224 $17,093,410 $12,199,888
- ----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
29
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
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
30
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
FLORIDA INSURED PORTFOLIO
-----------------------------------------------------
YEAR ENDED JANUARY 31,
-----------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Ratios to average daily net assets+
- -------------------------------------------------------------------------------------
Net expenses 0.38% 0.18% 0.07% 0.09% 0.07%
Net expenses after custodian
fee reduction 0.34% 0.11% -- 0.02% --
Net investment income 5.32% 5.21% 5.63% 5.76% 5.82%
Portfolio Turnover 34% 9% 34% 36% 32%
- -------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S
OMITTED) $ 25,760 $ 28,140 $ 24,850 $ 24,204 $ 21,416
- -------------------------------------------------------------------------------------
+ The operating expenses of the Portfolio may reflect a reduction of the investment
adviser fee, an allocation of expenses to the Investment Adviser, or both. Had
such actions not been taken, the ratios would have been as follows:
Expenses 0.30% 0.48% 0.39% 0.39%
Expenses after custodian fee
reduction 0.23% 0.41% 0.32% 0.32%
Net investment income 5.09% 5.22% 5.46% 5.50%
- -------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
HAWAII PORTFOLIO
-----------------------------------------------------
YEAR ENDED JANUARY 31,
-----------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Ratios to average daily net assets+
- -------------------------------------------------------------------------------------
Net expenses 0.02% 0.04% 0.03% 0.04% 0.06%
Net expenses after custodian
fee reduction 0.00% 0.00% 0.00% 0.00% 0.00%
Net investment income 5.67% 5.39% 5.70% 5.96% 6.01%
Portfolio Turnover 20% 29% 27% 21% 19%
- -------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S
OMITTED) $ 17,093 $ 20,390 $ 19,864 $ 16,014 $ 15,578
- -------------------------------------------------------------------------------------
+ The operating expenses of the Portfolio may reflect a reduction of the investment
adviser fee, an allocation of expenses to the Investment Adviser, or both. Had
such actions not been taken, the ratios would have been as follows:
Expenses 0.38% 0.28% 0.46% 0.43% 0.41%
Expenses after custodian fee
reduction 0.36% 0.24% 0.43% 0.39% 0.35%
Net investment income 5.31% 5.15% 5.27% 5.57% 5.66%
- -------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
KANSAS PORTFOLIO
-----------------------------------------------------
YEAR ENDED JANUARY 31,
-----------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Ratios to average daily net assets+
- -------------------------------------------------------------------------------------
Net expenses 0.05% 0.06% 0.05% 0.08% 0.09%
Net expenses after custodian
fee reduction 0.00% 0.00% 0.00% 0.00% 0.00%
Net investment income 5.59% 5.34% 5.79% 5.91% 5.93%
Portfolio Turnover 24% 33% 17% 49% 21%
- -------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S
OMITTED) $ 12,200 $ 12,881 $ 11,419 $ 11,736 $ 11,609
- -------------------------------------------------------------------------------------
+ The operating expenses of the Portfolio may reflect a reduction of the investment
adviser fee, an allocation of expenses to the Investment Adviser, or both. Had
such actions not been taken, the ratios would have been as follows:
Expenses 0.49% 0.36% 0.57% 0.48% 0.50%
Expenses after custodian fee
reduction 0.44% 0.30% 0.52% 0.40% 0.41%
Net investment income 5.15% 5.04% 5.27% 5.51% 5.52%
- -------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
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 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 accretion of 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 each Portfolio in
connection with its organization have been amortized on the straight-line
basis over five years and are fully amortized at January 31, 2000.
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, a Portfolio will realize a loss in the amount of
the cost of the option. When a Portfolio enters into a closing sale
transaction, a 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 put options is limited to
the premium originally paid.
G When-issued and Delayed Delivery Transactions -- The Portfolios may engage in
when-issued and delayed delivery transactions. The Portfolios record
when-issued securities on trade date and maintain security positions such
that sufficient liquid assets will be available to make payments for the
securities purchased.
34
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
Securities purchased on a when-issued or delayed delivery basis are
marked-to-market daily and begin earning 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 reported as a
reduction of total expenses in the Statement of Operations.
I Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
J Other -- Investment transactions are accounted for on a trade date basis.
2 Investment Adviser Fee and Other Transactions with Affiliates
- -------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to 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, 2000, each Portfolio incurred
advisory fees as follows:
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT EFFECTIVE RATE*
<S> <C> <C>
------------------------------------------------------------------
Florida Insured $57,216 0.20%
Hawaii 29,892 0.16%
Kansas 16,685 0.13%
</TABLE>
* As a percentage of average daily net assets.
To enhance the net income of the Hawaii Portfolio and Kansas Portfolio, BMR
made a reduction of its fee in the amount of $29,892 and $16,685,
respectively, and $39,126 and $39,509, 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 officers and Trustees of the Portfolios are officers 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, 2000, 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, 2000, were as follows:
<TABLE>
<CAPTION>
FLORIDA INSURED PORTFOLIO
<S> <C>
----------------------------------------------------
Purchases $9,837,244
Sales 9,339,958
<CAPTION>
HAWAII PORTFOLIO
<S> <C>
----------------------------------------------------
Purchases $3,756,442
Sales 4,526,103
<CAPTION>
KANSAS PORTFOLIO
<S> <C>
----------------------------------------------------
Purchases $3,715,415
Sales 2,962,345
</TABLE>
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned by each Portfolio at January 31, 2000, as computed on a
federal income tax basis, are as follows:
<TABLE>
<CAPTION>
FLORIDA INSURED PORTFOLIO
<S> <C>
-----------------------------------------------------
AGGREGATE COST $26,727,801
-----------------------------------------------------
Gross unrealized appreciation $ 383,279
Gross unrealized depreciation (1,942,299)
-----------------------------------------------------
NET UNREALIZED DEPRECIATION $(1,559,020)
-----------------------------------------------------
</TABLE>
35
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
<TABLE>
<CAPTION>
HAWAII PORTFOLIO
<S> <C>
-----------------------------------------------------
AGGREGATE COST $17,868,640
-----------------------------------------------------
Gross unrealized appreciation $ 206,144
Gross unrealized depreciation (1,391,700)
-----------------------------------------------------
NET UNREALIZED DEPRECIATION $(1,185,556)
-----------------------------------------------------
<CAPTION>
KANSAS PORTFOLIO
<S> <C>
-----------------------------------------------------
AGGREGATE COST $12,720,704
-----------------------------------------------------
Gross unrealized appreciation $ 70,173
Gross unrealized depreciation (987,408)
-----------------------------------------------------
NET UNREALIZED DEPRECIATION $ (917,235)
-----------------------------------------------------
</TABLE>
5 Line of Credit
- -------------------------------------------
The Portfolios participate with other portfolios and funds managed by BMR and
EVM and its affiliates in a $150 million unsecured line of credit agreement
with a group of banks. 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. The Portfolios did not have any significant
borrowings or allocated fees during the year ended January 31, 2000.
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.
At January 31, 2000, there were no outstanding obligations under these
financial instruments.
36
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2000
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, 2000, the
related statements of operations for the year then ended, the statements of
changes in net assets for the years ended January 31, 2000 and 1999 and the
supplementary data for each of the five years in the period ended January 31,
2000. 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, 2000 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of Florida Insured Municipals
Portfolio, Hawaii Municipals Portfolio and Kansas Municipals Portfolio at
January 31, 2000, 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 3, 2000
37
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2000
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
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
MUNICIPALS PORTFOLIOS
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and Trustee
Cynthia J. Clemson
Vice President and Portfolio Manager of
Florida Insured Municipals Portfolio
Robert B. MacIntosh
Vice President and Portfolio Manager of
Hawaii Municipals Portfolio
Thomas M. Metzold
Vice President and Portfolio Manager of
Kansas Municipals Portfolio
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
38
<PAGE>
PORTFOLIO INVESTMENT ADVISER
Boston Management and Research
The Eaton Vance Building
255 State Street
Boston, MA 02109
FUND ADMINISTRATOR
Eaton Vance Management
The Eaton Vance Building
255 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
PFPC Global Fund Services
Attention: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02904-9653
INDEPENDENT AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
EATON VANCE MUNICIPALS TRUST II
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
335-3/00 3CSRC-3/00
