<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
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
