<PAGE>
Florida Insured Municipals Portfolio as of July 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- ---------------------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.7%
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA $ 1,160 Dade County, Professional Sports
Franchise, (MBIA), 0.00%, 10/1/19 $ 396,210
- ---------------------------------------------------------------------------------------
$ 396,210
- ---------------------------------------------------------------------------------------
Housing -- 16.0%
- ---------------------------------------------------------------------------------------
Aaa NR $ 360 Duval County HFA, SFMR, (GNMA),
(AMT), 6.70%, 10/1/26 $ 385,495
Aaa AAA 750 Escambia County HFA, SFMR,
(GNMA), (AMT), 7.00%, 4/1/28 825,105
Aaa NR 715 Manatee County, HFA, SFMR,
(GNMA), (AMT), 6.875%, 11/1/26 798,441
Aaa NR 1,000 Pinellas County HFA, SFMR, (AMT),
5.80%, 3/1/29 1,025,390
NR AAA 795 Pinellas County HFA, SFMR,
(GNMA), (AMT), 6.70%, 2/1/28 852,304
- ---------------------------------------------------------------------------------------
$ 3,886,735
- ---------------------------------------------------------------------------------------
Insured-Education -- 2.2%
- ---------------------------------------------------------------------------------------
Aaa AAA $ 500 Florida A&M University, (Student
Apartment Facilties), (MBIA),
5.625%, 7/1/25 $ 521,690
- ---------------------------------------------------------------------------------------
$ 521,690
- ---------------------------------------------------------------------------------------
Insured-Electric Utilities -- 9.5%
- ---------------------------------------------------------------------------------------
Aaa AAA $ 445 Citrus County, PCR, (MBIA),
6.35%, 2/1/22 $ 483,132
Aaa AAA 895 Florida State Municipal Power
Agency, (Stanton), (AMBAC),
4.50%, 10/1/27 802,036
Aaa AAA 1,000 Puerto Rico Electric Power
Authority, (MBIA), 5.50%, 7/1/25 1,028,010
- ---------------------------------------------------------------------------------------
$ 2,313,178
- ---------------------------------------------------------------------------------------
Insured-Hospitals -- 0.8%
- ---------------------------------------------------------------------------------------
Aaa AAA $ 200 Dade, Public Facilities Revenue,
(Jackson Memorial Hospital),
(MBIA), 4.875%, 6/1/15 $ 195,052
- ---------------------------------------------------------------------------------------
$ 195,052
- ---------------------------------------------------------------------------------------
Insured-Housing -- 14.8%
- ---------------------------------------------------------------------------------------
NR A $ 375 Clearwater HFA, (Hamptons at
Clearwater), (ACA), 5.30%, 5/1/18 $ 377,261
NR A 500 Clearwater HFA, (Hamptons at
Clearwater), (ACA), 5.35%, 5/1/24 503,000
Aaa AAA 500 Florida HFA, (Maitland Club
Apartments), (AMBAC), (AMT),
6.875%, 8/1/26 549,655
Aaa AAA 1,000 Florida HFA, (Mariner Club
Apartments), (AMBAC), (AMT),
6.375%, 9/1/36 1,078,220
Aaa AAA 500 Florida HFA, (MBIA), (AMT),
5.90%, 7/1/29 522,910
Aaa AAA 500 Florida HFA, (Spinnaker Cove
Apartments), (AMBAC), (AMT),
6.50%, 7/1/36 542,930
- ---------------------------------------------------------------------------------------
$ 3,573,976
- ---------------------------------------------------------------------------------------
Insured-Industrial Development Revenue -- 2.1%
- ---------------------------------------------------------------------------------------
Aaa AAA $ 500 Dade County Resources Recovery
Facilities, (AMBAC), (AMT),
5.50%, 10/1/13 $ 517,885
- ---------------------------------------------------------------------------------------
$ 517,885
- ---------------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 16.4%
- ---------------------------------------------------------------------------------------
Aaa AAA $ 500 Bradenton, Special Revenue
Sub-Lien, (FGIC), 5.00%, 10/1/15 $ 499,680
Aaa AAA 1,000 Jacksonville, Excise Taxes
Revenue, (FGIC), 5.00%, 10/1/16 993,440
Aaa AAA 1,000 Jacksonville, Excise Taxes
Revenue, (FGIC), (AMT), 5.70%,
10/1/09 1,048,010
Aaa AAA 250 Orange, Tourist Development Tax,
(MBIA), 6.00%, 10/1/24 272,013
Aaa AAA 505 St. Petersburg Excise Tax,
(FGIC), 5.00%, 10/1/16 501,096
Aaa AAA 340 Sunrise Public Facilities,
(MBIA), 0.00%, 10/1/15 144,673
Aaa AAA 500 Tampa, Occupational License Tax
Revenue, (FGIC), 5.50%, 10/1/27 519,095
- ---------------------------------------------------------------------------------------
$ 3,978,007
- ---------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
17
<PAGE>
Florida Insured Municipals Portfolio as of July 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- --------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------------
Insured-Transportation -- 12.4%
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA $ 1,000 Dade County Aviation Facilities,
(Miami International Airport),
(FSA), (AMT), 5.125%, 10/1/22 $ 982,250
Aaa AAA 1,000 Dade County, Seaport Revenue,
(MBIA), 5.125%, 10/1/16 1,002,290
Aaa AAA 1,000 Florida Ports Financing
Commission, (State Transportation
Trust Fund), (MBIA), (AMT), 1,012,210
5.375%, 6/1/27
- --------------------------------------------------------------------------------------
$ 2,996,750
- --------------------------------------------------------------------------------------
Insured-Water and Sewer -- 24.1%
- --------------------------------------------------------------------------------------
Aaa AAA $ 500 Dade County, Water And Sewer
System, (FGIC), 5.25%, 10/1/26 $ 502,270
Aaa AAA 325 Dade County, Water and Sewer
System, (FGIC), 5.375%, 10/1/16 333,769
Aaa AAA 735 Enterprise Community Development
District, (MBIA), 6.125%, 5/1/24 799,967
Aaa AAA 1,000 Jacksonville, (AMBAC), (AMT),
6.35%, 8/1/25 1,095,869
Aaa AAA 1,000 Lee County IDA, (Bonita Springs),
(MBIA), (AMT), 6.05%, 11/1/20 1,074,230
Aaa AAA 70 North Port, Utility Revenue,
(FGIC), 6.25%, 10/1/17 77,016
Aaa AAA 500 North Port, Utility Revenue,
(FGIC), 6.25%, 10/1/22 550,115
Aaa AAA 400 Titisville, (MBIA), 6.00%, 10/1/24 435,220
Aaa AAA 1,000 Vero Beach, (FGIC),
5.00%, 12/1/21 977,700
- --------------------------------------------------------------------------------------
$ 5,846,156
- --------------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100%
(identified cost $22,530,409) $ 24,225,639
- --------------------------------------------------------------------------------------
</TABLE>
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The Portfolio primarily invests in debt securities issued by Florida
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at July 31, 1998, 84.0% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. At July 31, 1998, the Portfolio's insured
securities by financial institution are as follows:
% of
Market Value Market Value
- --------------------------------------------------------------------------------
American Capital Access (ACA) $ 880,261 3.6%
American Municipal Bond Assurance
Corp. (AMBAC) 4,586,595 18.9
Financial Guaranty Insurance Corp. (FGIC) 6,002,191 24.8
Financial Security Assurance (FSA) 982,250 4.1
Municipal Bond Insurance Assoc. (MBIA) 7,887,607 32.6
- --------------------------------------------------------------------------------
Total $20,338,904 84.0%
- --------------------------------------------------------------------------------
See notes to financial statements
18
<PAGE>
Hawaii Municipals Portfolio as of July 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 3.0%
- --------------------------------------------------------------------------------
Baa1 BBB+ $1,500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 $ 576,450
- --------------------------------------------------------------------------------
$ 576,450
- --------------------------------------------------------------------------------
General Obligations -- 5.2%
- --------------------------------------------------------------------------------
A1 A+ $ 140 Hawaii State, 5.75%, 1/1/11 $ 153,082
Aa2 AA 750 Honolulu, 4.75%, 9/1/17 720,398
Baa1 A 285 Puerto Rico, Public
Improvement, 0.00%, 7/1/15 120,777
- --------------------------------------------------------------------------------
$ 994,257
- --------------------------------------------------------------------------------
Hospitals -- 15.7%
- --------------------------------------------------------------------------------
A A $ 635 Hawaii State Department of
Budget and Finance, (Kapiolani
Health System), 6.00%, 7/1/19 $ 670,763
Aa3 AA 870 Hawaii State Department of
Budget and Finance, (Queens
Health System), 5.75%, 7/1/26 912,507
NR BB 750 Hawaii State Department of
Budget and Finance, (Wahiawa
General Hospital), 7.50%, 7/1/12 816,120
NR BBB+ 300 Hawaii State Department of
Budget and Finance, (Wilcox
Memorial Hospital), 5.35%, 7/1/18 297,087
NR BBB+ 300 Hawaii State Department of
Budget and Finance, (Wilcox
Memorial Hospital), 5.50%, 7/1/28 298,674
- --------------------------------------------------------------------------------
$ 2,995,151
- --------------------------------------------------------------------------------
Housing -- 7.5%
- --------------------------------------------------------------------------------
NR AAA $ 200 Guam Housing Corp., Single
Family, 5.75%, 9/1/31 $ 212,660
Aa1 AA 1,000 Hawaii State Housing Finance
and Development, Single Family,
5.90%, 7/1/27 1,039,639
Aa1 AA 175 Hawaii State Housing Finance
and Development, Single Family,
(AMT), 6.00%, 7/1/26 181,227
- --------------------------------------------------------------------------------
$ 1,433,526
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 6.0%
- --------------------------------------------------------------------------------
Ba2 BB- $ 370 Hawaii State Department of
Transportation, (Continental
Airlines, Inc.), (AMT),
5.625%, 11/15/27 $ 369,963
A1 AA- 550 Puerto Rico Industrial,
Tourist, Educational,
Medical and Environmental
Control Authority, (Upjohn
Co.), 7.50%, 12/1/23 572,545
Baa3 BBB- 180 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.30%, 6/1/23 191,041
- --------------------------------------------------------------------------------
$ 1,133,549
- --------------------------------------------------------------------------------
Insured-Education -- 5.5%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Hawaii State Housing
Development Corp.,
(University of Hawaii),
(AMBAC), 5.65%, 10/1/16 $ 523,370
Aaa AAA 500 University of Hawaii Board
of Regents, University
System, (AMBAC), 5.65%, 10/1/12 525,850
- --------------------------------------------------------------------------------
$ 1,049,220
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 8.9%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Hawaii State Department of
Budget and Finance, (Hawaiian
Electric Co.), (MBIA), (AMT),
5.65%, 10/1/27 $ 1,038,729
Aaa AAA 500 Hawaii State Department of Budget
and Finance, (Hawaiian Electric
Co., Inc.), (AMT), (MBIA), 550,825
6.60%, 1/1/25
Aaa AAA 100 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(1)/ 113,125
- --------------------------------------------------------------------------------
$ 1,702,679
- --------------------------------------------------------------------------------
Insured-General Obligations -- 16.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 350 Hawaii County, (FGIC),
5.55%, 5/1/10 $ 377,748
Aaa AAA 400 Hawaii State, (FGIC),
5.00%, 10/1/17 393,436
Aaa AAA 250 Honolulu, (FGIC), 5.00%, 11/1/16 247,473
Aaa AAA 305 Kauai County, (MBIA), 5.90%, 2/1/14 325,151
Aaa AAA 910 Maui County, (FGIC), 5.00%, 9/1/17 895,131
See notes to financial statements
19
<PAGE>
Hawaii Municipals Portfolio as of July 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-General Obligations (continued)
- --------------------------------------------------------------------------------
Aaa AAA $ 250 Maui County, (FGIC),
5.25%, 3/1/18 $ 252,475
Aaa AAA 420 Maui County, (FGIC),
5.30%, 9/1/14 430,135
Aaa AAA 250 Maui County, (FGIC),
5.75%, 1/1/13 262,275
- --------------------------------------------------------------------------------
$ 3,183,824
- --------------------------------------------------------------------------------
Insured-Hospitals -- 3.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Hawaii State Department of Budget
and Finance, (Queens Health
System), (MBIA), 5.00%, 7/1/28 $ 478,675
Aaa AAA 100 Hawaii State Department of Budget
and Finance, (St. Francis Medical
Center), (CGIC), 6.50%, 7/1/22 108,596
- --------------------------------------------------------------------------------
$ 587,271
- --------------------------------------------------------------------------------
Insured-Housing -- 2.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 485 Honolulu, Mortgage Revenue Bonds,
(Smith Beretania), (FHA Insured)
(MBIA), 7.80%, 7/1/24 $ 518,785
- --------------------------------------------------------------------------------
$ 518,785
- --------------------------------------------------------------------------------
Insured-Transportation -- 9.9%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Hawaii State Airports System,
(AMT), (FGIC), 7.50%, 7/1/20 $ 537,125
Aaa AAA 100 Hawaii State Airports System,
(AMT), (MBIA), 6.90%, 7/1/12 119,049
Aaa AAA 245 Hawaii State Airports System,
(AMT), (MBIA), 7.00%, 7/1/18 265,578
Aaa AAA 650 Hawaii State Harbor Revenue,
(AMT), (FGIC), 6.375%, 7/1/24 706,186
Aaa AAA 250 Hawaii State Harbor Revenue,
(AMT), (MBIA), 7.00%, 7/1/17 266,290
- --------------------------------------------------------------------------------
$ 1,894,228
- --------------------------------------------------------------------------------
Special Tax Revenue -- 1.3%
- --------------------------------------------------------------------------------
NR BBB- $ 250 Virgin Islands PFA,
5.625%, 10/1/25 $ 254,213
- --------------------------------------------------------------------------------
$ 254,213
- --------------------------------------------------------------------------------
Transportation -- 11.2%
- --------------------------------------------------------------------------------
NR BBB $ 200 Guam Airport Authority, (AMT),
6.70%, 10/1/23 $ 218,730
Aa3 AA 715 Hawaii State Highway Revenue,
5.00%, 7/1/12 715,179
Aa3 AA 250 Hawaii State Highway Revenue,
5.50%, 7/1/18 264,663
Baa1 A 1,000 Puerto Rico Highway and
Transportation Authority,
4.75%, 7/1/38 938,099
- --------------------------------------------------------------------------------
$ 2,136,671
- --------------------------------------------------------------------------------
Water and Sewer -- 3.3%
- --------------------------------------------------------------------------------
Aa3 AA $ 600 Honolulu, Water Supply System,
5.80%, 7/1/16 $ 638,130
- --------------------------------------------------------------------------------
$ 638,130
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100%
(identified cost $17,916,593) $19,097,954
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The portfolio invests primarily in debt securities issued by Hawaii
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by the economic developments in a specific industry
or municipality. In order to reduce the risk associated with such economic
developments, at July 31, 1998, 46.8% 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 0.6% to 21.5% of total investments.
/(1)/ Security has been issued as an inverse floater bond.
See notes to financial statements
20
<PAGE>
Kansas Municipals Portfolio as of July 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- --------------------
Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 1.4%
- --------------------------------------------------------------------------------
NR BBB $ 150 Guam Power Authority,
6.625%, 10/1/14 $ 166,053
- --------------------------------------------------------------------------------
$ 166,053
- --------------------------------------------------------------------------------
Escrowed/Prerefunded -- 3.6%
- --------------------------------------------------------------------------------
Aaa NR $1,000 Saline County, SFMR, 1983
Series A, 0.00%, 12/1/15 $ 419,850
- --------------------------------------------------------------------------------
$ 419,850
- --------------------------------------------------------------------------------
General Obligations -- 12.8%
- --------------------------------------------------------------------------------
Aa3 NR $ 400 Douglas County, USD #497,
6.00%, 9/1/15 $ 429,416
Aa1 AA 890 Johnson County, USD #229,
5.00%, 10/1/16 887,311
Baa1 A 500 Puerto Rico, 0.00%, 7/1/18 180,560
- --------------------------------------------------------------------------------
$ 1,497,287
- --------------------------------------------------------------------------------
Hospitals -- 7.7%
- --------------------------------------------------------------------------------
NR NR $ 225 Atchison, (Atchison Hospital
Assn.), 5.70%, 11/15/18 $ 226,195
A3 NR 250 Lawrence, (Lawrence
Memorial Hospital), 6.20%, 7/1/19 265,388
NR BBB- 400 Newton, (Newton Healthcare
Corp.), 5.75%, 11/15/24 402,180
- --------------------------------------------------------------------------------
$ 893,763
- --------------------------------------------------------------------------------
Housing -- 27.0%
- --------------------------------------------------------------------------------
Aaa NR $ 65 Kansas City, Mortgage
Revenue, (AMT), (GNMA),
5.30%, 5/1/07 $ 67,009
Aaa NR 70 Kansas City, Mortgage
Revenue, (AMT), (GNMA),
5.30%, 11/1/07 72,262
Aaa NR 155 Kansas City, Mortgage
Revenue, (AMT), (GNMA),
5.90%, 11/1/27 160,563
NR AAA 360 Kansas City, Mortgage
Revenue, (AMT), (GNMA),
7.00%, 12/1/11 380,966
NR AAA 220 Kansas City, Multifamily,
(FHA), 6.70%, 7/1/23 228,510
Aa NR 100 Kansas Development Authority,
Single Family, (FHA),
(Martin Creek), 6.60%, 8/1/34 104,998
Aaa A- 415 Labette County, SFMR,
0.00%, 12/1/14 184,650
Aaa NR 130 Olathe and Labette County, SFMR,
(AMT), (GNMA), 8.10%, 8/1/23 145,919
NR AAA 195 Olathe, Mortgage Revenue,
(AMT), (GNMA), 7.60%, 3/1/07 205,559
NR AAA 250 Olathe, Multifamily,
(FNMA), 6.45%, 6/1/19 265,580
NR AA 210 Puerto Rico Housing Finance
Corp., 7.50%, 4/1/22 221,726
Aaa NR 225 Sedgwick and Shawnee
County, SFMR, (GNMA),
7.75%, 11/1/24/(1)/ 258,563
Aaa NR 390 Sedgwick County, SFMR,
(GNMA), 8.00%, 5/1/25 439,764
Aaa NR 40 Sedgwick County, SFMR,
(GNMA), 8.20%, 5/1/14 45,018
NR AAA 350 Wichita, Multifamily,
(Broadmoor Chelsea
Apartments), (AMT), (FNMA),
5.65%, 7/1/16 360,605
- --------------------------------------------------------------------------------
$ 3,141,692
- --------------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 3.7%
- --------------------------------------------------------------------------------
Baa3 BBB- $ 250 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.25%, 6/1/26 $ 270,288
NR NR 160 Topeka IDA, (Resers Fine Foods,
Inc.), (AMT), 5.40%, 4/1/05 158,061
- --------------------------------------------------------------------------------
$ 428,349
- --------------------------------------------------------------------------------
Insured-Education -- 2.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 250 Johnson County Community
College, (Student Commons
And Parking Systems),
(MBIA), 5.05%, 11/15/21 $ 247,448
- --------------------------------------------------------------------------------
$ 247,448
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 7.6%
- --------------------------------------------------------------------------------
Aaa AAA $ 345 Burlington PCR, (Kansas Gas
& Electric Co.), (MBIA),
7.00%, 6/1/31(1) $ 374,818
Aaa AAA 100 Puerto Rico Electric Power
Authority, "STRIPES",
(FSA), Variable Rate, 7/1/02/(2)/ 110,250
See notes to financial statements
21
<PAGE>
Kansas Municipals Portfolio as of July 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Ratings (Unaudited)
- --------------------
Principal
Standard Amount
& (000's
Moody's Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Electric Utilities (continued)
- --------------------------------------------------------------------------------
Aaa AAA $ 400 Wellington Electric Waterworks
And Authority Revenue, (AMBAC),
5.20%, 5/1/23 $ 400,724
- --------------------------------------------------------------------------------
$ 885,792
- --------------------------------------------------------------------------------
Insured-General Obligations -- 9.8%
- --------------------------------------------------------------------------------
Aaa AAA $ 200 County of Johnson Unified School
District, (FGIC), 6.00%, 10/1/16 $ 225,214
Aaa AAA 150 Garnett, Combined Utility
Revenue Bonds, (MBIA),
6.00%, 10/1/17 160,316
Aaa AAA 200 Kansas City, Utility Systems,
(FGIC), 6.375%, 9/1/23 222,806
Aaa AAA 250 Sedgwick County, USD #267,
(AMBAC), 6.15%, 11/1/09 275,728
Aaa AAA 230 Sedgwick County, USD #267,
(AMBAC), 6.15%, 11/1/10 253,161
- --------------------------------------------------------------------------------
$ 1,137,225
- --------------------------------------------------------------------------------
Insured-Hospitals -- 13.0%
- --------------------------------------------------------------------------------
Aaa NR $ 250 Kansas State DFA, (Medical Center
Inc.), (MBIA), 5.50%, 11/15/22 $ 257,398
Aaa AAA 500 Kansas State DFA, (St. Luke's),
(MBIA), 5.375%, 11/15/26 509,055
Aaa AAA 500 Kansas State DFA, (Stormont-Vail)
(MBIA), 5.80%, 11/15/11 536,259
Aaa AAA 200 Olathe, Health Facilities,
(Evangelical Lutheran Good
Samaritan Society), (AMBAC),
6.00%, 5/1/19 214,388
- --------------------------------------------------------------------------------
$ 1,517,100
- --------------------------------------------------------------------------------
Insured-Housing -- 3.4%
- --------------------------------------------------------------------------------
NR AA $ 100 Puerto Rico Housing Finance
Corp., (AMBAC), 7.50%, 10/1/11 $ 103,326
Aaa AAA 180 Sedgwick County, Mortgage
Loan Revenue, (MBIA),
(AMT), (GNMA), 7.50%, 12/1/09 187,947
Aaa AAA 95 Sedgwick County, Mortgage
Loan Revenue, (MBIA), (AMT),
(GNMA), 7.50%, 12/1/10 99,194
- --------------------------------------------------------------------------------
$ 390,467
- --------------------------------------------------------------------------------
Insured-Life Care -- 4.2%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Kansas State DFA, (Sisters
Of Charity Leavenworth),
(MBIA), 5.00%, 12/1/25 $ 485,815
- --------------------------------------------------------------------------------
$ 485,815
- --------------------------------------------------------------------------------
Transportation -- 3.7%
- --------------------------------------------------------------------------------
NR BBB $ 100 Guam Airport Authority,
6.50%, 10/1/23 $ 108,846
NR BBB 300 Guam Airport Authority,
(AMT), 6.70%, 10/1/23 328,095
- --------------------------------------------------------------------------------
$ 436,941
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100%
(identified cost $11,145,539) $11,647,782
- --------------------------------------------------------------------------------
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 July 31, 1998, 40.1% of the securities in
the portfolio of investments are backed by bond insurance of various
financial institutions and financial guaranty assurance agencies. The
aggregate percentage by financial institution ranged from 1.0% to 24.5% of total
investments.
/(1)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(2)/ Security has been issued as an inverse floater bond.
See notes to financial statements
22
<PAGE>
Eaton Vance Municipals Portfolios as of July 31, 1998
FINANCIAL STATEMENTS (Unaudited)
Statements of Assets and Liabilities
As of July 31, 1998
<TABLE>
<CAPTION>
Florida Insured Hawaii Kansas
Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Investments --
Identified cost $ 22,530,409 $ 17,916,593 $ 11,145,539
Unrealized appreciation 1,695,230 1,181,361 502,243
- ------------------------------------------------------------------------------------------------------------------------------------
Investments, at value $ 24,225,639 $ 19,097,954 $ 11,647,782
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 550,112 $ 102,777 $ 171,334
Receivable for investments sold -- -- 15,200
Interest receivable 405,094 186,869 165,127
Receivable from the Investment Adviser 4,598 6,085 9,145
Deferred organization expenses 1,423 1,448 1,288
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 25,186,866 $ 19,395,133 $ 12,009,876
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for daily variation margin on open financial futures contracts $ -- $ -- $ 62
Payable to affiliate for Trustees' fees 16 2 2
Other accrued expenses 6,166 1,554 1,581
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 6,182 $ 1,556 $ 1,645
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $ 25,180,684 $ 19,393,577 $ 12,008,231
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $ 23,485,454 $ 18,212,216 $ 11,508,031
Net unrealized appreciation (computed on the basis of identified cost) 1,695,230 1,181,361 500,200
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 25,180,684 $ 19,393,577 $ 12,008,231
</TABLE>
See notes to financial statements
23
<PAGE>
Eaton Vance Municipals Portfolios as of July 31, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statement of Operations
For the Six Months Ended July 31, 1998
<TABLE>
<CAPTION>
Florida Hawaii Kansas
Insured Portfolio Portfolio
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
Interest $ 671,784 $ 535,079 $ 319,800
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income $ 671,784 $ 535,079 $ 319,800
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Adviser fee $ 22,784 $ 15,085 $ 9,045
Trustees fees and expenses 562 122 122
Custodian fee 9,429 5,492 5,199
Legal and accounting services -- -- 3,359
Amortization of organization expenses 1,208 961 1,092
Miscellaneous 2,828 3,051 3,252
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 36,811 $ 24,711 $ 22,069
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Preliminary reduction of Investment Adviser fee $ 22,784 $ 15,085 $ 9,045
Preliminary allocation of expenses to the Investment Adviser 4,598 6,085 9,145
Reduction of custodian fee 9,429 3,541 3,879
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 36,811 $ 24,711 $ 22,069
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 671,784 $ 535,079 $ 319,800
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 4,774 $ 231,795 $ 58,514
Financial futures contracts 29,927 (44,338) (20,235)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain $ 34,701 $ 187,457 $ 38,279
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $(138,295) $(410,525) $(126,855)
Financial futures contracts 12,983 12,298 4,326
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $(125,312) $(398,227) $(122,529)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized loss $ (90,611) $(210,770) $ (84,250)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 581,173 $ 324,309 $ 235,550
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
24
<PAGE>
Eaton Vance Municipals Portfolios as of July 31, 1998
FINANCIAL STATEMENTS (Unaudited) CONT'D
Statements of Changes in Net Assets
For the Six Months Ended July 31, 1998
<TABLE>
<CAPTION>
Florida Insured Hawaii Kansas
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
From operations --
Net investment income $ 671,784 $ 535,079 $ 319,800
Net realized gain 34,701 187,457 38,279
Net change in unrealized appreciation (depreciation) (125,312) (398,227) (122,529)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 581,173 $ 324,309 $ 235,550
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 2,072,110 $ 1,124,326 $ 852,247
Withdrawals (2,322,672) (1,919,192) (498,190)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital transactions $ (250,562) $ (794,866) $ 354,057
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 330,611 $ (470,557) $ 589,607
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of period $24,850,073 $ 19,864,134 $11,418,624
- ------------------------------------------------------------------------------------------------------------------------------------
At end of period $25,180,684 $ 19,393,577 $12,008,231
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
25
<PAGE>
Eaton Vance Municipals Portfolios as of July 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended January 31, 1998
<TABLE>
<CAPTION>
Florida Insured Hawaii Kansas
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
From operations --
Net investment income $ 1,337,092 $ 1,031,743 $ 666,134
Net realized gain 301,794 269,040 86,194
Net change in unrealized appreciation (depreciation) 811,156 513,990 382,975
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 2,450,042 $ 1,814,773 $ 1,135,303
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,342,239 $ 4,723,447 $ 1,495,952
Withdrawals (7,146,067) (2,688,011) (2,948,351)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital transactions $ (1,803,828) $ 2,035,436 $ (1,452,399)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 646,214 $ 3,850,209 $ (317,096)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $ 24,203,859 $ 16,013,925 $ 11,735,720
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $ 24,850,073 $ 19,864,134 $ 11,418,624
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
26
<PAGE>
Eaton Vance Municipals Portfolios as of July 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Florida Insured Portfolio Hawaii Portfolio
---------------------------------------------------- -----------------------------------------------------
Six Months Ended Year Ended January 31, Six Months Ended Year Ended January 31,
July 31, 1998 --------------------------------- July 31, 1998 ----------------------------------
(Unaudited) 1998 1997 1996 1995* (Unaudited) 1998 1997 1996 1995*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets+
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses/(1)/ 0.08%+ 0.07% 0.09% 0.07% 0.01%+ 0.04%+ 0.03% 0.04% 0.06% 0.06%+
Net expenses after
custodian fee
reduction 0.00%+ 0.00% 0.02% 0.00% -- 0.00%+ 0.00% 0.00% 0.00% --
Net investment income 5.47%+ 5.63% 5.76% 5.82% 5.73%+ 5.55%+ 5.70% 5.96% 6.01% 6.03%+
Portfolio Turnover 2% 34% 36% 32% 33% 16% 27% 21% 19% 66%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000's
omitted) $25,181 $24,850 $24,204 $21,416 $14,400 $19,394 $19,864 $16,014 $15,578 $12,865
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ The operating expenses of the Portfolios may reflect a reduction of the
Investment Adviser fee, an allocation of expenses to the Investment Adviser,
or both. Had such actions not been taken, the ratios would have been as
follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses/(1)/ 0.30%+ 0.48% 0.39% 0.39% 0.41%+ 0.26%+ 0.46% 0.43% 0.41% 0.38%+
Expenses after custodian fee
reduction 0.22%+ 0.41% 0.32% 0.32% -- 0.22%+ 0.43% 0.39% 0.35% --
Net investment income 5.25%+ 5.22% 5.46% 5.50% 5.33%+ 5.33%+ 5.27% 5.57% 5.66% 5.70%+
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, March 2, 1994, to January 31,
1995.
/(1)/ The expense ratios for the year ended January 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolios to
increase their expense ratios by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the prior periods have not been adjusted to reflect this change.
See notes to financial statements
27
<PAGE>
Eaton Vance Municipals Portfolios as of July 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Kansas Portfolio
---------------------------------------------------------
Six Months Ended Year Ended January 31,
July 31, 1998 ----------------------------------------
(Unaudited) 1998 1997 1996 1995*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets:+
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses/(1)/ 0.07%+ 0.05% 0.08% 0.09% 0.01%+
Net expenses after custodian fee reduction 0.00%+ 0.00% 0.00% 0.00% --
Net investment income 5.57%+ 5.79% 5.91% 5.93% 5.68%+
Portfolio Turnover 23% 17% 49% 21% 12%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 12,008 $ 11,419 $11,736 $11,609 $ 8,306
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ 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:
<TABLE>
<S> <C> <C> <C> <C> <C>
Expenses /(1)/ 0.39%+ 0.57% 0.48% 0.50% 0.43%+
Expenses after custodian fee reduction 0.32%+ 0.52% 0.40% 0.41% --
Net investment income 5.25%+ 5.27% 5.51% 5.52% 5.26%+
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, March 2, 1994, to January 31,
1995.
/(1)/ The expense ratios for the year ended January 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Portfolio to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for the prior
period have not been adjusted to reflect this change.
See notes to financial statements
28
<PAGE>
Eaton Vance Municipals Portfolios as of July 31, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
1 Significant Accounting Policies
----------------------------------------------------------------------------
Florida Insured Municipals Portfolio ("Florida Insured Portfolio"), Hawaii
Municipals Portfolio ("Hawaii Portfolio") and Kansas Municipals Portfolio
("Kansas Portfolio"), collectively the Portfolios, are registered under the
Investment Company Act of 1940, as amended, as non-diversified open-end
management investment companies. The Portfolios were organized as trusts
under the laws of the State of New York on May 1, 1992 for the Hawaii
Portfolio and October 25, 1993 for the Florida Insured Portfolio and the
Kansas Portfolio. The Declarations of Trust permit the Trustees to issue
interests in the Portfolios. The following is a summary of significant
accounting policies consistently followed by the Portfolios in the
preparation of their financial statements. The policies are in conformity
with generally accepted accounting principles.
A Investment Valuations -- Municipal bonds are normally valued on the basis
of valuations furnished by a pricing service. Taxable obligations, if any,
for which price quotations are readily available are normally valued at the
mean between the latest bid and asked prices. Futures contracts and options
on financial futures contracts listed on commodity exchanges are valued at
closing settlement prices. Over-the-counter options on financial futures
contracts are normally valued at the mean between the latest bid and asked
prices. Short-term obligations, maturing in sixty days or less, are valued
at amortized cost, which approximates value. Investments for which
valuations or market quotations are unavailable are valued at fair value
using methods determined in good faith by or at the direction of the
Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes.
C Income Taxes -- The Portfolios are treated as partner- ships for Federal
tax purposes. No provision is made by the Portfolios for Federal or state
taxes on any taxable income of the Portfolios because each investor in the
Portfolios is ultimately responsible for the payment of any taxes. Since
some of the Portfolios' investors are regulated investment companies that
invest all or substantially all of their assets in the Portfolios, the
Portfolios normally must satisfy the applicable source of income and
diversification requirements (under the Internal Revenue Code) in order for
their respective investors to satisfy them. The Portfolios will allocate at
least annually among their respective investors each investor's distributive
share of the Portfolios' net taxable (if any) and tax-exempt investment
income, net realized capital gains, and any other items of income, gain,
loss, deduction or credit. Interest income received by the Portfolios on
investments in municipal bonds, which is excludable from gross income under
the Internal Revenue Code, will retain its status as income exempt from
federal income tax when allocated to each Portfolio's investors. The portion
of such interest, if any, earned on private activity bonds issued after
August 7, 1986, may be considered a tax preference item for investors.
D Deferred Organization Expenses -- Costs incurred by a Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E Financial Futures Contracts -- Upon the entering
of a financial futures contract, a Portfolio is required to deposit
("initial margin") either in cash or securities an amount equal to a certain
percentage of the purchase price indicated in the financial futures
contract. Subsequent payments are made or received by a Portfolio ("margin
maintenance") each day, dependent on the daily fluctuations in the value of
the underlying security, and are recorded for book purposes as unrealized
gains or losses by a Portfolio. A Portfolio's investment in financial
futures contracts is designed only to hedge against anticipated future
changes in interest rates. Should interest rates move unexpectedly, a
Portfolio may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss.
F Options on Financial Futures Contracts -- Upon the purchase of a put
option on a financial futures contract by a Portfolio, the premium paid is
recorded as an investment, the value of which is marked-to-market daily.
When a purchased option expires, the Portfolio will realize a loss in the
amount of cost of the option. When a Portfolio enters into a closing sales
transaction, the Portfolio will realize a gain or loss depending on whether
the sales proceeds from the closing sale transaction are greater or less
than the cost of the option. When a Portfolio exercises a put option,
settlement is made in cash. The risk associated with purchasing options is
limited to the premium originally paid.
G When-issued and Delayed Delivery Transactions -- The Portfolios may engage
in when-issued or delayed delivery transactions. The Portfolios record
when-issued securities on trade date and maintain security positions such
that sufficient liquid assets will be available to make payments for the
securities purchased. Securities purchased on a when-issued or delayed
delivery
29
<PAGE>
Eaton Vance Municipals Portfolios as of July 31, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
basis are marked-to-market daily and begin accruing interest on settlement
date.
H Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolios. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based
on the average daily cash balances each Portfolio maintains with IBT. All
significant credit balances used to reduce the Portfolios' custodian fees
are reflected as a reduction of expenses on the Statement of Operations.
I Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
J Other -- Investment transactions are accounted for on a trade date basis.
K Interim Financial Statements -- The interim financial statements relating
to July, 31, 1998 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial
statements.
2 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 six months ended July 31, 1998, each
Portfolio incurred advisory fees as follows:
Portfolio Amount Effective Rate*
-----------------------------------------------------------------------------
Florida Insured $22,784 0.19%
Hawaii 15,085 0.16%
Kansas 9,045 0.16%
* As a percentage of average daily net assets.
To enhance the net income of the Florida Insured Portfolio, Hawaii Portfolio
and Kansas Portfolio, BMR made a reduction of its fee in the amount of
$22,784, $15,085 and $9,045, respectively, and $4,598, $6,085 and $9,145,
respectively, of expenses related to the operation of the Portfolios were
allocated to BMR. Except as to Trustees of the Portfolio who are not members
of EVM's or BMR's organization, officers and Trustees receive remuneration
for their services to the Portfolios out of such investment adviser fee.
Certain of the officers and Trustees of the Portfolios are officers and
directors/trustees of the above organizations.
Trustees of the Portfolios that are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of the Trustees Deferred Compensation
Plan. For the six months ended July 31, 1998, 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 six months ended
July 31, 1998, were as follows:
Florida Insured Portfolio
----------------------------------------------------------------------------
Purchases $ 397,822
Sales 506,940
Hawaii Portfolio
----------------------------------------------------------------------------
Purchases $3,117,994
Sales 3,201,605
Kansas Portfolio
----------------------------------------------------------------------------
Purchases $2,837,022
Sales 2,611,636
30
<PAGE>
Eaton Vance Municipals Portfolios as of July 31, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
4 Federal Income Tax Basis of Investments
----------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned by each Portfolio at July 31, 1998, as computed on a
federal income tax basis, are as follows:
Florida Insured Portfolio
----------------------------------------------------------------------------
Aggregate Cost $ 22,530,409
----------------------------------------------------------------------------
Gross unrealized appreciation $ 1,709,749
Gross unrealized depreciation (14,519)
----------------------------------------------------------------------------
Net unrealized appreciation $ 1,695,230
----------------------------------------------------------------------------
Hawaii Portfolio
----------------------------------------------------------------------------
Aggregate Cost $ 17,916,593
----------------------------------------------------------------------------
Gross unrealized appreciation $ 1,189,369
Gross unrealized depreciation (8,008)
----------------------------------------------------------------------------
Net unrealized appreciation $ 1,181,361
----------------------------------------------------------------------------
Kansas Portfolio
----------------------------------------------------------------------------
Aggregate Cost $ 11,145,539
----------------------------------------------------------------------------
Gross unrealized appreciation $ 515,748
Gross unrealized depreciation (13,505)
----------------------------------------------------------------------------
Net unrealized appreciation $ 502,243
----------------------------------------------------------------------------
5 Line of Credit
----------------------------------------------------------------------------
The Portfolios participate with other portfolios and funds managed by BMR
and EVM and its affiliates in a $100 million unsecured line of credit
agreement with a group of banks. Borrowings will be made by the Portfolios
solely to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Interest is charged to each fund or portfolio based on
its borrowings at the bank's base rate or at an amount above either the
bank's adjusted certificate of deposit rate, Eurodollar rate or federal
funds effective rate. In addition, a fee computed at an annual rate of 0.10%
on the daily unused portion of the facility is allocated among the
participating portfolios and funds at the end of each quarter. The Florida
Insured Portfolio, the Hawaii Portfolio and the Kansas Portfolio did not
have any significant borrowings or allocated fees during the period ended
July 31, 1998.
6 Financial Instruments
----------------------------------------------------------------------------
The Portfolios regularly trade in financial instruments with off-balance
sheet risk in the normal course of their investing activities to assist in
managing exposure to various market risks. These financial instruments
include futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment a Portfolio has in particular classes of financial instruments
and does not necessarily represent the amounts potentially subject to risk.
The measurement of the risks associated with these instruments is meaningful
only when all related and offsetting transactions are considered.
A summary of obligations under these financial instruments at July 31, 1998,
is as follows:
Futures
Contracts
Expiration Net Unrealized
Portfolio Date Contracts Positions Depreciation
---------------------------------------------------------------------------
Kansas 9/98 2 U.S. Treasury Bond Short $2,043
---------------------------------------------------------------------------
At July 31, 1998, the Portfolio had sufficient cash and/or securities to
cover margin requirements on open futures contracts.
31
<PAGE>
Municipals Portfolio as of July 31, 1998
INVESTMENT MANAGEMENT
<TABLE>
<CAPTION>
Municipals Portfolios
<S> <C>
Officers Independent Trustees
Thomas J. Fetter Donald R. Dwight
President and Portfolio Manager President, Dwight Partners, Inc.
of Florida Insured Municipals
Portfolio
Samuel L. Hayes, III
James B. Hawkes Jacob H. Schiff Professor of Investment
Vice President and Trustee Banking, Harvard University Graduate School of
Business Administration
Robert B. MacIntosh
Vice President and Portfolio Norton H. Reamer
Manager of Hawaii Municipals Chairman and Chief Executive Officer,
Portfolio United Asset Management Corporation
Timothy T. Browse John L. Thorndike
Vice President and Portfolio Formerly Director, Fiduciary Company Incorporated
Manager of Kansas
Municipals Portfolio Jack L. Treynor
Investment Adviser and Consultant
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
</TABLE>
32
