<PAGE>
Florida Insured Municipals Portfolio as of January 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Housing -- 16.0%
- --------------------------------------------------------------------------------
Aaa NR $ 360 Duval County, FL, Housing
Finance Authority, Single
Family Mortgage Revenue,
(GNMA), (AMT),
6.70%, 10/1/26 $ 386,104
Aaa AAA 750 Escambia, FL, HFA, SFMR,
(GNMA), (AMT), 7.00%, 4/1/28 827,415
Aaa NR 730 Manatee, FL, HFA, SFMR,
(GNMA), (AMT), 6.875%,
11/1/26 810,110
Aaa NR 1,000 Pinellas County, FL, HFA,
SFMR, (AMT), 5.80%, 3/1/29 1,029,620
NR AAA 795 Pinellas, FL, HFA, SFMR,
(GNMA), (AMT), 6.70%, 2/1/28 853,274
- --------------------------------------------------------------------------------
$ 3,906,523
- --------------------------------------------------------------------------------
Insured-Education -- 2.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Florida A&M University,
(Student Apartment
Facilties), (MBIA), 5.625%,
7/1/25 $ 524,375
- --------------------------------------------------------------------------------
$ 524,375
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 9.6%
- --------------------------------------------------------------------------------
Aaa AAA $ 445 Citrus County, FL, PCR,
(MBIA), 6.35%, 2/1/22 $ 488,374
Aaa AAA 895 Florida State Municipal
Power Agency, (Stanton
Project), (AMBAC),
4.50%, 10/1/27 817,099
Aaa AAA 1,000 Puerto Rico Electric Power
Authority, (MBIA), 5.50%,
7/1/25 1,032,510
- --------------------------------------------------------------------------------
$ 2,337,983
- --------------------------------------------------------------------------------
Insured-Hospitals -- 0.8%
- --------------------------------------------------------------------------------
Aaa AAA $ 200 Dade, FL, Public Facilities
Revenue, (Jackson Memorial
Hospital), (MBIA), 4.875%,
6/1/15 $ 197,796
- --------------------------------------------------------------------------------
$ 197,796
- --------------------------------------------------------------------------------
Insured-Housing -- 14.5%
- --------------------------------------------------------------------------------
NR A $ 375 Clearwater, FL, HFA,
(Hamptons at Clearwater),
(ACA), 5.30%, 5/1/18 $ 376,136
NR A 500 Clearwater, FL, HFA,
(Hamptons at Clearwater),
(ACA), 5.35%, 5/1/24 501,510
Aaa AAA 500 Florida Health Facilities
Authority, (Maitland Club
Apartments), (AMBAC),
(AMT), 6.875%, 8/1/26 545,740
Aaa AAA 1,000 Florida HFA, (Mariner Club
Apartments), (AMBAC),
(AMT), 6.375%, 9/1/36/(1)/ 1,072,770
Aaa AAA 500 Florida HFA, (MBIA), (AMT),
5.90%, 7/1/29 520,210
Aaa AAA 500 Florida HFA, (Spinnaker
Cove Apartments), (AMBAC),
(AMT), 6.50%, 7/1/36 538,405
- --------------------------------------------------------------------------------
$ 3,554,771
- --------------------------------------------------------------------------------
Insured-Industrial Development Revenue -- 2.2%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Dade County, FL, Resources
Recovery Facilities,
(AMBAC), (AMT),
5.50%, 10/1/13 $ 525,085
- --------------------------------------------------------------------------------
$ 525,085
- --------------------------------------------------------------------------------
Insured-Special Tax Revenue -- 18.4%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Bradenton, FL, Special
Revenue Sub-Lien, (FGIC),
5.00%, 10/1/15 $ 1,004,500
Aaa AAA 1,000 Jacksonville, FL, Excise
Taxes Revenue, (FGIC),
5.00%, 10/1/16 1,003,740
Aaa AAA 1,000 Jacksonville, FL, Excise
Taxes Revenue, (FGIC),
(AMT), 5.70%, 10/1/09 1,049,980
Aaa AAA 250 Orange, FL, Tourist
Development Tax, (MBIA),
6.00%, 10/1/24 272,825
Aaa AAA 505 St. Petersburg, FL, Excise
Tax Revenue, (FGIC), 5.00%,
10/1/16 506,101
Aaa AAA 340 Sunrise, FL, Public
Facilities Revenue, (MBIA),
0.00%, 10/1/15 144,293
Aaa AAA 500 Tampa, FL, Occupational
License Tax Revenue,
(FGIC), 5.50%, 10/1/27 521,700
- --------------------------------------------------------------------------------
$ 4,503,139
- --------------------------------------------------------------------------------
See notes to financial statements
17
<PAGE>
Florida Insured Municipals Portfolio as of January 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-Transportation -- 12.3%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Dade County, FL, Aviation
Revenue, (Miami International
Airport-Series B), (FSA),
(AMT), 5.125%, 10/1/22 $ 990,940
Aaa AAA 1,000 Dade County, FL, Seaport
Revenue, (MBIA), 5.125%,
10/1/16 1,011,820
Aaa AAA 1,000 Florida Ports Financing
Commission, (State
Transportation Trust Fund),
(MBIA), (AMT), 5.375%,
6/1/27 1,013,920
- --------------------------------------------------------------------------------
$ 3,016,680
- --------------------------------------------------------------------------------
Insured-Water and Sewer -- 24.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Dade County, FL, Water And
Sewer System Revenue,
(FGIC), 5.25%, 10/1/26 $ 506,060
Aaa AAA 325 Dade County, FL, Water and
Sewer System, (FGIC),
5.375%, 10/1/16 337,110
Aaa AAA 735 Enterprise Community
Development District, FL,
Water and Sewer Revenue,
(MBIA), 6.125%, 5/1/24 803,414
Aaa AAA 1,000 Jacksonville, FL, Water and
Sewer Revenue, (AMBAC),
(AMT), 6.35%, 8/1/25 1,108,030
Aaa AAA 1,000 Lee County, FL, (Bonita
Springs), (MBIA), (AMT),
6.05%, 11/1/20 1,087,520
Aaa AAA 70 North Port, FL, Utility
Revenue, (FGIC), 6.25%,
10/1/17 76,861
Aaa AAA 500 North Port, FL, Utility
Revenue, (FGIC), 6.25%,
10/1/22 549,015
Aaa AAA 400 Titisville, FL, Water and
Sewer Revenue, (MBIA),
6.00%, 10/1/24 436,520
Aaa AAA 1,000 Vero Beach, FL, Water and
Sewer Revenue, (FGIC),
5.00%, 12/1/21 983,520
- --------------------------------------------------------------------------------
$ 5,888,050
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100%
(identified cost $22,620,877) $24,454,402
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The Portfolio primarily invests in debt securities issued by Florida
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at January 31, 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 January 31, 1998, the Portfolio's
insured securities by financial institution are as follows:
% of
Market Value Market Value
- --------------------------------------------------------------------------------
American Capital Access (ACA) $ 877,646 3.6%
American Municipal Bond Assurance
Corp. (AMBAC) 4,607,129 18.8
Financial Guaranty Insurance
Corp. (FGIC) 6,538,588 26.7
Financial Security Assurance
(FSA) 990,940 4.1
Municipal Bond Insurance Assoc.
(MBIA) 7,533,577 30.8
- --------------------------------------------------------------------------------
Total $20,547,880 84.0%
- --------------------------------------------------------------------------------
/(1)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
18
<PAGE>
Hawaii Municipals Portfolio as of January 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 2.9%
- --------------------------------------------------------------------------------
Baa1 BBB+ $1,500 Puerto Rico Electric Power
Authority, 0.00%, 7/1/17 $ 568,395
- --------------------------------------------------------------------------------
$ 568,395
- --------------------------------------------------------------------------------
General Obligations -- 7.3%
- --------------------------------------------------------------------------------
Aa2 AA $ 750 City and County of Honolulu,
HI, 4.75%, 9/1/17 $ 724,905
Baa1 A 285 Commonwealth of Puerto
Rico, Public Improvement,
0.00%, 7/1/15 121,598
NR BBB 400 Government of Guam, 5.375%,
11/15/13 406,452
Aa3 A+ 140 State of Hawaii, 5.75%,
1/1/11 155,617
- --------------------------------------------------------------------------------
$ 1,408,572
- --------------------------------------------------------------------------------
Hospitals -- 14.7%
- --------------------------------------------------------------------------------
A2 A+ $ 400 State of Hawaii Department
of Budget and Finance,
(Kaiser Permanente), 6.25%,
3/1/21 $ 425,004
A A 635 State of Hawaii Department
of Budget and Finance,
(Kapiolani Health System),
6.00%, 7/1/19 669,506
Aa3 AA 870 State of Hawaii Department
of Budget and Finance,
(Queens Health System),
5.75%, 7/1/26 918,111
NR BBB- 750 State of Hawaii Department
of Budget and Finance,
Special Purpose Mortgage
Revenue, (Wahiawa General
Hospital), 7.50%, 7/1/12 828,083
- --------------------------------------------------------------------------------
$ 2,840,704
- --------------------------------------------------------------------------------
Housing -- 8.9%
- --------------------------------------------------------------------------------
Aa1 AA $ 500 State of Hawaii Housing
Finance and Development
Corp., 5.75%, 7/1/30 $ 511,750
Aa1 AA 1,000 State of Hawaii Housing
Finance and Development,
Single Family Mortgage
Bonds, 5.90%, 7/1/27/(1)/ 1,038,899
Aa1 AA 175 State of Hawaii Housing
Finance and Development,
Single Family Mortgage
Bonds, (AMT), 6.00%, 7/1/26 181,183
- --------------------------------------------------------------------------------
$ 1,731,832
- --------------------------------------------------------------------------------
Industrial Development Revenue/Pollution Control Revenue -- 4.2%
- --------------------------------------------------------------------------------
A1 AA- $ 550 Puerto Rico Industrial,
Tourist, Educational,
Medical and Environmental
Control Authority, (Upjohn
Co.), 7.50%, 12/1/23 $ 584,144
Ba3 BB- 220 State Department of
Transportation, HI,
(Continental Airlines,
Inc.), (AMT), 5.625%,
11/15/27 220,581
- --------------------------------------------------------------------------------
$ 804,725
- --------------------------------------------------------------------------------
Insured-Education -- 5.5%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 Hawaii State Housing
Development Corp.,
(University of Hawaii),
(AMBAC), 5.65%, 10/1/16 $ 528,855
Aaa AAA 500 University of Hawaii Board
of Regents, University
System, (AMBAC),
5.65%, 10/1/12 530,150
- --------------------------------------------------------------------------------
$ 1,059,005
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 11.8%
- --------------------------------------------------------------------------------
Aaa AAA $ 100 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/03/(2)/ $ 115,875
Aaa AAA 500 State of Hawaii Department
of Budget and Finance,
(Hawaii Electric Co.,
Inc.), (AMT), (MBIA),
6.20%, 5/1/26 546,995
Aaa AAA 500 State of Hawaii Department
of Budget and Finance,
(Hawaii Electric Co.,
Inc.), (AMT), (MBIA),
6.60%, 1/1/25 557,285
Aaa AAA 1,000 State of Hawaii Department
of Budget and Finance, HI,
(Hawaiian Electric Co.),
(MBIA), (AMT), 5.65%, 10/1/27 1,055,999
- --------------------------------------------------------------------------------
$ 2,276,154
- --------------------------------------------------------------------------------
Insured-General Obligations -- 21.0%
- --------------------------------------------------------------------------------
Aaa AAA $ 250 City and County of
Honolulu, HI, (FGIC),
5.00%, 11/1/16 $ 250,423
Aaa AAA 700 County of Hawaii, HI,
(FGIC), 5.55%, 5/1/10 768,943
Aaa AAA 305 County of Kauai, HI,
(MBIA), 5.90%, 2/1/14 332,014
See notes to financial statements
19
<PAGE>
Hawaii Municipals Portfolio as of January 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited) Principal
- -------------------- Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-General Obligations (continued)
- --------------------------------------------------------------------------------
Aaa AAA $ 910 County of Maui, HI, (FGIC),
5.00%, 9/1/17 $ 911,547
Aaa AAA 420 County of Maui, HI, (FGIC),
5.30%, 9/1/14 438,249
Aaa AAA 250 County of Maui, HI, (FGIC),
5.75%, 1/1/13 262,325
Aaa AAA 1,100 State Series Corporate Purpose,
HI, (FGIC), 5.00%, 10/1/17 1,097,194
- --------------------------------------------------------------------------------
$ 4,060,695
- --------------------------------------------------------------------------------
Insured-Hospitals -- 1.1%
- --------------------------------------------------------------------------------
Aaa AAA $ 100 State of Hawaii Department of
Budget and Finance, (Queen's
Medical Center), (FGIC), 6.50%,
7/1/12 $ 101,184
Aaa AAA 100 State of Hawaii Department
of Budget and Finance, (St.
Francis Medical Centers),
(CGIC), 6.50%, 7/1/22 109,531
- --------------------------------------------------------------------------------
$ 210,715
- --------------------------------------------------------------------------------
Insured-Housing -- 2.7%
- --------------------------------------------------------------------------------
Aaa AAA $ 490 City and County of Honolulu,
HI, Mortgage Revenue Bonds,
(Smith Beretania), (MBIA),
7.80%, 7/1/24 $ 526,378
- --------------------------------------------------------------------------------
$ 526,378
- --------------------------------------------------------------------------------
Insured-Transportation -- 9.9%
- --------------------------------------------------------------------------------
Aaa AAA $ 500 State of Hawaii Airports
System, (AMT), (FGIC),
7.50%, 7/1/20 $ 544,060
Aaa AAA 100 State of Hawaii Airports
System, (AMT), (MBIA),
6.90%, 7/1/12 120,040
Aaa AAA 245 State of Hawaii Airports
System, (AMT), (MBIA),
7.00%, 7/1/18 268,326
Aaa AAA 650 State of Hawaii Harbor
Revenue, (AMT), (FGIC),
6.375%, 7/1/24 715,923
Aaa AAA 250 State of Hawaii Harbor
Revenue, (AMT), (MBIA),
7.00%, 7/1/17 269,193
- --------------------------------------------------------------------------------
$ 1,917,542
- --------------------------------------------------------------------------------
Special Tax Revenue -- 0.8%
- --------------------------------------------------------------------------------
Baa1 A $ 50 Puerto Rico Highway and
Transportation Authority,
5.50%, 7/1/36 $ 53,171
NR NR 100 Virgin Islands Public
Finance Authority, 7.25%,
10/1/18 112,585
- --------------------------------------------------------------------------------
$ 165,756
- --------------------------------------------------------------------------------
Transportation -- 5.9%
- --------------------------------------------------------------------------------
NR BBB $ 200 Guam Airport Authority,
(AMT), 6.70%, 10/1/23 $ 220,236
Baa3 BBB- 180 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.30%, 6/1/23 192,586
Aa3 AA 715 State of Hawaii Highway
Revenue, 5.00%, 7/1/12 723,809
- --------------------------------------------------------------------------------
$ 1,136,631
- --------------------------------------------------------------------------------
Water and Sewer -- 3.3%
- --------------------------------------------------------------------------------
Aa3 AA $ 600 City and County of Honolulu,
HI, Water Supply System, 5.80%,
7/1/16 $ 639,570
- --------------------------------------------------------------------------------
$ 639,570
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100%
(identified cost $17,754,788) $19,346,674
- --------------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
The portfolio invests primarily in debt securities issued by Hawaii
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by the economic developments in a specific industry
or municipality. In order to reduce the risk associated with such economic
developments, at January 31, 1998, 52% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage insured by
financial institutions ranged from 1.2% to 26.7% 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
20
<PAGE>
Kansas Municipals Portfolio as of January 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Electric Utilities -- 1.5%
- --------------------------------------------------------------------------------
NR BBB $ 150 Guam Power Authority Revenue,
6.625%, 10/1/14 $ 167,184
- --------------------------------------------------------------------------------
$ 167,184
- --------------------------------------------------------------------------------
General Obligations -- 13.1%
- --------------------------------------------------------------------------------
Baa1 A $ 500 Commonwealth of Puerto Rico,
Public Improvement, 0.00%,
7/1/18 $ 179,870
Aa NR 400 Douglas County, KS, USD #497,
6.00%, 9/1/15 429,736
Aa1 AA 890 Johnson County, KS, USD #229,
5.00%, 10/1/16 893,879
- --------------------------------------------------------------------------------
$ 1,503,485
- --------------------------------------------------------------------------------
Hospitals -- 2.3%
- --------------------------------------------------------------------------------
A3 NR $ 250 Lawrence, KS, Hospital Revenue,
(Lawrence Memorial Hospital),
6.20%, 7/1/19 $ 266,008
- --------------------------------------------------------------------------------
$ 266,008
- --------------------------------------------------------------------------------
Housing -- 29.3%
- --------------------------------------------------------------------------------
Aaa NR $ 70 Kansas City, KS, Mortgage
Revenue, (AMT), (GNMA), 5.30%,
5/1/07 $ 72,210
Aaa NR 70 Kansas City, KS, Mortgage
Revenue, (AMT), (GNMA), 5.30%,
11/1/07 72,304
Aaa NR 160 Kansas City, KS, Mortgage
Revenue, (AMT), (GNMA), 5.90%,
11/1/27 165,075
NR AAA 380 Kansas City, KS, Mortgage
Revenue, (AMT), (GNMA), 7.00%,
12/1/11 403,150
NR AAA 220 Kansas City, KS, Multifamily
Housing Revenue, (FHA), 6.70%,
7/1/23 229,645
Aa NR 100 Kansas Development Authority,
Single Family Housing, (FHA),
(Martin Creek), 6.60%, 8/1/34 105,137
Aaa A- 415 Labette County, KS, Single Family
Mortgage Revenue, 0.00%, 12/1/14 181,143
Aaa NR 175 Olathe and Labette County, KS,
Single Family Mortgage Revenue,
(AMT), (GNMA), 8.10%, 8/1/23 196,889
NR AAA 205 Olathe, KS, Mortgage Loan
Revenue, (AMT), (GNMA), 7.60%,
3/1/07 217,056
NR AAA 250 Olathe, KS, Multifamily Housing
Revenue, (FNMA), 6.45%, 6/1/19 266,030
NR AA 250 Puerto Rico Housing Finance Corp.,
7.50%, 4/1/22 265,373
Aaa NR 235 Sedgwick and Shawnee County, KS,
Single Family Revenue, (GNMA),
7.75%, 11/1/24/(1)/ 269,453
Aaa NR 455 Sedgwick County, KS, Single Family
Mortgage Revenue, (GNMA), 8.00%,
5/1/25 514,546
Aaa NR 45 Sedgwick County, KS, Single Family
Mortgage Revenue, (GNMA), 8.20%,
5/1/14 50,845
NR AAA 350 Wichita, KS, Multifamily Housing
Revenue, (Broadmoor Chelsea
Apartments), (AMT), (FNMA), 5.65%,
7/1/16 360,021
- --------------------------------------------------------------------------------
$ 3,368,877
- --------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 2.3%
- --------------------------------------------------------------------------------
A2 NR $ 100 Puerto Rico Industrial, Medical
and Environmental Pollution
Control Facility Finance
Authority, (American Home
Products), 5.10%, 12/1/18 $ 99,485
Baa3 BBB- 150 Puerto Rico Port Authority,
(American Airlines), (AMT),
6.30%, 6/1/23 160,488
- --------------------------------------------------------------------------------
$ 259,973
- --------------------------------------------------------------------------------
Insured-Electric Utilities -- 4.3%
- --------------------------------------------------------------------------------
Aaa AAA $ 345 Burlington, KS, Pollution Control
Revenue, (Kansas Gas & Electric
Co.), (MBIA), 7.00%, 6/1/31/(1)/ $ 377,813
Aaa AAA 100 Puerto Rico Electric Power
Authority, "STRIPES", (FSA),
Variable Rate, 7/1/02/(2)/ 113,125
- --------------------------------------------------------------------------------
$ 490,938
- --------------------------------------------------------------------------------
Insured-General Obligations -- 14.3%
- --------------------------------------------------------------------------------
Aaa AAA $ 200 County of Johnson Unified, KS,
(School District), (FGIC),
6.00%, 10/1/16/(3)/ $ 228,290
Aaa AAA 150 Garnett, KS, Combined Utility
Revenue Bonds, (MBIA), 6.00%,
10/1/17 159,792
See notes to financial statements
21
<PAGE>
Kansas Municipals Portfolio as of January 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- -------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- --------------------------------------------------------------------------------
Insured-General Obligations (continued)
- --------------------------------------------------------------------------------
Aaa AAA $ 200 Kansas City, KS, Utility
Systems Revenue, (FGIC),
6.375%, 9/1/23 $ 225,208
Aaa AAA 500 Puerto Rico Public Building
Authority, (AMBAC), 5.00%,
7/1/27 496,170
Aaa AAA 250 Sedgwick County, KS, USD #267,
(AMBAC), 6.15%, 11/1/09 279,325
Aaa AAA 230 Sedgwick County, KS, USD #267,
(AMBAC), 6.15%, 11/1/10 256,275
- --------------------------------------------------------------------------------
$ 1,645,060
- --------------------------------------------------------------------------------
Insured-Hospitals -- 25.5%
- --------------------------------------------------------------------------------
Aaa AAA $1,000 Kansas State Development
Finance Authority, Health
Facilities Revenue, (St.
Luke's), (MBIA), 5.375%,
11/15/26/(4)/ $ 1,017,539
Aaa AAA 500 Kansas State Development
Finance Authority, Health
Facilities, (Stormont-Vail)
(MBIA), 5.80%, 11/15/11 541,970
Aaa AAA 200 Olathe, KS, Health Facilities,
(Evangelical Lutheran Good
Samaritan Society), (AMBAC),
6.00%, 5/1/19 216,806
Aaa AAA 895 Shawnee County, KS, Health
Care Facilities, (Menninger
Foundation), (FSA), 5.00%,
8/15/16 889,630
Aaa NR 250 State Development Finance
Authority, KS, (Medical
Center Inc.), (MBIA),
5.50%, 11/15/22 258,783
- --------------------------------------------------------------------------------
$ 2,924,728
- --------------------------------------------------------------------------------
Insured-Housing -- 3.6%
- --------------------------------------------------------------------------------
NR AA $ 100 Puerto Rico Housing Finance
Corp., (AMBAC), 7.50%, 10/1/11 $ 104,213
Aaa AAA 195 Sedgwick County, KS, Mortgage
Loan Revenue, (MBIA), (AMT),
(GNMA), 7.50%, 12/1/09 205,150
Aaa AAA 100 Sedgwick County, KS, Mortgage
Loan Revenue, (MBIA), (AMT),
(GNMA), 7.50%, 12/1/10 105,205
- --------------------------------------------------------------------------------
$ 414,568
- --------------------------------------------------------------------------------
Transportation -- 3.8%
- --------------------------------------------------------------------------------
NR BBB $ 100 Guam Airport Authority, 6.50%,
10/1/23 $ 109,818
NR BBB 300 Guam Airport Authority, (AMT),
6.70%, 10/1/23 330,354
- --------------------------------------------------------------------------------
$ 440,172
- --------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100%
(identified cost $10,851,895) $11,480,993
- --------------------------------------------------------------------------------
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, 1998, 47.7% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage by financial
institution ranged from 4.0% to 20.8% 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.
/(3)/ When-issued security.
/(4)/ Security has been segregated to cover when-issued securities.
See notes to financial statements
22
<PAGE>
EV Municipals Portfolios as of January 31, 1998
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
As of January 31, 1998
<TABLE>
<CAPTION>
Florida Insured Hawaii Kansas
Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Investments --
Identified cost $22,620,877 $17,754,788 $10,851,895
Unrealized appreciation 1,833,525 1,591,886 629,098
- ------------------------------------------------------------------------------------------------------------------------------------
Investments at value (Note 1A) $24,454,402 $19,346,674 $11,480,993
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 620 $ 267,743 $ 503
Receivable for investments sold -- -- 5,000
Interest receivable 419,466 222,032 166,286
Receivable from the Investment Adviser (Note 2) 56,285 50,117 42,013
Deferred organization expenses (Note 1D) 2,631 2,409 2,380
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $24,933,404 $19,888,975 $11,697,175
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for when-issued securities (Note 1G) $ -- $ -- $ 226,431
Demand note payable (Note 5) 50,000 -- 33,000
Payable for daily variation margin on open financial futures
contracts (Notes 1E and 6) 10,235 3,250 1,975
Payable to affiliate for Trustees' fees (Note 2) 22 22 22
Accrued expenses 23,074 21,569 17,123
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 83,331 $ 24,841 $ 278,551
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $24,850,073 $19,864,134 $11,418,624
- ------------------------------------------------------------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $23,029,531 $18,284,546 $10,795,895
Net unrealized appreciation of investments and financial futures
contracts (computed on the basis of identified cost) 1,820,542 1,579,588 622,729
- ------------------------------------------------------------------------------------------------------------------------------------
Total $24,850,073 $19,864,134 $11,418,624
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
23
<PAGE>
EV Municipals Portfolios as of January 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Operations
For the Year Ended January 31, 1998
<TABLE>
<CAPTION>
Florida Insured Hawaii Kansas
Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income (Note 1B)
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income $1,337,092 $1,031,743 $ 666,134
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income $1,337,092 $1,031,743 $ 666,134
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 42,792 $ 28,115 $ 17,995
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 176 176 176
Custodian fee (Note 1H) 24,783 16,503 13,626
Legal and accounting services 30,388 30,387 22,906
Bond pricing 4,480 4,719 4,667
Amortization of organization expenses (Note 1D) 2,417 2,210 2,184
Interest expense (Note 5) 8,175 365 2,265
Miscellaneous 1,831 1,798 1,648
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 115,042 $ 84,273 $ 65,467
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of investment adviser fee (Note 2) $ 42,792 $ 28,115 $ 17,995
Allocation of expenses to the Investment Adviser (Note 2) 56,285 50,117 42,013
Reduction of custodian fee (Note 1H) 15,965 6,041 5,459
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense reductions $ 115,042 $ 84,273 $ 65,467
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,337,092 $1,031,743 $ 666,134
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 576,556 $ 370,520 $ 115,006
Financial futures contracts (274,762) (101,480) (28,812)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investment transactions $ 301,794 $ 269,040 $ 86,194
- ------------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 815,395 $ 546,709 $ 395,133
Financial futures contracts (4,239) (32,719) (12,158)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments $ 811,156 $ 513,990 $ 382,975
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments $1,112,950 $ 783,030 $ 469,169
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $2,450,042 $1,814,773 $1,135,303
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
24
<PAGE>
EV Municipals Portfolios as of January 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 on investment transactions 301,794 269,040 86,194
Net change in unrealized appreciation (depreciation)
of investments 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
25
<PAGE>
EV Municipals Portfolios as of January 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
For the Year Ended January 31, 1997
<TABLE>
<CAPTION>
Florida Insured Hawaii Kansas
Increase (Decrease) in Net Assets Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
From operations --
Net investment income $ 1,329,075 $ 924,536 $ 696,638
Net realized gain (loss) on investment transactions (66,180) (88,245) 116,773
Net change in unrealized appreciation (depreciation)
of investments (666,127) (289,897) (398,583)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 596,768 $ 546,394 $ 414,828
- ------------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 7,574,982 $ 2,082,938 $ 2,234,921
Withdrawals (5,383,691) (2,193,484) (2,522,670)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital transactions $ 2,191,291 $ (110,546) $ (287,749)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets $ 2,788,059 $ 435,848 $ 127,079
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
At beginning of year $21,415,800 $15,578,077 $11,608,641
- ------------------------------------------------------------------------------------------------------------------------------------
At end of year $24,203,859 $16,013,925 $11,735,720
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
26
<PAGE>
EV Municipals Portfolios as of January 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Florida Insured Portfolio Hawaii Portfolio
--------------------------------------- ---------------------------------------
Year Ended January 31, Year Ended January 31,
--------------------------------------- ---------------------------------------
1998 1997 1996 1995* 1998 1997 1996 1995*
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios to average daily net assets++:
- ------------------------------------------------------------------------------------------------------------------------------
Net expenses/(1)/ 0.07% 0.09% 0.07% 0.01%+ 0.03% 0.04% 0.06% 0.06%+
Net expenses after custodian fee reduction 0.00% 0.02% 0.00% -- 0.00% 0.00% 0.00% --
Net investment income 5.63% 5.76% 5.82% 5.73%+ 5.70% 5.96% 6.01% 6.03%+
Portfolio Turnover 34% 36% 32% 33% 27% 21% 19% 66%
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $24,850 $24,204 $21,416 $14,400 $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 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>
Expenses/(1)/ 0.48% 0.39% 0.39% 0.41%+ 0.46% 0.43% 0.41% 0.38%+
Expenses after custodian fee reduction 0.41% 0.32% 0.32% -- 0.43% 0.39% 0.35% --
Net investment income 5.22% 5.46% 5.50% 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 thereafter have
been adjusted to reflect a change in reporting requirements. The new
reporting guidelines require each Portfolio to increase its expense ratios
by the effect of any offset arrangements with its service providers. The
expense ratios for the period ended January 31, 1995 have not been
adjusted to reflect this change.
See notes to financial statements
27
<PAGE>
EV Municipals Portfolios as of January 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Kansas Portfolio
-------------------------------------------------------
Year Ended January 31,
-------------------------------------------------------
1998 1997 1996 1995*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ratios to average daily net assets++:
- -----------------------------------------------------------------------------------------------------------------------------------
Net expenses/(1)/ 0.05% 0.08% 0.09% 0.01%+
Net expenses after custodian fee reduction 0.00% 0.00% 0.00% --
Net investment income 5.79% 5.91% 5.93% 5.68%+
Portfolio Turnover 17% 49% 21% 12%
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $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 Adviser, or both.
Had such actions not been taken, the ratios would have been as follows:
<TABLE>
<S> <C> <C> <C> <C>
Expenses/(1)/ 0.57% 0.48% 0.50% 0.43%+
Expenses after custodian fee reduction 0.52% 0.40% 0.41% --
Net investment income 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 thereafter have
been adjusted to reflect a change in reporting requirements. The new
reporting guidelines require the Portfolio to increase its expense ratios
by the effect of any expense offset arrangements with its service
providers. The expense ratios for the period ended January 31, 1995 have
not been adjusted to reflect this change.
See notes to financial statements
28
<PAGE>
EV Municipals Portfolios as of January 31, 1998
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
----------------------------------------------------------------------------
Florida Insured Municipals Portfolio ("Florida Insured Portfolio"), Hawaii
Municipals Portfolio ("Hawaii Portfolio") and Kansas Municipals Portfolio
("Kansas Portfolio"), collectively the Portfolios, are registered under the
Investment Company Act of 1940, as amended, as non-diversified open-end
management investment companies. The Portfolios were organized as trusts
under the laws of the State of New York on May 1, 1992 for the Hawaii
Portfolio and October 25, 1993 for the Florida Insured Portfolio and the
Kansas Portfolio. The Declarations of Trust permit the Trustees to issue
interests in the Portfolios. The following is a summary of significant
accounting policies consistently followed by the Portfolios in the
preparation of their financial statements. The policies are in conformity
with generally accepted accounting principles.
A Investment Valuations -- Municipal bonds are normally valued on the basis
of valuations furnished by a pricing service. Taxable obligations, if any,
for which price quotations are readily available are normally valued at the
mean between the latest bid and asked prices. Futures contracts and options
on financial futures contracts listed on commodity exchanges are valued at
closing settlement prices. Over-the-counter options on financial futures
contracts are normally valued at the mean between the latest bid and asked
prices. Short-term obligations, maturing in sixty days or less, are valued at
amortized cost, which approximates value. Investments for which valuations or
market quotations are unavailable are valued at fair value using methods
determined in good faith by or at the direction of the Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes.
C Income Taxes -- The Portfolios are treated as partnerships for Federal tax
purposes. No provision is made by the Portfolios for Federal or state taxes
on any taxable income of the Portfolios because each investor in the
Portfolios is ultimately responsible for the payment of any taxes. Since some
of the Portfolios' investors are regulated investment companies that invest
all or substantially all of their assets in the Portfolios, the Portfolios
normally must satisfy the applicable source of income and diversification
requirements (under the Internal Revenue Code) in order for their respective
investors to satisfy them. The Portfolios will allocate at least annually
among their respective investors each investor's distributive share of the
Portfolios' net taxable (if any) and tax-exempt investment income, net
realized capital gains, and any other items of income, gain, loss, deduction
or credit. Interest income received by the Portfolios on investments in
municipal bonds, which is excludable from gross income under the Internal
Revenue Code, will retain its status as income exempt from federal income tax
when allocated to each Portfolio's investors. The portion of such interest,
if any, earned on private activity bonds issued after August 7, 1986, may be
considered a tax preference item for investors.
D Deferred Organization Expenses -- Costs incurred by a Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E Financial Futures Contracts -- Upon the entering of a financial futures
contract, a Portfolio is required to deposit ("initial margin") either in
cash or securities an amount equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
made or received by a Portfolio ("margin maintenance") each day, dependent on
the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized gains or losses by a Portfolio. A
Portfolio's investment in financial futures contracts is designed only to
hedge against anticipated future changes in interest rates. Should interest
rates move unexpectedly, a Portfolio may not achieve the anticipated benefits
of the financial futures contracts and may realize a loss.
F Options on Financial Futures Contracts -- Upon the purchase of a put option
on a financial futures contract by a Portfolio, the premium paid is recorded
as an investment, the value of which is marked-to-market daily. When a
purchased option expires, the Portfolio will realize a loss in the amount of
cost of the option. When a Portfolio enters into a closing sales transaction,
the Portfolio will realize a gain or loss depending on whether the sales
proceeds from the closing sale transaction are greater or less than the cost
of the option. When a Portfolio exercises a put option, settlement is made in
cash. The risk associated with purchasing options is limited to the premium
originally paid.
29
<PAGE>
EV Municipals Portfolios as of January 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
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 basis are marked-to-market daily and begin accruing interest on
settlement date.
H Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolios. Pursuant to the respective custodian agreements,
IBT receives a fee reduced by credits which are determined based on the
average daily cash balances each Portfolio maintains with IBT. All
significant credit balances used to reduce the Portfolios' custodian fees are
reflected as a reduction of expenses on the Statement of Operations.
I Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
J Other -- Investment transactions are accounted for on a trade date basis.
2 Investment Adviser Fee and Other Transactions with Affiliates
-----------------------------------------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to each Portfolio.
The fee is based upon a percentage of average daily net assets plus a
percentage of gross income (i.e., income other than gains from the sale of
securities). For the year ended January 31, 1998, each Portfolio incurred
advisory fees as follows:
Portfolio Amount Effective Rate*
-----------------------------------------------------------------------------
Florida Insured $42,792 0.18%
Hawaii 28,115 0.16%
Kansas 17,995 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
$42,792, $28,115 and $17,995, respectively, and $56,285, $50,117 and $42,013,
respectively, of expenses related to the operation of the Portfolios were
allocated to BMR. Except as to Trustees of the Portfolio who are not members
of EVM's or BMR's organization, officers and Trustees receive remuneration
for their services to the Portfolios out of such investment adviser fee.
Certain of the officers and Trustees of the Portfolios are officers and
directors/trustees of the above organizations.
Trustees of the Portfolios that are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of the Trustees Deferred Compensation Plan.
For the year ended January 31, 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 year ended
January 31, 1998 were as follows:
Florida Insured Portfolio
-----------------------------------------------------------------------------
Purchases $8,003,690
Sales 9,834,142
Hawaii Portfolio
-----------------------------------------------------------------------------
Purchases $7,286,096
Sales 4,720,701
Kansas Portfolio
-----------------------------------------------------------------------------
Purchases $1,889,771
Sales 2,229,865
30
<PAGE>
EV Municipals Portfolios as of January 31, 1998
NOTES TO FINANCIAL STATEMENTS 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 January 31, 1998, as computed on a
federal income tax basis, are as follows:
Florida Insured Portfolio
-----------------------------------------------------------------------------
Aggregate Cost $22,620,877
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 1,837,729
Gross unrealized depreciation (4,204)
-----------------------------------------------------------------------------
Net unrealized appreciation $ 1,833,525
-----------------------------------------------------------------------------
Hawaii Portfolio
-----------------------------------------------------------------------------
Aggregate Cost $17,754,788
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 1,593,406
Gross unrealized depreciation (1,520)
-----------------------------------------------------------------------------
Net unrealized appreciation $ 1,591,886
-----------------------------------------------------------------------------
Kansas Portfolio
-----------------------------------------------------------------------------
Aggregate Cost $10,851,895
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 637,933
Gross unrealized depreciation (8,835)
-----------------------------------------------------------------------------
Net unrealized appreciation $ 629,098
-----------------------------------------------------------------------------
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. At January 31, 1998, the
Florida Insured Portfolio and the Kansas Portfolio had balances outstanding
pursuant to this line of credit of $50,000 and $33,000, respectively. The
Florida Insured Portfolio, the Hawaii Portfolio and the Kansas Portfolio did
not have any significant borrowings or allocated fees during the year ended
January 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 January 31,
1998, is as follows:
Futures
Contracts
Expiration Net Unrealized
Portfolio Date Contracts Position Depreciation
-----------------------------------------------------------------------------
Florida Insured 3/98 22 U.S. Treasury Bond Short $12,983
-----------------------------------------------------------------------------
Hawaii 3/98 8 U.S. Treasury Bond Short $12,298
-----------------------------------------------------------------------------
Kansas 3/98 4 U.S. Treasury Bond Short $ 6,369
-----------------------------------------------------------------------------
At January 31, 1998, each Portfolio had sufficient cash and/or securities to
cover margin requirements on open futures contracts.
31
<PAGE>
EV Municipals Portfolios as of January 31, 1998
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of Florida Insured Municipals Portfolio, Hawaii
Municipals Portfolio, and 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, 1998, the
related statements of operations for the year then ended, the statements of
changes in net assets for the years ended January 31, 1998 and 1997 and the
supplementary data for each of the three years in the period ended January 31,
1998 and for the period from the start of business, March 2, 1994, to
January 31, 1995. These financial statements and supplementary data are the
responsibility of each Portfolio's management. Our responsibility is to express
an opinion on these financial statements and supplementary data based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities held as of
January 31, 1998 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other audit procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and supplementary data referred to
above present fairly, in all material respects, the financial position of
Florida Insured Municipals Portfolio, Hawaii Municipals Portfolio and Kansas
Municipals Portfolio at January 31, 1998, 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 13, 1998
32
<PAGE>
EV Municipals Portfolios as of January 31, 1998
INVESTMENT MANAGEMENT
Municipals Portfolios
Officers
Thomas J. Fetter
President of the Florida Insured, Hawaii and Kansas Municipals Portfolios and
Portfolio Manager of Florida Insured Municipals Portfolio
James B. Hawkes
Vice President and Trustee
Robert B. MacIntosh
Vice President of Florida Insured, Hawaii and Kansas Municipals Portfolios and
Portfolio Manager of Hawaii Municipals Portfolio
Timothy T. Browse
Vice President and Portfolio Manager of Kansas Municipals Portfolio
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration
Norton H. Reamer
President and Director, United Asset Management Corporation
John L. Thorndike
Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
33
