<PAGE>
HAWAII MUNICIPALS PORTFOLIO AS OF JULY 31, 2000
PORTFOLIO OF INVESTMENTS (UNAUDITED)
TAX-EXEMPT INVESTMENTS -- 94.3%
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
------------------------------------------------------------------------
Electric Utilities -- 3.3%
------------------------------------------------------------------------
$1,500 Puerto Rico Electric Power Authority,
0.00%, 7/1/17 $ 583,500
------------------------------------------------------------------------
$ 583,500
------------------------------------------------------------------------
General Obligations -- 4.5%
------------------------------------------------------------------------
$ 750 Honolulu, 4.75%, 9/1/17 $ 679,290
285 Puerto Rico, Public Improvement,
0.00%, 7/1/15 126,318
------------------------------------------------------------------------
$ 805,608
------------------------------------------------------------------------
Hospital -- 15.1%
------------------------------------------------------------------------
$ 200 Hawaii Department of Budget and Finance,
(Kaiser Permanente), 5.15%, 3/1/15 $ 177,470
635 Hawaii Department of Budget and Finance,
(Kapiolani Health System),
6.00%, 7/1/19 614,413
870 Hawaii Department of Budget and Finance,
(Queens Health System), 5.75%, 7/1/26 808,691
665 Hawaii Department of Budget and Finance,
(Wahiawa General Hospital),
7.50%, 7/1/12 602,570
300 Hawaii Department of Budget and Finance,
(Wilcox Memorial Hospital),
5.35%, 7/1/18 244,602
300 Hawaii Department of Budget and Finance,
(Wilcox Memorial Hospital),
5.50%, 7/1/28 235,119
------------------------------------------------------------------------
$ 2,682,865
------------------------------------------------------------------------
Housing -- 7.5%
------------------------------------------------------------------------
$ 200 Guam Housing Corp., Single Family,
(AMT), 5.75%, 9/1/31 $ 197,960
1,000 Hawaii Housing Finance and Development,
Single Family, 5.90%, 7/1/27(1) 991,940
145 Hawaii Housing Finance and Development,
Single Family, (AMT), 6.00%, 7/1/26 143,301
------------------------------------------------------------------------
$ 1,333,201
------------------------------------------------------------------------
Industrial Development Revenue -- 3.2%
------------------------------------------------------------------------
$ 400 Hawaii Department of Transportation
Special Facilities, (Continental
Airlines), 7.00%, 6/1/20 $ 394,468
180 Puerto Rico Port Authority, (American
Airlines), (AMT), 6.30%, 6/1/23 179,548
------------------------------------------------------------------------
$ 574,016
------------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
------------------------------------------------------------------------
Insured-Education -- 5.7%
------------------------------------------------------------------------
$ 500 Hawaii State Housing Development Corp.,
(University of Hawaii), (AMBAC),
5.65%, 10/1/16 $ 504,615
500 University of Hawaii Board of Regents,
University System, (AMBAC),
5.65%, 10/1/12 508,835
------------------------------------------------------------------------
$ 1,013,450
------------------------------------------------------------------------
Insured-Electric Utilities -- 9.2%
------------------------------------------------------------------------
$1,000 Hawaii Department of Budget and Finance,
(Hawaiian Electric Co.), (AMBAC), (AMT),
5.75%, 12/1/18 $ 993,750
500 Hawaii Department of Budget and Finance,
(Hawaiian Electric Co.), (MBIA), (AMT),
6.60%, 1/1/25 531,165
100 Puerto Rico Electric Power Authority,
STRIPES, (FSA), Variable Rate, 7/1/03(2) 105,500
------------------------------------------------------------------------
$ 1,630,415
------------------------------------------------------------------------
Insured-General Obligations -- 14.1%
------------------------------------------------------------------------
$ 350 Hawaii County, (FGIC), 5.55%, 5/1/10 $ 365,368
400 Hawaii State, (FGIC), 5.00%, 10/1/17 375,188
150 Honolulu, City and County, (FGIC),
5.00%, 7/1/23 136,207
305 Kauai County, (MBIA), 5.90%, 2/1/14 312,131
910 Maui County, (FGIC), 5.00%, 9/1/17 849,931
250 Maui County, (FGIC), 5.25%, 3/1/18 240,145
250 Puerto Rico, (FSA), 5.00%, 7/1/28 230,920
------------------------------------------------------------------------
$ 2,509,890
------------------------------------------------------------------------
Insured-Hospital -- 0.6%
------------------------------------------------------------------------
$ 100 Hawaii Department of Budget and Finance,
(St. Francis Medical Center), (FSA),
6.50%, 7/1/22 $ 102,996
------------------------------------------------------------------------
$ 102,996
------------------------------------------------------------------------
Insured-Housing -- 2.8%
------------------------------------------------------------------------
$ 475 Honolulu, Mortgage Revenue Bonds, (Smith
Beretania), (FHA Insured) (MBIA),
7.80%, 7/1/24 $ 490,908
------------------------------------------------------------------------
$ 490,908
------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 1.3%
------------------------------------------------------------------------
$ 250 Hawaii, (Kapolei State Office Building),
(AMBAC), 5.00%, 5/1/18 $ 226,065
------------------------------------------------------------------------
$ 226,065
------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
HAWAII MUNICIPALS PORTFOLIO AS OF JULY 31, 2000
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
------------------------------------------------------------------------
Insured-Special Tax Revenue -- 0.9%
------------------------------------------------------------------------
$ 210 Puerto Rico Infrastructure Financing
Authority, (AMBAC), Variable Rate,
7/1/28(3) $ 161,918
------------------------------------------------------------------------
$ 161,918
------------------------------------------------------------------------
Insured-Transportation -- 12.2%
------------------------------------------------------------------------
$ 100 Hawaii Airports System, (MBIA), (AMT),
6.90%, 7/1/12 $ 113,570
245 Hawaii Airports System, (MBIA), (AMT),
7.00%, 7/1/18 254,455
650 Hawaii Harbor Revenue, (FGIC), (AMT),
6.375%, 7/1/24 669,272
1,300 Puerto Rico Highway and Transportation
Authority, (FSA), 4.75%, 7/1/38 1,126,021
------------------------------------------------------------------------
$ 2,163,318
------------------------------------------------------------------------
Insured-Water and Sewer -- 5.4%
------------------------------------------------------------------------
$1,000 Honolulu, City and County Waste Water
Systems, (FGIC), 0.00%, 7/1/18 $ 355,910
730 Honolulu, City and County Waterworks
System Revenue, (FGIC), 4.50%, 7/1/28 596,738
------------------------------------------------------------------------
$ 952,648
------------------------------------------------------------------------
Special Tax Revenue -- 2.3%
------------------------------------------------------------------------
$ 200 Puerto Rico Infrastructure Financing
Authority, Variable Rate, 7/1/28(2)(4) $ 169,472
250 Virgin Islands Public Facilities
Authority, 5.625%, 10/1/25 233,130
------------------------------------------------------------------------
$ 402,602
------------------------------------------------------------------------
Transportation -- 2.8%
------------------------------------------------------------------------
$ 250 Hawaii Highway Revenue, 5.00%, 7/1/12 $ 243,533
250 Hawaii Highway Revenue, 5.50%, 7/1/18 250,128
------------------------------------------------------------------------
$ 493,661
------------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
------------------------------------------------------------------------
Water and Sewer -- 3.4%
------------------------------------------------------------------------
$ 600 Honolulu, Water Supply System,
5.80%, 7/1/16 $ 612,360
------------------------------------------------------------------------
$ 612,360
------------------------------------------------------------------------
Total Tax-Exempt Investments -- 94.3%
(identified cost $16,864,862) $16,739,421
------------------------------------------------------------------------
Other Assets, Less Liabilities -- 5.7% $ 1,007,304
------------------------------------------------------------------------
Net Assets -- 100.0% $17,746,725
------------------------------------------------------------------------
</TABLE>
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
The Portfolio invests primarily in debt securities issued by Hawaii
municipalities. The ability of the issuers of the debt securities to meet
their obligations may be affected by economic developments in a specific
industry or municipality. In order to reduce the risk associated with such
economic developments, at July 31, 2000, 55.3% of the securities in the
portfolio of investments are backed by bond insurance of various financial
institutions and financial guaranty assurance agencies. The aggregate
percentage insured by financial institutions ranged from 9.4% to 21.4% of
total investments.
(1) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
(2) Security has been issued as an inverse floater bond.
(3) Security has been issued as a leveraged inverse floater bond.
(4) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JULY 31, 2000
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENTS OF ASSETS AND LIABILITIES
AS OF JULY 31, 2000
<TABLE>
<CAPTION>
FLORIDA INSURED PORTFOLIO HAWAII PORTFOLIO KANSAS PORTFOLIO
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------
Assets
---------------------------------------------------------------------------------------------
Investments --
Identified cost $25,036,713 $16,864,862 $11,722,985
Unrealized appreciation
(depreciation) 154,719 (125,441) (245,192)
---------------------------------------------------------------------------------------------
INVESTMENTS, AT VALUE $25,191,432 $16,739,421 $11,477,793
---------------------------------------------------------------------------------------------
Cash $ 255,151 $ 850,963 $ 29,307
Interest receivable 417,593 157,436 146,024
Receivable from the Investment
Adviser -- 2,328 4,379
Receivable for daily variation
margin on open financial
futures contracts 875 -- --
---------------------------------------------------------------------------------------------
TOTAL ASSETS $25,865,051 $17,750,148 $11,657,503
---------------------------------------------------------------------------------------------
Liabilities
---------------------------------------------------------------------------------------------
Payable for daily variation
margin on open financial
futures contracts $ -- $ 281 $ --
Accrued expenses 4,915 3,142 3,584
---------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 4,915 $ 3,423 $ 3,584
---------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
INVESTORS' INTEREST
IN PORTFOLIO $25,860,136 $17,746,725 $11,653,919
---------------------------------------------------------------------------------------------
Sources of Net Assets
---------------------------------------------------------------------------------------------
Net proceeds from capital
contributions
and withdrawals $25,706,112 $17,902,909 $11,899,111
Net unrealized appreciation
(depreciation) (computed on
the basis of
identified cost) 154,024 (156,184) (245,192)
---------------------------------------------------------------------------------------------
TOTAL $25,860,136 $17,746,725 $11,653,919
---------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JULY 31, 2000
FINANCIAL STATEMENTS (UNAUDITED) CONT'D
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JULY 31, 2000
<TABLE>
<CAPTION>
FLORIDA INSURED PORTFOLIO HAWAII PORTFOLIO KANSAS PORTFOLIO
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------
Investment Income
---------------------------------------------------------------------------------------------
Interest $ 753,381 $ 518,043 $352,182
---------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME $ 753,381 $ 518,043 $352,182
---------------------------------------------------------------------------------------------
Expenses
---------------------------------------------------------------------------------------------
Investment adviser fee $ 24,766 $ 14,510 $ 10,117
Trustees fees and expenses 1,236 197 197
Legal and accounting services 19,010 16,810 16,810
Custodian fee 8,351 5,520 2,369
Miscellaneous 4,307 2,682 3,607
---------------------------------------------------------------------------------------------
TOTAL EXPENSES $ 57,670 $ 39,719 $ 33,100
---------------------------------------------------------------------------------------------
Deduct --
Preliminary reduction of
investment adviser fee $ -- $ 7,897 $ 9,102
Preliminary allocation of
expenses to the
Investment Adviser -- 2,328 4,379
Reduction of custodian fee 3,262 2,062 --
---------------------------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 3,262 $ 12,287 $ 13,481
---------------------------------------------------------------------------------------------
NET EXPENSES $ 54,408 $ 27,432 $ 19,619
---------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 698,973 $ 490,611 $332,563
---------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
---------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions
(identified cost basis) $ (192,356) $ (140,135) $(28,654)
---------------------------------------------------------------------------------------------
NET REALIZED LOSS $ (192,356) $ (140,135) $(28,654)
---------------------------------------------------------------------------------------------
Change in unrealized
appreciation
(depreciation) --
Investments (identified
cost basis) $1,713,739 $1,060,115 $672,043
Financial futures contracts (695) (30,743) --
---------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $1,713,044 $1,029,372 $672,043
---------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN $1,520,688 $ 889,237 $643,389
---------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $2,219,661 $1,379,848 $975,952
---------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
27
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JULY 31, 2000
FINANCIAL STATEMENTS (UNAUDITED) CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JULY 31, 2000
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS FLORIDA INSURED PORTFOLIO HAWAII PORTFOLIO KANSAS PORTFOLIO
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 698,973 $ 490,611 $ 332,563
Net realized loss (192,356) (140,135) (28,654)
Net change in unrealized
appreciation (depreciation) 1,713,044 1,029,372 672,043
------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 2,219,661 $ 1,379,848 $ 975,952
------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 1,672,088 $ 369,253 $ 329,311
Withdrawals (3,791,837) (1,095,786) (1,851,232)
------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
CAPITAL TRANSACTIONS $(2,119,749) $ (726,533) $(1,521,921)
------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS $ 99,912 $ 653,315 $ (545,969)
------------------------------------------------------------------------------------------------
Net Assets
------------------------------------------------------------------------------------------------
At beginning of period $25,760,224 $17,093,410 $12,199,888
------------------------------------------------------------------------------------------------
AT END OF PERIOD $25,860,136 $17,746,725 $11,653,919
------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JULY 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JANUARY 31, 2000
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS FLORIDA INSURED PORTFOLIO HAWAII PORTFOLIO KANSAS PORTFOLIO
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 1,508,327 $ 1,082,364 $ 719,905
Net realized loss (185,258) (88,647) (50,545)
Net change in unrealized
appreciation (depreciation) (3,681,324) (2,675,664) (1,561,606)
------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
OPERATIONS $(2,358,255) $(1,681,947) $ (892,246)
------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 6,405,002 $ 1,633,534 $ 2,479,031
Withdrawals (6,426,139) (3,247,725) (2,268,175)
------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL
TRANSACTIONS $ (21,137) $(1,614,191) $ 210,856
------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS $(2,379,392) $(3,296,138) $ (681,390)
------------------------------------------------------------------------------------------------
Net Assets
------------------------------------------------------------------------------------------------
At beginning of year $28,139,616 $20,389,548 $12,881,278
------------------------------------------------------------------------------------------------
AT END OF YEAR $25,760,224 $17,093,410 $12,199,888
------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
29
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JULY 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
FLORIDA INSURED PORTFOLIO
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JANUARY 31,
JULY 31, 2000 --------------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
--------------------------------------------------------------------------------------------------------------
Ratios (As a percentage of
average daily net assets):
Net expenses 0.45%(1) 0.38% 0.18% 0.07% 0.09% 0.07%
Net expenses after
custodian fee reduction 0.43%(1) 0.34% 0.11% 0.00% 0.02% 0.00%
Net investment income 5.49%(1) 5.32% 5.21% 5.63% 5.76% 5.82%
Portfolio Turnover 7% 34% 9% 34% 36% 32%
--------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(000'S OMITTED) $25,860 $25,760 $28,140 $24,850 $24,204 $21,416
--------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Portfolio may reflect a reduction of the investment adviser fee, an
allocation of expenses to the Investment Adviser, or both. Had such actions not been taken, the ratios
would have been as follows:
Ratios (As a percentage of
average daily net assets):
Expenses 0.30% 0.48% 0.39% 0.39%
Expenses after custodian
fee reduction 0.23% 0.41% 0.32% 0.32%
Net investment income 5.09% 5.22% 5.46% 5.50%
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JULY 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
HAWAII PORTFOLIO
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JANUARY 31,
JULY 31, 2000 --------------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
--------------------------------------------------------------------------------------------------------------
Ratios (As a percentage of
average daily net assets):
Net expenses 0.34%(1) 0.02% 0.04% 0.03% 0.04% 0.06%
Net expenses after
custodian fee reduction 0.32%(1) 0.00% 0.00% 0.00% 0.00% 0.00%
Net investment income 5.67%(1) 5.67% 5.39% 5.70% 5.96% 6.01%
Portfolio Turnover 4% 20% 29% 27% 21% 19%
--------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(000'S OMITTED) $17,747 $17,093 $20,390 $19,864 $16,014 $15,578
--------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Portfolio may reflect a reduction of the investment adviser fee, an
allocation of expenses to the Investment Adviser, or both. Had such actions not been taken, the ratios
would have been as follows:
Ratios (As a percentage of
average daily net assets):
Expenses 0.46%(1) 0.38% 0.28% 0.46% 0.43% 0.41%
Expenses after custodian
fee reduction 0.44%(1) 0.36% 0.24% 0.43% 0.39% 0.35%
Net investment income 5.55%(1) 5.31% 5.15% 5.27% 5.57% 5.66%
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JULY 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
KANSAS PORTFOLIO
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JANUARY 31,
JULY 31, 2000 --------------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
--------------------------------------------------------------------------------------------------------------
Ratios (As a percentage of
average daily net assets):
Net expenses 0.33%(1) 0.05% 0.06% 0.05% 0.08% 0.09%
Net expenses after
custodian fee reduction 0.33%(1) 0.00% 0.00% 0.00% 0.00% 0.00%
Net investment income 5.62%(1) 5.59% 5.34% 5.79% 5.91% 5.93%
Portfolio Turnover 1% 24% 33% 17% 49% 21%
--------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(000'S OMITTED) $11,654 $12,200 $12,881 $11,419 $11,736 $11,609
--------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Portfolio may reflect a reduction of the investment adviser fee, an
allocation of expenses to the Investment Adviser, or both. Had such actions not been taken, the ratios
would have been as follows:
Ratios (As a percentage of
average daily net assets):
Expenses 0.56%(1) 0.49% 0.36% 0.57% 0.48% 0.50%
Expenses after custodian
fee reduction 0.56%(1) 0.44% 0.30% 0.52% 0.40% 0.41%
Net investment income 5.39%(1) 5.15% 5.04% 5.27% 5.51% 5.52%
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JULY 31, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1 Significant Accounting Policies
-------------------------------------------
Florida Insured Municipals Portfolio (Florida Insured Portfolio), Hawaii
Municipals Portfolio (Hawaii Portfolio) and Kansas Municipals Portfolio
(Kansas Portfolio), collectively the Portfolios, are registered under the
Investment Company Act of 1940, as amended, as diversified open-end
management investment companies. The Portfolios were organized as trusts
under the laws of the State of New York on May 1, 1992 for the Hawaii
Portfolio and October 25, 1993 for the Florida Insured Portfolio and the
Kansas Portfolio. The Portfolios seek to achieve current income exempt from
regular federal income tax and particular state or local income or other
taxes by investing primarily in investment grade municipal obligations. The
Declarations of Trust permit the Trustees to issue interests in the
Portfolios. The following is a summary of significant accounting policies
consistently followed by the Portfolios in the preparation of their financial
statements. The policies are in conformity with generally accepted accounting
principles.
A Investment Valuations -- Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts and options on
financial futures contracts listed on commodity exchanges are valued at
closing settlement prices. Over-the-counter options on financial futures
contracts are normally valued at the mean between the latest bid and asked
prices. Short-term obligations, maturing in sixty days or less, are valued at
amortized cost, which approximates value. Investments for which valuations or
market quotations are unavailable are valued at fair value using methods
determined in good faith by or at the direction of the Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or accretion of discount when required
for Federal income tax purposes.
C Income Taxes -- The Portfolios are treated as partnerships for Federal tax
purposes. No provision is made by the Portfolios for federal or state taxes
on any taxable income of the Portfolios because each investor in the
Portfolios is ultimately responsible for the payment of any taxes. Since some
of the Portfolios' investors are regulated investment companies that invest
all or substantially all of their assets in the Portfolios, the Portfolios
normally must satisfy the applicable source of income and diversification
requirements (under the Internal Revenue Code) in order for their respective
investors to satisfy them. The Portfolios will allocate at least annually
among their respective investors each investor's distributive share of the
Portfolios' net taxable (if any) and tax-exempt investment income, net
realized capital gains, and any other items of income, gain, loss, deduction
or credit. Interest income received by the Portfolios on investments in
municipal bonds, which is excludable from gross income under the Internal
Revenue Code, will retain its status as income exempt from federal income tax
when allocated to each Portfolio's investors. The portion of such interest,
if any, earned on private activity bonds issued after August 7, 1986, may be
considered a tax preference item for investors.
D 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.
E Options on Financial Futures Contracts -- Upon the purchase of a put option
on a financial futures contract by a Portfolio, the premium paid is recorded
as an investment, the value of which is marked-to-market daily. When a
purchased option expires, a Portfolio will realize a loss in the amount of
the cost of the option. When a Portfolio enters into a closing sale
transaction, a Portfolio will realize a gain or loss depending on whether the
sales proceeds from the closing sale transaction are greater or less than the
cost of the option. When a Portfolio exercises a put option, settlement is
made in cash. The risk associated with purchasing put options is limited to
the premium originally paid.
F When-issued and Delayed Delivery Transactions -- The Portfolios may engage in
when-issued and delayed delivery transactions. The Portfolios record
when-issued securities on trade date and maintain security positions such
that sufficient liquid assets will be available to make payments for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked-to-market daily and begin earning interest on
settlement date.
33
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JULY 31, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
G Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Portfolios. Pursuant to the respective custodian agreements, IBT
receives a fee reduced by credits which are determined based on the average
daily cash balances each Portfolio maintains with IBT. All significant credit
balances used to reduce the Portfolios' custodian fees are reported as a
reduction of total expenses in the Statement of Operations.
H Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
I Other -- Investment transactions are accounted for on a trade date basis.
Realized gains and losses are computed based on the specific identification
of the securities sold.
J Interim Financial Statements -- The interim financial statements relating to
July 31, 2000 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the
Portfolios' 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, 2000, each Portfolio incurred
advisory fees as follows:
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT EFFECTIVE RATE*
<S> <C> <C>
------------------------------------------------------------------
Florida Insured $24,766 0.19%
Hawaii 14,510 0.17%
Kansas 10,117 0.17%
</TABLE>
* As a percentage of average daily net assets (annualized).
To enhance the net income of the Hawaii Portfolio and Kansas Portfolio, BMR
made a reduction of its fee in the amount of $7,897 and $9,102, respectively,
and $2,328 and $4,379 respectively, of expenses related to the operation of
the Portfolios were allocated to BMR. Except as to Trustees of the Portfolio
who are not members of EVM's or BMR's organization, officers and Trustees
receive remuneration for their services to the Portfolios out of such
investment adviser fee.
Certain officers and Trustees of the Portfolios are officers of the above
organizations.
Trustees of the Portfolios that are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of the Trustees Deferred Compensation Plan.
For the six months ended July 31, 2000, no significant amounts have been
deferred.
3 Investments
-------------------------------------------
Purchases and sales of investments, other than U.S. Government securities,
put option transactions and short-term obligations, for the six months ended
July 31, 2000, were as follows:
<TABLE>
<CAPTION>
FLORIDA INSURED PORTFOLIO
<S> <C>
----------------------------------------------------
Purchases $1,828,431
Sales 3,380,739
<CAPTION>
HAWAII PORTFOLIO
<S> <C>
----------------------------------------------------
Purchases $ 617,229
Sales 1,506,768
<CAPTION>
KANSAS PORTFOLIO
<S> <C>
----------------------------------------------------
Purchases $ 163,450
Sales 1,153,212
</TABLE>
34
<PAGE>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JULY 31, 2000
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, 2000, as computed on a
federal income tax basis, are as follows:
<TABLE>
<CAPTION>
FLORIDA INSURED PORTFOLIO
<S> <C>
-----------------------------------------------------
AGGREGATE COST $25,036,713
-----------------------------------------------------
Gross unrealized appreciation $ 833,614
Gross unrealized depreciation (678,895)
-----------------------------------------------------
NET UNREALIZED APPRECIATION $ 154,719
-----------------------------------------------------
<CAPTION>
HAWAII PORTFOLIO
<S> <C>
-----------------------------------------------------
AGGREGATE COST $16,864,862
-----------------------------------------------------
Gross unrealized appreciation $ 453,387
Gross unrealized depreciation (578,828)
-----------------------------------------------------
NET UNREALIZED DEPRECIATION $ (125,441)
-----------------------------------------------------
<CAPTION>
KANSAS PORTFOLIO
<S> <C>
-----------------------------------------------------
AGGREGATE COST $11,722,985
-----------------------------------------------------
Gross unrealized appreciation $ 163,728
Gross unrealized depreciation (408,920)
-----------------------------------------------------
NET UNREALIZED DEPRECIATION $ (245,192)
-----------------------------------------------------
</TABLE>
5 Line of Credit
-------------------------------------------
The Portfolios participate with other portfolios and funds managed by BMR and
EVM and its affiliates in a $150 million unsecured line of credit agreement
with a group of banks. The Portfolios may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above either the Eurodollar rate or federal funds rate. In addition, a
fee computed at an annual rate of 0.10% on the daily unused portion of the
line of credit is allocated among the participating portfolios and funds at
the end of each quarter. The Portfolios did not have any significant
borrowings or allocated fees during the six months ended July 31, 2000.
6 Financial Instruments
-------------------------------------------
The Portfolios regularly trade in financial instruments with off-balance
sheet risk in the normal course of their investing activities to assist in
managing exposure to various market risks. These financial instruments
include futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment a Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
A summary of obligations under these financial instruments at July 31, 2000
is as follows:
<TABLE>
<CAPTION>
FUTURES
CONTRACTS
EXPIRATION NET UNREALIZED
PORTFOLIO DATE CONTRACTS POSITION DEPRECIATION
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
Florida Insured 9/00 7 U.S. Treasury Bond Short $ (695)
------------------------------------------------------------------------------------------------
Hawaii 9/00 9 U.S. Treasury Bond Short (30,743)
</TABLE>
At July 31, 2000, the Portfolios had sufficient cash and/or securities to
cover margin requirements on open futures contracts.
35
<PAGE>
EATON VANCE MUNICIPALS FUNDS AS OF JULY 31, 2000
INVESTMENT MANAGEMENT
MUNICIPALS PORTFOLIOS
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and Trustee
Cynthia J. Clemson
Vice President and Portfolio
Manager of Florida
Insured Municipals Portfolio
Robert B. MacIntosh
Vice President and Portfolio
Manager of Hawaii
Municipals Portfolio
Thomas M. Metzold
Vice President and Portfolio
Manager of Kansas
Municipals Portfolio
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman of the Board,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
36
