<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-08134
---------
Eaton Vance Municipals Trust II
-------------------------------
(Exact Name of Registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(Registrant's Telephone Number)
January 31
----------
Date of Fiscal Year End
January 31, 2004
----------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-08134
---------
Eaton Vance Municipals Trust II
-------------------------------
(Exact Name of Registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(Registrant's Telephone Number)
January 31
----------
Date of Fiscal Year End
January 31, 2004
----------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-08134
---------
Eaton Vance Municipals Trust II
-------------------------------
(Exact Name of Registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(Registrant's Telephone Number)
January 31
----------
Date of Fiscal Year End
January 31, 2004
----------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
[EV LOGO]
[GRAPHIC IMAGE]
ANNUAL REPORT JANUARY 31, 2004
[GRAPHIC IMAGE]
EATON VANCE MUNICIPALS TRUST II
FLORIDA INSURED
HAWAII
KANSAS
[GRAPHIC IMAGE]
<Page>
EATON VANCE FUNDS
EATON VANCE MANAGEMENT
BOSTON MANAGEMENT AND RESEARCH
EATON VANCE DISTRIBUTORS, INC.
PRIVACY NOTICE
The Eaton Vance organization is committed to ensuring your financial
privacy. This notice is being sent to comply with privacy regulations of
the Securities and Exchange Commission. Each of the above financial
institutions has in effect the following policy with respect to nonpublic
personal information about its customers:
- Only such information received from you, through application forms or
otherwise, and information about your Eaton Vance fund transactions will
be collected.
- None of such information about you (or former customers) will be
disclosed to anyone, except as permitted by law (which includes
disclosure to employees necessary to service your account).
- Policies and procedures (including physical, electronic and procedural
safeguards) are in place that are designed to protect the confidentiality
of such information.
For more information about Eaton Vance's privacy policies, call:
1-800-262-1122.
IMPORTANT NOTICE
REGARDING DELIVERY OF
SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission permits funds to deliver only one
copy of shareholder documents, including prospectuses, proxy statements and
shareholder reports, to fund investors with multiple accounts at the same
residential or post office box address. This practice is often called
"householding" and it helps eliminate duplicate mailings to shareholders.
EATON VANCE, OR YOUR FINANCIAL ADVISER, MAY HOUSEHOLD THE MAILING OF YOUR
DOCUMENTS INDEFINITELY UNLESS YOU INSTRUCT EATON VANCE, OR YOUR FINANCIAL
ADVISER, OTHERWISE.
If you would prefer that your Eaton Vance documents not be householded,
please contact Eaton Vance at 1-800-262-1122, or contact your financial
adviser.
Your instructions that householding not apply to delivery of your Eaton
Vance documents will be effective within 30 days of receipt by Eaton Vance
or your financial adviser.
From time to time, funds are required to vote proxies related to the securities
held by the funds. The Eaton Vance Funds or their underlying Portfolios vote
proxies according to a set of policies and procedures approved by the Funds' and
Portfolios' Boards. You may obtain a description of these policies and
procedures without charge, upon request, by calling 1-800-262-1122. This
description is also available on the Securities and Exchange Commission's
website at http://www.sec.gov.
<Page>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2004
LETTER TO SHAREHOLDERS
[PHOTO OF THOMAS J. FETTER]
Thomas J. Fetter
President
Amid the market volatility and external political shocks of recent years, many
investors have become more concerned with risk management. That trend has been
especially true in the municipal bond market, where the use of bond insurance
has become increasingly common. Today, roughly half of all municipal bond
issuance is composed of insured bonds. As part of our continuing educational
series, we thought it might be helpful to discuss bond insurance and its impact
on the municipal market.
THE USE OF BOND INSURANCE HAS GROWN DRAMATICALLY OVER THE YEARS...
Municipal bond insurance was initially developed in 1971, when AMBAC Assurance
Corp., the nation's first municipal insurer, offered insurance as a way to
guarantee principal and interest payments on bond issues in the event of a bond
default. Over the following three decades, the municipal market has witnessed a
surge in the use of insurance. For example, in 1980, just 3% of all municipal
issuance was insured. However, by late 2003, that figure had risen to roughly
50%. Insurance has clear benefits for purchasers: the elimination of default
risk of the underlying issuer, AAA quality ratings and an enhancement of an
issue's liquidity. (It's important to note that, while insured bonds are insured
as to principal and interest payments, they still remain subject to interest
rate and market risks.)
THE MECHANICS OF MUNICIPAL BOND INSURANCE...
We start with the underlying reality that an issuer with a AAA credit rating
will pay less in interest expense than an issuer with a lower credit rating.
Thus, an issuer must first determine whether purchasing insurance is financially
feasible. That is, will the interest savings offset the cost of insurance? If
so, the issuer must then qualify for insurance. Just as an individual must
qualify for insurance, so must a bond issuer meet certain criteria. The issuer
provides key financial data and documents to potential insurers that are then
used to assess the issuer's financial strength and underlying fundamentals. If
the issuer qualifies, insurance is then effected by "direct purchase," with the
payment of a one-time premium by the issuer. The premium fee is calculated as a
percentage of the value of the bond issue - typically, around 50 basis points
(0.50%), but more if the credit entails higher risk. (An alternative method of
purchase involves "elective bidding," in which the insurance is purchased by
bond dealers, who determine at the time the bond is sold whether it is more
attractive as an insured or uninsured bond.)
IN-DEPTH CREDIT ANALYSIS INCLUDES INSURERS AS WELL AS BOND ISSUERS...
When analyzing municipal bonds, an investor naturally researches the issuer's
fundamentals. However, if the bond is insured, the analyst is concerned with the
soundness of the insurer as well. At Eaton Vance, analysis of the insured
segment is an integral part of our total municipal research effort. Research
includes, among other areas, analysis of an insurer's claims-paying ability, its
capital structure and the overall quality of its portfolio of policies. Based on
claims-paying ability, there are currently six bond insurers rated AAA by
Moody's Investors Service, Standard & Poor's and Fitch Ratings - the nation's
leading rating agencies.
INSURERS CAN PLAY A VALUABLE ROLE IN STRUCTURING BOND DEALS AND IMPROVING CREDIT
QUALITY...
Insurers play an important role in capital formation for municipal borrowers,
working closely with municipal officials to forge deals that raise capital for
vital projects at affordable interest rates. In so doing, the insurers can help
states and municipalities achieve more efficient fiscal management. Insurers
often re-structure bond deals by insisting on provisions that are intended to
make the deal more secure. That has proved a major benefit to investors in
recent years. In a more risk-conscious climate, we believe that an ongoing
analysis of the insured market is a necessary discipline to invest successfully
in today's municipal market.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
President
March 10, 2004
MUTUAL FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED.
2
<Page>
MARKET RECAP
The U.S. economy gained strength in the year ended January 31, 2004, although
still characterized by uneven job growth. Spending - by individuals and
businesses alike - was helped by improving consumer and investor sentiment.
While fixed-income investors showed some concern about the improved economic
outlook, the bond market nonetheless registered solid returns in 2003.
CONSTRUCTION, RETAILING, FINANCIAL SERVICES AND MANUFACTURING SHOWED SOME
STRENGTH IN 2003...
The long-beleaguered manufacturing sector saw some improvement in 2003, as
capital spending showed signs of renewal. Meanwhile, the construction sector
remained strong, supported by strong residential building. The impressive
performance by the equity markets resulted in rising profits and additional
hiring within the financial service industry. Finally, consumers were encouraged
by the tax cuts enacted in May by Congress, which boosted spending and increased
retail jobs.
AMID SLOW JOB GROWTH AND LOW INFLATION, THE FEDERAL RESERVE KEPT INTEREST RATES
LOW...
The nation's Gross Domestic Product grew by 4.0% in the fourth quarter of 2003,
following an 8.2% surge in the third quarter. While these reports confirmed that
a recovery was in progress, the slow pace of job creation remained a concern.
The nation's unemployment rate was 5.6% in January 2004, down from 5.8% a year
ago. There were signs of hiring within specific sectors -temporary employment
agencies, the financial services sector and the building trades. However, nearly
three years after the onset of the 2001 recession, total jobs had still not
recovered to pre-recession levels, a phenomenon last seen in 1939.
Inflation remained generally under control. While, not surprisingly, health care
costs continued to rise, wage pressures were modest in the slow labor markets.
Retail prices were generally flat and manufacturers, despite increases in key
inputs like energy and steel, generally held the line with respect to pricing.
With inflation in check, the Federal Reserve has maintained an accommodative
monetary policy, holding its Federal Funds rate - a key short-term interest rate
barometer - at 1.00%, where it has stood since June 2003.
Amid a generally improving economy, the municipal bond market outperformed the
Treasury market. Ten-year Treasury bond yields - which began the fiscal year at
3.96% - rose to 4.14% by January 31, 2004, while 10-year municipal yields fell
from 4.01% to 3.68%. The Lehman Brothers Municipal Bond Index posted a total
return of 6.19% for the year ended January 31, 2004.(1)
STATE TAX RATES ROSE AGAIN IN 2003, INCREASING THE BURDEN ON STATE TAX
PAYERS... According to the Tax Foundation, state tax increases in 2002 were
estimated at $7.6 billion, and estimated at roughly twice that figure in
2003. Over the past decade, the fastest growing category of state tax
collections was individual income taxes, which rose at an average annual rate
of 7.7%. That trend has left taxpayers with a larger state tax bill and made
a strong case for municipal bonds as one of the few remaining ways to pare
one's tax burden. Thus, we continue to believe that municipal bonds remain a
worthwhile consideration for tax-conscious investors.
(1) It is not possible to invest directly in an Index.
[CHART]
Municipal bonds yield 97% of Treasury yields
<Table>
30-Year AAA-rated
General Obligation (GO) Bonds* 4.82%
Taxable equivalent yield
in 35.0% tax bracket 7.42%
30-Year Treasury bond 4.97%
</Table>
Principal and interest payments of Treasury securities are guaranteed by the
U.S. government.
*GO yields are a compilation of a representative variety of
general obligations and are not necessarily representative of the Funds' yields.
Statistics as of January 31, 2004.
Past performance is no guarantee of future results.
Source: Bloomberg, L.P.
THE VIEWS EXPRESSED THROUGHOUT THIS REPORT ARE THOSE OF THE VARIOUS PORTFOLIO
MANAGERS AND ARE CURRENT ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS
STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON
MARKET OR OTHER CONDITIONS, AND EATON VANCE DISCLAIMS ANY RESPONSIBILITY TO
UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND,
BECAUSE INVESTMENT DECISIONS FOR AN EATON VANCE FUND ARE BASED ON MANY FACTORS,
MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY EATON
VANCE FUND.
3
<Page>
EATON VANCE FLORIDA INSURED MUNICIPALS FUND AS OF JANUARY 31, 2004
INVESTMENT UPDATE
[PHOTO OF CYNTHIA J. CLEMSON]
Cynthia J. Clemson
Portfolio Manager
MANAGEMENT UPDATE
- - Florida's economy continued to lead the nation in job growth. Housing was
very strong, fueled by strong migration into south Florida. Tourism faltered
somewhat, amid fewer foreign visits to major theme parks. The state's jobless
rate was 4.7% in January 2004, down from 5.3% a year ago.
- - The Portfolio continued to emphasize essential service bonds because of their
reliable revenue stream. Insured* water and sewer bonds were the Portfolio's
largest sector weighting at January 31, 2004, and featured a geographically
diverse range of Florida issuers.
- - Insured* special tax revenue bonds were a major focus. Special tax revenue
bonds are backed by special assessments, sales taxes, utility taxes and/or
various special taxes.
- - Insured* transportation bonds played a significant role in the Portfolio.
Investments included bonds that funded a broad range of transportation
projects, including airports, seaports and highway construction.
- - Management emphasized diversification by issuer, sector and coupon. Puerto
Rico bonds added further flexibility in this regard and included general
obligations, electric utilities and transportation bonds.
THE FUND
- - During the year ended January 31, 2004, the Fund's Class A and Class B shares
had total returns of 5.90% and 5.22%, respectively.(1) For Class A, this
return resulted from an increase in net asset value (NAV) per share to $11.54
on January 31, 2004 from $11.43 on January 31, 2003, and the reinvestment of
$0.550 per share in tax-free income.(2) For Class B, this return resulted
from an increase in NAV to $11.42 on January 31, 2004 from $11.30 on January
31, 2003, and the reinvestment of $0.460 per share in tax-free income.(2)
- - Based on the Fund's most recent dividends and NAVs on January 31, 2004 of
$11.54 per share for Class A and $11.42 for Class B, the distribution rates
were 4.77% and 4.03%, respectively.(3) The distribution rates of Class A and
Class B are equivalent to taxable rates of 7.34% and 6.20%, respectively.(4)
- - The SEC 30-day yields for Class A and Class B shares at January 31, 2004 were
3.72% and 3.19%, respectively.(5) The SEC 30-day yields of Class A and Class
B are equivalent to taxable yields of 5.72% and 4.91%, respectively.(4)
[CHART]
RATING DISTRIBUTION(6)
<Table>
A 0.5%
Non-Rated 1.0%
AAA 98.5%
</Table>
* Private insurance does not decrease the risk of loss of principal
associated with an insured investment.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Performance is for the stated time
period only; due to market volatility, the Fund's current performance may
be lower or higher.
FUND INFORMATION
AS OF JANUARY 31, 2004
<Table>
<Caption>
PERFORMANCE(7) CLASS A CLASS B
- -------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
One Year 5.90% 5.22%
Five Years 5.03 4.25
Life of Fund+ 6.66 5.83
SEC Average Annual Total Returns (including sales
charge or applicable CDSC)
One Year 0.87% 0.22%
Five Years 4.01 3.91
Life of Fund+ 6.14 5.83
</Table>
+ Inception date: Class A: 3/3/94; Class B: 3/2/94
[CHART]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE FLORIDA
INSURED MUNICIPALS FUND CLASS B VS. THE LEHMAN BROTHERS MUNICIPAL BOND INDEX**
March 31, 1994 - January 31, 2004
FLORIDA INSURED MUNICIPALS FUND- CLASS B
Inception: 3/2/94
<Table>
<Caption>
FUND FUND LEHMAN BROTHER
VALUE AT VALUE WITH MUNICIPAL BOND
DATE NAV SALES CHARGE INDEX
- ---------------------------------------------------------------
3/31/1994 10,000 N/A 10,000
4/30/1994 10,403 10,085
5/31/1994 10,561 10,172
6/30/1994 10,456 10,110
7/31/1994 10,696 10,295
8/31/1994 10,666 10,331
9/30/1994 10,471 10,180
10/31/1994 10,194 9,999
11/30/1994 9,975 9,818
12/31/1994 10,319 10,034
1/31/1995 10,710 10,321
2/28/1995 11,120 10,621
3/31/1995 11,172 10,743
4/30/1995 11,167 10,756
5/31/1995 11,441 11,099
6/30/1995 11,190 11,002
7/31/1995 11,259 11,106
8/31/1995 11,336 11,247
9/30/1995 11,404 11,318
10/31/1995 11,634 11,483
11/30/1995 11,940 11,673
12/31/1995 12,128 11,785
1/31/1996 12,143 11,874
2/29/1996 11,981 11,794
3/31/1996 11,751 11,644
4/30/1996 11,710 11,611
5/31/1996 11,711 11,606
6/30/1996 11,828 11,733
7/31/1996 11,937 11,839
8/31/1996 11,915 11,836
9/30/1996 12,121 12,001
10/31/1996 12,188 12,137
11/30/1996 12,383 12,359
12/31/1996 12,294 12,307
1/31/1997 12,282 12,331
2/28/1997 12,414 12,444
3/31/1997 12,213 12,278
4/30/1997 12,292 12,381
5/31/1997 12,500 12,567
6/30/1997 12,630 12,701
7/31/1997 12,991 13,053
8/31/1997 12,792 12,930
9/30/1997 12,958 13,084
10/31/1997 13,076 13,168
11/30/1997 13,163 13,245
12/31/1997 13,374 13,439
1/31/1998 13,458 13,577
2/28/1998 13,474 13,581
3/31/1998 13,468 13,593
4/30/1998 13,395 13,532
5/31/1998 13,612 13,746
6/30/1998 13,674 13,800
7/31/1998 13,710 13,835
8/31/1998 13,935 14,049
9/30/1998 14,093 14,224
10/31/1998 14,027 14,224
11/30/1998 14,088 14,273
12/31/1998 14,081 14,309
1/31/1999 14,241 14,479
2/28/1999 14,152 14,416
3/31/1999 14,143 14,436
4/30/1999 14,153 14,472
5/31/1999 14,038 14,388
6/30/1999 13,741 14,181
7/31/1999 13,736 14,233
8/31/1999 13,468 14,119
9/30/1999 13,322 14,125
10/31/1999 13,125 13,972
11/30/1999 13,251 14,120
12/31/1999 13,091 14,015
1/31/2000 12,964 13,954
2/29/2000 13,231 14,116
3/31/2000 13,657 14,425
4/30/2000 13,486 14,339
5/31/2000 13,321 14,265
6/30/2000 13,821 14,643
7/31/2000 14,059 14,847
8/31/2000 14,267 15,075
9/30/2000 14,077 14,997
10/31/2000 14,289 15,161
11/30/2000 14,420 15,275
12/31/2000 14,956 15,653
1/31/2001 14,982 15,808
2/28/2001 15,018 15,858
3/31/2001 15,134 16,000
4/30/2001 14,831 15,827
5/31/2001 15,032 15,997
6/30/2001 15,153 16,104
7/31/2001 15,442 16,343
8/31/2001 15,729 16,612
9/30/2001 15,579 16,556
10/31/2001 15,779 16,745
11/30/2001 15,595 16,612
12/31/2001 15,412 16,455
1/31/2002 15,646 16,740
2/28/2002 15,857 16,942
3/31/2002 15,480 16,610
4/30/2002 15,749 16,935
5/31/2002 15,846 17,038
6/30/2002 15,964 17,218
7/31/2002 16,187 17,439
8/31/2002 16,388 17,649
9/30/2002 16,853 18,035
10/31/2002 16,455 17,736
11/30/2002 16,322 17,663
12/31/2002 16,746 18,035
1/31/2003 16,669 17,990
2/28/2003 16,910 18,241
3/31/2003 16,916 18,252
4/30/2003 17,134 18,373
5/31/2003 17,444 18,803
6/30/2003 17,264 18,723
7/31/2003 16,597 18,068
8/31/2003 16,761 18,203
9/30/2003 17,183 18,738
10/31/2003 17,165 18,643
11/30/2003 17,411 18,838
12/31/2003 17,511 18,994
1/31/2004 17,539 19,102
</Table>
** Source: Thomson Financial. Investment operations commenced 3/2/94. The
chart uses closest month-end after inception. The chart compares the total
return of the Fund's Class B shares with that of the Lehman Brothers
Municipal Bond Index, a broad-based, unmanaged market index. Returns are
calculated by determining the percentage change in net asset value (NAV)
with all distributions reinvested. The lines on the chart represent total
returns of $10,000 hypothetical investments in the Fund and the Lehman
Brothers Municipal Bond Index. An investment in Class A shares on 3/3/94 at
net asset value would have grown to $18,966 on January 31, 2004; $18,062,
including the 4.75% sales charge. The Index's total return does not reflect
commissions or expenses that would have been incurred if an investor
individually purchased or sold the securities represented in the Index. It
is not possible to invest directly in an Index. The performance graph and
table do not reflect the deduction of taxes that a shareholder would incur
on Fund distributions or the redemption of Fund shares.
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS. For federal income tax
purposes, 99.78% of the total dividends paid by the Fund from net investment
income during the year ended January 31, 2004 was designated as an
exempt-interest dividend.
4
<Page>
EATON VANCE HAWAII MUNICIPALS FUND as of January 31, 2004
MANAGEMENT UPDATE
[PHOTO OF ROBERT B. MACINTOSH]
Robert B. MacIntosh
Portfolio Manager
- - Hawaii's economy posted uneven growth in 2003, led by an investment-driven
construction boom. Health care and business services were other areas that
posted strong job growth. Manufacturing, information services and some
tourism-service areas were weaker. Hawaii's January 2004 jobless rate was
4.1%, up from 3.6% a year ago.
- - Insured* transportation bonds were the Portfolio's largest sector weighting
at January 31, 2004. Investments included bonds for a variety of projects,
including airports, highways and harbor facilities.
- - Insured* general obligation bonds were a large focus for the Portfolio.
Management emphasized superior credit quality and secure income from Hawaii
state and county issuers.
- - The Hawaii market featured very little new supply in 2003, characteristic of
the trend in recent years. New purchases included Department of Budget and
Finance bonds for a newly combined hospital entity, as well as selected new
airport and housing bonds.
- - Management sought diversification, to the extent possible, according to
issuer, sector and coupon. Puerto Rico and Guam bonds added further
flexibility in this regard and included general obligations, electric
utilities, housing, insured* education, insured* transportation and insured*
special tax revenue bonds.
THE FUND
- - During the year ended January 31, 2004, the Fund's Class A and Class B shares
had total returns of 6.99% and 6.18%, respectively.(1) For Class A, this
return resulted from an increase in net asset value (NAV) per share to $9.91
on January 31, 2004 from $9.70 on January 31, 2003, and the reinvestment of
$0.453 per share in tax-free income.(2) For Class B, this return resulted
from an increase in net asset value (NAV) per share to $10.04 on January 31,
2004 from $9.83 on January 31, 2003, and the reinvestment of $0.387 per share
in tax-free income.(2)
- - Based on the Fund's most recent dividends and NAVs on January 31, 2004 of
$9.91 per share for Class A and $10.04 for Class B, the distribution rates
were 4.52% and 3.78%, respectively.(3) The distribution rates of Class A and
Class B are equivalent to taxable rates of 7.58% and 6.34%, respectively.(4)
- - The SEC 30-day yields for Class A and Class B shares at January 31, 2004 were
3.18% and 2.70%, respectively.(5) The SEC 30-day yields of Class A and Class
B are equivalent to taxable yields of 5.33% and 4.53%, respectively.(4)
[CHART]
RATING DISTRIBUTION(6)
<Table>
A 8.8%
AA 10.0%
AAA 74.0%
B 1.9%
BBB 4.2%
Non-Rated 1.1%
</Table>
* Private insurance does not decrease the risk of loss of principal
associated with an insured investment.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Performance is for the stated time
period only; due to market volatility, the Fund's current performance may
be lower or higher.
FUND INFORMATION
AS OF JANUARY 31, 2004
<Table>
<Caption>
PERFORMANCE(7) Class A Class B
- -------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
One Year 6.99% 6.18%
Five Years 4.68 3.89
Life of Fund+ 5.01 4.63
SEC Average Annual Total Returns (including sales
charge or applicable CDSC)
One Year 1.94% 1.18%
Five Years 3.67 3.55
Life of Fund+ 4.49 4.63
</Table>
+ Inception date: Class A: 3/14/94; Class B: 3/2/94
[CAHRT]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE HAWAII
MUNICIPALS FUND CLASS B VS. THE LEHMAN BROTHERS MUNICIPAL BOND INDEX**
March 31, 1994 - January 31, 2004
HAWAII MUNICIPALS FUND- CLASS B
Inception: 3/2/94
<Table>
<Caption>
FUND FUND LEHMAN BROTHERS
VALUE AT VALUE WITH MUNICIPAL BOND
DATE NAV SALES CHARGE INDEX
- ----------------------------------------------------------------
3/31/1994 10,000 N/A 10,000
4/30/1994 10,023 10,085
5/31/1994 10,101 10,172
6/30/1994 9,949 10,110
7/31/1994 10,134 10,295
8/31/1994 10,152 10,331
9/30/1994 9,968 10,180
10/31/1994 9,668 9,999
11/30/1994 9,394 9,818
12/31/1994 9,631 10,034
1/31/1995 9,926 10,321
2/28/1995 10,285 10,621
3/31/1995 10,413 10,743
4/30/1995 10,395 10,756
5/31/1995 10,689 11,099
6/30/1995 10,514 11,002
7/31/1995 10,606 11,106
8/31/1995 10,694 11,247
9/30/1995 10,785 11,318
10/31/1995 10,944 11,483
11/30/1995 11,159 11,673
12/31/1995 11,307 11,785
1/31/1996 11,389 11,874
2/29/1996 11,274 11,794
3/31/1996 11,100 11,644
4/30/1996 11,066 11,611
5/31/1996 11,029 11,606
6/30/1996 11,161 11,733
7/31/1996 11,262 11,839
8/31/1996 11,238 11,836
9/30/1996 11,404 12,001
10/31/1996 11,520 12,137
11/30/1996 11,710 12,359
12/31/1996 11,663 12,307
1/31/1997 11,662 12,331
2/28/1997 11,761 12,444
3/31/1997 11,585 12,278
4/30/1997 11,690 12,381
5/31/1997 11,857 12,567
6/30/1997 11,955 12,701
7/31/1997 12,293 13,053
8/31/1997 12,157 12,930
9/30/1997 12,267 13,084
10/31/1997 12,351 13,168
11/30/1997 12,416 13,245
12/31/1997 12,609 13,439
1/31/1998 12,720 13,577
2/28/1998 12,709 13,581
3/31/1998 12,702 13,593
4/30/1998 12,585 13,532
5/31/1998 12,811 13,746
6/30/1998 12,835 13,800
7/31/1998 12,858 13,835
8/31/1998 13,091 14,049
9/30/1998 13,255 14,224
10/31/1998 13,198 14,224
11/30/1998 13,247 14,273
12/31/1998 13,240 14,309
1/31/1999 13,393 14,479
2/28/1999 13,298 14,416
3/31/1999 13,300 14,436
4/30/1999 13,321 14,472
5/31/1999 13,198 14,388
6/30/1999 12,963 14,181
7/31/1999 12,943 14,233
8/31/1999 12,698 14,119
9/30/1999 12,597 14,125
10/31/1999 12,333 13,972
11/30/1999 12,422 14,120
12/31/1999 12,250 14,015
1/31/2000 12,110 13,954
2/29/2000 12,373 14,116
3/31/2000 12,762 14,425
4/30/2000 12,604 14,339
5/31/2000 12,453 14,265
6/30/2000 12,806 14,643
7/31/2000 13,022 14,847
8/31/2000 13,249 15,075
9/30/2000 13,127 14,997
10/31/2000 13,302 15,161
11/30/2000 13,433 15,275
12/31/2000 13,878 15,653
1/31/2001 13,927 15,808
2/28/2001 13,988 15,858
3/31/2001 14,074 16,000
4/30/2001 13,850 15,827
5/31/2001 14,025 15,997
6/30/2001 14,176 16,104
7/31/2001 14,385 16,343
8/31/2001 14,652 16,612
9/30/2001 14,427 16,556
10/31/2001 14,544 16,745
11/30/2001 14,460 16,612
12/31/2001 14,319 16,455
1/31/2002 14,499 16,740
2/28/2002 14,713 16,942
3/31/2002 14,414 16,610
4/30/2002 14,660 16,935
5/31/2002 14,740 17,038
6/30/2002 14,869 17,218
7/31/2002 15,021 17,439
8/31/2002 15,133 17,649
9/30/2002 15,446 18,035
10/31/2002 15,080 17,736
11/30/2002 15,039 17,663
12/31/2002 15,384 18,035
1/31/2003 15,264 17,990
2/28/2003 15,477 18,241
3/31/2003 15,429 18,252
4/30/2003 15,572 18,373
5/31/2003 15,873 18,803
6/30/2003 15,768 18,723
7/31/2003 15,389 18,068
8/31/2003 15,472 18,203
9/30/2003 15,827 18,738
10/31/2003 15,862 18,643
11/30/2003 16,061 18,838
12/31/2003 16,205 18,994
1/31/2004 16,208 19,102
</Table>
** Source: Thomson Financial. Investment operations commenced 3/2/94. The
chart uses closest month-end after inception. The chart compares the total
return of the Fund's Class B shares with that of the Lehman Brothers
Municipal Bond Index, a broad-based, unmanaged market index. Returns are
calculated by determining the percentage change in net asset value (NAV)
with all distributions reinvested. The lines on the chart represent total
returns of $10,000 hypothetical investments in the Fund and the Lehman
Brothers Municipal Bond Index. An investment in Class A shares on 3/14/94
at net asset value would have grown to $16,211 on January 31, 2004;
$15,439, including the 4.75% sales charge. The Index's total return does
not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index. The performance
graph and table above do not reflect the deduction of taxes that a
shareholder would incur on Fund distributions or the redemption of Fund
shares.
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS. For federal income tax
purposes, 95.02% of the total dividends paid by the Fund from net investment
income during the year ended January 31, 2004 was designated as an
exempt-interest dividend.
5
<Page>
EATON VANCE KANSAS MUNICIPALS FUND as of January 31, 2004
INVESTMENT UPDATE
MANAGEMENT UPDATE
[PHOTO OF THOMAS M. METZOLD]
Thomas M. Metzold
Portfolio Manager
- - The Kansas economy strengthened in 2004, characterized by a firmer labor
market and a rebounding manufacturing sector. Residential construction
remained fairly strong, the result of record low interest rates. In the farm
sector, dry weather kept the wheat harvest well below last year's. The
January 2004 jobless rate was 4.8%, up from 4.7% a year ago.
- - Insured* general obligations were the Portfolio's largest sector weighting at
January 31, 2004. These investments provided geographic diversification and
high quality among selected unified school districts.
- - Management had large investments in essential services bonds, including
insured* water and sewer revenue issues. These issues funded sewer and
waste-water facilities for Kansas counties and municipalities.
- - The Portfolio was selective within the hospital sector, given the industry's
low Medicare reimbursements. Management focused on insured* and non-insured
issues of well-managed facilities with sound financial fundamentals.
- - The Portfolio made structural changes to adjust to shifting market
conditions. Management maintained a well-diversified coupon allocation,
balancing higher-income housing and utility issues with
interest-rate-sensitive, low- and zero-coupon issues for appreciation
potential.
THE FUND
- - During the year ended January 31, 2004, the Fund's Class A and Class B shares
had total returns of 6.33% and 5.45%, respectively.(1) For Class A, this
return resulted from an increase in net asset value (NAV) per share to $10.68
on January 31, 2004 from $10.50 on January 31, 2003, and the reinvestment of
$0.471 per share in tax-free income.(2) For Class B, this return resulted
from an increase in NAV to $10.59 on January 31, 2004 from $10.42 on January
31, 2003, and the reinvestment of $0.390 per share in tax-free income.(2)
- - Based on the Fund's most recent dividends and NAVs on January 31, 2004 of
$10.68 per share for Class A and $10.59 for Class B, the distribution rates
were 4.59% and 3.85%, respectively.(3) The distribution rates of Class A and
Class B are equivalent to taxable rates of 7.55% and 6.33%, respectively.(4)
- - The SEC 30-day yields for Class A and Class B shares at January 31, 2004 were
3.61% and 3.03%, respectively.(5) The SEC 30-day yields of Class A and Class
B are equivalent to taxable yields of 5.94% and 4.98%, respectively.(4)
[CHART]
RATING DISTRIBUTION(6)
<Table>
Non-Rated 1.6%
AAA 86.2%
AA 5.9%
A 6.3%
</Table>
* Private insurance does not decrease the risk of loss of principal
associated with an insured investment.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Performance is for the stated time
period only; due to market volatility, the Fund's current performance may
be lower or higher.
FUND INFORMATION
AS OF JANUARY 31, 2004
<Table>
<Caption>
PERFORMANCE(7) Class A Class B
- -------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
One Year 6.33% 5.45%
Five Years 5.28 4.49
Life of Fund+ 5.75 5.21
SEC Average Annual Total Returns (including sales
charge or applicable CDSC)
One Year 1.31% 0.45%
Five Years 4.26 4.15
Life of Fund+ 5.23 5.21
</Table>
+ Inception date: Class A: 3/3/94; Class B: 3/2/94
[CHART]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE KANSAS
MUNICIPALS FUND CLASS B VS. THE LEHMAN BROTHERS MUNICIPAL BOND INDEX**
March 31, 1994 - January 31, 2004
KANSAS MUNICIPALS FUND- CLASS B
Inception: 3/2/94
<Table>
<Caption>
FUND FUND LEHMAN BROTHERS
VALUE AT VALUE WITH MUNICIPALS BOND
DATE NAV SALES CHARGE INDEX
- ------------------------------------------------------------------------------
3/31/1994 10,000 N/A 10,000
4/30/1994 10,136 10,085
5/31/1994 10,275 10,172
6/30/1994 10,162 10,110
7/31/1994 10,375 10,295
8/31/1994 10,393 10,331
9/30/1994 10,179 10,180
10/31/1994 9,933 9,999
11/30/1994 9,662 9,818
12/31/1994 9,928 10,034
1/31/1995 10,273 10,321
2/28/1995 10,617 10,621
3/31/1995 10,711 10,743
4/30/1995 10,704 10,756
5/31/1995 10,962 11,099
6/30/1995 10,810 11,002
7/31/1995 10,877 11,106
8/31/1995 10,998 11,247
9/30/1995 11,076 11,318
10/31/1995 11,266 11,483
11/30/1995 11,455 11,673
12/31/1995 11,567 11,785
1/31/1996 11,636 11,874
2/29/1996 11,523 11,794
3/31/1996 11,351 11,644
4/30/1996 11,328 11,611
5/31/1996 11,326 11,606
6/30/1996 11,421 11,733
7/31/1996 11,533 11,839
8/31/1996 11,544 11,836
9/30/1996 11,719 12,001
10/31/1996 11,821 12,137
11/30/1996 12,032 12,359
12/31/1996 11,947 12,307
1/31/1997 11,922 12,331
2/28/1997 12,033 12,444
3/31/1997 11,895 12,278
4/30/1997 12,011 12,381
5/31/1997 12,164 12,567
6/30/1997 12,284 12,701
7/31/1997 12,619 13,053
8/31/1997 12,472 12,930
9/30/1997 12,618 13,084
10/31/1997 12,664 13,168
11/30/1997 12,740 13,245
12/31/1997 12,907 13,439
1/31/1998 12,980 13,577
2/28/1998 12,970 13,581
3/31/1998 12,987 13,593
4/30/1998 12,922 13,532
5/31/1998 13,122 13,746
6/30/1998 13,133 13,800
7/31/1998 13,169 13,835
8/31/1998 13,351 14,049
9/30/1998 13,475 14,224
10/31/1998 13,445 14,224
11/30/1998 13,482 14,273
12/31/1998 13,482 14,309
1/31/1999 13,624 14,479
2/28/1999 13,556 14,416
3/31/1999 13,558 14,436
4/30/1999 13,594 14,472
5/31/1999 13,498 14,388
6/30/1999 13,250 14,181
7/31/1999 13,256 14,233
8/31/1999 13,052 14,119
9/30/1999 12,937 14,125
10/31/1999 12,715 13,972
11/30/1999 12,845 14,120
12/31/1999 12,674 14,015
1/31/2000 12,551 13,954
2/29/2000 12,802 14,116
3/31/2000 13,165 14,425
4/30/2000 13,050 14,339
5/31/2000 12,927 14,265
6/30/2000 13,310 14,643
7/31/2000 13,542 14,847
8/31/2000 13,784 15,075
9/30/2000 13,635 14,997
10/31/2000 13,811 15,161
11/30/2000 13,973 15,275
12/31/2000 14,462 15,653
1/31/2001 14,498 15,808
2/28/2001 14,560 15,858
3/31/2001 14,663 16,000
4/30/2001 14,424 15,827
5/31/2001 14,599 15,997
6/30/2001 14,719 16,104
7/31/2001 14,957 16,343
8/31/2001 15,208 16,612
9/30/2001 15,085 16,556
10/31/2001 15,274 16,745
11/30/2001 15,100 16,612
12/31/2001 14,943 16,455
1/31/2002 15,091 16,740
2/28/2002 15,319 16,942
3/31/2002 14,944 16,610
4/30/2002 15,308 16,935
5/31/2002 15,401 17,038
6/30/2002 15,543 17,218
7/31/2002 15,708 17,439
8/31/2002 15,894 17,649
9/30/2002 16,341 18,035
10/31/2002 15,883 17,736
11/30/2002 15,810 17,663
12/31/2002 16,260 18,035
1/31/2003 16,093 17,990
2/28/2003 16,256 18,241
3/31/2003 16,269 18,252
4/30/2003 16,488 18,373
5/31/2003 16,724 18,803
6/30/2003 16,651 18,723
7/31/2003 16,087 18,068
8/31/2003 16,170 18,203
9/30/2003 16,633 18,738
10/31/2003 16,652 18,643
11/30/2003 16,819 18,838
12/31/2003 16,947 18,994
1/31/2004 16,970 19,102
</Table>
** Source: Thomson Financial. Investment operations commenced 3/2/94. The
chart uses closest month-end after inception. The chart compares the total
return of the Fund's Class B shares with that of the Lehman Brothers
Municipal Bond Index, a broad-based, unmanaged market index. Returns are
calculated by determining the percentage change in net asset value (NAV)
with all distributions reinvested. The lines on the chart represent total
returns of $10,000 hypothetical investments in the Fund and the Lehman
Brothers Municipal Bond Index. An investment in Class A shares on 3/3/94 at
net asset value would have grown to $17,410 on January 31, 2004; $16,581,
including the 4.75% sales charge. The Index's total return does not reflect
commissions or expenses that would have been incurred if an investor
individually purchased or sold the securities represented in the Index. It
is not possible to invest directly in an Index. The performance graph and
table above do not reflect the deduction of taxes that a shareholder would
incur on Fund distributions or the redemption of Fund shares.
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS. For federal income tax
purposes, 100.00% of the total dividends paid by the Fund from net investment
income during the year ended January 31, 2004 was designated as an
exempt-interest dividend.
6
<Page>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2004
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
AS OF JANUARY 31, 2004
<Table>
<Caption>
FLORIDA INSURED FUND HAWAII FUND KANSAS FUND
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investment in Municipals Portfolio --
Identified cost $ 45,400,055 $ 18,235,985 $ 22,023,848
Unrealized appreciation 2,769,575 1,551,877 1,311,106
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT IN PORTFOLIO, AT VALUE $ 48,169,630 $ 19,787,862 $ 23,334,954
- --------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold $ 92,589 $ 34,103 $ --
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 48,262,219 $ 19,821,965 $ 23,334,954
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed $ 219,420 $ 27,073 $ 130,827
Dividends payable 96,462 33,780 38,330
Payable to affiliate for service fees 8,111 3,373 3,982
Accrued expenses 24,202 19,913 21,762
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 348,195 $ 84,139 $ 194,901
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 47,914,024 $ 19,737,826 $ 23,140,053
- --------------------------------------------------------------------------------------------------------------------------------
SOURCES OF NET ASSETS
Paid-in capital $ 45,920,007 $ 18,791,691 $ 22,116,095
Accumulated net realized loss from Portfolio
(computed on the basis of identified cost) (750,733) (571,962) (295,238)
Accumulated undistributed (distributions in excess of)
net investment income (24,825) (33,780) 8,090
Net unrealized appreciation from Portfolio
(computed on the basis of identified cost) 2,769,575 1,551,877 1,311,106
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL $ 47,914,024 $ 19,737,826 $ 23,140,053
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSETS $ 20,845,143 $ 2,442,447 $ 11,179,314
SHARES OUTSTANDING 1,806,065 246,358 1,046,895
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of beneficial interest
outstanding) $ 11.54 $ 9.91 $ 10.68
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 95.25 of net asset value per share) $ 12.12 $ 10.40 $ 11.21
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSETS $ 27,068,881 $ 17,295,379 $ 11,960,739
SHARES OUTSTANDING 2,371,268 1,723,323 1,129,816
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of beneficial interest
outstanding) $ 11.42 $ 10.04 $ 10.59
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
On sales of $25,000 or more, the offering price of Class A shares is reduced.
See notes to financial statements
7
<Page>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 2004
<Table>
<Caption>
FLORIDA INSURED FUND HAWAII FUND KANSAS FUND
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest allocated from Portfolio $ 2,306,595 $ 986,810 $ 1,233,516
Expenses allocated from Portfolio (166,394) (71,126) (89,165)
- --------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME FROM PORTFOLIO $ 2,140,201 915,684 1,144,351
- --------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Trustees fees and expenses $ 175 $ 175 $ 175
Distribution and service fees
Class A 33,258 2,138 22,155
Class B 253,334 166,168 112,752
Legal and accounting services 15,182 18,419 15,094
Printing and postage 6,823 4,268 6,105
Custodian fee 9,275 7,988 7,988
Transfer and dividend disbursing agent fees 14,149 9,387 11,727
Registration fees 860 121 608
Miscellaneous 2,590 2,101 2,594
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES $ 335,646 $ 210,765 $ 179,198
- --------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 1,804,555 $ 704,919 $ 965,153
- --------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 126,154 $ (108,604) $ (84,189)
Financial futures contracts (119,764) (41,838) 77,203
Interest rate swap contracts -- -- (224,550)
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) $ 6,390 $ (150,442) $ (231,536)
- --------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 556,216 $ 521,724 $ 627,805
Financial futures contracts (190,111) 24,029 (78,804)
- --------------------------------------------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 366,105 $ 545,753 $ 549,001
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 372,495 $ 395,311 $ 317,465
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,177,050 $ 1,100,230 $ 1,282,618
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
8
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JANUARY 31, 2004
<Table>
<Caption>
INCREASE (DECREASE) IN NET ASSETS FLORIDA INSURED FUND HAWAII FUND KANSAS FUND
- --------------------------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 1,804,555 $ 704,919 $ 965,153
Net realized gain (loss) 6,390 (150,442) (231,536)
Net change in unrealized appreciation (depreciation) 366,105 545,753 549,001
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,177,050 $ 1,100,230 $ 1,282,618
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (793,020) $ (48,319) $ (492,307)
Class B (1,076,999) (680,932) (440,160)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (1,870,019) $ (729,251) $ (932,467)
- --------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 9,670,072 $ 1,831,197 $ 3,160,500
Class B 6,773,275 1,126,959 1,304,646
Net asset value of shares issued to shareholders in payment of
distributions declared
Class A 345,796 27,466 309,546
Class B 470,176 373,004 265,243
Cost of shares redeemed
Class A (2,775,835) (128,216) (2,812,738)
Class B (3,983,037) (1,729,573) (1,037,053)
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS $ 10,500,447 $ 1,500,837 $ 1,190,144
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 10,807,478 $ 1,871,816 $ 1,540,295
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of year $ 37,106,546 $ 17,866,010 $ 21,599,758
- --------------------------------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 47,914,024 $ 19,737,826 $ 23,140,053
- --------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS
IN EXCESS OF) NET INVESTMENT INCOME
INCLUDED IN NET ASSETS
AT END OF YEAR $ (24,825) $ (33,780) $ 8,090
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
9
<Page>
<Table>
<Caption>
INCREASE (DECREASE) IN NET ASSETS FLORIDA INSURED FUND HAWAII FUND KANSAS FUND
- --------------------------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 1,427,816 $ 722,412 $ 781,638
Net realized loss (276,075) (153,260) (48,031)
Net change in unrealized appreciation (depreciation) 971,241 362,410 472,540
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,122,982 $ 931,562 $ 1,206,147
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (513,199) $ (30,702) $ (363,237)
Class B (890,709) (707,353) (387,376)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (1,403,908) $ (738,055) $ (750,613)
- --------------------------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 4,966,529 $ 148,297 $ 4,384,676
Class B 6,194,928 2,346,564 2,139,328
Net asset value of shares issued to shareholders in payment of
distributions declared
Class A 186,091 14,005 233,613
Class B 304,731 352,996 226,328
Cost of shares redeemed
Class A (1,006,466) (12,430) (548,637)
Class B (3,928,291) (2,754,938) (1,315,282)
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS $ 6,717,522 $ 94,494 $ 5,120,026
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 7,436,596 $ 288,001 $ 5,575,560
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of year $ 29,669,950 $ 17,578,009 $ 16,024,198
- --------------------------------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 37,106,546 $ 17,866,010 $ 21,599,758
- --------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS
IN EXCESS OF) NET INVESTMENT INCOME
INCLUDED IN NET ASSETS
AT END OF YEAR $ 56,159 $ (32,895) $ (13,740)
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
10
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
FLORIDA INSURED FUND -- CLASS A
----------------------------------------------------------------------
YEAR ENDED JANUARY 31,
----------------------------------------------------------------------
2004(1) 2003 2002(1)(2) 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year $ 11.430 $ 11.170 $ 11.140 $ 10.070 $ 11.540
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 0.531 $ 0.554 $ 0.546 $ 0.527 $ 0.541
Net realized and unrealized gain (loss) 0.129 0.256 0.026 1.084 (1.470)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.660 $ 0.810 $ 0.572 $ 1.611 $ (0.929)
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
From net investment income $ (0.550) $ (0.550) $ (0.542) $ (0.541) $ (0.541)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.550) $ (0.550) $ (0.542) $ (0.541) $ (0.541)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 11.540 $ 11.430 $ 11.170 $ 11.140 $ 10.070
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) 5.90% 7.40% 5.24% 16.38% (8.24)%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $ 20,845 $ 13,499 $ 9,114 $ 5,180 $ 5,629
Ratios (As a percentage of average daily net assets):
Expenses(4) 0.72% 0.70% 0.76% 0.91% 0.69%
Expenses after custodian fee reduction(4) 0.70% 0.69% 0.72% 0.87% 0.65%
Net investment income 4.62% 4.90% 4.88% 4.93% 5.02%
Portfolio Turnover of the Portfolio 19% 16% 18% 8% 34%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income per share was computed using average shares
outstanding.
(2) The Fund, through its investment in the Portfolio, has adopted the
provisions of the revised AICPA Audit and Accounting Guide for Investment
Companies and began using the interest method to amortize premiums on
fixed-income securities. The effect of this change for the year ended
January 31, 2002 was to increase net investment income per share by $0.004,
decrease net realized and unrealized gains per share by $0.004 and increase
the ratio of net investment income to average net assets from 4.84% to
4.88%. Per share data and ratios for the periods prior to February 1, 2001
have not been restated to reflect this change in presentation.
(3) Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. Total return is
not computed on an annualized basis.
(4) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
See notes to financial statements
11
<Page>
<Table>
<Caption>
FLORIDA INSURED FUND -- CLASS B
----------------------------------------------------------------------
YEAR ENDED JANUARY 31,
----------------------------------------------------------------------
2004(1) 2003 2002(1)(2) 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year $ 11.300 $ 11.050 $ 11.020 $ 9.950 $ 11.400
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 0.442 $ 0.466 $ 0.460 $ 0.440 $ 0.452
Net realized and unrealized gain (loss) 0.138 0.244 0.022 1.080 (1.456)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.580 $ 0.710 $ 0.482 $ 1.520 $ (1.004)
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
From net investment income $ (0.460) $ (0.460) $ (0.452) $ (0.450) $ (0.446)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.460) $ (0.460) $ (0.452) $ (0.450) $ (0.446)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 11.420 $ 11.300 $ 11.050 $ 11.020 $ 9.950
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) 5.22% 6.54% 4.43% 15.57% (8.97)%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $ 27,069 $ 23,608 $ 20,556 $ 20,131 $ 19,914
Ratios (As a percentage of average daily net assets):
Expenses(4) 1.47% 1.45% 1.51% 1.66% 1.50%
Expenses after custodian fee reduction(4) 1.45% 1.44% 1.47% 1.62% 1.46%
Net investment income 3.89% 4.18% 4.15% 4.18% 4.22%
Portfolio Turnover of the Portfolio 19% 16% 18% 8% 34%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income per share was computed using average shares
outstanding.
(2) The Fund, through its investment in the Portfolio, has adopted the
provisions of the revised AICPA Audit and Accounting Guide for Investment
Companies and began using the interest method to amortize premiums on
fixed-income securities. The effect of this change for the year ended
January 31, 2002 was to increase net investment income per share by $0.004,
decrease net realized and unrealized gains per share by $0.004 and increase
the ratio of net investment income to average net assets from 4.11% to
4.15%. Per share data and ratios for the periods prior to February 1, 2001
have not been restated to reflect this change in presentation.
(3) Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. Total return is
not computed on an annualized basis.
(4) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
See notes to financial statements
12
<Page>
<Table>
<Caption>
HAWAII FUND -- CLASS A
----------------------------------------------------------------------
YEAR ENDED JANUARY 31,
----------------------------------------------------------------------
2004(1) 2003(1) 2002(1)(2) 2001(1) 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year $ 9.700 $ 9.580 $ 9.580 $ 8.690 $ 10.050
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 0.433 $ 0.454 $ 0.453 $ 0.466 $ 0.487
Net realized and unrealized gain (loss) 0.230 0.124 0.005 0.885 (1.362)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.663 $ 0.578 $ 0.458 $ 1.351 $ (0.875)
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
From net investment income $ (0.453) $ (0.458) $ (0.458) $ (0.461) $ (0.485)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.453) $ (0.458) $ (0.458) $ (0.461) $ (0.485)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 9.910 $ 9.700 $ 9.580 $ 9.580 $ 8.690
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) 6.99% 6.14% 4.87% 15.91% (8.95)%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+
Net assets, end of year (000's omitted) $ 2,442 $ 694 $ 537 $ 458 $ 258
Ratios (As a percentage of average daily net assets):
Net expenses(4) 0.83% 0.80% 0.97% 0.77% 0.48%
Net expenses after custodian fee reduction(4) 0.81% 0.75% 0.94% 0.70% 0.46%
Net investment income 4.41% 4.68% 4.70% 5.07% 5.20%
Portfolio Turnover of the Portfolio 4% 11% 22% 13% 20%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
+ The operating expenses of the Fund and the Portfolio may reflect a
reduction of the investment adviser fee, an allocation of expenses to the
Investment Adviser, or both. Had such actions not been taken, the ratios
and net investment income per share would have been as follows:
<Table>
Ratios (As a percentage of average daily net assets):
Expenses(4) 0.82% 0.84%
Expenses after custodian fee reduction(4) 0.75% 0.82%
Net investment income 5.02% 4.84%
Net investment income per share $ 0.461 $ 0.453
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income per share was computed using average shares
outstanding.
(2) The Fund, through its investment in the Portfolio, has adopted the
provisions of the revised AICPA Audit and Accounting Guide for Investment
Companies and began using the interest method to amortize premiums on
fixed-income securities. The effect of this change for the year ended
January 31, 2002 was to increase net investment income per share by $0.003,
decrease net realized and unrealized gains per share by $0.003 and increase
the ratio of net investment income to average net assets from 4.67% to
4.70%. Per share data and ratios for the periods prior to February 1, 2001
have not been restated to reflect this change in presentation.
(3) Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. Total return is
not computed on an annualized basis.
(4) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
See notes to financial statements
13
<Page>
<Table>
<Caption>
HAWAII FUND -- CLASS B
----------------------------------------------------------------------
YEAR ENDED JANUARY 31,
----------------------------------------------------------------------
2004(1) 2003(1) 2002(1)(2) 2001(1) 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year $ 9.830 $ 9.720 $ 9.720 $ 8.820 $ 10.200
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 0.374 $ 0.388 $ 0.389 $ 0.404 $ 0.430
Net realized and unrealized gain (loss) 0.223 0.117 0.006 0.896 (1.388)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.597 $ 0.505 $ 0.395 $ 1.300 $ (0.958)
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
From net investment income $ (0.387) $ (0.395) $ (0.395) $ (0.400) $ (0.422)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.387) $ (0.395) $ (0.395) $ (0.400) $ (0.422)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 10.040 $ 9.830 $ 9.720 $ 9.720 $ 8.820
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) 6.18% 5.28% 4.11% 15.00% (9.58)%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+
Net assets, end of year (000's omitted) $ 17,295 $ 17,172 $ 17,041 $ 18,200 $ 16,669
Ratios (As a percentage of average daily net assets):
Net expenses(4) 1.58% 1.55% 1.73% 1.54% 1.20%
Net expenses after custodian fee reduction(4) 1.56% 1.50% 1.70% 1.47% 1.18%
Net investment income 3.76% 3.95% 3.98% 4.35% 4.51%
Portfolio Turnover of the Portfolio 4% 11% 22% 13% 20%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
+ The operating expenses of the Fund and the Portfolio may reflect a
reduction of the investment adviser fee, an allocation of expenses to the
Investment Adviser, or both. Had such actions not been taken, the ratios
and net investment income per share would have been as follows:
<Table>
Ratios (As a percentage of average daily net assets):
Expenses(4) 1.59% 1.56%
Expenses after custodian fee reduction(4) 1.52% 1.54%
Net investment income 4.30% 4.15%
Net investment income per share $ 0.399 $ 0.396
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income per share was computed using average shares
outstanding.
(2) The Fund, through its investment in the Portfolio, has adopted the
provisions of the revised AICPA Audit and Accounting Guide for Investment
Companies and began using the interest method to amortize premiums on
fixed-income securities. The effect of this change for the year ended
January 31, 2002 was to increase net investment income per share by $0.003,
decrease net realized and unrealized gains per share by $0.003 and increase
the ratio of net investment income to average net assets from 3.95% to
3.98%. Per share data and ratios for the periods prior to February 1, 2001
have not been restated to reflect this change in presentation.
(3) Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. Total return is
not computed on an annualized basis.
(4) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
See notes to financial statements
14
<Page>
<Table>
<Caption>
KANSAS FUND -- CLASS A
----------------------------------------------------------------------
YEAR ENDED JANUARY 31,
----------------------------------------------------------------------
2004(1) 2003(1) 2002(1)(2) 2001(1) 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of period $ 10.500 $ 10.230 $ 10.200 $ 9.230 $ 10.470
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 0.487 $ 0.478 $ 0.458 $ 0.488 $ 0.505
Net realized and unrealized gain (loss) 0.164 0.255 0.042 0.976 (1.231)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.651 $ 0.733 $ 0.500 $ 1.464 $ (0.726)
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
From net investment income $ (0.471) $ (0.463) $ (0.470) $ (0.494) $ (0.509)
From net realized gain -- -- -- -- (0.005)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.471) $ (0.463) $ (0.470) $ (0.494) $ (0.514)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 10.680 $ 10.500 $ 10.230 $ 10.200 $ 9.230
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) 6.33% 7.30% 4.98% 16.25% (7.12)%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+
Net assets, end of period (000's omitted) $ 11,179 $ 10,354 $ 6,091 $ 3,110 $ 2,455
Ratios (As a percentage of average daily net assets):
Net expenses(4) 0.79% 0.86% 1.03% 0.74% 0.53%
Net expenses after custodian fee reduction(4) 0.78% 0.83% 0.99% 0.73% 0.48%
Net investment income 4.59% 4.58% 4.46% 5.03% 5.12%
Portfolio Turnover of the Portfolio 20% 17% 18% 7% 24%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
+ The operating expenses of the Fund and the Portfolio may reflect a
reduction of the investment adviser fee, an allocation of expenses to the
Investment Adviser, or both. Had such actions not been taken, the ratios
and net investment income per share would have been as follows:
<Table>
Ratios (As a percentage of average daily net assets):
Expenses(4) 1.06% 0.98% 0.97%
Expenses after custodian fee reduction(4) 1.02% 0.97% 0.92%
Net investment income 4.43% 4.79% 4.68%
Net investment income per share $ 0.455 $ 0.465 $ 0.462
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income per share was computed using average shares
outstanding.
(2) The Fund, through its investment in the Portfolio, has adopted the
provisions of the revised AICPA Audit and Accounting Guide for Investment
Companies and began using the interest method to amortize premiums on
fixed-income securities. The effect of this change for the year ended
January 31, 2002 was to increase net investment income per share by $0.007,
decrease net realized and unrealized gains per share by $0.007 and increase
the ratio of net investment income to average net assets from 4.39% to
4.46%. Per share data and ratios for the periods prior to February 1, 2001
have not been restated to reflect this change in presentation.
(3) Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. Total return is
not computed on an annualized basis.
(4) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
See notes to financial statements
15
<Page>
<Table>
<Caption>
KANSAS FUND -- CLASS B
----------------------------------------------------------------------
YEAR ENDED JANUARY 31,
----------------------------------------------------------------------
2004(1) 2003(1) 2002(1)(2) 2001(1) 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year $ 10.420 $ 10.140 $ 10.120 $ 9.140 $ 10.370
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 0.404 $ 0.400 $ 0.380 $ 0.415 $ 0.424
Net realized and unrealized gain (loss) 0.156 0.263 0.029 0.975 (1.225)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.560 $ 0.663 $ 0.409 $ 1.390 $ (0.801)
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
From net investment income $ (0.390) $ (0.383) $ (0.389) $ (0.410) $ (0.424)
From net realized gain -- -- -- -- (0.005)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.390) $ (0.383) $ (0.389) $ (0.410) $ (0.429)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 10.590 $ 10.420 $ 10.140 $ 10.120 $ 9.140
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) 5.45% 6.64% 4.09% 15.51% (7.87)%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+
Net assets, end of year (000's omitted) $ 11,961 $ 11,246 $ 9,933 $ 9,147 $ 9,568
Ratios (As a percentage of average daily net assets):
Net expenses(4) 1.54% 1.61% 1.78% 1.48% 1.33%
Net expenses after custodian fee reduction(4) 1.53% 1.58% 1.74% 1.47% 1.28%
Net investment income 3.85% 3.87% 3.74% 4.32% 4.32%
Portfolio Turnover of the Portfolio 20% 17% 18% 7% 24%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
+ The operating expenses of the Fund and the Portfolio may reflect a
reduction of the investment adviser fee, an allocation of expenses to the
Investment Adviser, or both. Had such actions not been taken, the ratios
and net investment income per share would have been as follows:
<Table>
Ratios (As a percentage of average daily net assets):
Expenses(4) 1.81% 1.72% 1.77%
Expenses after custodian fee reduction(4) 1.77% 1.71% 1.72%
Net investment income 3.71% 4.08% 3.88%
Net investment income per share $ 0.378 $ 0.392 $ 0.381
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income per share was computed using average shares
outstanding.
(2) The Fund, through its investment in the Portfolio, has adopted the
provisions of the revised AICPA Audit and Accounting Guide for Investment
Companies and began using the interest method to amortize premiums on
fixed-income securities. The effect of this change for the year ended
January 31, 2002 was to increase net investment income per share by $0.007,
decrease net realized and unrealized gains per share by $0.007 and increase
the ratio of net investment income to average net assets from 3.67% to
3.74%. Per share data and ratios for the periods prior to February 1, 2001
have not been restated to reflect this change in presentation.
(3) Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. Total return is
not computed on an annualized basis.
(4) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
See notes to financial statements
16
<Page>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2004
NOTES TO FINANCIAL STATEMENTS
1 SIGNIFICANT ACCOUNTING POLICIES
Eaton Vance Municipals Trust II (the Trust) is an entity of the type
commonly known as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Trust presently consists of four Funds, each
diversified, three of which are included in these financial statements.
They include Eaton Vance Florida Insured Municipals Fund (Florida Insured
Fund), Eaton Vance Hawaii Municipals Fund (Hawaii Fund) and Eaton Vance
Kansas Municipals Fund (Kansas Fund). The Funds offer two classes of
shares. Class A shares are generally sold subject to a sales charge imposed
at time of purchase. Class B shares are sold at net asset value and are
subject to a declining contingent deferred sales charge (see Note 6). The
Trustees have adopted a conversion feature pursuant to which Class B shares
of each Fund automatically convert to Class A shares eight years after
their purchase as described in each Fund's prospectus. Each class
represents a pro rata interest in the Fund, but votes separately on
class-specific matters and (as noted below) is subject to different
expenses. Realized and unrealized gains and losses are allocated daily to
each class of shares based on the relative net assets of each class to the
total net assets of the Fund. Net investment income, other than class
specific expenses, is allocated daily to each class of shares based upon
the ratio of the value of each class' paid shares to the total value of all
paid shares. Each class of shares differs in its distribution plan and
certain other class specific expenses. Each Fund invests all of its
investable assets in interests in a separate corresponding open-end
management investment company (a Portfolio), a New York Trust, having the
same investment objective as its corresponding Fund. The Florida Insured
Fund invests its assets in the Florida Insured Municipals Portfolio, the
Hawaii Fund invests its assets in the Hawaii Municipals Portfolio and the
Kansas Fund invests its assets in the Kansas Municipals Portfolio. The
value of each Fund's investment in its corresponding Portfolio reflects the
Fund's proportionate interest in the net assets of that Portfolio
(approximately 99.9% at January 31, 2004 for each Fund). The performance of
each Fund is directly affected by the performance of its corresponding
Portfolio. The financial statements of each Portfolio, including the
portfolio of investments, are included elsewhere in this report and should
be read in conjunction with each Fund's financial statements.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in
the United States of America.
A INVESTMENT VALUATIONS -- Valuation of securities by the Portfolios is
discussed in Note 1A of the Portfolios' Notes to Financial Statements,
which are included elsewhere in this report.
B INCOME -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount.
C FEDERAL TAXES -- Each Fund's policy is to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute to shareholders each year all of its taxable and tax-exempt
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is necessary. At January 31,
2004, the Funds, for federal income tax purposes, had capital loss
carryovers which will reduce each Fund's taxable income arising from future
net realized gain on investments, if any, to the extent permitted by the
Internal Revenue Code, and thus will reduce the amount of distributions to
shareholders which would otherwise be necessary to relieve the Funds of any
liability for federal income or excise tax. The amounts and expiration
dates of the capital loss carryovers for each Fund are as follows:
<Table>
<Caption>
FUND AMOUNT EXPIRES
--------------------------------------------------------
Florida Insured $ 18,493 January 31, 2008
375,493 January 31, 2009
32,368 January 31, 2010
216,412 January 31, 2011
Hawaii 26,381 January 31, 2005
75,392 January 31, 2008
201,940 January 31, 2009
182,699 January 31, 2011
93,535 January 31, 2012
Kansas 32,566 January 31, 2011
</Table>
Dividends paid by each Fund from net interest on tax-exempt municipal bonds
allocated from its corresponding Portfolio are not includable by
shareholders as gross income for federal income tax purposes because each
Fund and Portfolio intend to meet certain requirements of the Internal
Revenue Code applicable to regulated investment companies which will enable
the Funds to pay exempt-interest dividends. The portion of such interest,
if any, earned on private activity bonds issued after August 7, 1986 may be
considered a tax preference item to shareholders.
17
<Page>
Additionally, at January 31, 2004, Florida Insured Fund, Hawaii Fund and
Kansas Fund had net capital losses of $338,974, $74,762 and $398,112
attributable to security transactions incurred after October 31, 2003.
These net capital losses are treated as arising on the first day of each
Fund's taxable year ending January 31, 2005.
D USE OF ESTIMATES -- The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States of America 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.
E EXPENSES -- The majority of expenses of the Trust are directly
identifiable to an individual fund. Expenses which are not readily
identifiable to a specific fund are allocated taking into consideration,
among other things, the nature and type of expense and the relative size of
the funds.
F INDEMNIFICATIONS -- Under the Trust's organizational documents, its
officers and Trustees may be indemnified against certain liabilities and
expenses arising out of the performance of their duties to the Fund and
shareholders are indemnified against personal liability for obligations of
the Trust. Additionally, in the normal course of business, the Fund enters
into agreements with service providers that may contain indemnification
clauses. The Fund's maximum exposure under these arrangements is unknown as
this would involve future claims that may be made against the Fund that
have not yet occurred.
G EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as
custodian to the Funds and the Portfolios. Pursuant to the respective
custodian agreements, IBT receives a fee reduced by credits which are
determined based on the average daily cash balances the Funds and
Portfolios maintain with IBT. All significant credit balances used to
reduce the Funds' custodian fees are reported as a reduction of total
expenses in the statements of operations.
H OTHER -- Investment transactions are accounted for on a trade-date basis.
2 DISTRIBUTIONS TO SHAREHOLDERS
The net income of each Fund is determined daily and substantially all of
the net income so determined is declared as a dividend to shareholders of
record at the time of declaration. Distributions are declared separately
for each class of shares. Distributions are paid monthly. Distributions of
allocated realized capital gains, if any, are made at least annually.
Shareholders may reinvest income and capital gain distributions in
additional shares of the same class of a Fund at the net asset value as of
the reinvestment date. Distributions are paid in the form of additional
shares of the same class or, at the election of the shareholder, in cash.
The Funds distinguish between distributions on a tax basis and a financial
reporting basis. Accounting principles generally accepted in the United
States of America require that only distributions in excess of tax basis
earnings and profits be reported in the financial statements as a return of
capital. Permanent differences between book and tax accounting relating to
distributions are reclassified to paid-in capital. These differences relate
primarily to the method of amortizing premiums and, for the Hawaii Fund, to
expired capital loss carryforwards.
3 SHARES OF BENEFICIAL INTEREST
The Funds' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Such shares may be issued in a number of different series (such as
the Funds) and classes. Transactions in Fund shares were as follows:
<Table>
<Caption>
FLORIDA INSURED
------------------------
YEAR ENDED JANUARY 31,
------------------------
CLASS A 2004 2003
----------------------------------------------------------------------------
Sales 837,788 437,583
Issued to shareholders electing to
receive payments of distributions
in Fund shares 30,096 16,408
Redemptions (242,778) (88,671)
----------------------------------------------------------------------------
NET INCREASE 625,106 365,320
----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
FLORIDA INSURED
------------------------
YEAR ENDED JANUARY 31,
------------------------
CLASS B 1997 1996
----------------------------------------------------------------------------
Sales 590,935 551,733
Issued to shareholders electing to
receive payments of distributions
in Fund shares 41,306 27,241
Redemptions (349,517) (350,912)
----------------------------------------------------------------------------
NET INCREASE 282,724 228,062
----------------------------------------------------------------------------
</Table>
18
<Page>
<Table>
<Caption>
HAWAII
------------------------
YEAR ENDED JANUARY 31,
------------------------
CLASS A 2004 2003
----------------------------------------------------------------------------
Sales 184,913 15,421
Issued to shareholders electing to
receive payments of distributions
in Fund shares 2,797 1,444
Redemptions (12,910) (1,291)
----------------------------------------------------------------------------
NET INCREASE 174,800 15,574
----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
HAWAII
------------------------
YEAR ENDED JANUARY 31,
------------------------
CLASS B 2004 2003
----------------------------------------------------------------------------
Sales 113,422 238,065
Issued to shareholders electing to
receive payments of distributions
in Fund shares 37,496 35,956
Redemptions (174,545) (281,187)
----------------------------------------------------------------------------
NET DECREASE (23,627) (7,166)
----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
KANSAS
------------------------
YEAR ENDED JANUARY 31,
------------------------
CLASS A 2004 2003
----------------------------------------------------------------------------
Sales 297,932 420,781
Issued to shareholders electing to
receive payments of distributions
in Fund shares 29,207 22,362
Redemptions (265,887) (53,123)
----------------------------------------------------------------------------
NET INCREASE 61,252 390,020
----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
KANSAS
------------------------
YEAR ENDED JANUARY 31,
------------------------
CLASS B 2004 2003
----------------------------------------------------------------------------
Sales 123,889 207,207
Issued to shareholders electing to
receive payments of distributions
in Fund shares 25,196 21,907
Redemptions (99,066) (128,926)
----------------------------------------------------------------------------
NET INCREASE 50,019 100,188
----------------------------------------------------------------------------
</Table>
4 TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves as the Administrator of each Fund, but
receives no compensation. Each of the Portfolios has engaged Boston
Management and Research (BMR), a subsidiary of EVM, to render investment
advisory services. See Note 2 of the Portfolios' Notes to Financial
Statements which are included elsewhere in this report. Except as to
Trustees of the Funds and Portfolios who are not members of EVM's or BMR's
organization, officers and Trustees receive remuneration for their services
to each Fund out of the investment adviser fee earned by BMR. EVM serves as
the sub-transfer agent of each Fund and receives from the transfer agent an
aggregate fee based upon the actual expenses incurred by EVM in the
performance of those services. For the year ended January 31, 2004, EVM
earned $1,139, $710, and $1,090 in sub-transfer agent fees from Florida
Insured Fund, Hawaii Fund and Kansas Fund, respectively. The Funds were
informed that Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM and
the Funds' principal underwriter, received $13,168, $972 and $5,296 as its
portion of the sales charge on sales of Class A shares from Florida Insured
Fund, Hawaii Fund and Kansas Fund, respectively, for the year ended January
31, 2004.
Certain officers and Trustees of the Funds and of the Portfolios are
officers of the above organizations.
5 DISTRIBUTION AND SERVICE PLANS
Each Fund has in effect a distribution plan for Class B (Class B Plan)
pursuant to Rule 12b-1 under the Investment Company Act of 1940, and a
service plan for Class A (Class A Plan), (collectively, the Plans). The
Class B Plan requires each Fund to pay EVD amounts equal to 0.75% of each
Fund's average daily net assets attributable to Class B shares, for
providing ongoing distribution services and facilities to the respective
Fund. Each Fund will automatically discontinue payments to EVD during any
period in which there are no outstanding Uncovered Distribution Charges,
which are equivalent to the sum of (i) 5% of the aggregate amount received
by the Fund for Class B shares sold plus (ii) interest calculated by
applying the rate of 1% over the prevailing prime rate to the outstanding
balance of Uncovered Distribution Charges of EVD reduced by the aggregate
amount of contingent deferred sales charges (see Note 6) and amounts
theretofore paid to EVD. The amount payable to EVD with respect to each day
is accrued on such day as a liability of each Class B and, accordingly,
reduces net assets. For the year ended January 31, 2004, the Class B shares
of the Florida Insured Fund, Hawaii Fund and Kansas Fund paid
19
<Page>
$200,001, $131,185 and $89,015, respectively, to EVD, representing 0.75% of
each Fund's Class B average daily net assets. At January 31, 2004, the
amount of Uncovered Distribution Charges of EVD calculated under the Class
B Plans for Florida Insured Fund, Hawaii Fund and Kansas Fund were
approximately $820,000, $500,000 and $291,000, respectively.
The Plans authorize each Fund to make payments of service fees to EVD,
investment dealers and other persons in amounts not exceeding 0.20% of each
Fund's average daily net assets attributable to Class A and Class B shares
for each fiscal year. Service fee payments will be made for personal
services and/or the maintenance of shareholder accounts. Service fees are
separate and distinct from the sales commissions and distribution fees
payable by each Fund to EVD, and as such are not subject to automatic
discontinuance when there are no outstanding Uncovered Distribution Charges
of EVD. Service fee payments for the year ended January 31, 2004 for the
Florida Insured Fund, Hawaii Fund and Kansas Fund amounted to $33,258,
$2,138, and $22,155, respectively, for Class A shares, and $53,333, $34,983
and $23,737, respectively, for Class B shares.
Certain officers and Trustees of the Funds are officers or directors of
EVD.
6 CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) generally is imposed on
redemptions of Class B shares made within six years of purchase. Class A
shares may be subject to a 1% CDSC if redeemed within 18 months of purchase
(depending on the circumstances of purchase). Generally, the CDSC is based
upon the lower of the net asset value at date of redemption or date of
purchase. No charge is levied on shares acquired by reinvestment of
dividends or capital gains distributions. The Class B CDSC is imposed at
declining rates that begin at 5% in the case of redemptions in the first
and second year after purchase, declining one percentage point each
subsequent year. No CDSC is levied on shares which have been sold to EVM or
its affiliates or to their respective employees or clients and may be
waived under certain other limited conditions. CDSC charges received on
Class B redemptions are paid to EVD to reduce the amount of Uncovered
Distribution Charges calculated under each Fund's Class B Distribution
Plan. CDSC charges received on Class B redemptions when no Uncovered
Distribution Charges exist for Class B will be credited to each Fund. EVD
received approximately $41,000, $9,000 and $15,000 of CDSC paid by Class B
shareholders of Florida Insured Fund, Hawaii Fund and Kansas Fund,
respectively, and approximately $10,000, 0 and $200 of CDSC paid by Class A
shareholders of Florida Insured, Hawaii, and Kansas, respectively, for the
year ended January 31, 2004.
7 INVESTMENT TRANSACTIONS
Increases and decreases in each Fund's investment in its corresponding
Portfolio for the year ended January 31, 2004 were as follows:
<Table>
FLORIDA INSURED
Increases $ 16,380,002
Decreases 7,919,383
HAWAII
Increases $ 2,924,107
Decreases 2,358,630
KANSAS
Increases $ 4,465,819
Decreases 4,236,877
</Table>
20
<Page>
EATON VANCE MUNICIPALS FUNDS AS OF JANUARY 31, 2004
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS OF EATON VANCE MUNICIPALS TRUST II:
We have audited the accompanying statements of assets and liabilities of Eaton
Vance Florida Insured Municipals Fund, Eaton Vance Hawaii Municipals Fund and
Eaton Vance Kansas Municipals Fund (certain of the series constituting Eaton
Vance Municipals Trust II) (the "Trust") as of January 31, 2004, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
aforementioned funds of Eaton Vance Municipals Trust II as of
January 31, 2004, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and their financial highlights for each of the five years in the period then
ended, in conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 18, 2004
21
<Page>
FLORIDA INSURED MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 97.6%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -------------------------------------------------------------------------------------------------
HOSPITAL -- 0.5%
$ 250 Highland County, Health Facilities Authority, (Adventist
Health System), 5.375%, 11/15/35 $ 253,877
- -------------------------------------------------------------------------------------------------
$ 253,877
- -------------------------------------------------------------------------------------------------
HOUSING -- 3.7%
$ 90 Duval County, HFA, SFMR, (GNMA), (AMT),
6.70%, 10/1/26 $ 92,599
420 Escambia County, HFA, SFMR, (GNMA), (AMT),
7.00%, 4/1/28 435,708
190 Manatee County, HFA, SFMR, (GNMA), (AMT),
6.875%, 11/1/26 194,913
720 Pinellas County, HFA, SFMR, (GNMA), (AMT),,
5.80% 3/1/29 747,382
310 Pinellas County, HFA, SFMR, (GNMA), (AMT),
6.70%, 2/1/28 319,377
- -------------------------------------------------------------------------------------------------
$ 1,789,979
- -------------------------------------------------------------------------------------------------
INSURED-EDUCATION -- 3.1%
$ 1,500 Florida State University, System Improvement Revenue,
(AMBAC), 4.50%, 7/1/23 $ 1,487,475
- -------------------------------------------------------------------------------------------------
$ 1,487,475
- -------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 3.7%
$ 600 Puerto Rico Electric Power Authority, (FSA), Variable
Rate, 7/1/29(1)(2) $ 671,328
750 Puerto Rico Electric Power Authority, (MBIA),
5.00%, 7/1/32 782,017
200 Puerto Rico Electric Power Authority, (MBIA), Variable Rate,
7/1/16(2)(3) 303,146
- -------------------------------------------------------------------------------------------------
$ 1,756,491
- -------------------------------------------------------------------------------------------------
INSURED-ESCROWED / PREREFUNDED -- 3.8%
$ 1,160 Dade County, Professional Sports Franchise, (MBIA),
Escrowed to Maturity, 0.00%, 10/1/19 $ 571,868
500 Lakeland, Energy System, (MBIA), Prerefunded to
10/1/10, 5.50%, 10/1/40 582,085
250 Orange, Tourist Development Tax, (MBIA), Prerefunded to
10/1/04, 6.00%, 10/1/24 263,272
400 Titusville Water and Sewer, (MBIA), Prerefunded to
10/1/04, 6.00%, 10/1/24 421,236
- -------------------------------------------------------------------------------------------------
$ 1,838,461
- -------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 4.1%
$ 500 Florida Board of Education Capital Outlay, (Public Education),
(MBIA), 5.00%, 6/1/32 $ 516,970
1,000 Florida Board of Education, Capital Outlay, (Public Education),
(MBIA), 5.00%, 6/1/32(4) 1,033,940
330 Puerto Rico, (FSA), Variable Rate, 7/1/27(2)(3) 396,416
- -------------------------------------------------------------------------------------------------
$ 1,947,326
- -------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 12.1%
$ 1,020 Brevard County, Health Facilities Authority,
(Health First, Inc.), (MBIA), 5.125%, 4/1/31 $ 1,053,599
200 Dade, Public Facilities Board, (Jackson Memorial Hospital),
(MBIA), 4.875%, 6/1/15 202,544
1,000 Jacksonville, Economic Development Commission Health
Care, (Mayo Clinic), (MBIA), 5.50%, 11/15/36 1,079,090
350 Miami Dade County, Health Facilities Authority, (Miami
Children's Hospital), (AMBAC), 5.125%, 8/15/26 362,726
1,000 Sarasota County, Public Hospital Board, (Sarasota
Memorial Hospital), (MBIA), 5.50%, 7/1/28 1,126,890
1,900 South Miami, Health Facility Authority Hospital Revenue,
(Baptist Health), (AMBAC), 5.25%, 11/15/33 1,996,634
- -------------------------------------------------------------------------------------------------
$ 5,821,483
- -------------------------------------------------------------------------------------------------
INSURED-HOUSING -- 4.3%
$ 500 Florida HFA, (Maitland Club Apartments), (AMBAC),
(AMT), 6.875%, 8/1/26 $ 517,580
1,000 Florida HFA, (Mariner Club Apartments), (AMBAC),
(AMT), 6.375%, 9/1/36 1,046,240
500 Florida HFA, (Spinnaker Cove Apartments), (AMBAC),
(AMT), 6.50%, 7/1/36 523,345
- -------------------------------------------------------------------------------------------------
$ 2,087,165
- -------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF PARTICIPATION -- 1.6%
$ 500 Broward County, School Board, Certificates of Participation,
(FSA), 5.00%, 7/1/26 $ 515,750
250 Puerto Rico Public Finance Corp., (AMBAC), Variable Rate,
6/1/26(1)(2) 264,220
- -------------------------------------------------------------------------------------------------
$ 779,970
- -------------------------------------------------------------------------------------------------
INSURED-MISCELLANEOUS -- 5.2%
$ 500 St. John's County, IDA, (Professional Golf), (MBIA),
5.00%, 9/1/23 $ 521,060
1,900 Village Center Community Development District, (MBIA),
5.00%, 11/1/32 1,968,172
- -------------------------------------------------------------------------------------------------
$ 2,489,232
- -------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
22
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -------------------------------------------------------------------------------------------------
INSURED-SOLID WASTE -- 1.1%
$ 500 Dade County Resource Recovery Facilities, (AMBAC),
(AMT), 5.50%, 10/1/13 $ 546,760
- -------------------------------------------------------------------------------------------------
$ 546,760
- -------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 17.1%
$ 365 Celebration Community Development District, (MBIA),
5.125%, 5/1/20 $ 388,382
750 Crossings at Fleming Island Community Development
District, (MBIA), 5.80%, 5/1/16 864,435
415 Dade County, Special Obligations, Residual Certificates,
(AMBAC), Variable Rate, 10/1/35(2)(3) 436,999
1,580 Jacksonville Sales Tax, (AMBAC), 5.00%, 10/1/30 1,626,010
500 Jacksonville, Capital Improvement Revenue, (Stadium),
(AMBAC), 4.75%, 10/1/25 503,235
750 Jacksonville, Capital Improvements, (AMBAC),
5.00%, 10/1/30 774,180
490 Julington Creek, Plantation Community Development
District, (MBIA), 5.00%, 5/1/29 505,161
500 Miami-Dade County, Special Obligations, (MBIA), 5.00%,
10/1/37 511,115
300 Orange County, Tourist Development Tax, (AMBAC),
Variable Rate, 10/1/30(2)(3) 336,480
465 Polk County, Transportation Improvements, (FSA), 5.25%,
12/1/22 496,169
340 Sunrise Public Facilities Sales Tax, (MBIA), 0.00%,
10/1/15 210,409
1,625 Tampa, Utility Tax, (AMBAC), 0.00%, 4/1/21 716,105
1,950 Tampa, Utility Tax, (AMBAC), 0.00%, 10/1/21 839,066
- -------------------------------------------------------------------------------------------------
$ 8,207,746
- -------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 13.6%
$ 500 Dade County Aviation Facilities, (Miami International Airport),
(FSA), (AMT), 5.125%, 10/1/22 $ 511,260
500 Dade County, Seaport, (MBIA), 5.125%, 10/1/16 544,300
400 Greater Orlando, Aviation Authority, (FGIC), Variable Rate,
4/1/13(2)(3) 460,104
1,000 Orlando and Orange County Expressway Authority, (AMBAC),
5.00%, 7/1/35 1,033,740
700 Puerto Rico Highway and Transportation Authority, (CIFG),
5.00%, 7/1/28 731,528
500 Puerto Rico Highway and Transportation Authority, (MBIA),
4.75%, 7/1/38 508,090
750 Puerto Rico Highway and Transportation Authority, (MBIA),
5.00%, 7/1/36 787,980
150 Puerto Rico Highway and Transportation Authority, (MBIA),
5.50%, 7/1/36 168,963
$ 500 Tampa-Hillsborough County Expressway Authority, (FGIC),
5.00%, 7/1/32 $ 517,065
1,250 Tampa-Hillsborough County Expressway Authority, (FGIC),
5.00%, 7/1/35 1,292,175
- -------------------------------------------------------------------------------------------------
$ 6,555,205
- -------------------------------------------------------------------------------------------------
INSURED-UTILITY -- 3.2%
$ 1,000 Marco Island, Utility System, (MBIA), 5.00%, 10/1/24 $ 1,041,580
500 Marco Island, Utility System, (MBIA), 5.00%, 10/1/27 518,245
- -------------------------------------------------------------------------------------------------
$ 1,559,825
- -------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 20.5%
$ 600 Cocoa, Water and Sewer, (FGIC), 4.50%, 10/1/22 $ 600,480
735 Enterprise Community Development District, Water and
Sewer, (MBIA), 6.125%, 5/1/24 750,516
250 Florida Governmental Utility Authority, (Barefoot Bay
Utility System), (AMBAC), 5.00%, 10/1/29 257,445
1,000 Jacksonville, Water and Sewer, (AMBAC), (AMT),
6.35%, 8/1/25 1,080,560
500 JEA, Water & Sewer, (AMBAC), 4.75%, 10/1/43 500,030
1,000 Lee County, IDA, (Bonita Springs Utilities), (MBIA),
(AMT), 6.05%, 11/1/20 1,102,820
750 Lee County, Water and Sewer, (AMBAC),
5.00%, 10/1/29 772,335
1,000 Marion County, Utility System, (FGIC),
5.00%, 12/1/31 1,032,750
1,000 Marion County, Utility System, (MBIA),
5.00%, 12/1/28 1,036,510
1,000 Sunrise Utilities Systems, (AMBAC), 5.00%, 10/1/28 1,045,430
250 Tallahassee, Consolidated Utility System, (FGIC),
5.50%, 10/1/19 289,998
375 Tampa Bay, Water Utility System, (FGIC), Variable Rate,
10/1/27(1)(2) 379,684
1,000 Tohopekaliga, Water Utility System, (FSA),
5.00%, 10/1/28 1,036,090
- -------------------------------------------------------------------------------------------------
$ 9,884,648
- -------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 97.6%
(IDENTIFIED COST $44,027,252) $ 47,005,643
- -------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 2.4% $ 1,164,092
- -------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 48,169,735
- -------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
23
<Page>
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax. FSA - Financial
Security Assurance, Inc.
FGIC - Financial Guaranty Insurance Company
AMBAC - AMBAC Financial Group, Inc.
MBIA - Municipal Bond Insurance Association
CIFG - CDC IXIS Financial Guaranty North America, Inc.
The Portfolio invests primarily in debt securities issued by Florida
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at January 31, 2004, 95.7% 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 insured by
financial institutions ranged from 1.6% to 41.2% of total investments. At
January 31, 2004, the Portfolio's insured securities by financial institution
are as follows:
<Table>
<Caption>
MARKET % OF
VALUE MARKET VALUE
- ----------------------------------------------------------------------------------------
American Municipal Bond Assurance Corp. (AMBAC) $ 16,666,595 35.5%
Financial Guaranty Insurance Corp. (FGIC) 4,572,256 9.7%
Financial Security Assurance (FSA) 3,627,013 7.7%
Municipal Bond Insurance Association (MBIA) 19,364,395 41.2%
CDC IXIS Financial Guaranty North America, Inc. (CIFG) 731,528 1.6%
- ----------------------------------------------------------------------------------------
$ 44,961,787 95.7%
- ----------------------------------------------------------------------------------------
</Table>
(1) Security has been issued as an inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(3) Security has been issued as a leveraged inverse floater bond.
(4) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
24
<Page>
HAWAII MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 98.3%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- --------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 4.1%
$ 1,500 Puerto Rico Electric Power Authority, 0.00%, 7/1/17 $ 816,915
- -------------------------------------------------------------------------------------------------
$ 816,915
- -------------------------------------------------------------------------------------------------
ESCROWED / PREREFUNDED -- 3.5%
$ 620 Hawaii Department of Budget and Finance, (Queens Health
System), Prerefunded to 7/1/06, 5.75%, 7/1/26 $ 691,405
- -------------------------------------------------------------------------------------------------
$ 691,405
- -------------------------------------------------------------------------------------------------
GENERAL OBLIGATIONS -- 9.1%
$ 750 Honolulu, 4.75%, 9/1/17 $ 805,642
575 Maui County, 5.00%, 3/1/21 599,161
200 Maui County, 5.50%, 3/1/19 221,754
285 Puerto Rico, 0.00%, 7/1/15 173,807
- -------------------------------------------------------------------------------------------------
$ 1,800,364
- -------------------------------------------------------------------------------------------------
HOSPITAL -- 2.8%
$ 300 Hawaii Department of Budget and Finance, (Wilcox
Memorial Hospital), 5.35%, 7/1/18 $ 305,115
150 Hawaii Department of Budget and Finance, (Wilcox
Memorial Hospital), 5.50%, 7/1/28 150,112
100 Hawaii Pacific Health, 5.60%, 7/1/33 100,249
- -------------------------------------------------------------------------------------------------
$ 555,476
- -------------------------------------------------------------------------------------------------
HOUSING -- 6.9%
$ 240 Guam Housing Corp., Single Family, (AMT),
5.75%, 9/1/31 $ 265,999
1,000 Hawaii Housing Finance and Development, Single Family,
5.90%, 7/1/27 1,037,660
55 Hawaii Housing Finance and Development, Single Family, (AMT),
6.00%, 7/1/26 56,198
- -------------------------------------------------------------------------------------------------
$ 1,359,857
- -------------------------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT REVENUE -- 1.8%
$ 375 Hawaii Department of Transportation Special Facilities,
(Continental Airlines), 7.00%, 6/1/20 $ 360,690
- -------------------------------------------------------------------------------------------------
$ 360,690
- -------------------------------------------------------------------------------------------------
INSURED-BOND BANK -- 1.1%
$ 200 Puerto Rico Municipal Finance Agency, (FSA),
5.00%, 8/1/27 $ 208,422
- -------------------------------------------------------------------------------------------------
$ 208,422
- -------------------------------------------------------------------------------------------------
INSURED-EDUCATION -- 9.0%
$ 500 Hawaii State Housing Development Corp., (University of
Hawaii), (AMBAC), 5.65%, 10/1/16 $ 536,315
240 University of Hawaii Board of Regents, University System,
(FSA), 5.00%, 10/1/18 256,030
250 University of Hawaii Board of Regents, University System,
(FSA), 5.25%, 10/1/16 276,447
100 University of Hawaii Board of Regents, University System,
(FSA), 5.25%, 10/1/17 109,765
175 University of Hawaii, University System, (Wellness Center),
(FGIC), 5.125%, 7/15/32 181,522
400 University of Puerto Rico, (MBIA), 5.375%, 6/1/30 419,572
- -------------------------------------------------------------------------------------------------
$ 1,779,651
- -------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 4.1%
$ 250 Hawaii Department of Budget and Finance, (Hawaiian
Electric Co.), (AMBAC), (AMT), 5.75%, 12/1/18 $ 278,072
500 Hawaii Department of Budget and Finance, (Hawaiian
Electric Co.), (MBIA), (AMT), 6.60%, 1/1/25 525,700
- -------------------------------------------------------------------------------------------------
$ 803,772
- -------------------------------------------------------------------------------------------------
INSURED-ESCROWED / PREREFUNDED -- 3.7%
$ 375 Hawaii, (MBIA), Prerefunded to 10/1/10,
5.25%, 10/1/20 $ 430,894
305 Kauai County, (MBIA), Prerefunded to 2/1/04,
5.90%, 2/1/14 311,143
- -------------------------------------------------------------------------------------------------
$ 742,037
- -------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 12.3%
$ 350 Hawaii County, (FGIC), 5.125%, 7/15/21 $ 368,456
350 Hawaii County, (FGIC), 5.55%, 5/1/10 404,170
100 Hawaii County, (FSA), 5.00%, 7/15/22 104,718
375 Hawaii, (FSA), 5.125%, 2/1/22 394,129
375 Hawaii, (MBIA), 5.00%, 4/1/17 400,294
400 Kauai County, (MBIA), 5.00%, 8/1/24(1) 412,232
100 Puerto Rico, (FGIC), Variable Rate, 7/1/32(2)(3) 111,685
200 Puerto Rico, (FSA), Variable Rate, 7/1/27(2)(3) 240,252
- -------------------------------------------------------------------------------------------------
$ 2,435,936
- -------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 0.5%
$ 100 Hawaii Department of Budget and Finance, (St. Francis
Medical Center), (FSA), 6.50%, 7/1/22 $ 101,379
- -------------------------------------------------------------------------------------------------
$ 101,379
- -------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
25
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF PARTICIPATION -- 0.8%
$ 150 Puerto Rico Public Finance Corp., (MBIA),
5.00%, 8/1/21 $ 157,911
- -------------------------------------------------------------------------------------------------
$ 157,911
- -------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 3.3%
$ 200 Puerto Rico Infrastructure Financing Authority, (AMBAC),
Variable Rate, 7/1/07(2)(4) $ 211,766
210 Puerto Rico Infrastructure Financing Authority, (AMBAC),
Variable Rate, 7/1/28(3) 228,533
200 Puerto Rico Infrastructure Financing Authority, (AMBAC),
5.50%, 10/1/40 219,490
- -------------------------------------------------------------------------------------------------
$ 659,789
- -------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 20.3%
$ 500 Guam Government Ltd. Obligation - Highway Revenue,
(FSA), 5.25%, 5/1/11 $ 572,535
500 Guam International Airport Authority, (MBIA),
5.25%, 10/1/22 537,020
500 Hawaii Airports System, (FGIC), (AMT),
5.25%, 7/1/21 520,055
100 Hawaii Airports System, (MBIA), (AMT),
6.90%, 7/1/12 121,864
650 Hawaii Harbor Revenue, (FGIC), (AMT),
6.375%, 7/1/24 675,383
250 Hawaii Highway, (FSA), 5.00%, 7/1/22 259,640
1,300 Puerto Rico Highway and Transportation Authority,
(FSA), 4.75%, 7/1/38 1,321,034
- -------------------------------------------------------------------------------------------------
$ 4,007,531
- -------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 11.0%
$ 720 Honolulu, City and County Board Water Supply Systems,
(FSA), 5.25%, 7/1/31 $ 752,098
1,000 Honolulu, City and County Wastewater Systems, (FGIC),
0.00%, 7/1/18 507,470
730 Honolulu, City and County Wastewater Systems, (FGIC),
4.50%, 7/1/28 707,866
200 Honolulu, City and County Wastewater Systems, (FGIC),
5.00%, 7/1/23 205,998
- -------------------------------------------------------------------------------------------------
$ 2,173,432
- -------------------------------------------------------------------------------------------------
OTHER REVENUE -- 1.3%
$ 200 Puerto Rico Infrastructure Financing Authority, (Escrow
Fund), Variable Rate, 10/1/34(2)(3) $ 260,318
- -------------------------------------------------------------------------------------------------
$ 260,318
- -------------------------------------------------------------------------------------------------
SPECIAL TAX REVENUE -- 1.3%
$ 250 Virgin Islands Public Facilities Authority,
5.625%, 10/1/25 $ 255,268
- -------------------------------------------------------------------------------------------------
$ 255,268
- -------------------------------------------------------------------------------------------------
TRANSPORTATION -- 1.4%
$ 250 Hawaii Highway Revenue, 5.50%, 7/1/18 $ 287,368
- -------------------------------------------------------------------------------------------------
$ 287,368
- -------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 98.3%
(IDENTIFIED COST $17,857,083) $ 19,457,521
- -------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 1.7% $ 330,448
- -------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 19,787,969
- -------------------------------------------------------------------------------------------------
</Table>
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
FSA - Financial Security Assurance, Inc.
FGIC - Financial Guaranty Insurance Company
AMBAC - AMBAC Financial Group, Inc.
MBIA - Municipal Bond Insurance Association
The Portfolio invests primarily in debt securities issued by Hawaii
municipalities. The ability of the issuers of the debt securities to meet their
obligations may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at January 31, 2004, 67.2% of the securities in the portfolio of
investments are backed by bond insurance of various financial institutions and
financial guaranty assurance agencies. The aggregate percentage insured by
financial institutions ranged from 7.6% to 23.6% of total investments.
(1) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(3) Security has been issued as a leveraged inverse floater bond.
(4) Security has been issued as an inverse floater bond.
See notes to financial statements
26
<Page>
KANSAS MUNICIPALS PORTFOLIO AS OF JANUARY 31, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 98.5%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -------------------------------------------------------------------------------------------------
ESCROWED / PREREFUNDED -- 6.4%
$ 550 Kansas Highway Transportation Department, Prerefunded to
9/1/09, 5.25%, 9/1/19 $ 627,495
415 Labette County, SFMR, Escrowed to Maturity,
0.00%, 12/1/14 266,538
1,000 Saline County, SFMR, Escrowed to Maturity,
0.00%, 12/1/15 607,180
- -------------------------------------------------------------------------------------------------
$ 1,501,213
- -------------------------------------------------------------------------------------------------
GENERAL OBLIGATIONS -- 2.2%
$ 500 Johnson County, Unified School District #229,
5.00%, 10/1/16 $ 523,945
- -------------------------------------------------------------------------------------------------
$ 523,945
- -------------------------------------------------------------------------------------------------
HOSPITAL -- 5.6%
$ 250 Sedgwick County, Health Care Facility,
(Catholic Care Center, Inc.), 5.875%, 11/15/31 $ 257,895
500 University of Kansas Hospital Authority, 5.50%, 9/1/22 519,555
500 Wichita, (Christi Health Systems, Inc.), 6.25%, 11/15/24 539,380
- -------------------------------------------------------------------------------------------------
$ 1,316,830
- -------------------------------------------------------------------------------------------------
HOUSING -- 1.9%
$ 250 Olathe, Multifamily, (Deerfield Apts.), (FNMA),
6.45%, 6/1/19 $ 256,205
120 Puerto Rico Housing Finance Corp., 7.50%, 4/1/22 123,600
60 Sedgwick County, SFMR, (GNMA), 8.00%, 5/1/25 61,860
- -------------------------------------------------------------------------------------------------
$ 441,665
- -------------------------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT REVENUE -- 1.6%
$ 350 Wyandotte County & Kansas City Unified Government
Pollution, (General Motors Corp.), 6.00%, 6/1/25 $ 370,181
- -------------------------------------------------------------------------------------------------
$ 370,181
- -------------------------------------------------------------------------------------------------
INSURED-EDUCATION -- 6.4%
$ 100 Kansas Development Finance Authority,
(Kansas Board of Regents), (AMBAC), 5.00%, 4/1/14 $ 111,423
500 Kansas Development Finance Authority,
(Kansas Board of Regents), (AMBAC), 5.00%, 10/1/32 515,475
550 Kansas Development Finance Authority, (Kansas State
University-Athletic Facility), (AMBAC), 0.00%, 7/1/18 281,869
500 Washburn University, Topeka, (Living Learning Center),
(AMBAC), 6.125%, 7/1/29 574,100
- -------------------------------------------------------------------------------------------------
$ 1,482,867
- -------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 6.2%
$ 250 Augusta, Electric System, (AMBAC), 5.00%, 8/1/22 $ 261,537
345 Burlington, PCR, (Kansas Gas & Electric Co.), (MBIA),
7.00%, 6/1/31 358,369
135 Kansas City, Utility System, (FGIC), 6.375%, 9/1/23 141,434
250 Pratt, Electric System, (AMBAC), 5.25%, 5/1/18 272,037
375 Puerto Rico Electric Power Authority, (FSA), Variable Rate,
7/1/29(1)(2) 419,580
- -------------------------------------------------------------------------------------------------
$ 1,452,957
- -------------------------------------------------------------------------------------------------
INSURED-ESCROWED / PREREFUNDED -- 5.9%
$ 250 Kansas Development Finance Authority,
(7th and Harrison Project), (AMBAC), Prerefunded to
12/1/09, 5.75%, 12/1/27 $ 292,687
500 Kansas Development Finance Authority,
(Stormont Vail Healthcare), (MBIA), Prerefunded to
11/15/06, 5.80%, 11/15/11 555,575
250 Sedgwick County, Unified School District #267,
(AMBAC), Prerefunded to 11/1/05, 6.15%, 11/1/09 271,432
230 Sedgwick County, Unified School District #267,
(AMBAC), Prerefunded to 11/1/05, 6.15%, 11/1/10 249,718
- -------------------------------------------------------------------------------------------------
$ 1,369,412
- -------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 21.1%
$ 250 Butler and Sedgwick County, Unified School District #385,
(FGIC), 5.00%, 9/1/19 $ 263,320
250 Butler and Sedgwick County, Unified School District #385,
(FSA), 5.40%, 9/1/18 276,388
500 Dodge, Ford County Unified School District #443,
(FGIC), 4.20%, 9/1/17 505,935
200 Johnson County, Unified School District #231,
(FGIC), 6.00%, 10/1/16 242,220
250 Johnson County, Unified School District #232,
(FSA), 4.75%, 9/1/19 258,050
300 Johnson County, Unified School District #233,
(FGIC), 5.50%, 9/1/17 349,032
500 Lyon County, Unified School District #253,
(FGIC), 4.75%, 9/1/21 511,845
230 Puerto Rico, (FGIC), Variable Rate, 7/1/32(2)(3) 256,876
80 Puerto Rico, (MBIA), Variable Rate, 7/1/20(2)(3) 119,072
750 Scott County, Unified School District #466,
(FGIC), 5.00%, 9/1/22 784,868
1,000 Sedgwick County, Unified School District #259,
(FSA), 2.50%, 10/1/17 826,840
500 Sedgwick County, Unified School District #267,
(AMBAC), 5.00%, 11/1/19 526,750
- -------------------------------------------------------------------------------------------------
$ 4,921,196
- -------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
27
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 10.5%
$ 250 Coffeyville, Public Building Commission Health Care Facility,
(Coffeyville Regional Medical Center), (AMBAC),
5.00%, 8/1/22 $ 258,305
250 Kansas Development Finance Authority,
(Hays Medical Center, Inc.), (MBIA), 5.50%, 11/15/22 268,773
500 Kansas Development Finance Authority,
(Sisters Of Charity - Leavenworth), (MBIA),
5.00%, 12/1/25 506,740
500 Kansas Development Finance Authority,
(St. Luke's/Shawnee Mission), (MBIA),
5.375%, 11/15/26 522,250
600 Kansas Development Finance Authority,
(Stormont-Vail Healthcare), (MBIA), 5.375%, 11/15/24 632,046
250 Manhattan Hospital, (Mercy Health Center),
(FSA), 5.20%, 8/15/26 256,895
- -------------------------------------------------------------------------------------------------
$ 2,445,009
- -------------------------------------------------------------------------------------------------
INSURED-HOUSING -- 1.1%
$ 250 Augusta Public Building Commission Revenue,
(Cottonwood Point, Inc.), (MBIA), 5.25%, 4/1/22 $ 255,393
- -------------------------------------------------------------------------------------------------
$ 255,393
- -------------------------------------------------------------------------------------------------
INSURED-INDUSTRIAL DEVELOPMENT REVENUE -- 1.1%
$ 250 Wyandotte County & Kansas City Unified Government
Utility System, (MBIA), 5.00%, 5/1/21 $ 260,710
- -------------------------------------------------------------------------------------------------
$ 260,710
- -------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF PARTICIPATION -- 2.9%
$ 500 Kansas Development Finance Authority,
(Capital Restoration Parking Facility), (FSA),
5.00%, 10/1/21(4) $ 526,370
120 Puerto Rico Public Finance Corp., (AMBAC),
Variable Rate, 12/1/19(2)(3) 156,097
- -------------------------------------------------------------------------------------------------
$ 682,467
- -------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 6.0%
$ 525 Puerto Rico Infrastructure Financing Authority, (AMBAC),
Variable Rate, 7/1/28(3) $ 571,331
750 Puerto Rico Infrastructure Financing Authority, (AMBAC),
5.50%, 10/1/40 823,080
- -------------------------------------------------------------------------------------------------
$ 1,394,411
- -------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 5.6%
$ 440 Kansas Turnpike Authority, (AMBAC),
Variable Rate, 3/1/15(2)(3) $ 422,017
$ 750 Kansas Turnpike Authority, (FSA), 5.00%, 9/1/24 $ 779,415
100 Puerto Rico Highway and Transportation Authority, (FSA),
Variable Rate, 7/1/32(2)(3) 111,685
- -------------------------------------------------------------------------------------------------
$ 1,313,117
- -------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 13.1%
$ 500 Chisholm Creek Utility Authority, Water and Wastewater,
(Bel Aire & Park City), (MBIA), 5.25%, 9/1/20 $ 541,810
500 Kansas Development Finance Authority, Public Water Supply,
(AMBAC), 5.00%, 4/1/24 518,805
500 Topeka, Water Pollution Control Utility System, (FGIC),
5.40%, 8/1/31 533,085
200 Wellington Electric, Waterworks, and Sewer Utilities System,
(AMBAC), 5.20%, 5/1/23 210,904
500 Wichita, Water & Sewer Utility, (FGIC), 5.00%, 10/1/28 518,125
750 Wyandotte County & Kansas City Unified Government Utility
System, (MBIA), 4.50%, 9/1/28 732,518
- -------------------------------------------------------------------------------------------------
$ 3,055,247
- -------------------------------------------------------------------------------------------------
WATER AND SEWER -- 0.9%
$ 200 Kansas Development Finance Authority, 5.00%, 11/1/21 $ 209,068
- -------------------------------------------------------------------------------------------------
$ 209,068
- -------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 98.5%
(IDENTIFIED COST $21,595,551) $ 22,995,688
- -------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 1.5% $ 339,372
- -------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 23,335,060
- -------------------------------------------------------------------------------------------------
</Table>
FNMA - Federal National Mortgage Association (Fannie Mae)
GNMA - Government National Mortgage Association (Ginnie Mae)
FSA - Financial Security Assurance, Inc.
FGIC - Financial Guaranty Insurance Company
AMBAC - AMBAC Financial Group, Inc.
MBIA - Municipal Bond Insurance Association
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, 2004, 81.0% 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 15.0% to 27.5% of total investments.
(1) Security has been issued as an inverse floater bond.
See notes to financial statements
28
<Page>
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(3) Security has been issued as a leveraged inverse floater bond.
(4) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.See notes to financial
statements
See notes to financial statements
29
<Page>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2004
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
As of January 31, 2004
<Table>
<Caption>
FLORIDA INSURED PORTFOLIO HAWAII PORTFOLIO KANSAS PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments --
Identified cost $ 44,027,252 $ 17,857,083 $ 21,595,551
Unrealized appreciation 2,978,391 1,600,438 1,400,137
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS, AT VALUE $ 47,005,643 $ 19,457,521 $ 22,995,688
- -------------------------------------------------------------------------------------------------------------------------------
Cash $ 512,228 $ 504,670 $ 54,662
Receivable for investments sold 125,000 -- 5,100
Interest receivable 608,956 197,574 349,193
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 48,251,827 $ 20,159,765 $ 23,404,643
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased $ -- $ 327,902 $ --
Payable for daily variation margin on open financial
futures contracts 55,500 20,250 45,625
Accrued expenses 26,592 23,644 23,958
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 82,092 $ 371,796 $ 69,583
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $ 48,169,735 $ 19,787,969 $ 23,335,060
- -------------------------------------------------------------------------------------------------------------------------------
SOURCES OF NET ASSETS
Net proceeds from capital contributions and withdrawals $ 45,382,162 $ 18,227,463 $ 22,014,436
Net unrealized appreciation (computed on the basis of
identified cost) 2,787,573 1,560,506 1,320,624
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $ 48,169,735 $ 19,787,969 $ 23,335,060
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
30
<Page>
STATEMENTS OF OPERATIONS
For the year ended January 31, 2004
<Table>
<Caption>
FLORIDA INSURED PORTFOLIO HAWAII PORTFOLIO KANSAS PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 2,306,599 $ 986,814 $ 1,233,520
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME $ 2,306,599 $ 986,814 $ 1,233,520
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment adviser fee $ 107,252 $ 28,342 $ 39,787
Trustees fees and expenses 1,757 175 175
Legal and accounting services 23,751 21,334 21,444
Custodian fee 30,714 17,405 21,095
Miscellaneous 9,942 7,945 9,983
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES $ 173,416 $ 75,201 $ 92,484
- -------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 7,022 $ 4,074 $ 3,319
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 7,022 $ 4,074 $ 3,319
- -------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES $ 166,394 $ 71,127 $ 89,165
- -------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 2,140,205 $ 915,687 $ 1,144,355
- -------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 126,155 $ (108,604) $ (84,189)
Financial futures contracts (119,765) (41,838) 77,203
Interest rate swap contracts -- -- (224,550)
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) $ 6,390 $ (150,442) $ (231,536)
- -------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 556,219 $ 521,728 $ 627,807
Financial futures contracts (190,112) 24,029 (78,804)
- -------------------------------------------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 366,107 $ 545,757 $ 549,003
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 372,497 $ 395,315 $ 317,467
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,512,702 $ 1,311,002 $ 1,461,822
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
31
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended January 31, 2004
<Table>
<Caption>
INCREASE (DECREASE) IN NET ASSETS FLORIDA INSURED PORTFOLIO HAWAII PORTFOLIO KANSAS PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 2,140,205 $ 915,687 $ 1,144,355
Net realized gain (loss) 6,390 (150,442) (231,536)
Net change in unrealized appreciation (depreciation) 366,107 545,757 549,003
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,512,702 $ 1,311,002 $ 1,461,822
- -------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 16,380,002 $ 2,924,107 $ 4,465,819
Withdrawals (7,919,383) (2,358,630) (4,236,877)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 8,460,619 $ 565,477 $ 228,942
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 10,973,321 $ 1,876,479 $ 1,690,764
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of year $ 37,196,414 $ 17,911,490 $ 21,644,296
- -------------------------------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 48,169,735 $ 19,787,969 $ 23,335,060
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
32
<Page>
<Table>
<Caption>
INCREASE (DECREASE) IN NET ASSETS FLORIDA INSURED PORTFOLIO HAWAII PORTFOLIO KANSAS PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 1,708,960 $ 937,194 $ 952,671
Net realized loss (277,266) (154,552) (48,369)
Net change in unrealized appreciation (depreciation) 976,814 366,119 477,700
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,408,508 $ 1,148,761 $ 1,382,002
- -------------------------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 11,147,165 $ 2,494,995 $ 6,529,606
Withdrawals (6,277,172) (3,509,526) (2,586,730)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 4,869,993 $ (1,014,531) $ 3,942,876
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 7,278,501 $ 134,230 $ 5,324,878
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of year $ 29,917,913 $ 17,777,260 $ 16,319,418
- -------------------------------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 37,196,414 $ 17,911,490 $ 21,644,296
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
33
<Page>
SUPPLEMENTARY DATA
<Table>
<Caption>
FLORIDA INSURED PORTFOLIO
-------------------------------------------------------------
YEAR ENDED JANUARY 31,
-------------------------------------------------------------
2004 2003 2002(1) 2001 2000
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratios (As a percentage of average daily net assets):
Expenses 0.40% 0.37% 0.39% 0.47% 0.38%
Expenses after custodian fee reduction 0.38% 0.36% 0.35% 0.43% 0.34%
Net investment income 4.94% 5.25% 5.26% 5.34% 5.32%
Portfolio Turnover 19% 16% 18% 8% 34%
- ------------------------------------------------------------------------------------------------------------------------
Total Return(2) 6.34% 7.68% 5.60% -- --
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S OMITTED) $ 48,170 $ 37,196 $ 29,918 $ 25,539 $ 25,760
- ------------------------------------------------------------------------------------------------------------------------
</Table>
(1) The Portfolio has adopted the provisions of the revised AICPA Audit and
Accounting Guide for Investment Companies and began using the interest
method to amortize premiums on fixed-income securities. The effect of this
change for the year ended January 31, 2002 was to increase the ratio of net
investment income to average net assets from 5.22% to 5.26%. Ratios for the
periods prior to February 1, 2001 have not been restated to reflect this
change in presentation.
(2) Total return is required to be disclosed for fiscal years beginning after
December 15, 2000.
See notes to financial statements
34
<Page>
<Table>
<Caption>
HAWAII PORTFOLIO
-------------------------------------------------------------
YEAR ENDED JANUARY 31,
-------------------------------------------------------------
2004 2003 2002(1) 2001 2000
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+
Ratios (As a percentage of average daily net assets):
Net expenses 0.40% 0.38% 0.48% 0.35% 0.02%
Net expenses after custodian fee reduction 0.38% 0.33% 0.45% 0.28% 0.00%
Net investment income 4.92% 5.10% 5.20% 5.53% 5.67%
Portfolio Turnover 4% 11% 22% 13% 20%
- ------------------------------------------------------------------------------------------------------------------------
Total Return(2) 7.44% 6.51% 5.43% -- --
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S OMITTED) $ 19,788 $ 17,911 $ 17,777 $ 18,885 $ 17,093
- ------------------------------------------------------------------------------------------------------------------------
</Table>
+ The operating expenses of the Portfolio may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Investment
Adviser, or both. Had such actions not been taken, the ratios would have
been as follows:
<Table>
Ratios (As a percentage of average daily net assets):
Expenses 0.40% 0.38%
Expenses after custodian fee reduction 0.33% 0.36%
Net investment income 5.48% 5.31%
</Table>
(1) The Portfolio has adopted the provisions of the revised AICPA Audit and
Accounting Guide for Investment Companies and began using the interest
method to amortize premiums on fixed-income securities. The effect of this
change for the year ended January 31, 2002 was to increase the ratio of net
investment income to average net assets from 5.17% to 5.20%. Ratios for the
periods prior to February 1, 2001 have not been restated to reflect this
change in presentation.
(2) Total return is required to be disclosed for fiscal years beginning after
December 15, 2000.
See notes to financial statements
35
<Page>
<Table>
<Caption>
KANSAS PORTFOLIO
-------------------------------------------------------------
YEAR ENDED JANUARY 31,
-------------------------------------------------------------
2004 2003 2002(1) 2001 2000
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+
Ratios (As a percentage of average daily net assets):
Net expenses 0.40% 0.41% 0.50% 0.23% 0.05%
Net expenses after custodian fee reduction 0.39% 0.38% 0.46% 0.22% 0.00%
Net investment income 4.97% 5.05% 5.00% 5.55% 5.59%
Portfolio Turnover 7% 17% 18% 7% 24%
- ------------------------------------------------------------------------------------------------------------------------
Total Return(2) 6.65% 7.93% 5.40% -- --
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S OMITTED) $ 23,335 $ 21,644 $ 16,319 $ 12,423 $ 12,200
- ------------------------------------------------------------------------------------------------------------------------
</Table>
+ The operating expenses of the Portfolio may reflect a reduction of the
investment adviser fee, an allocation of expenses to the Investment
Adviser, or both. Had such actions not been taken, the ratios would have
been as follows:
<Table>
Ratios (As a percentage of average daily net assets):
Expenses 0.53% 0.47% 0.49%
Expenses after custodian fee reduction 0.49% 0.46% 0.44%
Net investment income 4.97% 5.31% 5.15%
</Table>
(1) The Portfolio has adopted the provisions of the revised AICPA Audit and
Accounting Guide for Investment Companies and began using the interest
method to amortize premiums on fixed-income securities. The effect of this
change for the year ended January 31, 2002 was to increase the ratio of net
investment income to average net assets from 4.93% to 5.00%. Ratios for the
periods prior to February 1, 2001 have not been restated to reflect this
change in presentation.
(2) Total return is required to be disclosed for fiscal years beginning after
December 15, 2000.
See notes to financial statements
36
<Page>
EATON VANCE MUNICIPALS PORTFOLIOS as of January 31, 2004
NOTES TO FINANCIAL STATEMENTS
1 SIGNIFICANT ACCOUNTING POLICIES
Florida Insured Municipals Portfolio (Florida Insured Portfolio), Hawaii
Municipals Portfolio (Hawaii Portfolio) and Kansas Municipals Portfolio
(Kansas Portfolio), collectively the Portfolios, are registered under the
Investment Company Act of 1940, as amended, as diversified open-end
management investment companies. The Portfolios were organized as trusts
under the laws of the State of New York on May 1, 1992 for the Hawaii
Portfolio and October 25, 1993 for the Florida Insured Portfolio and the
Kansas Portfolio. The 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. At January 31, 2004, the Eaton Vance Florida Insured Municipals
Fund, the Eaton Vance Hawaii Municipals Fund and the Eaton Vance Kansas
Municipals Fund held an approximate 99.9% interest in its corresponding
Portfolio. 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 accounting
principles generally accepted in the United States of America.
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. Interest rate swaps are normally valued on the basis of valuations
furnished by a broker. 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.
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
37
<Page>
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.
G INTEREST RATE SWAPS -- A Portfolio may enter into interest rate swap
agreements to enhance return, to hedge against fluctuations in securities
prices or interest rates or as substitution for the purchase or sale of
securities. Pursuant to these agreements, the Portfolio makes semi-annual
payments at a fixed interest rate. In exchange, a Portfolio receives
payments based on the interest rate of a benchmark industry index. During
the term of the outstanding swap agreement, changes in the underlying value
of the swap are recorded as unrealized gains and losses. The value of the
swap is determined by changes in the relationship between two rates of
interest. The Portfolio is exposed to credit loss in the event of
non-performance by the swap counterparty. However, the Portfolio does not
anticipate non-performance by the counterparty. Risk may also arise from
the unanticipated movements in value of interest rates.
H LEGAL FEES -- Legal fees and other related expenses incurred as part of
negotiations of the terms and requirements of capital infusions, or that
are expected to result in the restructuring of or a plan of reorganization
for an investment are recorded as realized losses. Ongoing expenditures to
protect or enhance an investment are treated as operating expenses.
I 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 Statements of
Operations.
J USE OF ESTIMATES -- The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States of America 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.
K INDEMNIFICATIONS -- Under the Portfolio's organizational documents, its
officers and Trustees may be indemnified against certain liabilities and
expenses arising out of the performance of their duties to the Portfolio.
Interestholders in the Portfolio are jointly and severally liable for the
liabilities and obligations of the Portfolio in the event that the
Portfolio fails to satisfy such liabilities and obligations; provided,
however, that, to the extent assets are available in the Portfolio, the
Portfolio may, under certain circumstances, indemnify interestholders from
and against any claim or liability to which such holder may become subject
by reason of being or having been an interestholder in the Portfolio.
Additionally, in the normal course of business, the Portfolio enters into
agreements with service providers that may contain indemnification clauses.
The Portfolio's maximum exposure under these arrangements is unknown as
this would involve future claims that may be made against the Portfolio
that have not yet occurred.
L 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.
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, 2004, each
Portfolio incurred advisory fees as follows:
<Table>
<Caption>
PORTFOLIO AMOUNT EFFECTIVE RATE*
-----------------------------------------------------------------------------------
Florida Insured $ 107,252 0.25%
Hawaii 28,342 0.15%
Kansas 39,787 0.17%
</Table>
* As a percentage of average daily net assets.
Except as to Trustees of the Portfolios 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. 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, 2004, no significant amounts have been deferred.
38
<Page>
Certain officers and Trustees of the Portfolios are officers of the above
organizations.
During the year ended January 31, 2004, certain Portfolios engaged in
purchase and sale transactions with other Portfolios that also utilize BMR
as an investment adviser. These purchase and sale transactions complied
with Rule 17a-7 under the Investment Company Act of 1940 and amounted to:
<Table>
<Caption>
PORTFOLIO PURCHASES SALES
---------------------------------------------------------------------------------------------
Florida Insured $ 1,191,583 --
Hawaii 223,897 --
Kansas 816,053 $ 507,980
</Table>
3 INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities,
put option transactions and short- term obligations, for the year ended
January31, 2004, were as follows:
<Table>
FLORIDA INSURED
Purchases $ 16,959,873
Sales 7,769,608
HAWAII
Purchases $ 2,302,601
Sales 676,548
KANSAS
Purchases $ 5,622,957
Sales 4,618,314
</Table>
4 FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION)
The cost and unrealized appreciation (depreciation) in value of the
investments owned by each Portfolio at January 31, 2004, as computed on a
federal income tax basis, are as follows:
<Table>
FLORIDA INSURED
AGGREGATE COST $ 43,986,994
---------------------------------------------------------------------------------
Gross unrealized appreciation $ 3,032,549
Gross unrealized depreciation (13,900)
---------------------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 3,018,649
---------------------------------------------------------------------------------
HAWAII
AGGREGATE COST $ 17,813,754
---------------------------------------------------------------------------------
Gross unrealized appreciation $ 1,670,113
Gross unrealized depreciation (26,346)
---------------------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 1,643,767
---------------------------------------------------------------------------------
KANSAS
AGGREGATE COST $ 21,539,563
---------------------------------------------------------------------------------
Gross unrealized appreciation $ 1,473,303
Gross unrealized depreciation (17,178)
---------------------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 1,456,125
---------------------------------------------------------------------------------
</Table>
5 LINE OF CREDIT
The Portfolios participate with other portfolios and funds managed by BMR
and EVM and its affiliates in a $150 million unsecured line of credit
agreement with a group of banks. The Portfolios may temporarily borrow from
the line of credit to satisfy redemption requests or settle investment
transactions. Interest is charged to each portfolio or fund based on its
borrowings at an amount above either the Eurodollar rate or Federal Funds
rate. In addition, a fee computed at an annual rate of 0.10% on the daily
unused portion of the line of credit is allocated among the participating
portfolios and funds at the end of each quarter. The Portfolios did not
have any significant borrowings or allocated fees during the year ended
January 31, 2004.
39
<Page>
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 interest rate swaps 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,
2004 is as follows:
Futures Contracts
<Table>
<Caption>
EXPIRATION NET UNREALIZED
PORTFOLIO DATE CONTRACTS POSITION DEPRECIATION
--------------------------------------------------------------------------------
Florida Insured 3/04 74 U.S. Treasury Bond Short $ (190,818)
Hawaii 3/04 27 U.S. Treasury Bond Short (39,932)
Kansas 3/04 55 U.S. Treasury Bond Short (66,046)
3/04 10 U.S. Treasury Note Short (13,467)
</Table>
At January 31, 2004, the Portfolios had sufficient cash and/or securities
to cover margin requirements on open futures contracts.
40
<Page>
EATON VANCE MUNICIPALS PORTFOLIOS AS OF JANUARY 31, 2004
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, 2004, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the supplementary data for each of the five years in the period then ended.
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 auditing standards generally accepted
in the United States of America. 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, 2004 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing 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, the 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 as of January 31, 2004, the results of their operations for
the year then ended, the changes in their net assets for each of the two years
in the period then ended, and their supplementary data for each of the five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 18, 2004
41
<Page>
EATON VANCE MUNICIPALS FUNDS
MANAGEMENT AND ORGANIZATION
FUND MANAGEMENT. The Trustees of Eaton Vance Municipals Trust II (the Trust),
Florida Insured Municipals Portfolio (Florida Insured Portfolio), Hawaii
Municipals Portfolio (Hawaii Portfolio) and Kansas Municipals Portfolio (Kansas
Portfolio) are responsible for the overall management and supervision of the
Trust's and Portfolios' affairs. The Trustees and officers of the Trust and the
Portfolios are listed below. Except as indicated, each individual has held the
office shown or other offices in the same company for the last five years.
Trustees and officers of the Trust and the Portfolios hold indefinite terms of
office. The "noninterested Trustees" consist of those Trustees who are not
"interested persons" of the Trust and the Portfolios, as that term is defined
under the 1940 Act. The business address of each Trustee and officer is The
Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. As used
below, "EVC" refers to Eaton Vance Corp., "EV" refers to Eaton Vance, Inc.,
"EVM" refers to Eaton Vance Management, "BMR" refers to Boston Management and
Research and "EVD" refers to Eaton Vance Distributors, Inc. EVC and EV are the
corporate parent and trustee, respectively, of EVM and BMR. EVD is the Trust's
principal underwriter, the Portfolios' placement agent and a wholly-owned
subsidiary of EVM.
<Table>
<Caption>
POSITION(S) TERM OF NUMBER OF PORTFOLIOS
WITH THE OFFICE AND IN FUND COMPLEX
NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS
DATE OF BIRTH THE PORTFOLIOS SERVICE DURING PAST FIVE YEARS TRUSTEE(1) HELD
- -----------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE(S)
Jessica M. Bibliowicz Trustee Since 1998 Since 1998 Chairman, President 193 Director of National
11/28/59 and Chief Executive Officer of Financial Partners
National Financial Partners
(financial services company)
(since April 1999). President
and Chief Operating Officer of
John A. Levin & Co. (registered
investment adviser) (July 1997
to April 1999) and a Director
of Baker, Fentress & Company,
which owns John A. Levin & Co.
(July 1997 to April 1999).
Ms. Bibliowicz is an interested
person because of her
affiliation with a brokerage
firm.
James B. Hawkes Trustee and Vice Trustee and Vice Chairman, President and Chief 196 Director of EVC
11/9/41 President President of the Executive Officer of BMR, EVC,
Trust, Florida EVM and EV; Director of EV;
Insured Portfolio Vice President and Director of
and Kansas Portfolio EVD. Trustee and/or officer of
since 1993; of 196 registered investment
Hawaii Portfolio companies in the Eaton Vance
since 1992 Fund Complex. Mr.Hawkes is an
interested person because of
his positions with BMR, EVM,
EVC and EV, which are
affiliates of the Trust
and the Portfolios.
NONINTERESTED
TRUSTEE(S)
Samuel L. Hayes, III Trustee Trustee of the Jacob H. Schiff Professor of 196 Director of Tiffany&
2/23/35 Trust, Florida Investment Banking Emeritus, Co. (specialty
Insured Portfolio Harvard University Graduate retailer) and
and Kansas Portfolio School of Business Telect, Inc.
since 1993; of Administration. (telecommunication
Hawaii Portfolio services company)
since 1992
William H. Park Trustee Since 2003 President and Chief Executive 193 None
9/19/47 Officer, Prizm Capital
Management, LLC (investment
management firm) (since 2002).
Executive Vice President and
Chief Financial Officer,
United Asset Management
Corporation (a holding company
owning institutional
investment management firms)
(1982-2001).
Ronald A. Pearlman Trustee Since 2003 Professor of Law, Georgetown 193 None
7/10/40 University Law Center (since
1999). Tax Partner, Covington &
Burling, Washington, DC
(1991-2000).
</Table>
42
<Page>
<Table>
<Caption>
POSITION(S) TERM OF NUMBER OF PORTFOLIOS
WITH THE OFFICE AND IN FUND COMPLEX
NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS
DATE OF BIRTH THE PORTFOLIOS SERVICE DURING PAST FIVE YEARS TRUSTEE(1) HELD
- -----------------------------------------------------------------------------------------------------------------------------------
NONINTERESTED
TRUSTEE(S)
(CONTINUED)
Norton H. Reamer Trustee Trustee of the President, Chief Executive 196 None
9/21/35 Trust, Florida Officer and a Director of
Insured Portfolio Asset Management Finance Corp.
and Kansas Portfolio (a specialty finance company
since 1993; of serving the investment
Hawaii Portfolio management industry) (since
since 1992 October 2003). President,
Unicorn Corporation (an
investment and financial
advisory services company)
(since September 2000).
Formerly, Chairman, Hellman,
Jordan Management Co., Inc.
(an investment management
company) (2000-2003).
Formerly, Advisory Director of
Berkshire Capital Corporation
(investment banking firm)
(2002-2003). Formerly,
Chairman of the Board, United
Asset Management Corporation
(a holding company owning
institutional investment
management firms) and
Chairman, President and
Director, UAM Funds (mutual
funds) (1980-2000).
Lynn A. Stout Trustee Since 1998 Professor of Law, University 196 None
9/14/57 of California at Los Angeles
School of Law (since
July 2001). Formerly, Professor
of Law, Georgetown University
Law Center.
</Table>
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
<Table>
<Caption>
POSITION(S) TERM OF
WITH THE OFFICE AND
NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S)
DATE OF BIRTH THE PORTFOLIOS SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------------------
Cynthia J. Clemson Vice President of Since 1998 Vice President of EVM and BMR.
3/2/63 Florida Insured Officer of 20 registered investment
Portfolio companies managed by EVM or BMR.
Thomas J. Fetter President President of the Trust, Florida Vice President of EVM and BMR.
8/20/43 Insured Portfolio and Kansas Officer of 127 registered
Portfolio since 1993; of investment companies managed by EVM
Hawaii Portfolio since 1992 or BMR.
Robert B. MacIntosh Vice President Vice President of the Trust, Vice President of EVM and BMR.
1/22/57 Florida Insured Portfolio and Officer of 127 registered
Kansas Portfolio since 1993; investment companies managed by EVM
of Hawaii Portfolio since or BMR.
1992
Thomas M. Metzold Vice President of Since 2000 Vice President of EVM and BMR.
8/3/58 Kansas Portfolio Officer of 7 registered investment
companies managed by EVM or BMR.
Alan R. Dynner Secretary Since 1997 Vice President, Secretary and Chief
10/10/40 Legal Officer of BMR, EVM, EVD, EV
and EVC. Officer of 196 registered
investment companies managed by EVM
or BMR.
Kristin S. Anagnost Treasurer of the Since 2002(2) Assistant Vice President of EVM and
6/12/65 Portfolios BMR. Officer of 109 registered
investment companies managed by EVM
or BMR.
James L. O'Connor Treasurer of the Trust Since 1993 Vice President of BMR, EVM and EVD.
4/1/45 Officer of 117 registered investment
companies managed by EVM or BMR.
</Table>
(1) Includes both master and feeder funds in a master-feeder structure.
(2) Prior to 2002, Ms. Anagnost served as Assistant Treasurer since 1998.
The SAI for the Funds includes additional information about the Trustees and
officers of the Funds and the Portfolios and can be obtained without charge by
calling 1-800-225-6265.
43
<Page>
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<Page>
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<Page>
THIS PAGE INTENTIONALLY LEFT BLANK
<Page>
PORTFOLIO INVESTMENT ADVISER
BOSTON MANAGEMENT AND RESEARCH
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
FUND ADMINISTRATOR
EATON VANCE MANAGEMENT
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
PRINCIPAL UNDERWRITER
EATON VANCE DISTRIBUTORS, INC.
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
(617) 482-8260
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 CLARENDON STREET
BOSTON, MA 02116
TRANSFER AGENT
PFPC INC.
ATTN: EATON VANCE FUNDS
P.O. BOX 9653
PROVIDENCE, RI 02940-9653
(800) 262-1122
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
200 BERKELEY STREET
BOSTON, MA 02116-5022
EATON VANCE MUNICIPALS TRUST II
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS WHICH
CONTAINS MORE COMPLETE INFORMATION ON EACH FUND, INCLUDING ITS SALES CHARGES AND
EXPENSES. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
<Page>
335-3/04 3CSRC
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (a fixed income
investment management firm). Previously, he served as Executive Vice President
and Chief Financial Officer of United Asset Management Corporation ("UAM") (a
holding company owning institutional investment management firms). Mr. Hayes is
the Jacob H. Schiff Professor of Investment Banking Emeritus of the Harvard
University Graduate School of Business Administration. Mr. Reamer is the
President, Chief Executive Officer and a Director of Asset Management Finance
Corp. (a specialty finance company serving the investment management industry)
and is President of Unicorn Corporation (an investment and financial advisory
services company). Formerly, Mr. Reamer was Chairman of Hellman, Jordan
Management Co., Inc. (an investment management company) and Advisory Director of
Berkshire Capital Corporation (an investment banking firm), Chairman of the
Board of UAM and Chairman, President and Director of the UAM Funds (mutual
funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a)-(d)
Eaton Vance Florida Insured Municipals Fund (the "Fund") is a series of Eaton
Vance Municipals Trust II (the "Trust"), a Massachusetts business trust. The
Trust is registered under the Investment Company Act of 1940 as an open-end
management investment company. Including the Fund, the Trust contains a total of
four series (collectively, the "Series"). This Form N-CSR relates to the Fund's
annual report.
The following table present the aggregate fees billed to the Fund for the Fund's
fiscal years ended January 31, 2003 and January 31, 2004 by the Fund's principal
accountant for professional services rendered for the audit of the Fund's annual
financial statements and fees billed for other services rendered by the
principal accountant during those periods.
<Page>
<Table>
<Caption>
YEARS ENDED 1/31/03 1/31/04
- ---------------------------------------------------------------------------------------
Audit Fees $ 8,827 $ 9,682
Audit-Related Fees(1) $ 0 $ 0
Tax Fees(2) $ 4,900 $ 5,200
All Other Fees(3) $ 0 $ 0
---------------------------------------
Total $ 13,727 $ 14,882
=======================================
</Table>
The following table presents the aggregate audit, audit-related, tax, and other
fees billed to all of the Series in the Trust by each Series's principal
accountant for the last two fiscal years of each Series.
<Table>
<Caption>
YEARS ENDED 1/31/03 1/31/04
- ---------------------------------------------------------------------------------------
Audit Fees $ 35,514 $ 38,625
Audit-Related Fees(1) $ 0 $ 0
Tax Fees(2) $ 19,300 $ 20,800
All Other Fees(3) $ 0 $ 0
---------------------------------------
Total $ 54,814 $ 59,425
=======================================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees.
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning and specifically include fees for tax return
preparation.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is
<Page>
specifically pre-approved under the Pre-Approval Policies, it must be separately
pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01 (c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed to all of the Series in the
Trust by each Series's principal accountant for the last two fiscal years of
each Series; and (ii) the aggregate non-audit fees (i.e., fees for
audit-related, tax, and other services) billed to Eaton Vance Corp. by each
Series's principal accountant for the last two fiscal years of each Series.
<Table>
<Caption>
YEARS ENDED 1/31/03 1/31/04
- ---------------------------------------------------------------------------------------
Registrant(1) $ 19,300 $ 20,800
Eaton Vance Corp.(2) $ 331,017 $ 458,858
</Table>
(1) Includes all of the Series in the Trust.
(2) The investment adviser, as well as any of its affiliates that provide
ongoing services to the Series, are subsidiaries of Eaton Vance Corp.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the investment
adviser and any entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant that were not
pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is compatible
with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Required in Filing.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not required in this filing.
<Page>
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a) It is the conclusion of the registrant's principal executive officer and
principal financial officer that the effectiveness of the registrant's current
disclosure controls and procedures (such disclosure controls and procedures
having been evaluated within 90 days of the date of this filing) provide
reasonable assurance that the information required to be disclosed by the
registrant has been recorded, processed, summarized and reported within the time
period specified in the Commission's rules and forms and that the information
required to be disclosed by the registrant has been accumulated and communicated
to the registrant's principal executive officer and principal financial officer
in order to allow timely decisions regarding required disclosure.
(b) There have been no significant changes in the registrant's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
EATON VANCE MUNICIPALS TRUST II (ON BEHALF OF EATON VANCE FLORIDA INSURED
MUNICIPALS FUND)
By: /S/ Thomas J. Fetter
-------------------------
Thomas J. Fetter
President
Date: March 18, 2004
--------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /S/ James L. O'Connor
-------------------------
James L. O'Connor
Treasurer
Date: March 18, 2004
--------------
By: /S/ Thomas J. Fetter
-------------------------
Thomas J. Fetter
President
Date: March 18, 2004
--------------
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (a fixed income
investment management firm). Previously, he served as Executive Vice President
and Chief Financial Officer of United Asset Management Corporation ("UAM") (a
holding company owning institutional investment management firms). Mr. Hayes is
the Jacob H. Schiff Professor of Investment Banking Emeritus of the Harvard
University Graduate School of Business Administration. Mr. Reamer is the
President, Chief Executive Officer and a Director of Asset Management Finance
Corp. (a specialty finance company serving the investment management industry)
and is President of Unicorn Corporation (an investment and financial advisory
services company). Formerly, Mr. Reamer was Chairman of Hellman, Jordan
Management Co., Inc. (an investment management company) and Advisory Director of
Berkshire Capital Corporation (an investment banking firm), Chairman of the
Board of UAM and Chairman, President and Director of the UAM Funds (mutual
funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a)-(d)
Eaton Vance Hawaii Municipals Fund (the "Fund") is a series of Eaton Vance
Municipals Trust II (the "Trust"), a Massachusetts business trust. The Trust is
registered under the Investment Company Act of 1940 as an open-end management
investment company. Including the Fund, the Trust contains a total of four
series (collectively, the "Series"). This Form N-CSR relates to the Fund's
annual report.
The following table present the aggregate fees billed to the Fund for the Fund's
fiscal years ended January 31, 2003 and January 31, 2004 by the Fund's principal
accountant for professional services rendered for the audit of the Fund's annual
financial statements and fees billed for other services rendered by the
principal accountant during those periods.
<Page>
<Table>
<Caption>
YEARS ENDED 1/31/03 1/31/04
- ---------------------------------------------------------------------------------------
Audit Fees $ 7,797 $ 8,549
Audit-Related Fees(1) $ 0 $ 0
Tax Fees(2) $ 4,700 $ 5,200
All Other Fees(3) $ 0 $ 0
---------------------------------------
Total $ 12,497 $ 13,749
=======================================
</Table>
The following table presents the aggregate audit, audit-related, tax, and other
fees billed to all of the Series in the Trust by each Series's principal
accountant for the last two fiscal years of each Series.
<Table>
<Caption>
YEARS ENDED 1/31/03 1/31/04
- ---------------------------------------------------------------------------------------
Audit Fees $ 35,514 $ 38,625
Audit-Related Fees(1) $ 0 $ 0
Tax Fees(2) $ 19,300 $ 20,800
All Other Fees(3) $ 0 $ 0
---------------------------------------
Total $ 54,814 $ 59,425
=======================================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees.
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning and specifically include fees for tax return
preparation.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is
<Page>
specifically pre-approved under the Pre-Approval Policies, it must be separately
pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01 (c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed to all of the Series in the
Trust by each Series's principal accountant for the last two fiscal years of
each Series; and (ii) the aggregate non-audit fees (i.e., fees for
audit-related, tax, and other services) billed to Eaton Vance Corp. by each
Series's principal accountant for the last two fiscal years of each Series.
<Table>
<Caption>
YEARS ENDED 1/31/03 1/31/04
- ---------------------------------------------------------------------------------------
Registrant(1) $ 19,300 $ 20,800
Eaton Vance Corp.(2) $ 331,017 $ 458,858
</Table>
(1) Includes all of the Series in the Trust.
(2) The investment adviser, as well as any of its affiliates that provide
ongoing services to the Series, are subsidiaries of Eaton Vance Corp.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the investment
adviser and any entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant that were not
pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is compatible
with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Required in Filing.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not required in this filing.
<Page>
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a) It is the conclusion of the registrant's principal executive officer and
principal financial officer that the effectiveness of the registrant's current
disclosure controls and procedures (such disclosure controls and procedures
having been evaluated within 90 days of the date of this filing) provide
reasonable assurance that the information required to be disclosed by the
registrant has been recorded, processed, summarized and reported within the time
period specified in the Commission's rules and forms and that the information
required to be disclosed by the registrant has been accumulated and communicated
to the registrant's principal executive officer and principal financial officer
in order to allow timely decisions regarding required disclosure.
(b) There have been no significant changes in the registrant's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
EATON VANCE MUNICIPALS TRUST II (ON BEHALF OF EATON VANCE HAWAII MUNICIPALS
FUND)
By: /S/ Thomas J. Fetter
-------------------------
Thomas J. Fetter
President
Date: March 18, 2004
--------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /S/ James L. O'Connor
-------------------------
James L. O'Connor
Treasurer
Date: March 18, 2004
--------------
By: /S/ Thomas J. Fetter
-------------------------
Thomas J. Fetter
President
Date: March 18, 2004
--------------
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (a fixed income
investment management firm). Previously, he served as Executive Vice President
and Chief Financial Officer of United Asset Management Corporation ("UAM") (a
holding company owning institutional investment management firms). Mr. Hayes is
the Jacob H. Schiff Professor of Investment Banking Emeritus of the Harvard
University Graduate School of Business Administration. Mr. Reamer is the
President, Chief Executive Officer and a Director of Asset Management Finance
Corp. (a specialty finance company serving the investment management industry)
and is President of Unicorn Corporation (an investment and financial advisory
services company). Formerly, Mr. Reamer was Chairman of Hellman, Jordan
Management Co., Inc. (an investment management company) and Advisory Director of
Berkshire Capital Corporation (an investment banking firm), Chairman of the
Board of UAM and Chairman, President and Director of the UAM Funds (mutual
funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a)-(d)
Eaton Vance Kansas Municipals Fund (the "Fund") is a series of Eaton Vance
Municipals Trust II (the "Trust"), a Massachusetts business trust. The Trust is
registered under the Investment Company Act of 1940 as an open-end management
investment company. Including the Fund, the Trust contains a total of four
series (collectively, the "Series"). This Form N-CSR relates to the Fund's
annual report.
The following table present the aggregate fees billed to the Fund for the Fund's
fiscal years ended January 31, 2003 and January 31, 2004 by the Fund's principal
accountant for professional services rendered for the audit of the Fund's annual
financial statements and fees billed for other services rendered by the
principal accountant during those periods.
<Page>
<Table>
<Caption>
YEARS ENDED 1/31/03 1/31/04
- ---------------------------------------------------------------------------------------
Audit Fees $ 7,900 $ 8,549
Audit-Related Fees(1) $ 0 $ 0
Tax Fees(2) $ 4,600 $ 5,200
All Other Fees(3) $ 0 $ 0
---------------------------------------
Total $ 12,500 $ 13,749
=======================================
</Table>
The following table presents the aggregate audit, audit-related, tax, and other
fees billed to all of the Series in the Trust by each Series's principal
accountant for the last two fiscal years of each Series.
<Table>
<Caption>
YEARS ENDED 1/31/03 1/31/04
- ---------------------------------------------------------------------------------------
Audit Fees $ 35,514 $ 38,625
Audit-Related Fees(1) $ 0 $ 0
Tax Fees(2) $ 19,300 $ 20,800
All Other Fees(3) $ 0 $ 0
---------------------------------------
Total $ 54,814 $ 59,425
=======================================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of the financial statements and are not reported under the category
of audit fees.
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning and specifically include fees for tax return
preparation.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is
<Page>
specifically pre-approved under the Pre-Approval Policies, it must be separately
pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01 (c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed to all of the Series in the
Trust by each Series's principal accountant for the last two fiscal years of
each Series; and (ii) the aggregate non-audit fees (i.e., fees for
audit-related, tax, and other services) billed to Eaton Vance Corp. by each
Series's principal accountant for the last two fiscal years of each Series.
<Table>
<Caption>
YEARS ENDED 1/31/03 1/31/04
- ---------------------------------------------------------------------------------------
Registrant(1) $ 19,300 $ 20,800
Eaton Vance Corp.(2) $ 331,017 $ 458,858
</Table>
(1) Includes all of the Series in the Trust.
(2) The investment adviser, as well as any of its affiliates that provide
ongoing services to the Series, are subsidiaries of Eaton Vance Corp.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the investment
adviser and any entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant that were not
pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is compatible
with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Required in Filing.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not required in this filing.
<Page>
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a) It is the conclusion of the registrant's principal executive officer and
principal financial officer that the effectiveness of the registrant's current
disclosure controls and procedures (such disclosure controls and procedures
having been evaluated within 90 days of the date of this filing) provide
reasonable assurance that the information required to be disclosed by the
registrant has been recorded, processed, summarized and reported within the time
period specified in the Commission's rules and forms and that the information
required to be disclosed by the registrant has been accumulated and communicated
to the registrant's principal executive officer and principal financial officer
in order to allow timely decisions regarding required disclosure.
(b) There have been no significant changes in the registrant's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
EATON VANCE MUNICIPALS TRUST II (ON BEHALF OF EATON VANCE KANSAS MUNICIPALS
FUND)
By: /S/ Thomas J. Fetter
-------------------------
Thomas J. Fetter
President
Date: March 18, 2004
--------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /S/ James L. O'Connor
-------------------------
James L. O'Connor
Treasurer
Date: March 18, 2004
--------------
By: /S/ Thomas J. Fetter
-------------------------
Thomas J. Fetter
President
Date: March 18, 2004
--------------