<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
July 31, 2004
-------------
Date of Reporting Period
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
[EATON VANCE(R) MANAGEMENT INVESTMENTS LOGO]
[GRAPHIC]
SEMIANNUAL REPORT JULY 31, 2004
[GRAPHIC]
EATON VANCE HIGH YIELD MUNICIPALS FUND
[GRAPHIC]
<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.
The Fund will file a schedule of its portfolio holdings on Form N-Q with the
Securities and Exchange Commission (the "SEC") for the first and third quarters
of each fiscal year. The Fund's Form N-Q will be available on the Eaton Vance
website www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the
EDGAR database on the SEC's website at www.sec.gov. Form N-Q may also be
reviewed and copied at the SEC's public reference room in Washington, D.C. (call
1-800-732-0330 for information on the operation of the public reference room).
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 HIGH YIELD MUNICIPALS FUND as of July 31, 2004
TABLE OF CONTENTS
<Table>
President's Letter to Shareholders 2
Market Recap 3
Fund Investment Update 4
Disclosure of Fund Expenses 5
Financial Statements 6
Management and Organization 26
</Table>
1
<Page>
EATON VANCE HIGH YIELD MUNICIPALS FUND as of July 31, 2004
LETTER TO SHAREHOLDERS
[PHOTO OF THOMAS J. FETTER]
Thomas J. Fetter
President
The municipal bond market consists of a broad array of bond issues, with widely
varying features and performance characteristics that may make them appropriate
for a specific investment scenario. In this edition of our continuing
educational series, we will feature zero coupon bonds - a variety of bond that
has seen increasing use by investors over the past 20 years - and discuss why
they can provide flexibility in managing a bond portfolio.
THE 1980'S BROUGHT NEW VARIATIONS TO THE BOND MARKET...
Any discussion of zero coupon bonds should start with the term "coupon."
Traditionally, bonds were issued in certificate form, with interest coupons
attached, which the owner would clip and present for payment. The coupon rate
indicates the rate of annual interest the issuer pays to the bondholder. For
example, a $1,000 bond with a 5% coupon makes two semiannual interest payments
of $25 each.
Today, most bonds are issued as "book-entry bonds," registered in the owner's
name, but not delivered in certificate form. That change has not only replaced
the antiquated coupon-clipping system, but also encouraged the development of
new types of bonds - including zero coupon bonds, introduced in 1982.
ZERO-COUPONS: NO INTEREST PAYMENTS, BUT A PREDICTABLE LUMP-SUM PAYMENT AT
MATURITY...
Zero coupon bonds do not have coupons attached and do not make regular interest
payments. Instead, they are issued at a discount, usually well below par, or
face value. As with coupon bonds, the bondholder receives face value if the bond
is held to its maturity date. Over time - from its issuance to its maturity -
zero coupon bonds accrete to par, meaning that their price appreciates over time
to reflect the accrual of "imputed" compound interest. An investor holding a
zero coupon bond to maturity receives a lump sum payment from the issuer for
face value reflecting the initial investment plus interest that has accrued.
Although zero coupon bonds do not pay any interest until they mature, the
accrual of "imputed" compound interest is recognized currently.
ZERO COUPON BONDS PROVIDE PORTFOLIO MANAGERS ADDITIONAL FLEXIBILITY...
For a portfolio manager, zero coupons can play a useful strategic role. Like
other bonds, zero coupon bond prices are affected by market conditions, changes
in an issuer's underlying fundamentals and fluctuations in interest rates.
Because they pay no coupon or periodic interest payments, they typically display
more price sensitivity than other bonds in response to changes in interest
rates. Therefore, zero coupon bonds can provide more appreciation potential in a
declining interest rate environment. Of course, zero coupons display increased
DOWNSIDE volatility in the event of an INCREASE in interest rates.
Some zero coupon bonds start out as coupon-bearing bonds, which are then
deposited with a trustee and subsequently "stripped" of their coupons. New
securities are then created from principal and coupon payments. This allows an
investor to choose a maturity to match the time when funds will be needed.
Moreover, because of their many permutations, zero coupon bonds can help balance
income-oriented bonds with performance-oriented zero coupons, providing more
versatility in managing a municipal portfolio.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
Vice President
September 8, 2004
CURRENTLY, THE FUND INVESTS ITS ASSETS IN A CORRESPONDING INVESTMENT COMPANY
(REFERRED TO AS A PORTFOLIO) THAT HAS THE SAME INVESTMENT OBJECTIVE AND POLICIES
AS THE FUND. EFFECTIVE SEPTEMBER 10, 2004, THE FUND WILL INVEST ITS ASSETS
DIRECTLY IN SECURITIES. THE FUND'S INVESTMENT OBJECTIVE AND OTHER INVESTMENT
POLICIES REMAIN UNCHANGED. IN ADDITION, BOSTON MANAGEMENT AND RESEARCH, THE
INVESTMENT ADVISER TO THE PORTFOLIO, WILL ACT AS INVESTMENT ADVISER TO THE FUND.
THE INVESTMENT ADVISORY FEE PAID REMAINS UNCHANGED.
[SIDENOTE]
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>
EATON VANCE HIGH YIELD MUNICIPALS FUND as of July 31, 2004
MARKET RECAP
The U.S. economy improved in the six months ended July 31, 2004, albeit at an
uneven pace. Consumer spending moderated somewhat in response to ongoing
concerns over the war on terror, sharply higher energy costs and an increasingly
perplexing job market. With signs of rising inflation, the bond markets gave
back some of their gains from 2003.
A MIXED PICTURE IN THE ECONOMY, ALTHOUGH SOME SECTORS REMAINED RELATIVELY
STRONG...
The nation's Gross Domestic Product grew by 3.0% in the second quarter of 2004,
following a 4.0% rise in the first quarter. Growth moderated in some key areas
of the economy. Retail sales slowed, with auto sales particularly disappointing.
Travel and tourism remained strong. Recent construction trends continued, with
residential building continuing to expand, while commercial activity lagged.
Interestingly, manufacturing activity continued to show increases, continuing a
trend spotted earlier in 2004. Steel production reflected robust demand. The
overall strength of the manufacturing sector was confirmed by spot shortages and
longer lead times for some manufactured goods.
HAVING STRENGTHENED EARLIER IN THE YEAR, JOB GROWTH SLOWED IN JULY...
Job growth has been a key focus of economists and analysts looking for a key to
the economy's direction. While monthly labor data can be quite volatile, trends
in the first half of the year showed signs of new momentum in job creation. The
nation's unemployment rate fell to 5.5% in July 2004, down from 6.2% a year
earlier. The economy registered job gains in technology, apparel, finance,
construction and manufacturing.
INTEREST RATES MOVED HIGHER, AS THE FEDERAL RESERVE PROMISED TO BATTLE
INFLATION...
Inflation re-emerged as a concern to investors and to the Federal Reserve. Oil
prices surged above $45 a barrel, pushing prices higher for gasoline,
petrochemicals and a wide range of oil-derivatives. Cost pressures were evident
for other production components, as well, including steel, and cement. Some farm
prices - including beef, chicken, and milk - also posted price hikes. The
Federal Reserve continued to monitor inflation and employment closely and -
after holding its benchmark Federal Funds rate steady for more than a year -
raised short-term rates by 25 basis points on June 30 and again on August 10.
Municipal bonds yield 98% of Treasury yields
<Table>
30-Year AAA-rated General Obligation (GO) Bonds* 5.09%
Taxable equivalent yield in 35.0% tax bracket 7.83%
30-Year Treasury bond 5.18%
</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 a Fund's yield. Statistics as of July
31, 2004.
Past performance is no guarantee of future results.
Source: Bloomberg, L.P.
Following the robust gains of last year, the municipal bond market - like the
Treasury market -turned in a weak performance during the six-month period ended
July 31, 2004. Ten-year Treasury bond yields - which were around 4.14% at
January 31, 2004 - rose to 4.44% by July 31, 2004, while 10-year municipal
yields rose from 3.68% to 4.01%. Amid rising concerns over inflation and a less
accommodative monetary policy, the Lehman Brothers Municipal Bond Index posted a
total return of 0.06% during the six months ended July 31, 2004.*
*It is not possible to invest directly in an Index.
THE VIEWS EXPRESSED THROUGHOUT THIS REPORT ARE THOSE OF THE PORTFOLIO MANAGER
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 HIGH YIELD MUNICIPALS FUND as of July 31, 2004
INVESTMENT UPDATE
[PHOTO OF THOMAS M. METZOLD]
THOMAS M. METZOLD
Portfolio Manager
MANAGEMENT UPDATE
- - The U.S. economy continued its uneven recovery in the six months ended July
31, 2004. While the manufacturing climate improved, rising interest rates,
higher energy costs and unease over the war on terror took an increasing toll
on consumer confidence. The nation's jobless rate in July 2004 was 5.5%, down
from 6.2% a year ago.
- - Industrial development revenue bonds (IDR) were the Portfolio's largest sector
weighting at July 31, 2004. Investments focused on sectors of the economy that
management believed were well-positioned to benefit from an economic recovery,
including transportation, paper and utilities bonds.
- - Other revenue bonds - non-sector-specific - were among the Portfolio's largest
weightings, including bonds for school and tourism projects, as well as tribal
gaming issues and tobacco bonds. Tobacco bonds generally underperformed during
the period amid concerns over revenue projections.
- - Senior living/life care bonds and other health care-related bonds constituted
significant investments for the Portfolio. Management focused on institutions
and projects that possess strong market share and the ability to keep costs in
check.
- - Effective September 3, 2004, Cynthia J. Clemson became co-portfolio manager of
the Portfolio. A vice president of Eaton Vance Management and Boston Research
and Management, Ms. Clemson manages other Eaton Vance municipal bond
portfolios and has been a portfolio manager at Eaton Vance since 1994.
FUND PERFORMANCE FOR THE PAST SIX MONTHS
- - During the six months ended July 31, 2004, the Fund's Class A shares had a
total return of -0.87%.(1) This return resulted from a decrease in net asset
value (NAV) per share to $9.82 on July 31, 2004 from $10.23 on January 31,
2004, and the reinvestment of $0.322 in tax-free income.(2)
- - The Fund's Class B shares had a total return of -1.35% during the six months
ended July 31, 2004,(1) the result of a decrease in NAV per share to $9.78
from $10.20, and the reinvestment of $0.285 in tax-free income.(2)
- - The Fund's Class C shares had a total return of -1.35% during the six months
ended July 31, 2004,(1) the result of a decrease in NAV per share to $9.08
from $9.47 , and the reinvestment of $0.263 in tax-free income.(2)
- - In comparison, the Lehman Brothers Municipal Bond Index had a total return of
0.06% during the six months ended July 31, 2004.(3)
- - Based on the Fund's most recent dividends and NAVs on July 31, 2004 of $9.82
per share for Class A, $9.78 per share for Class B and $9.08 per share for
Class C, the distribution rates were 6.47%, 5.71% and 5.69% for Class A, Class
B and Class C, respectively.(4) The distribution rates of Class A, Class B and
Class C are equivalent to taxable rates of 9.95%, 8.78% and 8.75%,
respectively.(5)
- - The SEC 30-day yields for Class A, Class B and Class C shares at July 31 were
6.51%, 6.07% and 6.06%, respectively.(6) The SEC 30-day yields of Class A,
Class B and Class C are equivalent to taxable yields of 10.02%, 9.34% and
9.32%, respectively.(5)
(1) THESE RETURNS DO NOT INCLUDE THE 4.75% MAXIMUM SALES CHARGE FOR CLASS A
SHARES OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGES (CDSC) FOR CLASS
B AND CLASS C SHARES. IF SALES CHARGES WERE REFLECTED, PERFORMANCE WOULD BE
LOWER.
(2) A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO FEDERAL INCOME AND/OR
FEDERAL ALTERNATIVE MINIMUM TAX.
(3) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX.
(4) THE FUND'S DISTRIBUTION RATE REPRESENTS ACTUAL DISTRIBUTIONS PAID TO
SHAREHOLDERS AND IS CALCULATED BY DIVIDING THE LAST DISTRIBUTION PER SHARE
(ANNUALIZED) BY THE NET ASSET VALUE.
(5) TAXABLE-EQUIVALENT RATES ASSUME MAXIMUM 35.00% FEDERAL INCOME TAX RATE. A
LOWER RATE WOULD RESULT IN LOWER TAX-EQUIVALENT FIGURES.
(6) THE FUND'S SEC YIELD IS CALCULATED BY DIVIDING THE NET INVESTMENT INCOME PER
SHARE FOR THE 30-DAY PERIOD BY THE OFFERING PRICE AT THE END OF THE PERIOD
AND ANNUALIZING THE RESULT.
(7) SEC RETURNS FOR CLASS A REFLECT THE MAXIMUM 4.75% SALES CHARGE. SEC RETURNS
FOR CLASS B REFLECT APPLICABLE CDSC BASED ON THE FOLLOWING SCHEDULE: 5% -
1ST AND 2ND YEARS; 4% - 3RD YEAR; 3% - 4TH YEAR; 2% - 5TH YEAR; 1% - 6TH
YEAR. I-YEAR SEC RETURN FOR CLASS C INCLUDES 1% CDSC.
(8) RATING DISTRIBUTION MAY NOT BE REPRESENTATIVE OF THE PORTFOLIO'S CURRENT OR
FUTURE INVESTMENTS.
FUND INFORMATION
as of July 31, 2004
<Table>
<Caption>
PERFORMANCE(7) CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
One Year 5.74% 4.85% 4.88%
Five Years 4.58 3.75 3.77
Life of Fund+ 6.36 5.49 4.21
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
One Year 0.76% -0.10% 3.89%
Five Years 3.57 3.44 3.77
Life of Fund+ 5.79 5.49 4.21
</Table>
+Inception Dates - Class A: 8/7/95; Class B: 8/7/95; Class C: 6/18/97
[CHART]
RATING DISTRIBUTION(8) By total investments
<Table>
AAA 16.9%
AA 3.0%
A 12.8%
BBB 10.8%
BB 3.0%
B 5.0%
CCC 5.0%
C 0.3%
Non-Rated 43.2%
</Table>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL AND
ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE WITH ALL
DISTRIBUTIONS REINVESTED. 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 THAN THE QUOTED RETURN.
FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO
www.eatonvance.com.
4
<Page>
EATON VANCE HIGH YIELD MUNICIPALS FUND as of July 31, 2004
FUND EXPENSES
Example: As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchases and redemption
fees (if applicable); and (2) ongoing costs, including management fees;
distribution or service fees; and other Fund expenses. This Example is intended
to help you understand your ongoing costs (in dollars) of investing in the Fund
and to compare these costs with the ongoing costs of investing in other mutual
funds. The Example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period (2/1/04-7/31/04).
Actual Expenses: The first line of the table below provides information about
actual account values and actual expenses. You may use the information in this
line, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second line of the table below
provides information about hypothetical account values and hypothetical expenses
based on the Fund's actual expense ratio and an assumed rate of return of 5% per
year, which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads) or redemption fees (if
applicable). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
EATON VANCE HIGH YIELD MUNICIPALS FUND
<Table>
<Caption>
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
(2/1/04) (7/31/04) (2/1/04-7/31/04)
- ----------------------------------------------------------------------------------------------------------
Actual
Class A $ 1,000.00 $ 991.30 $ 4.95
Class B $ 1,000.00 $ 986.50 $ 8.64
Class C $ 1,000.00 $ 986.50 $ 8.64
Hypothetical
(5% return)
Class A $ 1,000.00 $ 1,019.90 $ 5.02
Class B $ 1,000.00 $ 1,016.20 $ 8.77
Class C $ 1,000.00 $ 1,016.20 $ 8.77
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 1.00% for Class A
shares, 1.75% for Class B shares and 1.75% for Class C shares multiplied by
the average account value over the period, multiplied by 182/366 (to reflect
the one-half year period).
5
<Page>
EATON VANCE HIGH YIELD MUNICIPALS FUND as of July 31, 2004
FINANCIAL STATEMENTS (Unaudited)
STATEMENT OF ASSETS AND LIABILITIES
AS OF JULY 31, 2004
<Table>
ASSETS
Investment in High Yield Municipals Portfolio, at value
(identified cost, $579,712,677) $ 559,169,710
Receivable for Fund shares sold 2,240,911
- -----------------------------------------------------------------------------------------------
TOTAL ASSETS $ 561,410,621
- -----------------------------------------------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed $ 1,797,265
Dividends payable 1,640,814
Payable to affiliate for distribution and service fees 111,018
Accrued expenses 71,127
- -----------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 3,620,224
- -----------------------------------------------------------------------------------------------
NET ASSETS $ 557,790,397
- -----------------------------------------------------------------------------------------------
SOURCES OF NET ASSETS
Paid-in capital $ 602,907,925
Accumulated net realized loss from Portfolio (computed on
the basis of identified cost) (24,871,882)
Accumulated undistributed net investment income 297,321
Net unrealized depreciation from Portfolio (computed on
the basis of identified cost) (20,542,967)
- -----------------------------------------------------------------------------------------------
TOTAL $ 557,790,397
- -----------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSETS $ 305,274,541
SHARES OUTSTANDING 31,099,756
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of beneficial interest outstanding) $ 9.82
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 95.25 of $9.82) $ 10.31
- -----------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSETS $ 166,597,427
SHARES OUTSTANDING 17,026,176
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of beneficial interest outstanding) $ 9.78
- -----------------------------------------------------------------------------------------------
CLASS C SHARES
NET ASSETS $ 85,918,429
SHARES OUTSTANDING 9,458,246
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of beneficial interest outstanding) $ 9.08
- -----------------------------------------------------------------------------------------------
</Table>
On sales of $25,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
JULY 31, 2004
<Table>
INVESTMENT INCOME
Interest allocated from Portfolio $ 20,296,311
Expenses allocated from Portfolio (1,837,450)
- -----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME FROM PORTFOLIO $ 18,458,861
- -----------------------------------------------------------------------------------------------
EXPENSES
Trustees' fees and expenses $ 1,333
Distribution and service fees
Class A 350,754
Class B 923,433
Class C 435,735
Transfer and dividend disbursing agent fees 116,827
Registration fees 82,696
Printing and postage 15,997
Custodian fee 15,219
Legal and accounting services 13,250
Miscellaneous 2,796
- -----------------------------------------------------------------------------------------------
TOTAL EXPENSES $ 1,958,040
- -----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 16,500,821
- -----------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED
GAIN (LOSS) FROM PORTFOLIO
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (507,863)
Financial futures contracts 4,802,367
- -----------------------------------------------------------------------------------------------
NET REALIZED GAIN $ 4,294,504
- -----------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ (22,711,045)
Financial futures contracts (5,238,216)
- -----------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ (27,949,261)
- -----------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS $ (23,654,757)
- -----------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (7,153,936)
- -----------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
6
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
SIX MONTHS ENDED
INCREASE (DECREASE) JULY 31, 2004 YEAR ENDED
IN NET ASSETS (UNAUDITED) JANUARY 31, 2004
- -------------------------------------------------------------------------------------------
From operations --
Net investment income $ 16,500,821 $ 26,301,400
Net realized gain from investments and
financial futures contracts transactions 4,294,504 1,909,160
Net change in unrealized appreciation
(depreciation) from investments and
financial futures contracts (27,949,261) 18,593,451
- -------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ (7,153,936) $ 46,804,011
- -------------------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (9,052,201) $ (11,093,470)
Class B (5,270,420) (11,574,935)
Class C (2,475,818) (2,884,924)
- -------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (16,798,439) $ (25,553,329)
- -------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 94,090,053 $ 123,051,796
Class B 16,805,886 41,975,685
Class C 28,865,333 49,736,323
Net asset value of shares issued to
shareholders in payment
of distributions declared
Class A 3,021,735 3,067,860
Class B 1,833,816 3,513,046
Class C 946,688 1,171,511
Cost of shares redeemed
Class A (40,203,680) (43,590,070)
Class B (34,285,411) (32,110,446)
Class C (18,964,125) (10,042,789)
Net asset value of shares exchanged
Class A 22,528,760 --
Class B (22,528,760) --
- -------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS $ 52,110,295 $ 136,772,916
- -------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 28,157,920 $ 158,023,598
- -------------------------------------------------------------------------------------------
<Caption>
SIX MONTHS ENDED
JULY 31, 2004 YEAR ENDED
NET ASSETS (UNAUDITED) JANUARY 31, 2004
- -------------------------------------------------------------------------------------------
At beginning of period $ 529,632,477 $ 371,608,879
- -------------------------------------------------------------------------------------------
AT END OF PERIOD $ 557,790,397 $ 529,632,477
- -------------------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME
INCLUDED IN NET ASSETS
- -------------------------------------------------------------------------------------------
AT END OF PERIOD $ 297,321 $ 594,939
- -------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
7
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
CLASS A
-------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JANUARY 31,
JULY 31, 2004 --------------------------------------------------------------
(UNAUDITED) 2004(1) 2003(1) 2002(1)(2) 2001(1) 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of period $ 10.230 $ 9.730 $ 9.660 $ 9.800 $ 9.790 $ 11.380
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 0.316 $ 0.668 $ 0.682 $ 0.627 $ 0.640 $ 0.640
Net realized and unrealized gain (loss) (0.404) 0.486 0.031 (0.128) 0.015 (1.585)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ (0.088) $ 1.154 $ 0.713 $ 0.499 $ 0.655 $ (0.945)
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
From net investment income $ (0.322) $ (0.654) $ (0.643) $ (0.639) $ (0.645) $ (0.645)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.322) $ (0.654) $ (0.643) $ (0.639) $ (0.645) $ (0.645)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 9.820 $ 10.230 $ 9.730 $ 9.660 $ 9.800 $ 9.790
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) (0.87)% 12.25% 7.59% 5.18% 6.89% (8.62)%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 305,275 $ 238,169 $ 147,004 $ 134,950 $ 117,525 $ 114,610
Ratios (As a percentage of average daily net
assets):
Expenses(4) 1.01%(5) 1.02% 1.05% 1.07% 1.08% 1.01%
Expenses after custodian fee reduction(4) 1.00%(5) 1.02% 1.05% 1.07% 1.08% 1.00%
Net investment income 6.34%(5) 6.70% 7.01% 6.37% 6.52% 5.95%
Portfolio Turnover of the Portfolio 39% 40% 15% 24% 30% 58%
- --------------------------------------------------------------------------------------------------------------------------------
</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 less
than $0.001, increase net realized and unrealized losses per share by less
than $0.001 and increase the ratio of net investment income to average net
assets by less than 0.01%. 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 the Portfolio's allocated expenses.
(5) Annualized.
See notes to financial statements
8
<Page>
<Table>
<Caption>
CLASS B
-------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JANUARY 31,
JULY 31, 2004 --------------------------------------------------------------
(UNAUDITED) 2004(1) 2003(1) 2002(1)(2) 2001(1) 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of period $ 10.200 $ 9.700 $ 9.640 $ 9.770 $ 9.750 $ 11.330
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 0.281 $ 0.600 $ 0.606 $ 0.545 $ 0.559 $ 0.554
Net realized and unrealized gain (loss) (0.417) 0.479 0.022 (0.120) 0.016 (1.579)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ (0.136) $ 1.079 $ 0.628 $ 0.425 $ 0.575 $ (1.025)
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
From net investment income $ (0.284) $ (0.579) $ (0.568) $ (0.555) $ (0.555) $ (0.555)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.284) $ (0.579) $ (0.568) $ (0.555) $ (0.555) $ (0.555)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 9.780 $ 10.200 $ 9.700 $ 9.640 $ 9.770 $ 9.750
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) (1.35)% 11.44% 6.66% 4.38% 6.02% (9.32)%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 166,597 $ 212,391 $ 188,959 $ 187,232 $ 191,418 $ 204,348
Ratios (As a percentage of average daily
net assets):
Expenses(4) 1.76%(5) 1.77% 1.80% 1.82% 1.87% 1.77%
Expenses after custodian fee reduction(4) 1.75%(5) 1.77% 1.80% 1.82% 1.87% 1.76%
Net investment income 5.60%(5) 6.04% 6.25% 5.56% 5.72% 5.18%
Portfolio Turnover of the Portfolio 39% 40% 15% 24% 30% 58%
- --------------------------------------------------------------------------------------------------------------------------------
</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 less
than $0.001, increase net realized and unrealized losses per share by less
than $0.001 and increase the ratio of net investment income to average net
assets by less than 0.01%. 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 the Portfolio's allocated expenses.
(5) Annualized.
See notes to financial statements
9
<Page>
<Table>
<Caption>
CLASS C
-------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JANUARY 31,
JULY 31, 2004 --------------------------------------------------------------
(UNAUDITED) 2004(1) 2003(1) 2002(1)(2) 2001(1) 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of period $ 9.470 $ 9.000 $ 8.950 $ 9.060 $ 9.030 $ 10.490
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 0.257 $ 0.543 $ 0.561 $ 0.511 $ 0.516 $ 0.505
Net realized and unrealized gain (loss) (0.384) 0.465 0.017 (0.112) 0.019 (1.460)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ (0.127) $ 1.008 $ 0.578 $ 0.399 $ 0.535 $ (0.955)
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
From net investment income $ (0.263) $ (0.538) $ (0.528) $ (0.509) $ (0.505) $ (0.505)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.263) $ (0.538) $ (0.528) $ (0.509) $ (0.505) $ (0.505)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 9.080 $ 9.470 $ 9.000 $ 8.950 $ 9.060 $ 9.030
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) (1.35)% 11.53% 6.61% 4.43% 6.04% (9.38)%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 85,918 $ 79,072 $ 35,646 $ 23,470 $ 17,285 $ 17,699
Ratios (As a percentage of average daily
net assets):
Expenses(4) 1.76%(5) 1.77% 1.80% 1.82% 1.89% 1.84%
Expenses after custodian fee reduction(4) 1.75%(5) 1.77% 1.80% 1.82% 1.89% 1.83%
Net investment income 5.56%(5) 5.88% 6.22% 5.62% 5.70% 5.09%
Portfolio Turnover of the Portfolio 39% 40% 15% 24% 30% 58%
- --------------------------------------------------------------------------------------------------------------------------------
</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 less
than $0.001, increase net realized and unrealized losses per share by less
than $0.001 and increase the ratio of net investment income to average net
assets by less than 0.01%. 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 the Portfolio's allocated expenses.
(5) Annualized.
See notes to financial statements
10
<Page>
EATON VANCE HIGH YIELD MUNICIPALS FUND as of July 31, 2004
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 SIGNIFICANT ACCOUNTING POLICIES
Eaton Vance High Yield Municipals Fund (the Fund) is a diversified series
of Eaton Vance Municipals Trust II (the Trust). 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 Fund offers three classes of shares.
Class A shares are generally sold subject to a sales charge imposed at time
of purchase. Class B and Class C 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 the Fund automatically convert to Class A shares eight years after their
purchase as described in the 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. The Fund invests all of its investable assets in
interests in High Yield Municipals Portfolio (the Portfolio), a New York
trust, having the same investment objective as the Fund. The value of the
Fund's investment in the Portfolio reflects the Fund's proportionate
interest in the net assets of the Portfolio (99.9% at July 31, 2004). The
performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the
portfolio of investments, are included elsewhere in this report and should
be read in conjunction with the Fund's financial statements.
The following is a summary of significant accounting policies consistently
followed by the Fund 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 VALUATION -- Valuation of securities by the Portfolio is
discussed in Note 1A of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report.
B INCOME -- The Fund's net investment income consists of the Fund's
pro-rata share of the net investment income of the Portfolio, less all
actual and accrued expenses of the Fund determined in accordance with
accounting principles generally accepted in the United States of America.
C FEDERAL TAXES -- The 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 Fund, for federal income tax purposes, had a capital loss
carryover of $23,188,200, which will reduce the 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 Fund of any liability for federal income or excise tax. Such capital
loss carryover will expire January 31, 2012 ($707,905), January 31, 2011
($12,893,267), January 31, 2010 ($628,329), January 31, 2009 ($4,844,026),
January 31, 2008 ($2,693,858) and January 31, 2006 ($1,420,815). Dividends
paid by the Fund from net tax-exempt interest on municipal bonds allocated
from the Portfolio are not includable by shareholders as gross income for
federal income tax purposes because the Fund and Portfolio intend to meet
certain requirements of the Internal Revenue Code applicable to regulated
investment companies which will enable the Fund 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.
Additionally, at January 31, 2004, the Fund had net capital losses of
$7,970,181 attributable to security transactions incurred after October 31,
2003. These are treated as arising on the first day of the Fund's taxable
year ended January 31, 2005.
D EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as
custodian to the Fund and the Portfolio. Pursuant to the respective
custodian agreements, IBT receives a fee reduced by credits which are
determined based on the average daily cash balances the Fund or the
Portfolio maintains with IBT. All credit balances used to reduce the Fund's
custodian fees are reported as a reduction of total expenses in the
Statement of Operations.
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.
11
<Page>
F 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.
G 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.
H OTHER -- Investment transactions are accounted for on a trade-date basis.
I INTERIM FINANCIAL STATEMENTS -- The interim financial statements relating
to July 31, 2004 and for the six months then ended have not been audited by
an independent registered public accounting firm, but in the opinion of the
Fund's management reflect all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
2 DISTRIBUTIONS TO SHAREHOLDERS
The net income of the 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 the 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 Fund distinguishes 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.
3 SHARES OF BENEFICIAL INTEREST
The Fund's 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 Fund) and classes. Transactions in Fund shares were as follows:
<Table>
<Caption>
SIX MONTHS ENDED
JULY 31, 2004 YEAR ENDED
CLASS A (UNAUDITED) JANUARY 31, 2004
-----------------------------------------------------------------------------------
Sales 9,329,256 12,239,678
Issued to shareholders electing to
receive payments of distributions
in Fund shares 303,442 306,447
Redemptions (4,035,019) (4,382,440)
Exchange from Class B shares 2,226,806 --
-----------------------------------------------------------------------------------
NET INCREASE 7,824,485 8,163,685
-----------------------------------------------------------------------------------
<Caption>
SIX MONTHS ENDED
JULY 31, 2004 YEAR ENDED
CLASS B (UNAUDITED) JANUARY 31, 2004
-----------------------------------------------------------------------------------
Sales 1,680,792 4,221,260
Issued to shareholders electing to
receive payments of distributions
in Fund shares 183,309 353,078
Redemptions (3,426,838) (3,235,608)
Exchange to Class A shares (2,233,272) --
-----------------------------------------------------------------------------------
NET INCREASE (DECREASE) (3,796,009) 1,338,730
-----------------------------------------------------------------------------------
<Caption>
SIX MONTHS ENDED
JULY 31, 2004 YEAR ENDED
CLASS C (UNAUDITED) JANUARY 31, 2004
-----------------------------------------------------------------------------------
Sales 3,069,851 5,349,946
Issued to shareholders electing to
receive payments of distributions
in Fund shares 102,332 126,693
Redemptions (2,064,030) (1,085,426)
-----------------------------------------------------------------------------------
NET INCREASE 1,108,153 4,391,213
-----------------------------------------------------------------------------------
</Table>
12
<Page>
4 INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services
(See Note 2 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report). Except as to Trustees of the Fund and
the Portfolio who are not members of EVM's or BMR's organization, officers
and Trustees receive remuneration for their services to the Fund out of the
investment advisor fee earned by BMR. Certain officers and Trustees of the
Fund and of the Portfolio are officers of EVM and BMR. EVM serves as the
sub-transfer agent of the Fund and receives from the transfer agent an
aggregate fee based upon the actual expenses incurred by EVM in the
performance of those activities. For the six months ended July 31, 2004,
EVM earned $8,995 in sub-transfer agent fees. The Fund was informed that
Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM and the Fund's
principal underwriter, received $62,328 as its portion of the sales charge
on sales of Class A shares for the six months ended July 31, 2004.
5 DISTRIBUTION AND SERVICE PLANS
The Fund has in effect distribution plans for Class B shares (Class B Plan)
and Class C shares (Class C Plan) pursuant to Rule 12b-1 under the
Investment Company Act of 1940 and a service plan for Class A shares (Class
A Plan) (collectively, the Plans). The Class B and Class C Plans require
the Fund to pay amounts equal to 1/365 of 0.75% of the Fund's average daily
net assets attributable to Class B and Class C shares for providing ongoing
distribution services and facilities to the Fund. The 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% and 6.25% of the aggregate amount received by the Fund
for the Class B and Class C shares sold, respectively, 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
daily amounts theretofore paid to EVD by each respective class. The Fund
paid or accrued $692,575 and $326,801 for Class B and Class C shares,
respectively, to or payable to EVD for the six months ended July 31, 2004,
representing 0.75% (annualized) of the average daily net assets for Class B
and Class C shares. At July 31, 2004, the amount of Uncovered Distribution
Charges of EVD calculated under the Plan was approximately $17,912,000 and
$8,623,000 for Class B and Class C shares, respectively.
The Plans authorize the Fund to make payments of service fees to EVD,
investment dealers and other persons in amounts equal to 0.25% (annualized)
of the Fund's average daily net assets attributable to Class A, Class B,
and Class C 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 the Fund to EVD and, as such are not subject
to automatic discontinuance where there are no outstanding Uncovered
Distribution Charges of EVD. Service fee payments for the six months ended
July 31, 2004 amounted to $350,754, $230,858, and $108,934 for Class A,
Class B, and Class C shares, respectively.
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 and on
redemptions of Class C shares made within one year 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 gain distributions. Class A shares may
be subject to a 1% CDSC if redeemed within one year of purchase (depending
upon the circumstances of purchase). 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. Class C shares will be subject to a 1% CDSC if redeemed
within one year of purchase. 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 are
paid to EVD to reduce the amount of Uncovered Distribution Charges
calculated under the Fund's Distribution Plan (see Note 5). CDSC charges
received when no Uncovered Distribution Charges exist will be credited to
the Fund. EVD received approximately $165,000 and $31,000 of CDSC paid by
shareholders for Class B shares and Class C shares, respectively, for the
six months ended July 31, 2004.
7 INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio for the
six months ended July 31, 2004 aggregated $164,180,571 and $128,312,570,
respectively.
13
<Page>
HIGH YIELD MUNICIPALS PORTFOLIO as of July 31, 2004
PORTFOLIO OF INVESTMENTS (Unaudited)
TAX-EXEMPT INVESTMENTS -- 97.3%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------------------------------------------------------------
COGENERATION -- 2.5%
$ 7,000 Maryland Energy Cogeneration, (AES Warrior Run), (AMT),
7.40%, 9/1/19 $ 7,157,570
2,000 Ohio Water Development Authority, Solid Waste Disposal,
(Bay Shore Power), (AMT), 5.875%, 9/1/20 1,865,720
4,900 Ohio Water Development Authority, Solid Waste Disposal,
(Bay Shore Power), (AMT), 6.625%, 9/1/20 4,928,469
- ----------------------------------------------------------------------------------------------------------------------
$ 13,951,759
- ----------------------------------------------------------------------------------------------------------------------
EDUCATION -- 1.0%
$ 3,000 California Educational Facilities Authority, Residual Certificates,
Variable Rate, 12/1/32(1)(2) $ 3,321,660
2,000 New Hampshire HEFA, (Colby-Sawyer College),
7.50%, 6/1/26(3) 2,084,400
- ----------------------------------------------------------------------------------------------------------------------
$ 5,406,060
- ----------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 5.8%
$ 3,000 Brazos River Authority, TX, PCR (Texas Energy Co.), (AMT),
6.75%, 4/1/38 $ 3,376,650
4,200 Clark County, NV, (Nevada Power), (AMT),
5.90%, 10/1/30 3,685,290
1,250 Connecticut Development Authority, (Connecticut Light and
Power), Variable Rate, 9/1/08(2)(4) 1,345,600
2,500 Connecticut Development Authority, (Western Mass Electric),
Variable Rate, 9/1/22(2)(4) 2,691,200
3,965 Matagorda County, TX, Navigation District No.1, (Reliant
Energy), 5.95%, 5/1/30 3,902,987
4,000 Matagorda County, TX, Navigation District No.1, (Reliant
Energy), 8.00%, 5/1/29 4,407,920
1,500 Mississippi Business Finance Corp., (System Energy
Resources, Inc.), 5.90%, 5/1/22 1,512,855
5,880 Puerto Rico Electric Power Authority, 5.125%, 7/1/29 5,894,347
5,500 Puerto Rico Electric Power Authority, 5.25%, 7/1/31 5,558,300
- ----------------------------------------------------------------------------------------------------------------------
$ 32,375,149
- ----------------------------------------------------------------------------------------------------------------------
ESCROWED / PREREFUNDED -- 3.6%
$ 25,000 Bakersfield, CA, (Bakersfield Assisted Living Center),
Escrowed to Maturity, 0.00%, 4/15/21 $ 10,884,250
9,500 Dawson Ridge, CO, Metropolitan District #1, Escrowed to
Maturity, 0.00%, 10/1/22 3,694,455
3,500 Dawson Ridge, CO, Metropolitan District #1, Escrowed to
Maturity, 0.00%, 10/1/22 1,361,115
$ 3,685 Forsyth County, GA, Hospital Authority, (Georgia Baptist
Health Care System), Escrowed to Maturity,
6.25%, 10/1/18 $ 4,328,622
- ----------------------------------------------------------------------------------------------------------------------
$ 20,268,442
- ----------------------------------------------------------------------------------------------------------------------
GENERAL OBLIGATIONS -- 6.8%
$ 1,195 California, 5.00%, 2/1/32 $ 1,162,627
4,655 California, 5.10%, 2/1/34 4,587,921
2,250 California, 5.25%, 2/1/30 2,260,372
2,000 California, 5.25%, 2/1/33 2,007,480
15,420 California, 5.25%, 4/1/34 15,480,292
5,940 Georgia, 2.00%, 12/1/23 3,794,650
3,000 New York, NY, Variable Rate, 6/1/28(1)(2) 3,118,080
5,000 Puerto Rico Commonwealth, Variable Rate, 7/1/29(2)(4) 5,582,150
- ----------------------------------------------------------------------------------------------------------------------
$ 37,993,572
- ----------------------------------------------------------------------------------------------------------------------
HEALTH CARE-MISCELLANEOUS -- 3.5%
$ 2,845 Illinois Development Finance Authority, (Community
Rehabilitation Providers), 5.60%, 7/1/19 $ 2,755,468
1,439 Osceola County, FL, IDA, Community Provider Pooled
Loan-93, 7.75%, 7/1/17 1,448,037
2,339 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 6.75%, 12/1/36 2,409,856
1,206 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 7.00%, 12/1/36 1,250,514
997 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 7.00%, 12/1/36 1,034,260
2,176 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 7.75%, 12/1/36 2,237,157
1,830 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 7.90%, 12/1/36 1,910,447
343 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 8.25%, 12/1/36 363,503
780 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 8.375%, 12/1/36 813,118
2,160 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 8.50%, 12/1/36 2,212,344
907 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 8.70%, 12/1/36 948,577
</Table>
See notes to financial statements
14
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------------------------------------------------------------
HEALTH CARE-MISCELLANEOUS (CONTINUED)
$ 1,813 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 8.81%, 9/1/36 $ 1,903,955
544 Tax Revenue Exempt Securities Trust, Community Health
Provider, (Pooled Loan Program Various States Trust
Certificates), 8.875%, 12/1/36 572,176
- ----------------------------------------------------------------------------------------------------------------------
$ 19,859,412
- ----------------------------------------------------------------------------------------------------------------------
HOSPITAL -- 5.8%
$ 2,500 California Health Facilities Authority, (Cedars Sinai Medical
Center), Variable Rate, 12/1/34(2)(4) $ 2,804,425
2,220 Chautauqua County, NY, IDA, (Women's Christian
Association), 6.40%, 11/15/29 2,050,503
1,000 Henderson, NV, Health Care Facility, 5.625%, 7/1/24 995,210
7,000 Maricopa County, AZ, IDA, (Catholic Healthcare),
5.375%, 7/1/23 6,861,260
2,000 Maricopa County, AZ, IDA, (Catholic Healthcare),
5.50%, 7/1/26 1,948,980
2,000 New Hampshire HEFA, (Littleton Hospital), 6.00%, 5/1/28 1,754,120
2,000 New Jersey Health Care Facilities Financing Authority,
(Trinitas Hospital), 7.50%, 7/1/30 2,221,100
1,000 Oklahoma Development Finance Authority, (Hillcrest
Healthcare), 5.00%, 8/15/08 1,080,000
1,500 Oklahoma Development Finance Authority, (Hillcrest
Healthcare), 5.20%, 8/15/11 1,620,000
3,010 Oklahoma Development Finance Authority, (Hillcrest
Healthcare), 5.625%, 8/15/29 3,250,800
1,500 Oklahoma Development Finance Authority, (Hillcrest
Healthcare), 5.75%, 8/15/12 1,620,000
65 Oklahoma Development Finance Authority, (Hillcrest
Healthcare), 5.75%, 8/15/13 70,200
2,560 Oneida County, NY, Industrial Development Agency,
(Elizabeth Medical Center), 6.00%, 12/1/29 2,271,770
875 Prince George's County, MD, (Greater Southeast Healthcare
System), 6.375%, 1/1/13(5) 210,875
5,900 Prince George's County, MD, (Greater Southeast Healthcare
System), 6.375%, 1/1/23(5) 1,421,900
2,200 Sullivan County, TN, Health Educational and Housing Facility
Board, (Wellmont Health System), 6.25%, 9/1/32 2,198,394
- ----------------------------------------------------------------------------------------------------------------------
$ 32,379,537
- ----------------------------------------------------------------------------------------------------------------------
HOUSING -- 5.0%
$ 450 Atlanta, GA, Urban Residential Finance Authority, (New
Community John Hope Project), (AMT), 7.25%, 6/1/07 $ 450,684
4,000 Charter Mac Equity Trust, TN, 6.00%, 4/30/19 4,117,160
2,500 Florida Capital Projects Finance Authority, Student Housing
Revenue, (Florida University), 7.75%, 8/15/20 2,529,750
$ 455 Florida Capital Projects Finance Authority, Student Housing
Revenue, (Florida University), 9.50%, 8/15/05 $ 453,549
1,830 Jefferson County, MO, IDA, Multifamily, (Riverview Bend
Apartments), (AMT), 6.75%, 11/1/29 1,691,707
485 Jefferson County, MO, IDA, Multifamily, (Riverview Bend
Apartments), (AMT), 7.125%, 11/1/29 456,632
3,775 Maricopa County, AZ, IDA, (National Health Facilities II),
6.375%, 1/1/19 3,033,552
1,500 Maricopa County, AZ, IDA, (National Health Facilities II),
6.625%, 7/1/33 1,131,045
2,320 Maricopa County, AZ, IDA, (National Health Facilities II),
8.00%, 1/1/34 1,695,015
5,000 Muni Mae Tax-Exempt Bond, LLC, (AMT),
6.875%, 6/30/09 5,455,300
3,290 Oregon Health Authority, (Trillium Affordable Housing),
(AMT), 6.75%, 2/15/29 2,907,570
1,440 Oregon Health Authority, (Trillium Affordable Housing),
(AMT), 6.75%, 2/15/29 1,258,459
1,020 Texas Student Housing Corp., (University of Northern
Texas), 9.375%, 7/1/06 1,002,487
2,000 Texas Student Housing Corp., (University of Northern
Texas), 11.00%, 7/1/31 1,801,660
- ----------------------------------------------------------------------------------------------------------------------
$ 27,984,570
- ----------------------------------------------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT REVENUE -- 19.0%
$ 2,329 Abia Development Corp., TX, (Austin Cargoport
Development), (AMT), 6.50%, 10/1/24 $ 2,106,405
3,065 Abia Development Corp., TX, (Austin Cargoport
Development), (AMT), 9.25%, 10/1/21 3,329,816
4,500 Alabama IDA, Solid Waste Disposal, (Pine City Fiber Co.),
(AMT), 6.45%, 12/1/23 4,453,965
9,095 Alliance Airport Authority, TX, (American Airlines), (AMT),
7.50%, 12/1/29 6,246,264
2,000 Camden County, NJ, (Holt Hauling), (AMT),
9.875%, 1/1/21(5) 280,000
3,900 Carbon County, UT, (Laidlaw Environmental Services Inc.),
(AMT), 7.45%, 7/1/17 4,027,140
6,810 Dallas-Fort Worth, TX, International Airport Facility
Improvements Corp., (AMT), 7.625%, 11/1/21 2,984,687
1,665 Dallas-Fort Worth, TX, International Airport Facility
Improvements Corp., DRIVERS,
Variable Rate, 11/1/18(1)(2) 2,010,038
12,480 Denver, CO, City and County Special Facilities,
(United Airlines), (AMT), 6.875%, 10/1/32 9,172,800
7,750 Effingham County, GA, Solid Waste Disposal, (Fort James),
(AMT), 5.625%, 7/1/18 7,463,793
225 Florence County, SC, (Stone Container),
7.375%, 2/1/07 454,370
</Table>
See notes to financial statements
15
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT REVENUE (CONTINUED)
$ 2,700 Hancock County, KY, (Southwire Co.), (AMT),
7.75%, 7/1/25 $ 2,699,919
4,000 Hardeman County, TN, (Correctional Facilities Corp.),
7.75%, 8/1/17 4,143,480
5,200 Houston, TX, Airport System, (Continental Airlines),
6.75%, 7/1/29 4,019,392
6,365 Indianapolis, IN, Airport Authority, (United Airlines), (AMT),
6.50%, 11/15/31(5) 1,185,438
3,930 Kansas City, MO, IDA, (Airline Cargo Facilities), (AMT),
8.50%, 1/1/17 4,116,203
750 Kenton County, KY, Airport, (Delta Airlines), (AMT),
6.125%, 2/1/22 480,203
5,350 Kenton County, KY, Airport, (Delta Airlines), (AMT),
7.125%, 2/1/21 3,892,232
1,000 Kenton County, KY, Airport, (Delta Airlines), (AMT),
7.50%, 2/1/20 760,970
2,730 Maryland EDA, (AFCO Cargo), (AMT), 6.50%, 7/1/24 2,510,372
655 Maryland EDA, (Air Cargo), (AMT), 7.34%, 7/1/24 656,592
1,300 Michigan Strategic Fund, (S.D. Warren), (AMT),
7.375%, 1/15/22 1,322,360
3,400 Morgantown, KY, Solid Waste Revenue,
(IMCO Recycling, Inc.), (AMT), 7.45%, 5/1/22 3,178,354
505 New Albany, IN, IDA, (K-Mart), 7.40%, 6/1/06 491,759
13,000 New Jersey EDA, (Continental Airlines), (AMT),
6.25%, 9/15/29 9,747,400
3,000 New Jersey EDA, (Continental Airlines), (AMT),
6.40%, 9/15/23 2,357,460
4,000 New Jersey EDA, (Holt Hauling), (AMT),
7.90%, 3/1/27(5) 3,895,000
500 New Jersey EDA, (Holt Hauling), (AMT),
8.95%, 12/15/18(5) 405,625
5,995 New York City, NY, Industrial Development Agency,
(American Airlines, Inc.), (AMT), 8.50%, 8/1/28 4,591,271
2,000 Perry County, KY, TJ International Inc., (AMT),
6.55%, 4/15/27 2,063,460
1,700 Phoenix, AZ, IDA, (America West Airlines, Inc.), (AMT),
6.25%, 6/1/19 1,309,510
9,415 Puerto Rico Port Authority, (American Airlines), (AMT),
6.25%, 6/1/26 6,333,659
825 Puerto Rico Port Authority, (American Airlines), (AMT),
6.30%, 6/1/23 555,052
3,000 Rumford, ME, Solid Waste Disposal, (Boise Cascade Corp.),
6.875%, 10/1/26 3,015,780
- ----------------------------------------------------------------------------------------------------------------------
$ 106,260,769
- ----------------------------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 1.3%
$ 3,600 Memphis, TN, Electric System, (MBIA),
Variable Rate, 12/1/11(1)(2) $ 4,384,584
$ 1,500 Puerto Rico Electric Power Authority, RITES, (FSA),
Variable Rate, 7/1/20(1)(2) $ 1,645,920
1,000 Wamego, KS, PCR, (MBIA), 5.30%, 6/1/31 1,030,150
- ----------------------------------------------------------------------------------------------------------------------
$ 7,060,654
- ----------------------------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 1.9%
$ 1,000 California, Residual Certificates, (AMBAC),
Variable Rate, 10/1/30(1)(2) $ 1,122,150
1,520 California, RITES, (AMBAC), Variable Rate, 2/1/28(1)(2) 1,600,530
1,580 Mississippi, (FSA), Variable Rate, 11/1/21(1)(2) 2,078,379
4,900 Puerto Rico General Obligation, (FSA),
Variable Rate, 7/1/27(1)(2) 6,037,486
- ----------------------------------------------------------------------------------------------------------------------
$ 10,838,545
- ----------------------------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 0.5%
$ 2,415 California Statewide Communities Development Authority,
(Sutter Health), Residual Certificates, (FSA),
Variable Rate, 8/15/27(1)(2) $ 2,902,492
- ----------------------------------------------------------------------------------------------------------------------
$ 2,902,492
- ----------------------------------------------------------------------------------------------------------------------
INSURED-MISCELLANEOUS -- 1.5%
$ 10,510 Harris County-Houston, TX, Sports Authority, (MBIA),
0.00%, 11/15/26 $ 3,069,761
10,000 Harris County-Houston, TX, Sports Authority, (MBIA),
0.00%, 11/15/28 2,560,400
2,500 Harris County-Houston, TX, Sports Authority, (MBIA),
5.25%, 11/15/40 2,515,900
- ----------------------------------------------------------------------------------------------------------------------
$ 8,146,061
- ----------------------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 0.0%
$ 75 South Orange County, CA, Public Financing Authority, (FGIC),
DRIVERS, Variable Rate, 8/15/15(1)(2) $ 239,888
- ----------------------------------------------------------------------------------------------------------------------
$ 239,888
- ----------------------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 4.6%
$ 5,480 California Infrastructure and Economic Development,
(Bay Area Toll Bridges), (AMBAC), 5.00%, 7/1/33 $ 5,489,535
6,735 Massachusetts Turnpike Authority, Metropolitan Highway
System, (MBIA), 5.00%, 1/1/37 6,686,575
2,985 Monroe County, NY, Airport Authority, (MBIA), DRIVERS,
(AMT), Variable Rate, 1/1/18(2)(4) 3,753,249
2,000 New Jersey Turnpike Authority, RITES, (MBIA),
Variable Rate, 1/1/30(1)(2) 2,266,460
3,000 Puerto Rico Highway and Transportation Authority, (FSA),
Variable Rate, 7/1/32(1)(2) 3,078,720
</Table>
See notes to financial statements
16
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION (CONTINUED)
$ 20,000 Texas State Turnpike Authority, (AMBAC),
0.00%, 8/15/30 $ 4,628,000
- ----------------------------------------------------------------------------------------------------------------------
$ 25,902,539
- ----------------------------------------------------------------------------------------------------------------------
INSURED-UTILITIES -- 0.8%
$ 4,500 Los Angeles, CA, Department of Water and Power, (FGIC),
5.00%, 7/1/43 $ 4,432,995
- ----------------------------------------------------------------------------------------------------------------------
$ 4,432,995
- ----------------------------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 0.4%
$ 2,550 Connecticut Development Authority, Aquarion Water, RITES,
(XLCA), Variable Rate, 7/1/07(1)(2) $ 2,108,850
- ----------------------------------------------------------------------------------------------------------------------
$ 2,108,850
- ----------------------------------------------------------------------------------------------------------------------
LEASE REVENUE / CERTIFICATES OF PARTICIPATION -- 0.4%
$ 2,000 New Jersey EDA, (School Facilities),
Variable Rate, 6/15/28(2)(4) $ 2,006,020
- ----------------------------------------------------------------------------------------------------------------------
$ 2,006,020
- ----------------------------------------------------------------------------------------------------------------------
NURSING HOME -- 3.9%
$ 3,260 Bell County, TX, (Heritage Oaks Healthcare),
6.70%, 6/1/29 $ 1,010,600
2,960 Clovis, NM, IDR, (Retirement Ranches, Inc.),
7.75%, 4/1/19 3,042,466
2,300 Colorado HFA, (Volunteers of America),
5.75%, 7/1/20 2,069,264
3,600 Colorado HFA, (Volunteers of America),
5.875%, 7/1/28 3,136,536
1,100 Colorado HFA, (Volunteers of America),
6.00%, 7/1/29 966,405
2,500 Massachusetts IFA, (Age Institute of Massachusetts),
8.05%, 11/1/25 2,469,475
1,180 Mississippi Business Finance Corp., (Magnolia Healthcare),
7.99%, 7/1/25 953,169
1,860 Ohio HFA, Retirement Rental Housing,
(Encore Retirement Partners), 6.75%, 3/1/19 1,587,826
3,838 Tarrant County, TX, Health Facilities Authority,
8.00%, 9/1/25(5) 115,136
1,475 Tarrant County, TX, Health Facilities Authority,
(3927 Foundation), 10.125%, 9/1/09(5) 14,751
4,328 Tarrant County, TX, Health Facilities Authority,
(3927 Foundation), 10.25%, 9/1/19(5) 43,284
3,130 Westmoreland, PA, (Highland Health Systems, Inc.),
9.25%, 6/1/22 3,146,151
$ 3,685 Wisconsin HEFA, (Wisconsin Illinois Senior Housing),
7.00%, 8/1/29 $ 3,404,461
- ----------------------------------------------------------------------------------------------------------------------
$ 21,959,524
- ----------------------------------------------------------------------------------------------------------------------
OTHER REVENUE -- 12.5%
$ 6,000 California Statewide Communities Development Authority,
(East Valley Tourist Development Authority),
8.25%, 10/1/14 $ 6,089,460
1,000 California Statewide Communities Development Authority,
(East Valley Tourist Development Authority),
9.25%, 10/1/20 1,084,990
3,000 California Statewide Communities Development Authority,
(East Valley Tourist Development Authority),
11.00%, 10/1/20 3,001,560
4,300 Capital Trust Agency, FL, (Seminole Tribe Convention),
8.95%, 10/1/33 4,974,283
9,100 Capital Trust Agency, FL, (Seminole Tribe Convention),
10.00%, 10/1/33 10,859,940
5,375 Golden Tobacco Securitization Corp., CA, 5.50%, 6/1/33 5,402,574
2,295 Golden Tobacco Securitization Corp., CA, 6.625%, 6/1/40 2,021,849
4,755 Golden Tobacco Securitization Corp., CA, 6.75%, 6/1/39 4,291,292
9,125 Golden Tobacco Securitization Corp., CA,
Variable Rate, 6/1/33(2)(4) 9,218,623
3,300 Golden Tobacco Securitization Corp., CA,
Variable Rate, 6/1/31(2)(4) 3,381,906
2,077 Pueblo of Santa Ana, NM, 15.00%, 4/1/24 2,078,992
1,200 Puerto Rico Infrastructure Financing Authority,
Variable Rate, 10/1/32(1)(2) 1,543,080
2,000 Sandoval County, NM, (Santa Ana Pueblo),
7.75%, 7/1/15 2,011,620
2,525 Santa Fe, NM, (1st Interstate Plaza), 8.00%, 7/1/13 2,531,072
9,240 Tobacco Settlement Financing Corp., NJ, 6.75%, 6/1/39 8,338,915
3,525 Tobacco Settlement Financing Corp., NJ,
Variable Rate, 6/1/39(2)(4) 2,837,519
- ----------------------------------------------------------------------------------------------------------------------
$ 69,667,675
- ----------------------------------------------------------------------------------------------------------------------
SENIOR LIVING / LIFE CARE -- 8.1%
$ 7,740 Albuquerque, NM, Retirement Facilities,
(La Vida Liena Retirement Center), 6.60%, 12/15/28 $ 7,467,088
2,500 Arizona Health Facilities Authority,
(Care Institute, Inc. - Mesa), 7.625%, 1/1/26(6) 1,954,150
1,000 Chester, PA, IDA, (Senior Life-Choice of Kimberton),
(AMT), 8.50%, 9/1/25 1,032,060
3,500 Delaware County, PA, (White Horse Village),
7.30%, 7/1/14 3,583,125
1,585 Delaware County, PA, IDA, (Glen Riddle), (AMT),
8.625%, 9/1/25 1,649,351
</Table>
See notes to financial statements
17
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- ----------------------------------------------------------------------------------------------------------------------
SENIOR LIVING / LIFE CARE (CONTINUED)
$ 1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 1/1/13 $ 447,930
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 7/1/13 427,070
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 1/1/14 405,350
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 7/1/14 386,380
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 1/1/15 366,400
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 7/1/15 348,400
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 1/1/16 331,260
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 7/1/16 314,900
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 1/1/17 299,260
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 7/1/17 284,510
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 1/1/18 270,450
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 7/1/18 257,040
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 1/1/19 244,360
1,000 Glen Cove, NY, IDA, (The Regency at Glen Cove),
0.00%, 7/1/19 232,240
1,860 Grove City, PA, Area Hospital Authority, (Grove Manor),
6.625%, 8/15/29 1,843,093
3,465 Illinois Development Finance Authority,
(Care Institute, Inc. - Illinois), 7.80%, 6/1/25 3,547,190
7,500 Kansas City, MO, IDA, (Kingswood United Methodist Manor),
5.875%, 11/15/29 6,457,950
5,165 Massachusetts IFA, (Forge Hill), (AMT), 6.75%, 4/1/30 4,836,919
6,470 Minneapolis, MN, (Walker Methodist Senior Services),
6.00%, 11/15/28 4,963,072
5,205 North Miami, FL, Health Care Facilities, (Imperial Club),
8.00%, 1/1/33 3,631,268
- ----------------------------------------------------------------------------------------------------------------------
$ 45,580,816
- ----------------------------------------------------------------------------------------------------------------------
SPECIAL TAX REVENUE -- 1.8%
$ 2,240 Bell Mountain Ranch, CO, Metropolitan District,
6.625%, 11/15/25 $ 2,279,626
3,395 Bell Mountain Ranch, CO, Metropolitan District,
7.375%, 11/15/19 3,602,231
$ 3,800 Cottonwood, CO, Water and Sanitation District,
7.75%, 12/1/20 $ 4,002,312
- ----------------------------------------------------------------------------------------------------------------------
$ 9,884,169
- ----------------------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 6.6%
$ 925 Eagle County, CO, (Eagle County Airport Terminal), (AMT),
7.00%, 5/1/21 $ 890,081
1,375 Eagle County, CO, (Eagle County Airport Terminal), (AMT),
7.125%, 5/1/31 1,308,780
400 Eagle County, CO, (Eagle County Airport Terminal), (AMT),
7.50%, 5/1/21 407,020
5,000 New Jersey Transportation Trust Fund Authority,
Variable Rate, 6/15/17(2)(4) 5,396,200
5,250 Northwest Arkansas Regional Airport Authority, (AMT),
7.625%, 2/1/27 5,578,178
3,500 Port Authority of New York and New Jersey,
5.00%, 9/1/38 3,451,910
19,970 Puerto Rico Highway and Transportation Authority,
5.125%, 7/1/39 19,776,690
- ----------------------------------------------------------------------------------------------------------------------
$ 36,808,859
- ----------------------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 97.3%
(IDENTIFIED COST $556,647,968) $ 544,018,357
- ----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 2.7% $ 15,151,464
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 559,169,821
- ----------------------------------------------------------------------------------------------------------------------
</Table>
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
AMBAC - AMBAC Financial Group, Inc.
FGIC - Financial Guaranty Insurance Company
FSA - Financial Security Assurance, Inc.
MBIA - Municipal Bond Insurance Association
XLCA - XL Capital Assurance, Inc.
At July 31, 2004, the concentration of the Portfolio's investments in the
various states, determined as a percentage of net assets, is as follows:
<Table>
California 16.6%
Puerto Rico 10.0%
Others, representing less than 10% individually 70.7%
</Table>
The Portfolio invests primarily in debt securities issued by municipalities. The
ability of the issuers of the debt securities to meet their obligations may be
affected by economic developments
See notes to financial statements
18
<Page>
in a specific industry or municipality. In order to reduce the risk associated
with such economic developments, at July 31, 2004, 11.3% of the securities in
the portfolio of investments are backed by bond insurance of various financial
institutions and financial guaranty assurance agencies. The aggregate percentage
insured by an individual financial institution ranged from 0.4% to 4.8% of total
investments.
(1) Security has been issued as a leveraged inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At July 31, 2004
the aggregate value of the securities is $76,475,209 or 13.7% of the net
assets.
(3) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
(4) Security has been issued as an inverse floater bond.
(5) Non-income producing security.
(6) The Portfolio is accruing only partial interest on this security.
See notes to financial statements
19
<Page>
HIGH YIELD MUNICIPALS PORTFOLIO AS OF JULY 31, 2004
FINANCIAL STATEMENTS (Unaudited)
STATEMENT OF ASSETS AND LIABILITIES
AS OF JULY 31, 2004
<Table>
ASSETS
Investments, at value
(identified cost, $556,647,968) $ 544,018,357
Cash 989,829
Receivable for investments sold 4,719,866
Interest receivable 11,989,799
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 561,717,851
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for daily variation margin on open financial futures contracts $ 2,500,000
Accrued expenses 48,030
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 2,548,030
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $ 559,169,821
- -----------------------------------------------------------------------------------------------------------------------
SOURCES OF NET ASSETS
Net proceeds from capital contributions and withdrawals 579,710,011
Net unrealized depreciation (computed on the basis of identified cost) (20,540,190)
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 559,169,821
- -----------------------------------------------------------------------------------------------------------------------
</Table>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
JULY 31, 2004
<Table>
INVESTMENT INCOME
Interest $ 20,296,315
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME $ 20,296,315
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment adviser fee $ 1,660,290
Trustees' fees and expenses 8,608
Custodian fee 109,149
Legal and accounting services 61,823
Miscellaneous 12,366
- -----------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES $ 1,852,236
- -----------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 14,786
- -----------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 14,786
- -----------------------------------------------------------------------------------------------------------------------
NET EXPENSES $ 1,837,450
- -----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 18,458,865
- -----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (507,863)
Financial futures contracts 4,802,370
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN $ 4,294,507
- -----------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ (22,711,052)
Financial futures contracts (5,238,217)
- -----------------------------------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ (27,949,269)
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS $ (23,654,762)
- -----------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (5,195,897)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
20
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
SIX MONTHS ENDED
INCREASE (DECREASE) JULY 31, 2004 YEAR ENDED
IN NET ASSETS (UNAUDITED) JANUARY 31, 2004
- ----------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 18,458,865 $ 29,594,027
Net realized gain from investments and
financial futures contracts transactions 4,294,507 1,909,160
Net change in unrealized appreciation
(depreciation) from investments and
financial futures contracts (27,949,269) 18,593,458
- ----------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ (5,195,897) $ 50,096,645
- ----------------------------------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 164,180,571 $ 211,911,695
Withdrawals (128,312,570) (106,669,582)
- ----------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 35,868,001 $ 105,242,113
- ----------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 30,672,104 $ 155,338,758
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of period $ 528,497,717 $ 373,158,959
- ----------------------------------------------------------------------------------------------------------------
AT END OF PERIOD $ 559,169,821 $ 528,497,717
- ----------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
21
<Page>
SUPPLEMENTARY DATA
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED JANUARY 31,
JULY 31, 2004 ---------------------------------------------------------------
(UNAUDITED) 2004 2003 2002(1) 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratios (As a percentage of average daily
net assets):
Expenses 0.67%(2) 0.68% 0.71% 0.70% 0.72% 0.68%
Expenses after custodian fee reduction 0.66%(2) 0.68% 0.71% 0.70% 0.72% 0.67%
Net investment income 6.67%(2) 7.08% 7.32% 6.69% 6.86% 6.25%
Portfolio Turnover 39% 40% 15% 24% 29% 58%
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) (0.81)% 12.64% 7.72% 5.55% -- --
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000'S OMITTED) $ 559,170 $ 528,498 $ 373,159 $ 347,092 $ 328,134 $ 338,925
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) The Portfolio adopted the provisions of the revised AICPA Audit and
Accounting Guide for Investment Companies and began amortizing market
discount on fixed-income securities. The effect of this change for the year
ended January 31, 2002 on the ratio of net investment income to average net
assets was less than 0.01%. Ratios for the periods prior to February 1,
2001 have not been restated to reflect this change in presentation.
(2) Annualized.
(3) Total return is required to be disclosed for fiscal years beginning after
December 15, 2000.
See notes to financial statements
22
<Page>
HIGH YIELD MUNICIPALS PORTFOLIO as of July 31, 2004
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 SIGNIFICANT ACCOUNTING POLICIES
High Yield Municipals Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940, as a diversified open-end management
investment company, which was organized as a trust under the laws of the
State of New York on May 1, 1995. The Portfolio seeks to achieve high current
income exempt from regular federal income tax. The Declaration of Trust
permits the Trustees to issue interests in the Portfolio. At July 31, 2004,
the Eaton Vance High Yield Municipals Fund had an approximate 99.9% interest
in the Portfolio. The following is a summary of significant accounting
policies of the Portfolio. The policies are in conformity with accounting
principles generally accepted in the United States of America.
A INVESTMENT VALUATION -- 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 listed on
commodity exchanges are valued at closing settlement prices. Short-term
obligations maturing in sixty days or less are valued at amortized cost which
approximates fair 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 Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally
must satisfy the applicable source of income and diversification requirements
(under the Internal Revenue Code) in order for its investors to satisfy them.
The Portfolio will allocate at least annually among its investors each
investor's distributive share of the Portfolio's 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
Portfolio 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 the 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 entering into a financial futures
contract, the 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 the 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 the Portfolio.
The Portfolio's investment in financial futures contracts is designed only to
hedge against anticipated future changes in interest rates. Should interest
rates move unexpectedly, the Portfolio may not achieve the anticipated
benefits of the financial futures contracts and may realize a loss.
E INTEREST RATE SWAPS -- The 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 bi-annual
payments at a fixed interest rate. In exchange, the 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.
F 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.
G WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Portfolio may engage
in when-issued and delayed delivery transactions. The Portfolio records
when-issued securities on trade date and maintains security positions such
that sufficient liquid assets will be available to make payments for the
securities purchased.
23
<Page>
Securities purchased on a when-issued or delayed delivery basis are
marked-to-market daily and begin accruing interest on settlement date.
H EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by credits which are determined based on the average daily cash
balances the Portfolio maintains with IBT. All credit balances used to reduce
the Portfolio's custodian fees are reported as a reduction of operating
expenses on the Statement of Operations.
I 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.
J 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.
K OTHER -- Investment transactions are accounted for on a trade-date basis.
L INTERIM FINANCIAL STATEMENTS -- The interim financial statements relating
to July 31, 2004 and for the six months then ended have not been audited by
an independent registered public accounting firm, but in the opinion of the
Portfolio's management reflect all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
2 INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to the 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 sales of
securities). For the six months ended July 31, 2004, the fee was equivalent
to 0.60% (annualized) of the Portfolio's average net assets for such period
and amounted to $1,660,290. Except as to Trustees of the Portfolio who are
not members of EVM's or BMR's organization, officers and Trustees receive
remuneration for their services to the Portfolio out of such investment
adviser fee. Trustees of the Portfolio who are not affiliated with the
Investment Adviser may elect to defer receipt of all or a percentage of their
annual fees in accordance with the terms of the Trustees Deferred
Compensation Plan. For the six months ended July 31, 2004, no significant
amounts have been deferred.
Certain officers and Trustees of the Portfolio are officers of the above
organizations.
3 INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $272,250,046 and $208,622,476,
respectively, for the six months ended July 31, 2004.
4 FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION)
The cost and unrealized appreciation (depreciation) in value of the
investments owned at July 31, 2004 as computed on a federal income tax basis,
were as follows:
<Table>
AGGREGATE COST $ 556,102,545
----------------------------------------------------------
Gross unrealized appreciation $ 25,109,671
Gross unrealized depreciation (37,193,859)
----------------------------------------------------------
NET UNREALIZED DEPRECIATION $ (12,084,188)
----------------------------------------------------------
</Table>
24
<Page>
5 LINE OF CREDIT
The Portfolio participates 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. Borrowings will be made by the Portfolio solely to
facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Interest is charged to each participating 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 Portfolio
did not have any significant borrowings or allocated fees during the six
months ended July 31, 2004.
6 FINANCIAL INSTRUMENTS
The Portfolio regularly trades in financial instruments with off-balance
sheet risk in the normal course of its investing activities to assist in
managing exposure to various market risks. These financial instruments
include futures contracts and interest rate swap contracts and may involve,
to a varying degree, elements of risk in excess of the amounts recognized for
financial statement purposes. The notional or contractual amounts of these
instruments represent the investment the Portfolio has in particular classes
of financial instruments and do not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with
these instruments is meaningful only when all related and offsetting
transactions are considered.
A summary of obligations under these financial instruments at July 31, 2004
is as follows:
FUTURES CONTRACTS
<Table>
<Caption>
AGGREGATE NET
EXPIRATION FACE UNREALIZED
DATE(S) CONTRACTS POSITION VALUE VALUE DEPRECIATION
-----------------------------------------------------------------------------------------------------------
9/04 1,250 U.S.
Treasury Bond Short $ (140,044,382) $ (135,273,437) $ (4,770,945)
9/04 1,250 U.S.
Treasury Note Short (141,538,071) (138,398,437) (3,139,634)
-----------------------------------------------------------------------------------------------------------
$ (7,910,579)
-----------------------------------------------------------------------------------------------------------
</Table>
At July 31, 2004, the Portfolio had sufficient cash and/or securities to
cover margin requirements on open futures contracts.
25
<Page>
EATON VANCE HIGH YIELD MUNICIPALS FUND
INVESTMENT MANAGEMENT
EATON VANCE HIGH YIELD MUNICIPALS FUND
OFFICERS
Thomas J. Fetter
President
William H. Ahern, Jr.
Vice President
Craig R. Brandon
Vice President
Cynthia J. Clemson
Vice President
James B. Hawkes
Vice President and Trustee
Robert B. MacIntosh
Vice President
Thomas M. Metzold
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
TRUSTEES
Samuel L. Hayes, III
William H. Park
Ronald A. Pearlman
Norton H. Reamer
Lynn A. Stout
HIGH YIELD MUNICIPALS PORTFOLIO
OFFICERS
Thomas J. Fetter
President
Cynthia J. Clemson
Co-Portfolio Manager
James B. Hawkes
Vice President and Trustee
Robert B. MacIntosh
Vice President
Thomas M. Metzold
Vice President and
Co-Portfolio Manager
Barbara E. Campbell
Treasurer
Alan R. Dynner
Secretary
TRUSTEES
Samuel L. Hayes, III
William H. Park
Ronald A. Pearlman
Norton H. Reamer
Lynn A. Stout
26
<Page>
INVESTMENT ADVISER OF HIGH YIELD MUNICIPALS PORTFOLIO
BOSTON MANAGEMENT AND RESEARCH
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
ADMINISTRATOR OF EATON VANCE HIGH YIELD MUNICIPALS FUND
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
EATON VANCE HIGH YIELD MUNICIPALS FUND
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
This report must be preceded or accompanied by a current prospectus. Before
investing, investors should consider carefully the Fund's investment
objective(s), risks, and charges and expenses. The Fund's current prospectus
contains this and other information about the Fund and is available through your
financial advisor. Please read the prospectus carefully before you invest or
send money. For further information please call 800-225-6265.
<Page>
416-9/04 HYSRC
<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 (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
Not required in this filing
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not required in this filing.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
<Page>
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not required in this filing.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not required in this filing.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such candidate recommended by a shareholder of a Fund if such recommendation
contains sufficient background information concerning the candidate, and is
received in a sufficiently timely manner (and in any event no later than the
date specified for receipt of shareholder proposals in any applicable proxy
statement with respect to a Fund). Shareholders shall be directed to address any
such recommendations to the attention of the Governance Committee, c/o the
Secretary of the Fund.
ITEM 10. 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 changes in the registrant's internal controls over
financial reporting during the period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. 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 HIGH YIELD MUNICIPALS
FUND)
By: /s/ Thomas J. Fetter
--------------------------------
Thomas J. Fetter
President
Date: September 20, 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: September 20, 2004
------------------
By: /s/ Thomas J. Fetter
--------------------------------
Thomas J. Fetter
President
Date: September 20, 2004