<PAGE>
To Shareholders
EV Classic National Municipals Fund paid to its shareholders monthly income
dividends totaling $0.545 per share during the fiscal year that ended September
30, 1995. Based on the most recent dividend paid and the Fund's net asset value
per share of $9.31 on September 30, 1995, the Fund's annualized distribution
rate at net asset value was 5.77%.
To equal this rate in a taxable investment, a couple in the 36% Federal tax
bracket would have to receive 8.98%.
The U.S. economy continues to demonstrate a pattern of slow growth with low
inflation. Gross domestic product should grow only modestly during 1995, between
2% and 3%, with inflation of less than 3%. These characteristics bode well for
all capital markets and particularly fixed income markets, including municipal
bonds.
Municipal bonds performed well during the first half of 1995, realizing strong
capital appreciation in a favorable investment environment. However, the
municipal market underperformed the taxable market because of concern about the
potential passage of major tax reform (e.g., flat tax, value added tax or
consumption tax) legislation.
PORTFOLIO OVERVIEW
Based on market value as of Sept. 30, 1995
Number of issues........................248
Average quality........................BBB+
Investment grade............................66.9%
Effective maturity (years)...................15.5
Largest sectors:
Transportation.............................14.4%
Hospitals..................................11.2
Industrials................................10.4
Refunded and escrowed.......................9.7
Life Care...................................8.4
We at Eaton Vance believe there is little chance of major tax reform legislation
being enacted. Many factors have led us to this conclusion. For example, the
inherent regressivity of the various flat tax proposals will provoke much
opposition, as will proposals to eliminate such tax breaks as deductions for
mortgage interest and state and local taxes. Also, such proposals could
seriously depress entire sectors of the U.S. economy.
We will continue to monitor changes in economic and political conditions and to
pursue the goal of your Fund: to provide you with a competitive distribution of
tax-free income from a portfolio of quality municipal bonds.+
Naturally, there is no guarantee that the patterns of past periods will be
repeated. However, with increasing numbers of taxpayers seeking tax relief and
fewer municipal bonds available, the value of outstanding bonds may well
increase.
Sincerely,
[Photo of Thomas J. Fetter]
/s/Thomas J. Fetter
Thomas J. Fetter
President
November 20, 1995
+ A portion of the Fund's income could be subject to state, local and/or Federal
alternative minimum tax.
<PAGE>
Management Report
An interview with Thomas M. Metzold, manager of the National Municipals
Portfolio.
Q. TOM, COULD YOU DESCRIBE THE INVESTMENT CLIMATE DURING THE PAST 12 MONTHS?
A. The market went through two distinct phases. The first, negative phase was
September, October and part of November of 1994, when the market continued
its long slide downward. By the middle of November, the market began a rally
that continued through the third quarter of 1995. The investment climate
throughout the period ending September 30, 1995 has been helped by slow but
steady economic growth and little inflation.
Q. HOW WOULD YOU DESCRIBE THE PROCESS OF MANAGING THE PORTFOLIO DURING THIS
PERIOD?
A. I'd say it was primarily a matter of paying very close attention to the
market and taking advantage of small, temporary market inefficiencies. These
inefficiencies can be fleeting, appearing one day and disappearing the next.
The goal is to identify them, realize what they mean and translate that
knowledge into changes that can benefit the Portfolio.
Q. CAN YOU GIVE AN EXAMPLE OF HOW AN INEFFICIENCY MIGHT WORK TO YOUR ADVANTAGE?
A. We track the performance of all our bonds against a number of indices. We
buy a bond because we believe that it represents value relative to the
specific index we're using, and if we've made a good choice, the bond will
outperform the index over time.
[Photo of Thomas M. Metzold]
THOMAS M. METZOLD
Invariably there will come a time when market conditions change -- even
slightly -- in a way that gives us an opportunity to sell the bond and
realize its outperformance. There are a variety of factors at work -- the
quality of the bond, the bond's sector, its maturity and the condition of
the market, among others. With this multi-dimensional, multi-tiered market,
the key is to find the inefficiencies and to be prepared to act on them.
Q. HOW DO YOU KNOW WHEN TO RESPOND TO A CHANGE IN THE MARKET?
A. You don't know in advance when the ideal time will be. Instead, you have to
continuously monitor the market. The bond market is dynamic, constantly
changing, and whether the market is going up or down, there will always be
opportunities on which we can capitalize.
Q. HAVE YOU MADE ANY MAJOR CHANGES DURING THIS 12-MONTH PERIOD?
A. Our basic investment philosophy has not changed. That is, we continue to
invest to meet the dual objectives of income and total return. We are
constantly making changes to ensure the Portfolio is positioned to meet
those objectives. At times, one such adjustment might be to change the
Portfolio's sector weighting. For example, during this period we reduced our
large position in the airline sector, realizing profits in the process.
Q. HOW HAS THE 1995 MARKET DIFFERED FROM THAT OF 1994?
A. The differences have been dramatic. Most of 1994 -- until mid-November --
was a bear market and made 1994 what is generally believed to be one of the
worst years for the bond market in over 60 years.* Since then, however, the
market has rallied. Throughout the tough times, we stuck with our philosophy
of holding bonds of longer maturity. As the market recovered in 1995, that
philosophy benefited our shareholders.
"WITH THIS MULTI-DIMENSIONAL, MULTI-TIERED MARKET, THE KEY IS TO FIND THE
INEFFICIENCIES AND TO BE PREPARED TO ACT ON THEM."
Q. WHAT DOES THIS SAY ABOUT THE VARIATIONS IN THE MARKET?
A. It says that an investment should be made for the long term. Investors
should realize that there will be times when the market is down, possibly to
a significant degree. But markets are dynamic and have up cycles and down
cycles. The long-term investor rides out the down periods and takes
advantage of the recoveries.
Q. IN PAST REPORTS, YOU'VE SAID YOU WERE REDUCING THE PORTFOLIO'S EXPOSURE TO
HOSPITALS. DOES THAT CONTINUE TO BE TRUE?
A. Yes. All around the country, health care institutions are facing tougher
competition and lower profitability. We would rather invest our
shareholders' money in other sectors.
Q. SUCH AS...?
A. We're still enthusiastic about elderly housing, nursing homes and assisted
living projects, all of which are comparatively better investment
opportunities. The graying of America is a fact, and we think it's wise for
the Portfolio to take advantage of this demographic trend.
Q. ARE THERE HOSPITAL BONDS IN THE PORTFOLIO AT ALL?
A. Although we've lessened the proportion of hospitals in the Portfolio, we
still maintain a presence in that sector. Through extensive research, we
seek out hospitals that have some extra feature that makes them stand out.
They may be the sole provider of hospital care to a community or the
dominant provider in their service area. In other cases, they are hospitals
that, through alliances formed with HMOs or other health care providers we
feel will be survivors in the increasingly competitive world of health care.
One example of a sole community provider is Winslow Memorial Hospital
in Winslow, Arizona. This is a small hospital, but one that serves a
community whose people will always need primary hospital care in a local
facility. They may go for specialized treatment to a larger facility in a
larger city. But the people of Winslow will need a local hospital where
bones are set, cuts are stitched and where babies are delivered. That's the
function that Winslow Memorial performs now, and, we expect, will continue
to perform in the future.
Q. HOW DO YOU VIEW THE LONG-TERM FUTURE FOR THE MUNICIPAL BOND MARKET?
A. There will probably be short-term volatility in the municipal bond market,
especially as it deals with the possibility of tax reform. However, based on
our reading of the economic fundamentals, we're positive about the market's
long-term future.
Q. WHAT ABOUT THE PEOPLE WHO SAY THE MARKET WILL BE HURT BY TAX REFORM?
A. There are a number of tax reform proposals that, if they were enacted, could
dramatically change the economic landscape of the United States. It's a fact
that if some of those proposals were enacted in their current form, the
municipal bond market might be hurt. And it's that possibility that has
caused the market's performance to be somewhat muted during the last half of
this 12-month period.
But consider the magnitude of the changes that are being discussed. There
are thousands of pages of tax code. We saw what happened to health care
reform proposals a year ago. The length of the debate and the lack of
workable health care reform legislation should give us an idea of the
daunting task in store for tax reformers. That's not only because of the
size of the project, but because they're attacking some ideas that are
strongly ingrained in the American way of economic life.
These are ideas such as a deductibility of mortgage interest and the
tax-free status of municipal bonds.
It's likely that some sort of tax reform will be enacted, but we don't
believe the tax exemption for municipal bonds will be eliminated. When all
of this is thought through, people should realize that issuing municipal
bonds is an established borrowing practice that ought to be continued.
* Source: Ibbotson Associates 1995 Yearbook.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV CLASSIC NATIONAL
MUNICIPALS FUND (INCLUDING SALES CHARGE) AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
From December 31, 1993, through September 30, 1995
- ------------------------------------
AVERAGE ANNUAL 1 Life of
RETURNS Year Fund*
- ------------------------------------
With CDSC 9.1% 2.1%
- ------------------------------------
Without CDSC 10.1% 2.1%
- ------------------------------------
LABEL A B
LABEL date c. national lehman bros.
- ----------------------------------------------------
1 12/93+ 10000 10000
2 1/94 10151 10114
3 2/94 9927 9852
4 3/94 9374 9451
5 4/94 9415 9531
6 5/94 9487 9614
7 6/94 9412 9558
8 7/94 9618 9730
9 8/94 9629 9764
10 9/94 9430 9621
11 10/94 9242 9450
12 11/94 8986 9279
13 12/94 9202 9483
14 1/95 9531 9754
15 2/95 9857 10038
16 3/95 9913 10153
17 4/95 9921 10165
18 5/95 10304 10490
19 6/95 10200 10398
20 7/95 10219 10496
21 8/95 10333 10630
22 9/95 10384 10697
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced on 12/3/93.
+ Index information is available only at month-end; therefore, the line
comparison begins at the next month-end following the commencement of the
Fund's investment operations.
FUND PERFORMANCE
The performance chart above compares your Fund's total return with that of a
broad-based securities market index. The lines on the chart represent the total
returns of $10,000 hypothetical investments in the Fund and the unmanaged Lehman
Brothers Municipal Bond Index.
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX
INFORMATION ON DISTRIBUTIONS...
For Federal income tax purposes, 99.06% of the total dividends paid by the Fund
from net investment income during the fiscal year that ended September 30, 1995,
is designated as an exempt-interest dividend. Tax legislation eliminated the
exemption to market discount rules applicable to tax-exempt obligations. As a
result, certain tax-exempt obligations acquired by the Portfolio subsequent to
April 30, 1993, at market discounts may generate a small amount of ordinary
taxable income.
- -------------------------------------------------------------------------------
THE TOTAL RETURN FIGURES
The solid colored line on the chart represents the Fund's performance at net
asset value. The Fund's total return figure reflects Fund expenses and portfolio
transaction costs, and assumes the reinvestment of income dividends and capital
gains distributions. It also reflects the Funds maximum applicable contingent
deferred sales charge (CDSC) that is deducted for redemptions made within the
first 12 months of purchase.
The black line represents the performance of the Lehman Brothers Municipal Bond
Index, a broad-based, widely recognized unmanaged index of municipal bonds. The
Index's total return does not reflect any commissions or expenses that would be
incurred if an investor individually purchased or sold the securities
represented in the Index.
<PAGE>
EV CLASSIC NATIONAL MUNICIPALS FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
September 30, 1995
- ------------------------------------------------------------------------------
ASSETS:
Investment in National Municipals Portfolio, at value
(Note 1A) (identified cost, $40,182,281) $41,213,772
Receivable for Fund shares sold 119,174
Deferred organization expenses (Note 1D) 32,678
-----------
Total assets $41,365,624
LIABILITIES:
Dividends payable $ 52,391
Payable for Fund shares redeemed 4,918
Payable to affiliate --
Trustees' fees 43
Accrued expense 10,164
--------
Total liabilities 67,516
-----------
NET ASSETS for 4,434,267 shares of beneficial interest
outstanding $41,298,108
===========
SOURCES OF NET ASSETS:
Paid-in capital $42,533,484
Accumulated net realized loss on investment and
financial futures transactions (computed on the
basis of identified cost) (2,293,026)
Accumulated undistributed net investment income 26,159
Unrealized appreciation of investments from
Portfolio (computed on the basis of identified
cost) 1,031,491
-----------
Total $41,298,108
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE (NOTE 6)
PER SHARE
($41,298,108 / 4,434,267 shares of beneficial interest) $9.31
=====
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended September 30, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 2,860,839
Expenses allocated from Portfolio (185,697)
-----------
Net investment income from Portfolio $ 2,675,142
Expenses --
Compensation of Trustees not members of the
Administrator's organization $ 184
Custodian fee (Note 4) 1,798
Distribution costs (Note 5) 381,778
Transfer and dividend disbursing agent fees 25,692
Printing and postage 42,328
Legal and accounting services 9,529
Amortization of organization expense (Note 1D) 9,522
Registration costs 8,660
Miscellaneous 14,875
-----------
Total expenses 494,366
-----------
Net investment income $ 2,180,776
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from Portfolio --
Investment transactions
(identified cost basis) $(1,151,348)
Financial futures contracts (457,140)
-----------
Net realized loss on investments $(1,608,488)
Change in unrealized appreciation of investments 3,377,796
-----------
Net realized and unrealized gain $ 1,769,308
-----------
Net increase in net assets from operations $ 3,950,084
===========
See notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------
1995 1994*
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 2,180,776 $ 1,131,407
Net realized loss on investments (1,608,488) (684,538)
Change in unrealized appreciation
(depreciation) of investments 3,377,796 (2,346,305)
------------ ------------
Net increase (decrease) in net assets from
operations $ 3,950,084 $ (1,899,436)
------------ ------------
Distributions to shareholders (Note 2) --
From net investment income $ (2,180,776) $ (1,131,407)
In excess of net investment income (110,797) (158,410)
------------ ------------
Total distributions to shareholders $ (2,291,573) $ (1,289,817)
------------ ------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sales of shares $ 20,082,406 $ 49,268,774
Net asset value of shares issued to
shareholders in payment of distributions
declared 1,482,149 778,669
Cost of shares redeemed (15,906,483) (12,876,665)
------------ ------------
Increase in net assets from Fund share
transactions $ 5,658,072 $ 37,170,778
------------ ------------
Net increase in net assets $ 7,316,583 $ 33,981,525
NET ASSETS:
At beginning of year 33,981,525 --
------------ ------------
At end of year (including undistributed
(distributions in excess of) net investment
income of $26,159 and $(1,786),
respectively) $ 41,298,108 $ 33,981,525
============ ============
*For the period from the start of business, December 3, 1993 to September 30,
1994.
See notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------
1995 1994*
------- -------
NET ASSET VALUE, beginning of year $ 8.980 $10.000
------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.517 $ 0.425
Net realized and unrealized gain (loss) on
investment 0.356 (0.961)
------- -------
Total income (loss) from operations $ 0.873 $(0.536)
------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.517) $(0.425)
In excess of net investment income (0.026) (0.059)
------- -------
Total distributions $(0.543) $(0.484)
------- -------
NET ASSET VALUE, end of year $ 9.310 $ 8.980
======= =======
TOTAL RETURN (2) 10.10% (5.60%)
RATIOS/SUPPLEMENTAL DATA**:
Net assets, end of period (000 omitted) $41,298 $33,982
Ratio of net expenses to average daily net
assets (1) 1.79% 1.60%(+)
Ratio of net investment income to average
daily net assets 5.71% 5.39%(+)
**For the period from the start of business, December 3, 1993, to September
30, 1994, the operating expenses of the Fund reflect an allocation of
expenses to the Administrator. Had such action not been taken, net
investment income per share and the ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $ 0.405
=======
RATIOS (As a percentage of average daily net assets):
Expenses (1) 1.86%(+)
Net investment income 5.13%(+)
(+) Annualized.
(1) Includes the Fund's share of National Municipals Portfolio's allocated
expenses.
(2) Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each period reported. Dividends and distributions, if any, are assumed to
be reinvested at the net asset value on the payable date.
* For the period from the start of business, December 3, 1993, to September
30, 1994.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Classic National Municipals Fund (the Fund) is a diversified series of
Eaton Vance Municipals Trust (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 invests all of its investable assets in interests
in the National 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 (1.8% at September 30, 1995). 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 generally
accepted accounting principles.
A. INVESTMENT VALUATIONS -- Valuations of securities by the Portfolio is
discussed in Note 1 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 generally accepted
accounting principles.
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 September 30, 1995, the Fund,
for federal income tax purposes had a capital loss carryover of $599,696 which
will reduce the taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code, and
thus will reduce the amount of the 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 on September 30, 2002.
Additionally, at September 30, 1995, net capital losses of $1,525,424
attributable to security transactions incurred after October 31, 1994, are
treated as arising on the first day of the Fund's next taxable year. 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.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on
the straight-line basis over five years.
E. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale of
Fund shares and other distribution costs are charged to operations. As a
result of a recent Internal Revenue Service Ruling, the Fund changed its tax
accounting for commissions paid from charging the expense to paid-in capital
to charging the expense to operations. The change had no effect on either the
Fund's current yield or total return (Notes 2 and 5).
F. OTHER -- Investment transactions are accounted for on a trade date basis.
- ------------------------------------------------------------------------------
(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 of allocable realized capital gains,
if any, are made at least annually. Shareholders may reinvest capital gains
distributions in additional shares of the Fund at the net asset value as of
the ex-dividend date. Distributions are paid in the form of additional shares
or, at the election of the shareholder, in cash. The Fund distinguishes
between distributions on a tax basis and a financial reporting basis and
requires that only distributions in excess of tax basis earnings and profits
are reported in the financial statements as a return of capital. Differences
in the recognition or classification of income between the financial
statements and tax earnings and profits which result in over distributions for
financial statement purposes are classified as distributions in excess of net
investment income or accumulated net realized gains. During the year ended
September 30, 1995, $138,742 was reclassified from distributions in excess of
net investment income to paid in capital, due to differences between book and
tax accounting for distribution costs. Net investment income, net realized
gains and net assets were not affected by this reclassification.
- ------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994*
-------- --------
Sales 2,252,175 5,078,176
Issued to shareholders electing to receive
payment of distributions in Fund shares 164,219 83,946
Redemptions (1,767,381) (1,376,868)
--------- ---------
Net increase 649,013 3,785,254
========= =========
* For the period from the start of business, December 3, 1993 to September 30,
1994.
- ------------------------------------------------------------------------------
(4) 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 such investment
adviser fee. Investors Bank & Trust Company (IBT), an affiliate of EVM, serves
as custodian of 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 cash balances the Fund or the Portfolio
maintains with IBT. Certain of the officers and Trustees of the Fund and
Portfolio are officers and directors/trustees of the above organizations (Note
5).
- ------------------------------------------------------------------------------
(5) DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the Plan) pursuant to Rule 12b-1 under
the Investment Company Act of 1940. Effective January 30, 1995 the Trustees of
the Fund adopted an Amended Distribution Plan. The Plan requires the Fund to pay
the Principal Underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal
to 1/365th of 0.75% of the Fund's daily net assets, 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) 6.25% of
the aggregate amount received by the Fund for shares sold plus, (ii)
distribution fees calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of EVD,
reduced by the aggregate amount of contingent deferred sales charges (see Note
6) and amounts theretofore paid to EVD. The amount payable to EVD with respect
to each day is accrued on such day as a liability of the Fund and, accordingly,
reduces the Fund's net assets. The Fund paid or accrued $286,334 to or payable
to EVD for the year ended September 30, 1995, representing 0.75% (annualized) of
average daily net assets. At September 30, 1995, the amount of Uncovered
Distribution Charges of EVD calculated under the Plan was approximately
$4,059,000.
In addition, the Plan permits the Fund to make monthly payments of service
fees to the Principal Underwriter in amounts not exceeding 0.25% of the Fund's
average daily net assets for each fiscal year. The Fund paid or accrued
service fees to or payable to EVD for the year ended September 30, 1995, in
the amount of $95,444. EVD makes monthly service fee payments to Authorized
Firms in amounts anticipated to be equivalent to 0.25% (annualized) of the
assets maintained in the Fund by their customers. On sales of shares made on
January 30, 1995 and thereafter, EVD currently expects to pay to an Authorized
Firm a service fee at the time of sale equal to 0.25% of the purchase price of
the shares sold by such Firm and monthly payments of service fees in amounts
not expected to exceed 0.25% per annum of the Fund's average daily net assets
based on the value of Fund shares sold by such Firm and remaining outstanding
for at least one year. During the first year after a purchase of Fund shares,
EVD will retain the service fee as reimbursement for the service fee payment
made to the Authorized Firm at the time of sale. Service fee payments are made
for personal services and/or the maintenance of shareholder accounts. Service
fees paid to EVD and Authorized Firms 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 when there are no outstanding
Uncovered Distribution Charges of EVD. Certain officers and Trustees of the
Fund are officers or directors of EVD.
- ------------------------------------------------------------------------------
(6) CONTINGENT DEFERRED SALES CHARGES
For shares purchased on or after January 30, 1995, a contingent deferred sales
charge (CDSC) of 1% is imposed on any redemption of Fund 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 gains distributions.
No CDSC is levied on shares which have been sold to EVD or its affiliates or
to their respective employees or clients. CDSC charges are paid to EVD to
reduce the amount of Uncovered Distribution Charges calculated under the
Fund's Distribution Plan. CDSC received when no Uncovered Distribution Charges
exist will be credited to the Fund. For the year ended September 30, 1995, EVD
received $2,000 CDSC paid by shareholders.
- ------------------------------------------------------------------------------
(7) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investments in the Portfolio for the
year ended September 30, 1995 aggregated $21,193,031 and $17,857,906,
respectively.
<PAGE>
INDEPENDENT AUTITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS OF EATON VANCE MUNICIPALS TRUST:
We have audited the accompanying statement of assets and liabilities of EV
Classic National Municipals Fund (one of the series of the Eaton Vance
Municipals Trust), as of September 30, 1995, and the related statement of
operations for the year then ended, and the statements of changes in net assets
and the financial highlights for the year ended September 30, 1995 and for the
period from the start of business, December 3, 1993, to September 30, 1994.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of EV Classic National
Municipals Fund series of Eaton Vance Municipals Trust at September 30, 1995,
the results of its operations, the changes in its net assets, and its financial
highlights for the respective stated periods in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
OCTOBER 27, 1995
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100%
- --------------------------------------------------------------------------------------------------------
RATINGS (UNAUDITED)
- ------------------
PRINCIPAL
STANDARD AMOUNT
MOODY'S & POOR'S (000 OMITTED) SECURITY VALUE
- --------------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C>
UTILITY REVENUE BONDS - 4.0%
Baa2 BBB $ 10,000 Brazos River Authority, Texas,
PCR, Texas Utilities Electric
Company, 9.25%, 3/1/18 $ 11,183,800
Aa AA 22,600 Lewis County, Washington, Cowlitz
Falls Hydroelectric Project,
5.5%, 10/1/22 21,415,308
Aa AA 10,000 Los Angeles, California,
Department of Water & Power,
5%, 10/15/33 8,347,900
Aa AA 29,700 Washington Public Power Supply
System, Project 2, 4.8%, 7/1/04 28,487,052
Aaa AAA 16,340 Washington Public Power Supply
System, Project 2, 5%, 7/1/09 15,111,232
NR NR 5,000 West Feliciana, Louisiana, PCR,
Gulf States Utilities Company
Project, (AMT), 9%, 5/1/15 5,619,600
--------------
$ 90,164,892
--------------
HEALTH CARE - 2.5%
NR NR $ 17,070 Bell County, Texas, Health
Facilities, Care Institute Inc.,
9%, 11/1/24 $ 18,102,223
NR NR 5,000 Delaware County, Pennsylvania,
Glen Riddle Project,
8.625%, 9/1/25 5,007,700
NR NR 5,460 Hillsborough County, Florida, IDA,
Center for Independent Living,
Tampa Projects, 11%, 3/1/19<F4> 4,368,000
NR NR 4,650 Hillsborough County, Florida, IDA,
Center for Independent Living,
Tampa Projects, 10.25%, 3/1/09<F4> 3,720,000
NR NR 18,740 Illinois Development Finance
Authority, Care Institute Inc.,
7.8%, 6/1/25 17,846,851
NR NR 7,915 Roseville, Minnesota, Elder Care
Facility, Care Institute Inc.,
7.75%, 11/1/23 7,960,828
--------------
$ 57,005,602
--------------
HOSPITALS - 11.2%
NR BBB $ 7,000 Arizona Health Facilities, Phoenix
Memorial, 8.2%, 6/1/21 $ 7,473,760
NR NR 2,450 Berlin, Maryland, Atlantic
General, 8.375%, 6/1/22 2,590,703
Baa1 BBB+ 12,700 Butler County, Pennsylvania,
Butler Memorial, 8%, 7/1/16 13,372,719
Baa NR 10,180 Chaves County, New Mexico, Eastern
New Mexico Medical Center,
7.25%, 12/1/22 10,376,270
NR BBB+ 8,405 Christian County, Kentucky, Jennie
Stuart Medical Center,
7.625%, 4/1/10 8,768,012
Baa BBB 35,000 Colorado Health Facilities, Rocky
Mountain Adventist Healthcare,
6.625%, 2/1/22 34,082,650
NR BBB- 3,000 Colorado Health Facilities,
National Jewish Center For
Immunology and Respiratory
Medicine, 6.875%, 2/15/12 2,943,420
NR BBB- 5,015 Colorado Health Facilities,
National Jewish Center For
Immunology and Respiratory
Medicine, 7.1%, 2/15/22 4,869,213
Baa1 NR 4,000 Crossville, Tennessee, HEFA,
Cumberland Medical Center,
6.75%, 11/1/12 4,051,080
Baa1 BBB 6,000 District of Columbia, Washington
Hospital Center Issue --
Medlantic Healthcare Group,
Inc., 7.125%, 8/15/19 5,982,240
NR A- 5,000 Dubuque, Iowa, Finley Hospital
Project, 6.875%, 1/1/12 5,234,550
NR NR 1,325 Grant County, New Mexico, Gila
Regional Medical Center,
10%, 2/1/12 1,404,897
NR BBB- 5,720 Grove City Area Hospital
Authority, Pennsylvania, United
Community Hospital, 8.125%, 7/01/12 5,920,886
NR BBB- 4,000 Hawaii Department of Budget and
Finance, Special Purpose
Mortgage Revenue, Wahiawa General
Hospital, 7.5%, 7/1/12 4,118,080
NR NR 4,760 Health Services Authority of
Hazleton, Luzerne County,
Pennsylvania, Hazleton-Saint Joseph
Medical Center, 8.375%, 7/1/12 4,921,078
NR BBB+ 4,650 Illinois, Chicago Osteopathic
Health Systems, 7.125%, 5/15/11 4,795,778
NR BBB+ 4,500 Illinois, Chicago Osteopathic
Health Systems, 7.25%, 5/15/22 4,615,245
Baa1 NR 1,000 Illinois HFA, Holy Cross Hospital,
6.7%, 3/1/14 1,000,660
Baa1 NR 2,650 Illinois HFA, Holy Cross Hospital,
6.75%, 3/1/24 2,623,341
Baa NR 4,500 Indiana Health Facility Financing
Authority, Memorial Hospital and
Health Care Center, 7.4%, 3/1/22 4,618,440
Baa1 BBB+ 3,750 Louisiana Public Facilities
Authority, Woman's Hospital
Foundation, 7.25%, 10/1/22 3,824,325
Baa BB+ 10,000 Maricopa County, Arizona, Sun
Health Corporation, 8.125%, 4/1/12 10,701,300
Baa NR 2,000 Marshall County, Alabama,
Guntersville-Arab Medical
Center, 7%, 10/1/09 2,048,160
Baa NR 2,000 Marshall County, Alabama,
Guntersville-Arab Medical
Center, 7%, 10/1/13 2,029,360
NR BBB 6,000 Midland County Hospital District,
Memorial Hospital and Medical
Center, 0%, 6/1/07 2,972,040
NR BBB 6,500 Midland County Hospital District,
Memorial Hospital and Medical
Center, 0%, 6/1/11 2,360,020
Ba NR 5,000 Mississippi Hospital Equipment and
Facilities Authority, Magnolia
Hospital, 7.375%, 10/1/21 4,962,800
NR BBB 5,340 Montgomery County, Ohio, Dayton
Osteopathic Hospital, 6%, 12/1/12 4,956,268
Ba1 NR 3,090 Montgomery County, Pennsylvania,
United Hospitals, Inc.,
7.5%, 11/1/13 3,112,279
Ba1 NR 2,000 Montgomery County, Pennsylvania,
United Hospitals, Inc.,
7.5%, 11/1/14 2,011,620
Ba1 NR 3,465 Montgomery County, Pennsylvania,
United Hospitals, Inc.,
7.5%, 11/1/15 3,482,706
Baa NR 8,405 New Hampshire HEFA, Frisbie
Memorial Hospital, 6.125%, 10/1/13 7,928,857
A BBB+ 10,000 Philadelphia, Pennsylvania, Albert
Einstein Medical Center, 7%, 10/1/21 10,402,900
Baa1 BBB+ 9,000 Philadelphia, Pennsylvania,
Graduate Health System Obligated
Group, 6.625%, 7/1/21 8,829,900
Baa1 A- 9,250 Philadelphia, Pennsylvania, Temple
University Hospital, 6.625%,
11/15/23 9,173,318
Baa NR 6,000 Prince George's County, Maryland,
Greater Southeast Healthcare
System, 6.375% 1/1/23 5,444,700
Baa1 BBB+ 10,000 Randolph County Building
Commission, West Virginia, Davis
Memorial Hospital, 7.65%, 11/1/21 10,495,900
NR BB+ 8,000 Scranton-Lackawanna Health and
Welfare Authority, Pennsylvania,
Moses Taylor Hospital, 8.25%, 7/1/09 8,384,720
Baa BBB 8,000 South Dakota HEFA, Prairie Lakes
Health Care System Issue,
7.25%, 4/1/22 8,148,160
NR NR 5,220 Vermont Educational and Health
Buildings Financing Agency,
Northwestern Medical Center
Project, 9.75%, 9/1/18 5,682,440
NR NR 4,950 Winslow, Arizona, IDA, Winslow
Memorial Hospital, 9.5%, 6/1/22 5,444,407
--------------
$ 256,159,202
--------------
LIFE CARE - 8.4%
NR NR $ 8,616 Albuquerque, New Mexico, First
Mortgage IDR, La Vida Llena
Retirement Center 8.625%, 2/1/20 $ 9,075,061
NR NR 7,000 Albuquerque, New Mexico, First
Mortgage IDR, La Vida Llena
Retirement Center 8.85%, 2/1/23 7,451,150
NR NR 5,744 Albuquerque, New Mexico, First
Mortgage IDR, La Vida Llena
Retirement Center 2.25%, 2/1/23 1,872,659
NR NR 10,000 Atlantic Beach, Florida, Fixed
Rate Improvement, Fleet Landing
Project, 8%, 10/1/24 10,455,200
NR NR 3,060 Chester County, Pennsylvania,
Kimberton Project, (AMT),
8.5%, 9/1/25 3,066,946
NR NR 5,185 Collier County, IDA, Florida,
Retirement Rental, Beverly
Enterprises, Florida, Inc.,
10.75%, 3/1/03 6,088,590
NR NR 12,555 Dekalb Private Hospital, Georgia
GF/Atlanta, 8.5%, 3/1/25 12,327,378
NR NR 4,320 Florence, Kentucky, Housing
Facilities, Bluegrass RHF
Housing, Inc., 9.5%, 7/1/17 4,582,440
NR NR 6,690 Fulton County Residential Care
Facilities for the Elderly
Authority, Georgia, Lenbrook Square
Foundation, Inc., 9.75%, 1/1/17 7,066,112
Baa1 NR 10,000 Indianapolis, Indiana, National
Benevolent Association-Robin Run
Village, 7.625%, 10/1/22 10,466,600
NR NR 4,500 Kansas City, Missouri, IDA,
Kingswood United Methodist
Manor, 9%, 11/15/13 4,843,755
NR NR 2,100 Loudon County, Virginia, IDA,
Residential Care, Falcons Landing,
9.25%, 7/1/04 2,252,964
NR NR 20,400 Loudon County, Virginia, IDA,
Residential Care, Falcons Landing,
8.75%, 11/1/24 20,793,312
NR NR 18,545 Lousiana HFA - HCC Assisted Living
Group 1, 9%, 3/1/25 18,912,747
NR NR 1,950 New Hampshire Higher Educational &
Health Facilities, Riverwoods at
Exeter, 8%, 3/1/01 2,000,427
NR NR 10,000 New Hampshire Higher Educational &
Health Facilities, Riverwoods at
Exeter, 9%, 3/1/23 10,696,100
NR NR 3,500 New Jersey EDA, Cadbury
Corporation-1991 Project,
7.5%, 7/1/21 3,432,975
NR NR 20,000 New Jersey EDA, Keswick Pines
Project, 8.75%, 1/1/24 20,137,200
NR NR 10,000 New Jersey EDA, Forsgate Project,
8.625%, 6/1/25 9,763,200
NR NR 13,955 St. Tammany Public Finance,
Christwood Project, 9%, 11/15/25 13,739,116
NR NR 7,500 Vermont IDA, Wake Robin
Corporation, 8.75%, 4/1/23 7,842,825
NR NR 4,500 Vermont IDA, Wake Robin
Corporation, 8.75%, 3/1/23 4,840,605
--------------
$ 191,707,362
--------------
NURSING HOMES - 6.7%
NR NR $ 13,680 Bell County, Texas, Riverside
Healthcare, Inc.-Normandy Terrace,
9%, 4/1/23 $ 14,700,391
NR NR 5,500 Dauphin County IDA, Pennsylvania,
Susquehanna Center Nursing
Facility, 10%, 6/1/21<F4> 3,575,000
NR NR 5,000 Delaware County, Pennsylvania,
Mainline-Haverford Nursing and
Rehabilitation Centers, 9%, 8/1/22 5,442,150
NR NR 930 Jefferson County IDA, Missouri,
Cedar Hills Retirement Village,
12%, 12/1/15 968,716
NR NR 3,750 Lackawanna County, Pennsylvania
IDA, Edella Street Associates,
8.875%, 9/1/14 4,084,012
NR NR 3,445 Luzerne County, Pennsylvania, IDA,
River Street Associates,
8.75%, 6/15/07 3,708,301
NR NR 6,455 Massachusetts HEFA, Fairview
Extended Care Services, Inc.,
10.125%, 1/1/11 7,041,437
NR NR 11,790 Mississippi Finance Corp, Magnolia
Healthcare, 7.99%, 7/1/25 11,139,546
NR NR 6,750 Missouri HEFA, Bethesda Health
Group of St. Louis, Inc.,
6.625%, 8/15/05 6,761,340
NR NR 14,000 Missouri HEFA, Bethesda Health
Group of St. Louis, Inc.,
7.5%, 8/15/12 14,417,200
NR NR 12,500 Montgomery County, Pennsylvania,
IDA, Advancement of Geriatric
Health Care Institute, 8.375%, 7/1/23 12,967,875
NR NR 5,000 New Jersey EDA, Claremont Health
System, Inc., 9.1%, 9/1/22 5,280,600
NR NR 5,915 New Jersey EDA, Victoria Health
Corporation, 7.75%, 1/1/24 5,927,067
NR NR 3,305 Okaloosa County, Florida, Beverly
Enterprises-Florida, Inc.,
10.75%, 10/1/03 3,612,927
NR NR 3,500 Philadelphia, Pennsylvania, The
Philadelphia Protestant Home Project,
8.625%, 7/1/21 3,559,255
Baa1 BBB 4,630 Racine County, Wisconsin, Health
Center, 8.125%, 8/1/21 4,836,915
NR NR 5,000 Rhode Island Health and Education
Building, Steere House, 8.25%, 7/1/15 5,276,050
NR NR 12,430 St. Paul, Minnesota, Housing and
Redevelopment, Care Institute,
Inc. - Highland, 8.75%, 11/1/24 12,528,570
NR NR 5,000 Sussex County, Delaware, Delaware
Health Corporation, 7.6%, 1/1/24 5,002,600
NR NR 5,000 Sussex County, Delaware, Delaware
Health Corporation, 7.5%, 1/1/14 5,088,500
NR NR 4,500 Tarrant County Health Facilities,
Texas, 3927 Foundation, Inc.,
10.25%, 9/1/19 4,747,950
NR NR 1,805 Upshur County, West Virginia
County Commission, Holbrook
Nursing Home, Inc., 10.25%, 4/1/12 1,878,120
NR NR 6,000 Westmoreland County, Pennsylvania,
IDA, Highland Health System,
Inc., 9.25%, 6/1/22 6,291,180
NR NR 3,605 Wood County, West Virginia, West
Virginia Rehabilitation
Services, Inc., (AMT), 9.5%, 12/1/15 3,857,206
--------------
$ 152,692,908
--------------
SINGLE & MULTI-FAMILY HOUSING - 3.1%
Aa AA- 9,850 California Housing Finance Agency,
(AMT), "RIBS", Variable Rate,
8/1/23<F1> $ 9,997,750
NR NR 7,000 Chester County, Pennsylvania, IDB,
Senior Life Choice of Paoli, L.P.,
8.05%, 1/1/24 7,094,570
NR NR 9,500 Lake Creek Affordable Housing
Corporation, Multifamily Housing,
8%, 12/1/23 9,624,165
NR NR 8,000 Los Angeles County Housing
Authority, California,
Multifamily Housing, Corporate
Fund for Housing Projects,
10.5%, 12/1/29 8,246,800
NR BBB+ 2,000 Massachusetts Housing Finance
Authority, Multifamily, Harbor Point
Revenue, (AMT), 8%, 12/1/15 2,075,680
NR NR 3,345 Minneapolis Community Development,
Multifamily, Lindsay Brothers,
9.5%, 12/1/07 3,466,892
NR NR 2,185 Minneapolis Community Development,
Multifamily, Lindsay Brothers,
1.5%, 12/1/07 823,985
NR NR 4,770 North Little Rock Residential
Housing Facilities, Arkansas,
Parkstone Place, 9.75%, 8/1/21 4,994,238
NR NR 4,000 North Miami, Florida, Health Care
Facilities, The Imperial Club,
8%, 1/1/13 3,651,160
NR NR 8,925 North Miami, Florida, Health Care
Facilities, The Imperial Club,
9.25%, 1/1/13 9,533,863
NR NR 5,000 Village of North Syracuse Housing
Authority, AJM Senior Housing,
Inc., Janus Park, 8%, 6/1/24 4,878,600
NR NR 5,800 Ridgeland, Mississippi, Urban
Renewal, The Orchard Limited Project,
7.75%, 12/1/15 5,740,782
--------------
$ 70,128,485
--------------
HOTELS - 0.6%
NR NR $ 3,885 Chandler, Arizona, IDA, SMP II
Limited Partner, Resort/Convention
Center, 7.5%, 12/1/15 $ 3,864,409
NR NR 1,929 Illinois Development Finance
Authority, Comfort Inn-O'Hare,
10%, 5/1/16 2,107,681
NR NR 1,068 Illinois Development Finance
Authority, Comfort Inn-O'Hare,
2.5%, 5/1/16 373,194
NR NR 1,025 Kirksville, Missouri, IDA, Holiday
Inn, 10.5%, 7/1/03<F4> 563,750
NR NR 3,615 Kirksville, Missouri, IDA, Holiday
Inn, 11%, 7/1/16<F4> 1,988,250
NR NR 4,205 Niagara County, New York, IDA,
Wintergarden Inn Associate,
9.75%, 6/1/11<F4> 2,312,750
NR NR 1,795 Orange Beach, Alabama, Romar
Hotels, Inc., 10.5%, 4/1/16 1,901,156
--------------
$ 13,111,190
--------------
GENERAL OBLIGATIONS - 0.5%
A1 A $ 14,500 California, 4.75%, 9/1/23 $ 11,848,095
--------------
LEASE/COP - 1.0%
A A $ 16,500 Indiana Transportation Finance,
Airport Facilities, 6.25%, 11/1/16 $ 16,422,450
NR A- 3,500 Plymouth County, Massachusetts,
COP, Plymouth County Correctional
Facility, 7%, 4/1/22 3,753,015
NR NR 2,500 St. Louis, Missouri, Convention
and Sports Facility, 7.9%, 8/15/21 2,741,875
--------------
$ 22,917,340
--------------
TRANSPORTATION - 14.4%
Baa2 BB+ $ 28,000 Chicago, Illinois, O'Hare
International, American Airlines,
(AMT), 7.875%, 11/1/25 $ 30,009,560
Baa2 BB+ 20,275 Chicago, Illinois, O'Hare International,
American Airlines, 8.2%, 12/1/24 23,277,322
Baa2 BB+ 41,000 Dallas-Fort Worth, Texas,
International Airport Facility,
American Airlines, (AMT),
7.25%, 11/1/30 42,995,880
Baa BB 8,000 Denver, Colorado, Airport System
Revenue, (AMT), 7%, 11/15/25 8,086,160
Baa BB 7,800 Denver, Colorado, Airport System
Revenue, (AMT), 8%, 11/15/17 8,391,708
Baa BB 5,725 Denver, Colorado, Airport System
Revenue, (AMT), 7.5%, 11/15/23 6,111,724
Baa3 BB 95,500 Denver, Colorado, United Airlines,
(AMT), 6.875%, 10/1/32 96,293,605
A A- 5,000 Hawaii Airports, (AMT), 7%, 7/1/18 5,255,200
NR NR 2,200 Los Angeles International Airport,
Continental Airlines, (AMT),
9%, 8/1/08 2,420,154
NR NR 4,425 Los Angeles International Airport,
Continental Airlines, (AMT),
9%, 8/1/17 4,740,237
NR BBB 900 New York State Thruway Authority,
Cross-Westchester Expressway,
0%, 1/1/02 633,987
NR BBB 4,000 New York State Thruway Authority,
Cross-Westchester Expressway,
0%, 1/1/03 2,702,240
NR BBB 2,940 New York State Thruway Authority,
Cross-Westchester Expressway,
0%, 1/1/04 1,838,235
NR BBB 2,905 New York State Thruway Authority,
Cross-Westchester Expressway,
0%, 1/1/06 1,596,965
A1 AA- 15,000 Port Authority of New York and New
Jersey, (AMT), Variable Rate,
1/15/27<F1> 15,537,300
B2 NR 11,000 Port Authority of New York and New
Jersey, La Guardia Airport,
Continental and Eastern
Airlines, (AMT), 9.125%, 12/1/15 12,412,620
A1 AA- 5,000 Port of Seattle, Washington,
(AMT), 6%, 12/1/14 5,001,650
NR NR 35,100 San Joaquin Hills, California,
Toll Roads, 0%, 1/1/17 8,098,272
NR NR 25,000 San Joaquin Hills, California,
Toll Roads, 0%, 1/1/18 5,383,250
NR NR 46,210 San Joaquin Hills, California,
Toll Roads, 0%, 1/1/20 8,668,072
NR NR 72,685 San Joaquin Hills, California,
Toll Roads, 0%, 1/1/21 12,724,963
NR NR 29,225 San Joaquin Hills, California,
Toll Roads, 0%, 1/1/22 4,775,365
NR NR 45,045 San Joaquin Hills, California,
Toll Roads, 0%, 1/1/23 6,869,363
NR NR 108,260 San Joaquin Hills, California,
Toll Roads, 0%, 1/1/24 15,409,728
--------------
$ 329,233,560
--------------
WATER & SEWER - 0.6%
A A- $ 10,000 New York City Municipal Water
Finance Authority, 6.25%, 6/15/21 $ 10,065,500
Baa BBB 4,000 Philadelphia, Pennsylvania,
Municipal Water Finance
Authority, 7%, 8/1/18 4,473,320
--------------
$ 14,538,820
--------------
SOLID WASTE - 2.7%
Baa2 BBB+ $ 6,050 Carbon County, Utah, Laidlaw,
(AMT), 7.5%, 2/1/10 $ 6,466,603
NR A- 2,625 Eastern Connecticut, Resource
Recovery, Wheelabrator, 5.5%, 1/1/14 2,382,923
NR A- 11,495 Eastern Connecticut, Resource
Recovery, Wheelabrator, 5.5%, 1/1/20 10,306,187
Ba NR 2,000 Mercer County, New Jersey, Improvement
Authority, (AMT), 0%, 4/1/14 533,040
Ba NR 5,000 Mercer County, New Jersey, Improvement
Authority, (AMT), 0%, 4/1/15 1,240,650
Ba NR 10,000 Mercer County, New Jersey, Improvement
Authority, (AMT), 0%, 4/1/16 2,310,100
NR NR 35,000 Village of Robbins, Cook County,
Illinois, Robbins Resource
Recovery Partners, L.P.,
9.25%, 10/15/16 38,525,200
--------------
$ 61,764,703
--------------
COGENERATION FACILITIES - 3.3%
NR NR $ 14,000 Maryland Energy, AES Warrior Run
Project, (AMT), 7.4%, 9/1/19 $ 14,411,740
NR BB+ 22,150 New Jersey EDA, Vineland
Cogeneration Limited Partnership
Project, (AMT), 7.875%, 6/1/19 23,738,155
NR NR 2,300 Palm Beach County, Florida, Solid
Waste IDR, Osceola Power Limited
Partnership Project, (AMT),
6.95%, 1/1/22 2,294,135
NR NR 7,000 Pennsylvania EDA, Northampton
Generating Project, Junior
Liens, (AMT), 6.875%, 1/1/11 6,777,750
NR NR 13,450 Pennsylvania EDA, Northampton
Generating Project, (AMT),
6.6%, 1/1/19 12,760,822
NR NR 5,100 Pennsylvania EDA, Northampton
Generating Project, (AMT),
6.5%, 1/1/13 4,955,364
NR NR 10,000 Pennsylvania EDA, Colver Project,
(AMT), 8.05%, 12/1/15 10,371,200
--------------
$ 75,309,166
--------------
INDUSTRIALS - 10.4%
Baa2 NR $ 3,000 Camden, Alabama, IDB, MacMillan
Bloedel Project, 7.75%, 5/1/09 $ 3,191,250
NR NR 4,325 College Park, Georgia, Airport
Parking Venture, 10%, 5/15/16 3,892,500
Baa1 BBB 24,000 Courtland, Alabama, IDB, Champion
International Corporation,
(AMT), 7%, 6/1/22 24,943,920
Baa1 BBB 20,245 Courtland, Alabama, IDB, Champion
International Corporation,
(AMT), 6.375%, 3/1/29 19,792,119
NR NR 8,040 East Chicago, Indiana, PCR, Inland
Steel Company Project #9, (AMT),
10%, 11/1/11 8,679,743
Baa1 BBB 19,000 Gulf Coast Waste Disposal, Texas,
Champion International
Corporation, (AMT), 6.875%, 12/1/28 19,621,680
NR NR 6,000 Gwinnett County, Georgia, IDR,
Plastics/Packaging, Inc., (AMT),
9%, 5/1/13 6,000,000
Baa1 BBB- 10,000 Maine Finance Authority, Great
Northern Paper, Inc., Project-
Bowater Incorporated, (AMT),
7.75%, 10/1/22 10,687,400
NR BB+ 5,000 Maine Solid Waste Disposal, Boise
Cascade Corporation, (AMT),
7.9%, 6/1/15 5,295,600
NR NR 1,765 Massachusetts Industrial Finance
Agency, IDR, Boston Beer
Company, (AMT), 11.5%, 7/15/07 2,015,348
Baa1 BBB- 5,000 McMinn County, Tennessee, IDB,
Calhoun Newsprint Company
Project-Bowater Incorporated,
(AMT), 7.4%, 12/1/22 5,302,750
NR NR 10,000 Michigan Strategic, S.D. Warren
Co., Series 87A, (AMT),
7.375%, 1/15/22 10,235,500
NR NR 15,000 Michigan Strategic, S.D. Warren
Co., Series 87B, (AMT),
7.375%, 1/15/22 15,353,250
NR NR 2,500 Michigan Strategic, S.D. Warren
Co., Series 87C, (AMT),
7.375%, 1/15/22 2,559,425
NR NR 4,370 Middleboro, Massachusetts, IDR,
Read Corporation, 9.5%, 10/1/10 3,714,500
Baa2 BBB- 7,500 Pennsylvania, EDA, MacMillan
Bloedel Project, (AMT),
7.6%, 12/1/20 8,177,925
Baa1 BBB+ 10,000 Pennsylvania, EDA, Sun Company,
Inc. (R&M), (AMT), 7.6%, 12/1/24 10,911,100
Baa3 BBB- 12,000 Port of Corpus Christi, Texas,
Valero Refining & Marketing
Company, 10.25%, 6/1/17 13,492,920
NR NR 2,695 Savannah, Georgia, IDR, Intercat-
Savannah, Inc., (AMT), 9.75%, 7/1/10 2,896,936
NR NR 4,000 Savannah, Georgia, IDR, Intercat-
Savannah, Inc., (AMT), 9%, 1/1/15 4,278,600
A1 AA- 61,120 Valdez, Alaska, Marine Terminal,
BP Pipelines, Inc., 5.5%, 10/1/28<F3> 55,694,378
--------------
$ 236,736,844
--------------
INSURED UTILITY REVENUE BONDS - 5.2%
Aaa AAA $ 20,000 Intermountain Power Agency, Utah,
(MBIA) 6%, 7/1/16<F2> $ 19,224,000
Aaa AAA 10,000 Puerto Rico Telephone Authority,
(MBIA), Variable Rate, 1/25/07<F1> 9,962,500
Aaa AAA 16,500 Sacramento, California, Municipal
Utility District, (MBIA),
Variable Rate, 11/15/15<F1> 14,870,625
Aaa AAA 21,000 Sacramento, California, Municipal
Utility District, (MBIA),
4.75%, 9/1/21<F3> 17,617,320
Aaa AAA 49,245 South Carolina Public Services,
Forwards, Series 96A, (MBIA),
5.75%, 1/1/22<F2> 46,506,486
Aaa AAA 15,350 South Carolina Public Services,
"RIBS" (FGIC), Variable Rate,
1/1/25<F1> 10,572,312
--------------
$ 118,753,243
--------------
INSURED TRANSPORTATION - 1.8%
Aaa AAA $ 14,400 Metropolitan Washington Airports
Authority, (MBIA), Variable
Rate, 4/1/21<F1> $ 12,510,000
Aaa AAA 18,200 Mobile, Alabama, Airport
Authority, (MBIA),
6.375%, 10/1/14<F3> 19,056,128
Aaa AAA 10,000 Triborough Bridge and Tunnel
Authority, "Rites", (MBIA),
Variable Rate, 1/1/19<F1> 10,110,100
--------------
$ 41,676,228
--------------
INSURED HOSPITAL - 0.8%
Aaa AAA $ 10,000 Louisville, Kentucky, Alliant
Health System, Inc., (MBIA),
Variable Rate, 10/1/14<F1> $ 11,000,000
Aaa AAA 7,000 Montgomery County, Pennsylvania,
Abington Memorial Hospital,
(AMBAC), Variable Rate, 6/1/11<F1> 7,931,980
--------------
$ 18,931,980
--------------
INSURED SPECIAL TAX REVENUE - 5.6%
Aaa AAA $ 20,000 Los Angeles County (California),
Metropolitan Transportation,
(AMBAC), 4.75%, 7/1/18 $ 16,960,600
Aaa AAA 92,995 Metropolitan Pier and Exposition
Authority, Illinois, McCormick
Place Expansion Project, (MBIA),
0%, 6/15/28 12,225,123
Aaa AAA 92,995 Metropolitan Pier and Exposition
Authority, Illinois, McCormick
Place Expansion Project, (FGIC),
0%, 6/15/29 11,489,532
Aaa AAA 9,800 Metropolitan Pier and Exposition
Authority, Illinois, McCormick
Place Expansion Project, (MBIA),
"RIBS" Variable Rate, 6/15/27<F1> 9,114,000
Aaa AAA 3,415 New Orleans Regional Transit
Authority, Louisiana, Sales Tax,
(FGIC), 0%, 12/1/12 1,227,078
Aaa AAA 10,935 New Orleans Regional Transit
Authority, Louisiana, Sales Tax,
(FGIC), 0%, 12/1/15 3,190,833
Aaa AAA 10,000 New Orleans Regional Transit
Authority, Louisiana, Sales Tax,
(FGIC), 0%, 12/1/21 1,982,200
Aaa AAA 21,655 Rancho Mirage, California, Water
District Financing, (AMBAC),
4.75%, 8/15/21 18,168,978
Aaa AAA 13,350 Rancho Mirage, California,
Whitewater Redevelopment
Project, (MBIA), 5%, 4/1/24 11,635,459
Aaa AAA 40,000 South Orange, California, Public
Financing, Foothill Area, (FGIC),
5.5%, 8/15/15<F3> 36,909,200
Aaa AAA 7,000 Utah Municipal Finance
Corporation, Local Government
Revenue, (FSA), 0%, 3/1/10 2,975,700
Aaa AAA 6,000 Utah Municipal Finance
Corporation, Local Government
Revenue, (FSA), 0%, 3/1/11 2,385,840
--------------
$ 128,264,543
--------------
INSURED INDUSTRIALS - 0.4%
Aaa AAA $ 11,950 Chicago, Illinois, The Peoples Gas
Light and Coke Company, (AMBAC),
"RIBS" (AMT), Variable Rate,
12/1/23<F1> $ 10,217,250
--------------
INSURED HOUSING - 0.4%
Aaa AAA $ 7,525 SCA Multifamily Mortgage, IDB,
Hamilton County, Tennessee,
(FSA) (AMT), 7.35%, 1/1/30 $ 8,057,845
--------------
INSURED GENERAL OBLIGATION STATE &
SCHOOL DISTRICT - 0.9%
Aaa AAA $ 10,000 California General Obligation,
(FSA), 4.75%, 9/1/18 $ 8,475,500
Aaa AAA 15,000 California General Obligation,
(FGIC), 4.75%, 9/1/23 12,509,250
--------------
$ 20,984,750
--------------
INSURED WATER & SEWER - 0.9%
Aaa AAA $ 10,300 Harrisburg, Pennsylvania, Water
Revenue Bonds, (FGIC)
Variable, 8/11/16<F1> $ 9,447,572
Aaa AAA 10,000 New York City Municipal Water
Finance Authority, (FSA),
Variable Rate, 6/15/21<F1> 10,075,000
--------------
$ 19,522,572
--------------
REFUNDED & ESCROWED - 9.7%
NR AAA $ 65,000 Bakersfield, California,
Bakersfield Assisted Living
Center, 0%, 4/15/21 $ 11,924,250
NR NR 2,200 Bexar County, Texas, Health
Facilities, St. Luke's Lutheran,
7%, 5/1/21 2,501,422
NR AAA 177,055 Colorado HFA, Retirement Housing,
Liberty Heights Project,
0%, 7/15/24 24,484,936
NR AAA 27,870 Colorado HFA, Retirement Housing,
Liberty Heights Project,
0%, 7/15/20 5,159,016
Aaa NR 29,600 Colorado HFA, Retirement Housing,
Liberty Heights Project,
0%, 7/15/22 4,745,176
Ba1 BBB 10,000 Detroit, Michigan, Unlimited Tax,
8.7%, 4/1/10 11,823,200
Ba1 BBB 3,500 Detroit, Michigan, Unlimited Tax,
Series 1991, 8%, 4/1/11 4,111,275
NR NR 7,000 Florida, Mid-Bay Bridge Authority
Revenue Bonds, 6.875%, 10/1/22 7,864,570
NR NR 1,820 Hyland Hills Park and Recreation
District, Adams County, Colorado,
9.75%, 7/1/01 1,856,400
NR NR 2,430 Hyland Hills Park and Recreation
District, Adams County, Colorado,
9.9%, 7/1/04 2,573,297
NR NR 1,615 Hyland Hills Park and Recreation
District, Adams County, Colorado,
10%, 7/1/06 1,711,690
NR AAA 30,360 Illinois Development Finance
Authority, Regency Park at
Lincolnwood, 0%, 7/15/25 3,897,313
NR AAA 186,555 Illinois Development Finance
Authority, Regency Park at
Lincolnwood, 0%, 7/15/23 27,781,770
NR AAA 4,000 Jackson County, Oklahoma, Jackson
County Memorial Hospital,
9%, 8/1/15 4,420,640
NR AAA 12,750 Louisiana Public Facilities
Authority, Southern Baptist
Hospitals, Inc., 8%, 5/15/12 15,393,075
Aaa NR 138,000 Mississippi Housing Finance
Corporation, Single Family
Mortgage, 0%, 6/1/15 41,157,120
Aaa NR 6,130 North Salt Lake Municipal Building
Authority, Davis County, Utah,
8.625%, 12/1/17 7,617,690
NR NR 8,885 Scottsdale IDA, Arizona,
Westminster Village, Inc.,
10%, 6/1/07 9,982,831
Aaa AAA 19,165 Texas Turnpike Authority, Houston
Ship Channel Bridge, 0%, 1/1/20 26,769,672
Aaa AAA 2,675 Washington Public Power Supply
System, Nuclear Project No. 1,
14.375%, 7/1/01 3,927,167
NR BBB- 1,000 West Virginia HFA, Logan General
Hospital, 8.625%, 4/1/01 1,042,720
NR BBB- 1,750 West Virginia HFA, Logan General
Hospital, 8.75%, 4/1/13 1,825,845
--------------
$ 222,571,075
--------------
COLLEGES & UNIVERSITIES - 0.4%
NR BBB- $ 3,300 Massachusetts Health and
Educational Facilities, Nichols
College, 7%, 10/1/20 $ 3,381,048
NR NR 4,415 New Hampshire Higher Educational
and Health, Franklin Pierce Law
Center, 7.5%, 7/1/22 4,690,452
--------------
$ 8,071,500
--------------
TAX ALLOCATION - 0.2%
Baa BBB $ 3,870 Inglewood, California Public
Financing Authority, In-Town,
Manchester-Prairie and North
Inglewood Industrial Park
Redevelopment Projects-
Redevelopment Loans 7%, 5/1/22 $ 3,959,745
--------------
SPECIAL ASSESSMENT - 0.8%
A BBB $ 8,000 Hoffman Estates, Illinois,
Economic Development Project
Area, 0%, 5/15/05 $ 4,630,720
A BBB 11,000 Hoffman Estates, Illinois,
Economic Development Project
Area, 0%, 5/15/06 5,929,330
A BBB 17,460 Hoffman Estates, Illinois,
Economic Development Project
Area, 0%, 5/15/07 8,740,651
---------------
$ 19,300,701
---------------
MISCELLANEOUS - 3.5%
NR NR $ 6,805 American Samoa Economic
Development, Executive Office
Building, 10.125%, 9/1/08 $ 7,677,129
NR NR 11,500 Harris County, Texas, Space Center
Houston Project, 9.25%, 8/15/15<F5> 3,450,000
NR A- 16,500 Los Angeles Regional Airports
Improvement Corporation,
LAXFuel, (AMT), 6.5%, 1/1/32 16,204,650
NR NR 4,710 Mille Lacs Capital Improvements,
Mille Lacs Band of Chippewa
Indians, 9.25%, 11/1/12 5,198,898
NR NR 22,500 New Jersey, Sports & Exhibition
Authority, Monmouth Park
Project, 8%, 1/1/25 24,552,675
NR NR 10,200 Orange County Community Activity
Center Revenue Bonds, 8%, 3/1/24 10,374,420
NR NR 19,500 Retama, Texas, Special Facilities
Revenue, Retama Race Track,
8.75%, 12/15/18<F5> 11,700,000
---------------
$ 79,157,772
---------------
<PAGE>
TOTAL TAX-EXEMPT INVESTMENTS
(identified cost, $2,147,410,455) $ 2,282,787,373
---------------
TAXABLE INVESTMENT -- 0.0%
NR NR $ 935 Ridgeland, Mississippi, Urban Renewal,
The Orchard Limited Project,
9%,12/1/00 (identified cost,
$935,000) $ 932,663
---------------
TOTAL INVESTMENTS
(identified cost, $2,148,345,455) $ 2,283,720,036
===============
<FN>
<F1> The above designated securities have been issued as inverse floater bonds.
<F2> When-issued security.
<F3> Security has been segregated to cover when-issued securities.
<F4> Non-income producing security.
<F5> The Portfolio is accruing only partial interest on this security.
</TABLE>
At September 30, 1995, the concentration of the Portfolio's investments in the
various states, determined as a percentage of total investments is as follows:
California -- 12.1%
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 in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at September 30, 1995, 16.0% of the securities in the portfolio
of investments are backed by bond insurance of various financial guaranty
assurance agencies. The aggregate percentage by financial institution ranges
from 1.4% to 9.1% of total investments.
Note: The classification of securities by industry sector set forth above is
unaudited.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
September 30, 1995
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$2,148,345,455) $2,283,720,036
Cash 3,616,689
Receivable for investments sold 32,684,771
Interest receivable 43,138,659
Deferred organization expenses (Note 1D) 46,641
--------------
Total assets $2,363,206,796
LIABILITIES:
Payable for investments purchased $ 5,033,541
Payable for when-issued securities (Note 1G) 97,457,676
Payable to affiliate --
Trustees' fees 7,368
Accrued expenses 61,848
-----------
Total liabilities 102,560,433
--------------
NET ASSETS applicable to investors' interest in Portfolio $2,260,646,363
==============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $2,125,271,782
Unrealized appreciation of investments
(computed on the basis of identified cost) 135,374,581
--------------
Total $2,260,646,363
==============
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended September 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest income (Note 1B) $166,061,913
Expenses --
Investment adviser fee (Note 2) $ 9,944,026
Compensation of Trustees not members of the Investment Adviser's organization 29,082
Custodian fee (Note 2) 374,289
Legal and accounting services 117,108
Amortization of organization expenses (Note 1D) 19,459
Miscellaneous 609,017
-----------
Total expenses $ 11,092,981
Deduct reduction of custodian fee (Note 2) 317,043
-----------
Net expenses $ 10,775,938
-----------
Net investment income $155,285,975
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss --
Investment transactions (identified cost basis) $(60,263,375)
Financial futures contracts (26,703,060)
-----------
Net realized loss on investments $(86,966,435)
Change in unrealized appreciation of
investments (identified cost basis) 177,320,778
-----------
Net realized and unrealized gain on investments $ 90,354,343
-----------
Net increase in net assets from operations $245,640,318
============
</TABLE>
See notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------
1995 1994
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 155,285,975 $ 144,467,768
Net realized loss on investment
transactions (86,966,435) (8,642,077)
Change in unrealized appreciation
(depreciation) of investments 177,320,778 (224,012,810)
-------------- --------------
Net increase (decrease) in net assets
from operations $ 245,640,318 $ (88,187,119)
-------------- --------------
Capital transactions --
Contributions $ 443,671,368 $ 760,864,297
Withdrawals (639,601,609) (545,063,348)
-------------- --------------
Increase (decrease) in net assets
resulting from capital transactions $ (195,930,241) $ 215,800,949
-------------- --------------
Net increase in net assets $ 49,710,077 $ 127,613,830
NET ASSETS:
At beginning of year 2,210,936,286 2,083,322,456
-------------- --------------
At end of year $2,260,646,363 $2,210,936,286
============== ==============
- ------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- ------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------
1995 1994 1993<F2>
-------- --------- ---------
RATIOS (As a percentage of average
net assets):
Expenses 0.50% 0.50% 0.47%<F1>
Net investment income 7.00% 6.55% 6.58%<F1>
PORTFOLIO TURNOVER 54% 40% 13%
NET ASSETS, at end of
period (000 omitted) $2,260,646 $2,210,936 $2,083,322
<F1> Computed on an annualized basis.
<F2> For the period from the start of business, February 1, 1993 to
September 30, 1993.
See notes to financial statements
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
National 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, 1992. The Declaration of Trust permits the Trustees to issue
interests in the Portfolio. The following is a summary of significant
accounting policies of the Portfolio. The policies are in conformity with
generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Municipal bonds are normally valued on the basis
of valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts 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 value. Investments for which valuations or market quotations are
unavailable are valued at fair value using methods determined in good faith by
or at the direction of the Trustees.
B. INCOME -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes.
C. INCOME TAXES -- The 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
investors' 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. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E. FINANCIAL FUTURES CONTRACTS -- Upon the entering of a financial futures
contract, 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.
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 payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin accruing interest on settlement date.
H. OTHER -- Investment transactions are accounted for on a trade date basis.
- ------------------------------------------------------------------------------
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to 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 sale of securities). For
the year ended September 30, 1995, the fee was equivalent to 0.45% of the
Portfolio's average net assets for such period and amounted to $9,944,026.
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. Investors Bank & Trust
Company (IBT), an affiliate of EVM and BMR, 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. For the year ended September 30, 1995, credits
used to reduce the custodian fee amounted to $317,043. Certain of the officers
and Trustees of the Portfolio are officers and directors/trustees of the above
organizations.
Trustees of the Portfolio that are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual fees
in accordance with the terms of the Trustees Deferred Compensation Plan. For
the year ended September 30, 1995, no significant amounts have been deferred.
- ------------------------------------------------------------------------------
(3) INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities and
short term obligations, aggregated $1,192,305,188 and $1,201,905,002,
respectively.
- ------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at September 30, 1995, as computed on a federal income tax basis, were
as follows:
Aggregate cost $2,148,345,455
==============
Gross unrealized appreciation $ 165,148,448
Gross unrealized depreciation 29,773,867
--------------
Net unrealized appreciation $ 135,374,581
==============
- ------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM in a $120 million unsecured line of credit agreement with a bank. The line
of credit consists of a $20 million committed facility and a $100 million
discretionary facility. 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 Portfolio based on its borrowings at
an amount above either the bank's adjusted certificate of deposit rate, a
variable adjusted certificate of deposit rate, or a federal funds effective
rate. In addition, a fee computed at an annual rate of 1/4 of 1% on the $20
million committed facility and on the daily unused portion of the $100 million
discretionary facility is allocated among the participating funds and portfolios
at the end of each quarter. For the year ended September 30, 1995, the Portfolio
did not have any significant borrowings.
- ------------------------------------------------------------------------------
(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 written
options and futures contracts and may involve, to a varying degree, elements
of risk in excess of the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments
and does not necessarily represent the amounts potentially subject to risk.
The measurement of the risks associated with these instruments is meaningful
only when all related and offsetting transactions are considered.
The Portfolio did not have any open obligations under these financial
instruments at September 30, 1995.
<PAGE>
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------------------------
TO THE TRUSTEES AND INVESTORS OF
NATIONAL MUNICIPALS PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of National Municipals Portfolio as of
September 30, 1995, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended September
30, 1995 and 1994 and the supplementary data for the years ended September 30,
1995 and 1994, and for the period from the start of business, February 1,
1993, to September 30, 1993. These financial statements and supplementary data
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and supplementary data based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
supplementary data are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at September 30, 1995 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and supplementary data present
fairly, in all material respects, the financial position of National
Municipals Portfolio at September 30, 1995, the results of its operations, the
changes in its net assets, and its supplementary data for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
OCTOBER 27, 1995
<PAGE>
INVESTMENT MANAGEMENT
EV CLASSIC OFFICERS INDEPENDENT TRUSTEES
NATIONAL THOMAS J. FETTER DONALD R. DWIGHT
MUNICIPALS President President, Dwight Partners, Inc.
FUND JAMES B. HAWKES Chairman, Newspapers of
24 Federal Street Vice President, Trustee New England, Inc.
Boston, MA 02110 ROBERT B. MACINTOSH SAMUEL L. HAYES, III
Vice President Jacob H. Schiff Professor
JAMES L. O'CONNOR of Investment Banking,
Treasurer Harvard University Graduate
THOMAS OTIS School of Business
Secretary Administration
NORTON H. REAMER
President and Director,
United Asset Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
------------------------------------------------------------
NATIONAL OFFICERS INDEPENDENT TRUSTEES
MUNICIPALS THOMAS J. FETTER DONALD R. DWIGHT
PORTFOLIO President President, Dwight Partners, Inc.
24 Federal Street JAMES B. HAWKES Chairman, Newspapers of
Boston, MA 02110 Vice President, Trustee New England, Inc.
ROBERT B. MACINTOSH SAMUEL L. HAYES, III
Vice President Jacob H. Schiff Professor
THOMAS M. METZOLD of Investment Banking,
Vice President and Harvard University Graduate
Portfolio Manager School of Business
JAMES L. O'CONNOR Administration
Treasurer NORTON H. REAMER
THOMAS OTIS President and Director,
Secretary United Asset Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
<PAGE>
INVESTMENT ADVISER
OF NATIONAL
MUNICIPALS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV CLASSIC NATIONAL
MUNICIPALS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
EV CLASSIC NATIONAL MUNICIPALS FUND
24 FEDERAL STREET
BOSTON, MA 02110
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
EV CLASSIC
NATIONAL
MUNICIPALS FUND
ANNUAL SHAREHOLDER REPORT
SEPTEMBER 30, 1995
C-NASRC
