<PAGE>
TO SHAREHOLDERS
In the six months that ended March 31, 1995, EV Classic National Municipals Fund
paid to its shareholders monthly income dividends of $0.274 per share.
Based on the most recent dividend paid and the Funds' net asset value of $9.15
per share on March 31, 1995, the Funds annualized distribution rate was 5.87
percent. To equal that rate in a taxable investment, a couple in the combined 36
percent tax bracket would have to receive 9.17 percent.
During 1994 the economy remained stronger than economists and money managers had
anticipated at the start of the year. In response to this strength, and in an
attempt to keep inflation in check, the Federal Reserve raised short-term
interest rates six times in 1994 and once again in 1995. Long-term rates moved
upward as well and, as a result, the prices of municipal bonds dropped.
But the market slide was not the only concern in 1994. Many shareholders of
Eaton Vance tax free mutual funds may have wondered whether the problems that
surfaced in Orange County, California, had in any way affected their investment
in our non-California tax free funds. The answer is no. After a brief period
during which the value of California bonds declined, the market realized that
this was a local problem; other Eaton Vance portfolios were not impacted.
Despite the difficulties that beset the market in 1994, we feel optimistic about
prospects for 1995. The market now appears convinced that the Federal Reserve
is, in fact, keeping a tight watch on inflation. And, while it is impossible to
predict the outcomes of government initiatives, it appears that proposals put
forth by the new Congress to cut spending and taxes could have an overall
positive effect if enacted.
This report features some changes which we hope will help you to better
understand your investment, and how your Portfolio's holdings help provide the
means for the Federal government, as well a state and local governments, to fund
such projects as roads, bridges, hospitals and schools. The fund review includes
a Portfolio Overview, or snapshot, as well as comments from the portfolio
manager. In addition, we are profiling a specific bond holding.
Regardless of what lies ahead for the economy, the goal of your fund remains the
same: to provide you with a competitive distribution of tax free income from a
portfolio of high-quality municipal bonds.+
Sincerely,
[Photo of Thomas J. Fetter]
/s/ Thomas J. Fetter
Thomas J. Fetter
President
May 19, 1995
+A portion of the Portfolio's income could be subject to Federal alternative
minimum tax.
30-Year treasuries chart, revised
This chart is entitled as follows: "In 1994, long-term interest rates hit their
highest level in 3 years."
Below the title is a three-dimensional line graph labeled, "Month-end 30-year
Treasuries rate." The axis ascending on the left side of the chart is labeled
from 5% to 8% at one-percent intervals. Along the bottom of the chart, the axis
lists dates from 2/92 to 2/95, at one-year intervals.
The high point of interest rates during that period, 8.04%, is labeled on the
chart and occurred near the end of the period being measured.
Attachment: DeltaGraph plot points.
Interest Rate Month
7.35 2/92
7.6 3/92
7.82 4/92
7.85 5/92
8.1 6/92
7.92 7/92
7.78 8/92
7.46 9/92
7.53 10/92
7.58 11/92
7.31 12/92
7.31 1/93
6.92 2/93
6.65 3/93
6.29 4/93
6.28 5/93
6.31 6/93
5.99 7/93
5.99 8/93
6.16 9/93
6.63 10/93
6.76 11/93
6.97 12/93
6.89 1/94
6.95 2/94
6.89 3/94
7.23 4/94
7.39 5/94
7.36 6/94
7.63 7/94
7.34 8/94
7.44 9/94
7.46 10/94
7.82 11/94
7.89 12/94
8.04 1/95
7.97 2/95
An interview with Thomas M. Metzold, manager of the National Municipals
Portfolio.
Q. TOM, HOW WOULD YOU DESCRIBE THE INVESTMENT CLIMATE IN THE SIX MONTHS THAT
ENDED MARCH 31, 1995?
A. It really was two very different periods. September, October and part of
November were a continuation of the market slide that had begun several months
earlier. Suffice it to say that these months helped contribute to making 1994
the worst year for the bond market in recent memory.
However, by mid-November, the bond market began to rally, and this upswing
continued through the first quarter of 1995.
I should also mention that through active Portfolio management, we were able to
take advantage of rising interest rates and increase the annual dividend $.01
per share as of January 10, 1995.
Q. AS THE MARKET CORRECTED DURING 1994, HOW DID YOU REACT?
A. In a down market, investors may be tempted to change what they've been doing:
to sell at the wrong time or to lose faith in their investment philosophy. We
didn't do either of these things. We didn't shorten the duration of the
Portfolio, since we believed that there was going to be a market recovery. A
strategy of the Portfolio is to invest in bonds of longer maturity. So we stayed
the course, and as the market has recovered in 1995, it's paid off.
<PAGE>
PORTFOLIO OVERVIEW
Based on market value as of March 31, 1995
Number of issues 266
Average quality BBB+
Investment grade 67.1%
Effective maturity (years) 17.7
Largest sectors:
Transportation 15.8%
Hospitals 11.7
Industrials 11.0
Insured special tax revenue 8.7*
Refunded and escrowed 8.6
* Private insurance does not remove the market risk associated with
this investment
Q. IS THERE A LESSON TO BE LEARNED FROM THE PERFORMANCE OF THE FUND DURING THESE
PERIODS?
A. Absolutely. This Fund should be only one part of an investors overall
portfolio strategy and should be viewed as a long-term investment. The serious
long-term investor should know that the market will have down periods as well as
up periods and that history shows that after each downturn there is usually a
recovery. So even six months or nine months of down performance should not cause
a change in investment philosophy.
Q. DID YOU PUT ANY SPECIAL STRATEGIES INTO EFFECT TO DEAL WITH THE MARKET
DOWNTURN?
A. During the sell-off, we were able to upgrade the quality of the Portfolio
while rates were rising. That was possible because quality spreads -- the
difference in prices between bonds of varying quality became so narrow that, in
effect, you didn't have to pay very much to get additional quality.
Q. WHAT STRATEGIES ARE YOU USING TO TAKE ADVANTAGE OF THE CURRENT MARKET?
A. Weve reduced our exposure to hospitals. Regardless of health care reform
proposals in Washington, there is a health care reform that is being imposed by
the marketplace. What's been happening is that competition in the health care
industry has stiffened around the country and has reduced the profitability of
many hospitals. We feel there are better places to invest our shareholders money
right now.
Q. WHAT ARE THOSE AREAS?
A. We believe that it makes sense to take advantage of a major demographic
trend, the so-called graying of America. Were investing more heavily in elderly
housing, nursing homes and assisted living projects. There are many more
opportunities for profit in these areas today.
Q. CAN YOU GIVE AN EXAMPLE?
A. Janus Park, located in Liverpool, NY, is a nursing home alternative that
derives its competitive advantage from the high prices that people pay in
nursing homes. This facility offers an elderly person his or hier own small
apartment, but also provides the security of available meals and linen services
if needed. In addition, a home health care agency is available at Janus Park to
provide as little or as much assistance as required. Janus Park can provide full
nursing home care that costs less than at a regular nursing home.
In addition to cost, another big advantage is dignity. For example, residents
furnish their apartments with their own belongings. We think this is a concept
that makes sense from the standpoint of providing quality care, but from the
standpoint of cost as well.
Q. WHAT OTHER KINDS OF INVESTMENTS ARE A GROWING PART OF THE PORTFOLIO?
A. There's a category that we call Lifecare. This consists of facilities
referred to as Continuing Care Retirement Communities. These provide more care
levels than facilities such as Janus Park, depending on the needs of the
residents. For example, these facilities generally will have apartments to
accommodate those who are still able to live independently. There are
intermediate facilities for those who need some help but who do not need an
institutional level of care. Finally, many of these facilities provide full
nursing home care. In states whose licensing requirements do not allow nursing
homes to be a part of such facilities, residents are transferred to a separate
nursing home when they reach the point of needing that level of care.
Photo of buildings reflected in pond in foreground
Janus Park, Liverpool, NY
(Photo: Trinca Photography)
Q. DURING 1994, ONE OF THE BIGGEST INVESTMENT STORIES WAS ORANGE COUNTY, CA. HOW
DID THOSE PROBLEMS AFFECT THE PORTFOLIO?
A. Direct Orange County credits were the ones that were really affected by the
county's problems, and the Portfolio didn't own any of them. Actually, we saw
the situation in California as an opportunity, because for a brief period, the
Orange County problems caused prices of a number of California bonds to drop.
That gave us the chance to buy bonds that were inexpensive or that offered a
higher yield than we could normally obtain.
Q. ANOTHER MAJOR INVESTMENT STORY WAS DENVER INTERNATIONAL AIRPORT, WHOSE
OPENING WAS DELAYED SEVERAL TIMES. DID THE PORTFOLIO HOLD ANY OF THAT AIRPORT'S
BONDS DURING THE SIX MONTHS THAT ENDED MARCH 31, 1995?
A. Yes. The Denver Airport presented an interesting investment situation.
Continuing problems with an innovative luggage-handling system created
uncertainty over when, if ever, the airport would open. As a result, the
airport's bonds were trading at low prices. It was a pretty sure thing that the
airport would open, because there really was no alternative, as anyone who has
seen Stapleton Airport, which used to serve Denver, would know. So we did, in
fact, buy some of these bonds, and held them through the price increase that
occurred once the airport actually did open.
Since then, however, I've sold some of them, for two reasons. First, I wanted to
take advantage of the price increases that we'd seen. Second, I anticipated
another decrease in price, once it became apparent that there would be the
inevitable glitches that accompany the opening of any major public works
project.
Q. WHAT'S YOUR OUTLOOK ON BONDS?
A. In the short term, there could be periods of volaility. But we don't
anticipate the high rates of economic growth that would trigger inflation.
That's a good sign for long-term bond investors.
- --------------------------
Photo of THOMAS M. METZOLD
- --------------------------
<PAGE>
EV CLASSIC NATIONAL MUNICIPALS FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
March 31, 1995 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investment in National Municipals Portfolio, at value (Note 1A)
(identified cost, $40,267,065) $ 40,209,901
Receivable for Fund shares sold 4,796
Receivable from the Administrator (Note 4) 939
Deferred organization expenses (Note 1D) 41,833
------------
Total assets $ 40,257,469
LIABILITIES:
Dividends payable $ 58,319
Payable for Fund shares redeemed 516,289
Payable to affiliate --
Trustees' fees 40
Accrued expense 33,036
--------
Total liabilities 607,684
------------
NET ASSETS for 4,332,955 shares of beneficial interest
outstanding $ 39,649,785
============
SOURCES OF NET ASSETS:
Paid-in capital $ 41,661,688
Net realized loss on investment and financial
futures transactions (computed on the basis of
identified cost) (1,903,590)
Distribution in excess of net investment income (51,149)
Unrealized depreciation of investments from
Portfolio (computed on the basis of identified cost) (57,164)
------------
Total $ 39,649,785
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE (NOTE 6)
PER SHARE
($39,649,785 / 4,332,955 shares of beneficial interest) $9.15
=====
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the Six Months Ended March 31, 1995 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 1,416,333
Expenses allocated from Portfolio (93,117)
------------
Net investment income from Portfolio $ 1,323,216
Expenses --
Compensation of Trustees not members of the
Administrator's organization $ 80
Distribution costs (Note 5) 184,990
Custodian fee (Note 4) 1,223
Printing and postage 29,491
Transfer and dividend disbursing agent fees 12,717
Legal and accounting services 8,485
Registration costs 5,471
Amortization of organization expense (Note 1D) 5,127
Miscellaneous 12,334
----------
Total expenses $ 259,918
Deduct preliminary allocation of expenses to the
Administrator (Note 4) 939
----------
Net expenses 258,979
------------
Net investment income $ 1,064,237
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from Portfolio on investment
transactions (identified cost basis) $ (1,219,052)
Change in unrealized appreciation on investments 2,289,141
------------
Net realized and unrealized gain $ 1,070,089
------------
Net increase in net assets from operations $ 2,134,326
============
See notes to financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, 1995 SEPTEMBER 30,
(UNAUDITED) 1994*
----------- -----------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,064,237 $ 1,131,407
Net realized loss on investments (1,219,052) (684,538)
Change in unrealized appreciation
(depreciation) of investments 2,289,141 (2,346,305)
----------- -----------
Net increase (decrease) in net assets from
operations $ 2,134,326 $(1,899,436)
----------- -----------
Distributions to shareholders (Note 2) --
From net investment income $ (1,064,237) $(1,131,407)
In excess of net investment income (86,661) (158,410)
----------- -----------
Total distributions to shareholders $ (1,150,898) $(1,289,817)
----------- -----------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares $ 12,811,955 $49,268,774
Net asset value of shares issued to
shareholders in payment of distributions
declared 730,893 778,669
Cost of shares redeemed (8,858,016) (12,876,665)
----------- -----------
Increase in net assets from Fund share
transactions $ 4,684,832 $37,170,778
----------- -----------
Net increase in net assets $ 5,668,260 $33,981,525
NET ASSETS:
At beginning of period 33,981,525 --
----------- -----------
At end of period (including distributions in
excess of net investment income of
$51,149 and $1,786, respectively) $ 39,649,785 $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
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
1995 SEPTEMBER 30,
(UNAUDITED) 1994*
---------- -------------
NET ASSET VALUE, beginning of period $ 8.980 $10.000
------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income $ 0.253 $ 0.425
Net realized and unrealized gain
(loss) on investments 0.191 (0.961)
------- -------
Total income (loss) from operations $ 0.444 $(0.536)
LESS DISTRIBUTIONS:
From net investment income $(0.253) $(0.425)
In excess of net investment income (0.021) (0.059)
------ ------
Total distributions $(0.274) $(0.484)
------- --------
NET ASSET VALUE, end of period $ 9.150 $ 8.980
======= =======
TOTAL RETURN(2) 5.10% (5.60%)
RATIOS/SUPPLEMENTAL DATA**:
Net assets, end of period (000 omitted) $39,650 $33,982
Ratio of net expenses to average
daily net assets(1) 1.90%+ 1.60%+
Ratio of net investment income to
average daily net assets 5.75%+ 5.39%+
**For the six months ended March 31, 1995 and 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 $ 0.253 $ 0.405
======= =======
RATIOS (As a percentage of average
daily net assets):
Expenses(1) 1.91%+ 1.86%+
==== ====
Net investment income 5.74%+ 5.13%+
==== ====
+Computed on an annualized basis.
*For the period from the start of business, December 3, 1993 to September 30,
1994.
(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.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(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 March 31, 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, 1994, the Fund, for
federal income tax purposes had a capital loss carryover of $612,277 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. Dividends paid by
the Fund from net interest on tax-exempt 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 a
Fund's shares and other distribution costs are charged to operations. For tax
purposes, commissions paid were charged to paid-in capital prior to November 23,
1994 and subsequently charged to operations. The change in the tax accounting
practice was prompted by a recent Internal Revenue Service ruling and has 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.
G. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
March 31, 1995 and for the six months then ended have not been audited by
independent certified public accountants, 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. In addition, the Fund declares each day an amount equal to
the excess of tax basis net income over book net income, which amount is
reported for financial statement purposes as a distribution in excess of net
investment income. 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 period from October 1, 1994 to
November 22, 1994, $37,298 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:
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
1995 SEPTEMBER 30,
(UNAUDITED) 1994
-------- --------
Sales 1,471,357 5,078,176
Issued to shareholders electing
to receive payment of distribution
in Fund shares 83,224 83,946
Redemptions (1,006,880) (1,376,868)
-------- --------
Net increase 547,701 3,785,254
======= =========
- ------------------------------------------------------------------------------
(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. To enhance the net income of the Fund, $939 of
expenses related to the operation of the Fund were allocated, on a preliminary
basis, to EVM. 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/or
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 $138,742 to or payable
to EVD for the six months ended March 31, 1995, representing 0.75% (annualized)
of average daily net assets. At March 31, 1995, the amount of Uncovered
Distribution Charges of EVD calculated under the Plan was approximately
$3,590,000.
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 Trustees have initially
implemented the Plan by authorizing the Fund to make monthly service fee
payments to the Principal Underwriter in amounts not to exceed 0.25% of the
Fund's average daily net assets for any fiscal year. The Fund paid or accrued
service fees to or payable to EVD for the six months ended March 31, 1995, in
the amount of $46,248. 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 cap ital 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 six months ended March 31, 1995, EVD
received no CDSC paid by shareholders.
- ------------------------------------------------------------------------------
(7) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investments in the Portfolio for the six
months ended March 31, 1995 aggregated $13,797,764 and $9,415,075, respectively.
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1995
- --------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 99.96%
- --------------------------------------------------------------------------------
RATINGS (UNAUDITED)
- -------------------
PRINCIPAL
STANDARD AMOUNT
MOODY'S & POOR'S (000 OMITTED) SECURITY VALUE
- --------------------------------------------------------------------------------
UTILITY REVENUE BONDS - 3.6%
Baa2 BBB $ 10,000 Brazos River Authority,
Texas, PCR, Texas
Utilities Electric
Company, 9.25%, 3/1/18 $ 11,114,900
Aa AA 10,000 Lewis County, Washington,
Cowlitz Falls
Hydroelectric Project,
5.5%, 10/1/22 8,972,700
Aa AA 15,000 Los Angeles, California,
Department of Water &
Power, 5%, 10/15/33 12,187,650
Aa AA 29,700 Washington Public Power
Supply System, Project
2, 4.8%, 7/1/04 27,155,601
Aaa AAA 16,340 Washington Public Power
Supply System, Project
2, 5%, 7/1/09 14,860,740
NR NR 5,000 West Feliciana,
Louisiana, PCR, Gulf
States Utilities
Company Project,
(AMT), 9%, 5/1/15 5,635,050
--------------
$ 79,926,641
--------------
HEALTH CARE - 1.2%
NR NR $ 17,070 Bell County, Texas,
Health Facilities, Care
Institution Inc., 9%,
11/1/24 $ 17,746,143
NR NR 5,460 Hillsborough County,
Florida, IDA, Center
for Independent Living,
Tampa Projects, 11%,
3/1/19(3) 4,313,400
NR NR 4,650 Hillsborough County,
Florida, IDA, Center
for Independent Living,
Tampa Projects, 10.25%,
3/1/09(3) 3,673,500
--------------
$ 25,733,043
--------------
HOSPITAL - 11.7%
NR BBB $ 7,000 Arizona Health
Facilities, Phoenix
Memorial, 8.2%, 6/1/21 $ 7,349,020
NR NR 2,475 Berlin, Maryland,
Atlantic General,
8.375%, 6/1/22 2,591,127
Baa1 BBB+ 12,700 Butler County,
Pennsylvania, Butler
Memorial, 8%, 7/1/16 13,402,945
Baa NR 10,180 Chaves County, New
Mexico, Eastern New
Mexico Medical Center,
7.25%, 12/1/22 10,206,366
NR BBB+ 8,405 Christian County,
Kentucky, Jennie Stuart
Medical Center, 7.625%,
4/1/10 8,715,733
Baa BBB 35,000 Colorado Health
Facilities, Rocky
Mountain Adventist
Healthcare,
6.625%, 2/1/22 32,814,950
NR BBB- 3,000 Colorado Health
Facilities, National
Jewish Center For
Immunology and
Respiratory Medicine,
6.875%, 2/15/12 2,913,840
NR BBB- 3,000 Colorado Health
Facilities, National
Jewish Center For
Immunology and
Respiratory Medicine,
7.1%, 2/15/22 2,929,410
Baa1 NR 4,000 Crossville, Tennessee,
HEFA, Cumberland
Medical Center, 6.75%,
11/1/12 3,935,040
Baa1 BBB 5,000 District of Columbia,
Washington Hospital
Center Issue-Medlantic
Healthcare Group, Inc.,
7.125%, 8/15/19 4,850,650
NR A- 5,000 Dubuque, Iowa, Finley
Hospital Project,
6.875%, 1/1/12 5,156,600
NR NR 1,355 Grant County, New Mexico,
Gila Regional Medical
Center, 10%, 2/1/12 1,473,427
NR BBB- 5,860 Grove City Area Hospital
Authority, Pennsylvania,
United Community
Hospital, 8.125%, 7/01/12 6,013,708
NR BBB- 4,000 Hawaii Department of
Budget and Finance,
Special Purpose Mortgage
Revenue, Wahiawa General
Hospital, 7.5%, 7/1/12 4,055,120
NR NR 4,885 Health Services Authority
of Hazelton, Luzerne
County, Pennsylvania,
Hazelton-Saint Joseph
Medical Center, 8.375%,
7/1/12 4,993,007
NR BBB+ 4,650 Illinois, Chicago
Osteopathic Health
Systems, 7.125%, 5/15/11 4,722,587
NR BBB+ 4,500 Illinois, Chicago
Osteopathic Health
Systems, 7.25%, 5/15/22 4,544,235
Baa1 NR 1,000 Illinois HFA, Holy Cross
Hospital, 6.7%, 3/1/14 959,620
Baa1 NR 2,650 Illinois HFA, Holy Cross
Hospital, 6.75%, 3/1/24 2,493,359
Baa NR 4,500 Indiana Health Facility
Financing Authority,
Memorial Hospital and
Health Care Center,
7.4%, 3/1/22 4,549,275
Baa BBB- 4,000 Jefferson County Health
Facilities, Texas,
Baptist Health Care,
8.3%, 10/1/14 4,261,400
Baa1 NR 6,250 La Fourche Parish,
Louisiana, Hospital
Service District #3,
6%, 10/1/23 5,346,875
Baa1 BBB+ 3,750 Louisiana Public
Facilities Authority,
Woman's Hospital
Foundation, 7.25%,
10/1/22 3,762,713
Baa BB+ 10,000 Maricopa County, Arizona,
Sun Health Corporation,
8.125%, 4/1/12 10,476,100
Baa NR 2,000 Marshall County, Alabama,
Guntersville-Arab
Medical Center, 7%,
10/1/09 2,016,560
Baa NR 2,000 Marshall County, Alabama,
Guntersville-Arab
Medical Center, 7%,
10/1/13 1,981,560
NR BBB 6,000 Midland County Hospital
District, Memorial
Hospital and Medical
Center, 0%, 6/1/07 2,691,060
NR BBB 6,500 Midland County Hospital
District, Memorial
Hospital and Medical
Center, 0%, 6/1/11 2,153,905
Ba NR 5,000 Mississippi Hospital
Equipment and
Facilities Authority,
Magnolia Hospital,
7.375%, 10/1/21 4,586,750
NR BBB 5,470 Montgomery, Ohio, Dayton
Osteopathic Hospital,
6%, 12/1/12 4,909,325
Ba1 NR 3,090 Montgomery County,
Pennsylvania, United
Hospitals, Inc., 7.5%,
11/1/13 3,071,306
Ba1 NR 2,000 Montgomery County,
Pennsylvania, United
Hospitals, Inc., 7.5%,
11/1/14 1,947,860
Ba1 NR 4,465 Montgomery County,
Pennsylvania, United
Hospitals, Inc., 7.5%,
11/1/15 4,332,702
Baa NR 8,405 New Hampshire HEFA,
Frisbie Memorial
Hospital, 6.125%,
10/1/13 7,616,022
A BBB+ 10,000 Philadelphia,
Pennsylvania, Albert
Einstein Medical
Center, 7%, 10/1/21 10,088,900
Baa1 BBB+ 9,000 Philadelphia,
Pennsylvania, Graduate
Health System Obligated
Group, 6.625%, 7/1/21 8,362,350
NR A- 1,100 Philadelphia,
Pennsylvania, Children's
Seashore House, 7%,
8/15/17 1,117,996
NR A- 3,400 Philadelphia,
Pennsylvania,Children's
Seashore House, 7%,
8/15/22 3,455,624
Baa1 A- 7,000 Philadelphia,
Pennsylvania, Temple
University Hospital,
6.625%, 11/15/23 6,880,370
Baa NR 5,000 Prince George's County,
Maryland, Greater
Southeast Healthcare
System Issue, 6.375%
1/1/23 4,404,300
Baa1 BBB+ 10,000 Randolph County Building
Commission, West
Virginia, Davis
Memorial Hospital,
7.65%, 11/1/21 10,354,600
NR BB+ 8,000 Scranton-Lackawanna
Health and Welfare
Authority,
Pennsylvania, Moses
Taylor Hospital, 8.25%,
7/1/09 8,204,720
Baa BBB 8,000 South Dakota HEFA,
Prairie Lakes Health
Care System Issue,
7.25%, 4/1/22 8,011,120
NR NR 5,220 Vermont Educational and
Health Buildings
Financing Agency,
Northwestern Medical
Center Project, 9.75%,
9/1/18 5,561,648
NR BBB- 1,000 West Virginia HFA, Logan
General Hospital,
8.625%, 4/1/01 1,045,570
NR BBB- 1,750 West Virginia HFA, Logan
General Hospital,
8.75%, 4/1/13 1,803,112
NR NR 5,000 Winslow, Arizona, IDA,
Winslow Memorial
Hospital, 9.5%, 6/1/22 5,464,100
--------------
$ 262,578,567
--------------
LIFE CARE - 7.2%
NR NR $ 8,616 Albuquerque, New Mexico,
First Mortgage IDR, La
Vida Llena Retirement
Center 8.625%, 2/1/20 $ 8,314,440
NR NR 8,500 Albuquerque, New Mexico,
First Mortgage IDR, La
Vida Llena Retirement
Center 8.85%, 2/1/23 8,393,750
NR NR 5,744 Albuquerque, New Mexico,
First Mortgage IDR, La
Vida Llena Retirement
Center 2.25%, 2/1/23 1,550,880
NR NR 10,000 Atlantic Beach, Florida,
Fixed Rate Improvement,
Fleet Landing Project,
8%, 10/1/24 10,237,600
NR NR 5,185 Collier County, IDA,
Florida, Retirement
Rental, Beverly
Enterprises-Florida,
Inc., 10.75%, 3/1/03 6,069,405
NR NR 12,555 Dekalb Private Hospital,
Georgia GF/Atlanta,
8.5%, 3/1/25 11,905,781
NR NR 4,415 Florence, Kentucky,
Housing Facilities,
Bluegrass RHF Housing,
Inc., 9.5%, 7/1/17 4,701,666
NR NR 6,690 Fulton County Residential
Care Facilities for the
Elderly Authority,
Georgia, Lenbrook
Square Foundation,
Inc., 9.75%, 1/1/17 7,244,869
Baa1 NR 10,000 Indianapolis, Indiana,
National Benevolent
Association-Robin Run
Village, 7.625%, 10/1/22 10,302,600
NR NR 4,500 Kansas City, Missouri,
IDA, Kingswood United
Methodist Manor,
9%, 11/15/13 4,737,960
NR NR 2,100 Loudon County, Virginia,
IDA, Residential Care,
Falcons Landing,
9.25%, 11/1/04 2,222,745
NR NR 20,400 Loudon County, Virginia,
IDA, Residential Care,
Falcons Landing,
8.75%, 11/1/24 20,443,860
NR NR 18,545 Lousiana HFA - HCC
Assisted Living Group
1, 9%, 3/1/25 17,626,652
NR NR 1,950 New Hampshire Higher
Educational & Health
Facilities, Riverwoods
at Exeter, 8%, 3/1/01 1,979,971
NR NR 10,000 New Hampshire Higher
Educational & Health
Facilities, Riverwoods
at Exeter, 9%, 3/1/23 10,508,900
NR NR 3,500 New Jersey EDA, Cadbury
Corporation-1991
Project, 7.5%, 7/1/21 3,107,370
NR NR 20,000 New Jersey EDA, Keswick
Pines Project, 8.75%,
1/1/24 19,726,400
NR NR 7,500 Vermont IDA, Wake Robin
Corporation, 8.75%,
4/1/23 7,827,075
NR NR 4,500 Vermont IDA, Wake Robin
Corporation, 8.75%,
3/1/23 4,762,440
--------------
$ 161,664,364
--------------
NURSING HOME - 6.6%
NR NR $ 13,680 Bell County, Texas,
Riverside Healthcare,
Inc.-Normandy Terrace,
9%, 4/1/23 $ 14,252,645
NR NR 5,500 Dauphin County IDA,
Pennsylvania,
Susquehanna Center
Nursing Facility, 10%,
6/1/21(3) 3,575,000
NR NR 5,000 Delaware County,
Pensylvania, Mainline-
Haverford Nursing and
Rehabilitation Centers,
9%, 8/1/22 5,379,000
NR NR 930 Jefferson County IDA,
Missouri, Cedar Hills
Retirement Village,
12%, 12/1/15 996,467
NR NR 3,825 Lackawanna County,
Pennsylvania IDA,
Edella Street
Associates,
8.875%, 9/1/14 4,092,597
NR NR 3,605 Luzerne County,
Pennsylvania, IDA,
River Street
Associates,
8.75%, 6/15/07 3,821,480
NR NR 6,455 Massachusetts HEFA,
Fairview Extended Care
Services, Inc.,
10.125%, 1/1/11 6,975,338
NR NR 6,750 Missouri HEFA, Bethesda
Health Group of St.
Louis, Inc.,
6.625%, 8/15/05 6,667,313
NR NR 14,000 Missouri HEFA, Bethesda
Health Group of St.
Louis, Inc., 7.5%,
8/15/12 14,029,680
NR NR 12,500 Montgomery County,
Pennsylvania, IDA,
Advancement of
Geriatric Health Care
Institute, 8.375%,
7/1/23 12,200,500
NR NR 5,000 New Jersey EDA, Claremont
Health System, Inc.,
9.10%, 9/1/22 5,164,550
NR NR 5,915 New Jersey EDA, Victoria
Health Corporation,
7.75%, 1/1/24 5,774,282
NR NR 3,490 Okaloosa County, Florida,
Beverly Enterprises-
Florida, Inc.,
10.75%, 10/1/03 3,840,640
NR NR 3,500 Philadelphia,
Pennsylvania, The
Philadelphia Protestant
Home Project,
8.625%, 7/1/21 3,490,165
Baa1 BBB 4,630 Racine County, Wisconsin,
Health Center, 8.125%,
8/1/21 4,851,962
NR NR 5,000 Rhode Island Health and
Education Building,
Steere House, 8.25%,
7/1/15 5,220,100
NR NR 7,915 Roseville, Minnesota,
Elder Care Facility,
Care Institute, Inc.,
7.75%, 11/1/23 7,771,422
NR NR 12,430 St. Paul, Minnesota,
Housing and
Redevelopment, Care
Institute, Inc.-
Highland, 8.75%, 11/1/24 12,260,579
NR NR 5,000 Sussex County, Delaware,
Delaware Health
Corporation, 7.6%,
1/1/24 4,868,350
NR NR 5,000 Sussex County, Delaware,
Delaware Health
Corporation, 7.5%, 1/1/14 5,039,450
NR NR 4,500 Tarrant County Health
Facilities, Texas, 3927
Foundation, Inc.,
10.25%, 9/1/19 4,861,440
NR NR 1,805 Upshur County, West
Virginia County
Commission, Holbrook
Nursing Home, Inc.,
10.25%, 4/1/12 1,907,127
NR NR 6,000 Westmoreland County,
Pennsylvania, IDA,
Highland Health System,
Inc., 9.25%, 6/1/22 6,157,320
NR NR 3,605 Wood County, West
Virginia, West Virginia
Rehabilitation Services,
Inc., (AMT), 9.5%, 12/1/15 3,905,152
--------------
$ 147,102,559
--------------
SINGLE & MULTI-FAMILY HOUSING - 3.2%
Aa AA- $ 10,000 California Housing
Finance Agency, (AMT),
"RIBS", Variable Rate,
8/1/23(1) $ 9,987,500
NR NR 7,000 Chester County,
Pennsylvania, IDB,
Senior Life Choice of
Paoli, L.P.,
8.05%, 1/1/24 6,534,640
NR NR 9,500 Lake Creek Affordable
Housing Corporation,
Multifamily Housing,
8%, 12/1/23 9,627,585
NR NR 8,000 Los Angeles County
Housing Authority,
California, Multifamily
Housing, Corporate Fund
for Housing Projects,
10.5%, 12/1/29 8,310,000
NR BBB+ 2,000 Massachusetts Housing
Finance Authority,
Multifamily, Harbor
Point Revenue, (AMT),
8%, 12/1/15 2,079,440
NR A 3,530 Nashville and Davidson
County, Tennessee,
Metropolitan IDB, The
Park at Hermitage
Project, 5.9%, 2/1/19 3,207,464
NR NR 3,345 Minneapolis Community
Development,
Multifamily, Lindsay
Brothers,
9.5%, 12/1/07 3,278,100
NR NR 2,185 Minneapolis Community
Development,
Multifamily, Lindsay
Brothers,
1.5%, 12/1/07 655,500
NR NR 4,800 North Little Rock
Residential Housing
Facilities, Arkansas,
Parkstone Place, 9.75%,
8/1/21 4,951,776
NR NR 4,000 North Miami, Florida,
Health Care Facilities,
The Imperial Club,
8%, 1/1/13 3,640,000
NR NR 8,925 North Miami, Florida,
Health Care Facilities,
The Imperial Club,
9.25%, 1/1/13 9,354,025
NR NR 5,000 Village of North Syracuse
Housing Authority, AJM
Senior Housing, Inc.,
Janus Park,8%, 6/1/24 4,695,350
NR NR 5,800 Ridgeland, Mississippi,
Urban Renewal, The
Orchard Limited,
7.75%, 12/1/15 5,552,340
--------------
$ 71,873,720
--------------
HOTELS - 0.6%
NR NR $ 3,885 Chandler, Arizona, IDA,
SMP II Limited Partner,
Resort/Convention
Center, 7.5%, 12/1/15 $ 3,885,000
NR NR 1,929 Illinois Development
Finance Authority,
Comfort Inn-O'Hare,
10%, 5/1/16 1,928,574
NR NR 1,071 Illinois Development
Finance Authority,
Comfort Inn-O'Hare,
2.5%, 5/1/16 107,143
NR NR 1,025 Kirksville, Missouri,
IDA, Holiday Inn,
10.5%, 7/1/03(3) 563,750
NR NR 3,615 Kirksville, Missouri,
IDA, Holiday Inn, 11%,
7/1/16(3) 1,988,250
NR NR 4,205 Niagara County, New York,
IDA, Wintergarden Inn
Associate,
9.75%, 6/1/11(3) 2,312,750
NR NR 1,795 Orange Beach, Alabama,
Romar Hotels, Inc.,
10.5%, 4/1/16 1,897,297
--------------
$ 12,682,764
--------------
GENERAL OBLIGATIONS - 1.2%
A1 A $ 14,500 California, 4.75%, 9/1/23 $ 11,559,835
Ba1 BBB 10,000 Detroit, Michigan,
Unlimited Tax, 8.7%,
4/1/10 11,058,000
Ba1 BBB 3,500 Detroit, Michigan,
Unlimited Tax, Series
1991, 8%, 4/1/11 3,779,195
--------------
$ 26,397,030
--------------
LEASE/COP - 1.2%
A A- $ 5,000 California Public Works,
Community College, 6%,
10/1/14 $ 4,827,500
A A 16,500 Indiana Transportation
Finance, Airport
Facilities, 6.25%,
11/1/16 16,344,900
NR A- 3,500 Plymouth County,
Massachusetts, COP,
Plymouth County
Correctional,
7%, 4/1/22 3,617,355
NR NR 2,500 St. Louis, Missouri,
Convention and Sports
Facility, 7.9%, 8/15/21 2,671,400
--------------
$ 27,461,155
--------------
TRANSPORTATION - 15.8%
Baa2 BB+ $ 28,000 Chicago, Illinois, O'Hare
International, American
Airlines, (AMT),
7.875%, 11/1/25 $ 29,211,280
Baa2 BB+ 20,275 Chicago, Illinois, O'Hare
International, American
Airlines, 8.2%, 12/1/24 22,244,514
Baa2 BB+ 41,000 Dallas-Fort Worth, Texas,
International Airport
Facility, American
Airlines, (AMT), 7.25%,
11/1/30 41,347,680
Baa BB 8,000 Denver, Colorado, Airport
System Revenue, (AMT),
7%, 11/15/25 7,875,040
Baa BB 7,800 Denver, Colorado, Airport
System Revenue, (AMT),
8%, 11/15/17 8,056,074
Baa BB 5,725 Denver, Colorado, Airport
System Revenue, (AMT),
7.5%, 11/15/23 5,848,889
Baa3 BB 95,500 Denver, Colorado, United
Airlines, (AMT),
6.875%, 10/1/32(2) 91,135,650
NR NR 2,000 Florida Mid-Bay Bridge
Authority, 7.5%,
10/1/17 2,175,440
A A- 5,000 Hawaii Airports, (AMT),
7%, 7/1/18 5,166,600
Ba1 BB 73,000 Kenton County Airport
Board, Kentucky, Delta
Airlines, (AMT),
6.125%, 2/1/22 64,351,690
NR NR 2,200 Los Angeles International
Airport, Continental
Airlines, (AMT),
9%, 8/1/08 2,375,868
NR NR 4,425 Los Angeles International
Airport, Continental
Airlines, (AMT),
9%, 8/1/17 4,702,448
NR BBB 4,000 New York State Thruway
Authority, Cross-
Westchester Expressway,
0%, 1/1/99 3,183,720
NR BBB 1,000 New York State Thruway
Authority, Cross-
Westchester Expressway,
0%, 1/1/02 657,900
NR BBB 4,000 New York State Thruway
Authority, Cross-
Westchester Expressway,
0%, 1/1/03 2,539,880
NR BBB 2,940 New York State Thruway
Authority, Cross-
Westchester Expressway,
0%, 1/1/04 1,694,146
NR BBB 2,905 New York State Thruway
Authority, Cross-
Westchester Expressway,
0%, 1/1/06 1,460,518
A1 AA- 15,000 Port Authority of New
York and New Jersey,
(AMT), Variable Rate,
1/15/27(1) 15,128,400
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 12,225,950
A1 AA- 5,000 Port of Seattle,
Washington, (AMT), 6%,
12/1/14 4,820,700
A1 AA- 4,500 Port of Seattle,
Washington, (AMT), 6%,
11/1/17 4,338,180
NR NR 46,210 San Joaquin Hills,
California, Toll Roads,
0%, 1/1/20 7,778,991
NR NR 72,685 San Joaquin Hills,
California, Toll Roads,
0%, 1/1/21 11,245,822
NR NR 29,225 San Joaquin Hills,
California, Toll Roads,
0%, 1/1/22 4,205,478
--------------
$ 353,770,858
--------------
WATER & SEWER - 0.6%
A A- $ 10,000 New York City Municipal
Water Finance
Authority, 6.25%,
6/15/21 $ 9,973,100
Baa BBB 4,000 Philadelphia,
Pennsylvania, Municipal
Water Finance
Authority, 7%, 8/1/18 4,112,360
--------------
$ 14,085,460
--------------
SOLID WASTE - 3.0%
Baa2 BBB+ $ 6,050 Carbon County, Utah,
Laidlaw, (AMT), 7.5%,
2/1/10 $ 6,196,834
NR BBB- 1,000 Greater Detroit Resource
Recovery Authority,
Michigan, A,
9.25%, 12/13/08 1,050,500
NR BBB- 3,000 Greater Detroit Resource
Recovery Authority,
Michigan, E,
9.25%, 12/13/08 3,134,520
NR BBB- 2,000 Greater Detroit Resource
Recovery Authority,
Michigan, G,
9.25%, 12/13/08 2,101,000
NR BBB- 4,000 Greater Detroit Resource
Recovery Authority,
Michigan, H,
9.25%, 12/13/08 4,179,360
Ba NR 2,000 Mercer County, New
Jersey, Improvement
Authority, (AMT), 0%,
4/1/14 456,120
Ba NR 5,000 Mercer County, New
Jersey, Improvement
Authority, (AMT), 0%,
4/1/15 1,054,900
Ba NR 10,000 Mercer County, New
Jersey, Improvement
Authority, (AMT), 0%,
4/1/16 1,951,700
A NR 8,000 Northeast Maryland Waste
Disposal Authority,
Montgomery County
Project, (AMT), 6.3%,
7/1/16 7,780,240
NR NR 35,000 Robbins, Cook County,
Illinois, Robbins
Resource Recovery
Partners, L.P.,
9.25%, 8/15/16 37,904,300
--------------
$ 65,809,474
--------------
COGENERATION FACILITIES - 2.4%
NR NR $ 21,150 New Jersey EDA, Vineland
Cogeneration Limited
Partnership Project,
(AMT), 7.875%, 6/1/19 $ 22,105,980
NR NR 3,000 Palm Beach County,
Florida, Solid Waste
IDR, Osceola Power
Limited Partnership
Project, (AMT), 6.85%,
1/1/14 2,898,420
NR NR 11,500 Palm Beach County,
Florida, Solid Waste
IDR, Osceola Power
Limited
PartnershipProject,
(AMT), 6.95%, 1/1/22 11,119,465
NR NR 4,250 Pennsylvania EDA,
Northampton Generating
Project, (AMT), 6.6%,
1/1/19 3,867,245
NR NR 5,100 Pennsylvania EDA,
Northampton Generating
Project, (AMT), 6.5%,
1/1/13 4,735,248
NR NR 10,000 Pennsylvania EDA, Colver
Project, (AMT), 8.05%,
12/1/15 10,172,200
--------------
$ 54,898,558
--------------
INDUSTRIALS - 11.0%
Baa2 NR $ 3,000 Camden, Alabama, IDB,
MacMillan Bloedel
Project, 7.75%, 5/1/09 $ 3,152,010
NR NR 4,370 College Park, Georgia,
Airport Parking
Venture, 7%, 5/15/16 3,933,000
Baa1 BBB 24,000 Courtland, Alabama, IDB,
Champion International
Corporation, (AMT), 7%,
6/1/22 24,287,520
Baa1 BBB 19,700 Courtland, Alabama, IDB,
Champion International
Corporation, (AMT),
6.375%, 3/1/29 18,644,277
Baa1 BBB 13,800 Dickenson County,
Michigan, Champion
International
Corporation,
5.85%, 10/1/18 12,852,354
NR NR 8,040 East Chicago, Indiana,
PCR, Inland Steel
Company Project #9,
(AMT), 10%, 11/1/11 8,691,240
Ba3 B 5,000 East Chicago, Indiana,
PCR, Inland Steel
Company Project #11,
7.125%, 6/1/07 5,119,850
Baa1 BBB 19,000 Gulf Coast Waste
Disposal, Texas,
Champion International
Corporation,
(AMT), 6.875%, 12/1/28 19,075,810
NR NR 7,456 Gwinnett County, Georgia,
IDR, Plastics/
Packaging, Inc., (AMT),
10.75%, 5/1/13(3) 5,964,966
NR A 3,000 Jackson, Tennessee, IDR,
BICC Cables
Corporation, (AMT),
7.125%, 5/1/01 3,141,420
Baa1 BBB- 10,000 Maine Finance Authority,
Great Northern Paper,
Inc., Project-Bowater
Incorporated, (AMT),
7.75%, 10/1/22 10,507,000
NR BB+ 5,000 Maine Solid Waste
Disposal, Boise Cascade
Corporation, (AMT),
7.9%, 6/1/15 5,167,150
NR NR 1,810 Massachusetts Industrial
Finance Agency, IDR,
Boston Beer Company,
(AMT), 11.5%, 7/15/07 2,037,789
Baa1 BBB- 5,000 McMinn County, Tennessee,
IDB, Calhoun Newsprint
Company Project-Bowater
Incorporated, (AMT),
7.4%, 12/1/22 5,176,900
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 7,922,925
Baa1 BBB+ 10,000 Pennsylvania, EDA, Sun
Company, Inc. (R&M),
(AMT), 7.6%, 12/1/24 10,635,300
B3 BB- 6,000 Polk County, Florida,
IDR, IMC Fertilizer,
Inc., 1992, (AMT),
7.60%, 1/1/15 6,100,500
B1 BB- 15,075 Polk County, Florida,
IDR, IMC Fertilizer,
Inc., 1991, (AMT),
7.525%, 1/1/15 15,270,372
Baa3 BBB- 12,000 Port of Corpus Christi,
Texas, Valero Refining
& Marketing Company,
10.25%, 6/1/17 13,430,520
NR NR 2,770 Savannah, Georgia, IDR,
Intercat-Savannah,
Inc., (AMT), 9.75%,
7/1/10 2,950,244
NR NR 4,000 Savannah, Georgia, IDR,
Intercat-Savannah,
Inc., (AMT), 9%, 1/1/15 4,178,200
A1 AA- 47,620 Valdez, Alaska, Marine
Terminal, BP Pipelines,
Inc., 5.5%, 10/1/28 42,328,942
A1 AA- 12,280 Valdez, Alaska, Marine
Terminal, BP Pipelines,
Inc., 5.65%, 12/1/28 11,168,536
--------------
$ 245,451,325
--------------
INSURED UTILITY REVENUE BONDS -1.2%
Aaa AAA $ 10,000 Puerto Rico Telephone
Authority, (MBIA),
Variable Rate,
1/25/07(1) $ 9,650,000
Aaa AAA 21,000 Sacramento, California,
Municipal Utility
District, (MBIA),
4.75%, 9/1/21 17,043,180
--------------
$ 26,693,180
--------------
INSURED TRANSPORTATION - 2.4%
Aaa AAA $ 10,000 Metropolitan Washington
Airports Authority,
(MBIA), (AMT),
6.25%, 10/1/21 $ 9,923,100
Aaa AAA 14,400 Metropolitan Washington
Airports Authority,
(MBIA), Variable Rate,
10/1/21(1) 12,852,000
Aaa AAA 18,200 Mobile, Alabama, Airport
Authority, (MBIA),
6.25%, 10/1/00 18,740,176
Aaa AAA 3,680 Mobile, Alabama, Airport
Authority, (MBIA),
(AMT), 6.375%, 10/1/14 3,811,192
Aaa AAA 10,000 Triborough Bridge and
Tunnel Authority,
"Rites", (MBIA),
Variable Rate,
1/1/19(1) 10,071,000
--------------
$ 55,397,468
--------------
INSURED HOSPITAL - 1.1%
Aaa AAA $ 10,300 Louisiana Public
Facilities, St. Francis
Medical Center, (FSA),
Variable Rate,
7/1/18(1) $ 7,213,811
Aaa AAA 10,000 Louisville, Kentucky,
Alliant Health System,
Inc., (MBIA), Variable
Rate, 10/1/14(1) 10,787,500
Aaa AAA 7,000 Montgomery County,
Pennsylvania, Abington
Memorial Hospital,
(AMBAC), Variable Rate,
6/1/11(1) 7,710,220
--------------
$ 25,711,531
--------------
INSURED SPECIAL TAX REVENUE - 8.7%
Aaa AAA $ 20,000 Los Angeles County
(California),
Metropolitan
Transportation,
(AMBAC), 4.75%, 7/1/18 $ 16,537,200
Aaa AAA 92,995 Metropolitan Pier and
Exposition Authority,
Illinois, McCormick
Place Expansion Project,
(MBIA), 0%, 6/15/28 10,834,847
Aaa AAA 92,995 Metropolitan Pier and
Exposition Authority,
Illinois, McCormick
Place Expansion Project,
(FGIC), 0%, 6/15/29 10,155,054
Aaa AAA 3,415 New Orleans Regional
Transit Authority,
Louisiana, Sales Tax,
(FGIC), 0%, 12/1/12 1,137,571
Aaa AAA 10,935 New Orleans Regional
Transit Authority,
Louisiana, Sales Tax,
(FGIC), 0%, 12/1/15 2,968,306
Aaa AAA 10,000 New Orleans Regional
Transit Authority,
Louisiana, Sales Tax,
(FGIC), 0%, 12/1/21 1,816,200
Aaa AAA 2,165 Paramount Redevelopment
Project #1, Tax
Allocation Refunding,
(MBIA), 6.25%, 8/1/09 2,228,564
Aaa AAA 2,305 Paramount Redevelopment
Project #1, Tax
Allocation Refunding,
(MBIA), 6.25%, 8/1/10 2,356,471
Aaa AAA 2,450 Paramount Redevelopment
Project #1, Tax
Allocation Refunding,
(MBIA), 6.25%, 8/1/11 2,483,394
Aaa AAA 2,600 Paramount Redevelopment
Project #1, Tax
Allocation Refunding,
(MBIA), 6.25%, 8/1/12 2,624,180
Aaa AAA 2,765 Paramount Redevelopment
Project #1, Tax
Allocation Refunding,
(MBIA), 6.25%, 8/1/13 2,785,986
Aaa AAA 2,935 Paramount Redevelopment
Project #1, Tax
Allocation Refunding,
(MBIA), 6.25%, 8/1/14 2,949,704
Aaa AAA 3,120 Paramount Redevelopment
Project #1, Tax
Allocation Refunding,
(MBIA), 6.25%, 8/1/15 3,132,979
Aaa AAA 33,080 Paramount Redevelopment
Project #1, Tax
Allocation Refunding,
(MBIA), 6.25%, 8/1/23 32,945,364
Aaa AAA 28,000 Pennsylvania
Intergovernmental
Corporation Authority,
City of Philadelphia
Refunding Program,
(FGIC), 5.35%, 6/15/07 27,505,240
Aaa AAA 21,655 Rancho Mirage,
California, Water
District Financing,
(AMBAC),4.75%, 8/15/21 17,576,714
Aaa AAA 13,350 Rancho Mirage,
California, Whitewater
Redevelopment Project,
(MBIA), 5%, 4/1/24 11,411,981
Aaa AAA 40,000 South Orange, California,
Public Financing,
Foothill Area, (FGIC),
5.5%, 8/15/15 37,220,000
Aaa AAA 7,000 Utah Municipal Finance
Corporation, Local
Government Revenue,
(FSA), 0%, 3/1/10 2,791,110
Aaa AAA 6,000 Utah Municipal Finance
Corporation, Local
Government Revenue,
(FSA), 0%, 3/1/11 2,238,900
--------------
$ 193,699,765
--------------
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(1) $ 10,202,313
--------------
INSURED HOUSING - 0.4%
Aaa AAA $ 845 Mississippi Home
Corporation, (FGIC),
9.25%, 3/1/12 $ 921,075
Aaa AAA 7,525 SCA Multifamily Mortgage,
IDB, Hamilton County,
Tennessee, (AMT),
7.35%, 1/1/30 7,808,693
--------------
$ 8,729,768
--------------
INSURED GENERAL OBLIGATION STATE &
SCHOOL DISTRICT - 0.9%
Aaa AAA $ 10,000 California, (FSA), 4.75%,
9/1/18 $ 8,274,000
Aaa AAA 15,000 California, (FGIC),
4.75%, 9/1/23 12,092,850
--------------
$ 20,366,850
--------------
INSURED WATER & SEWER - 0.6%
Aaa AAA $ 5,150 Harrisburg, Pennsylvania,
Water Revenue Bonds,
"RIBS", Variable Rate,
8/11/16(1) $ 4,081,787
Aaa AAA 10,000 New York City Municipal
Water Finance
Authority, (FSA),
Variable Rate,
6/15/21(1) 10,062,500
--------------
$ 14,144,287
--------------
REFUNDED & ESCROWED - 8.6%
NR AAA $ 70,000 Bakersfield, California,
Bakersfield Assisted
Living Center, 0%,
4/15/21 $ 11,109,700
Baa1 BBB 2,200 Bexar County, Texas,
Health Facilities, St.
Luke's Lutheran, 7%,
5/1/21 2,456,674
NR AAA 85,905 Colorado HFA, Retirement
Housing, Liberty Heights
Project, 0%, 7/15/24 9,529,442
NR AAA 27,870 Colorado HFA, Retirement
Housing, Liberty Heights
Project, 0%, 7/15/20 4,174,647
Aaa NR 27,100 Colorado HFA, Retirement
Housing, Liberty Heights
Project, 0%, 7/15/22 3,493,190
NR NR 3,780 Edinburg Hospital
Authority, Texas,
Edinburg General
Hospital, 10%, 7/1/11 3,931,238
NR NR 7,000 Florida, Mid-Bay Bridge
Authority Revenue
Bonds, 6.875%, 10/1/22 7,870,870
NR NR 1,820 Hyland Hills Park and
Recreation District,
Adams County, Colorado,
9.75%, 7/1/01 1,935,297
NR NR 2,430 Hyland Hills Park and
Recreation District,
Adams County, Colorado,
9.9%, 7/1/04 2,600,853
NR NR 1,615 Hyland Hills Park and
Recreation District,
Adams County, Colorado,
10%, 7/1/06 1,730,489
NR AAA 143,260 Illinois Development
Finance Authority,
Regency Park at
Lincolnwood,
0%, 7/15/25 14,742,887
NR AAA 183,500 Illinois Development
Finance Authority,
Regency Park at
Lincolnwood,
0%, 7/15/23 21,942,930
NR NR 4,000 Jackson County, Oklahoma,
Jackson County Memorial
Hospital, 9%, 8/1/15 4,430,280
NR AAA 12,750 Louisiana Public
Facilities Authority,
Southern Baptist
Hospitals, Inc.,
8%, 5/15/12 15,014,272
Aaa NR 145,500 Mississippi Housing
Finance Corporation,
Single Family Mortgage,
0%, 6/1/15 39,705,494
NR NR 6,130 North Salt Lake Municipal
Building Authority,
Davis County, Utah,
8.625%, 12/1/17 7,518,506
NR NR 9,265 Scottsdale IDA, Arizona,
Westminster Village,
Inc., 10%, 6/1/07 10,478,252
Aaa AAA 19,165 Texas Turnpike Authority,
Houston Ship Channel
Bridge, 0%, 1/1/20 25,345,712
Aaa AAA 2,675 Washington Public Power
Supply System, Nuclear
Project No. 1,
14.375%, 7/1/01 3,928,238
--------------
$ 191,938,971
--------------
STUDENT LOANS - 0.2%
NR NR $ 4,000 Arizona Educational Loan
Marketing Corporation,
(AMT), 6.3%, 12/1/08 $ 3,830,320
--------------
COLLEGES & UNIVERSITIES - 0.7%
NR BBB- $ 3,300 Massachusetts Health and
Educational Facilities,
Nichols College,
7%, 10/1/20 $ 3,326,202
Baa NR 3,900 Mississippi Educational
Facilities Authority,
Tougaloo College,
6.5%, 6/1/18 3,902,418
Baa1 NR 4,000 New Hampshire Higher
Educational and Health,
Saint Anselm College,
6.375%, 7/1/23 3,707,280
NR NR 4,460 New Hampshire Higher
Educational and Health,
Franklin Pierce
Law Center, 7.5%, 7/1/22 4,621,496
--------------
$ 15,557,396
--------------
TAX ALLOCATION - 0.2%
Baa BBB $ 3,915 Inglewood, California
Public Financing
Authority, In-Town,
Manchester-Prairie and
North Inglewood
Industrial Park
Redevelopment Projects-
Redevelopment Loans
7%, 5/1/22 $ 3,988,250
--------------
SPECIAL ASSESSMENT - 0.8%
A BBB $ 8,000 Hoffman Estates,
Illinois, Economic
Development Project
Area, 0%, 5/15/05 $ 4,146,000
A BBB 11,000 Hoffman Estates,
Illinois, Economic
Development Project
Area, 0%, 5/15/06 5,285,170
A BBB 17,460 Hoffman Estates,
Illinois, Economic
Development Project
Area, 0%, 5/15/07 7,808,112
--------------
$ 17,239,282
--------------
MISCELLANEOUS - 4.4%
NR NR $ 7,055 American Samoa Economic
Development, Executive
Office Building,
10.125%, 9/1/08 $ 7,775,316
NR NR 11,500 Harris County, Texas,
Space Center Houston
Project, 9.25%, 8/15/15 9,775,000
NR A- 16,500 Los Angeles Regional
Airports Improvement
Corporation, LAXFuel,
(AMT), 6.5%, 1/1/32 15,831,914
NR NR 4,825 Mille Lacs Capital
Improvements, Mille
Lacs Band of Chippewa
Indians, 9.25%, 11/1/12 5,271,360
NR NR 22,500 New Jersey, Sports &
Exhibition Authority,
Monmouth Park Project,
8%, 1/1/25 23,470,650
NR NR 10,200 Orange County Community
Activity Center Revenue
Bonds, 8%, 3/1/24 9,974,478
NR NR 19,500 Retama, Texas, Special
Facilities Revenue,
Retama Race Track,
8.75%, 12/15/18 19,058,325
NR NR 6,654 Rhode Island Depositors
Economic Protection
Corporation, 10%, 7/1/07 7,335,600
--------------
$ 98,492,643
--------------
TOTAL TAX-EXEMPT INVESTMENTS
(identified cost
$2,148,754,102) $2,235,427,542
TAXABLE INVESTMENT -- 0.04%
NR NR $ 1,000 Ridgeland, Mississippi,
Urban Renewal, The
Orchard Limited
Project, 9%, 12/1/00
(identified cost,
$1,000,000) 1,000,000
--------------
TOTAL INVESTMENTS
(identified cost,
$2,149,754,102) $2,236,427,542
==============
(1) The above designated securities have been issued as inverse floater bonds.
(2) A portion of the above securities market value was segregated to cover
margin requirements for open financial futures contracts.
(3) Non-income producing security.
(4) At March 31, 1995, the concentration of the Portfolio's investments in the
various states determined as a percentage of total investments is as
follows:
California 12.5%
Other, representing less than 10% individually 87.5%
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 March
31, 1995, 15.7% 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 2.3% to 8.0% 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
- --------------------------------------------------------------------------------
March 31, 1995
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$2,149,754,102) $2,236,427,542
--------------
Cash 376
Receivable for investments sold 9,626,457
Interest receivable 44,261,997
Deferred organization expenses (Note 1D) 56,371
--------------
Total assets $2,290,372,743
LIABILITIES:
Demand note payable $42,304,000
Payable for investments purchased 1,599,704
Payable to affiliate --
Trustees' fees 7,131
Accrued expenses 97,947
-----------
Total liabilities 44,008,782
--------------
NET ASSETS applicable to investors' interest in Portfolio $2,246,363,961
==============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $2,168,217,421
Unrealized appreciation of investments and
financial futures contracts (computed on the
basis of identified cost) 78,146,540
--------------
Total $2,246,363,961
==============
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the six months ended March 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income (Note 1B) $ 82,735,460
Expenses --
Investment adviser fee (Note 2) $ 4,931,250
Compensation of Trustees not members
of the Investment Adviser's organization 14,258
Custodian fee (Note 2) 57,246
Interest expense 297,072
Legal and accounting services 63,683
Amortization of organization expense (Note 1D) 9,729
Bond pricing 25,936
Miscellaneous 36,752
------------
Total expenses 5,435,926
------------
Net investment income $ 77,299,534
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions
(identified cost basis) $(70,999,376)
Change in unrealized appreciation (depreciation) --
Investments $128,619,637
Financial futures contracts (8,526,900)
------------
Net change in unrealized appreciation 120,092,737
------------
Net realized and unrealized gain on investments $ 49,093,361
------------
Net increase in net assets from operations $126,392,895
============
See notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1995 1994
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 77,299,534 $ 144,467,768
Net realized gain (loss) on investment
transactions (70,999,376) (8,642,077)
Change in unrealized appreciation
(depreciation) of investments 120,092,737 (224,012,810)
-------------- --------------
Net increase (decrease) in net assets
from operations $ 126,392,895 $ (88,187,119)
-------------- --------------
Capital transactions --
Contributions $ 240,896,047 $ 760,864,297
Withdrawals (331,861,267) (545,063,348)
-------------- --------------
Increase (decrease) in net assets
resulting from capital transactions $ (90,965,220) $ 215,800,949
-------------- --------------
Total increase in net assets $ 35,427,675 $ 127,613,830
NET ASSETS:
At beginning of year 2,210,936,286 2,083,322,456
-------------- --------------
At end of year $2,246,363,961 $2,210,936,286
============== ==============
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
SIX MONTHS ENDED ------------------------
MARCH 31, 1995 1994 1993*
---------------- ---- ----
RATIOS (As a percentage of average
net assets):
Expenses 0.50%+ 0.50% 0.47%+
Net investment income 7.17%+ 6.55% 6.58%+
PORTFOLIO TURNOVER 32% 40% 13%
+ Computed on an annualized basis.
* 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 or 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 six months ended March 31, 1995, the fee was equivalent to 0.46%
(annualized) of the Portfolio's average net assets for such period and amounted
to $4,931,250. 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. 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
six months ended March 31, 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 $698,087,837 and $685,042,420, respectively.
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at March 31, 1995, as computed on a federal income tax basis, were as
follows:
Aggregate cost $2,149,754,102
==============
Gross unrealized appreciation $ 121,419,499
Gross unrealized depreciation 34,746,059
--------------
Net unrealized appreciation $ 86,673,440
==============
- --------------------------------------------------------------------------------
(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 six months ended March 31, 1995, the average
daily loan balance was $17,085,667 and the average interest rate was 7.07%,
respectively. The maximum borrowings at any month end during the six months
ended March 31, 1995 was $42,381,000. At March 31, 1995 the Portfolio had a loan
of $42,304,000 outstanding.
- --------------------------------------------------------------------------------
(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.
A summary of obligations under these financial instruments at March 31, 1995 is
as follows:
FUTURES CONTRACTS NET UNREALIZED
EXPIRATION DATE CONTRACTS POSITION DEPRECIATION
----------------- --------- -------- --------------
6/95 5,000 U.S. Treasury Bonds Short 8,526,900
=========
At March 31, 1995, the Portfolio had sufficient cash and/or securities to cover
margin requirements on open futures contracts.
<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 March 31,
1995, the related statement of operations for the six months then ended, the
statement of changes in net assets for the six months ended March 31, 1995 and
for the year ended September 30, 1994 and the supplementary data for the six
months ended March 31, 1995, for the year ended September 30, 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 March
31, 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 March 31, 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
May 5, 1995
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT MANAGEMENT
<S> <C> <C>
EV CLASSIC OFFICERS INDEPENDENT TRUSTEES
NATIONAL THOMAS J. FETTER DONALD R. DWIGHT
MUNICIPALS FUND President President,
24 Federal Street JAMES B. HAWKES Dwight Partners, Inc.
Boston, MA 02110 Vice President, Trustee Chairman, Newspapers of
ROBERT B. MACINTOSH New England, Inc.
Vice President SAMUEL L. HAYES, III
JAMES J. O'CONNOR Jacob H. Schiff Professor of
Treasurer Investment Banking,
THOMAS OTIS Harvard University
Secretary Graduate School of
BARBARA E. CAMPBELL Business Administration
Assistant Treasurer NORTON H. REAMER
DOUGLAS C. MILLER President and Director, United Asset
Assistant Treasurer Management Corporation
JANET E. SANDERS JOHN L. THORNDIKE
Assistant Treasurer and Director, Fiduciary Company
Assistant Secretary Incorporated
A. JOHN MURPHY JACK L. TREYNOR
Assistant Secretary Investment Adviser and Consultant
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NATIONAL OFFICERS INDEPENDENT TRUSTEES
MUNICIPALS THOMAS J. FETTER DONALD R. DWIGHT
PORTFOLIO President President,
24 Federal Street JAMES B. HAWKES Dwight Partners, Inc.
Boston, MA 02110 Vice President, Trustee Chairman, Newspapers of
ROBERT B. MACINTOSH New England, Inc.
Vice President SAMUEL L. HAYES, III
JAMES J. O'CONNOR Jacob H. Schiff Professor of
Treasurer Investment Banking,
THOMAS OTIS Harvard University
Secretary Graduate School of
BARBARA E. CAMPBELL Business Administration
Assistant Treasurer NORTON H. REAMER
JANET E. SANDERS President and Director, United Asset
Assistant Treasurer and Management Corporation
Assistant Secretary JOHN L. THORNDIKE
A. JOHN MURPHY Director, Fiduciary Company
Assistant Secretary Incorporated
PORTFOLIO MANAGER JACK L. TREYNOR
THOMAS M. METZOLD Investment Adviser and Consultant
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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
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
24 FEDERAL STREET
BOSTON, MA 02110 C-NASRC
EV CLASSIC
NATIONAL
MUNICIPALS FUND
SEMI-ANNUAL SHAREHOLDER REPORT
MARCH 31, 1995
