<PAGE>
[EATON VANCE LOGO] MUTUAL FUNDS
FOR PEOPLE [PHOTO OF EDUCATION SIGN]
WHO PAY
TAXES-Registered Trademark-
ANNUAL REPORT SEPTEMBER 30, 2000
[PHOTO OF CARS ON HIGHWAY] EATON VANCE
NATIONAL
MUNICIPAL
FUND
[PHOTO OF BRIDGE]
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
LETTER TO SHAREHOLDERS
[PHOTO] Eaton Vance National Municipals Fund paid its shareholders monthly
income dividends totalling $0.639 per share for Class A shares, $0.534 for
Class B shares, $0.482 for Class C shares, and $0.600 for Class I shares
during the year ended September 30, 2000.(1) Based on the Fund's most recent
distribution and its net asset value per share on September 30, 2000, the
Fund's annualized distribution rates were 6.26% for Class A, 5.92% for Class
B, 5.30% for Class C, and 6.34% for Class I.(2) These distribution rates are
equivalent to taxable rates of 10.36% for Class A, 9.80% for Class B, 8.77%
for Class C, and 10.50% for Class I.(3) The SEC 30-day yields on that date were
5.86% for Class A, 5.83% for Class B, 5.31% for Class C, and 6.33% for Class
I.(4) The SEC 30-day yields are equivalent to taxable yields of 9.70% for Class
A, 9.65% for Class B, 8.79% for Class C, and 10.48% for Class I.(3)
A COOLING ECONOMY HELPED KEEP INTEREST RATES DOWN....
The rate of economic growth in the U.S. showed signs of easing in 2000. Last
year's prolonged rise in interest rates resulted in lower corporate profits,
slower capital investment and weaker consumer demand. Together with a decline
in the equity markets, these trends have tempered the outlook for economic
growth. In the second quarter, GDP growth slowed to a moderate 2.3%. The
Federal Reserve Board then left rates unchanged at its August 2000 meeting
and signaled that its string of rate hikes may be near an end.
<TABLE>
<CAPTION>
------------------------------------------------------------------
Municipal bond yields are nearly 98% of Treasury yields
<S> <C>
---------------------------------------------------------------
5.76% | 9.54%
---------------------------------------------------------------
30-Year AAA-rated Taxable equivalent yield
General Obligation in 39.6% tax bracket
(GO) Bonds*
----------------------------
5.88%
----------------------------
30-Years Treasury Bond
Principal and interest payments of Treasury securities are
guaranteed by the U.S. government.
*GO yields are a compilation of a representative variety
of general obligations and are not necessarily representative
of the Fund's yield. Statistics as of September 30, 2000.
------------------------------------------------------------------
</TABLE>
AS RATES STABILIZED, THE CLIMATE FOR MUNICIPAL BONDS IMPROVED...
The prospect of stable, or potentially lower, interest rates was applauded by
fixed-income markets, including the municipal market, which mounted a modest
rally. The funds in the Lipper General Municipal Debt Fund Classification,
which had a average total return of -4.58% in 1999, had a return of 3.39% in
the six-month period ended September 30, 2000.(5)
The economy will, of course, bear close watching in coming months. But, in a
moderating economy, we believe that municipals are increasingly worthy of the
consideration of tax-conscious investors, as part of a diversified portfolio.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
President
November 13, 2000
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND INFORMATION
as of September 30, 2000
PERFORMANCE(6) CLASS A CLASS B CLASS C CLASS I
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
------------------------------------------------------------------------------------------
One Year 4.39% 3.72% 3.46% 4.96%
Five Years 5.67 4.93 4.80 N.A.
Ten Years N.A. 6.71 N.A. N.A.
Life of Fund + 6.72 6.49 4.08 1.91
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
------------------------------------------------------------------------------------------
One Year -0.56% -1.18% 2.48% 4.96%
Five Years 4.65 4.61 4.80 N.A.
Ten Years N.A. 6.71 N.A. N.A.
Life of Fund + 5.92 6.49 4.08 1.91
+ Inception Dates - Class A: 4/5/94; Class B: 12/19/85; Class C: 12/3/93; Class I: 7/1/99
------------------------------------------------------------------------------------------
</TABLE>
(1) A portion of the Fund's income could be subject to federal income tax
and/or alternative minimum tax. Income may be subject to state and local tax.
(2) The Fund's distribution rate represents actual distributions paid to
shareholders and is calculated by dividing the last distribution rate per
share (annualized)by the net asset value.
(3) Taxable-equivalent rates assume maximum 39.60% federal income tax rate. A
lower rate would result in lower tax-equivalent figures.
(4) The Fund's SEC yield is calculated by dividing the net investment income
per share for the 30-day period by the offering price at the end of the
period and annualizing the result.
(5) It is not possible to invest directly in a Lipper Classsification.
(6) Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 4.75% sales charge. SEC returns for Class B
reflect applicable CDSC based on the following schedule: 5% - 1st and 2nd
years; 4% -3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC 1-Year
return for Class C reflects a 1% CDSC. Past performance is no guarantee of
future results. Investment return and principal value will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
MUTUAL FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED.
2
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
MANAGEMENT DISCUSSION
AN INTERVIEW WITH THOMAS M. METZOLD, VICE PRESIDENT AND PORTFOLIO MANAGER OF
NATIONAL MUNICIPALS PORTFOLIO
[PHOTO]
Thomas M. Metzold
Portfolio Manager
Q: Tom, how would you characterize the investment environment for National
Municipals Portfolio over the past year?
A: Compared to other asset classes, municipal bonds have had strong
performance over the past year. This marks an improvement over 1999, when
the adverse effect of higher interest rates on the municipal market was
quite evident. Bond prices, which move in the opposite direction of
interest rates, reacted negatively to the rate hikes, creating
disappointing returns for municipal bond funds.
In the six-month period ended September 30, 2000, however, the picture
brightened somewhat, as munis staged a modest rally - the result of a
number of factors. First, the supply/demand equilibrium came back into
balance. As increased tax revenues at the state and local levels reduced
funding needs, the rate of new municipal issuance declined from previous
years, reducing supply pressures within the municipal market. Second, we
saw a fair amount of asset reallocation, as investors sought out stability
in the bond markets during a period of equity volatility. Combined with
falling interest rates over this time period, these elements helped to
boost the municipals market, and we benefitted from those factors as a
result.
Q: Was there anything else that contributed to the performance of the
Portfolio?
A: The Fund's dividend yield was very high, compared to its competitors. By
utilizing a large staff of credit analysts, we can look for investment
opportunities that deliver higher-than-average yields, which we can then
pass along to the shareholders. We selectively choose bonds across all
credit rating categories - we not only invest in the highest-quality
credits, but we also invest some of our assets in selected non-rated and
lower-rated credits, which can help provide exceptional dividend yield. In
this way, we were able to meet our objective of providing current income,
as well as providing total return. And of course, this income is exempt
from regular federal income taxes.*
* A portion of the Fund's income could be subject to federal income tax
and/or alternative minimum tax. Income may be subject to state and local tax.
-------------------------------------------------------------------------------
FIVE LARGEST SECTOR POSITIONS+
-------------------------------------------------------------------------------
By total net assets
----------------------------------------------------------
Escrowed/Pre-refunded 14.4%
----------------------------------------------------------
-------------------------------------------------
Industrial Development Revenue 12.9%
-------------------------------------------------
------------------------------------------
Housing 9.5%
------------------------------------------
-----------------------------------
Nursing Home 7.9%
-----------------------------------
---------------------------
Hospital 7.3%
---------------------------
-------------------------------------------------------------------------------
RATING DISTRIBUTION+
-------------------------------------------------------------------------------
By total net assets
[PIE CHART]
AA 6.6% A 4.3%
AAA 38.5% BBB 18.9%
BB 3.3%
B 0.4%
NON-RATED 27.8%
CCC 0.2%
+ Portfolio Sector Positions and Rating Distribution are subject to change.
3
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
MANAGEMENT DISCUSSION
Q: You mentioned the credit ratings of bonds. What more can you tell us
about this?
A: The rating of a bond is an indication of its credit quality; more
specifically, of the issuer's ability to repay the debt. For example, the
highest sector distribution for the Portfolio, at 14.4%, at September 30,
2000, was escrowed/pre-refunded bonds (see chart, page 3). You simply can't
get a higher credit quality than a bond that is escrowed with
U.S.Treasuries or securities guaranteed by the U.S. Treasury. When it comes
to non-rated issues, which can help boost the income provided by the Fund,
it's important to remember that this doesn't necessarily indicate that a
bond is not a good credit - it just hasn't been rated by one of the major
rating agencies.
That's why in-house credit analysis is such an important part of our
investment process.
Our team constantly monitors trends in the economy to insure that the
performance of these bonds, particularly in the health care and
industrial sectors this year, lives up to expectations, and that we're on
top of anything that might impact performance. Although 27.8% of the
Portfolio was non-rated at September 30, 2000, over 49% was rated above A,
and the AAA percentage was 38.5%, so the Portfolio's non-rated holdings are
more than offset by higher-rated securities.
<TABLE>
<CAPTION>
PORTFOLIO OVERVIEW+
-------------------------------------------------------------------------------
By total net assets
<S> <C>
Number of Issues 206
Average Maturity 24.2 years
Effective Maturity 19.5 years
Average Rating A -
Average Call 9.3 years
Average Dollar Price $85.74
+ Portfolio overview is subject to change.
-------------------------------------------------------------------------------
</TABLE>
Q: What role can municipal bonds play in an investor's portfolio in the
current investment environment?
A: Because they are mostly free from federal income tax, the advantages of
municipals for the tax-conscious investor are undeniable. The
taxable-equivalent yield of this Fund compares quite favorably with
taxable asset classes of similar credit quality.
Also, the Fund can offer added investment value because of its long-term
perspective. In fact, over the long term, we have outperformed most of our
peer funds: the Fund's Class A shares were ranked 9 out of 183 funds among
its peers over a five-year period.* We believe a long-term approach, via
exceptional call protection, affords a prudent way to capitalize on the
opportunities that exist in this complex market. We further believe that
investors should diversify across all asset classes, and munis are an
excellent vehicle for diversification. Finally, we continue to believe
that munis are undervalued on a relative basis to other asset classes, and
that the coming year can provide excellent investment opportunities.
* Source: Lipper Inc. National Municipals Fund ranked #9 among 183
municipal funds for the 5 years ended 9/30/00. For the one year period,
National Municipals Fund ranked #180 out of 263 funds. Rankings are for
Class A shares only, ranking for other classes may vary. Rankings are
based on percentage change in net asset value and do not take sales charge
into consideration. Past performance is no guarantee of future results.
It is not possible to invest directly in a Lipper classification.
4
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
-------------------------------------------------------------------------------
P E R F O R M A N C E
-------------------------------------------------------------------------------
Comparison of Change in Value of a $10,000 Investment in Eaton Vance National
Municipals Fund, Class B vs. the Lehman Brothers Municipal Bond Index*
September 30, 1990 - September 30, 2000
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
Lehman Brothers Municipal Bond Index $20,258
EATON VANCE MUNICIPAL FUND CLASS B $19,136
[GRAPH]
<TABLE>
<S> <C> <C>
SEP $10,000.00 $10,000
OCT $10,181.62 $10,125
NOV $10,386.35 $10,267
DEC $10,431.35 $10,268
JAN 1991 $10,571.55 $10,353
FEB $10,663.56 $10,407
MAR $10,667.14 $10,410
APR $10,809.73 $10,568
MAY $10,905.72 $10,667
JUN $10,894.97 $10,668
JUL $11,027.60 $10,856
AUG $11,172.98 $11,005
SEP $11,318.36 $11,133
OCT $11,420.32 $11,196
NOV $11,452.18 $11,181
DEC $11,697.93 $11,477
JAN 1992 $11,724.62 $11,423
FEB $11,728.60 $11,463
MAR $11,732.58 $11,512
APR $11,837.34 $11,677
MAY $11,976.74 $11,868
JUN $12,177.48 $12,163
JUL $12,542.72 $12,668
AUG $12,420.44 $12,391
SEP $12,501.69 $12,432
OCT $12,378.62 $12,107
NOV $12,600.47 $12,512
DEC $12,729.12 $12,631
JAN 1993 $12,877.29 $12,756
FEB $13,342.89 $13,364
MAR $13,201.90 $13,155
APR $13,334.93 $13,345
MAY $13,409.81 $13,473
JUN $13,634.05 $13,741
JUL $13,651.57 $13,773
AUG $13,935.95 $14,091
SEP $14,094.87 $14,284
OCT $14,121.96 $14,356
NOV $13,997.29 $14,199
DEC $14,292.83 $14,477
JAN 1994 $14,456.13 $14,682
FEB $14,081.73 $14,323
MAR $13,508.18 $13,510
APR $13,622.89 $13,584
MAY $13,740.79 $13,702
JUN $13,660.73 $13,589
JUL $13,907.28 $13,876
AUG $13,955.47 $13,895
SEP $13,750.75 $13,596
OCT $13,506.59 $13,341
NOV $13,262.04 $12,978
DEC $13,553.99 $13,308
JAN 1995 $13,941.53 $13,793
FEB $14,346.99 $14,262
MAR $14,511.89 $14,342
APR $14,529.02 $14,358
MAY $14,992.63 $14,918
JUN $14,861.59 $14,765
JUL $15,002.19 $14,794
AUG $15,192.58 $14,971
SEP $15,288.56 $15,044
OCT $15,510.81 $15,317
NOV $15,768.51 $15,715
DEC $15,919.86 $15,943
JAN 1996 $16,040.15 $16,004
FEB $15,931.81 $15,855
MAR $15,728.28 $15,500
APR $15,683.67 $15,383
MAY $15,677.70 $15,453
JUNE $15,848.57 $15,628
JULY $15,991.95 $15,760
AUG $15,988.37 $15,817
SEP $16,211.81 $16,072
OCT $16,395.03 $16,272
NOV $16,695.34 $16,562
DEC $16,624.85 $16,524
JAN 1997 $16,656.31 $16,500
FEB $16,809.26 $16,668
MAR $16,585.02 $16,420
APR $16,724.02 $16,561
MAY $16,975.74 $16,805
JUN $17,156.57 $17,241
JUL $17,631.74 $17,994
AUG $17,466.44 $17,751
SEP $17,673.56 $18,054
OCT $17,787.47 $18,219
NOV $17,892.22 $18,305
DEC $18,153.10 $18,656
JAN 1998 $18,340.30 $18,876
FEB $18,345.88 $18,944
MAR $18,362.21 $18,979
APR $18,279.36 $18,827
MAY $18,568.53 $19,100
JUN $18,641.81 $19,164
JUL $18,688.41 $19,136
AUG $18,977.18 $19,438
SEP $19,213.77 $19,606
OCT $19,213.37 $19,521
NOV $19,280.68 $19,550
DEC $19,329.27 $19,553
JAN 1999 $19,559.09 $19,744
FEB $19,473.85 $19,588
MAR $19,500.94 $19,565
APR $19,549.13 $19,625
MAY $19,436.01 $19,466
JUN $19,156.41 $19,001
JUL $19,226.11 $18,928
AUG $19,071.97 $18,580
SEP $19,079.94 $18,450
OCT $18,873.22 $18,074
NOV $19,073.96 $18,212
DEC $18,931.77 $17,891
JAN 2000 $18,849.32 $17,598
FEB $19,068.39 $17,964
MAR $19,485.00 $18,510
APR $19,369.90 $18,308
MAY $19,269.13 $18,037
JUNE $19,779.74 $18,638
JULY $20,054.96 $18,954
AUGUST $20,364.04 $19,261
SEPTEMBER $20,258.10 $19,136
</TABLE>
<TABLE>
<CAPTION>
PERFORMANCE(5) CLASS A CLASS B CLASS C CLASS I
-------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One Year 4.39% 3.72% 3.46% 4.96%
Five Years 5.67 4.93 4.80 N.A.
Ten Years N.A. 6.71 N.A. N.A.
Life of Fund+ 6.72 6.49 4.08 1.91
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
-------------------------------------------------------------------------------
One Year -0.56% -1.18% 2.48% 4.96%
Five Years 4.65 4.61 4.80 N.A.
Ten Years N.A. 6.71 N.A. N.A.
Life of Fund+ 5.92 6.49 4.08 1.91
+ Inception Dates - Class A: 4/5/94; Class B: 12/19/85; Class C:12/3/93; Class I:7/1/99
-------------------------------------------------------------------------------
</TABLE>
* Source: TowersData, Bethesda, MD. Investment operations commenced 12/19/85.
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.
The chart compares the Fund's total return with that of the Lehman
Brothers Municipal Bond Index, a broad-based, unmanaged market index of
municipal bonds. Returns are calculated by determining the percentage
change in net asset value with all distributions reinvested. The lines on
the chart represent the total returns of $10,000 hypothetical investments
in the Fund (Class B) and in the Lehman Brothers Municipal Bond Index. An
investment in the Fund's Class A shares on 4/5/94 at net asset value
would have grown to $15,254 on September 30, 2000, $14,527 including
applicable sales charge. An investment in the Fund's Class C shares on
12/3/93 at net asset value would have grown to $13,138 on
September 30, 2000. An investment in the Fund's Class I shares at its
inception on 7/1/99 at net asset value would have grown to $10,240 on
September 30, 2000. The Index's total returns do not reflect any
commissions or expenses that would have been incurred if an investor
individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
** Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns
for Class A reflect the maximum 4.75% sales charge. SEC returns for
Class B reflect applicable CDSC based on the following schedule: 5% - 1st
and 2nd years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year.
SEC 1-Year return for Class C reflects 1% CDSC.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
-------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS. For federal income tax
purposes, 99.85% of the total dividends paid by the Fund from net investment
income during the fiscal year ended September 30, 2000 was designated as an
exempt-interest dividend.
-------------------------------------------------------------------------------
5
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 2000
<S> <C>
Assets
--------------------------------------------------------
Investment in National Municipals
Portfolio, at value
(identified cost, $1,763,209,946) $1,769,985,266
Receivable for Fund shares sold 1,771,629
Miscellaneous receivable 65,395
--------------------------------------------------------
TOTAL ASSETS $1,771,822,290
--------------------------------------------------------
Liabilities
--------------------------------------------------------
Dividends payable $ 4,246,466
Payable for Fund shares redeemed 3,370,107
Payable to affiliate for Trustees' fees 60
Accrued expenses 1,562,810
--------------------------------------------------------
TOTAL LIABILITIES $ 9,179,443
--------------------------------------------------------
NET ASSETS $1,762,642,847
--------------------------------------------------------
Sources of Net Assets
--------------------------------------------------------
Paid-in capital $1,790,288,188
Accumulated net realized loss from
Portfolio (computed on the basis of
identified cost) (31,057,174)
Accumulated distributions in excess of
net investment income (3,363,487)
Net unrealized appreciation from
Portfolio (computed on the basis of
identified cost) 6,775,320
--------------------------------------------------------
TOTAL $1,762,642,847
--------------------------------------------------------
Class A Shares
--------------------------------------------------------
NET ASSETS $ 174,024,241
SHARES OUTSTANDING 17,017,565
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 10.23
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 95.25 of $10.23) $ 10.74
--------------------------------------------------------
Class B Shares
--------------------------------------------------------
NET ASSETS $1,483,565,502
SHARES OUTSTANDING 155,314,056
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 9.55
--------------------------------------------------------
Class C Shares
--------------------------------------------------------
NET ASSETS $ 104,454,610
SHARES OUTSTANDING 11,483,050
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 9.10
--------------------------------------------------------
Class I Shares
--------------------------------------------------------
NET ASSETS $ 598,494
SHARES OUTSTANDING 63,240
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 9.46
--------------------------------------------------------
</TABLE>
On sales of $25,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
SEPTEMBER 30, 2000
<S> <C>
Investment Income
------------------------------------------------------
Interest allocated from Portfolio $128,180,914
Expenses allocated from Portfolio (8,762,530)
------------------------------------------------------
NET INVESTMENT INCOME FROM PORTFOLIO $119,418,384
------------------------------------------------------
Expenses
------------------------------------------------------
Trustees fees and expenses $ 3,216
Distribution and service fees
Class A 150,577
Class B 10,509,980
Class C 1,138,963
Transfer and dividend disbursing agent
fees 1,455,993
Printing and postage 103,346
Registration fees 70,828
Legal and accounting services 33,258
Custodian fee 6,971
Miscellaneous 135,742
------------------------------------------------------
TOTAL EXPENSES $ 13,608,874
------------------------------------------------------
NET INVESTMENT INCOME $105,809,510
------------------------------------------------------
Realized and Unrealized Gain
(Loss) from Portfolio
------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $(29,265,457)
------------------------------------------------------
NET REALIZED LOSS $(29,265,457)
------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $(16,870,231)
------------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $(16,870,231)
------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS $(46,135,688)
------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 59,673,822
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
<S> <C> <C>
--------------------------------------------------------------------------------------
From operations --
Net investment income $ 105,809,510 $ 113,675,295
Net realized gain (loss) (29,265,457) 31,760,687
Net change in unrealized
appreciation (depreciation) (16,870,231) (280,608,083)
--------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 59,673,822 $ (135,172,101)
--------------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (11,518,618) $ (10,782,875)
Class B (88,245,574) (96,032,463)
Class C (6,121,440) (6,816,227)
Class I (6,725) (3,068)
In excess of net investment income
Class A (188,394) --
Class B (395,953) (642,529)
Class I (76) --
--------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (106,476,780) $ (114,277,162)
--------------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 76,663,892 $ 132,294,349
Class B 84,983,374 163,062,444
Class C 22,528,666 67,007,386
Class I 600,004 467,716
Net asset value of shares issued to
shareholders in payment of
distributions declared
Class A 5,306,814 5,807,264
Class B 29,049,725 37,369,476
Class C 2,859,716 4,191,417
Class I 2,451 2,734
Cost of shares redeemed
Class A (114,313,049) (51,471,895)
Class B (356,484,139) (294,751,646)
Class C (57,769,924) (38,042,760)
Class I (453,019) --
--------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS $ (307,025,489) $ 25,936,485
--------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS $ (353,828,447) $ (223,512,778)
--------------------------------------------------------------------------------------
Net Assets
--------------------------------------------------------------------------------------
At beginning of year $ 2,116,471,294 $ 2,339,984,072
--------------------------------------------------------------------------------------
AT END OF YEAR $ 1,762,642,847 $ 2,116,471,294
--------------------------------------------------------------------------------------
Accumulated distributions
in excess of net investment
income included in net assets
--------------------------------------------------------------------------------------
AT END OF YEAR $ (3,363,487) $ (2,696,217)
--------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-----------------------------------
YEAR ENDED SEPTEMBER 30,
-----------------------------------
2000(1) 1999 1998
<S> <C> <C> <C>
---------------------------------------------------------------------
Net asset value -- Beginning
of year $ 10.440 $ 11.650 $ 11.260
---------------------------------------------------------------------
Income (loss) from operations
---------------------------------------------------------------------
Net investment income $ 0.629 $ 0.636 $ 0.644
Net realized and unrealized
gain (loss) (0.200) (1.209) 0.398
---------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 0.429 $ (0.573) $ 1.042
---------------------------------------------------------------------
Less distributions
---------------------------------------------------------------------
From net investment income $ (0.629) $ (0.637) $ (0.652)
In excess of net investment
income (0.010) -- --
---------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.639) $ (0.637) $ (0.652)
---------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 10.230 $ 10.440 $ 11.650
---------------------------------------------------------------------
TOTAL RETURN(2) 4.39% (5.14)% 9.49%
---------------------------------------------------------------------
Ratios/Supplemental Data
---------------------------------------------------------------------
Net assets, end of year (000's
omitted) $174,024 $211,206 $146,067
Ratios (As a percentage of
average daily net assets):
Expenses(3) 0.66% 0.71% 0.71%
Expenses after custodian
fee reduction(3) 0.65% 0.69% 0.69%
Net investment income 6.23% 5.67% 5.60%
Portfolio Turnover of the
Portfolio 41% 60% 28%
---------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using averge shares
outstanding.
(2) Total 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------------
2000(1) 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------
Net asset value -- Beginning
of year $9.740 $10.870 $10.530 $9.900 $ 9.800
----------------------------------------------------------------------------------------------------
Income (loss) from operations
----------------------------------------------------------------------------------------------------
Net investment income $0.532 $0.508 $0.523 $0.550 $ 0.557
Net realized and unrealized
gain (loss) (0.188) (1.126) 0.361 0.634 0.096
----------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $0.344 $(0.618 ) $0.884 $1.184 $ 0.653
----------------------------------------------------------------------------------------------------
Less distributions
----------------------------------------------------------------------------------------------------
From net investment income $(0.532 ) $(0.508 ) $(0.531 ) $(0.554 ) $ (0.553)
In excess of net investment
income (0.002) (0.004) (0.013) -- --
----------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.534 ) $(0.512 ) $(0.544 ) $(0.554 ) $ (0.553)
----------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $9.550 $9.740 $10.870 $10.530 $ 9.900
----------------------------------------------------------------------------------------------------
TOTAL RETURN(2) 3.72% (5.90)% 8.60% 12.33% 6.84%
----------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------------
Net assets, end of year (000's
omitted) $1,483,566 $1,764,616 $2,071,078 $2,040,626 $2,101,632
Ratios (As a percentage of
average daily net assets):
Expenses(3) 1.25% 1.53% 1.53% 1.60% 1.55%
Expenses after custodian
fee reduction(3) 1.24% 1.51% 1.51% 1.60% 1.54%
Net investment income 5.63% 4.86% 4.87% 5.45% 5.62%
Portfolio Turnover of the
Portfolio 41% 60% 28% 17% 19%
----------------------------------------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using averge shares
outstanding.
(2) Total 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
-----------------------------------
YEAR ENDED SEPTEMBER 30,
-----------------------------------
2000(1) 1999 1998
<S> <C> <C> <C>
---------------------------------------------------------------------
Net asset value -- Beginning
of year $ 9.280 $ 10.350 $ 10.010
---------------------------------------------------------------------
Income (loss) from operations
---------------------------------------------------------------------
Net investment income $ 0.477 $ 0.482 $ 0.493
Net realized and unrealized
gain (loss) (0.175) (1.073) 0.349
---------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 0.302 $ (0.591) $ 0.842
---------------------------------------------------------------------
Less distributions
---------------------------------------------------------------------
From net investment income $ (0.482) $ (0.479) $ (0.502)
---------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.482) $ (0.479) $ (0.502)
---------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 9.100 $ 9.280 $ 10.350
---------------------------------------------------------------------
TOTAL RETURN(2) 3.46% (5.92)% 8.59%
---------------------------------------------------------------------
Ratios/Supplemental Data
---------------------------------------------------------------------
Net assets, end of year (000's
omitted) $104,455 $140,182 $122,839
Ratios (As a percentage of
average daily net assets):
Expenses(3) 1.58% 1.54% 1.54%
Expenses after custodian
fee reduction(3) 1.57% 1.52% 1.52%
Net investment income 5.31% 4.84% 4.83%
Portfolio Turnover of the
Portfolio 41% 60% 28%
---------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using averge shares
outstanding.
(2) Total 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS I
------------------------
YEAR ENDED SEPTEMBER 30,
------------------------
2000(1) 1999(2)
<S> <C> <C>
----------------------------------------------------------
Net asset value -- Beginning
of year $ 9.610 $10.000
----------------------------------------------------------
Income (loss) from operations
----------------------------------------------------------
Net investment income $ 0.557 $ 0.149
Net realized and unrealized
loss (0.107) (0.390)
----------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 0.450 $(0.241)
----------------------------------------------------------
Less distributions
----------------------------------------------------------
From net investment income $(0.593) $(0.149)
In excess of net investment
income (0.007) --
----------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.600) $(0.149)
----------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 9.460 $ 9.610
----------------------------------------------------------
TOTAL RETURN(3) 4.96% (2.44)%
----------------------------------------------------------
Ratios/Supplemental Data
----------------------------------------------------------
Net assets, end of year (000's
omitted) $ 598 $ 468
Ratios (As a percentage of
average daily net assets):
Expenses(4) 0.57% 0.55%(5)
Expenses after custodian
fee reduction(4) 0.56% 0.53%(5)
Net investment income 5.87% 6.12%(5)
Portfolio Turnover of the
Portfolio 41% 60%
----------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using averge shares
outstanding.
(2) For the period from the commencement of offering of class I shares, July
1, 1999, to September 30, 1999.
(3) Total 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(4) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
(5) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-------------------------------------------
Eaton Vance 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 offers four classes of shares. Class A shares
are generally sold subject to a sales charge imposed at time of purchase.
Class B and Class C shares are sold at net asset value and are subject to a
contingent deferred sales charge (see Note 6). Class I shares are sold at net
asset value to certain institutional investors. Each class represents a pro
rata interest in the Fund, but votes separately on class-specific matters and
(as noted below) is subject to different expenses. Realized and unrealized
gains and losses are allocated daily to each class of shares based on the
relative net assets of each class to the total net assets of the Fund. Net
investment income, other than class specific expenses, is allocated daily to
each class of shares based upon the ratio of the value of each class' paid
shares to the total value of all paid shares. Each class of shares differs in
its distribution plan and certain other class specific expenses. The Fund
invests all of its investable assets in interests in 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
(99.9% at September 30, 2000). 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 Valuation -- Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B Income -- The Fund's net investment income consists of the Fund's pro-rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund determined in accordance with 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, if any, 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, 2000, the Fund, for federal income tax purposes, had capital
loss carryovers of $6,949,359 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. A portion
of such capital loss carryover was acquired through a Fund Reorganization and
may be subject to certain limitations. Such capital loss carryovers will
expire on September 30, 2008 ($5,377,834) and September 30, 2005
($1,571,525). Dividends paid by the Fund from net tax-exempt interest on
municipal bonds allocated from the Portfolio are not includable by
shareholders as gross income for federal income tax purposes because the Fund
and Portfolio intend to meet certain requirements of the Internal Revenue
Code applicable to regulated investment companies which will enable the Fund
to pay exempt-interest dividends. The portion of such interest, if
any, earned on private activity bonds issued after August 7, 1986, may be
considered a tax preference item to shareholders.
Additionally, at September 30, 2000, National Municipals Fund had net capital
losses of $23,947,133 attributable to security transactions incurred after
October 31, 1999. These capital losses are treated as arising on the first
day of the Fund's next taxable year.
D Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
E Other -- Investment transactions are accounted for on a trade-date basis.
F Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
to the Fund and the Portfolio. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based
on the average daily cash balances the Fund or the
12
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
Portfolio maintains with IBT. All significant credit balances used to reduce
the Fund's custodian fees are reported as a reduction of total expenses in
the Statement of Operations.
2 Distributions to Shareholders
-------------------------------------------
The net income of the Fund is determined daily and substantially all of the
net income so determined is declared as a dividend to shareholders of record
at the time of declaration. Distributions are paid monthly. Distributions of
allocated realized gains, if any, are made at least annually. Shareholders
may reinvest capital gain 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. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be 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 temporary over-distributions for financial
statement purposes are classified as distributions in excess of net
investment income or accumulated net realized gains. Permanent differences
between book and tax accounting relating to distributions are reclassified to
paid-in capital.
3 Shares of Beneficial Interest
-------------------------------------------
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Such shares may be issued in a number of different series (such as
the Fund) and classes. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
CLASS A 2000 1999
<S> <C> <C>
--------------------------------------------------------------------
Sales 7,622,978 11,806,517
Issued to shareholders electing to
receive payments of distributions in
Fund shares 526,581 521,090
Redemptions (11,359,864) (4,636,351)
--------------------------------------------------------------------
NET INCREASE (DECREASE) (3,210,305) 7,691,256
--------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
CLASS B 2000 1999
<S> <C> <C>
--------------------------------------------------------------------
Sales 8,951,233 15,476,801
Issued to shareholders electing to
receive payments of distributions in
Fund shares 3,083,270 3,573,074
Redemptions (37,900,442) (28,384,309)
--------------------------------------------------------------------
NET DECREASE (25,865,939) (9,334,434)
--------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
CLASS C 2000 1999
<S> <C> <C>
--------------------------------------------------------------------
Sales 2,512,096 6,674,087
Issued to shareholders electing to
receive payments of distributions in
Fund shares 318,811 421,840
Redemptions (6,449,307) (3,859,279)
--------------------------------------------------------------------
NET INCREASE (DECREASE) (3,618,400) 3,236,648
--------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
CLASS I 2000 1999(1)
<S> <C> <C>
--------------------------------------------------------------------
Sales 62,718 48,369
Issued to shareholders electing to
receive payments of distributions in
Fund shares 261 284
Redemptions (48,392) --
--------------------------------------------------------------------
NET INCREASE 14,587 48,653
--------------------------------------------------------------------
</TABLE>
(1) For the period from the commencement of offering of Class I shares,
July 1, 1999 to September 30, 1999.
4 Investment Adviser Fee and Other Transactions with Affiliates
-------------------------------------------
Eaton Vance Management (EVM) serves as the Administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services.
See Note 2 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report. Except as to Trustees of the Fund and the
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to the Fund out of the
investment adviser fee earned by BMR. The Fund was informed that Eaton Vance
Distributors, Inc. (EVD), a subsidiary of EVM and the Fund's principal
underwriter, received $31,218 as its portion of the sales charge on sales of
Class A shares for the year ended September 30, 2000.
Certain officers and Trustees of the Fund and of the Portfolio are officers
of the above organizations.
13
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
5 Distribution and Service Plans
-------------------------------------------
The Fund has in effect distribution plans, for Class B (Class B Plan) and
Class C (Class C Plan) pursuant to Rule 12b-1 under the Investment Company
Act of 1940 and a service plan (Class A Plan) (collectively, the Plans). The
Class B and Class C Plans require the Fund to pay EVD amounts equal to 1/365
of 0.75% of the Fund's average daily net assets attributable to Class B and
Class C shares for providing ongoing distribution services and facilities to
the Fund. The Fund will automatically discontinue payments to EVD during any
period in which there are no outstanding Uncovered Distribution Charges,
which are equivalent to the sum of (i) 5% and 6.25% of the aggregate amount
received by the Fund for the Class B and Class C shares sold, respectively,
plus (ii) interest calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of
EVD of each respective class reduced by the aggregate amount of contingent
deferred sales charges (see Note 6) and daily amounts theretofore paid to EVD
by each respective class. The Fund paid or accrued $7,721,265 and $854,222
for Class B, and Class C shares, respectively, to or payable to EVD for the
year ended September 30, 2000, representing 0.49% and 0.75% (annualized) of
the average daily net assets for Class B and Class C shares, respectively. At
September 30, 2000, the amount of Uncovered Distribution Charges EVD
calculated under the Plans was approximately $15,795,000 for Class C shares.
There were no Uncovered Distribution Charges for Class B shares at
September 30, 2000.
The Plans authorize the Fund to make payments of service fees to EVD,
investment dealers and other persons in amounts not exceeding 0.25% of the
Fund's average daily net assets attributable to Class A, Class B, and
Class C shares for each fiscal year. The Trustees initially implemented the
Plans by authorizing the Fund to make quarterly payments of service fees to
EVD and investment dealers equal to 0.25% per annum of the Fund's average
daily net assets attributable to Class A and Class B shares based on the
value of Fund shares sold by such persons and remaining outstanding for at
least one year. On October 4, 1999, the Trustees approved service fee
payments equal to 0.25% per annum of the Trust's average daily net assets
attributable to Class A and Class B shares for any fiscal year on shares of
the Trust sold on or after October 12, 1999. The Class C Plan permits the
fund to make monthly payments of service fees in amounts not expected to
exceed 0.25% of the Fund's average daily net assets attributable to Class C
shares for any fiscal year. Service fee payments will be made for personal
services and/or the maintenance of shareholder accounts. Service fees are
separate and distinct from the sales commissions and distribution fees
payable by the Fund to EVD, and, as such are not subject to automatic
discontinuance when there are no outstanding Uncovered Distribution
Charges of EVD. Service fee payments for the year ended September 30, 2000
amounted to $150,577, $2,788,715, and $284,741,for Class A, Class B, and
Class C shares, respectively.
6 Contingent Deferred Sales Charge
-------------------------------------------
A contingent deferred sales charge (CDSC) generally is imposed on redemptions
of Class B shares made within six years of purchase and on redemptions of
Class C shares made within one year of purchase. Generally, the CDSC is based
upon the lower of the net asset value at date of redemption or date of
purchase. No charge is levied on shares acquired by reinvestment of dividends
or capital gains distributions. Class B CDSC is imposed at declining rates
that begin at 5% in the case of redemptions in the first and second year
after purchase, declining one percentage point each subsequent year. Class C
shares will be subject to a 1% CDSC if redeemed within one year of purchase.
No CDSC is levied on shares which have been sold to EVM or its affiliates or
to their respective employees or clients and may be waived under certain
other limited conditions. CDSC charges are paid to EVD to reduce the amount
of Uncovered Distribution Charges calculated under each Fund's Distribution
Plan (see Note 5). CDSC charges received when no Uncovered Distribution
Charges exist will be credited to the Fund. EVD received approximately
$39,000 of CDSC paid by shareholders for Class C shares for the year ended
September 30, 2000. EVD also received approximately $1,832,000 of CDSC paid
by Class B shareholders of which $705,167 was paid directly to the Fund for
days when no Uncovered Distribution Charges existed.
7 Investment Transactions
-------------------------------------------
Increases and decreases in the Fund's investment in the National Municipals
Portfolio aggregated $184,624,795 and $613,467,015, respectively, for the
year
ended September 30, 2000.
14
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS
OF EATON VANCE MUNICIPALS TRUST
---------------------------------------------
We have audited the accompanying statement of assets and liabilities of Eaton
Vance National Municipals Fund (one of the series constituting Eaton Vance
Municipals Trust) as of September 30, 2000, and the related statement of
operations for the year then ended, the statements of changes in net assets for
the years ended September 30, 2000 and 1999 and the financial highlights for
each of the years in the five-year period ended September 30, 2000. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Eaton Vance
National Municipals Fund at September 30, 2000, and the results of its
operations, the changes in its net assets, and its financial highlights for the
respective stated periods in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
November 3, 2000
15
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 98.2%
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Assisted Living -- 5.7%
---------------------------------------------------------------------------
$ 6,035 Arizona Health Facilities Authority,
(Care Institute, Inc. - Mesa),
7.625%, 1/1/26 $ 5,203,558
17,220 Bell County, TX, Health Facilities
Authority, (Care Institute, Inc.-Texas),
9.00%, 11/1/24 18,644,611
3,060 Chester, PA, IDA, (Senior Life-Choice of
Kimberton), (AMT), 8.50%, 9/1/25 3,252,199
4,935 Chester, PA, IDA, (Senior Life-Choice of
Paoli, L.P.), (AMT), 8.05%, 1/1/24 5,073,377
4,960 Delaware, PA, IDA, (Glen Riddle), (AMT),
8.625%, 9/1/25 5,307,250
9,580 Glen Cove, NY, IDA, (Regency at Glen
Cove), 9.50%, 7/1/12 10,101,056
15,000 Illinois Development Finance Authority,
(Care Institute, Inc.), 7.80%, 6/1/25 15,393,000
4,605 New Jersey EDA, (Chelsea at East
Brunswick), (AMT), 8.25%, 10/1/20 4,728,046
9,605 New Jersey EDA, (Forsgate), (AMT),
8.625%, 6/1/25 10,329,505
4,935 North Syracuse Village Housing
Authority, NY, (AJM Senior Housing,
Inc., Janus Park), 8.00%, 6/1/24 2,566,644
7,915 Roseville, MN, Elder Care Facility,
(Care Institute, Inc. - Roseville),
7.75%, 11/1/23 7,366,728
12,290 St. Paul, MN, Housing and Redevelopment,
(Care Institute, Inc. - Highland),
8.75%, 11/1/24 13,287,579
---------------------------------------------------------------------------
$ 101,253,553
---------------------------------------------------------------------------
Cogeneration -- 6.6%
---------------------------------------------------------------------------
$ 22,150 Maryland Energy Cogeneration, (AES
Warrior Run), (AMT), 7.40%, 9/1/19 $ 22,494,654
30,145 New Jersey EDA, (Vineland Cogeneration),
(AMT), 7.875%, 6/1/19 31,065,025
12,950 Palm Beach County, FL, (Osceola Power),
(AMT), 6.95%, 1/1/22(1) 7,394,450
6,100 Pennsylvania EDA, (Northampton
Generating), (AMT), 6.50%, 1/1/13 5,988,309
21,950 Pennsylvania EDA, (Northampton
Generating), (AMT), 6.60%, 1/1/19 21,402,347
7,000 Pennsylvania EDA, (Northampton
Generating), Junior Liens, (AMT),
6.875%, 1/1/11 7,000,490
5,000 Pennsylvania EDA, (Northampton
Generating), Junior Liens, (AMT),
6.95%, 1/1/21 5,010,150
3,917 Robbins, IL, Resource Recovery, (AMT),
0.00%, 10/15/09 1,831,403
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Cogeneration (continued)
---------------------------------------------------------------------------
$ 1,952 Robbins, IL, Resource Recovery, (AMT),
7.25%, 10/15/09 $ 1,854,207
8,439 Robbins, IL, Resource Recovery, (AMT),
7.25%, 10/15/24 7,742,625
12,578 Robbins, IL, Resource Recovery, (AMT),
8.375%, 10/15/16(1) 3,270,312
4,922 Robbins, IL, Resource Recovery, (AMT),
8.375%, 10/15/16(1) 1,279,687
---------------------------------------------------------------------------
$ 116,333,659
---------------------------------------------------------------------------
Education -- 0.8%
---------------------------------------------------------------------------
$ 4,130 California Educational Facilities
Authority, (Stanford University),
Variable Rate, 6/1/27(2) $ 3,914,786
10,770 Florida Capital Projects Financing
Authority, Student Housing Revenue,
(Florida University), 7.85%, 8/15/31 10,578,402
---------------------------------------------------------------------------
$ 14,493,188
---------------------------------------------------------------------------
Electric Utilities -- 3.7%
---------------------------------------------------------------------------
$ 12,000 Clark County, NV, (Nevada Power), (AMT),
5.90%, 10/1/30 $ 10,695,000
5,000 Connecticut Development Authority,
(Connecticut Light and Power),
Variable Rate, 9/1/28(3)(4) 4,461,600
6,500 Connecticut Development Authority,
(Western Mass Electric), Variable Rate,
9/1/28(3)(4) 5,800,080
11,000 Intermountain Power Agency, UT,
7.24%, 7/1/19(3)(4) 11,170,720
22,000 Long Island Power Authority, NY,
Electric System Revenue, 5.50%, 12/1/29 20,794,620
5,000 Matagorda County, TX, Navigation
District No.1, (Reliant Energy) ,
5.95%, 5/1/30 4,570,300
8,000 North Carolina Municipal Power Agency ,
6.50%, 1/1/20 8,112,480
---------------------------------------------------------------------------
$ 65,604,800
---------------------------------------------------------------------------
Escrowed / Prerefunded -- 14.4%
---------------------------------------------------------------------------
$ 42,500 Bakersfield, CA, (Bakersfield Assisted
Living Center), Escrowed to Maturity,
0.00%, 4/15/21 $ 11,919,125
2,200 Bexar County, TX, Health Facilities,
(St. Luke's Lutheran), Escrowed to
Maturity, 7.00%, 5/1/21 2,580,908
184,070 Colorado Health Facilities Authority,
(Liberty Heights), Escrowed to Maturity,
0.00%, 7/15/24 42,218,295
244,325 Dawson Ridge, CO, Metropolitan District
#1, Escrowed to Maturity,
0.00%, 10/1/22 56,392,653
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Escrowed / Prerefunded (continued)
---------------------------------------------------------------------------
$ 11,175 Dawson Ridge, CO, Metropolitan District
#1, Escrowed to Maturity, 0.00%, 10/1/22 $ 2,579,302
7,000 Florida Mid-Bay Bridge Authority,
Escrowed to Maturity, 6.875%, 10/1/22 8,093,680
101,555 Illinois Development Finance Authority,
(Regency Park), Escrowed to Maturity,
0.00%, 7/15/23 24,238,132
60,360 Illinois Development Finance Authority,
(Regency Park), Escrowed to Maturity,
0.00%, 7/15/25 12,704,573
4,650 Illinois HEFA, (Chicago Osteopathic
Health Systems), Escrowed to Maturity,
7.125%, 5/15/11 5,203,908
4,500 Illinois HEFA, (Chicago Osteopathic
Health Systems), Prerefunded to
11/15/19, 7.25%, 5/15/22 5,292,225
10,865 Louisiana Public Facilities Authority,
(Southern Baptist Hospitals, Inc.),
Escrowed to Maturity, 8.00%, 5/15/12 12,652,292
5,675 Maricopa County, AZ, IDA, (Place Five
and The Greenery), Escrowed to Maturity,
6.625%, 1/1/27 6,079,684
1,000 Maricopa County, AZ, IDA, Multifamily,
Escrowed to Maturity, 6.45%, 1/1/17 1,068,850
100,000 Mississippi Housing Finance Corp., SFMR,
Escrowed to Maturity, (AMT),
0.00%, 6/1/15 44,470,000
46,210 San Joaquin Hills Transportation
Corridor Agency, CA, Toll Road Bonds,
Escrowed to Maturity, 0.00%, 1/1/20 15,613,897
15,000 San Joaquin Hills Transportation
Corridor Agency, CA, Toll Road Bonds,
Escrowed to Maturity, 0.00%, 1/1/25 3,699,750
---------------------------------------------------------------------------
$ 254,807,274
---------------------------------------------------------------------------
Gas Utilities -- 0.2%
---------------------------------------------------------------------------
$ 5,250 Philadelphia, PA, Natural Gas Works,
Variable Rate, 7/1/28(3) $ 4,028,745
---------------------------------------------------------------------------
$ 4,028,745
---------------------------------------------------------------------------
General Obligations -- 1.6%
---------------------------------------------------------------------------
$ 15,000 California, Variable Rate, 5/1/26(3)(4) $ 15,356,400
15,400 Houston, TX, Independent School
District, (PSF), 4.75%, 2/15/26 13,076,448
---------------------------------------------------------------------------
$ 28,432,848
---------------------------------------------------------------------------
Health Care-Miscellaneous -- 0.3%
---------------------------------------------------------------------------
$ 3,369 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 5.50%, 12/1/36 $ 2,959,063
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Health Care-Miscellaneous (continued)
---------------------------------------------------------------------------
$ 3,613 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 5.875%, 12/1/36 $ 3,282,309
---------------------------------------------------------------------------
$ 6,241,372
---------------------------------------------------------------------------
Hospital -- 7.3%
---------------------------------------------------------------------------
$ 6,500 Arizona Health Facilities Authority,
(Phoenix Memorial Hospital),
8.20%, 6/1/21 $ 6,144,970
2,290 Berlin, MD, (Atlantic General Hospital),
8.375%, 6/1/22 2,358,494
12,600 California Health Facilities Financing
Authority, (Cedars-Sinai Medical
Center), Variable Rate, 12/1/34(3)(4) 13,110,300
22,000 Colorado Health Facilities Authority,
(Rocky Mountain Adventist),
6.625%, 2/1/22 20,742,700
2,650 Corinth and Alcorn County, MS, (Magnolia
Registered Health Center),
5.50%, 10/1/21 2,276,164
4,000 Crossville, TN, HEFA, (Cumberland
Medical Center), 6.75%, 11/1/12 4,042,200
3,530 Hawaii Department of Budget and Finance,
(Wahiawa General Hospital),
7.50%, 7/1/12 3,191,332
1,000 Illinois Health Facilities Authority,
(Holy Cross Hospital), 6.70%, 3/1/14 910,160
2,650 Illinois Health Facilities Authority,
(Holy Cross Hospital), 6.75%, 3/1/24 2,304,148
4,500 Indiana Health Facility Financing
Authority, (Memorial Hospital and Health
Care Center), 7.40%, 3/1/22 4,558,995
10,585 Louisiana Public Facilities Authority,
(General Health Systems),
6.80%, 11/1/16 10,543,189
18,000 Maricopa County, AZ, IDA, (Mayo
Foundation), Residual Certificates,
5.25%, 11/15/37 16,334,460
2,000 Marshall County, AL, (Guntersville-Arab
Medical Center), 7.00%, 10/1/09 2,036,820
2,000 Marshall County, AL, (Guntersville-Arab
Medical Center), 7.00%, 10/1/13 2,042,480
13,815 Massachusetts HEFA, (Partners Healthcare
System), 5.25%, 7/1/29 11,857,414
3,500 New Jersey Health Care Facilities
Financing Authority, (Trinitas
Hospital), 7.50%, 7/1/30 3,598,525
9,000 Philadelphia, PA, HEFA, (Graduate Health
System), 6.625%, 7/1/21(1) 3,105,000
2,250 Philadelphia, PA, HEFA, (Graduate Health
System), 7.25%, 7/1/18(1) 776,250
3,075 Prince George's County, MD, (Greater
Southeast Healthcare System),
6.375%, 1/1/23(1) 1,076,865
7,750 Rhode Island HEFA, (St. Joseph Health
Services), 5.50%, 10/1/29 5,861,790
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Hospital (continued)
---------------------------------------------------------------------------
$ 12,500 Rochester, MN, Health Care Facilities,
(Mayo Clinic),
Variable Rate, 11/15/27(3)(4) $ 11,714,875
---------------------------------------------------------------------------
$ 128,587,131
---------------------------------------------------------------------------
Housing -- 9.5%
---------------------------------------------------------------------------
$ 3,000 ABAG Finance Authority, CA, (Civic
Center Drive Apartments), (AMT),
6.375%, 9/1/32 $ 3,063,990
7,900 Arkansas Development Finance Authority,
MFMR, (Park Apartments), (AMT),
5.95%, 12/1/28 7,025,707
6,200 Bexar County, TX, Housing Finance Corp.,
(Arboretum Apartments), (AMT),
6.10%, 8/1/36 5,704,248
10,900 Bexar County, TX, Housing Finance Corp.,
(North Knoll Apartments), 5.90%, 4/1/37 9,596,033
9,350 California Housing Finance Agency,
(AMT), Variable Rate, 8/1/23(3) 9,946,062
12,000 California Statewide Communities
Development Authority, (Chesapeake Bay
Apartments), 6.00%, 6/1/32 10,704,240
37,500 California Statewide Communities
Development Authority, (Corporate Fund
for Housing), 6.50%, 12/1/29 35,938,875
3,000 California Statewide Communities
Development Authority, (Corporate Fund
for Housing), 7.25%, 12/1/34 2,988,270
4,000 California Statewide Communities
Development Authority, (Corporate Fund
for Housing), 7.50%, 12/1/34 3,984,720
6,750 California Statewide Communities
Development Authority, (Nantucket Bay
Apartments), 6.00%, 6/1/32 6,021,135
2,500 California Statewide Communities
Development Authority, (Oaks at Sunset
Apartments), 6.00%, 6/1/36 2,221,475
7,800 California Statewide Communities
Development Authority, (San Luis Bay
Village Apartments), (AMT),
6.25%, 9/1/36 7,264,998
16,000 Charter Mac Equity, TN, (AMT),
6.625%, 6/30/09 15,780,000
1,890 El Paso County, TX, Housing Finance
Corp., (San Jose Ltd.), (AMT),
6.00%, 8/1/31 1,833,073
3,750 El Paso County, TX, Housing Finance
Corp., (San Jose Ltd.), (AMT),
6.10%, 8/1/31 3,688,200
10,630 Lake Creek, CO, (Affordable Housing
Corp.), 6.25%, 12/1/23 9,893,128
1,415 Maricopa County, AZ, IDA, (National
Health Facilities II), 6.375%, 1/1/19 1,320,308
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Housing (continued)
---------------------------------------------------------------------------
$ 8,325 Minneapolis, MN, Community Development,
Multifamily Housing, (Lindsay Brothers),
6.60%, 12/1/18 $ 8,126,365
15,675 New Hampshire Housing Finance Authority,
Multifamily Housing, 6.20%, 7/1/36 15,628,445
8,300 Speedway, IN, Economic Development
Authority, (Hermitage Apartments), (AMT)
, 6.00%, 5/1/31 8,050,917
---------------------------------------------------------------------------
$ 168,780,189
---------------------------------------------------------------------------
Industrial Development Revenue -- 12.9%
---------------------------------------------------------------------------
$ 7,400 Austin, TX, (Cargoport Development LLC),
(AMT), 8.30%, 10/1/21 $ 7,652,488
2,000 California Pollution Control Financing
Authority, (Laidlaw Environmental),
(AMT), 6.70%, 7/1/07(1) 76,000
2,000 Camden County, NJ, (Holt Hauling),
(AMT), 9.875%, 1/1/21 1,981,280
6,050 Carbon County, UT, (Laidlaw
Environmental), (AMT), 7.50%, 2/1/10 5,989,318
12,450 Courtland, AL, (Champion International),
(AMT), 7.00%, 6/1/22 12,779,427
25,250 Denver, CO, City and County, (United
Airlines),
Variable Rate, 10/1/32(3)(4) 26,021,640
8,000 Effingham County, GA, Solid Waste
Disposal, (Fort James), (AMT),
5.625%, 7/1/18 7,426,960
7,530 Gulf Coast, TX, Waste Disposal,
(Champion International), (AMT),
6.875%, 12/1/28 7,714,410
6,645 Hardeman County, TN, (Correctional
Facilities Corp.), 7.75%, 8/1/17 6,858,105
6,370 Kimball, NE, EDA, (Clean Harbors),
(AMT), 10.75%, 9/1/26 6,582,631
1,600 Knox County, TN, Industrial Development
Board (Melrose Place, Ltd.),
6.875%, 12/1/14 1,536,256
7,000 Knox County, TN, Industrial Development
Board (Weisgarber Partners),
6.875%, 12/1/14 6,753,950
7,650 Little River County, AR,
(Georgia-Pacific), (AMT),
5.60%, 10/1/26 7,014,897
6,500 Los Angeles, CA, Regional Airports
Improvement Corp., (LAXFuel), (AMT),
6.50%, 1/1/32 6,559,085
5,000 McMinn County, TN, (Calhoun Newsprint -
Bowater, Inc.), (AMT), 7.40%, 12/1/22 5,170,700
10,000 Michigan Strategic Fund, (S.D. Warren),
7.375%, 1/15/22 10,381,100
15,000 Michigan Strategic Fund, (S.D. Warren),
(AMT), 7.375%, 1/15/22 15,571,650
3,500 Michigan Strategic Fund, (S.D. Warren),
(AMT), 7.375%, 1/15/22 3,633,385
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Industrial Development Revenue (continued)
---------------------------------------------------------------------------
$ 3,625 Middleboro, MA, (Read Corp.),
9.50%, 10/1/10 $ 3,755,138
17,000 New Jersey EDA, (Holt Hauling),
7.75%, 3/1/27 16,663,740
1,500 New Jersey EDA, (Holt Hauling), (AMT),
7.90%, 3/1/27 1,455,930
11,885 New Jersey EDA, RITES ,
Variable Rate, 9/15/29 10,266,976
1,000 Ohio Solid Waste Revenue, (Republic
Engineered Steels), (AMT),
9.00%, 6/1/21 197,640
22,600 Peninsula Ports Authority, VA, (Zeigler
Coal), 6.90%, 5/2/22 11,074,000
10,000 Pennsylvania, IDA, (Sun Co.), (AMT),
7.60%, 12/1/24 10,504,100
2,585 Riverdale Village, IL, (ACME Metals,
Inc.), (AMT), 7.90%, 4/1/24 2,061,538
2,000 Riverdale Village, IL, (ACME Metals,
Inc.), (AMT), 7.95%, 4/1/25 1,595,000
2,185 Savannah, GA, (Intercat-Savannah),
(AMT), 9.75%, 7/1/10 1,341,507
3,597 Savannah, GA, EDA, (Intercat-Savannah),
(AMT), 9.00%, 1/1/15 2,208,548
5,000 Skowhegan, ME, (S.D. Warren), (AMT),
6.65%, 10/15/15 4,868,900
3,500 Toole County, UT, (Laidlaw
Environmental), (AMT), 7.55%, 7/1/27(1) 133,000
18,500 Valdez, AK, (British Petroleum),
Variable Rate, 8/1/25(3)(4) 18,043,420
4,000 Yavapai County, AZ, IDA, (Citizens
Utilities), (AMT), 5.45%, 6/1/33 3,724,400
---------------------------------------------------------------------------
$ 227,597,119
---------------------------------------------------------------------------
Insured-Electric Utilities -- 3.5%
---------------------------------------------------------------------------
$ 10,000 Los Angeles, CA, Department of Water and
Power, (MBIA), 5.00%, 10/15/33 $ 9,150,000
12,500 Matagorda County, TX, Navigation
District, (Houston Lighting), (AMBAC),
(AMT), 5.125%, 11/1/28 11,268,000
16,000 Piedmont, SC, Municipal Power Agency,
(MBIA), 4.75%, 1/1/25 13,540,960
16,500 Sacramento, CA, Municipal Utility
District, (MBIA),
Variable Rate, 11/15/15(3) 16,953,750
15,350 South Carolina Public Services, (FGIC),
Variable Rate, 1/1/25(3)(4) 11,838,688
---------------------------------------------------------------------------
$ 62,751,398
---------------------------------------------------------------------------
Insured-General Obligations -- 1.3%
---------------------------------------------------------------------------
$ 14,000 Chicago, IL, Board of Education, (FGIC),
0.00%, 12/1/29 $ 2,467,360
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Insured-General Obligations (continued)
---------------------------------------------------------------------------
$ 3,950 Umatilla County, OR, School District No.
008R, (MBIA),
Variable Rate, 12/15/14(3)(4) $ 3,662,045
10,000 University of Vermont and State
Agricultural College, (MBIA),
4.75%, 10/1/38 8,219,600
10,000 West Virginia, (FGIC), 4.50%, 6/1/23 8,354,400
---------------------------------------------------------------------------
$ 22,703,405
---------------------------------------------------------------------------
Insured-Health Care Miscellaneous -- 0.2%
---------------------------------------------------------------------------
$ 3,500 Massachusetts HEFA, (Harvard Pilgrim
Health), (FSA), 5.00%, 7/1/28 $ 2,995,895
---------------------------------------------------------------------------
$ 2,995,895
---------------------------------------------------------------------------
Insured-Hospital -- 1.3%
---------------------------------------------------------------------------
$ 15,210 Maryland HEFA, (Medlantic/Helix Issue),
(AMBAC), 5.25%, 8/15/38 $ 13,645,043
9,220 Tyler, TX, Health Facility Development
Corp., (East Texas Medical Center),
(FSA), 5.375%, 11/1/27 8,624,296
---------------------------------------------------------------------------
$ 22,269,339
---------------------------------------------------------------------------
Insured-Housing -- 0.4%
---------------------------------------------------------------------------
$ 7,525 SCA Multifamily Mortgage, Industrial
Development Board, Hamilton County, TN,
(FSA), (AMT), 7.35%, 1/1/30 $ 8,059,350
---------------------------------------------------------------------------
$ 8,059,350
---------------------------------------------------------------------------
Insured-Industrial Development Revenue -- 0.6%
---------------------------------------------------------------------------
$ 11,950 Chicago, IL, (The Peoples Gas, Light and
Coke), (AMBAC), (AMT),
Variable Rate, 12/1/23(3)(4) $ 11,587,079
---------------------------------------------------------------------------
$ 11,587,079
---------------------------------------------------------------------------
Insured-Special Tax Revenue -- 1.0%
---------------------------------------------------------------------------
$ 3,415 Regional Transportation Authority, LA,
(FGIC), 0.00%, 12/1/12 $ 1,802,335
10,935 Regional Transportation Authority, LA,
(FGIC), 0.00%, 12/1/15 4,737,370
10,000 Regional Transportation Authority, LA,
(FGIC), 0.00%, 12/1/21 2,931,800
7,000 Utah Municipal Finance Corp., Local
Government Revenue, (FSA),
0.00%, 3/1/10 4,335,380
6,000 Utah Municipal Finance Corp., Local
Government Revenue, (FSA),
0.00%, 3/1/11 3,496,140
---------------------------------------------------------------------------
$ 17,303,025
---------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Insured-Transportation -- 4.9%
---------------------------------------------------------------------------
$ 5,000 Atlanta, GA, Metropolitan Rapid
Transportation Authority, (MBIA),
Variable Rate, 7/1/20(3)(4) $ 4,301,100
20,930 Central Puget Sound, WA, Transportation
Authority, (FGIC), 4.75%, 2/1/28 17,631,223
12,000 Florida Turnpike Authority, (FSA) ,
4.50%, 7/1/28 9,814,080
8,750 Manchester Airport, NH, (MBIA),
4.50%, 1/1/28 7,023,275
12,000 Massachusetts Turnpike Authority,
Metropolitan Highway System, (MBIA),
5.00%, 1/1/37 10,511,280
22,100 Metropolitan Washington, DC Airport
Authority, (MBIA), 5.75%, 10/1/21 22,149,946
10,000 Ohio Turnpike Commission, (FGIC),
4.50%, 2/15/24 8,263,500
8,000 Ohio Turnpike Commission, (FGIC),
4.75%, 2/15/28 6,848,080
---------------------------------------------------------------------------
$ 86,542,484
---------------------------------------------------------------------------
Insured-Water and Sewer -- 4.9%
---------------------------------------------------------------------------
$ 31,125 Atlanta, GA, Water and Wastewater,
(FGIC), 5.00%, 11/1/38 $ 27,295,380
20,980 Chicago, IL, Wastewater Transmission,
(MBIA) , 0.00%, 1/1/26 4,702,457
14,000 Fulton County, GA, Water and Sewer,
(FGIC), 4.75%, 1/1/28 12,023,340
7,150 Harrisburg, PA, Water Revenue Bonds,
(FGIC), Variable Rate, 8/11/16(3) 6,729,938
23,015 New York City, NY, Municipal Water
Finance Authority, (Water and Sewer
System), (FGIC), 4.75%, 6/15/31 19,421,898
9,000 Tampa Bay, FL, Water Utility System,
(FGIC), 4.75%, 10/1/27 7,763,490
10,500 Upper Occoquan Sewage Authority, VA,
(MBIA), 4.75%, 7/1/29 8,920,170
---------------------------------------------------------------------------
$ 86,856,673
---------------------------------------------------------------------------
Miscellaneous -- 0.3%
---------------------------------------------------------------------------
$ 10,200 Orange County, NC, (Community Activity
Corp.), 8.00%, 3/1/24(1) $ 4,539,000
1,600 Pittsfield Township, MI, EDC, (Arbor
Hospice), 7.875%, 8/15/27 1,524,576
---------------------------------------------------------------------------
$ 6,063,576
---------------------------------------------------------------------------
Nursing Home -- 7.9%
---------------------------------------------------------------------------
$ 12,970 Bell County, TX, (Riverside Healthcare,
Inc. - Normandy Terrace), 9.00%, 4/1/23 $ 14,264,925
3,260 Collier County, FL, IDA, (Beverly
Enterprises), 10.75%, 3/1/03 3,401,614
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Nursing Home (continued)
---------------------------------------------------------------------------
$ 4,815 Delaware County, PA, (Mainline -
Haverford Nursing and Rehabilitation
Centers), 9.00%, 8/1/22 $ 5,217,004
2,150 Hillsborough County, FL, IDA, (Tampa Bay
Retirement Center), 0.00%, 6/1/25 1,056,231
10,015 Hillsborough County, FL, IDA, (Tampa Bay
Retirement Center), 7.00%, 6/1/25 9,096,224
10,000 Indianapolis, IN, (National Benevolent
Association - Robin Run Village),
7.625%, 10/1/22 10,323,800
3,475 Lackawanna County, PA, IDA, (Edella
Street Associates), 8.875%, 9/1/14 3,640,966
2,415 Luzerne County, PA, IDA, (River Street
Associates), 8.75%, 6/15/07 2,527,128
13,250 Massachusetts IFA, (Age Institute of
Massachusetts), 8.05%, 11/1/25 13,725,145
11,745 Mississippi Business Finance Corp.,
(Magnolia Healthcare), 7.99%, 7/1/25 11,717,517
6,750 Missouri HEFA, (Bethesda Health Group of
Saint Louis, Inc.), 6.625%, 8/15/05 6,836,333
14,000 Missouri HEFA, (Bethesda Health Group of
Saint Louis, Inc.), 7.50%, 8/15/12 14,704,760
12,155 Montgomery, PA, IDA, (Advancement of
Geriatric Health Care Institute),
8.375%, 7/1/23 12,491,572
4,820 New Jersey EDA, (Claremont Health
System, Inc.), 9.10%, 9/1/22 5,108,284
5,915 New Jersey EDA, (Victoria Health Corp.),
7.75%, 1/1/24 6,065,123
3,500 Orange County, FL, Health Facilities
Authority, (Westminster Community Care)
, 6.75%, 4/1/34 3,085,565
4,805 Sussex County, DE, (Delaware Health
Corp.), 7.50%, 1/1/14 4,807,258
4,900 Sussex County, DE, (Delaware Health
Corp.), 7.60%, 1/1/24 4,916,954
2,405 Westmoreland, PA, (Highland Health
Systems, Inc.), 9.25%, 6/1/22 2,548,386
4,000 Wisconsin HEFA, (Wisconsin Illinois
Senior Housing), 7.00%, 8/1/29 3,705,080
445 Wisconsin HEFA, (Wisconsin Illinois
Senior Housing) , 8.00%, 8/1/02 444,978
---------------------------------------------------------------------------
$ 139,684,847
---------------------------------------------------------------------------
Senior Living / Life Care -- 3.5%
---------------------------------------------------------------------------
$ 14,700 Albuquerque, NM, Retirement Facilities,
(La Vida Liena Retirement Center),
5.75%, 12/15/28 $ 11,640,783
10,000 Albuquerque, NM, Retirement Facilities,
(La Vida Liena Retirement Center),
6.60%, 12/15/28 8,592,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Senior Living / Life Care (continued)
---------------------------------------------------------------------------
$ 11,570 De Kalb County, GA, Private Hospital
Authority, (Atlanta, Inc.),
8.50%, 3/1/25(5) $ 5,900,700
15,000 Louisiana HFA, (HCC Assisted Living
Group 1), (AMT), 9.00%, 3/1/25 15,727,650
12,375 North Miami, FL, Health Facilities
Authority, (Imperial Club),
6.75%, 1/1/33 10,587,060
800 North Miami, FL, Health Facilities
Authority, (Imperial Club),
9.00%, 1/1/12 800,536
5,330 Ridgeland, MS, Urban Renewal, (The
Orchard), 7.75%, 12/1/15 5,516,017
2,565 South Dakota HEFA, (Prairie Lakes Health
Care), 7.25%, 4/1/22 2,600,243
---------------------------------------------------------------------------
$ 61,365,489
---------------------------------------------------------------------------
Special Tax Revenue -- 0.8%
---------------------------------------------------------------------------
$ 8,850 South Orange County, CA, Public
Financing Authority, DRIVERS,
Variable Rate, 8/15/15(3)(4) $ 9,006,911
5,125 University Square Community Development
District, FL, 6.75%, 5/1/20 5,088,869
---------------------------------------------------------------------------
$ 14,095,780
---------------------------------------------------------------------------
Transportation -- 2.2%
---------------------------------------------------------------------------
$ 5,750 Connector 2000 Association, Inc., South
Carolina Toll Road, (Southern
Connector), 5.25%, 1/1/23 $ 4,496,155
4,735 Denver, CO, City and County Airport
Revenue, (AMT), 7.50%, 11/15/23 5,169,484
20,505 Massachusetts Turnpike Authority,
6.39%, 1/1/23(3)(4) 17,892,048
9,500 Massachusetts Turnpike Authority,
6.869%, 1/1/20(3)(4) 8,368,075
3,000 Tri-County, OR, Metropolitan
Transportation District,
Variable Rate, 8/1/19(3)(4) 2,587,110
---------------------------------------------------------------------------
$ 38,512,872
---------------------------------------------------------------------------
Water and Sewer -- 2.4%
---------------------------------------------------------------------------
$ 10,960 California Water Resources, (Central
Valley), Variable Rate, 12/1/24(3)(4) $ 10,287,275
10,135 California Water Resources, (Central
Valley), Variable Rate, 12/1/28(3)(4) 9,181,601
10,000 Houston, TX, Water and Sewer System,
4.75%, 12/1/24 8,521,200
805 Metropolitan Southern California
Waterworks, 3.05%, 7/1/21 805,000
9,400 Metropolitan Southern California
Waterworks,
Variable Rate, 7/1/27(3)(4) 7,471,308
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
---------------------------------------------------------------------------
Water and Sewer (continued)
---------------------------------------------------------------------------
$ 7,000 Metropolitan Water District, CA,
(Southern California Waterworks),
Variable Rate, 7/1/27(3)(4) $ 5,564,020
---------------------------------------------------------------------------
$ 41,830,404
---------------------------------------------------------------------------
Total Tax-Exempt Investments -- 98.2%
(identified cost $1,732,006,176) $1,738,781,494
---------------------------------------------------------------------------
Other Assets, Less Liabilities -- 1.8% $ 31,203,795
---------------------------------------------------------------------------
Net Assets -- 100.0% $1,769,985,289
---------------------------------------------------------------------------
</TABLE>
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
At September 30, 2000, the concentration of the Portfolio's investments in
the various states, determined as a percentage of net assets, is as follows:
<TABLE>
<S> <C>
California 12.2%
Others, representing less than 10% individually 86.0%
</TABLE>
The Portfolio invests primarily in debt securities issued by municipali-
ties. 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, 2000, 18.5% of the securities in the portfolio
of investments are backed by bond insurance of various financial institutions
and financial guaranty assurance agencies. The aggregate percentage insured
by financial institutions ranged from 2.1% to 7.9% of total investments.
(1) Non-income producing security.
(2) Security has been issued as a leveraged inverse floater bond.
(3) Security has been issued as an inverse floater bond.
(4) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(5) The Portfolio is accruing only partial interest on this security.
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 2000
<S> <C>
Assets
--------------------------------------------------------
Investments, at value (identified cost,
$1,732,006,176) $1,738,781,494
Cash 23,423
Receivable for investments sold 50,000
Interest receivable 31,404,745
--------------------------------------------------------
TOTAL ASSETS $1,770,259,662
--------------------------------------------------------
Liabilities
--------------------------------------------------------
Demand note payable $ 200,000
Payable to affiliate for Trustees' fees 472
Accrued expenses 73,901
--------------------------------------------------------
TOTAL LIABILITIES $ 274,373
--------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $1,769,985,289
--------------------------------------------------------
Sources of Net Assets
--------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $1,763,209,971
Net unrealized appreciation (computed on
the basis of identified cost) 6,775,318
--------------------------------------------------------
TOTAL $1,769,985,289
--------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
SEPTEMBER 30, 2000
<S> <C>
Investment Income
------------------------------------------------------
Interest $128,180,914
------------------------------------------------------
TOTAL INVESTMENT INCOME $128,180,914
------------------------------------------------------
Expenses
------------------------------------------------------
Investment adviser fee $ 8,345,694
Trustees fees and expenses 34,841
Legal and accounting services 133,558
Custodian fee 319,515
Miscellaneous 230,505
------------------------------------------------------
TOTAL EXPENSES $ 9,064,113
------------------------------------------------------
Deduct --
Reduction of custodian fee $ 301,583
------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 301,583
------------------------------------------------------
NET EXPENSES $ 8,762,530
------------------------------------------------------
NET INVESTMENT INCOME $119,418,384
------------------------------------------------------
Realized and Unrealized Gain (Loss)
------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $(29,265,457)
------------------------------------------------------
NET REALIZED LOSS $(29,265,457)
------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $(16,870,231)
------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $(16,870,231)
------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS $(46,135,688)
------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 73,282,696
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
<S> <C> <C>
--------------------------------------------------------------------------------
From operations --
Net investment income $ 119,418,384 $ 136,988,870
Net realized gain (loss) (29,265,457) 31,760,688
Net change in unrealized appreciation
(depreciation) (16,870,231) (280,608,085)
--------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 73,282,696 $ (111,858,527)
--------------------------------------------------------------------------------
Capital transactions --
Contributions $ 184,624,795 $ 375,986,994
Withdrawals (613,467,015) (478,708,432)
--------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ (428,842,220) $ (102,721,438)
--------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS $ (355,559,524) $ (214,579,965)
--------------------------------------------------------------------------------
Net Assets
--------------------------------------------------------------------------------
At beginning of year $ 2,125,544,813 $ 2,340,124,778
--------------------------------------------------------------------------------
AT END OF YEAR $ 1,769,985,289 $ 2,125,544,813
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------
Ratios (As a percentage of
average daily net assets):
Expenses 0.48% 0.45% 0.45% 0.52% 0.49%
Expenses after custodian
fee reduction 0.47% 0.43% 0.43% 0.52% 0.48%
Net investment income 6.37% 5.92% 5.93% 6.51% 6.65%
Portfolio Turnover 41% 60% 28% 17% 19%
---------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S
OMITTED) $1,769,985 $2,125,545 $2,340,125 $2,181,615 $2,212,478
---------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-------------------------------------------
National Municipals Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940, as amended, 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 Valuation -- Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts listed on the
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 accretion of discount when required
for Federal income tax purposes.
C Federal Taxes -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally
must satisfy the applicable source of income and diversification requirements
(under the Internal Revenue Code) in order for its investors to satisfy them.
The Portfolio will allocate at least annually among its investors each
investor's distributive share of the Portfolio's net taxable (if any) and
tax-exempt investment income, net realized capital gains, and any other items
of income, gain, loss, deduction or credit. Interest income received by the
Portfolio on investments in municipal bonds, which is excludable from gross
income under the Internal Revenue Code, will retain its status as income
exempt from federal income tax when allocated to the Portfolio's investors.
The portion of such interest, if any, earned on private activity bonds issued
after August 7, 1986 may be considered a tax preference item for investors.
D Financial Futures Contracts -- Upon 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 for
both hedging against anticipated future changes in interest rates and
investment purposes. Should interest rates move unexpectedly, the Portfolio
may not achieve the anticipated benefits of the financial futures contracts
and may realize a loss.
E Options on Financial Futures Contracts -- Upon the purchase of a put option
on a financial futures contract by the Portfolio, the premium paid is
recorded as an investment, the value of which is marked-to-market daily. When
a purchased option expires, the Portfolio will realize a loss in the amount
of the cost of the option. When the Portfolio enters into a closing sale
transaction, the Portfolio will realize a gain or loss depending on whether
the sales proceeds from the closing sale transaction are greater or less than
the cost of the option. When the Portfolio exercises a put option, settlement
is made in cash. The risk associated with purchasing put options is limited
to the premium originally paid.
F Legal Fees -- Legal fees and other related expenses incurred as part of
negotiations of the terms and requirements of capital infusions, or that are
expected to result in the restructuring of or a plan of reorganization for an
investment are recorded as realized losses. Ongoing expenditures to protect
or enhance an investment are treated as operating expenses.
G When-issued and Delayed Delivery Transactions -- The Portfolio may engage in
when-issued and delayed delivery transactions. The Portfolio records
when-issued securities on trade date and maintains security positions such
that sufficient liquid assets will be available to make payments for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked-to-market daily and begin earning interest on
settlement date.
H Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported
25
<PAGE>
NATIONAL MUNICIPALS PORTFOLIO AS OF SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of income and expense during the reporting period.
Actual results could differ from those estimates.
I Other -- Investment transactions are accounted for on a trade date basis.
Realized gains and losses are computed based on the specific identification
of the securities sold.
J Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash
balance the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reported as a reduction of
total expenses in the Statement of Operations.
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 gross income (i.e., income other than
gains from the sale of securities). For the year ended September 30, 2000,
the fee was equivalent to 0.45% of the Portfolio's average daily net assets
for such period and amounted to $8,345,694. Except as to Trustees of the
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to the Portfolio out of such
investment adviser fee. Trustees of the Portfolio 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, 2000, no significant
amounts have been deferred.
Certain officers and Trustees of the Portfolio are officers of the above
organizations.
3 Investments
-------------------------------------------
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $763,508,479 and $1,116,383,302,
respectively, for the year ended September 30, 2000.
4 Federal Income Tax Basis of Investments
-------------------------------------------
The cost and unrealized appreciation/depreciation in the value of the
investments owned at September 30, 2000, as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $1,732,166,857
--------------------------------------------------------
Gross unrealized appreciation $ 90,413,630
Gross unrealized depreciation (83,798,993)
--------------------------------------------------------
NET UNREALIZED APPRECIATION $ 6,614,637
--------------------------------------------------------
</TABLE>
5 Line of Credit
-------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $150 million unsecured line of credit agreement
with a group of banks. The Portfolio may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above either the Eurodollar rate or federal funds rate. In addition, a
fee computed at an annual rate of 0.10% on the daily unused portion of the
line of credit is allocated among the participating portfolios and funds at
the end of each quarter. At September 30, 2000, the Portfolio had a balance
outstanding pursuant to this line of credit of $200,000. The Portfolio did
not have any significant borrowings or allocated fees during the year
ended September 30, 2000.
6 Financial Instruments
-------------------------------------------
The Portfolio regularly trades in financial instruments with off-balance
sheet risk in the normal course of its investing activities to assist in
managing exposure to various market risks. These financial instruments
include futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment a Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
At September 30, 2000, there were no outstanding obligations under these
financial instruments.
26
<PAGE>
NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS
OF EATON VANCE MUNICIPALS TRUST
---------------------------------------------
We have audited the accompanying statement of assets and liabilities of Eaton
Vance National Municipals Fund (one of the series constituting Eaton Vance
Municipals Trust) as of September 30, 2000, and the related statement of
operations for the year then ended, the statements of changes in net assets for
the years ended September 30, 2000 and 1999 and the financial highlights for
each of the years in the five-year period ended September 30, 2000. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Eaton Vance
National Municipals Fund at September 30, 2000, and the results of its
operations, the changes in its net assets, and its financial highlights for the
respective stated periods in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
November 3, 2000
27
<PAGE>
EATON VANCE NATIONAL MUNICIPALS FUND AS OF SEPTEMBER 30, 2000
INVESTMENT MANAGEMENT
EATON VANCE NATIONAL MUNICIPALS FUND
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and Trustee
Robert B. MacIntosh
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate School
of Business Administration
Norton H. Reamer
President, Unicorn
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
NATIONAL MUNICIPALS PORTFOLIO
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and Trustee
Robert B. MacIntosh
Vice President
Thomas M. Metzold
Vice President and Portfolio Manager
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate School of
Business Administration
Norton H. Reamer
President, Unicorn
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
28
<PAGE>
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<PAGE>
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<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
INVESTMENT ADVISER OF NATIONAL MUNICIPALS PORTFOLIO
BOSTON MANAGEMENT AND RESEARCH
The Eaton Vance Building
255 State Street
Boston, MA 02109
ADMINISTRATOR OF EATON VANCE NATIONAL MUNICIPALS FUND
EATON VANCE MANAGEMENT
The Eaton Vance Building
255 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
EATON VANCE DISTRIBUTORS, INC.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
PFPC, INC.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02904-9653
(800) 262-1122
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
200 Berkeley Street
Boston, MA 02116-5022
EATON VANCE MUNICIPALS TRUST
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
-------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution
plan, sales charges and expenses. Please read the prospectus carefully before
you invest or send money.
-------------------------------------------------------------------------------
448-11/00 HMSRC
