[COVER]
Investment Adviser of National
Limited Maturity Municipals Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Administrator of EV Traditional National
Limited Maturity Municipals Fund
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
Custodian
Investors Bank & Trust Company
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
Transfer Agent
First Data Investor Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
This report must be preceded or accompanied by a
current prospectus which contains more complete
information on the Fund, including its
distribution plan, sales charges and expenses.
Please read the prospectus carefully before you
invest or send money.
EV Traditional National
Limited Maturity Municipals Fund
24 Federal Street
Boston, MA 02110 T-LNASRC-5/96
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[Eaton Vance logo:
Ornamental doorway with arch over door]
EV Traditional
National
Limited Maturity
Municipals Fund
[PHOTO: Front porch]
Annual
Shareholder Report
March 31, 1996
<PAGE>
To Shareholders
EV Traditional National Limited Maturity Municipals Fund
had a total return of 5.3% for the year ended March 31, 1996.
That return was the result of a rise in net asset value per share
to $9.96 on March 31, 1996 from $9.93 on March 31, 1995,
and the reinvestment of $0.491 per share in dividends. That
return does not include the Fund's maximum current sales
charge. Based on the Fund's most recent dividend and a net
asset value of $9.96, the Fund had a distribution rate of 4.92%
at March 31, 1996. To equal that in a taxable investment, a
couple paying the 36% federal tax rate would need a yield of
7.69%.
Bond yields fell sharply in 1995, gaining back most of the
losses of the previous year. Twice during the year, the Federal
Reserve lowered short-term interest rates, further buoying the
market. Realistically, it may be difficult for the market to
match last year's gains. Still, there are many reasons to be
optimistic about the municipal bond market in 1996 and to
believe that an investment in municipal bonds represents very
good value and should be a part of a wise investor's fixed-
income portfolio.+
The U.S. economy continues in its favorable pattern of slow
growth and low inflation, which is a good environment for the
municipal bond market.
During 1995 the municipal market underperformed the taxable
market because of concern about the possible passage of major
tax reform legislation. While such concerns are likely to
persist this year, we at Eaton Vance continue to believe there
is little chance that significant reform, in the form of a flat tax,
consumption tax or value-added tax, will be enacted in the
forseeable future. While flat tax and other reform proposals
will be debated, especially during the Presidential campaigns,
they are so controversial and sweeping that we believe the
process needed to secure agreement and subsequent passage of
a plan is, at best, years away.
At the same time, the Presidential campaigns could provide
impetus to proposals that should prove favorable to the bond
market. Any positive result in this area is likely to provide
additional momentum to the bond market through fiscal
restraint and, therefore, lower yields.
These factors have combined to produce a significant
opportunity for municipal bond investors. To the extent that
fears about tax reform depress prices, investors can enter the
market at a discount. To the extent that budget reform
measures lessen the Federal government's borrowing needs,
investors may be expected to reap the rewards through a
strengthening bond market. As always, achieving investment
rewards may depend on an investor's willingness to adopt a
long-term investment horizon. That's why we at Eaton Vance
believe patience is a key to successful investing.
Sincerely,
[Photo of Thomas J. Fetter}
/s/ Thomas J. Fetter
Thomas J. Fetter
President
May 19, 1996
+ A portion of the Portfolio's income could be subject to Federal
alternative minimum tax.
1
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Management Discussion
An interview with Raymond E. Hender, Vice President, and Portfolio
Manager of the National Limited Maturity Municipals Portfolio.
Q. Ray, interest rates have been on a rollercoaster in the past year. What's
behind the fluctuations in interest rates?
A. This has been an extraordinarily volatile period for the bond markets in
general. From March through December 1995, the bond market enjoyed a
significant decline in interest rates as the economy showed signs of weakness
and the Federal Reserve pursued an accommodative monetary policy. In
addition, the markets held out hope throughout 1995 that the budget
negotiations would produce an agreement aimed at significant deficit
reduction.
[PHOTO: Raymond E. Hender]
Raymond E. Hender
After the first of the year, it appeared that the economy was somewhat
stronger than expected, which pushed rates a little higher. In addition, the
budget talks ended in a political stalemate. Although economic growth has
remained relatively modest for quite some time now -- in the 2.5% range --
those developments contributed to a more defensive market in the first
quarter.
Q. How has the intermediate sector of the market responded to the rate changes?
A. The intermediate sector has undergone significantly less volatility than the
longer-term market. Predictably, the intermediate segment of the market
underperformed during the long rate decline, but has outperformed during the
rate hike of the past several months. Importantly, the intermediate universe
has performed in line with expectations, which makes it very attractive to
conservative investors who want to limit their exposure to market turbulence.
Q. Did market volatility affect your strategy to any great degree?
A. With a flat-to-mildly lower interest rate outlook, we have increased the
Portfolio's average maturity and duration over the past six months to reflect
a longer-term positive outlook on the market. From the onset, the Portfolio
has pursued a conservative investment style, and hence, was relatively
well-positioned when the market declined in the first quarter of this year.
We have remained consistent with our prospectus mandate and have maintained a
duration in the middle of our allowable duration range -- around 6-to-6.5
years at March 31, 1996. That has limited the impact of rising rates on the
Portfolio.
Q. Where else have you focused?
A. We've found some good values in the non-rated segment of the intermediate
market. Eaton Vance has increasingly made the non-rated sector a specialty
in recent years. These bonds require an especially rigorous
2
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analysis, but we have been able to find selective situations that added
incrementally to current yield as well as afforded the Portfolio some
potential for capital appreciation.
We've also focused on consolidating positions within the Portfolio. In so
doing, we have increased the average size of our holdings, while reducing the
total number of holdings. Consolidating holdings helps improve liquidity, an
important element in structuring the Portfolio, especially in periods of
volatility. And finally, we sought to take advantage of the recent market
correction as an opportunity to improve the quality of the Portfolio.
Q. Is there a lesson that investors can learn from the past year's volatility?
A. I believe that in today's markets, discipline is more important than ever.
There are many influences on the markets, both domestically and abroad, that,
while unrelated to the fundamentals of the bond market, nonetheless exert a
short-term impact. In such a climate, the unsophisticated investor may be
cowed into abandoning a reasonable market view by these short-term
influences. I believe it is important to remain focused on fundamentals.
That's the approach that we take in the Portfolio and I think it's especially
appropriate today.
Q. So, you feel there is still good value in bonds?
A. Absolutely. From a long-term point of view, bonds currently offer very high
real rates of return -- that is, yield minus the rate of inflation. For
example, the typical 5-year AAA-rated municipal bond yielded 4.38% at March
31, 1996 according to Bloomberg Financial. For a taxpayer in the 36% tax
bracket, that represents a taxable equivalent yield of 6.84%. With inflation
running at 2.3%, the real rate of return is therefore more than 4.5%. Given
the fact that real rates of return on U.S. Treasury bonds have historically
been in the 3% range, the recent benchmarks suggest that municipal bonds have
uncommon value.
Q. Looking ahead, what is your outlook for the intermediate-term market?
A. We remain positive on the bond market over the long term. First quarter GDP
grew at a 2.8% annualized rate, according to preliminary Commerce Department
figures. While that was above estimates, the economy is far from booming.
However, as we've seen in the first quarter of 1996, there may be bumps along
the way. That draws many investors to the intermediate sector, which
typically garners a good percentage of the yield of long-term bonds, with
roughly half of their volatility. Naturally, past performance does not
guarantee future trends. But for investors whose primary investment goals
include tax-free income and relative stability of principal, there is a
continuing strong case to be made for intermediate-term municipal bonds.
3
<PAGE>
[Silhouette of "Capitol building"]
Your investment at work
Grand Ledge, MI
General Obligations
Michigan School District
This issue is dedicated to public school funding in this small community west of
Lansing. Rated Aaa/AAA by Moody's and S&P, the bond came to market at a
significant premium, and as a premium bond, affords the Portfolio a measure of
protection in a rising interest rate environment. The bond was especially
attractive due to its sound credit quality and coupon of 7.875%. However,
because the bond already trades at its call price, it is likely to maintain low
volatility, a strong asset in an uncertain market.
*******************************************************************************
Portfolio Overview
Based on market value as of March 31, 1996
Number of issues 86
Average quality A+
Investment grade 82.6%
Effective maturity 8.55 years
Largest sectors:
General obligations 15.9%
Education revenue 11.1
Industrial development revenue 10.2
Insured general obligations 9.0*
Utility revenue 7.8
* Private insurance does not remove the market risks that are associated
with these investments.
*******************************************************************************
The National Economy:
With the economy showing signs of weakness and inflation well under
control, the Federal Reserve pursued a generally accommodative
monetary policy through much of the year. However, in the first quarter
of 1996, the economy appeared to grow at a faster rate than anticipated,
with Gross Domestic Product rising 2.8%, according to preliminary
Commerce Department figures. Job creation also gathered steam in the
first quarter, which rattled the bond market and sent benchmark 30-year
U.S. Treasury yields close to 7% from 5.5% at year end. The newfound
economic strength was particularly impressive in light of the government
shutdown, several severe winter blizzards, and the widespread strikes at
General Motors plants. Interestingly, despite the economic surge, there
was little sign of renewed inflation. Continuing plentiful labor supply,
the effects of global competition, and relatively subdued spending
among consumers have combined to keep inflation at bay. Meanwhile,
the economic picture was muddled somewhat by weak corporate profit
growth, with first quarter earnings climbing just 7.3%. That represented
the weakest profit picture in four years and suggests that the profit
growth tied to downsizing and cost reductions may have hit a cyclical
peak.
4
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********************************* [LINE CHART] ********************************
Comparison of Change in Value of a $10,000 Investment
in EV Traditional National Limited Maturity Municipals
Fund (Including Sales Charge) and the Lehman Brothers
7-Year Municipal Bond Index
From June 30, 1994, through March 31, 1996
AVG. ANNUAL RETURNS 1 Year Life of Fund*
With maximum
2.5% sales charge 2.7% 3.4%
Without maximum
sales charge 5.3% 4.8%
date Nat. Ltd. Mty. NAV Lehman 7 Yr. Muni Bond T. Nat. Ltd. Mty. offering
6/94 10000 10000 9753
7/94 10133 10141 9883
8/94 10165 10194 9914
9/94 10074 10096 9825
10/94 9983 9995 9737
11/94 9881 9849 9637
12/94 10037 9999 9790
1/95 10205 10186 9953
2/95 10369 10415 10113
3/95 10434 10524 10176
4/95 10445 10552 10187
5/95 10626 10833 10363
6/95 10594 10823 10333
7/95 10692 10961 10428
8/95 10779 11090 10513
9/95 10833 11132 10565
10/95 10931 11229 10662
11/95 11040 11353 10767
12/95 11096 11413 10822
1/96 11163 11524 10887
2/96 11107 11485 10833
3/96 10988 11372 10716
Lehman Brothers
7-Year Municipal
Bond Index _____ _____ ______ ______ $11,372
EV Traditional National
Limited Maturity
Municipals Fund
(without max.
sales charge) _____ _____ ______ ______ $10,988
EV Traditional National
Limited Maturity
Municipals Fund
(with max. sales charge) _____ _____ ______ ______ $10,716
Past performance is not indicative of future results. Investment
returns and principal will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
Source: Towers Data Systems, Bethesda, MD. *Investment operations
commenced 6/3/94. +Index information is available only at
month-end; therefore, the line comparison begins at the next
month-end following the commencement of the Fund's investment
operations.
*******************************************************************************
Fund performance
In accordance with guidelines issued by the Securities and Exchange
Commission, we are including a performance chart that compares your
Fund's total return with that of a broad-based investment index. The
lines on the chart represent the total returns of $10,000 hypothetical
investments in EV Traditional National Limited Maturity Municipals
Fund with and without the maximum sales charge, and the unmanaged
Lehman Brothers 7-Year Municipal Bond Index.
The total return figures
The red line on the chart represents the Fund's performance at net asset
value. The Fund's total return figure reflects Fund expenses and
transaction costs, and assumes the reinvestment of income dividends and
capital gain distributions.
The black line represents the performance of the Lehman Brothers 7-
Year Municipal Bond Index, an unmanaged index of high yield bonds.
The Index's total return does not reflect any commissions or expenses
that would be incurred if an investor individually purchased or sold the
securities represented in the Index.
5
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EV Traditional National Limited Maturity Municipals Fund
Financial Statements
Statement of Assets and Liabilities
March 31, 1996
Assets:
Investment in National Limited
Maturity Municipals
Portfolio, at value (Note 1A)
(identified cost, $9,947,277) $ 9,958,069
Receivable for Fund shares sold 9,121
Receivable from the Administrator (Note 4) 54,321
Deferred organization expenses (Note 1D) 22,748
----------
Total assets $10,044,259
Liabilities:
Dividends payable $33,712
Payable to affiliate --
Trustees' fee 41
Accrued expenses 7,970
----
Total liabilities 41,723
----------
Net Assets for 1,004,218 shares
of beneficial
interest outstanding $10,002,536
==========
Sources of Net Assets:
Paid-in capital $ 9,887,531
Accumulated net realized gain on
investment and financial
futures transactions
(computed on the basis of
identified cost) 103,957
Accumulated undistributed net
investment income 256
Unrealized appreciation of
investments from
Portfolio (computed on
the basis of identified cost) 10,792
----------
Total $10,002,536
==========
Net Asset Value and Redemption Price Per Share
($10,002,536 / 1,004,218 shares of beneficial
interest outstanding) $ 9.96
==========
Computation of Offering Price Per Share
offering price per share (100/97.50 of $9.96) $10.22
==========
On sales of $100,000 or more, the offering price is
reduced.
See notes to financial statements
6
<PAGE>
Statement of Operations
For the Year Ended March 31, 1996
Investment Income (Note 1B):
Interest income allocated from Portfolio $518,667
Expenses allocated from Portfolio (51,628)
-------
Net investment income from Portfolio $467,039
Expenses --
Compensation of Trustees not members of the
Administrator's organization $ 571
Custodian fees (Note 4) 3,002
Service fees (Note 5) 577
Transfer and dividend disbursing agent fees 6,703
Printing and postage 26,112
Legal and accounting services 4,009
Registration costs 18,702
Amortization of organization expenses (Note 1D) 9,031
Miscellaneous 2,263
-----
Total expenses $ 70,970
Deduct --
Allocation of expenses to the Administrator (Note
4) 54,321
-----
Net expenses 16,649
-------
Net investment income $450,390
-------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) from Portfolio --
Investment transactions (identified cost basis) $138,120
Financial futures contracts (41,802)
-----
Net realized gain $ 96,318
Change in unrealized depreciation of investments (74,228)
-------
Net realized and unrealized gain $ 22,090
-------
Net increase in net assets from operations $472,480
=======
See notes to financial statements
7
<PAGE>
Statements of Changes in Net Assets
Year Ended March 31,
-------------------------
1996 1995*
---------- -----------
Increase (Decrease) in Net Assets:
From operations --
Net investment income $ 450,390 $ 71,079
Net realized gain on investments 96,318 7,639
Change in unrealized appreciation
(depreciation) of investments (74,228) 85,020
-------- ---------
Net increase in net assets from operations $ 472,480 $ 163,738
-------- ---------
Distributions to shareholders (Note 2) --
From net investment income $ (449,878) $ (71,079)
In excess of net investment income -- (679)
-------- ---------
Total distributions to shareholders $ (449,878) $ (71,758)
-------- ---------
Transactions in shares of beneficial interest
(Note 3) --
Proceeds from sales of shares $ 6,036,915 $7,741,061
Net asset value of shares issued to
shareholders in payment of distributions
declared 62,436 10,456
Cost of shares redeemed (3,914,720) (48,204)
-------- ---------
Increase in net assets from Fund share
transactions $ 2,184,631 $7,703,313
-------- ---------
Net increase in net assets $ 2,207,233 $7,795,293
Net Assets:
At beginning of year 7,795,303 10
-------- ---------
At end of year (including accumulated
undistributed (distributions in excess of) net
investment income of $256 and ($679),
respectively) $10,002,536 $7,795,303
======== =========
*For the period from the start of business, June 3, 1994, to March 31, 1995.
See notes to financial statements
8
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Financial Highlights
Year Ended
March 31,
-------------------
1996 1995**
------- --------
Net asset value, beginning of period $ 9.930 $10.000
----- ------
Income from operations:
Net investment income $ 0.492 $ 0.402
Net realized and unrealized gain (loss) on
investments 0.029 (0.066)+++
----- ------
Total income from operations $ 0.521 $ 0.336
----- ------
Less distributions:
From net investment income $(0.491) $(0.402)
In excess of net investment income -- (0.004)
----- ------
Total distributions $(0.491) $(0.406)
----- ------
Net asset value, end of period $ 9.960 $ 9.930
===== ======
Total Return (1) 5.31% 3.48%
Ratios/Supplemental Data*:
Net assets at end of period (000 omitted) $10,003 $7,795
Ratio of net expenses to average daily net assets
(2) (3) 0.75% 0.58%+
Ratio of net expenses to average daily net assets
after custodian fee reduction (2) 0.74% --
Ratio of net investment income to average daily
net assets 4.88% 4.68%+
*For the period from the start of business, June 3, 1994, to March 31, 1995,
and for the year ended March 31, 1996, the operating expenses of the Fund
reflect an allocation of expenses to the Administrator. Had such action not
been taken, net investment income per share and the ratios would have been
as follows:
Net investment income per share $0.432 $0.212
===== ======
Ratios (As a percentage of average daily
net assets):
Expenses (2) (3) 1.34 % 2.79 %+
Net investment income 4.29 % 2.47 %+
** For the period from the start of business, June 3, 1994, to March 31,
1995.
+ Computed on an annualized basis.
+++ The per share amount is not in accord with the net realized and
unrealized gain (loss) for the period because of timing of the sales of
Fund shares and the amount of per share realized and unrealized gains and
losses at such time.
(1) Total investment return is calculated assuming a purchase at the net
asset value on the first day and a sale at the net asset value on the
last day of each period reported. Dividends and distributions, if any,
are assumed to be reinvested at the net asset value on the payable date.
Total return is computed on a nonannualized basis.
(2) Includes the Fund's share of National Limited Maturity Municipals
Portfolio's (Portfolio) allocated expenses.
(3) The annualized expense ratios for the year ended March 31, 1996 have been
adjusted to reflect a change in reporting requirements. The new reporting
guidelines require the Fund to increase its expense ratio by the effect
of any expense offset arrangements with its service providers as well as
its share of the Portfolio's. The expense ratios for the period ended on
or before March 31, 1995 have not been adjusted to reflect this change.
See notes to financial statements
9
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Notes to Financial Statements
(1) Significant Accounting Policies
EV Traditional National Limited Maturity Municipals Fund, formerly EV
Traditional National Limited Tax Free Fund, (the Fund) is a diversified
series of Eaton Vance Investment Trust (the Trust). The Trust is an entity of
the type commonly known as a Massachusetts business trust and is registered
under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Fund invests all of its investable assets
in interests in the National Limited Maturity 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 (7.4% at March 31,
1996). 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 1 of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report.
B. Income--The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund determined in accordance with generally accepted
accounting principles.
C. Federal Taxes--The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable and tax-exempt
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is necessary. Dividends paid by
the Fund from net interest on tax-exempt municipal bonds allocated from the
Portfolio are not includable by shareholders as gross income for federal
income tax purposes because the Fund and Portfolio intend to meet certain
requirements of the Internal Revenue Code applicable to regulated investment
companies which will enable the Fund to pay exempt-interest dividends. The
portion of such interest, if any, earned on private activity bonds issued
after August 7, 1986, may be considered a tax preference item to
shareholders.
D. Deferred Organization Expenses--Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on
the straight-line basis over five years.
E. Use of Estimates--The preparation of 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 revenue and expense during the reporting period. Actual results could
differ from those estimates.
F. Other--Investment transactions are accounted for on a trade date basis.
10
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(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 capital 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 reclassification 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. During the year ended
March 31, 1996, $423 was reclassified from distributions in excess of net
investment income to paid-in capital, due to the differences between book and
tax accounting for excise tax payments. Net investment income, net realized
gains, and net assets were not affected by this reclassification.
(3) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
Year Ended March 31,
--------------------
1996 1995*
-------- --------
Sales 599,757 789,126
Issued to shareholders electing to receive payments
of distributions in Fund shares 6,187 1,066
Redemptions (386,892) (5,027)
------ ------
Net increase 219,052 785,165
====== ======
*For the period from the start of business, June 3, 1994, to March 31, 1995.
(4) Transactions with Affiliates
Eaton Vance Management (EVM) serves as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services.
See Note 2 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report. To enhance the net income of the Fund,
$54,321 of expenses related to the operation of the Fund were allocated to
EVM. Except as to Trustees of the Fund and the Portfolio who are not members
of EVM's or BMR's organization, officers and Trustees receive remuneration
for their services to the Fund out of such investment adviser fee. Eaton
Vance Distributors, Inc. (EVD), a subsidiary of EVM, and the Fund's principal
underwriter, did not receive any portion of the sales charge of sales of Fund
shares for the year ended March 31, 1996. EVD also receives a contingent
deferred sales charge (CDSC) on shareholder redemptions made within one year
of purchase, where initial investment in the Fund was $1 million or more. EVD
received no CDSC during the year ended March 31, 1996. Investors Bank & Trust
Company (IBT) serves as custodian to the Fund and the Portfolio. Prior to
November 10, 1995, IBT was an affiliate of EVM. Pursuant to the custodian
agreement, IBT receives a fee reduced by credits which are determined based
on the average cash balances the Fund or the Portfolio maintains with IBT.
All significant credit balances used to reduce the Funds' custody fees are
reported as a reduction of expenses in the statement of operations. Certain
of the officers and Trustees of the Fund and Portfolio are officers and
directors/trustees of the above organizations (Note 5).
11
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(5) Service Plan
The Fund adopted a service plan on April 14, 1994 designed to meet the
requirements of Rule 12b-1 under the Investment Company Act of 1940 and the
service fee requirements of the revised sales charge rule of The National
Association of Securities Dealers, Inc. The Service Plan provides that the
Fund may make service fee payments to the Principal Underwriter, Eaton Vance
Distributors, Inc. (EVD), a subsidiary of Eaton Vance Management, Authorized
Firms or other persons in amounts not exceeding 0.25% of the Fund's average
daily net assets for any fiscal year. The Trustees have initially implemented
the Plan by authorizing the Fund to make quarterly service fee payments to
the Principal Underwriter and Authorized Firms in amounts not exceeding 0.15%
of the Fund's average daily net assets for any fiscal year which is
attributable to shares of the Fund sold by such persons and remaining
outstanding for at least one year. The Fund paid or accrued service fees to
or payable to EVD for the year ended March 31, 1996, in the amount of $577.
Service fee payments are made for personal services and/or the maintenance of
shareholder accounts.
Certain of the officers and Trustees of the Funds are officers or directors
of EVD.
(6) Investment Transactions
Increases and decreases in the Fund's investment in the Portfolio for the
year ended March 31, 1996 aggregated $6,098,334 and $4,430,137, respectively.
(7) Special Meeting of Shareholders (Unaudited)
On December 8, 1995 a special meeting of the shareholders of the Fund was
held for the purpose of voting on the matters listed below. On October 23,
1995, the record date of the meeting, the Fund had 1,088,098 shares
outstanding and 1,027,255 shares were represented at the meeting.
Item 1. To consider and act on a proposal to amend the Fund's investment
policy to provide that the Fund may invest without limit in municipal
obligations the interest on which is exempt from regular federal income tax
(but which may be a tax preference item for purposes of alternative minimum
tax) and from the State taxes that, in accordance with the Fund's investment
objective, the Fund seeks to avoid.
The following are the results of the voting on the proposal:
FOR 857,718
AGAINST 169,537
ABSTAIN --
12
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Independent Auditors' Report
To the Trustees and Shareholders of
Eaton Vance Investment Trust:
We have audited the accompanying statement of assets and liabilities of EV
Traditional National Limited Maturity Municipals Fund (one of the series
constituting the Eaton Vance Investment Trust) as of March 31, 1996, and the
related statement of operations for the year then ended, the statement of
changes in net assets and financial highlights for the year ended March 31,
1996 and for the period from the start of business, June 3, 1994, to March
31, 1995. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of EV Traditional
National Limited Maturity Municipals Fund series of the Eaton Vance
Investment Trust at March 31, 1996, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 26, 1996
13
<PAGE>
<TABLE>
<CAPTION>
National Limited Maturity Municipals Portfolio
Portfolio of Investments
March 31, 1996
- ------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Investments--100%
- ------------------------------------------------------------------------------------------------------------------------
Ratings (unaudited)
- --------------------
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education Revenue--11.1%
Aa NR $1,500 Arizona Educational Loan Marketing Corporation, (AMT), 6.00%,
9/1/01 $ 1,550,175
NR NR 1,885 Arizona Educational Loan Marketing Corporation, (AMT), 6.25%,
6/1/06 1,894,651
A NR 1,000 Arizona Student Loan Acquisition Authority, (AMT), 7.625%,
5/1/10 1,083,000
A NR 1,970 Louisiana Public Facilities Authority Student Loan Revenue Bonds,
(AMT), 7.00%, 9/1/06 2,071,928
A NR 1,500 Maine Educational Loan Marketing Corporation, (AMT), 6.90%,
11/1/03 1,583,940
A A- 1,275 Massachusetts Industrial Financing Agency, Clark University, 6.80%,
7/1/06 1,347,076
A1 A+ 1,730 Massachusetts Health and Educational Facilities Authority, Tufts
University Issue, 7.40%, 8/1/18 1,870,338
A NR 1,495 The State of Texas, Texas College Student Loan Senior Lien, 7.45%,
10/1/06 1,549,538
Aa1 AA 2,000 University of Texas Financing System, 7.00%, 8/15/07 2,224,780
-----------
$15,175,426
-----------
Escrowed--4.4%
Aaa AAA $1,720 Corpus Christi TX, (FGIC), Prerefunded to 3/1/02, 6.70%, 3/1/08 $ 1,891,002
Aaa AAA 1,500 Grand Ledge, Michigan, Public School District, (MBIA),
Prerefunded to 5/1/04, 7.875%, 5/1/11 1,820,565
Aaa A+ 2,000 The Commonwealth of Massachusetts, Prerefunded to 8/1/01,
6.75%, 8/1/06 2,232,360
-----------
$ 5,943,927
-----------
General Obligations--15.9%
Aa AA $1,295 Arkansas State Capital Appreciation Bonds, 0.00%, 6/1/06 $ 755,076
Aa AA 595 Arkansas State Capital Appreciation Bonds, 0.00%, 6/1/07 325,429
Aa AA 660 Arkansas State Capital Appreciation Bonds, 0.00%, 6/1/08 339,966
Aa AA 1,035 Arkansas State Capital Appreciation Bonds, 0.00%, 6/1/11 433,065
Aaa AA+ 1,500 Baltimore County, Maryland, 6.00%, 7/1/05 1,611,555
NR NR 1,000 Cleveland, Ohio, City School District, 6.50%, 6/15/97 1,002,840
Aaa AAA 1,000 Dallas County, Texas, Unlimited Tax (Road Improvement), 6.50%,
8/15/08 1,065,410
Aa1 AAA 2,750 City of Dallas, Texas, 5.00%, 2/15/15 2,541,000
Ba1 BBB 5,000 City of Detroit, Michigan, 6.50%, 4/1/02 (2) 5,226,450
Ba1 BBB 460 City of Detroit, Michigan, 6.75%, 4/1/03 487,540
Aaa AA+ 1,000 State of Georgia, 6.00%, 3/1/04 1,082,270
14
<PAGE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Tax-Exempt Investments (Continued)
-----------------------------------------------------------------------------------------------------------------------
Ratings (unaudited)
- --------------------
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
General Obligations--(Continued)
Aa AA 2,225 Harris County, Texas, 0.00%, 10/1/08 1,125,450
Aaa AAA 4,170 Katy, Texas, Independent School District, (PSFG), 0.00%, 8/15/11 1,724,337
NR NR 3,950 Youngstown, Ohio County School District, 6.40%, 7/1/00 4,079,481
-----------
$21,799,869
-----------
Health Care--3.9%
NR BBB $1,250 Alexander City, Alabama, Special Care Facilities Financing
Authority, (Russell Hospital Corp.), 5.75%, 12/1/08 $ 1,180,100
NR BBB 1,250 Alexander City, Alabama, Special Care Facilities Financing
Authority, (Russell Hospital Corp.), 6.00%, 12/1/14 1,172,600
Baa BBB 1,500 Colorado Health Facilities Authority, (Rocky Mountain Adventist
Project), 6.00%, 2/1/98 1,512,210
NR BBB- 1,000 Lufkin, Texas, Health Facilities Development Corporation,
(Memorial Health System of East Texas), 6.50%, 2/15/06 974,380
NR NR 475 Vermont State Industrial Development Authority, (Wake Robins
Project), 8.00%, 4/1/09 486,661
-----------
$ 5,325,951
----------
Hospitals--5.3%
A1 AA- $1,500 Anchorage, Alaska, Hospital Revenue Bonds, (Sisters of Providence
Project), 6.75%, 10/1/00 $ 1,617,615
A1 AA- 1,400 California Health Facilities Financing Authority, (Sisters of
Providence), 7.50%, 10/1/10 1,533,266
Baa NR 1,355 Flint, Michigan, Hospital Authority, (Hurley Medical Center),
5.75%, 7/1/03 1,325,854
Aa AA- 2,500 Greenville, South Carolina, Hospital System, (Board of Trustees),
5.25%, 5/1/17 2,288,400
Baa1 BBB 500 Massachusetts Health and Educational Facilities Authority,
(Sisters of Providence Health System), 6.00%, 11/15/00 506,785
-----------
$ 7,271,920
-----------
Housing--5.4%
Baa NR $1,125 Illinois Development Finance Authority, Elderly Housing, (Rome
Meadows Project), 6.40%, 2/1/03 $ 1,125,484
Baa NR 1,005 Illinois Development Finance Authority, Elderly Housing, (Mattoon
Tower Project--Section 8), 6.35%, 7/1/10 988,257
Baa NR 1,145 Illinois Development Finance Authority, Elderly Housing, (Rome
Meadows Project), 6.65%, 2/1/06 1,145,676
NR A+ 1,000 New Jersey Housing and Mortgage Finance Agency, 6.40%, 11/1/02 1,054,690
Aa AA 2,895 Wyoming Community Development Agency, (Single Family Mortgage
Bonds), (FHA/VA Mortgages), (AMT), 7.20%, 6/1/10 3,105,032
-----------
$ 7,419,139
-----------
15
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Investments (Continued)
- ------------------------------------------------------------------------------------------------------------------------
Ratings (unaudited)
- --------------------
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Industrial Development Revenue--10.2%
Ba2 BB $1,500 Farmington, New Mexico, Pollution Control Revenue, (Public
Service of New Mexico--San Juan Project), 6.00%, 3/1/08 $ 1,447,995
Baa2 BBB 1,750 Indianapolis, Indiana, Airport Facilities, (Federal Express),
6.85%, 4/1/17 1,835,400
NR NR 5,300 Jackson, Tennessee, Industrial Development Board, Solid Waste
Disposal (Owens-Corning Fiberglass), (AMT), 6.25%, 3/31/04 (2) 5,339,379
Baa2 BBB 2,000 Memphis-Shelby County, Tennessee, Airport, (Federal Express),
6.75%, 9/1/12 2,079,060
B1 BB+ 2,075 Polk County, Florida, Industrial Development Authority, (IMC
Fertilizer), (AMT), 7.525%, 1/1/15 2,162,939
A1 A- 1,000 Richland County, South Carolina, Pollution Control Revenue (Union
Camp Corporation Project), 5.875%, 11/1/02 1,053,060
-----------
$13,917,833
-----------
Insured General Obligations--9.0%
Aaa AAA $4,800 Clark County, Nevada, School District, (FGIC), 0.00%, 3/1/09 $ 2,352,576
Aaa NR 4,410 Cook & Dupage Counties Combined School District, (#113--Lemont),
(FGIC), 0.00%, 12/1/14 1,455,300
Aaa AAA 1,280 Corpus Christi, Texas, (FGIC), 6.70%, 3/1/08 1,385,344
Aaa AAA 1,300 El Paso, Texas, (AMBAC), 5.00%, 8/15/12 1,218,347
Aaa Florida Board of Education Capital Outlay, (FGIC), 4.75%,
AAA 2,500 6/1/18 2,166,275
Aaa Iron Mountain, Michigan, City School District, (AMBAC), 5.125%,
AAA 2,000 5/1/16 1,845,440
Aaa LaPorte County, Indiana, Multi School Building Corporation, (MBIA),
AAA 2,835 0.00%, 7/1/13 1,020,487
Aaa LaPorte County, Indiana, Multi School Building Corporation, (MBIA),
AAA 2,500 0.00%, 1/15/14 873,700
-----------
$12,317,469
-----------
Insured Hospitals--1.6%
Aaa AAA $1,000 Kentucky Development Finance Authority, (St. Luke's Hospital)
(MBIA), 7.30%, 10/1/03 $ 1,098,530
Aaa AAA 1,000 Massachusetts Health & Education Facilities Authority, (Metro West
1,000 Health Inc.), (AMBAC), 5.70%, 11/15/01 1,053,340
-----------
$ 2,151,870
-----------
Insured Housing--2.3%
Aaa AAA $2,115 Massachusetts State Housing Finance Authority, (Harborpoint $ 2,121,937
Project), (AMBAC), (AMT), 6.20%, 12/1/10 (1)
16
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Investments (Continued)
- ------------------------------------------------------------------------------------------------------------------------
Ratings (unaudited)
- --------------------
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insured Housing--(Continued)
Aaa AAA 1,460 Massachusetts State Housing Finance Authority, (AMBAC),
(AMT), 6.00%, 1/1/04 1,043,890
----------
$3,165,827
----------
Insured Industrial Development Revenue--2.0%
Aaa AAA $1,500 Alabama Water Pollution Control Authority, Revolving Fund
(AMBAC), 6.50%, 8/15/04 $1,562,670
Aaa AAA 1,000 Illinois Development Finance Authority, Pollution Control
Revenue, (Commonwealth Edison), (MBIA), 7.25%, 6/1/11 1,110,840
----------
$2,673,510
----------
Insured Lease Revenue/Certificate of Participation--1.1%
Aaa AAA $1,500 Texas State Public Finance Authority, (AMBAC), 5.60%, 2/1/00 $1,555,710
----------
Insured Transportation--3.7%
Aaa AAA $1,100 Metropolitan Washington D.C. Airport Authority, (MBIA),
7.60%, 10/1/14 $1,209,043
Aaa AAA 1,500 Port of Houston Authority of Harris County, Texas, (MBIA)
5.75%, 5/1/02 1,538,280
Aaa AAA 2,270 Texas Turnpike Authority, (FGIC), 6.00%, 1/1/03 (1) 2,320,190
----------
$5,067,513
----------
Insured Utility--1.3%
Aaa AAA $3,460 Austin, Texas, Utility System, (MBIA), 0.00%, 11/15/08 $1,734,256
----------
Insured Water & Sewer--0.9%
Aaa AAA $1,170 City of Vallejo, California, (Water Improvement Project),
(FGIC), 6.00%, 11/1/00 $1,242,821
----------
Lease Revenue/Certificate of Participation--1.0%
NR NR $1,405 Los Angeles, California, Regional Airports Improvement
Corporation, (Trans World Airlines Inc.), 6.125%, 5/15/00 $1,398,031
----------
Miscellaneous--0.8%
Aa AA $1,000 Virginia State Public School Authority, 6.00%, 8/1/01 $1,070,770
----------
Nursing Homes--5.9%
NR NR $1,105 Arizona Health Facilities Authority, Assisted Living,
(Mesa Project), 7.625%, 1/1/06 $1,085,508
NR A+ 4,000 California Statewide Nursing Homes, (Pacific Homes),
5.90%, 4/1/09 4,005,480
NR NR 1,500 Massachusetts State Industrial Finance Agency, Health Care
Facilities, (Age Institute of MA Project), 7.60%, 11/1/05 1,501,875
NR NR 1,550 St. Tammany Public Trust Finance Authority, Louisiana,
(Christwood Project), 8.75%, 11/15/05 1,527,076
----------
$8,119,939
----------
17
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Investments (Continued)
- ------------------------------------------------------------------------------------------------------------------------
Ratings (unaudited)
- --------------------
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Solid Waste--3.0%
NR BBB- $1,120 New Jersey Economic Development Authority Heating & Cooling,
(Trigen-Trenton Project), (AMT), 6.10%, 12/1/05 $ 1,119,283
NR NR 1,800 Pennsylvania Economic Development Authority, Resource Recovery,
(Northampton), 6.75%, 1/1/07 1,814,778
NR NR 1,225 Pima County, Arizona, Industrial Development Authority, Solid
Waste Disposal, (Browning Ferris Industries), (AMT), 5.00%,
2/1/06 1,169,924
-----------
$ 4,103,985
-----------
Transportation--2.6%
Baa BBB $2,000 Denver, Colorado, City & County Airport, (AMT), 7.00%, 11/15/09 $ 2,107,040
Baa BBB 1,500 Tulsa, Oklahoma, Municipal Airport, (American Airlines Project),
6.25%, 6/1/20 1,496,130
-----------
$ 3,603,170
-----------
Utility Revenue--7.8%
Aa AA $1,545 Conservation and Renewable Energy System, Washington
Conservation Project, 5.55%, 10/1/02 $ 1,606,367
Aa3 AA- 1,000 Chicago, Illinois, Gas Supply Revenue Bonds, (The Peoples Gas
Light and Coke Company Project), 7.50%, 3/1/15 1,101,980
Aa1 AA 1,000 Jacksonville Electric Authority, St. John's River Power System,
6.75%, 10/1/05 1,099,050
Aa2 AA 2,500 Jefferson County, Kentucky, Louisville Gas and Electric Company
Project, 7.75%, 2/1/19 2,680,925
Aa AA- 1,500 Southern California Public Power Authority, 5.50%, 7/1/12 1,442,235
Aa AA 1,000 Washington Public Power Supply System, Nuclear Project No. 3,
7.375%, 7/1/04 1,102,690
Aa AA 1,500 Washington Public Power Supply System, Nuclear Project No. 1,
7.50%, 7/1/15 1,623,255
-----------
$10,656,502
-----------
18
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Investments (Continued)
- ------------------------------------------------------------------------------------------------------------------------
Ratings (unaudited)
- --------------------
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Water & Sewer Revenue--0.8%
Aa AA+ $1,000 Harris County, Texas, Flood Control District, 7.125%, 10/1/00 $ 1,105,727
------------
Total Investments (identified cost, $135,711,069) $136,821,165
============
</TABLE>
(1) When-Issued Security.
(2) Security has been segregated to cover when-issued securities.
The Portfolio invests primarily in debt securities issued by municipalities.
The ability of the issuers of the debt securities to meet their obligations
may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at March 31, 1996, 23.8% 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 by
financial institution range from 1.3% to 9.4% of total investments.
At March 31, 1996, the concentration of the Portfolio's investments in the
various states, determined as a percentage of total investments, is as
follows:
Texas 16%
Others, representing less than 10% individually 84%
See notes to financial statements
19
<PAGE>
Financial Statements
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
March 31, 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at value (Note 1A) (identified cost, $135,711,069) $136,821,165
Cash 223
Receivable for investments sold 1,684,395
Interest receivable 2,625,016
Deferred organization expenses (Note 1D) 5,154
------------
Total assets $141,135,953
Liabilities:
Payable for investments purchased $6,219,119
Demand note payable (Note 3) 130,000
Payable to affiliate --
Trustees' fees 2,188
Accrued expenses 8,278
----------
Total liabilities 6,359,585
------------
Net Assets applicable to investors' interest in Portfolio $134,776,368
============
Sources of Net Assets:
Net proceeds from capital contributions and withdrawals $133,666,272
Unrealized appreciation of investments (computed
on the basis of identified cost) 1,110,096
------------
Total $134,776,368
============
</TABLE>
See notes to financial statements
20
<PAGE>
Financial Statements (Continued)
<TABLE>
<CAPTION>
Statement of Operations
- ----------------------------------------------------------------------------------------------
Year Ended March 31, 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Interest income $8,620,881
Expenses --
Investment adviser fee (Note 2) $ 717,356
Compensation of Trustees not members of the Investment Adviser's
organization 11,064
Custodian fees (Note 2) 73,801
Legal and accounting services 25,060
Amortization of organization expenses (Note 1D) 2,474
Miscellaneous 52,396
----------
Total expenses $ 882,151
Deduct --
Reduction of custodian fee (Note 2) 20,757
----------
Net expenses 861,394
----------
Net investment income $7,759,487
----------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) --
Investment transactions (identified cost basis) $2,292,919
Financial futures contracts (838,327)
----------
Net realized gain $1,454,592
Change in unrealized appreciation (depreciation) of --
Investments $ (504,444)
Financial futures contracts 144,506
----------
Net change in unrealized depreciation (359,938)
----------
Net realized and unrealized gain $1,094,654
----------
Net increase in net assets from operations $8,854,141
==========
</TABLE>
See notes to financial statements
21
<PAGE>
Financial Statements (Continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------
1996 1995
------------ --------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From operations --
Net investment income $ 7,759,487 $ 8,797,304
Net realized gain (loss) on investments 1,454,592 (4,509,177)
Change in unrealized appreciation (depreciation) of investments (359,938) 4,668,165
------------ -------------
Net increase in net assets from operations $ 8,854,141 $ 8,956,292
------------ -------------
Capital transactions --
Contributions $ 15,935,762 $ 53,163,573
Withdrawals (59,634,339) (70,340,668)
------------ -------------
Decrease in net assets resulting from capital transactions $(43,698,577) $(17,177,095)
------------ -------------
Total decrease in net assets $(34,844,436) $ (8,220,803)
Net Assets:
At beginning of year 169,620,804 177,841,607
------------ -------------
At end of year $134,776,368 $169,620,804
============ =============
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Supplementary Data
- ---------------------------------------------------------------------------------------------------
Year Ended March 31,
------------------------------
1996 1995 1994*
------- ------- --------
<S> <C> <C> <C>
Ratios (As a percentage of average daily net assets):
Expenses (1) 0.57% 0.53% 0.52%+
Expenses after custodian fee reduction 0.56% -- --
Net investment income 5.08% 5.02% 4.74%+
Portfolio Turnover 68% 56% 21%
Net Assets, end of period (000 omitted) $134,776 $169,621 $177,842
</TABLE>
+ Annualized.
* For the period from the start of business, May 3, 1993, to March 31, 1994.
(1) The expense ratios for the year ended March 31, 1996 have been adjusted
to reflect a change in reporting requirements. The new reporting
guidelines require the Portfolio to increase its expense ratio by the
effect of any expense offset arrangements with its service providers. The
expense ratios for each of the periods ended on or before March 31, 1995
have not been adjusted to reflect this change.
See notes to financial statements
22
<PAGE>
Notes to Financial Statements
(1) Significant Accounting Policies
National Limited Maturity Municipals Portfolio, formerly National Limited
Maturity Tax Free Portfolio, (the Portfolio) is a mutual fund seeking to
provide a high level of income exempt from regular federal income tax and
limited principal fluctuation. The Portfolio is registered under the
Investment Company Act of 1940 as a diversified open-end management
investment company which was organized as a trust under the laws of the State
of New York on May 1, 1992. The Declaration of Trust permits the Trustees to
issue interests in the Portfolio. The following is a summary of significant
accounting policies of the Portfolio. The policies are in conformity with
generally accepted accounting principles.
A. Investment Valuation--Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts listed on
commodity exchanges are valued at closing settlement prices. Short-term
obligations, maturing in sixty days or less, are valued at amortized cost,
which approximates value. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods determined
in good faith by or at the direction of the Trustees.
B. Income--Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes.
C. Income Taxes--The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally
must satisfy the applicable source of income and diversification requirements
(under the Internal Revenue Code) in order for its investors to satisfy them.
The Portfolio will allocate at least annually among its investors each
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. Deferred Organization Expenses--Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E. Financial Futures Contracts--Upon the entering of a financial futures
contract, the Portfolio is required to deposit ("initial margin") either in
cash or securities an amount equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
made or received by the Portfolio ("margin maintenance") each day, dependent
on the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized gains or losses by the Portfolio.
The Portfolio's investment in financial futures contracts is designed only to
hedge against anticipated future changes in interest rates. Should interest
rates move unexpectedly, the Portfolio may not achieve the anticipated
benefits of the financial futures contracts and may realize a loss.
F. Use of Estimates--The preparation of 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 revenue and expense during the reporting period. Actual results could
differ from those estimates.
G. Other--Investment transactions are accounted for on a trade date basis.
23
<PAGE>
Notes to Financial Statements (Continued)
(2) Investment Adviser Fee and Other Transactions
with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to the Portfolio.
The fee is based upon a percentage of average daily net assets plus a
percentage of gross income (i.e., income other than gains from the sale of
securities). For the year ended March 31, 1996, the fee was equivalent to
0.47% of the Portfolio's average net assets for such period and amounted to
$717,356. Except as to Trustees of the Portfolio who are not members of EVM's
or BMR's organization, officers and Trustees receive remuneration for their
services to the Portfolio out of such investment adviser fee. Investors Bank
& Trust Company (IBT) serves as custodian to the Portfolio. Prior to November
10, 1995, IBT was an affiliate of EVM. Pursuant to the custodian agreement,
IBT receives a fee reduced by credits which are determined based on the
average cash balances the Portfolio maintains with IBT. All significant
credit balances used to reduce the Portfolio's custody fees are reported as a
reduction of expenses in the statement of operations. Certain of the officers
and Trustees of the Portfolio are officers and directors/trustees of the
above organizations. Trustees of the Portfolio may elect to defer receipt of
all or a portion of their annual fees in accordance with the terms of the
Trustee Deferred Compensation Plan. For the year ended March 31, 1996, no
significant amounts have been deferred.
- -------------------------------------------------------------------------------
(3) Line of Credit
The Portfolio participates with other portfolios and funds managed by BMR and
EVM in a $120 million unsecured line of credit agreement with a bank. The
line of credit consists of a $20 million committed facility and a $100
million discretionary facility. The Portfolio may temporarily borrow up to 5%
of its total assets to satisfy redemption requests or settle transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above either the bank's adjusted certificate of deposit rate, a
variable adjusted certificate of deposit rate, or a federal funds effective
rate. In addition, a fee computed at an annual rate of 1/4 of 1% on the $20
million committed facility and on the daily unused portion of the $100
million discretionary facility is allocated among the participating funds and
portfolios at the end of each quarter. At March 31, 1996, the Portfolio had a
balance outstanding pursuant to this line of credit of $130,000. The
Portfolio did not have any significant borrowings or allocated fees during
the year.
- -------------------------------------------------------------------------------
(4) Investments
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $103,068,498 and $133,743,025,
respectively.
- -------------------------------------------------------------------------------
(5) Federal Income Tax Basis of Investments
The cost and unrealized appreciation/depreciation in value of the investments
owned at March 31, 1996, as computed on a federal income tax basis, were as
follows:
Aggregate cost $135,711,069
============
Gross unrealized appreciation $ 2,337,287
Gross unrealized depreciation 1,227,191
------------
Net unrealized appreciation $ 1,110,096
============
- -------------------------------------------------------------------------------
(6) Financial Instruments
The Portfolio regularly trades in financial instruments with off-balance
sheet risk in the normal course of its investing activities to assist in
managing exposure to various market risks. These financial instruments
include written options and futures contracts and may involve, to a varying
degree, elements of risk in excess of the amounts recognized for financial
statement purposes. The notional or contractual amounts of these instruments
represent the investment the Portfolio has in particular classes of financial
instruments and does not necessarily represent the amounts potentially
subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions
are considered. The Portfolio had no such obligations outstanding at March
31, 1996.
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Independent Auditors' Report
To the Trustees and Investors of
National Limited Maturity Municipals Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments of National Limited Maturity
Municipals Portfolio as of March 31, 1996, the related statement of
operations for the year then ended, the statements of changes in net assets
for the years ended March 31, 1996 and 1995, and the supplementary data for
the years ended March 31, 1996 and 1995, and for the period from the start of
business, May 3, 1993, to March 31, 1994. These financial statements and
supplementary data are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
supplementary data are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of the
securities owned at March 31, 1996, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and supplementary data present
fairly, in all material respects, the financial position of National Limited
Maturity Municipals Portfolio as of March 31, 1996, the results of its
operations, changes in its net assets and its supplementary data for the
respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 26, 1996
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Investment Management
EV Traditional
National
Limited Maturity
Municipals Fund
24 Federal Street
Boston, MA 02110
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President, Trustee
Robert B. MacIntosh
Vice President
James L. O'Connor
Treasurer
Thomas Otis
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Chairman, Newspapers of
New England, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of
Investment Banking,
Harvard University Graduate School of
Business Administration
Norton H. Reamer
President and Director,
United Asset Management
Corporation
John L. Thorndike
Director, Fiduciary
Company Incorporated
Jack L. Treynor
Investment Adviser and
Consultant
National
Limited Maturity Municipals
Portfolio
24 Federal Street
Boston, MA 02110
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President, Trustee
Robert B. MacIntosh
Vice President
Raymond E. Hender
Vice President and
Portfolio Manager
James L. O'Connor
Treasurer
Thomas Otis
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Chairman, Newspapers of
New England, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of
Investment Banking,
Harvard University Graduate
School of Business
Administration
Norton H. Reamer
President and Director,
United Asset Management
Corporation
John L. Thorndike
Director, Fiduciary
Company Incorporated
Jack L. Treynor
Investment Adviser and
Consultant
26
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