To Shareholders
EV Classic National Limited Maturity Municipals Fund had a total return of 1.5%
for the six months ended September 30, 1996, the result of a decline in net
asset value per share to $9.52 on September 30, 1996 from $9.57 on March 31,
1996, and the reinvestment of $0.191 per share in dividends.+ That return does
not include contingent deferred sales charges incurred by certain redeeming
shareholders. Based on the Fund's most recent dividend and a net asset value of
$9.52, the Fund had a distribution rate of 3.96% at September 30. To equal that
in a taxable investment, a couple paying the 36% federal tax rate would need a
yield of 6.19%.
This year started well for bond investors, as the Federal Reserve lowered the
Federal Funds Rate - the rate banks charge each other for overnight loans and a
key short-term interest rate barometer - to 5.25%. Investors' optimism was
short-lived, however, as Fed Chairman Alan Greenspan suggested in his spring
Congressional testimony that, in light of current economic growth, the next move
in rates could possibly be higher. By midsummer, employment data showed that job
creation was exceeding market estimates, and that the labor market was indeed
tightening.
The fall brought news that job growth had cooled from the blistering pace set
early in the year and that inflation was still not a threat. However, the
economic data still have failed to give a clear indication of the economy's
future direction.
Accordingly, the Federal Reserve effectively put its monetary policy on hold
until after the November elections.
We believe that an investment in municipal bonds continues to represent good
value for tax-conscious investors for several reasons. First, the nation's
economy remains subdued and recent indicators suggest a possible slowdown in the
first half of 1997. More importantly, inflation remains well under control.
Second, the deficit has been reduced significantly. At present, the deficit as a
percentage of GDP is the smallest of all industrialized nations, alleviating
near-term borrowing needs. Finally, and perhaps most important, the tax burden
of our citizens is still extraordinarily high. Municipal bonds remain one of the
better ways for most individuals to relieve that burden and keep more of what
they work so hard to earn.We believe that, despite the occasional market
fluctuations, a steadfast, long-term outlook is the best way to reap the
advantages of tax-free investing.
Sincerely
/s/ Thomas J. Fetter
[PHOTO - THOMAS J. FETTER] Thomas J. Fetter
President
November 4, 1996
+ A portion of the Portfolio's income could be subject to federal alternative
minimum tax.
1
<PAGE>
Management Discussion
An interview with Raymond E. Hender, Vice President, and Portfolio Manager of
the National Limited Maturity Municipals Portfolio.
Q. Ray, how would you describe the bond market in recent months?
A. Volatility has certainly been the hallmark of the bond market for much of
the year. Many investors had been anticipating a slowdown in the second
half of the year, but the economy not only maintained its momentum, it
proved a bit stronger than expected. For example, third quarter GDP rose
2.2%, following a 4.7% surge in the second quarter attributed to a
rebuilding of inventories by business. The economy's strength in the face
of weaker expectations has contributed to the bond market's increasing
volatility during the year.
Q. Why has the market been unable to settle on one direction?
A. The employment reports in March and April started the ball rolling, with
much stronger-than-expected job data. However, no sooner had the market
digested that information, than we again saw some anecdotal signs of
weakness. That pattern continued through the period. Finally, prior to the
Fed's most recent Open Market Committee meeting in September, the market
anticipated that the Fed would elect to raise interest rates. Defying
expectations, the Fed decided to stand pat. Actually, the mere threat of a
Fed rate hike had caused the markets to adjust, eliminating the need for
Fed action. In any event, the market's expectations have contributed to the
volatility throughout the period and made this a fairly difficult
investment environment. That's been as true of the municipal market as it
has of the Treasury market.
[PHOTO]
[CAPTION: Raymond E. Hender]
Q. How would you characterize supply and demand in the municipal market?
A. Municipal supply has been relatively light and about equal to reduced
demand. With a strong stock market for much of the year, investors have
generally focused less on fixed-income vehicles. Much of the municipal
supply has consisted of insured bonds, which made the municipal market more
generic in nature. By that, I mean that quality spreads - the yield
difference between bonds of varying quality - have diminished. That has
made it considerably more difficult to find bargains in the investment
grade segment of the market.
- -------------------------------------------------------------------------------
Fund shares are not guaranteed 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>
Q. What changes have you made to the Portfolio in recent months?
A. We've made several shifts in recent months. First, we've extended the
duration of the Portfolio beyond the mid-point of our duration range.
Recent signs point to a weakening of the economy at some point, either in
the fourth quarter of this year or some time early next year. By extending
duration - a measure of responsiveness to interest rate changes we are
increasing the Portfolio's exposure to a potential market rally. Second,
we've added more aggressive coupons to the Portfolio by trading current and
premium coupon bonds for discount bonds. Typically, discounts have greater
potential for capital appreciation in a stable-to-lower interest rate
environment. Finally, we've improved the Portfolio's call protection, which
also tends to improve upside potential.
We've redoubled our efforts in the non-rated segment of the market. While
the Portfolio remains highly diversified, our selective use of non-rated
bonds should provide new opportunities for the Portfolio. In those
efforts, we benefit from the depth and ample resources of the Eaton Vance
research department.
Q. Could you focus briefly on Eaton Vance's municipal research department?
A. At Eaton Vance, we maintain a strong research effort, with analysts
dedicated to each state as well as to various industry sectors. We,
therefore, can be assured of full coverage of the important developments
within those areas and know that our standards are applied uniformly. That
is particularly critical in assessing non-rated bonds or lower-rated bonds.
This in-depth research is helpful in determining which bonds may present
good opportunities, and, conversely, which do not meet our criteria.
Q. Have you made many sector changes to the Portfolio?
A. There has not been much change in terms of sectors. With the states fairing
better in the past year, the general obligation sector has been fairly
stable. Elsewhere, we continue to monitor the electric utility sector
closely. Deregulation, together with wholesale and retailing wheeling - the
sale of power to customers in another service area - is certain to
radically alter that industry. In the health care sector, we have upgraded
the quality of our hospital holdings, focusing increasingly on the large,
well-managed systems that should fare well in a changing health care scene.
That has included several subsets of health care, including continuing care
communities and nursing homes. These alternative-care facilities are
beneficiaries from the nation's aging populations as well as from the push
in the political arena to find more effective and less costly ways to
deliver high-quality health care. Finally, in the solid waste sector, we
have been increasingly selective. The New Jersey court mandates initially
sent shockwaves through the entire solid waste sector. But the market is
once again focusing on the underlying
3
<PAGE>
fundamentals of individual projects and we have limited our exposure to
those that we view as the strongest.
Q. Looking ahead, what is your outlook for the market?
A. Predicting the direction of interest rates with any degree of certainty is
difficult. I would, however, agree with the consensus that, in the
near-term, the economy is likely to weaken. The major question is whether
the sharp employment growth of this year will fuel inflation. If inflation
does not result, we are likely to see a stable-to-lower interest rate
scenario. That should be a favorable backdrop for the overall bond market.
With the vast majority of refunding having been completed, the market is
not likely to suffer from severe supply pressures in the coming year.
That's important because there should then be a good balance between
supply and demand. Naturally, past trends don't necessarily provide a clue
to future perform-ance. But intermediate-term municipal bonds should
continue to offer yields that are over 80% of taxable yields, according to
Bloomberg Financial. In my view, that illustrates the continuing degree of
value in this segment of the municipal market. For investors who want the
benefits of tax-free income while limiting their volatility, the
intermediate-term sector of the market merits close attention.
- -------------------------------------------------------------------------------
The National Economy:
The nation's economy showed signs of stalling in the third quarter, following a
stronger- than-expected growth rate in the second quarter. Third quarter Gross
Domestic Product rose at a 2.2% pace, according to preliminary figures, well
below the 4.7% rate achieved in the second quarter. Importantly, much of the
growth was attributed to the rebuilding of inventories, as well as to investment
in equipment and technology. Consumer demand, which accounts for two-thirds of
U.S. economic activity, remained stagnant. Further growth may depend on a
stronger cons-umer sector in coming months. Meanwhile, the weak economic picture
appears to have justified the Federal Reserve's stand-pat policy, and should
provide a fairly good climate for the bond market.
- -------------------------------------------------------------------------------
Portfolio Overview
[GRAPHIC OF THE UNITED STATES]
Based on market value as of September 30, 1996
Number of issues 70
Average quality A
Investment grade 81.2%
Average duration 5.43 years.
Largest sectors:
General obligations 13.3%
Hospitals 11.6
Education revenue 9.6
Transportation 7.0
Insured general obligations 6.9*
* Private insurance does not remove the market risks that are associated with
this investment.
4
<PAGE>
EV Classic National Limited Maturity Municipals Fund
Financial Statements
Statement of Assets and Liabilities
- -------------------------------------------------------------------------------
September 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Assets:
Investment in National Limited Maturity
Municipals Portfolio, at value (Note 1A)
(identified cost, $11,168,583) $11,281,311
Deferred organization expenses (Note 1D) 16,603
-----------
Total assets $11,297,914
Liabilities:
Dividends payable $ 8,732
Payable for Fund shares redeemed 86,484
Payable to affiliate --
Trustees' fees 41
Accrued expenses 3,824
-------
Total liabilities 99,081
-----------
Net Assets for 1,176,847 shares of
beneficial interest outstanding $11,198,833
===========
Sources of Net Assets:
Paid-in capital $12,200,470
Accumulated net realized loss on investment
and financial futures transactions
(computed on the basis of identified cost) (1,115,712)
Accumulated undistributed net investment
income 1,347
Unrealized appreciation of investments and
financial futures contracts from Portfolio
(computed on the basis of identified cost) 112,728
-----------
Total $11,198,833
===========
Net Asset Value, Offering Price and
Redemption Price (Note 6) Per Share
($11,198,833 / 1,176,847 shares of
beneficial interest outstanding) $9.52
=====
</TABLE>
See notes to financial statements
5
<PAGE>
Financial Statements (Continued)
Statement of Operations
- -------------------------------------------------------------------------------
Six Months Ended September 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income (Note 1B):
Interest income allocated from Portfolio $ 350,405
Expenses allocated from Portfolio (34,975)
---------
Net investment income from Portfolio $ 315,430
Expenses --
Compensation of Trustees not members of the
Administrator's organization $ 82
Custodian fees (Note 1F) 1,499
Distribution fees (Note 5) 52,897
Transfer and dividend disbursing agent fees 3,317
Printing and postage 6,842
Legal and accounting services 7,495
Registration costs 4,503
Amortization of organization expenses (Note
1D) 3,812
Miscellaneous 2,041
-------
Net expenses 82,488
---------
Net investment income $ 232,942
---------
Realized and Unrealized Gain (Loss) on
Investments:
Net realized loss from Portfolio --
Investment transactions (identified cost
basis) $(64,839)
Financial futures contracts (93,639)
--------
Net realized loss $(158,478)
Change in unrealized appreciation of
investments 83,695
---------
Net realized and unrealized loss $ (74,783)
---------
Net increase in net assets from operations $ 158,159
=========
</TABLE>
See notes to financial statements
6
<PAGE>
Statements of Changes in Net Assets
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
September 30, 1996 Year Ended
(Unaudited) March 31, 1996
------------------ --------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From operations --
Net investment income $ 232,942 $ 612,920
Net realized loss on investments (158,478) (148,713)
Change in unrealized appreciation of investments 83,695 300,018
----------- ------------
Net increase in net assets from operations $ 158,159 $ 764,225
----------- ------------
Distributions to shareholders (Note 2) --
From net investment income $ (232,942) $ (611,406)
In excess of net investment income (271) --
----------- ------------
Total distributions to shareholders $ (233,213) $ (611,406)
----------- ------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sales of shares $ 667,485 $ 3,062,233
Net asset value of shares issued to
shareholders in payment of distributions
declared 144,210 381,127
Cost of shares redeemed (1,763,014) (11,300,488)
----------- ------------
Decrease in net assets from Fund share
transactions $ (951,319) $ (7,857,128)
----------- ------------
Net decrease in net assets $(1,026,373) $ (7,704,309)
Net Assets:
At beginning of period 12,225,206 19,929,515
----------- ------------
At end of period (including accumulated
undistributed net investment
income of $1,347 and $1,618,
respectively) $11,198,833 $ 12,225,206
=========== ============
</TABLE>
See notes to financial statements
7
<PAGE>
Financial Statements (Continued)
Financial Highlights
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended March 31,
Six Months Ended
September 30, 1996
(Unaudited) 1996 1995 1994**
------------------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.570 $ 9.530 $ 9.550 $10.000
------- ------- ------- -------
Income from operations:
Net investment income $ 0.188 $ 0.379 $ 0.375 $ 0.104
Net realized and unrealized gain (loss) on
investments (0.050) 0.039 0.026+++ (0.421)
------- ------- ------- -------
Total income (loss) from operations $ 0.138 $ 0.418 $ 0.401 $(0.317)
------- ------- ------- -------
Less distributions:
From net investment income $(0.188) $(0.378) $(0.375) $(0.104)
In excess of net investment income -- -- (0.046) (0.029)
------- ------- ------- -------
Total distributions $(0.188) $(0.378) $(0.421) $(0.133)
------- ------- ------- -------
Net asset value, end of period $ 9.520 $ 9.570 $ 9.530 $ 9.550
======= ======= ======= =======
Total return (1) 1.49% 4.42% 4.35% (3.32)%
Ratios/Supplemental Data*:
Net assets, end of period (000 omitted) $11,199 $12,225 $19,930 $26,046
Ratio of net expenses to average daily net
assets (2)(3) 2.01%+ 1.72% 1.57% 1.53%+
Ratio of net expenses to average daily net
assets after custodian fee reduction (2) 2.00%+ 1.71%
Ratio of net investment income to average
daily net assets 3.97%+ 3.95% 4.01% 3.10%+
*For the period from the start of business, December 8, 1993, to March 31, 1994, and for the years ended March 31, 1995 and 1996,
the operating expenses of the Fund reflect an allocation of expenses to the Administrator. Had such actions not been taken, net
investment income per share and the ratios would have been as follows:
Net investment income per share $ 0.349 $ 0.353 $ 0.093
======= ======= =======
Ratios (As a percentage of average daily net
assets):
Expenses (2)(3) 2.03% 1.81% 1.87%+
Net investment income 3.64% 3.77% 2.76%+
</TABLE>
**For the period from the start of business, December 8, 1993, to March 31,
1994.
+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 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. 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 six months ended September 30, 1996
and 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 or those of the Portfolio. 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
8
<PAGE>
Notes to Financial Statements
(Unaudited)
(1) Significant Accounting Policies
EV Classic National Limited Maturity Municipals Fund (the Fund), formerly EV
Classic National Limited Maturity Tax Free 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 (9.3% at September 30, 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. At March 31, 1996, the Fund, for
federal income tax purposes, had a capital loss carryover of $727,766 which will
reduce the Fund's taxable income arising from future net realized gain on
investments, if any, to the extent permitted by the Internal Revenue Code, and
thus will reduce the amount of distributions to shareholders which will
otherwise be necessary to relieve the Fund of any liability for federal income
taxes. Such capital loss carryover will expire on March 31, 2003 ($283,163) and
March 31, 2004 ($444,603). 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. 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
cash balances the Fund or the Portfolio maintains with IBT. All significant
credit balances used to reduce the Fund's custodian fees are reflected as a
reduction of operating expenses on the Statement of Operations.
G. Other--Investment transactions are accounted for on a trade date basis.
H. Interim Financial Information--The interim financial statements relating
to September 30, 1996 and for the six month period then ended have not been
audited by independent certified public accountants, but in the opinion of
the Fund's management reflect all adjustments consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
9
<PAGE>
Notes to Financial Statements (Continued)
(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
classification of income between the financial statements and tax earnings and
profits which result in over-distributions for financial statement purposes only
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. The
tax treatment of distributions for the calendar year will be reported to
shareholders prior to February 1, 1997 and will be based on tax accounting
methods which may differ from amounts determined for financial statement
purposes.
(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:
<TABLE>
<CAPTION>
Six Months Ended
September 30, 1996 Year Ended
(Unaudited) March 31, 1996
------------------ --------------
<S> <C> <C>
Sales 70,273 317,139
Issued to shareholders electing to receive
payments of distributions in Fund shares 15,189 39,524
Redemptions (185,808) (1,171,026)
-------- ----------
Net decrease (100,346) (814,363)
======== ==========
</TABLE>
(4) Transactions with Affiliates
Eaton Vance Management (EVM) serves as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services. See
Note 2 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
Except as to Trustees of the Fund and the Portfolio who are not members of EVM's
or BMR's organization, officers and Trustees receive remuneration for their
services to the Fund out of the investment adviser fee earned by BMR. Certain of
the officers and Trustees of the Fund and Portfolio are officers and
directors/trustees of the above organizations (Note 5).
(5) Distribution Plan
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay the
Principal Underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to
1/365 of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
uncovered Distribution Charges, which are equivalent to the sum of (i) 6.25% of
the aggregate amount received by the Fund for shares sold plus, (ii)
distribution fees calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of EVD
reduced by amounts theretofore paid to EVD. The amount payable to EVD with
respect to each day is accrued on such day as a liability of the Fund and,
accordingly, reduces the Fund's net assets. The Fund paid or accrued $44,081 to
or payable to EVD for the six months ended September 30, 1996, representing
0.75% (annualized) of average daily net assets. At September 30, 1996, the
amount of Uncovered Distribution Charges of EVD calculated under the Plan was
approximately $3,372,000.
In addition, the Plan permits the Fund to make monthly payments of service
fees to the Principal Underwriter in amounts not expected to exceed 0.25% of
the Fund's average daily net assets for any fiscal year. The Trustees have
initially implemented
10
<PAGE>
the Plan by authorizing the Fund to make monthly service fee payments to the
Principal Underwriter in amounts not expected to exceed 0.15% of the Fund's
average daily net assets for any fiscal year. The Fund paid or accrued
service fees to or payable to EVD for the six months ended September 30,
1996, in the amount of $8,816. EVD makes monthly service fee payments to
Authorized Firms in amounts anticipated to be equivalent to 0.15%,
annualized, of the assets maintained in the Fund by their customers. On sales
of shares made on January 30, 1995 and thereafter, EVD currently expects to
pay to an Authorized Firm a service fee at the time of sale equal to 0.15% of
the purchase price of the shares sold by such Firm and monthly payments of
service fees in amounts not expected to exceed 0.15% per annum of the Funds'
average daily net assets based on the value of Fund shares sold by such Firm
and remaining outstanding for at least one year. During the first year after
a purchase of Fund shares, EVD will retain the service fee as reimbursement
for the service fee payment made to the Authorized Firm at the time of sale.
Service fee payments are made for personal services and/or maintenance of
shareholder accounts. Service fees paid to EVD and Authorized Firms are
separate and distinct from the sales commissions and distribution fees
payable by a Fund to EVD, and as such are not subject to automatic
discontinuance when there are no outstanding Uncovered Distribution Charges
of EVD.
Certain officers and Trustees of the Fund and Portfolio are officers or
directors of EVD.
(6) Contingent Deferred Sales Charges
For shares purchased on or after January 30, 1995, a contingent deferred sales
charge (CDSC) of 1% is imposed on any redemption of Fund shares made within one
year of purchase. Generally, the CDSC is based upon the lower of the net asset
value at date of redemption or date of purchase. No charge is levied on shares
acquired by reinvestment of dividends or capital gains distributions. No CDSC is
levied on shares which have been sold to EVD or its affiliates or to their
respective employees or clients. CDSC charges are paid to EVD to reduce the
amount of Uncovered Distribution Charges calculated under the Fund's
Distribution Plan. CDSC received when no Uncovered Distribution Charges exist
will be credited to the Fund. For the six months ended September 30, 1996, EVD
received approximately $400 of CDSC paid by shareholders.
(7) Investment Transactions
Increases and decreases in the Fund's investment in the Portfolio for the six
months ended September 30, 1996, aggregated $770,708 and $2,074,465,
respectively.
11
<PAGE>
National Limited Maturity Municipals Portfolio
Portfolio of Investments
September 30, 1996
(Unaudited)
Tax-Exempt Investments--100%
<TABLE>
<CAPTION>
Ratings (unaudited)
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assisted Living--0.9%
NR NR $1,105 Arizona Health Facilities Authority Assisted
Living Facilities, (Mesa Project), 7.625%,
1/1/06 $ 1,105,155
-----------
Cogeneration--4.2%
NR BBB- $1,120 New Jersey Economic Development Authority
Heating & Cooling, (Trigen-Trenton Project),
(AMT), 6.10%, 12/1/04 $ 1,127,034
NR NR 1,800 Pennsylvania Economic Development Authority,
Resource Recovery, (Northampton), (AMT),
6.75%, 1/1/07 1,831,680
NR BBB- 2,000 Pennsylvania Economic Development Authority,
Resource Recovery, (AMT), (Culver Project),
6.75%, 1/1/07 2,094,260
-----------
$ 5,052,974
-----------
Education Revenue--9.6%
Aa NR $1,500 Arizona Educational Loan Marketing Corporation,
(AMT), 6.00%, 9/1/01 $ 1,550,025
NR NR 1,900 Arizona Educational Loan Marketing Corporation,
(AMT), 6.25%, 6/1/06 1,953,884
A NR 1,000 Arizona Student Loan Acquisition Authority,
(AMT), 7.625%, 5/1/10 1,083,720
A NR 1,000 Arkansas Student Loan Authority, (AMT), 6.25%,
6/1/10 999,890
A NR 1,500 Maine Educational Loan Marketing Corporation,
(AMT), 6.90%, 11/1/03 1,584,780
A1 A+ 1,730 Massachusetts Health and Educational Facilities
Authority, Tufts University Issue, 7.40%,
8/1/18 1,849,145
Ba1 NR 1,000 New Hampshire Higher Education & Health
Facilities Authority, Colby Sawyer College,
7.20%, 6/1/12 1,006,910
A NR 1,415 The State of Texas, Texas College Student Loan
Senior Lien, 7.45%, 10/1/06 1,452,865
-----------
$11,481,219
-----------
Escrowed--3.1%
Aaa AAA $1,720 Corpus Christi TX, (FGIC), Prerefunded to 3/1/02,
6.70%, 3/1/08 $ 1,878,292
Aaa AAA 1,500 Grand Ledge, Michigan, Public School District,
(MBIA), Prerefunded to 5/1/04, 7.875%, 5/1/11 1,805,655
-----------
$ 3,683,947
-----------
General Obligations--13.3%
Aaa AA+ $1,500 Baltimore County, Maryland, 6.00%, 7/1/05 $ 1,609,800
NR NR 1,000 Cleveland, Ohio, City School District, 6.50%,
6/15/97 1,001,360
Aaa AAA 1,000 Dallas County, Texas, Unlimited Tax (Road
Improvement), 6.50%, 8/15/08 1,057,380
12
<PAGE>
Tax-Exempt Investments (Continued)
Ratings (unaudited)
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- -----------------------------------------------------------------------------------------------------
General Obligations--(Continued)
Aa1 AAA 2,750 City of Dallas, Texas, 5.00%, 2/15/15 (3) 2,550,103
Ba1 BBB 5,000 City of Detroit, Michigan, 6.50%, 4/1/02 (2) 5,215,050
Aaa AA+ 1,000 State of Georgia, 6.00%, 3/1/04 1,073,400
NR NR 3,270 Youngstown, Ohio County School District, 6.40%,
7/1/00 3,352,469
-----------
$15,859,562
-----------
Hospitals--11.6%
NR BBB $1,250 Alexander City, Alabama, Special Care Facilities
Financing Authority, (Russell Hospital Corp.),
5.75%, 12/1/08 $ 1,215,825
NR BBB 1,250 Alexander City, Alabama, Special Care Facilities
Financing Authority, (Russell Hospital Corp.),
6.00%, 12/1/10 1,224,225
A1 AA- 1,500 Anchorage, Alaska, Hospital Revenue Bonds,
(Sisters of Providence Project), 6.75%, 10/1/00 1,613,055
Baa BBB 1,500 Colorado Health Facilities Authority, (Rocky
Mountain Adventist Project), 6.00%, 2/1/98 1,511,235
Baa NR 1,355 Flint, Michigan, Hospital Authority, (Hurley
Medical Center), 5.75%, 7/1/03 1,340,718
Aa AA- 2,500 Greenville, South Carolina, Hospital System,
(Board of Trustees), 5.25%, 5/1/17 2,304,900
NR BBB- 1,000 Lufkin, Texas, Health Facilities Development
Corporation, (Memorial Health System of East
Texas), 6.50%, 2/15/06 997,120
Baa BB 1,570 Massachusetts Health and Educational Facilities
Authority, (Milford Whitinsville Hospital),
7.125%, 7/15/02 1,581,916
Baa BBB- 2,000 Richardson, Texas, Hospital Authority,
(Richardson Medical Center), 6.50%, 12/1/12 2,001,120
-----------
$13,790,114
-----------
Housing--5.4%
Baa NR $1,125 Illinois Development Finance Authority, Elderly
Housing, (Rome Meadows Project), 6.40%, 2/1/03 $ 1,129,500
Baa NR 1,145 Illinois Development Finance Authority, Elderly
Housing, (Rome Meadows Project), 6.65%, 2/1/06 1,151,171
Baa NR 1,005 Illinois Development Finance Authority, Elderly
Housing, (Mattoon Tower Project--Section 8),
6.35%, 7/1/10 996,698
Aa AA 2,895 Wyoming Community Development Agency, (Single
Family Mortgage Bonds), (FHA/VA Mortgages),
(AMT), 7.20%, 6/1/10 3,111,893
-----------
$ 6,389,262
-----------
13
<PAGE>
Portfolio of Investments (Continued)
Tax-Exempt Investments (Continued)
Ratings (unaudited)
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- -----------------------------------------------------------------------------------------------------
Industrial Development Revenue--6.5%
NR NR $ 690 Austin, Texas, Cargoport Development LLC
Project, (AMT), 7.50%, 10/1/07 $ 689,993
NR NR 455 Austin, Texas, Cargoport Development LLC
Project, (AMT), 8.30%, 10/1/21 454,995
NR NR 3,980 Jackson, Tennessee, Industrial Development
Board, Solid Waste Disposal (Owens-Corning
Fiberglass), (AMT), 6.25%, 3/31/04 (2) 3,998,268
NR NR 500 Kimball, Nebraska, Economic Development
Authority, (Clean Harbors Inc.), 10.75%, 9/1/26 502,560
Baa2 BBB 2,000 Memphis-Shelby County, Tennessee, Airport,
(Federal Express), 6.75%, 9/1/12 2,093,240
-----------
$7,739,056
-----------
Insured Cogeneration--1.2%
Aaa AAA $1,500 Dade County, Florida, Resource Recovery,
(AMBAC), (AMT), 5.35%, 10/1/08 $1,476,540
----------
Insured General Obligations--6.9%
Aaa AAA $1,280 Corpus Christi, Texas, (FGIC), 6.70%, 3/1/08 $1,381,977
Aaa AAA 1,300 El Paso, Texas, (AMBAC), 5.00%, 8/15/12 1,218,607
Aaa AAA 2,835 LaPorte County, Indiana, Multi School Building
Corporation, (MBIA), 0.00%, 7/1/13 1,071,856
Aaa AAA 2,500 LaPorte County, Indiana, Multi School Building
Corporation, (MBIA), 0.00%, 1/15/14 916,675
Aaa AAA 4,000 Commonwealth of Massachusetts, (MBIA), 4.875%,
10/1/13 3,664,160
-----------
$8,253,275
-----------
Insured Hospital--0.9%
Aaa AAA $1,000 Kentucky Development Finance Authority, (St.
Luke's Hospital) (MBIA), 7.30%, 10/1/03 $1,086,310
-----------
Insured Housing--6.1%
Aaa AAA $2,115 Massachusetts State Housing Finance Authority,
(Harborpoint Project), (AMBAC), (AMT), 6.20%,
12/1/10 $2,137,525
Aaa AAA 4,000 Massachusetts State Housing Finance Authority,
(MBIA), 6.10%, 7/1/15 4,081,680
Aaa AAA 1,000 Massachusetts State Housing Finance Authority,
(AMBAC), (AMT), 6.00%, 1/1/04 1,047,070
-----------
$7,266,275
-----------
Insured Lease Revenue/Certificate of
Participation--1.3%
Aaa AAA $1,500 Texas State Public Finance Authority, (AMBAC),
5.60%, 2/1/00 $1,542,420
-----------
14
<PAGE>
Tax-Exempt Investments (Continued)
Ratings (unaudited)
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- -----------------------------------------------------------------------------------------------------
Insured Transportation--4.3%
Aaa AAA $1,100 Metropolitan Washington D.C. Airport Authority,
(MBIA), 7.60%, 10/1/14 $1,208,691
Aaa AAA 1,500 Port of Houston Authority of Harris County, Texas,
(MBIA) 5.75%, 5/1/02 1,538,160
Aaa AAA 2,270 Texas Turnpike Authority, (FGIC), 6.00%, 1/1/03
(1) 2,381,571
-----------
$5,128,422
-----------
Insured Water & Sewer--1.6%
Aaa AAA $2,000 Burbank, California, Wastewater Treatment,
(FGIC), 5.50%, 6/1/15 $1,963,240
-----------
Life Care--0.4%
NR NR $ 475 Vermont State Industrial Development Authority,
(Wake Robins Project), 8.00%, 4/1/09 $ 483,712
-----------
Miscellaneous--2.2%
NR NR $1,515 Santa Fe, New Mexico, Industrial Revenue
Custodial Receipts, (Crow Hobbs Project),
8.25%, 9/1/05 $1,519,530
Aa AA 1,000 Virginia State Public School Authority, 6.00%,
8/1/01 1,055,930
-----------
$2,575,460
-----------
Nursing Homes--6.0%
NR A+ $4,000 California Statewide Nursing Homes, (Pacific
Homes), 5.90%, 4/1/09 $4,007,880
NR NR 1,500 Massachusetts State Industrial Finance Agency,
Health Care Facilities, (Age Institute of MA
Project), 7.60%, 11/1/05 1,506,675
NR NR 1,550 St. Tammany Public Trust Finance Authority,
Louisiana, (Christwood Project), 8.75%,
11/15/05 1,657,074
-----------
$7,171,629
-----------
Transportation--7.0%
Baa BBB $2,000 Denver, Colorado City & County Airport,
(AMT),7.00%, 11/15/99 $2,120,460
NR NR 1,225 Eagle County, Colorado, Airport Terminal
Corporation Project, (American Airlines),
(AMT), 6.75%, 5/1/06 1,257,022
Baa3 BB+ 3,500 Kenton County, Kentucky, Airport Revenue Special
Facilities, (Delta Airlines Project),
(AMT),7.50%, 2/1/20 3,745,665
NR NR 1,180 Los Angeles, California, Regional Airport
Improvement Corporate Lease Project,
(TransWorld Airlines), 6.125%, 5/15/00 1,174,017
-----------
$8,297,164
-----------
15
<PAGE>
Portfolio of Investments (Continued)
Tax-Exempt Investments (Continued)
Ratings (unaudited)
Principal
Standard Amount
Moody's & Poor's (000 omitted) Security Value
- -----------------------------------------------------------------------------------------------------
Utility Revenue--6.6%
Aa1 AA- $1,545 Conservation and Renewable Energy System,
Washington Conservation Project, 5.55%,
10/1/02 $ 1,604,730
Aa3 AA- 1,000 Chicago, Illinois, Gas Supply Revenue Bonds,
(The Peoples Gas Light and Coke Company
Project), 7.50%, 3/1/15 1,102,640
Aa1 AA 1,000 Jacksonville Electric Authority, St. John's
River Power System, 6.75%, 10/1/05 1,093,210
Ba1 BB+ 1,500 Farmington, New Mexico, PCR, (Public Service
Company of New Mexico--San Juan Project),
6.00%, 3/1/08 1,470,810
Aa2 AA 2,500 Jefferson County, Kentucky, Louisville Gas
and Electric Company Project, (AMT),
7.75%, 2/1/19 2,650,475
------------
$ 7,921,865
------------
Water & Sewer Revenue--0.9%
Aa AA $1,000 Harris County, Texas, Flood Control District,
7.125%, 10/1/00 $ 1,091,942
------------
Total Tax-Exempt Investments (identified cost,
$117,307,269) $119,359,543
============
</TABLE>
(1) When-issued security.
(2) Security has been segregated to cover when-issued securities.
(3) Security has been segregated to cover margin requirements on open
financial futures contracts.
The Portfolio invests primarily in debt securities issued by municipalities.
The ability of the issuers of the debt securities to meet their obligations
may be affected by economic developments in a specific industry or
municipality. In order to reduce the risk associated with such economic
developments, at September 30, 1996, 22.3% of the securities in the portfolio
of investments are backed by bond insurance of various financial institutions
and financial guaranty assurance agencies. The aggregate percentage by
financial institution range from 6.2% to 12.9% of total investments.
At September 30, 1996, the concentration of the Portfolio's investments in
the various states, determined as a percentage of total investments is as
follows:
Texas 17%
Massachusetts 13%
Others, representing less than 5% individually 70%
See notes to financial statements
16
<PAGE>
Financial Statements
Statement of Assets and Liabilities
- -------------------------------------------------------------------------------
September 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Assets:
Investments, at value (Note 1A) (identified
cost, $117,307,269) $119,359,543
Cash 234
Receivable for daily variation margin on
open financial futures contracts (Note 1F) 16,875
Receivable for investments sold 3,043,588
Interest receivable 2,408,365
Deferred organization expenses (Note 1D) 3,917
------------
Total assets $124,832,522
Liabilities:
Payable for when-issued security (Note 1F) $2,566,931
Demand note payable (Note 3) 1,460,000
Payable to affiliate --
Trustees' fees 2,044
Accrued expenses 12,731
----------
Total liabilities 4,041,706
------------
Net Assets applicable to investors' interest
in Portfolio $120,790,816
============
Sources of Net Assets:
Net proceeds from capital contributions and
withdrawals $118,810,152
Unrealized appreciation of investments and
financial futures contracts (computed on the
basis of identified cost) 1,980,664
------------
Total $120,790,816
============
</TABLE>
See notes to financial statements
17
<PAGE>
Financial Statements (Continued)
Statement of Operations
- -------------------------------------------------------------------------------
Six Months Ended September 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income:
Interest Income $ 3,801,589
Expenses --
Investment adviser fee (Note 2) $ 303,767
Compensation of Trustees not members of
the Investment Adviser's organization 4,217
Custodian fees (Note 1G) 35,459
Legal and accounting services 20,896
Bond Pricing 5,044
Amortization of organization expenses
(Note 1D) 1,237
Miscellaneous 18,136
-----------
Total expenses $ 388,756
Deduct reduction of custodian fee (Note 1G) 9,260
-----------
Net expenses 379,496
-----------
Net investment income $ 3,422,093
-----------
Realized and Unrealized Gain (Loss):
Net realized loss--
Investment transactions (identified cost
basis) $ (697,999)
Financial futures contracts (1,014,251)
-----------
Net realized loss on investments $(1,712,250)
Change in unrealized appreciation
(depreciation) of--
Investments $ 942,178
Financial futures contracts (71,610)
-----------
Net change in unrealized appreciation 870,568
-----------
Net realized and unrealized loss $ (841,682)
-----------
Net increase in net assets from operations $ 2,580,411
===========
</TABLE>
See notes to financial statements
18
<PAGE>
Statements of Changes in Net Assets
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
September 30, 1996 Year Ended
(Unaudited) March 31, 1996
------------------ --------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From operations--
Net investment income $ 3,422,093 $ 7,759,487
Net realized gain (loss) on investments (1,712,250) 1,454,592
Change in unrealized appreciation
(depreciation) of investments 870,568 (359,938)
------------ ------------
Net increase in net assets from
operations $ 2,580,411 $ 8,854,141
------------ ------------
Capital transactions--
Contributions $ 27,705,252 $ 15,935,762
Withdrawals (44,271,215) (59,634,339)
------------ ------------
Decrease in net assets resulting from
capital transactions $(16,565,963) $(43,698,577)
------------ ------------
Total decrease in net assets $(13,985,552) $(34,844,436)
Net Assets:
At beginning of period 134,776,368 169,620,804
------------ ------------
At end of period $120,790,816 $134,776,368
============ ============
</TABLE>
- --------------------------------------------------------------------------------
Supplementary Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
September 30, 1996 Year Ended March 31,
(Unaudited) 1996 1995 1994*
------------------ -------- --------- ---------
<S> <C> <C> <C> <C>
Ratios (As a percentage of average daily net
assets):
Expenses (1) 0.61%+ 0.57% 0.53% 0.52%+
Expenses after custodian fee reduction 0.60%+ 0.56% -- --
Net investment income 5.37%+ 5.08% 5.02% 4.74%+
Portfolio Turnover 28% 68% 56% 21%
Net assets, end of period (000 omitted) $120,791 134,776 $169,621 $177,842
</TABLE>
+ Annualized.
* For the period from the start of business, May 3, 1993, to March 31, 1994.
(1) The annualized expense ratios for the six months ended September 30, 1996
and 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
19
<PAGE>
Notes to Financial Statements
(Unaudited)
(1) Significant Accounting Policies
National Limited Maturity Municipals 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. When-issued and Delayed Delivery Transaction--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 accruing interest on
settlement date.
G. Expense Reduction--Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by credits which are determined based on the average daily cash
balances the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reported as a reduction of
expenses on the Statement of Operations.
20
<PAGE>
H. 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.
I. Other--Investment transactions are accounted for on a trade date basis.
J. Interim Financial Information--The interim financial statements relating
to September 30, 1996 and for the six month period then ended have not been
audited by independent certified public accountants, but in the opinion of
the Portfolio's management reflect all adjustments consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
(2) Investment Adviser Fee and Other Transactions
with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to the Portfolio.
The fee is based upon a percentage of average daily net assets plus a
percentage of gross income (i.e., income other than gains from the sale of
securities). For the six months ended September 30, 1996, the fee was
equivalent to 0.48% of the Portfolio's average net assets for such period and
amounted to $303,767. 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. 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 six months ended September 30, 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, a
portion of which is discretionary. 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 daily
unused portion of the facility is allocated among the participating funds and
portfolios at the end of each quarter. At September 30, 1996, the Portfolio
had a balance outstanding pursuant to this line of credit of $1,460,000. The
Portfolio did not have any significant borrowings or allocated fees during
the period.
(4) Investments
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $35,902,539 and $53,504,781, respectively.
21
<PAGE>
Notes to Financial Statements (Continued)
(5) Federal Income Tax Basis of Investments
The cost and unrealized appreciation/depreciation in value of the investments
owned at September 30, 1996, as computed on a federal income tax basis, were
as follows:
Aggregate cost $117,307,269
============
Gross unrealized appreciation $ 2,249,612
Gross unrealized depreciation 197,338
------------
Net unrealized appreciation $ 2,052,274
============
(6) Financial Instruments
The Portfolio regularly trades in financial instruments with off-balance
sheet risk in the normal course of its investing activities to assist in
managing exposure to various market risks. These financial instruments
include written options and futures contracts and may involve, to a varying
degree, elements of risk in excess of the amounts recognized for financial
statement purposes. The notional or contractual amounts of these instruments
represent the investment the Portfolio has in particular classes of financial
instruments and does not necessarily represent the amounts potentially
subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions
are considered. A summary of obligations under these financial instruments at
September 30, 1996 is as follows:
Futures Contracts Net Unrealized
Expiration Date Contracts Position Depreciation
- ------------------ ---------------------- -------- ---------------
12/96 60 U.S. Treasury Bonds Short (71,610)
At September 30, 1996 the Portfolio had sufficient cash and/or securities to
cover margin requirements on open futures contracts.
22
<PAGE>
Investment Management
EV Classic
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
23
<PAGE>
[COVER]
Investment Adviser
of National
Limited Maturity Municipals
Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Administrator of
EV Classic 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
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
EV Classic National
Limited Maturity Municipals Fund
24 Federal Street
Boston, MA 02110 C-LNASRC-11/96
[EV LOGO]
[GRAPHIC OF FRONT PORCH WITH HANGING U.S. FLAG]
EV Classic
National
Limited Maturity
Municipals Fund
Semi-Annual Report
September 30, 1996
