<PAGE>
Investing
[LOGO OF EATON for the [PHOTO OF BRICK WALL AND
VANCE APPEARS HERE] 21st EDUCATION SIGN APPEARS HERE]
Century
Annual Report March 31, 1997
EV
MARATHON
[PHOTO OF HIGHWAY
AT NIGHT APPEARS NATIONAL
HERE]
LIMITED MATURITY
MUNICIPALS FUND
Eaton Vance
Global Management-Global Distribution
[PHOTO OF SUSPENSION Marathon
BRIDGE APPEARS HERE]
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
LETTER TO SHAREHOLDERS
[PHOTO OMITTED]
Thomas J. Fetter,
President
The municipal bond market in 1996 was characterized by heightened volatility as
investors reacted to a seesaw interest rate environment and a politically-
charged debate over the possibility of a flat tax. After showing signs of
slowing at the year's outset, it became apparent in the first quarter of 1996
that the economy was stronger than anticipated and that inflation, while still
modest, would bear further watching. Consequently, long-term bond yields climbed
steadily higher, reaching their peak in mid-June, 1996.
Investors were heartened by economic reports in the second half of the year that
showed a scenario of slow growth and low inflation. In addition, the federal
budget deficit, which had ballooned in the 1980s and had been so long the bane
of fixed-income investors, fell to just 1.5% of gross domestic product. Against
that favorable backdrop, bond yields finished the year at lower levels than at
mid-year.
The first quarter of 1997 was marked by stronger-than-expected economic growth,
a tightening labor market, and increasing uneasiness over inflation, which
remains low. At its March 25 meeting, the Federal Reserve raised the Federal
Funds Rate 0.25% in an effort to slow the economy and make a preemptory strike
at inflation. In response to 1997's economic events, the bond market has sold
off somewhat, and the yield on the 30-year Treasury Bond -- a widely-held gauge
of bond market sentiment -- rose to 7.08% on March 31 from 6.64% at the end of
1996.
Despite Changing Market Conditions, Municipal Bonds Remain an Attractive
Investment
According to the Public Securities Association, state and local governments sold
roughly $183 billion in securities in 1996, and will sell approximately the same
volume in 1997. That is sharply lower than the supply levels for 1995 and
earlier. With greatly reduced supply and increasing competition for bonds,
municipal bonds should retain their value among tax-conscious investors.
Tax-exempt bonds yield 81% of Treasury yields
[BAR GRAPH APPEARS HERE]
<TABLE>
<S> <C>
30-year AAA General Obligation (GO) Bonds* 5.75%
Taxable equivalent yield of investment for
couple in 36% tax bracket 8.98%
30-year Treasury Bond 7.10%
</TABLE>
Principal and interest payments of Treasury securities are guaranteed by the
U.S. Government.
* GO yield is a compilation of a representative variety of general obligations
and is not necessarily representative of the Fund's yields. Statistics as of
March 31, 1997.
Past performance is not indicative of future results.
Source: Bloomberg, L.P.
We believe an investment in municipal bonds continues to represent good value
for several reasons. First, Congress and the Clinton Administration have
reached a tentative agreement to balance the budget over the next five years --
a development viewed favorably by bond investors. Second, with the equity
markets having turned in two consecutive years of performances well above
historical averages, investors may look for alternatives within the bond
markets. And third, taxes remain a burden and, for most investors, municipal
bonds are one of the last remaining vehicles for tax relief. For these reasons,
we believe that the municipal market will continue to be a favored avenue for
tax-conscious investors. Eaton Vance's municipal bond department will continue
to seek high, tax-free income for shareholders.
Sincerely,
Thomas J. Fetter,
President
May 9, 1997
/s/ Thomas J. Fetter
- -------------------------------------------------------------------------------
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>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
MANAGEMENT DISCUSSION
An interview with William H. Ahern, Vice President and Portfolio Manager of
National Limited Maturity Municipals Portfolio
[PHOTO OMITTED]
William H. Ahern,
Portfolio Manager
Q: Bill, what were your impressions of the economy over the past year?
A: The economy has shown a good deal of resilience in the past year. While many
economists expected the growth trend to slow in late 1996 or early 1997, it
has maintained fairly strong momentum. The good news is that the expansion
has continued without significant inflation. The Federal Reserve has
monitored the situation closely and acted to preempt inflation, most
recently in March, when it raised the Federal Funds Rates by 25 basis points
(.25 percentage points). In response to the robust economic news, the bond
market has been quite volatile.
Q: What was behind the volatility?
A: The volatility appears to be more in response to shifting investor sentiment
toward the inflation outlook than to any empirical evidence. While actual
inflation data have been rather tame, the Fed has, for some time, signalled
a bias for higher interest rates. Interestingly, with the exception of its
March rate hike, the Fed has been fairly restrained in its actions. But the
markets have, nonetheless, been waiting for the other shoe to drop.
Meanwhile, investors have tended to overreact to economic reports,
especially employment data. With job creation very strong, interest rates
have risen more at the short end of the yield curve than the long end. That
has produced a fairly volatile environment for the bond market. As evidence
of that volatility, Treasury yields, which were 7.2% a year ago, declined to
6.35% in November before moving back up to 7.1% at March 31. That's a fairly
wild ride for bond investors.
Q: So the Fed has been "jawboning" interest rates higher?
A: That's correct. For many months, the Fed was able to accomplish much of the
rate increase through public comment alone. This jawboning can be very
effective over the short run, but runs the risk of losing credibility if it
is not followed by action. Thus, the March rate increase, while a relatively
mild action, can be seen as part of a larger Fed strategy to contain
inflation.
Q: Have you made any adjustments to the Portfolio in recent months?
A: Yes. We've made a number of structural changes to the Portfolio. As the
market has become increasingly generic in recent years, these structural
subtleties have become much more critical to performance. Our efforts have
been aimed primarily at enhancing liquidity, improving the Portfolio's call
protection, and adjusting duration, or the degree to which the Portfolio
will respond to changes in interest rates.
- --------------------------------------------------------------------------------
Fund Information
as of March 31, 1997
<TABLE>
<CAPTION>
Average Annual Total Returns/1/
- ----------------------------------------------------------------------
At Net Asset Value Class I Class II
- ----------------------------------------------------------------------
<S> <C> <C>
One year 3.3% 3.7%
Life of Fund* 4.8 4.9
Including Maximum Applicable CDSC
- ----------------------------------------------------------------------
One year 0.3% 3.7%
Life of Fund* 4.8 4.9
</TABLE>
* Class I: 5/22/92-3/31/97; For Class II, total return is based on Class I
total return until the first conversion of shares from Class I to Class II on
6/27/96.
<TABLE>
<CAPTION>
Five Largest Sectors By market value
- ----------------------------------------------------------------------
<S> <C>
General Obligations 14.8%
Industrial Development 13.5%
Transportation 11.7%
Nursing Homes 9.1%
Housing 7.7%
<CAPTION>
Portfolio Overview
- ----------------------------------------------------------------------
<S> <C>
Number of Issues 55
Average Effective Maturity 10.67 Yrs.
Average Duration/2/ 6.63 Yrs.
Average Rating/3/ A-
Average Coupon 6.63%
</TABLE>
/1/Average annual total returns are calculated by determining the percentage
change in net asset value with all distributions reinvested. For Class I,
returns reflect the applicable CDSC according to the following schedule: 3%-
1st year; 2.5%-2nd year; 2%-3rd year; 1%-4th year; 0%-5th and following
years.
/2/The Fund's duration is determined by average maturity and periodic cash flows
and is used to determine the Fund's sensitivity to changes in interest rates.
/3/Ratings are issued by Moody's Investors Service, a major independent ratings
agency.
Because the Fund is actively managed, sector weightings, and the
characteristics listed under Portfolio overview are subject to change.
Past performance is no guarantee of future results. The value of an
investment in the Fund may fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
3
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
MANAGEMENT DISCUSSION CONT'D
By consolidating holdings we have been able to reduce the number of bonds in
the Portfolio while increasing the average size of those holdings. That
helps to enhance the liquidity of the Portfolio. Call protection, of course,
continues to be an important consideration. By increasing call protection,
we have reduced the Portfolio's exposure to untimely bond redemptions and
increased upside potential. Finally, we have used the market downturn as an
opportunity to adjust the duration of the Portfolio and improve the trading
characteristics of our bonds. By keeping an average duration generally in
the 6.5- to-6.75 year range, we limited the damage during the recent
downturn.
Q: Specifically, what do you mean by a generic market?
A: That refers to the fact that in recent years, quality spreads - the yield
difference between bonds of varying quality - have become increasingly
narrow. That is largely a function of the widespread use of insurance by
municipal bond issuers. Bonds that, based on their underlying fundamentals,
would ordinarily carry an A-rating, receive a Aaa-rating due to private
insurance. The result is that the municipal market is increasingly dominated
by insured issues. Now, more than ever before, investors must really do
their homework to find good values.
Q: Has that affected your investment approach?
A: Yes. I think the changing make-up of the market has made it necessary for
investors to expand their research efforts. For example, we have redoubled
our efforts in the non-rated sector of the market. The non-rated segment
typically consists of smaller issuers, such as colleges, nursing homes, or
private purpose industrial development bonds. Because these bonds lack
ratings from the major rating agencies, they may carry an unusually
attractive coupon. Naturally, investing in non-rated bonds requires
especially rigorous analysis. At Eaton Vance, we have dedicated more
resources and analysts to this area of the market. Equally as important,
we've developed our own internal criteria to make certain that these bonds
meet our strict standards of creditworthiness.
By focusing on this segment of the market we have been able to add
incrementally to our yields in an era of declining spreads.
Q: Has the intermediate segment of the market performed in line with
expectations?
A: Yes. While the intermediate municipal market declined with the rate
increases, it characteristically declined less than the Treasury market. The
intermediate segment of the market was isolated from the decline somewhat by
shorter maturities as well as by the fact that price changes in the
municipal market are rarely as large as in the Treasury market - either on
the upside or the downside. Once again, the intermediate bond market
performed pretty much in line with expectations.
Q: Looking ahead, what is your outlook for the municipal market?
A: I remain generally constructive on the outlook for municipal bonds. While
the economy has registered steady growth, inflation has been modest.
Continuing increases in productivity and global competition are helping to
keep inflation in check. Having said that, the Federal Reserve has been a
staunch inflation-fighter and, therefore, we can't rule out the possibility
of additional Fed rate hikes. That would be a potential hurdle over the
short-term. But it's important to remember that Federal tax rates remain
fairly onerous and municipal bonds are among the few ways for investors to
reduce their tax bills.
For the conservative investor, a major investment goal may be tax-free
income with lower volatility, the mandate of the National Limited Municipals
Portfolio. While past performance is no guarantee of future results, the
intermediate sector has historically managed a good percentage of the yield
of long-term bonds, with roughly half of their volatility. I believe
intermediate municipals continue to merit consideration from conservative,
income-oriented investors.
4
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31,1997
MANAGEMENT DISCUSSION CONT'D
Your Investment at Work
- --------------------------------------------------------------------------------
Eagle County Co Airport Terminal Corp. [PICTURE OF AIRPLANE
American Airlines APPEARS HERE]
. The bond proceeds financed the construction of a passenger terminal to be
occupied and leased by American Airlines, Inc.
. The 31,000 square foot project includes lobby, ticketing areas, baggage-
handling equipment, passenger lounges, and additional apron space for aircraft
parking which will further accommodate increasing air traffic demands within
the area.
. With an attractive 6.75% coupon, this non-rated bond is an example of how
selective, research-driven, non-rated issues can add value to the Portfolio.
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 Marathon National
Limited Maturity Municipals Fund and the unmanaged Lehman Brothers 7-Year
Municipal Bond Index.
The blue line on the chart represents the Fund's performance at net asset value.
For Class I, returns reflect the applicable CDSC according to the following
schedule: 3%-1st year; 2.5%-2nd year; 2%-3rd year; 1%-4th year; 0%-5th and
following years. 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 municipal bonds. The Index's total
return does not reflect any commissions or expenses that would be incurred if an
investor individually purchased or sold the securities represented in the Index.
It is not possible to invest directly in the Index.
Comparison of Change in Value of a $10,000 Investment in EV Marathon National
Limited Maturity Municipals Fund vs. Lehman Brothers 7-Year Municipal Bond Index
From May 31, 1992, through March 31, 1997
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
EV Marathon National Limited EV Marathon National Limited
Date Maturity Municipals Fund, Class I Maturity Municipals Fund, Class II 7-Year Municipal Bond Index
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5/31/92 $10,000 $10,000 $10,000
6/30/92 $10,120 $10,120 $10,159
7/31/92 $10,459 $10,459 $10,462
8/31/92 $10,327 $10,327 $10,354
9/30/92 $10,391 $10,391 $10,438
10/31/92 $10,274 $10,274 $10,368
11/30/92 $10,517 $10,517 $10,522
12/31/92 $10,613 $10,613 $10,608
1/31/93 $10,722 $10,722 $10,763
2/28/93 $11,041 $11,041 $11,093
3/31/93 $10,905 $10,905 $10,947
4/30/93 $10,983 $10,983 $11,015
5/31/93 $11,031 $11,031 $11,048
6/30/93 $11,157 $11,157 $11,250
7/31/93 $11,180 $11,180 $11,252
8/31/93 $11,344 $11,344 $11,451
9/30/93 $11,441 $11,441 $11,577
10/31/93 $11,464 $11,464 $11,607
11/30/93 $11,391 $11,391 $11,505
12/31/93 $11,549 $11,549 $11,716
1/31/94 $11,652 $11,652 $11,840
2/28/94 $11,465 $11,465 $11,583
3/31/94 $11,134 $11,134 $11,274
4/30/94 $11,193 $11,193 $11,356
5/31/94 $11,258 $11,258 $11,413
6/30/94 $11,224 $11,224 $11,392
7/31/94 $11,357 $11,357 $11,553
8/31/94 $11,381 $11,381 $11,613
9/30/94 $11,281 $11,281 $11,502
10/31/94 $11,171 $11,171 $11,387
11/30/94 $11,023 $11,023 $11,221
12/31/94 $11,180 $11,180 $11,391
1/31/95 $11,369 $11,369 $11,604
2/28/95 $11,556 $11,556 $11,866
3/31/95 $11,627 $11,627 $11,989
4/30/95 $11,635 $11,635 $12,021
5/31/95 $11,821 $11,821 $12,341
6/30/95 $11,780 $11,780 $12,330
7/31/95 $11,880 $11,880 $12,487
8/31/95 $11,965 $11,965 $12,634
9/30/95 $12,029 $12,029 $12,683
10/31/95 $12,117 $12,117 $12,793
11/30/95 $12,227 $12,227 $12,934
12/31/95 $12,279 $12,279 $13,003
1/31/96 $12,368 $12,368 $13,129
2/28/96 $12,302 $12,302 $13,084
3/31/96 $12,151 $12,151 $12,956
4/30/96 $12,133 $12,133 $12,932
5/31/96 $12,113 $12,113 $12,913
6/30/96 $12,148 $12,148 $13,012
7/31/96 $12,201 $12,192 $13,120
8/31/96 $12,232 $12,232 $13,127
9/30/96 $12,351 $12,358 $13,246
10/31/96 $12,442 $12,456 $13,388
11/30/96 $12,647 $12,656 $13,612
12/31/96 $12,569 $12,598 $13,570
1/31/97 $12,538 $12,575 $13,619
2/28/97 $12,662 $12,708 $13,732
3/31/97 $12,553 $12,604 $13,554
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
- --------------------------------------------------------------------------------
<S> <C>
Class I At Net Asset Value
- --------------------------------------------------------------------------------
One year 3.3%
Life of Fund (5/22/92) 4.8
Value at 3/31/97 $12,553
Class II At Net Asset Value
- --------------------------------------------------------------------------------
One year 3.7%
Life of Fund (5/22/92) 4.9
Value at 3/31/97 $12,604
Class I Including Maximum Applicable CDSC
- --------------------------------------------------------------------------------
One year 0.3%
Life of Fund (5/22/92) 4.8
Value at 3/31/97 $12,553
</TABLE>
Source: Towers Data Systems, Bethesda, MD.
* 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.
Past performance is not indicative of future results. Investment returns and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
5
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of March 31, 1997
<TABLE>
<CAPTION>
Assets
- ---------------------------------------------------------------------------------------
<S> <C>
Investment in National Limited Maturity Municipals Portfolio,
at value (Note 1A) (identified cost, $85,229,931) $ 86,056,254
Receivable for Fund shares sold 10,000
Prepaid expenses 7,554
Deferred organization expense (Note 1D) 1,745
- ---------------------------------------------------------------------------------------
Total assets $ 86,075,553
- ---------------------------------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 118,686
Dividends payable 148,899
Payable to affiliate for Trustees' fees (Note 4) 395
Accrued expenses 43,687
- ---------------------------------------------------------------------------------------
Total liabilities $ 311,667
- ---------------------------------------------------------------------------------------
Net Assets for 8,514,079 shares of
beneficial interest outstanding $ 85,763,886
- ---------------------------------------------------------------------------------------
Sources of Net Assets
- ---------------------------------------------------------------------------------------
Paid-in capital $ 88,058,343
Accumulated net realized loss on investments and financial
futures contracts (computed on basis of identified cost) (3,052,327)
Accumulated distributions in excess of net investment income (68,453)
Net unrealized appreciation of investments from Portfolio
(computed on the basis of identified cost) 826,323
- ---------------------------------------------------------------------------------------
Total $ 85,763,886
- ---------------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
- ---------------------------------------------------------------------------------------
Class I Shares
Net Asset Value per share (Notes 3 and 6)
($48,692,294 / 4,833,487 shares of beneficial
interest outstanding) $ 10.07
- ---------------------------------------------------------------------------------------
Class II Shares
Net Asset Value per share (Notes 3 and 6)
($37,071,592 / 3,680,592 shares of beneficial
interest outstanding) $ 10.07
- ---------------------------------------------------------------------------------------
</TABLE>
Statement of Operations
For the Year Ended
March 31, 1997
<TABLE>
<CAPTION>
Investment Income (Note 1B)
- ---------------------------------------------------------------------------------------
<S> <C>
Interest income allocated from Portfolio $ 5,999,243
Expenses allocated from Portfolio (576,735)
- ---------------------------------------------------------------------------------------
Net investment income from Portfolio $ 5,422,508
- ---------------------------------------------------------------------------------------
Expenses
- ---------------------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 2,444
Distribution and service fees - Class I 725,560
Service fees - Class II 27,324
Transfer and dividend disbursing agent fees 75,797
Printing and postage 36,023
Registration fees 30,378
Legal and accounting services 12,878
Amortization of organization expenses (Note 1D) 12,560
Custodian fee 10,420
Miscellaneous 19,299
- ---------------------------------------------------------------------------------------
Total expenses $ 952,683
- ---------------------------------------------------------------------------------------
Net investment income $ 4,469,825
- ---------------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- ---------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 180,692
Financial futures contracts (1,029,081)
- ---------------------------------------------------------------------------------------
Net realized loss on investments $ (848,389)
- ---------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ (358,672)
Financial futures contracts 114,724
- ---------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ (243,948)
- ---------------------------------------------------------------------------------------
Net realized and unrealized loss on investments $ (1,092,337)
- ---------------------------------------------------------------------------------------
Net increase in net assets from operations $ 3,377,488
- ---------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
6
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended Year Ended
in Net Assets March 31, 1997 March 31, 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment income $ 4,469,825 $ 5,147,545
Net realized gain (loss) on
investments (848,389) 1,506,987
Net change in unrealized
appreciation (depreciation)
of investments (243,948) (585,728)
- -----------------------------------------------------------------------------------------
Net increase in net assets
from operations $ 3,377,488 $ 6,068,804
- -----------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income
Class I $ (3,425,235) $ (5,138,700)
Class II (913,947) --
- -----------------------------------------------------------------------------------------
Total distributions to shareholders $ (4,339,182) $ (5,138,700)
- -----------------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares
Class I $ 4,275,736 $ 5,913,271
Net asset value of shares
issued to shareholders in
payment of distributions declared
Class I 1,811,549 2,686,177
Class II 295,465 --
Cost of shares redeemed
Class I (24,654,777) (38,791,370)
Class II (7,029,741) --
Net asset value of shares
exchanged
Class I (43,941,246) --
Class II 43,941,246 --
- -----------------------------------------------------------------------------------------
Net decrease in net assets from Fund
share transactions $ (25,301,768) $ (30,191,922)
- -----------------------------------------------------------------------------------------
Net decrease in net assets $ (26,263,462) $ (29,261,818)
- -----------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------
At beginning of year $ 112,027,348 $ 141,289,166
- -----------------------------------------------------------------------------------------
At end of year $ 85,763,886 $ 112,027,348
- -----------------------------------------------------------------------------------------
Accumulated
distributions in excess
of net investment
income included
in net assets
- -----------------------------------------------------------------------------------------
At end of year $ (68,453) $ (199,096)
- -----------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
7
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Year Ended
March 31, 1997 Year Ended March 31,
--------------------------- --------------------------------------------
Class Class * 1996 1995 1994 1993 **
I II
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value-- Beginning of year $ 10.170 $ 10.030 $ 10.130 $ 10.160 $ 10.450 $10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.428 $ 0.393 $ 0.413 $ 0.400 $ 0.406 $ 0.339
Net realized and unrealized gain (loss) on investments (0.098) 0.033++ 0.040 0.033 (0.178) 0.573
- ------------------------------------------------------------------------------------------------------------------------------------
Total income from operations $ 0.330 $ 0.426 $ 0.453 $ 0.433 $ 0.228 $ 0.912
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.430) $ (0.386) $ (0.413 ) $ (0.400) $ (0.406) $(0.339)
In excess of net investment income -- -- -- (0.058) (0.091) --
From net realized gain on investments -- -- -- (0.005) (0.021) (0.010)
From paid-in capital -- -- -- -- -- (0.113)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.430) $ (0.386) $ (0.413 ) $ (0.463) $ (0.518) $(0.462)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of year $ 10.070 $ 10.070 $ 10.170 $ 10.130 $ 10.160 $10.450
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return /(1)/ 3.30% 4.06% 4.51 % 4.43% 2.10% 9.05%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000 omitted) $ 48,692 $ 37,072 $ 112,027 $ 141,289 $151,787 $89,878
Ratio of net expenses to average daily net assets (2)(3) 1.69% 0.99%+ 1.64 % 1.57% 1.46% 1.50%+
Ratio of net expenses to average daily net assets after
custodian fee reduction /(2)/ 1.67% 0.97%+ 1.63 % -- -- --
Ratio of net investment income to average daily net assets 4.37% 5.14%+ 4.04 % 3.99% 3.78% 3.86%+
Portfolio Turnover /(4)/ -- -- -- -- -- 51%
- ------------------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund reflects a reduction of the Investment
Adviser fee. Had such actions not been taken, the ratios and net investment
income per share would have been as follows:
Ratios (As a percentage of average daily net assets):
Expenses (2) 1.68%+
Net investment income 3.68%+
Net investment income per share $ 0.323
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period because of the timing of sales of Fund shares
and the amount of the per share realized and unrealized gains and losses at
such time.
* For the period from the start of business, June 27, 1996, to March 31,
1997.
** For the period from the start of business, May 22, 1992, to March 31, 1993.
(1) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
(3) The expense ratios for the year ended March 31, 1996 and periods
thereafter, have been adjusted to reflect a change in reporting guidelines.
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 prior periods
have not been adjusted to reflect this change.
(4) Portfolio Turnover represents the rate of portfolio activity for the period
while the Fund was making investments directly in securities. The portfolio
turnover rate for the period since the Fund transferred substantially all
of its investable assets to the Portfolio is shown in the Portfolio's
financial statements which are included elsewhere in this report.
See notes to financial statements
8
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
------------------------------------------------------------------------------
EV Marathon National Limited Maturity Municipals 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 has two classes of
shares. Class I shares are sold at net asset value and are subject to a
contingent deferred sales charge (See Note 6). Class I shares held for the
longer of (i) four years or (ii) the time at which the contingent deferred
sales charge applicable to such shares expires will automatically convert
to Class II shares. All classes of shares have equal rights as to assets
and voting privileges. Realized and unrealized gains or losses and net
investment income, other than class specific expenses, are allocated daily
to each class of shares based on the relative net assets of each class to
the total net assets of the Fund. Each class of shares differs in its
distribution plan and certain other class specific expenses. The Fund
invests all of its investable assets in interests in 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 (83.9% at March 31, 1997). The performance of the
Fund is directly affected by the performance of the Portfolio. The
financial statements of the Portfolio, including the portfolio of
investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. The following is a
summary of significant accounting policies consistently followed by the
Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
A Investment Valuations -- Valuation of securities by the Portfolio is
discussed in Note 1A of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report.
B Income -- The Fund's net investment income consists of the Fund's pro
rata share of the net investment income of the Portfolio, less all actual
and accrued expenses of the Fund determined in accordance with generally
accepted accounting principles.
C Federal Taxes -- The Fund's policy is to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute to shareholders each year all of its taxable 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, 1997, the Fund, for federal income tax purposes, had a capital
loss carryover of $3,181,558 which will reduce the 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 would otherwise be necessary to relieve
the Fund of any liability for federal income tax. Such capital loss
carryover will expire on March 31, 2003 ($1,638,170), March 31, 2004
($769,552), and March 31, 2005 ($773,836). 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 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 daily cash balances the Fund or the
Portfolio maintains with IBT. All significant credit balances used to
reduce the Fund's custodian fees are reported as a reduction of expenses on
the Statement of Operations.
G Other -- Investment transactions are accounted for on a trade date basis.
9
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
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. Dividends are declared separately for
each class of shares. 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 same class of the Fund at the net asset value as of the ex-dividend
date. Distributions are paid in the form of additional shares of the same
class 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, 1998
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).
Such shares may be issued in a number of different classes. Transactions in
Class I and II shares were as follows:
<TABLE>
<CAPTION>
Year Ended March 31,
-------------------------------
Class I 1997 1996
-------------------------------------------------------------------------
<S> <C> <C>
Sales 422,835 575,154
Issued to shareholders electing
to receive payments of
distributions in Fund shares 179,046 261,901
Redemptions (2,435,330) (3,777,641)
Exchange to Class II shares (4,344,898) -
-------------------------------------------------------------------------
Net increase (decrease) (6,178,347) (2,940,586)
-------------------------------------------------------------------------
<CAPTION>
Year Ended
Class II March 31, 1997
--------------------------------------------------------------------------
<S> <C>
Sales -
Issued to shareholders electing
to receive payments of
distributions in Fund shares 29,088
Redemptions (693,394)
Exchange from Class I shares 4,344,898
--------------------------------------------------------------------------
Net increase (decrease) 3,680,592
--------------------------------------------------------------------------
</TABLE>
There were no transactions involving Class II shares for the year ended
March 31, 1996.
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. Certain of the officers and Trustees
of the Fund and the Portfolio are officers and directors/trustees of the
above organizations (Note 5). Except as to Trustees of the Fund and the
Portfolio who are not members of EVM's organization, officers and Trustees
receive remuneration for their services to the Fund out of such investment
adviser fee.
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 Class I 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) 3% of the aggregate amount received by the
Fund for Class I shares sold plus, (ii) distribution fees calculated by
applying the rate of 1% over the prevailing prime rate to the outstanding
balance of Uncovered Distribution Charges of EVD reduced by the aggregate
amount of contingent deferred sales charges (see Note 6) and daily amounts
theretofore paid to EVD. The Fund accrued $607,612 as payable to EVD for
the year ended March 31, 1997, representing 0.75%
10
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
(annualized) of average daily net assets attributable to Class I shares. At
March 31, 1997, the amount of Uncovered Distribution Charges EVD calculated
under the Plan was approximately $542,000.
In addition, the Plan authorizes the Fund to make payments of service fees
to the Principal Underwriter, Authorized Firms and other persons in amounts
not exceeding 0.25% of the Fund's average daily net assets for each fiscal
year. The Trustees have initially implemented the Plan by authorizing the
Fund to make quarterly payments of service fees to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed 0.15%
per annum of the Fund's average daily net assets attributable to both Class
I and Class II shares based on the value of Fund shares sold by such
persons and remaining outstanding for at least one year. Service fee
payments will be made for personal services and/or the maintenance of
shareholder accounts. Service fees are separate and distinct from the sales
commissions and distribution fees payable by the Fund to EVD, and, as such
are not subject to automatic discontinuance where there are no outstanding
Uncovered Distribution Charges of EVD. Service fee payments for the year
ended March 31, 1997 amounted to $117,948 for Class I and $27,324 for Class
II.
Certain officers and Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
------------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on any redemption of
Class I shares made within four years 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 Class I shares acquired by reinvestment
of dividends or capital gains distributions. The CDSC is imposed at
declining rates that begin at 3% in the case of redemptions in the first
year of purchase. No CDSC is levied on shares which have been sold to EVM
or its affiliates or to their respective employees. CDSC charges are paid
to EVD to reduce the amount of Uncovered Distribution Charges calculated
under the Fund's Distribution Plan (See Note 5). CDSC charges received when
no Uncovered Distribution Charges exist will be credited to the Fund. EVD
received approximately $241,000 of CDSC paid by shareholders of Class I
shares for the year ended March 31, 1997.
7 Investment Transactions
------------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the
year ended March 31, 1997, aggregated $4,896,127 and $35,643,923,
respectively.
11
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
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
Marathon National Limited Maturity Municipals Fund (one of the series
constituting the Eaton Vance Investment Trust) as of March 31, 1997, the related
statement of operations for the year then ended, the statements of changes in
net assets for the years ended March 31, 1997 and 1996 and the financial
highlights for each of the years in the four year period ended March 31, 1997
and for the period from the start of business May 22, 1992 to May 31, 1993.
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, the financial statements and financial highlights present
fairly, in all material respects, the financial position of EV Marathon National
Limited Maturity Municipals Fund at March 31, 1997, 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
May 2, 1997
12
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1997
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.00%
<TABLE>
<CAPTION>
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cogeneration -- 1.31%
- -------------------------------------------------------------------------------------
NR A+ $ 1,250 New Jersey Economic Development
Authority, Vineland
Cogeneration Limited
Partnership Project (AMT),
7.875%, 6/1/19 $ 1,343,175
- -------------------------------------------------------------------------------------
$ 1,343,175
- -------------------------------------------------------------------------------------
Education -- 7.24%
- -------------------------------------------------------------------------------------
NR NR $ 1,500 Arizona Educational Loan
Marketing Corp., (AMT), 6.00%,
9/1/01 $ 1,556,310
NR NR 1,900 Arizona Educational Loan
Marketing Corp., (AMT), 6.25%,
6/1/06 1,950,426
A NR 1,000 Arizona Student Loan
Acquisition Authority, (AMT),
7.625%, 5/1/10 1,080,430
A1 NR 1,730 Massachusetts Health and
Educational Facilities
Authority (Tufts University),
7.40%, 8/1/18 1,828,420
Ba1 NR 1,000 New Hampshire Higher Education
and Health Facilities Authority
(Colby-Sawyer College), 7.20%,
6/1/12 1,012,640
- -------------------------------------------------------------------------------------
$ 7,428,226
- -------------------------------------------------------------------------------------
Escrowed / Prerefunded -- 1.73%
- -------------------------------------------------------------------------------------
Aaa AAA $ 1,500 Grand Ledge, MI, Public School
District, (MBIA), Prerefunded
to 5/1/04, 7.875%, 5/1/11 $ 1,781,580
- -------------------------------------------------------------------------------------
$ 1,781,580
- -------------------------------------------------------------------------------------
General Obligations -- 14.82%
- -------------------------------------------------------------------------------------
Baa BBB $ 5,000 City of Detroit, Michigan,
6.50%, 4/1/02/(1)/ $ 5,262,799
Ba1 BBB 1,000 Cleveland, OH, City School
District, 6.50%, 6/15/97 1,001,290
NR NR 1,800 Pennsylvania Economic
Development Authority, Resource
Recovery, (Northampton Project)
(AMT), 6.75%, 1/1/07 1,821,006
Aa3 AA- 3,800 State of Connecticut, 5.375%,
5/15/12/(2)/ 3,738,022
Baa NR 3,270 Youngstown, OH, County School
District, 6.40%, 7/1/00 3,391,055
- -------------------------------------------------------------------------------------
$ 15,214,172
- -------------------------------------------------------------------------------------
Hospitals -- 2.25%
- -------------------------------------------------------------------------------------
Aa3 AA- $ 2,500 Greenville, SC, Hospital System
(Board of Trustees), 5.25%,
5/1/17 $ 2,311,500
- -------------------------------------------------------------------------------------
$ 2,311,500
- -------------------------------------------------------------------------------------
Housing -- 7.70%
- -------------------------------------------------------------------------------------
A NR $ 1,005 Illinois Development Finance
Authority, Elderly Housing,
(Mattoon Tower - Section 8),
6.35%, 7/1/10 $ 1,013,854
Baa NR 1,125 Illinois Development Finance
Authority, Elderly Housing,
(Rome Meadows), 6.40%, 2/1/03 1,138,489
Baa NR 1,145 Illinois Development Finance
Authority, Elderly Housing,
(Rome Meadows), 6.65%, 2/1/06 1,160,103
NR A 3,500 Maricopa County, AZ, Industrial
Development Authority,
Multifamily, 6.45%, 1/1/17 3,568,915
NR NR 1,025 Maricopa County, AZ, Industrial
Development Authority,
Multifamily, 7.876%, 1/1/11 1,022,427
- -------------------------------------------------------------------------------------
$ 7,903,788
- -------------------------------------------------------------------------------------
Industrial Development Revenue / Pollution Control Revenue -- 13.50%
- -------------------------------------------------------------------------------------
NR NR $ 690 Austin, TX (Cargoport
Development LLC) (AMT), 7.50%,
10/1/07 $ 691,387
NR NR 455 Austin, TX (Cargoport
Development LLC) (AMT), 8.30%,
10/1/21 459,696
A3 A- 2,450 Columbus, NC (International
Paper Co.), 5.80%, 12/1/16 2,349,991
NR NR 3,500 Jackson, TN, Solid Waste
Disposal (Owens-Corning
Fiberglass), (AMT), 6.25%,
3/31/04/(1)/ 3,532,655
NR NR 500 Kimball, NE, Economic
Development Authority, (Clean
Harbors Inc.) (AMT), 10.75%,
9/1/26 503,850
NR NR 1,000 New Jersey Economic Development
Authority, 8.00%, 10/1/07 994,900
NR NR 1,000 New Jersey Economic Development
Authority (Holt Hauling and
Warehouse), 7.80%, 12/15/16 997,920
</TABLE>
See notes to financial statements
13
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- --------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Industrial Development Revenue /
Pollution Control Revenue (continued)
- -----------------------------------------------------------------------------------------
NR BBB $ 2,000 Pennsylvania Economic
Development Authority, Resource
Recovery, (AMT), (Colver
Project), 7.05%, 12/1/10 $ 2,117,520
NR NR 1,455 Santa Fe, NM (Crow Hobbs),
8.25%, 9/1/05 1,461,475
NR NR 750 State of Ohio, Solid Waste
(Republic Engineered Steel,
Inc.) (AMT), 9.00%, 6/1/21 754,973
- -----------------------------------------------------------------------------------------
$ 13,864,367
- -----------------------------------------------------------------------------------------
Insured Electric Utilities -- 2.87%
- -----------------------------------------------------------------------------------------
Aaa AAA $ 3,000 Municipal Electric Authority
Georgia (AMBAC), 5.375%, 1/1/10 $ 2,949,510
- -----------------------------------------------------------------------------------------
$ 2,949,510
- -----------------------------------------------------------------------------------------
Insured General Obligations -- 3.80%
- -----------------------------------------------------------------------------------------
Aaa AAA $ 2,000 Commonwealth of Massachusetts
(FGIC), 5.125%, 11/1/15 $ 1,855,520
Aaa AAA 2,250 Commonwealth of Massachusetts
(MBIA), 4.875%, 10/1/13 2,043,090
- -----------------------------------------------------------------------------------------
$ 3,898,610
- -----------------------------------------------------------------------------------------
Insured Housing -- 4.09%
- -----------------------------------------------------------------------------------------
Aaa AAA $ 2,115 Massachusetts Housing Finance
Authority (Harborpoint
Development), (AMBAC), (AMT),
6.20%, 12/1/10 $ 2,174,855
Aaa AAA 2,000 Massachusetts Housing Finance
Authority, (MBIA), 6.10%, 7/1/15 2,027,140
- -----------------------------------------------------------------------------------------
$ 4,201,995
- -----------------------------------------------------------------------------------------
Insured Special Tax Revenue -- 6.11%
- -----------------------------------------------------------------------------------------
Aaa AAA $ 3,000 Los Angeles County California
Public Works (MBIA), 5.25%,
9/1/12 $ 2,880,420
Aaa AAA 3,500 Pennsylvania Intergovernmental
Cooperative Authority (FGIC),
5.50%, 6/15/16 3,388,840
- -----------------------------------------------------------------------------------------
$ 6,269,260
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Insured Transportation -- 5.06%
- -----------------------------------------------------------------------------------------
Aaa AAA $ 3,000 Chicago, IL (O'Hare
International Airport) (AMBAC),
5.50%, 1/1/16 $ 2,840,280
Aaa AAA 2,270 Texas Turnpike Authority
(FGIC), 6.00%, 1/1/03/(3)/ 2,358,621
- -----------------------------------------------------------------------------------------
$ 5,198,901
- -----------------------------------------------------------------------------------------
Life Care -- 6.59%
- -----------------------------------------------------------------------------------------
Baa2 BBB $ 805 Colorado Health Facilities
Authority, (Rocky Mountain
Adventist), 6.00%, 2/1/98 $ 809,750
NR A+ 2,000 Illinois Health Facilities
Authority, 6.125%, 8/15/10 1,943,380
Baa3 BB 1,570 Massachusetts Health and
Educational Finance Authority
(Milford Whitinsville
Hospital), 7.125%, 7/15/02 1,586,108
Baa3 BBB- 1,915 Richardson, TX, Hospital
Authority, (Richardson Medical
Center), 6.50%, 12/1/12 1,940,699
NR NR 475 Vermont State Industrial
Development Authority, (Wake
Robins), 8.00%, 4/1/99 482,847
- -----------------------------------------------------------------------------------------
$ 6,762,784
- -----------------------------------------------------------------------------------------
Nursing Homes -- 9.09%
- -----------------------------------------------------------------------------------------
NR NR $ 1,105 Arizona Health Facilities
Authority Assisted Living
Facilites, (Mesa), 7.625%,
1/1/06 $ 1,093,795
NR A+ 4,000 California Statewide Nursing
Homes, (Pacific Homes), 5.90%,
4/1/09 4,034,239
NR NR 1,000 Fairfield, OH, Economic
Development Revenue (Beverly
Enterprises), 8.50%, 1/1/03 1,080,490
NR NR 1,500 Massachusetts Industrial
Finance Agency, Health Care
Facilities (Age Institute of
Massachusetts), 7.60%, 11/1/05 1,499,385
NR NR 1,550 Saint Tammany Public Trust
Finance Authority, Louisiana
(Christwood), 8.75%, 11/15/05 1,621,176
- -----------------------------------------------------------------------------------------
$ 9,329,085
- -----------------------------------------------------------------------------------------
Pooled Loans -- 0.98%
- -----------------------------------------------------------------------------------------
A NR $ 1,000 Arkansas State Student Loan
Authority (AMT), 6.25%, 6/1/10 $ 1,005,080
- -----------------------------------------------------------------------------------------
$ 1,005,080
- -----------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
14
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000
Moody's & Poor's omitted) Security Value
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Solid Waste -- 1.13%
- -------------------------------------------------------------------------------------
NR BBB- $ 1,120 New Jersey Economic Development
Authority, Heating and Cooling
(Trigen-Trenton), (AMT), 6.10%,
12/1/05 $ 1,158,786
- -------------------------------------------------------------------------------------
$ 1,158,786
- -------------------------------------------------------------------------------------
Transportation -- 11.73%
- -------------------------------------------------------------------------------------
Baa BBB $ 2,000 Denver, CO City and County
Airport, (AMT), 7.00%, 11/15/99 $ 2,108,060
NR NR 1,225 Eagle County, CO, Airport
Terminal Corp. (American
Airlines), (AMT), 6.75%, 5/1/06 1,252,403
NR NR 1,180 Los Angeles, CA, Regional
Airport Improvement Corporate
Lease, (TransWorld Airlines),
6.125%, 5/15/00 1,156,164
A1 A+ 3,000 Massachusetts State Turnpike
Authority, 5.00%, 1/1/20 2,662,290
Aa A+ 3,000 Triborough Bridge and Tunnel
Authority, 5.30%, 1/1/17 2,823,030
Aa2 AA 2,000 Wisconsin Housing and Economic
Development Authority, 6.45%,
9/1/27 2,038,700
- -------------------------------------------------------------------------------------
$ 12,040,647
- -------------------------------------------------------------------------------------
Total Tax-Exempt Investments
(identified cost, $101,840,272) $102,661,466
- -------------------------------------------------------------------------------------
</TABLE>
/(1)/ Security has been segregated to cover when-issued securities.
/(2)/ Security has been segregated to cover margin requirements on open
financial futures contracts.
/(3)/ When-issued security.
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
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 of such economic developments, at March 31, 1997, 23.7%
of the securities in the portfolio of investments are backed by bond insurance
of various financial institutions and financial guaranty assurance agencies. The
aggregate percentage insured by financial institutions ranged from 7.4% to 8.5%
of total investments.
At March 31, 1997 the concentration of the Portfolio's investments in
the various states, determined as a percentage of total investments is
as follows:
<TABLE>
<CAPTION>
<S> <C>
Massachusetts 15%
Arizona 10%
Others, representing less than 10% individually 75%
</TABLE>
See notes to financial statements
15
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of March 31, 1997
Assets
- -----------------------------------------------------------------------------------------
<S> <C>
Investments, at value (Note 1A)
(identified cost, $101,840,272) $ 102,661,466
Cash 704
Receivable for investments sold 1,594,030
Interest receivable 2,142,095
Receivable for variation margin on open financial futures
contracts (Note 1E) 7,633
Deferred organization expenses (Note 1D) 2,687
- -----------------------------------------------------------------------------------------
Total assets $ 106,408,615
- -----------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------
Payable for when-issued securities (Note 1G) $ 2,325,933
Demand note payable (Note 3) 1,569,000
Payable to affiliate - Trustees' fees (Note 2) 2,256
Accrued expenses 7,910
- -----------------------------------------------------------------------------------------
Total liabilities $ 3,905,099
- -----------------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $ 102,503,516
- -----------------------------------------------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $ 101,543,559
Net unrealized appreciation of investments and financial
futures contracts (computed on the basis of identified cost) 959,957
- -----------------------------------------------------------------------------------------
Total $ 102,503,516
- -----------------------------------------------------------------------------------------
<CAPTION>
Statement of Operations
For the Year Ended
March 31, 1997
Investment Income
- -----------------------------------------------------------------------------------------
<S> <C>
Interest income $ 7,212,252
- -----------------------------------------------------------------------------------------
Total income $ 7,212,252
- -----------------------------------------------------------------------------------------
Expenses
- -----------------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 575,268
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 8,729
Custodian fee 66,720
Legal and accounting services 24,420
Bond pricing 10,848
Amortization of organization expenses (Note 1D) 2,467
Miscellaneous 31,222
- -----------------------------------------------------------------------------------------
Total expenses $ 719,674
- -----------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee (Note 1H) $ 26,132
- -----------------------------------------------------------------------------------------
Total expense reductions $ 26,132
- -----------------------------------------------------------------------------------------
Net expenses $ 693,542
- -----------------------------------------------------------------------------------------
Net investment income $ 6,518,710
- -----------------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- -----------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 108,501
Financial futures contracts (1,238,242)
- -----------------------------------------------------------------------------------------
Net realized loss on investments $(1,129,741)
- -----------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments $ (288,902)
Financial futures contracts 138,763
- -----------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $ (150,139)
- -----------------------------------------------------------------------------------------
Net realized and unrealized loss on investments $(1,279,880)
- -----------------------------------------------------------------------------------------
Net increase in net assets from operations $ 5,238,830
- -----------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
16
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended Year Ended
in Net Assets March 31, 1997 March 31, 1996
- ---------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment income $ 6,518,710 $ 7,759,487
Net realized gain (loss)
on investments (1,129,741) 1,454,592
Net change in unrealized
appreciation (depreciation) (150,139) (359,938)
- ---------------------------------------------------------------------------------
Net increase in net assets
from operations $ 5,238,830 $ 8,854,141
- ---------------------------------------------------------------------------------
Capital transactions --
Contributions $ 8,914,088 $ 15,935,762
Withdrawals (46,425,770) (59,634,339)
- ---------------------------------------------------------------------------------
Net decrease in net assets from
capital transactions $ (37,511,682) $ (43,698,577)
- ---------------------------------------------------------------------------------
Net decrease in net assets $ (32,272,852) $ (34,844,436)
- ---------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------
At beginning of year $ 134,776,368 $ 169,620,804
- ---------------------------------------------------------------------------------
At end of year $ 102,503,516 $ 134,776,368
- ---------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
17
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Year Ended March 31,
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1997 1996 1995 1994*
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Ratios to average daily net assets
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Expenses /(1)/ 0.60% 0.57% 0.53% 0.52%+
Expenses after custodian fee reduction 0.58% 0.56% -- --
Net investment income 5.45% 5.08% 5.02% 4.74%+
Portfolio Turnover 68% 68% 56% 21%
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $ 102,504 $ 134,776 $ 169,621 $ 177,842
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</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 and periods
thereafter 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 prior periods have not been adjusted to reflect this change.
See notes to financial statements
18
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1997
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
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National Limited Maturity Municipals Portfolio (the Portfolio) seeks to
provide (1) a high level of income exempt from regular federal income tax
and (2) 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
the commodity exchanges are valued at closing settlement prices. Short-term
obligations, maturing in sixty days or less, are valued at amortized cost,
which approximates value. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods
determined in good faith by or at the direction of the Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or 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 Options on Financial Futures Contracts -- Upon the purchase of a put
option on a financial futures contract by the Portfolio, the premium paid
is recorded as an investment, the value of which is marked-to-market daily.
When a purchased option expires, a Portfolio will realize a loss in the
amount of the cost of the option. When a Portfolio enters into a closing
sales transaction, the Portfolio will realize a gain or loss depending on
whether the sales proceeds from the closing sales transaction is greater or
less than the cost of the option. When the Portfolio exercises a put
option, settlement is made in cash. The risk associated with purchasing
options is limited to the premium originally paid.
G When-issued and Delayed Delivery Transactions -- The Portfolio may engage
in when-issued and delayed delivery transactions. The Portfolio records
when-issued securities on trade date and maintains security positions such
that sufficient liquid assets will be available to make payments for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked-to-market daily and begin earning interest on
settlement date.
H 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.
19
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
I Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expense during the reporting
period. Actual results could differ from those estimates.
J Other -- Investment transactions are accounted for on a trade date basis.
2 Investment Adviser Fee and Other Transactions
with Affiliates
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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, 1997, the fee
was equivalent to 0.48% of the Portfolio's average net assets for such
period and amounted to $575,268. 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 that are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of the Trustees Deferred Compensation
Plan. For the year ended March 31, 1997, no significant amounts have been
deferred.
3 Line of Credit
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The Portfolio participates with other portfolios and funds managed by BMR
and EVM in a committed $120 million unsecured line of credit agreement with
a group of banks. The Portfolio may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above the bank's adjusted certificate of deposit rate, eurodollar
rate or federal funds rate. In addition, a fee computed at an annual rate
of 0.15% on the daily unused portion of the line of credit is allocated
among the participating portfolios and funds at the end of each quarter. At
March 31, 1997, the Portfolio had a balance outstanding pursuant to this
line of credit of $1,569,000. 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 $82,251,588 and $116,331,586,
respectively.
5 Federal Income Tax Basis of Investments
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The cost and unrealized appreciation/depreciation in value of the
investments owned at March 31, 1997, as computed on a federal income tax
basis, were as follows:
Aggregate cost $101,840,272
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Gross unrealized appreciation $ 1,485,488
Gross unrealized depreciation (664,294)
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Net unrealized appreciation $ 821,194
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6 Financial Instruments
---------------------------------------------------------------------------
The Portfolio regularly trades in financial instruments with off-balance
sheet risk in the normal course of its investing activities to assist in
managing exposure to various market risks. These financial instruments
include written options and futures contracts and may involve, to a varying
degree, elements of risk in excess of the amounts recognized for financial
statement purposes. The notional or contractual amounts of these
instruments represent the investment the Portfolio has in particular
classes of financial instruments and does not necessarily represent the
amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and
offsetting transactions are considered. A summary of obligations under
these financial instruments at March 31, 1997 were as follows:
<TABLE>
<CAPTION>
Futures
Contracts Net Unrealized
Expiration Date Contracts Position Appreciation
-----------------------------------------------------------------------
<S> <C> <C> <C>
6/97 50 U.S. Treasury Bonds Short $ 138,763
-----------------------------------------------------------------------
</TABLE>
20
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1997
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, 1997, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended March 31,
1997 and 1996 and the supplementary data for each of the years in the three year
period ended March 31, 1997 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 securities held as of March
31, 1997 by correspondence with the custodian and brokers. 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, the financial statements and supplementary data present
fairly, in all material respects, the financial position of National Limited
Maturity Municipals Portfolio at March 31, 1997, the results of its operations,
the changes in its net assets and its supplementary data for the respective
stated periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 2, 1997
21
<PAGE>
EV Marathon National Limited Maturity Municipals Fund as of March 31, 1997
INVESTMENT MANAGEMENT
EV Marathon National Limited Maturity Municipals Fund
Officers Independent Trustees
Thomas J. Fetter Donald R. Dwight
President President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
James B. Hawkes
Vice President and Trustee Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Robert B. MacIntosh Banking, Harvard University Graduate
Vice President School of Business Administration
James L. O'Connor Norton H. Reamer
Treasurer President and Director, United Asset
Management Corporation
Thomas Otis
Secretary John L. Thorndike
Formerly Director, Fiduciary Company
Incorporated
Jack L. Treynor
Investment Adviser and Consultant
National Limited Maturity Municipals Portfolio
Officers Independent Trustees
Thomas J. Fetter Donald R. Dwight
President President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
James B. Hawkes
Vice President and Trustee Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Robert B. MacIntosh Banking, Harvard University Graduate
Vice President School of Business Administration
William H. Ahern, Jr. Norton H. Reamer
Vice President and President and Director, United Asset
Portfolio Manager Management Corporation
James L. O'Connor John L. Thorndike
Treasurer Formerly Director, Fiduciary Company
Incorporated
Thomas Otis
Secretary Jack L. Treynor
Investment Adviser and Consultant
22
<PAGE>
Investment Adviser of
National Limited Maturity Municipals Portfolio
Boston Management and Research
24 Federal Street
Boston, MA02110
Administrator of EV Marathon 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.
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
EV Marathon National
Limited Maturity Municipals Fund
24 Federal Street
Boston, MA 02110
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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.
- --------------------------------------------------------------------------------
M-LNASRC-5/97
