<PAGE>
[LOGO OF EATON Investing [PHOTO OF BRICK WALL
VANCE APPEARS HERE] for the AND EDUCATION SIGN
21st APPEARS HERE]
Century
Annual Report March 31, 1997
[PHOTO OF HIGHWAY EV
AT NIGHT APPEARS
HERE] CLASSIC
NATIONAL
LIMITED MATURITY
MUNICIPALS FUND
Eaton Vance
Global Management-Global Distribution
Classic
[PHOTO OF SUSPENSION
BRIDGE APPEARS HERE]
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1997
LETTER TO SHAREHOLDERS
[PICTURE OF THOMAS J. FETTER APPEARS HERE]
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.
[BAR GRAPHS APPEARS HERE]
<TABLE>
<CAPTION>
Tax-exempt bonds yield 81% of Treasury yields
<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 Funds' 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 Classic 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
[PICTURE OF WILLIAM H. AHERN APPEARS HERE]
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
- ----------------------------------------------------------------------
<S> <C>
One year 3.0%
Life of Fund (12/8/93) 2.5
<CAPTION>
Including 1.00% CDSC for Shareholders Redeeming within the First Year
- ----------------------------------------------------------------------
<S> <C>
One year 2.0%
Life of Fund (12/8/93) 2.5
<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.
/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 Classic 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 Classic National Limited Maturity Municipals Fund as of March 31, 1997
MANAGEMENT DISCUSSION CONT'D
Your Investment at Work
- --------------------------------------------------------------------------------
Eagle County Co Airport Terminal [PICTURE OF AIRPLANE
Corp. 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 Classic 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.
The Fund's total return figures reflect the 1% contingent deferred sales charge
incurred by shareholders redeeming within the first year. 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 Classic National
Limited Maturity Municipals Fund vs. Lehman Brothers 7-Year Municipal Bond Index
From December 31, 1993, through March 31, 1997
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
EV Classic
National
Limited Maturity 7-Year
Municipals Municipal
Date Fund Bond Index
<S> <C> <C>
12/31/93 $10,000 $10,000
1/31/94 $10,100 $10,106
2/28/94 $9,903 $9,887
3/31/94 $9,612 $9,623
4/30/94 $9,679 $9,693
5/31/94 $9,746 $9,741
6/30/94 $9,710 $9,724
7/31/94 $9,828 $9,861
8/31/94 $9,845 $9,913
9/30/94 $9,737 $9,818
10/31/94 $9,631 $9,719
11/30/94 $9,458 $9,577
12/31/94 $9,604 $9,723
1/31/95 $9,773 $9,905
2/28/95 $9,972 $10,128
3/31/95 $10,022 $10,233
4/30/95 $10,035 $10,261
5/31/95 $10,223 $10,534
6/30/95 $10,191 $10,524
7/31/95 $10,299 $10,658
8/31/95 $10,383 $10,784
9/30/95 $10,416 $10,825
10/31/95 $10,503 $10,920
11/30/95 $10,610 $11,040
12/31/95 $10,664 $11,098
1/31/96 $10,729 $11,206
2/28/96 $10,664 $11,168
3/31/96 $10,542 $11,059
4/30/96 $10,510 $11,038
5/31/96 $10,487 $11,022
6/30/96 $10,545 $11,107
7/31/96 $10,608 $11,198
8/31/96 $10,586 $11,205
9/30/96 $10,699 $11,306
10/31/96 $10,775 $11,427
11/30/96 $10,955 $11,618
12/31/96 $10,888 $11,583
1/31/97 $10,865 $11,625
2/28/97 $10,947 $11,721
3/31/97 $10,842 $11,569
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
- ---------------------------------------------
At Net Asset Value
- ---------------------------------------------
<S> <C>
One year 3.0%
Life of Fund (12/8/93) 2.5
Value at 3/31/97 $10,824
<CAPTION>
Including Maximum 1.00% CDSC
- ---------------------------------------------
<S> <C>
One year 2.0%
Life of Fund (12/8/93) 2.5
Value at 3/31/97 $10,824
</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 Classic National Limited Maturity Municipals Fund as of March 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of March 31, 1997
Assets
- ----------------------------------------------------------------------------
<S> <C>
Investment in National Limited Maturity
Municipals Portfolio, at value (Note 1A)
(identified cost, $9,119,500) $ 9,203,905
Receivable for Fund shares sold 23,728
Deferred organization expenses (Note 1D) 12,812
- ----------------------------------------------------------------------------
Total assets $ 9,240,445
- ----------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------
Dividends payable $ 7,206
Payable for Fund shares redeemed 15,574
Payable to affiliate for Trustees' fees (Note 4) 41
Accrued expenses 2,563
- ----------------------------------------------------------------------------
Total liabilities $ 25,384
- ----------------------------------------------------------------------------
Net Assets for 973,278 shares of
beneficial interest outstanding $ 9,215,061
- ----------------------------------------------------------------------------
Sources of Net Assets
- ----------------------------------------------------------------------------
Paid-in capital $ 10,250,501
Accumulated net realized loss on investments
and financial futures contracts (computed
on the basis of identified cost) (1,124,858)
Accumulated undistributed net investment income 5,013
Net unrealized appreciation of investments
from Portfolio (computed on the basis of
identified cost) 84,405
- ----------------------------------------------------------------------------
Total $ 9,215,061
- ----------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
- ----------------------------------------------------------------------------
($9,215,061 / 973,278 shares of
beneficial interest outstanding) $ 9.47
- ----------------------------------------------------------------------------
Statement of Operations
<CAPTION>
For the Year Ended
March 31, 1997
Investment Income (Note 1B)
- ----------------------------------------------------------------------------
<S> <C>
Interest income allocated from Portfolio $ 667,128
Expenses allocated from Portfolio (64,181)
- ----------------------------------------------------------------------------
Net investment income from Portfolio $ 602,947
- ----------------------------------------------------------------------------
Expenses
- ----------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 164
Distribution fees (Note 5) 99,581
Registration fees 16,161
Printing and postage 14,711
Legal and accounting services 9,852
Transfer and dividend disbursing agent fees 8,967
Amortization of organization expenses (Note 1D) 7,603
Custodian fee 2,949
Miscellaneous 1,995
- ----------------------------------------------------------------------------
Total expenses $ 161,983
- ----------------------------------------------------------------------------
Net investment income $ 440,964
- ----------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- ----------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (53,283)
Financial futures contracts (114,341)
- ----------------------------------------------------------------------------
Net realized loss on investments $ (167,624)
- ----------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ 42,978
Financial futures contracts 12,394
- ----------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ 55,372
- ----------------------------------------------------------------------------
Net realized and unrealized loss on investments $ (112,252)
- ----------------------------------------------------------------------------
Net increase in net assets from operations $ 328,712
- ----------------------------------------------------------------------------
</TABLE>
See notes to financial statements
6
<PAGE>
EV Classic 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 $ 440,964 $ 612,920
Net realized loss on
investment transactions (167,624) (148,713)
Net change in unrealized appreciation
of investments 55,372 300,018
- ----------------------------------------------------------------------------
Net increase in net assets
from operations $ 328,712 $ 764,225
- ----------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income $ (437,569) $ (611,406)
- ----------------------------------------------------------------------------
Total distributions to shareholders $ (437,569) $ (611,406)
- ----------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares $ 999,812 $ 3,062,233
Net asset value of shares issued to
shareholders in payment of
distributions declared 272,566 381,127
Cost of shares redeemed (4,173,666) (11,300,488)
- ----------------------------------------------------------------------------
Net decrease in net assets from
Fund share transactions $(2,901,288) $ (7,857,128)
- ----------------------------------------------------------------------------
Net decrease in net assets $(3,010,145) $ (7,704,309)
- ----------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------
At beginning of year $12,225,206 $ 19,929,515
- ----------------------------------------------------------------------------
At end of year $ 9,215,061 $ 12,225,206
- ----------------------------------------------------------------------------
Accumulated
undistributed net
investment income
included in net assets
- ----------------------------------------------------------------------------
At end of year $ 5,013 $ 1,618
- ----------------------------------------------------------------------------
</TABLE>
See notes to financial statements
7
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------------------------------------------------
1997 1996 1995 1994*
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value--Beginning of year $ 9.570 $ 9.530 $ 9.550 $10.000
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -------------------------------------------------------------------------------------------------------------------
Net investment income 0.381 $ 0.379 $ 0.375 $ 0.104
Net realized and unrealized gain (loss) on investments (0.104) 0.039 0.026++ (0.421)
- -------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.277 $ 0.418 $ 0.401 $(0.317)
- -------------------------------------------------------------------------------------------------------------------
Less distributions
- -------------------------------------------------------------------------------------------------------------------
From net investment income $(0.377) $(0.378) $(0.375) $(0.104)
In excess of net investment income -- -- (0.046) (0.029)
- -------------------------------------------------------------------------------------------------------------------
Total distributions $(0.377) $(0.378) $(0.421) $(0.133)
- -------------------------------------------------------------------------------------------------------------------
Net asset value-- End of year $ 9.470 $ 9.570 $ 9.530 $ 9.550
- -------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 2.95% 4.42 % 4.35 % (3.32)%
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000 omitted) 9,215 $12,225 $19,930 $26,046
Ratio of net expenses to average daily net assets/(2)(3)/ 2.07% 1.72% 1.57% 1.53%+
Ratio of net expenses to average daily net assets after
custodian fee reduction/(2)/ 2.05% 1.71% -- --
Ratio of net investment income to average daily net asset 3.99% 3.95% 4.01% 3.10%+
+ The operating expenses of the Fund reflects an
allocation of expenses to the Administrator.
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)(3)/ 2.03% 1.81% 1.87%+
Expenses after custodian fee reduction/(2)/ 2.02% -- --
Net investment income 3.64% 3.77% 2.76%+
Net investment income per share $ 0.349 $ 0.353 $ 0.093
</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, December 8, 1993, to March 31,
1994.
/(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.
See notes to financial statements
8
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1997
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
----------------------------------------------------------------------------
EV Classic 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 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 (9.0% 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 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, 1997,
the Fund, for federal income tax purposes, had a capital loss carryover of
$837,098 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 or excise tax. Such capital loss carryover will
expire on March 31, 2002 ($1,059), March 31, 2003 ($282,104), March 31, 2004
($444,603), and March 31, 2005 ($109,332). 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.
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
9
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1997
NOTES TO FINANCIAL STATEMENTS cont'd
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).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------------------
1997 1996
------------------------------------------------------------------------------
<S> <C> <C>
Sales 105,036 317,139
Issued to shareholders electing
to receive payments of
distributions in Fund shares 28,601 39,524
Redemptions (437,552) (1,171,026)
------------------------------------------------------------------------------
Net decrease (303,915) (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 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 advisor fee. Certain of the officers and
Trustees of the Fund and the 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 the 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 Fund paid or
accrued $82,984 to or payable to EVD for the year ended March 31, 1997,
representing 0.75% (annualized) of average daily net assets. At March 31,
1997, the amount of Uncovered Distribution Charges EVD calculated under the
Plan was approximately $3,466,000.
In addition, the Plan authorizes the Fund to make monthly 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 monthly payments of service fees 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 year ended March 31, 1997, in the amount of $16,597. 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 the maintenance of
shareholder accounts. Service fees are separate and distinct
10
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
from the sales commissions and distribution fees payable by the Fund to EVD,
and, as such are not subject to automatic discontinuance when there are no
outstanding Uncovered Distribution Charges of EVD.
Certain officers and Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
- --------------------------------------------------------------------------------
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. CDSC charges are paid to EVD to reduce the
amount of Uncovered Distribution Charges calculated under the Fund's
Distribution Plan. CDSC charges received when no Uncovered Distribution
Charges exist will be credited to the Fund. For the year ended March 31, 1997,
EVD received approximately $1,000 of CDSC paid by shareholders.
7 Investment Transactions
- --------------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the year
ended March 31, 1997, aggregated $1,126,139 and $4,757,349, respectively.
11
<PAGE>
EV Classic 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
Classic 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 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 three year period ended March 31, 1997 and for the
period from the start of business, December 8, 1993 to March 31, 1994. 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 Classic 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
- -------------------------------------------------------------------------
Cogeneration -- 1.31%
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
- ----------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue (continued)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 Portforlio as of March 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000 Value
Moody's & Poor's omitted) Security
- --------------------------------------------------------------------------------
Solid Waste -- 1.13%
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 -- 100%
(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>
<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
- --------------------------------------------------------------------------
<CAPTION>
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
- --------------------------------------------------------------------------
<CAPTION>
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
- --------------------------------------------------------------------------
Interest income $ 7,212,252
- --------------------------------------------------------------------------
Total income $ 7,212,252
- --------------------------------------------------------------------------
<CAPTION>
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
- --------------------------------------------------------------------------
<CAPTION>
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,
-----------------------------------------------------------------
1997 1996 1995 1994*
- -----------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------
</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
-----------------------------------------------------------------------------
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
-----------------------------------------------------------------------------
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
-----------------------------------------------------------------------------
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
-----------------------------------------------------------------------------
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:
<TABLE>
<S> <C>
Aggregate cost $ 101,840,272
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 1,485,488
Gross unrealized depreciation (664,294)
-----------------------------------------------------------------------------
Net unrealized appreciation $ 821,194
-----------------------------------------------------------------------------
</TABLE>
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 Classic National Limited Maturity Municipals Fund as of March 31, 1997
INVESTMENT MANAGEMENT
EV Classic National Limited Maturity Municipals Fund
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and 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
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
National Limited Maturity Municipals Portfolio
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and Trustee
Robert B. MacIntosh
Vice President
William H. Ahern, Jr.
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
Formerly Director, Fiduciary Company Incorporated
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, 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, Inc.
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
EV Classic National
Limited Maturity Municipals Fund
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
- --------------------------------------------------------------------------------
C-LNASRC-5/97
