<PAGE>
-------- Investing
for the [PHOTO OF EDUCATION SIGN
21st APPEARS HERE]
Century
--------
Annual Report March 31, 1998
[PHOTO OF HIGHWAY EV Classic
APPEARS HERE] CLASSIC
NATIONAL
LIMITED MATURITY
MUNICIPALS FUND
Eaton Vance
Global Management-Global Distribution
[PHOTO OF BRIDGE SPAN
APPEARS HERE]
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
LETTER TO SHAREHOLDERS
[PHOTO APPEARS HERE]
EV Classic National Limited Maturity Municipals Fund had a total return of 8.9%
for the year ended March 31, 1998./1/ That return was the result of a rise in
net asset value per share from $9.47 on March 31, 1997 to $9.92 on March 31,
1998, and the reinvestment of $0.377 in dividends./2/ By comparison, the average
return of the 140 funds in the Intermediate Municipal Debt category, as compiled
by Lipper Analytical Services, Inc. - a nationally recognized monitor of mutual
fund performance - was 8.2% for the same period./3/
Amid volatile global markets,
more investors were drawn
to municipal bonds...
The past year has been very good for municipal bonds. Against a backdrop of
moderate economic growth and low inflation, investors again focused on the
unique features of municipals, which are among the last remaining tax-advantaged
vehicles. In addition, the municipal market attracted an increasing number of
crossover investors from other markets. Many investors bought municipals in a
flight to quality as the domestic equity market reached overvalued levels and
emerging markets were caught up in the turmoil of the Asian currency crisis.
A sound economy has resulted in
improving municipal credits...
The upbeat economic climate of recent years has provided strong support for the
municipal market. Steady job growth has generated increased tax revenues for
state and local issuers. As a result, many areas hard-hit in the recessions of
the 1970s and 1980s have made a significant economic comeback, a fact reflected
in the value of their bonds. We expect to see many more such stories emerge in
the coming year.
The municipal market continues to
offer opportunities for
tax-conscious investors...
At present, there is little sign of inflation on the horizon and the federal
budget situation has improved dramatically. Naturally, those conditions are
subject to change over time, and we will continue to closely monitor economic
progress. As for the tax-exempt market, we believe that municipals will continue
to serve their traditional function of financing vital public works, while
offering good opportunities for tax-conscious investors.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
President
May 8, 1998
- --------------------------------------------------------------------------------
Fund Information
as of March 31, 1998
Performance/4/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One year 8.9%
Life of Fund (12/8/93) 3.9
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year 7.9%
Life of Fund (12/8/93) 3.9
Five Largest Sector Weightings/5/
- --------------------------------------------------------------------------------
Industrial Development Bonds 18.1%
General Obligations 11.7%
Nursing Homes 11.7%
Escrowed/Prerefunded 10.7%
Hospitals 10.0%
/1/This return does not include the Fund's 1% contingent deferred sales charge.
/2/ A portion of the Fund's income may be subject to federal income and/or
alternative minimum tax and state income tax. /3/ It is not possible to
invest directly in an Average or Index. /4/ Returns are calculated by
determining the percentage change in net asset value with all distributions
reinvested. SEC returns reflect 1% CDSC. /5/ Five largest sector weightings
account for 62.2% of the portfolio's investments, determined by dividing the
total market value of the holdings by the total investments of the portfolio.
Holdings are subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
2
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
MANAGEMENT DISCUSSION
[PHOTO APPEARS HERE]
William H. Ahern,
Portfolio Manager
An interview with William H. Ahern, portfolio manager of National Limited
Maturity Portfolio.
Q:Bill, how would you characterize the intermediate-term municipal bond market
in the past year?
A:The intermediate-term market registered a good showing. As a measure of that
performance, the Lehman Brothers 7-year Municipal Bond Index rose 9.0% in the
year ended March 31./1/ Continued low inflation and manageable economic growth
provided a favorable backdrop for bonds in general. The municipal market did
slightly underperform the Treasury market due to a rise in municipal supply.
According to the Bond Market Association, municipal issuance rose to more than
$220 billion in 1997 alone, up from around $190 billion the previous year.
Because intermediate-term maturities tend to be less volatile than longer-term
maturities, the sector predictably lagged the longer-term end of the market.
But, more importantly, intermediate bonds performed according to expectations.
Overall, the intermediate market fared very well.
Q:What factors contributed to the Fund's performance during the year?
A:The Fund was helped by several factors. First, given our positive market view
and favorable outlook on inflation, the Fund maintained a slightly longer
average maturity. That helped the Fund participate fully in the market rally.
Second, several bonds purchased in previous periods were escrowed during the
fiscal year. Escrowed bonds are those that have been advance-refunded by their
issuers and are backed by Treasury bonds, making them the highest quality.
When a bond is escrowed, its credit quality is inevitably enhanced. The market
subsequently places a higher value on these bonds because they no longer have
credit risk.
Finally, the Fund benefited from its investments in non-rated bonds. With the
ongoing compression of quality spreads in recent years, non-rated bonds have
performed very well. The Portfolio has increased its efforts to find value in
that segment of the market.
- --------------------------------------------------------------------------------
Portfolio Quality Ratings/2/
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Aaa 11.7%
Aa 6.2%
A 12.7%
Baa 22.8%
Ba 4.3%
Non-Rated 42.3%
Portfolio Overview/2/
- --------------------------------------------------------------------------------
Number of Issues 76
Average Rating A-
Average Coupon 6.45%
Average Effective Maturity 8.69 years
Average Maturity 12 73 years
Average Duration 5.79 years
/1/ It is not possible to invest directly in an Index or Average.
/2/ Because the Portfolio is actively managed, Quality Ratings and Portfolio
Overview are subject to change.
- --------------------------------------------------------------------------------
Mutual fund shares are not insured by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
3
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
MANAGEMENT DISCUSSION CONT'D
Q:Where did you concentrate the Portfolio's largest investments?
A:The Portfolio was well-diversified across the municipal bond spectrum.
Industrial development bonds (IDB) constituted the largest sector weighting. A
robust economy provided strong support for the projects underlying most IDB
bonds. Elsewhere, nursing homes represented another large focus. As part of a
broader, continuing care sector, many non-rated nursing home bonds have fared
well as quality spreads have narrowed and the sector has taken on increasing
importance within the overall health care system. Finally, general obligations
also provided good performance. As the economy has generated higher tax
revenues, the finances of state and local issuers have improved dramatically.
The performance of general obligations have reflected that improvement.
Q:In what kind of industrial development projects did the Portfolio invest?
A:Typically, IDB projects are tied to commercial activity, and involve the
construction of facilities for resource recovery, solid waste disposal, energy
cogeneration, transportation, or port facilities. The Portfolio's IDB
investments ranged from paper companies such as International Paper Co.,
industrial manufacturers like Owens-Corning Fiberglass, and transportation
companies like Holt Hauling.
The bonds are attractive to investors because they often provide above-average
income while developing commercial interests that will generate further tax
revenues for communities. In addition, the bonds often finance projects that
contribute to cleaner water or air, and thus benefit these communities
environmentally.
Q:You indicated that nursing homes and life care facilities have played a
larger part in the Portfolio. Why have you found them attractive investments?
A:From a total health care standpoint, these facilities are playing an
increasingly critical role. That is especially important in a rapidly aging
population. Continuing care facilities have been shown to be cost-effective
and more desirable alternatives for older patients, providing a wide range of
medical services while giving senior citizens a large measure of independence.
From an investment standpoint, we have devoted a good deal of our municipal
resources at Eaton Vance toward this sector. The projects are typically
financed by non-rated bonds, which, because of their higher coupons and the
potential for credit improvement, provide unusual opportunities for the
Portfolio.
Your Investment at Work
- --------------------------------------------------------------------------------
Pennsylvania EDA [GRAPHIC APPEARS HERE]
Resource Recovery
Culver Project
. These bonds were issued to finance the development of a 102-megawatt,
waste-coal-fired, power production facility.
. The project will generate electricity through the use of 552,000 tons per year
of bituminous coal refuse left over from decades of coal mining in the region.
The project is popular because it uses waste products to provide energy for
the surrounding populations.
. This bond, rated BBB- by S&P, represents the efforts of the Portfolio to add
value through lower-rated, investment-grade bonds that may have further
upgrade potential.
4
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
MANAGEMENT DISCUSSION CONT'D
Q:You suggested that the intermediate range of the municipal market performed
according to expectations during the past fiscal year. Why is that important
to investors?
A:Investors are drawn to intermediate-term municipal bonds because they tend to
provide a good percentage of the yield of long-term bonds while limiting
volatility. Conservative, tax-conscious investors characteristically have
among their investment goals the relative stability of principal. Therefore,
it's comforting that, even as they slightly trailed the longer end of the
market, intermediate-term bonds performed as expected.
Q:What is your outlook for the intermediate-term municipal market in the coming
year?
A:While there has been virtually no sign of inflation, the Federal Reserve
nonetheless announced a bias toward higher interest rates at its last open
market meeting. Most economists have anticipated that the weakness in the
Asian economies would reduce U.S. growth rates slightly in 1998. However, the
economy continues to expand and, while we are a long way from dangerous
inflation, the growth rate bears watching.
If the Fed deems it necessary to raise interest rates at some point, the bond
market will, naturally, come under pressure. In that event, intermediate-term
municipals will continue to demonstrate the limited volatility that has made
them a favorite of conservative investors. In the meantime, municipal bonds
continue to provide good after-tax income in a high-tax era. In my view,
municipals should be a part of everyone's overall investment program.
Comparison of Change in Value of a $10,000 Investment in EV Classic National
Limited Maturity Municipals Fund vs. the Lehman Brothers 7-Year Municipal Bond
Index*
[LINE GRAPH APPEARS HERE]
Comparsion of Change in Value of a $10,000 Investment in
EV Traditional National Maturity Municipals Fund vs. the Lehman Brothers
7-Year Municipal Board Index
EV Classic National Limited
Date Maturity Municipals Fund Lehman 7-Yr. Municipal Bond Index
- -------- --------------------------- ---------------------------------
12/31/93 $10,000 $10,000
1/31/94 $10,072 $10,106
2/28/94 $9,927 $9,887
3/31/94 $9,649 $9,623
4/30/94 $9,707 $9,693
5/31/94 $9,756 $9,741
6/30/94 $9,731 $9,724
7/31/94 $9,851 $9,861
8/31/94 $9,869 $9,913
9/30/94 $9,774 $9,818
10/31/94 $9,680 $9,719
11/30/94 $9,551 $9,577
12/31/94 $9,687 $9,723
1/31/95 $9,847 $9,905
2/28/95 $10,006 $10,128
3/31/95 $10,068 $10,233
4/30/95 $10,072 $10,261
5/31/95 $10,230 $10,534
6/30/95 $10,200 $10,524
7/31/95 $10,278 $10,658
8/31/95 $10,364 $10,784
9/30/95 $10,409 $10,825
10/31/95 $10,498 $10,920
11/30/95 $10,585 $11,040
12/31/95 $10,630 $11,098
1/31/96 $10,697 $11,206
2/28/96 $10,645 $11,168
3/31/96 $10,513 $11,059
4/30/96 $10,493 $11,038
5/31/96 $10,472 $11,022
6/30/96 $10,510 $11,107
7/31/96 $10,553 $11,198
8/31/96 $10,577 $11,205
9/30/96 $10,670 $11,306
10/31/96 $10,748 $11,427
11/30/96 $10,919 $11,618
12/31/96 $10,854 $11,583
1/31/97 $10,833 $11,625
2/28/97 $10,928 $11,721
3/31/97 $10,824 $11,569
4/30/97 $10,904 $11,629
5/31/97 $11,020 $11,775
6/30/97 $11,104 $11,887
7/31/97 $11,300 $12,163
8/31/97 $11,233 $12,077
9/30/97 $11,317 $12,204
10/31/97 $11,365 $12,276
11/30/97 $11,428 $12,320
12/31/97 $11,579 $12,471
1/31/98 $11,735 $12,601
2/28/98 $11,762 $12,612
3/31/98 $11,784 $12,613
Performance+
- --------------------------------------------------------------------------------
Average Annual Total Returns (At Net Asset Value)
- --------------------------------------------------------------------------------
One year 8.9%
Life of Fund (12/8/93) 3.9
Average Annual Total Returns (Including applicable 1% CDSC)
- --------------------------------------------------------------------------------
One year 7.9%
Life of Fund (12/8/93) 3.9
* Source: Towers Data Systems, Bethesda, MD.
The chart compares the Fund's total return with that of the Lehman Brothers
7-year Municipal Bond Index, a broad-based, unmanaged market index of
intermediate-maturity municipal bonds. Returns are calculated by determining
the percentage change in net asset value (NAV) with all distributions
reinvested. The lines on the chart represent the total returns of $10,000
hypothetical investments in the Fund and the Index, The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Index. It is not possible to invest directly in an Index.
+ Returns are calculated by determining the percentage change in net asset value
(NAV) with all distributions reinvested. SEC returns reflect 1% CDSC.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less their original cost.
- --------------------------------------------------------------------------------
Federal income tax information on distributions. For Federal income tax
purposes, 100% of the total dividends paid by the Fund from net investment
income during the year ended March 31, 1998 is designated as an exempt-interest
dividend.
- --------------------------------------------------------------------------------
5
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of March 31, 1998
Assets
- --------------------------------------------------------------------------------
Investment in National Limited Maturity Municipals Portfolio,
at value (Note 1A) (identified cost, $7,236,745) $ 7,727,337
Receivable from the Administrator (Note 4) 9,572
Deferred organization expenses (Note 1D) 5,209
- --------------------------------------------------------------------------------
Total assets $ 7,742,118
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Dividends payable $ 6,625
Payable to affiliate for Trustees' fees (Note 4) 47
Accrued expenses 13,180
- --------------------------------------------------------------------------------
Total liabilities $ 19,852
- --------------------------------------------------------------------------------
Net Assets for 778,824 shares of
beneficial interest outstanding $ 7,722,266
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $ 8,373,154
Accumulated net realized loss on investments from
Portfolio (computed on the basis of
identified cost) (1,145,781)
Accumulated undistributed net investment income 4,301
Net unrealized appreciation of investments from
Portfolio (computed on the basis of
identified cost) 490,592
- --------------------------------------------------------------------------------
Total $ 7,722,266
- --------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
- --------------------------------------------------------------------------------
($7,722,266 / 778,824 shares of
beneficial interest outstanding) $ 9.92
- --------------------------------------------------------------------------------
Statement of Operations
For the Year Ended
March 31, 1998
Investment Income (Note 1B)
- --------------------------------------------------------------------------------
Interest income allocated from Portfolio $ 502,526
Expenses allocated from Portfolio (48,590)
- --------------------------------------------------------------------------------
Net investment income from Portfolio $ 453,936
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 173
Distribution and service fees (Note 5) 73,872
Registration fees 18,172
Legal and accounting services 15,131
Printing and postage 9,840
Custodian fee 9,091
Transfer and dividend disbursing agent fees 8,409
Amortization of organization expenses (Note 1D) 7,603
Miscellaneous 3,073
- --------------------------------------------------------------------------------
Total expenses $ 145,364
- --------------------------------------------------------------------------------
Deduct --
Allocation of expenses to the Administrator (Note 4) $ 9,572
- --------------------------------------------------------------------------------
Total expense reductions $ 9,572
- --------------------------------------------------------------------------------
Net expenses $ 135,792
- --------------------------------------------------------------------------------
Net investment income $ 318,144
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 82,434
Financial futures contracts (103,357)
- --------------------------------------------------------------------------------
Net realized loss on investment transactions $ (20,923)
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments $ 418,246
Financial futures contracts (12,059)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ 406,187
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 385,264
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 703,408
- --------------------------------------------------------------------------------
See notes to financial statements
6
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Increase (Decrease) Year Ended Year Ended
in Net Assets March 31,1998 March 31,1997
- -------------------------------------------------------------------------------
From operations --
Net investment income $ 318,144 $ 440,964
Net realized loss on
investment transactions (20,923) (167,624)
Net change in unrealized
appreciation (depreciation)
of investments 406,187 55,372
- -------------------------------------------------------------------------------
Net increase in net assets
from operations $ 703,408 $ 328,712
- -------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income $ (318,856) $ (437,569)
- -------------------------------------------------------------------------------
Total distributions to shareholders $ (318,856) $ (437,569)
- -------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares $ 820,273 $ 999,812
Net asset value of shares issued to
shareholders in payment of
distributions declared 216,304 272,566
Cost of shares redeemed (2,913,924) (4,173,666)
- -------------------------------------------------------------------------------
Net decrease in net assets from
Fund share transactions $(1,877,347) $ (2,901,288)
- -------------------------------------------------------------------------------
Net decrease in net assets $(1,492,795) $ (3,010,145)
- -------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------
At beginning of year $ 9,215,061 $ 12,225,206
- -------------------------------------------------------------------------------
At end of year $ 7,722,266 $ 9,215,061
- -------------------------------------------------------------------------------
Accumulated
undistributed net
investment income
included in net assets
- -------------------------------------------------------------------------------
At end of year $ 4,301 $ 5,013
- -------------------------------------------------------------------------------
See notes to financial statements
7
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------------------------------------------
1998 1997 1996 1995 1994 *
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value -- Beginning of year $ 9.470 $ 9.570 $ 9.530 $ 9.550 $ 10.000
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.377 $ 0.381 $ 0.379 $ 0.375 $ 0.104
Net realized and unrealized gain (loss) on investments 0.450 (0.104) 0.039 0.026++ (0.421)
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.827 $ 0.277 $ 0.418 $ 0.401 $ (0.317)
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.377) $(0.377) $ (0.378) $(0.375) $ (0.104)
In excess of net investment income -- -- -- (0.046) (0.029)
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.377) $(0.377) $ (0.378) $(0.421) $ (0.133)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of year $ 9.920 $ 9.470 $ 9.570 $ 9.530 $ 9.550
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return /(1)/ 8.87% 2.95% 4.42% 4.35% (3.32)%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $ 7,722 $ 9,215 $ 12,225 $19,930 $ 26,046
Ratio of net expenses to average daily net assets /(2)(3)/ 2.26% 2.07% 1.72% 1.57% 1.53%+
Ratio of net expenses to average daily net assets after 2.25% 2.05% 1.71% -- --
custodian fee reduction /(2)/
Ratio of net investment income to average daily net assets 3.88% 3.99% 3.95% 4.01% 3.10%+
- ----------------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio may reflect 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)/ 2.37% 2.03% 1.81% 1.87%+
Expenses after custodian fee reduction /(2)/ 2.36% 2.02% -- --
Net investment income 3.76% 3.64% 3.77% 2.76%+
Net investment income per share $ 0.365 $ 0.349 $ 0.353 $ 0.093
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gains and losses 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 reinvestment date. Total return
is not computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding 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
requirements. The new reporting guidelines require the Fund, as well as
its corresponding 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
8
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
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 (8.3% at
March 31, 1998). 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.
On June 23, 1997, the Board of Trustees approved a Plan of Reorganization
(the "Plan") for the Trust. Under the terms of the Plan, the EV Marathon
National Limited Maturity Municipals Fund (the Successor Fund), a separate
series of the Trust, would acquire substantially all of the assets and
liabilities of the Fund (the Acquired Fund). The transaction will be
structured for tax purposes to qualify as a tax-free reorganization under the
Internal Revenue Code. The Trust will issue and deliver to the Acquired Fund
a number of full and fractional shares of beneficial interest of a separate
class of the Successor Fund (Class C shares), which will be equal in value to
the net asset value per share of the Acquired Fund multiplied by the number
of full and fractional shares of the Acquired Fund then outstanding. Such
transaction will occur after the close of business, on March 31, 1998.
Effective April 1, 1998, the EV Marathon National Limited Maturity Municipals
Fund changed its name to the Eaton Vance National Limited Maturity Municipals
Fund.
A Investment Valuation -- Valuation of securities by the Portfolio is
discussed in Note 1A of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report.
B Income -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund determined in accordance with generally
accepted accounting principles.
C Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable, if any, and tax-
exempt income, including any net realized gain on investments. Accordingly,
no provision for federal income or excise tax is necessary. At March 31,
1998, the Fund, for federal income tax purposes, had a capital loss carryover
of $866,423 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), March 31, 2005 ($109,332), and March 31, 2006 ($29,325).
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.
9
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
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 operating 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 reinvestment date. Distributions
are paid in the form of additional shares or, at the election of the
shareholder, in cash. The Fund distinguishes between distributions on a tax
basis and a financial reporting basis. Generally accepted accounting
principles require that only distributions in excess of tax basis earnings
and profits be reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in over
distributions for financial statement purposes only are classified as
distributions in excess of net investment income or accumulated net realized
gains. Permanent differences between book and tax accounting relating to
distributions are reclassified to paid-in capital.
3 Shares of Beneficial Interest
----------------------------------------------------------------------------
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
Year Ended March 31,
----------------------------
1998 1997
----------------------------------------------------------------------------
Sales 84,408 105,036
----------------------------------------------------------------------------
Issued to shareholders electing to
receive payments of
distributions in Fund shares 22,246 28,601
Redemptions (301,108) (437,552)
----------------------------------------------------------------------------
Net decrease (194,454) (303,915)
----------------------------------------------------------------------------
4 Transactions with Affiliates
----------------------------------------------------------------------------
Eaton Vance Management (EVM) serves as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services.
See Note 2 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report. To enhance the net income of the Fund,
$9,572 of expenses related to the operation of the Fund were allocated to
EVM. Except as to Trustees of the Fund and the Portfolio who are not members
of EVM's 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.
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 $61,560 to or payable to EVD for the year ended March
31, 1998, representing 0.75% of average daily net assets. At March 31, 1998,
the amount of
10
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
Uncovered Distribution Charges of EVD calculated under the Plan was
approximately $3,813,000. 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, 1998, in the amount of $12,312. 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 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
----------------------------------------------------------------------------
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, 1998, 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, 1998, aggregated $915,382 and $3,231,150, respectively.
11
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
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, 1998, the related
statement of operations for the year then ended, the statements of changes in
net assets for the years ended March 31, 1998 and 1997, and the financial
highlights for each of the years in the four-year period ended March 31, 1998
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 audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of EV Classic National
Limited Maturity Municipals Fund at March 31, 1998, 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 1, 1998
12
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1998
PORTFOLIO OF INVESTMENTS
Tax-Exempt Investments -- 100.0%
Ratings (Unaudited)
- ------------------- Principal
Standard Amount
& Poor's (000's
Moody's omitted) Security Value
- ---------------------------------------------------------------------------
Assisted Living -- 1.2%
- ---------------------------------------------------------------------------
NR NR $1,000 New Jersey Economic
Development Authority,
(Chelsea at East
Brunswick), (AMT),
8.00%, 10/1/07 $ 1,107,710
- ---------------------------------------------------------------------------
$ 1,107,710
- ---------------------------------------------------------------------------
Cogeneration -- 4.3%
- ---------------------------------------------------------------------------
NR BBB $ 650 Eastern Connecticut
Resource Recovery
Authority, (Wheelabrator
Lisbon), (AMT), 5.50%,
1/1/20 $ 643,435
NR BBB- 1,120 New Jersey EDA,
(Trigen-Trenton), (AMT),
6.10%, 12/1/05 1,207,102
NR BB+ 1,250 New Jersey EDA, (Vineland
Cogeneration) (AMT),
7.875%, 6/1/19 1,376,313
NR NR 500 Palm Beach County, FL,
Okeelanta Power Project,
(AMT),
6.85%, 2/15/21 400,000
NR NR 500 Palm Beach County, FL,
Osceola Power Project,
(AMT),
6.95%, 1/1/22 395,000
- ---------------------------------------------------------------------------
$ 4,021,850
- ---------------------------------------------------------------------------
Colleges and Universities -- 1.2%
- ---------------------------------------------------------------------------
Aa AA- $1,700 University of Illinois,
0.00%, 4/1/15 $ 707,948
Aa AA- 1,000 University of Illinois,
0.00%, 4/1/16 394,140
- ---------------------------------------------------------------------------
$ 1,102,088
- ---------------------------------------------------------------------------
Economic Development Revenue -- 1.0%
- ---------------------------------------------------------------------------
NR BB- $ 950 Michigan State Strategic
Fund, 6.25%, 8/1/12 $ 981,065
- ---------------------------------------------------------------------------
$ 981,065
- ---------------------------------------------------------------------------
Education -- 1.2%
- ---------------------------------------------------------------------------
Ba1 NR $1,000 New Hampshire Higher
Education and Health
Facilities Authority
(Colby-Sawyer College),
7.20%, 6/1/12 $ 1,086,240
- ---------------------------------------------------------------------------
$ 1,086,240
- ---------------------------------------------------------------------------
Escrowed / Prerefunded -- 10.7%
- ---------------------------------------------------------------------------
Aaa AAA $1,500 Grand Ledge, MI, Public
School District, (MBIA),
Prerefunded to 5/1/04,
7.875%, 5/1/11 $ 1,809,690
NR NR 3,500 Maricopa County, AZ, IDA,
Multifamily, 6.45%, 1/1/17 3,954,964
NR NR 990 Maricopa County, AZ, IDA,
Multifamily, 7.876%, 1/1/11 1,194,683
Aaa NR 3,000 Massachusetts Turnpike
Authority, 5.00%, 1/1/20/(1)/ 2,990,759
- ---------------------------------------------------------------------------
$ 9,950,096
- ---------------------------------------------------------------------------
General Obligations -- 11.7%
- ---------------------------------------------------------------------------
Baa2 BBB+ $4,000 Detroit, MI, 6.50%,
4/1/02/(2)/ $ 4,306,559
Aa1 AA+ 750 Ohio State, 0.00%, 8/1/08 468,068
NR NR 1,800 Pennsylvania Economic
Development Financing
Authority, (Resource
Recovery for Northampton),
6.75%, 1/1/07 1,966,824
Baa1 A 1,500 Puerto Rico Aqueduct and
Sewer Authority, 5.00%,
7/1/15 1,474,365
NR NR 2,540 Youngstown, OH, County
School District, 6.40%,
7/1/00 2,633,802
- ---------------------------------------------------------------------------
$10,849,618
- ---------------------------------------------------------------------------
Hospitals -- 10.0%
- ---------------------------------------------------------------------------
NR NR $1,900 Colorado Health Facilities
Authority, (Steamboat
Springs Health),
5.00%, 9/15/03 $ 1,914,839
NR NR 500 Colorado Health Facilities
Authority, (Steamboat
Springs Health),
5.30%, 9/15/09 500,625
Baa3 NR 1,340 Massachusetts Health and
Educational Facilities
Authority,
(Milford-Whitinsville
Hospital), Series B,
7.125%, 7/15/02 1,427,328
- ---------------------------------------------------------------------------
NR BBB 500 Michigan State Hospital
(Gratiot Community
Hospital),
6.10%, 10/1/07 539,310
- ---------------------------------------------------------------------------
NR BB- 500 New Hampshire Higher
Educational And Health
Facilities Authority,
(Littleton Hospital
Association), 5.45%, 5/1/08 502,865
See notes to financial statements
13
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- ---------------------------------------------------------------------------
Hospitals (continued)
- ---------------------------------------------------------------------------
NR BBB- $1,390 New Hampshire Higher
Educational And Health
Facilities Authority,
(Monadnock Community
Hospital), 5.60%, 10/1/12 $ 1,412,991
Baa BBB- 1,830 Richardson, TX, Hospital
Authority, (Richardson
Medical Center),
6.50%, 12/1/12 1,969,867
NR BBB 500 Valley, AL, Special Tax
Care Facilities Financing
Authority, (Lanier Memorial
Hospital), 5.45%, 11/1/11 502,320
NR BBB 530 Valley, AL, Special Tax
Care Facilities Financing
Authority, (Lanier Memorial
Hospital), 5.50%, 11/1/07 546,902
- ---------------------------------------------------------------------------
$ 9,317,047
- ---------------------------------------------------------------------------
Housing -- 5.8%
- ---------------------------------------------------------------------------
A2 NR $1,005 Illinois Development
Finance Authority, Elderly
Housing, (Mattoon Tower),
(Section 8), 6.35%, 7/1/10 $ 1,045,059
Baa3 NR 1,035 Illinois Development
Finance Authority, Elderly
Housing, (Rome Meadows),
6.40%, 2/1/03 1,065,129
Baa3 NR 1,145 Illinois Development
Finance Authority, Elderly
Housing, (Rome Meadows),
6.65%, 2/1/06 1,187,239
Aa2 AA 2,000 Wisconsin Housing and
Economic Development
Authority, (Home
Ownership), (AMT), 6.45%,
9/1/27 2,137,560
- ---------------------------------------------------------------------------
$ 5,434,987
- ---------------------------------------------------------------------------
Industrial Development Revenue /
Pollution Control Revenue -- 18.1%
- ---------------------------------------------------------------------------
NR NR $ 690 Austin, TX (Cargoport
Development LLC) (AMT),
7.50%, 10/1/07 $ 735,071
NR NR 455 Austin, TX (Cargoport
Development LLC) (AMT),
8.30%, 10/1/21 506,602
A1 NR 1,060 Boise, ID, (Western Trailer
Co.), (LOC: First Security
Bank), (AMT),
5.05%, 9/1/06 1,047,439
NR BBB- 1,000 Clark County, NV, (Nevada
Power Co.), (AMT), 5.90%,
10/1/30 1,026,170
A3 A- 1,000 Columbus, NC (International
Paper Co.), 5.80%, 12/1/16 1,048,340
A3 A- 750 Essex County, NY, LOC,
(International Paper Co.),
(AMT), 5.70%, 7/1/16 800,850
NR NR 900 Iowa Finance Authority,
Commercial Development
Revenue, (Southbridge
Mall), 6.375%, 12/1/13 906,129
NR NR 3,445 Jackson, TN, Solid Waste
Disposal (Owens-Corning
Fiberglass), (AMT), 6.25%,
3/31/04/(2)/ 3,564,472
A3 A- 500 Jones County,
(International Paper Co.),
5.80%, 10/1/21 514,810
NR NR 500 Kimball, NE, EDA, (Clean
Harbors Inc.) (AMT),
10.75%, 9/1/26 549,765
NR NR 1,000 New Jersey EDA, (Holt
Hauling), 7.90%, 3/1/27 1,142,860
NR NR 750 Ohio Solid Waste Revenue,
(Republic Engineered Steels
Inc.), (AMT), 9.00%, 6/1/21 808,665
NR BBB- 2,000 Pennsylvania Economic
Development Financing
Authority, (Resources
Recovery - Culver Project),
(AMT), 7.05%, 12/1/10 2,227,220
NR NR 500 Robbins, IL, Resources
Recovery, (AMT), 8.375%,
10/15/10 523,575
NR NR 1,330 Santa Fe, NM (Crow Hobbs),
8.25%, 9/1/05 1,391,193
- ---------------------------------------------------------------------------
$16,793,161
- ---------------------------------------------------------------------------
Insured-Colleges and Universities -- 0.2%
- ---------------------------------------------------------------------------
Aaa AAA $ 500 Southern Illinois
University, Housing and
Auxiliary Facilities,
(MBIA), 0.00%, 4/1/17 $ 186,100
- ---------------------------------------------------------------------------
$ 186,100
- ---------------------------------------------------------------------------
Insured-General Obligations -- 1.6%
- ---------------------------------------------------------------------------
Aaa AAA $ 500 Kalamazoo, MI, (MBIA),
5.40%, 5/1/14 $ 528,720
Aaa AAA 1,000 Willow Run, MI, Community
School District, (AMBAC),
5.00%, 5/1/16 984,750
- ---------------------------------------------------------------------------
$ 1,513,470
- ---------------------------------------------------------------------------
See notes to financial statements
14
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- ---------------------------------------------------------------------------
Insured-Housing -- 2.5%
- ---------------------------------------------------------------------------
Aaa AAA $2,115 Massachusetts HFA,
(Harborpoint Development),
(AMBAC), (AMT), 6.20%,
12/1/10 $ 2,290,630
- ---------------------------------------------------------------------------
$ 2,290,630
- ---------------------------------------------------------------------------
Insured-Industrial Development Revenue -- 0.6%
- ---------------------------------------------------------------------------
Aaa AAA $ 260 Arkansas Development
Finance Authority, (ADFA
Guaranty Program), (AMBAC),
(AMT), 5.40%, 11/1/12 $ 261,227
Aaa AAA 260 Arkansas Development
Finance Authority, (AEDC
Guaranty Program), (AMBAC),
(AMT), 5.40%, 11/1/12 261,227
- ---------------------------------------------------------------------------
$ 522,454
- ---------------------------------------------------------------------------
Insured-Special Tax Revenue -- 0.6%
- ---------------------------------------------------------------------------
Aaa AAA $ 500 George L. Smith, (Georgia
World Congress Center -
Domed Stadium Project),
(MBIA), (AMT),
6.00%, 7/1/06/(3)/ $ 527,020
- ---------------------------------------------------------------------------
$ 527,020
- ---------------------------------------------------------------------------
Insured-Transportation -- 1.1%
- ---------------------------------------------------------------------------
Aaa AAA $1,000 Chicago, IL (O'Hare
International Airport),
(AMBAC), 5.50%, 1/1/16 $ 1,020,660
- ---------------------------------------------------------------------------
$ 1,020,660
- ---------------------------------------------------------------------------
Lease Revenue /
Certificates of Participation -- 0.6%
- ---------------------------------------------------------------------------
Baa3 NR $ 500 Mashantucket Western Pequot
Tribe, CT, 5.55%, 9/1/08 $ 525,410
- ---------------------------------------------------------------------------
$ 525,410
- ---------------------------------------------------------------------------
Life Care -- 4.0%
- ---------------------------------------------------------------------------
NR NR $1,065 Florence, KY, Housing
Facilities, (Bluegrass
Housing),
7.25%, 5/1/07 $ 1,134,470
NR NR 2,000 Illinois Health Facilities
Authority, (Lutheran Social
Services),
6.125%, 8/15/10 2,090,160
NR NR 475 Vermont State Industrial
Development Authority,
(Wake Robins),
8.00%, 4/1/99 478,392
- ---------------------------------------------------------------------------
$ 3,703,022
- ---------------------------------------------------------------------------
Miscellaneous -- 0.6%
- ---------------------------------------------------------------------------
NR NR $ 600 Tax Revenue Exempt
Securities Trust, Community
Health Provider, (Pooled
Loan Program Various States
Trust Certificates), 6.00%,
12/1/36 $ 605,010
- ---------------------------------------------------------------------------
$ 605,010
- ---------------------------------------------------------------------------
Nursing Homes -- 11.7%
- ---------------------------------------------------------------------------
NR NR $1,105 Arizona Health Facilities
Authority Assisted Living
Facilities, (Mesa), 7.625%,
1/1/06 $ 1,141,399
NR A+ 3,500 California Statewide
Communities Development
Corporation, (Pacific
Homes), 5.90%, 4/1/09 3,724,559
NR NR 650 Citrus County, FL,
Industrial Development
Authority, (Beverly
Enterprises), 5.00%,
4/1/03/(3)/ 650,572
NR NR 1,000 Clovis, NM, Industrial
Development Revenue,
(Retirement Ranches, Inc.),
7.75%, 4/1/19 1,022,420
NR NR 850 Fairfield, OH, EDR,
(Beverly Enterprises),
8.50%, 1/1/03 926,798
NR NR 1,500 Massachusetts Industrial
Finance Agency, Health Care
Facilities, (Age Institute
of Massachusetts),
7.60%, 11/1/05 1,605,300
NR NR 1,550 Saint Tammany Public Trust
Finance Authority, LA
(Christwood),
8.75%, 11/15/05 1,799,287
- ---------------------------------------------------------------------------
$10,870,335
- ---------------------------------------------------------------------------
Pooled Loans -- 4.6%
- ---------------------------------------------------------------------------
Aa2 NR $1,900 Arizona Educational Loan
Marketing Corp., (AMT),
6.25%, 6/1/06 $ 2,076,130
A NR 1,000 Arizona Student Loan
Acquisition Authority,
(AMT), 7.625%, 5/1/10 1,112,750
A NR 1,000 Arkansas State Student Loan
Authority, (AMT), 6.25%,
6/1/10 1,056,120
- ---------------------------------------------------------------------------
$ 4,245,000
- ---------------------------------------------------------------------------
See notes to financial statements
15
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Ratings (Unaudited)
- ------------------- Principal
Amount
Standard (000's
Moody's & Poor's omitted) Security Value
- ---------------------------------------------------------------------------
Transportation -- 6.7%
- ---------------------------------------------------------------------------
Baa1 BBB $2,000 Denver, CO City and County
Airport, (AMT), 7.00%,
11/15/99 $ 2,094,760
NR NR 1,225 Eagle County, CO, Airport
Terminal Corp. (American
Airlines), (AMT), 6.75%,
5/1/06 1,309,268
NR NR 900 Los Angeles, CA, Regional
Airport Improvement
Corporate Lease,
(TransWorld Airlines),
6.125%, 5/15/00 900,117
NR NR 260 Memphis-Shelby County, TN
Airport Authority, 6.125%,
12/1/16 266,578
Baa2 BBB 500 Memphis-Shelby County, TN,
(Federal Express Co.),
5.35%, 9/1/12 512,115
NR NR 1,000 Northwest Arkansas Regional
Airport Authority, (AMT),
7.625%, 2/1/27 1,154,370
- ---------------------------------------------------------------------------
$ 6,237,208
- ---------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100.0%
(identified cost $87,240,993) $92,890,181
- ---------------------------------------------------------------------------
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, 1998, 8.5% of the securities in the portfolio
of investments are backed by bond insurance of various financial
institutions and financial guaranty assurance agencies. The aggregate
percentage insured by financial institutions ranged from 3.3% to 5.2% of total
investments.
At March 31, 1998, the concentration of the Portfolio's investments in the
various states, determined as a percentage of total investments is
as follows:
Arizona 10%
Michigan 10%
Others, representing less than 10% individually 80%
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
/(1)/ Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
/(2)/ Security has been segregated to cover when-issued securities.
/(3)/ When-issued security.
See notes to financial statements
16
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1998
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of March 31, 1998
Assets
- ---------------------------------------------------------------------------
Investments, at value (Note 1A)
(identified cost, $87,240,993) $92,890,181
Cash 459
Receivable for investments sold 20,000
Interest receivable 1,720,255
Deferred organization expenses (Note 1D) 219
- ---------------------------------------------------------------------------
Total assets $94,631,114
- ---------------------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------------------
Payable for when-issued securities (Note 1G) $ 1,173,564
Demand note payable (Note 3) 297,000
Payable for daily variation margin on open
financial futures contracts (Notes 1E and 6) 21,562
Payable to affiliate for Trustees' fees (Note 2) 1,945
Accrued expenses 9,783
- ---------------------------------------------------------------------------
Total liabilities $ 1,503,854
- ---------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $93,127,260
- ---------------------------------------------------------------------------
Sources of Net Assets
- ---------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $87,497,879
Net unrealized appreciation of investments (computed
on the basis of identified cost) 5,629,381
- ---------------------------------------------------------------------------
Total $93,127,260
- ---------------------------------------------------------------------------
Statement of Operations
For the Year Ended
March 31, 1998
Investment Income (Note 1B)
- ---------------------------------------------------------------------------
Interest income $ 5,904,500
- ---------------------------------------------------------------------------
Total investment income $ 5,904,500
- ---------------------------------------------------------------------------
Expenses
- ---------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 466,594
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 7,331
Custodian fee (Note 1H) 57,976
Legal and accounting services 21,214
Amortization of organization expenses (Note 1D) 2,468
Miscellaneous 27,479
- ---------------------------------------------------------------------------
Total expenses $ 583,062
- ---------------------------------------------------------------------------
Deduct --
Reduction of custodian fee (Note 1H) $ 12,223
- ---------------------------------------------------------------------------
Total expense reductions $ 12,223
- ---------------------------------------------------------------------------
Net expenses $ 570,839
- ---------------------------------------------------------------------------
Net investment income $ 5,333,661
- ---------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- ---------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 1,034,776
Financial futures contracts (1,196,652)
- ---------------------------------------------------------------------------
Net realized loss on investment transactions $ (161,876)
- ---------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 4,827,994
Financial futures contracts (158,570)
- ---------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $ 4,669,424
of investments
- ---------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 4,507,548
- ---------------------------------------------------------------------------
Net increase in net assets from operations $ 9,841,209
- ---------------------------------------------------------------------------
See notes to financial statements
17
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Increase (Decrease) Year Ended Year Ended
in Net Assets March 31, 1998 March 31, 1997
- ----------------------------------------------------------------------------
From operations --
Net investment income $ 5,333,661 $ 6,518,710
Net realized loss on
investment transactions (161,876) (1,129,741)
Net change in unrealized
appreciation (depreciation)
of investments 4,669,424 (150,139)
- ----------------------------------------------------------------------------
Net increase in net assets
from operations $ 9,841,209 $ 5,238,830
- ----------------------------------------------------------------------------
Capital transactions --
Contributions $ 44,850,231 $ 8,914,088
Withdrawals (64,067,696) (46,425,770)
- ----------------------------------------------------------------------------
Net decrease in net assets
from capital transactions $(19,217,465) $ (37,511,682)
- ----------------------------------------------------------------------------
Net decrease in net assets $ (9,376,256) $ (32,272,852)
- ----------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------
At beginning of year $102,503,516 $ 134,776,368
- ----------------------------------------------------------------------------
At end of year $ 93,127,260 $ 102,503,516
- ----------------------------------------------------------------------------
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------------------------------------------------------------------
1998 1997 1996 1995 1994*
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average daily net assets
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses /(1)/ 0.60% 0.60% 0.57% 0.53% 0.52%+
Expenses after custodian fee reduction 0.59% 0.58% 0.56% -- --
Net investment income 5.53% 5.45% 5.08% 5.02% 4.74%+
Portfolio Turnover 41% 68% 68% 56% 21%
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $93,127 $ 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 ratios 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
19
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1998
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.
20
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
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 operating expenses on the Statement of Operations.
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, 1998, the fee was
equivalent to 0.48% of the Portfolio's average net assets for such period
and amounted to $466,594. 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, 1998, no significant amounts have been deferred.
3 Line of Credit
----------------------------------------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR
and EVM and its affiliates in a $100 million unsecured line of credit
agreement with a group of banks. The Portfolio may temporarily borrow from
the line of credit to satisfy redemption requests or settle investment
transactions. Interest is charged to each portfolio or fund based on its
borrowings at an amount above either the Eurodollar rate or federal funds
rate. In addition, a fee computed at an annual rate of 0.10% on the daily
unused portion of the line of credit is allocated among the participating
portfolios and funds at the end of each quarter. 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 $39,870,169 and $55,540,077,
respectively, for the year ended March 31, 1998.
5 Federal Income Tax Basis of Investments
----------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the
investments owned at March 31, 1998, as computed on a federal income tax
basis, were as follows:
Aggregate cost $ 87,240,993
----------------------------------------------------------------------------
Gross unrealized appreciation $ 5,673,416
Gross unrealized depreciation (24,228)
----------------------------------------------------------------------------
Net unrealized appreciation $ 5,649,188
----------------------------------------------------------------------------
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, 1998 were as follows:
Futures
Contracts Net Unrealized
Expiration Date Contracts Position Appreciation
---------------------------------------------------------------------
6/98 46 U.S. Treasury Bonds Short $ 19,807
---------------------------------------------------------------------
21
<PAGE>
National Limited Maturity Municipals Portfolio as of March 31, 1998
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, 1998, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended March 31,
1998 and 1997 and the supplementary data for each of the years in the four-year
period ended March 31, 1998 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 audits 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, 1998 by correspondence with the custodian and brokers; where replies were
not received, alternative procedures were performed. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of National Limited Maturity
Municipals Portfolio at March 31, 1998, 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 1, 1998
22
<PAGE>
EV Classic National Limited Maturity Municipals Fund as of March 31, 1998
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
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, 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
William H. Ahern, Jr.
Vice President and
Portfolio Manager
Robert B. MacIntosh
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, 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
23
<PAGE>
Investment Advisor 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
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
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-5/98
