<PAGE>
-----------------------------
TO SHAREHOLDERS
VANCE, SANDERS EXCHANGE FUND HAD A TOTAL RETURN OF 12.4% DURING THE SIX MONTHS
ENDED JUNE 30, 1996. That return represented a rise in net asset value per share
to $388.70 from $347.57, and the reinvestment of $1.75 per share in income
dividends. The Fund's performance compares favorably to the 10.1% total return
of the S&P 500, an unmanaged index of large capitalization stocks, during the
first half of the year.
VANCE, SANDERS EXCHANGE FUND HAD A TOTAL RETURN OF 12.4% DURING THE SIX MONTHS
ENDED JUNE 30, 1996.
IN THE PAST SIX MONTHS, THE STOCK MARKET HAS BENEFITED FROM A COMBINATION OF
MODERATE ECONOMIC GROWTH, RELATIVELY STABLE INTEREST RATES, AND LOW INFLATION.
On January 31, the Federal Reserve lowered the Federal funds rate (a key
short-term interest rate benchmark) for the third time in six months to 5.25%,
where it remains. Equities responded positively to the rate decreases in 1995,
and have continued to perform well this year.
IN RECENT WEEKS, YOU SHOULD HAVE RECEIVED NOTICE OF A SPECIAL MEETING OF
PARTNERS OF THE FUND TO BE HELD ON AUGUST 28, 1996. The meeting has been called
to vote on several important proposals that the Fund's Managing General Partners
have approved and believe will provide significant benefits to the Fund and its
shareholders. Adoption of these proposals requires a favorable vote of the
Partners; you are entitled to cast one vote for each share that you own.
THE MEETING WILL CONSIDER THREE PROPOSALS. The first proposal is to reorganize
the Fund as a series of a Massachusetts business trust, a change which provides
certain benefits to the Fund and the Partners and which is appropriate because
the Fund cannot retain its tax status as a partnership beyond 1997 due to
changes in federal tax laws. The second proposal is to amend the Fund's
investment objective to emphasize the consideration given to investor taxes in
managing the portfolio. This proposal would also amend certain fundamental
investment restrictions to permit the Fund to utilize certain modern investment
techniques and pursue certain tax-efficient management strategies. The third
proposal is to adopt the Hub-and-Spoke(R) mutual fund structure, which would
permit the Fund to pursue its investment objective by investing in the Tax
Managed Growth Portfolio (the "Portfolio"), a separate open-end management
investment company with substantially the same investment objective, policies,
and restrictions as the Fund, as proposed to be revised. Investing through the
Portfolio would enable the Fund to consolidate its assets on a tax-free basis
with other similar funds currently investing in the Portfolio and to participate
in a larger, more diversified and potentially more attractive investment
portfolio. The implementation of this proposal is contingent on the
reorganization of the Fund as described above.
[Photo of Landon T. Clay]
"THROUGHOUT ITS 20-YEAR HISTORY, VANCE, SANDERS EXCHANGE FUND HAS BEEN MANAGED
FOR THE LONG TERM AND WITH CONSIDERATION TO SHAREHOLDER TAXES AND AFTER-TAX
RETURNS."
THE MATTERS PRESENTED AT THE MEETING ARE VERY IMPORTANT. IF YOU DO NOT PLAN TO
ATTEND, PLEASE SIGN, DATE AND RETURN THE PROXY CARD ENCLOSED WITH THE MEETING
NOTICE. The issues which will be presented are described in detail in the proxy
statement accompanying the Meeting notice. The Managing General Partners believe
that all of the proposals are in the best interests of the Fund and its
shareholders.
<PAGE>
THROUGHOUT ITS 20-YEAR HISTORY, VANCE, SANDERS EXCHANGE FUND HAS BEEN MANAGED
FOR THE LONG TERM AND WITH CONSIDERATION TO SHAREHOLDER TAXES AND AFTER-TAX
RETURNS. Investing in the Portfolio through the Hub- and-Spoke(R) structure will
not alter this focus, but will enable the Fund to benefit from the changes being
made in its organization and operations. Of course, the Fund will continue to
benefit from the long-term growth of the economy and of stocks of companies
positioned to take advantage of that growth.
Sincerely,
/s/ Landon T. Clay
LANDON T. CLAY
Managing General Partner
August 5, 1996
<PAGE>
-----------------------------
VANCE, SANDERS
EXCHANGE FUND
JUNE 30, 1996
(UNAUDITED)
INVESTMENT CHANGES
SIX MONTHS ENDED JUNE 30, 1996
- ------------------------------------------------------------------------------
Shares Owned
12/31/95 6/30/96
- ------------------------------------------------------------------------------
INCREASES
- ------------------------------------------------------------------------------
Boston Scientific Corp. -- 125,000
- ------------------------------------------------------------------------------
DECREASES*
- ------------------------------------------------------------------------------
CBI Industries, Inc. 25,200 --
- ------------------------------------------------------------------------------
DEKALB Genetics Corp. Class B 415 --
- ------------------------------------------------------------------------------
Dun & Bradstreet Corp. 83,300 81,030
- ------------------------------------------------------------------------------
Intel Corp. 230,240 196,400
- ------------------------------------------------------------------------------
Loctite Corp. 141,392 138,612
- ------------------------------------------------------------------------------
McCormick & Co., Inc., Nonvoting 199,598 181,328
- ------------------------------------------------------------------------------
Nalco Chemical 129,840 116,020
- ------------------------------------------------------------------------------
Novell Inc. 115,500 --
- ------------------------------------------------------------------------------
Phillips Petroleum Co. 100,000 --
- ------------------------------------------------------------------------------
Providian Corp. 54,724 46,794
- ------------------------------------------------------------------------------
*Includes investments paid in kind on redemptions.
OTHER CHANGES
- ------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------
25,520 Automatic Data Processing Inc. in a 2 for 1 stock split.
- ------------------------------------------------------------------------------
127,968 Coca-Cola Company in a 2 for 1 stock split.
- ------------------------------------------------------------------------------
47,800 Federal National Mortgage Association in a 4 for 1 stock
split.
- ------------------------------------------------------------------------------
5,070 Highlands Insurance Group in a 1 for 10 spinoff from
Halliburton Co.
- ------------------------------------------------------------------------------
82,836 Johnson & Johnson in a 2 for 1 stock split.
- ------------------------------------------------------------------------------
60,000 Monsanto Co. in a 5 for 1 stock split.
- ------------------------------------------------------------------------------
150,000 PepsiCo, Inc. in a 2 for 1 stock split.
- ------------------------------------------------------------------------------
<PAGE>
-----------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
- ------------------------------------------------------------------------------
COMMON STOCKS - 97.5%
- ------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- --------------------------------------------------------------------------
AEROSPACE AND DEFENSE - 1.7%
Raytheon Co. 84,744 $ 4,374,909
------------
BEVERAGES - 8.8%
Coca-Cola Company 255,936 $ 12,508,872
PepsiCo, Inc. 300,000 10,612,500
------------
$ 23,121,372
------------
BUILDING MATERIALS - 0.6%
Masco Corp. 55,540 $ 1,680,085
------------
CHEMICALS - 4.1%
Dow Chemical Company 13,917 $ 1,057,692
Monsanto Co.* 300,000 9,750,000
------------
$ 10,807,692
------------
COMPUTERS & BUSINESS EQUIPMENT - 4.4%
Hewlett-Packard Co. 103,584 $ 10,319,556
International Business Machines Corp. 11,094 1,098,306
------------
$ 11,417,862
------------
DISTRIBUTION - 1.4%
Sysco Corp. 107,760 $ 3,690,780
------------
DRUGS - 11.6%
ASTRA AB - Series A ADR 250,000 $ 11,039,150
Merck & Co., Inc. 33,746 2,180,835
Pfizer Inc. 127,184 9,077,758
Schering-Plough Corp. 128,120 8,039,530
------------
$ 30,337,273
------------
ELECTRICAL EQUIPMENT - 4.0%
AMP Inc. 60,360 $ 2,421,945
Emerson Electric Co. 22,398 2,024,219
General Electric Co. 24,864 2,150,736
Lincoln Electric Co. 19,700 694,425
Lincoln Electric Co. Class A 19,700 595,925
General Signal Corp. 68,600 2,598,225
------------
$ 10,485,475
------------
ELECTRONICS - SEMICONDUCTORS - 5.5%
Intel Corp. 196,400 $ 14,423,125
------------
FINANCIAL SERVICES - MISCELLANEOUS - 2.5%
Federal National Mortgage Association 191,200 $ 6,405,200
------------
FOOD - 3.3%
McCormick & Co. Inc., Nonvoting 181,328 $ 4,011,882
Pioneer Hi-Bred International Inc. 87,000 4,600,125
------------
$ 8,612,007
------------
HOUSEHOLD PRODUCTS - 3.5%
Colgate-Palmolive Co. 21,826 $ 1,849,754
Procter & Gamble Co. 80,000 7,250,000
------------
$ 9,099,754
------------
INDUSTRIAL EQUIPMENT - 0.9%
Parker-Hannifin Corp. 53,730 $ 2,276,809
------------
INFORMATION SERVICES - 6.4%
Automatic Data Processing Inc. 51,040 $ 1,971,420
Dun & Bradstreet Corp. 81,030 5,064,375
Reuters Holdings PLC 132,000 9,570,000
------------
$ 16,605,795
------------
INSURANCE - 9.1%
American International Group Inc. 138,008 $ 13,413,789
General Re Corp. 26,816 4,082,736
Highlands Insurance Co.* 5,070 95,063
Marsh & McLennan Companies, Inc. 28,172 2,718,598
Providian Corp. 46,794 2,006,293
Seafield Capital Corp. 35,960 1,348,500
------------
$ 23,664,979
------------
MEDICAL PRODUCTS - 9.1%
Abbott Laboratories 80,000 $ 3,480,000
Baxter International Inc. 49,728 2,349,648
Boston Scientific Corp.* 125,000 5,625,000
Johnson & Johnson 165,672 8,200,764
Medtronic, Inc. 72,000 4,032,000
------------
$ 23,687,412
------------
METALS - INDUSTRIAL - 1.5%
Inco Ltd. 124,000 $ 3,999,000
------------
OIL AND GAS - EQUIPMENT & SERVICES - 2.7%
Halliburton Co. 50,700 $ 2,813,850
Schlumberger Ltd. 49,246 4,148,975
------------
$ 6,962,825
------------
OIL AND GAS - EXPLORATION & PRODUCTION - 1.3%
Apache Corp. 56,440 $ 1,855,470
Louisiana Land & Exploration Co. 25,000 1,440,625
------------
$ 3,296,095
------------
OIL AND GAS - INTEGRATED - 1.8%
Amoco Corp. 47,928 $ 3,468,789
Murphy Oil Corp. 29,700 1,347,637
------------
$ 4,816,426
------------
PRINTING AND BUSINESS FORMS - 1.2%
American Business Products Inc. - GA 146,497 $ 3,204,622
------------
PUBLISHING - 2.5%
Gannett Co., Inc. 93,400 $ 6,608,050
------------
RETAIL - SPECIALTY AND APPAREL - 3.4%
Home Depot, Inc. (The) 80,000 $ 4,320,000
Toys "R" Us, Inc.* 161,775 4,610,588
------------
$ 8,930,588
------------
SPECIALTY CHEMICALS AND MATERIALS - 6.2%
International Flavors & Fragrances 60,000 $ 2,857,500
Loctite Corp. 138,612 6,445,458
Millipore Corp.* 31,440 1,316,550
Minnesota Mining & Manufacturing Co. 26,288 1,813,872
Nalco Chemical Co. 116,020 3,654,630
------------
$ 16,088,010
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $35,289,028) $254,596,145
------------
- ------------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 2.4%
- ------------------------------------------------------------------------------
FACE AMOUNT
(000 OMITTED)
- ------------------------------------------------------------------------------
Associates Corp. of N. America,
3.51% 7/01/96 $ 400 $ 400,000
Ford Motor Credit Corp., 5.37% 7/03/96 6,100 6,098,180
------------
TOTAL SHORT-TERM OBLIGATIONS,
AT AMORTIZED COST $ 6,498,180
------------
TOTAL INVESTMENTS - 99.9%
(IDENTIFIED COST, $41,787,208) $261,094,325
OTHER ASSETS, LESS LIABILITIES - 0.1% 219,629
------------
NET ASSETS - 100% $261,313,954
============
*Non-income producing security.
See notes to financial statements
<PAGE>
-----------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$41,787,208) $261,094,325
Cash 36,694
Dividends receivable 314,581
Miscellaneous receivable 30,967
------------
Total assets $261,476,567
LIABILITIES:
Payable to affiliates --
Investment adviser fee $ 129,260
Managing General Partners 3,320
Accrued expenses and other liabilities 30,033
----------
Total liabilities 162,613
------------
NET ASSETS for 672,280 shares of partnership interest
outstanding $261,313,954
============
NET ASSETS APPLICABLE TO SHARES OF PARTNERSHIP
INTEREST OWNED BY:
Limited Partners (662,451 shares) $257,493,422
General Partners --
Managing Partners (547 shares) $ 212,619
Non-Managing Partner (9,282 shares) 3,607,913 3,820,532
---------- ------------
NET ASSETS $261,313,954
============
SOURCES OF NET ASSETS:
Accumulated net realized gain on investment and
foreign currency transactions (computed on the
basis of identified cost), less the excess of
cost of partnership interest redeemed over
proceeds from sales of partnership interest
(including shares issued to partners electing
to receive payment of distributions in shares) $ 55,544,246
Accumulated distributions of net realized gain
on investments as computed for federal income
tax purposes (16,700,504)
Unrealized appreciation of investments and
foreign currency transactions (computed on the
basis of identified cost) 219,308,729
Undistributed net investment income 3,161,483
------------
Total $261,313,954
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF
PARTNERSHIP INTEREST
($261,313,954 / 672,280 shares of partnership
interest outstanding) $388.70
=======
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
Six Months Ended June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividends (net of foreign withholding tax of
$37,160) $ 2,050,275
Interest 184,542
-----------
Total income $ 2,234,817
Expenses --
Investment adviser fee (Note 4) $ 745,696
Compensation of Managing General Partners not
members of the Non-Managing General Partner's
organization (Note 4) 6,648
Custodian fee 61,903
Printing and postage 30,155
Legal and accounting services 28,451
Transfer and dividend disbursing agent fees 7,500
Miscellaneous 9,742
-----------
Total expenses 890,095
-----------
Net investment income $ 1,344,722
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments and foreign
currency transactions, computed on
the basis of identified cost $ 4,681,623
Increase in unrealized appreciation of
investments and foreign currency 23,003,402
-----------
Net realized and unrealized gain on
investments and foreign currency
transactions 27,685,025
-----------
Net increase in net assets from
operations $29,029,747
===========
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,344,722 $ 2,508,193
Net realized gain on investments and foreign
currency transactions 4,681,623 9,325,132
Increase in unrealized appreciation of
investments and foreign currency 23,003,402 51,653,643
------------ ------------
Increase in net assets from operations $ 29,029,747 $ 63,486,968
------------ ------------
Distributions to partners from net investment
income $ (1,186,942) $ (2,400,734)
------------ ------------
Net decrease from transactions in shares of
partnership interest (Note 2) $ (3,561,154) $ (9,472,006)
------------ ------------
Net increase in net assets $ 24,281,651 $ 51,614,228
NET ASSETS:
At beginning of period 237,032,303 185,418,075
------------ ------------
At end of period (including undistributed net
investment income of $3,161,483 and
$3,003,703, respectively) $261,313,954 $237,032,303
============ ============
<PAGE>
<TABLE>
FINANCIAL STATEMENTS (Continued)
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 --------------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year $347.570 $259.490 $251.710 $246.130 $241.030 $181.960
-------- -------- -------- -------- -------- --------
INCOME FROM OPERATIONS:
Net investment income $ 2.048 $ 3.800 $ 3.406 $ 3.141 $ 3.198 $ 3.743
Net realized and unrealized gain on
investments 40.832 87.730 7.424 5.599 5.012 58.777
-------- -------- -------- -------- -------- --------
Total income from operations $ 42.880 $ 91.530 $ 10.830 $ 8.740 $ 8.210 $ 62.520
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
From net investment income $ (1.750) $ (3.450) $ (3.050) $ (3.000) $ (3.050) $ (3.450)
From net realized gain on investments -- -- -- (0.160) (0.060) --
-------- -------- -------- -------- -------- --------
Total distributions $ (1.750) $ (3.450) $ (3.050) $ (3.160) $ (3.110) $ (3.450)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, end of year $388.700 $347.570 $259.490 $251.710 $246.130 $241.030
======== ======== ======== ======== ======== ========
TOTAL RETURN (1) 12.38% 35.50% 4.39% 3.63% 3.50% 34.76%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000's omitted) $261,314 $237,032 $185,418 $188,538 $195,679 $201,607
Ratio of expenses to average net assets 0.72%+ 0.70% 0.71% 0.71% 0.71% 0.71%
Ratio of net investment income to average
net assets 1.09%+ 1.19% 1.31% 1.22% 1.31% 1.70%
PORTFOLIO TURNOVER 4% 0% 3% 3% 5% 7%
AVERAGE COMMISSION RATE PAID(2) $ 0.600 -- -- -- -- --
<FN>
(1) Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale
at the net asset value on the last day of each period reported. Dividends and distributions, if any, are
assumed to be reinvested at the net asset value on the payable date. Total return is not computed on an
annualized basis.
(2) For fiscal years beginning on or after September 1, 1995, a Fund is required to disclose its average
commission rate per share for security trades on which commissions are charged. Average commission rate paid
is computed by dividing the total dollar amount of commissions paid during the fiscal year by the total number
of shares purchased and sold during the fiscal year for which commissions were charged.
+ Computed on an annualized basis.
</TABLE>
See notes to financial statements
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) SIGNIFICANT ACCOUNTING POLICIES
The Fund is a limited partnership formed under The Uniform Limited Partnership
Act of California, and is registered under the Investment Company Act of 1940
as amended, as a diversified, open-end management investment company. Under
the Partnership Agreement, all partnership interests, whether of a limited
partner or a general partner, are represented by shares of the same class. The
following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Investments listed on security exchanges or in the
NASDAQ National Market are valued at closing sale prices. Listed or unlisted
investments for which closing sale prices are not
available are valued at closing bid prices. Short-term obligations, maturing
in 60 days or less, are valued at amortized cost, which approximates value.
B. INCOME TAXES AND DISTRIBUTIONS TO PARTNERS -- No provision is made by the
Fund for federal or state taxes on the taxable income of the partnership
because each partner is individually responsible for the payment of any taxes
on his share of such taxable income. The Managing General Partners will make
quarterly distributions to the partners from the Fund's net investment income
and it is their present intention to distribute each year approximately 30% of
any taxable net realized gain from investment transactions.
C. OTHER -- Investment transactions are accounted for on a trade date basis.
Dividend income and distributions to partners are recorded on the ex-dividend
date.
D. 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.
- ------------------------------------------------------------------------------
(2) SHARES OF PARTNERSHIP INTEREST
Transactions in shares of partnership interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED) YEAR ENDED DECEMBER 31, 1995
---------------------------------- --------------------------------
SHARES SHARES
------------------- -----------
GENERAL LIMITED GENERAL LIMITED
PARTNERS PARTNERS AMOUNT PARTNERS PARTNERS AMOUNT
--------- --------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Redemptions -- (10,050) $(3,693,250) -- (33,511) $(9,741,812)
Issued to partners electing to receive payment of
distributions in shares 45 323 132,096 109 815 269,806
--------- -------- ----------- --- ------- -----------
Net increase (decrease) 45 (9,727) $(3,561,154) 109 (32,696) $(9,472,006)
========= ======== =========== === ======= ===========
</TABLE>
- ------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregated $5,351,790 and $6,115,551, respectively. In addition, investments
having an aggregate market value of $3,523,822 at dates of redemption were
distributed in payment for shares of partnership interest redeemed, resulting
in realized capital gains of $3,515,215, for book purposes.
- ------------------------------------------------------------------------------
(4) INVESTMENT ADVISER FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
The investment adviser fee, computed at the monthly rate of 0.05 of 1% (1/12 of
an annual rate of 0.6 of 1%) of the Fund's average monthly net assets, was paid
to Eaton Vance Management (EVM) as compensation for management and investment
advisory services rendered to the Fund. The Fund pays the compensation of its
Managing General Partners who are not members of EVM's organization. One of the
Managing General Partners of the Fund is an officer and trustee of EVM and that
organization is the Non-Managing General Partner of the Fund. Managing General
Partners of the Fund that are not affiliated with the investment advisor 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 six months
ended June 30, 1996, no significant amounts have been deferred.
- ------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Fund participates with other funds managed by EVM and affiliates in a $120
million unsecured line of credit agreement with a bank. The line of credit
consists of a $20 million committed facility and a $100 million discretionary
facility. Borrowings will be made by the Fund solely to facilitate the handling
of unusual and/or unanticipated short-term cash requirements. Interest is
charged to each fund based on its borrowings at an amount above either the
bank's adjusted certificate of deposit rate, a variable certificate of deposit
rate, or a federal funds effective rate. In addition, a fee computed at an
annual rate of 1/4 of 1% on the $20 million committed facility and the unused
portion of the $100 million discretionary facility is allocated among the
participating funds at the end of each quarter. The Fund did not have any
significant borrowings or allocated fees during the period.
- ------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at June 30, 1996, as computed on a federal income tax basis, are as
follows:
Aggregate cost $ 41,787,208
============
Gross unrealized appreciation $219,307,117
Gross unrealized depreciation --
------------
Net unrealized appreciation $219,307,117
============
<PAGE>
-----------------------------
INVESTMENT MANAGEMENT
VANCE, SANDERS OFFICERS MANAGING GENERAL PARTNERS
EXCHANGE FUND
(A California LANDON T. CLAY DONALD R. DWIGHT
Limited Chairman and Managing President, Dwight Partners, Inc.
Partnership) General Partner Chairman, Newspapers of
24 Federal New England, Inc.
Street THOMAS E. FAUST, JR.
Boston, MA 02110 Vice President and SAMUEL L. HAYES, III
Portfolio Manager Jacob H. Schiff Professor of
Investment Banking, Harvard
JAMES L. O'CONNOR University Graduate School of
Treasurer Business Administration
THOMAS OTIS NORTON H. REAMER
Secretary President and Director, United
Asset Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
------------------------------------------------------------
VANCE, SANDERS TRANSFER AND DIVIDEND
EXCHANGE FUND DISBURSING AGENT
24 Federal Street First Data Investor
Boston, MA 02110 Services Group, Inc.
BOS725
P.O. Box 1559
INVESTMENT ADVISER Boston, MA 02104
Eaton Vance Management 800-262-1122
24 Federal Street
Boston, MA 02110
INDEPENDENT AUDITORS
Deloitte & Touche LLP
CUSTODIAN 125 Summer Street
Investors Bank & Trust Boston, MA 02110
Company
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
<PAGE>
VANCE, SANDERS
EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
PERFORMANCE RESULTS+
- ------------------------------------------------------------------------------
Average Annual Total Returns
(Standardized SEC performance data
for the periods ended June 30, 1996)
- ------------------------------------------------------------------------------
One year 27.4%
- ------------------------------------------------------------------------------
Five years 15.1%
- ------------------------------------------------------------------------------
Ten years 13.3%
- ------------------------------------------------------------------------------
Life of Fund (6/1/76) 13.8%
- ------------------------------------------------------------------------------
Cumulative Total Return
Life of Fund
(6/1/76 to 6/30/96)
- ------------------------------------------------------------------------------
Vance, Sanders Exchange Fund 1,237.6%
- ------------------------------------------------------------------------------
Dow Jones Industrial Average 1,281.6%
- ------------------------------------------------------------------------------
Standard & Poor's 500 1,392.1%
- ------------------------------------------------------------------------------
+Past performance is no guarantee of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
The Dow Jones Industrial Average and the Standard &Poor's 500 are unmanaged
lists of common stocks.
This report must be preceded or accompanied by a prospectus which contains more
complete information on the Fund including its distribution plan, sales charges
and expenses. Please read the prospectus carefully before investing.
[logo]
EATON VANCE
The Boston Tradition
Funds offered through
Eaton Vance Distributors, Inc.
24 Federal Street, Boston, Massachusetts 02110
8/96
VANCE, SANDERS
EXCHANGE FUND
An Eaton Vance
Exchange Fund
Semi-Annual Report
June 30, 1996
[logo]
