<PAGE>
VANCE SANDERS
EXCHANGE FUND
An Eaton Vance
Exchange Fund
Annual Report
December 31, 1995
<PAGE>
TO SHAREHOLDERS
VANCE, SANDERS EXCHANGE FUND HAD A TOTAL RETURN OF 35.5% DURING THE YEAR ENDED
DECEMBER 31, 1995. That return represented a rise in net asset value per share
to $347.57 from $259.49, and the reinvestment of $3.45 in dividends. By
comparison, the S&P 500 Index, an unmanaged index of common stocks, had a
return of 37.6%.
SHAREHOLDERS RECEIVED DIVIDENDS TOTALING $3.45 DURING THE YEAR ENDED DECEMBER
31, 1995.
THE STOCK MARKET PERFORMED VERY WELL DURING THE YEAR, REACHING NEW RECORD LEVELS
ON NUMEROUS OCCASIONS. In dramatic fashion, the market bounced back from the
weak conditions of 1994 to post exceptionally favorable results. The market's
behavior was a positive response to an economic environment of slow but positive
growth, low inflation, and increased optimism about the U.S. government's
ability to address its structural budgetary problems. Stocks also benefited from
exceptionally strong earnings momentum, driven in part by cost-cutting and
restructuring activities.
THE CRUCIAL ECONOMIC ISSUE DURING THE FIRST HALF OF THE YEAR WAS WHETHER THE
FEDERAL RESERVE'S PREVIOUS TIGHTENING OF ITS TARGET FEDERAL FUNDS RATE WOULD
CAUSE A RECESSION OR WOULD PROVIDE A "SOFT LANDING" FOR THE ECONOMY. Concerned
about a slowing economy, the Fed in July lowered its rate by a quarter of a
percentage point, the first downward change since September 1992. Another
quarter-point decrease was announced in December. The stock market reacted
positively to both these changes, which should help the economy continue to
advance slowly but steadily.
IT WAS A YEAR OF STRONG PERFORMANCE FOR A WIDE RANGE OF STOCKS. Large
capitalization stocks led the market surge. Many major corporations saw sharply
escalating profits, reflecting a favorable economy and the substantial
cost-reduction and productivity initiatives they have undertaken in recent
years.
AMONG THE STRONGER SECTORS OF THE STOCK MARKET DURING MUCH OF 1995 WERE
TECHNOLOGY, HEALTH CARE AND FINANCIAL SERVICES, THOUGH TECHNOLOGY UNDERPERFORMED
THE OVERALL MARKET. Among the Fund's largest holdings, the best performers
during 1995 were Intel Corp., up 77%, Monsanto Co., up 73.8%, Hewlett-Packard
Co., up 67.7% and Pfizer Inc., up 63.1%.
[Photo of Landon T. Clay]
"...OVER THE LONG TERM, INVESTMENTS THAT FOCUS ON A REPRESENTATIVE PORTFOLIO OF
HIGH QUALITY COMMON STOCKS ARE LIKELY TO DELIVER SUPERIOR PERFORMANCE."
LOOKING FORWARD, IT IS HIGHLY UNLIKELY THAT THE STOCK MARKET WILL BE ABLE TO
SUSTAIN THE LEVEL OF INVESTMENT RETURNS ACHIEVED IN 1995. The most likely
scenario for the U.S. economy in 1996 seems to be continued slow growth with low
inflation. Coupled with continued progress from Washington in tackling the
budgetary deficits, this should set the stage for continued steady or lower
interest rates. Stocks would benefit from this environment, but seem unlikely to
get widespread support from the rising earnings expectations and positive
earnings surprises such as were experienced in 1995.
WITH VALUATIONS FOR STOCKS ALREADY AT RELATIVELY HIGH LEVELS ON MOST MEASURES,
THIS SUGGESTS A SOMEWHAT MORE CAUTIOUS OUTLOOK FOR THE STOCK MARKET IN 1996.
However, over the long term, investments that focus on a representative
portfolio of high-quality common stocks are likely to deliver superior
performance. Because this remains the strategy of Vance, Sanders Exchange Fund,
I have confidence that the Fund will continue to participate in the growth of
the economy.
Sincerely,
/s/ Landon T. Clay
LANDON T. CLAY
President
February 21, 1996
<PAGE>
VANCE, SANDERS
EXCHANGE FUND
DECEMBER 31, 1995
(UNAUDITED)
INVESTMENT CHANGES
SIX MONTHS ENDED DECEMBER 31, 1995
- -------------------------------------------------------------------------------
Shares Owned
6/30/95 12/31/95
- ------------------------------------------------------------------------------
DECREASES*
- ------------------------------------------------------------------------------
Intel Corp. 256,270 230,240
- ------------------------------------------------------------------------------
McCormick & Co., Inc. 218,448 199,598
- ------------------------------------------------------------------------------
Nalco Chemical Co. 131,040 129,840
- ------------------------------------------------------------------------------
Novell Inc. 130,000 115,500
- ------------------------------------------------------------------------------
Stratus Computer, Inc. 20,000 --
- ------------------------------------------------------------------------------
DEKALB Genetics Corp. Class B 7,215 415
- ------------------------------------------------------------------------------
*Includes investments paid in kind on redemptions.
OTHER CHANGES
- ------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------
45,336 American Intl. Group Inc. 3 for 2 stock split.
- ------------------------------------------------------------------------------
36,000 Medtronic, Inc. 2 for 1 stock split.
- ------------------------------------------------------------------------------
15,720 Millipore Corp. 2 for 1 stock split.
- ------------------------------------------------------------------------------
63,592 Pfizer Inc. 2 for 1 stock split.
- ------------------------------------------------------------------------------
42,372 Raytheon Co. 2 for 1 stock split.
- ------------------------------------------------------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------
COMMON STOCKS - 97.5%
- --------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- --------------------------------------------------------------------------
AEROSPACE AND DEFENSE - 1.7%
Raytheon Co. 84,744 $ 4,004,154
------------
AGRICULTURE - 2.0%
DEKALB Genetics Corp. Class B* 415 $ 18,727
Pioneer Hi-Bred International Inc. 87,000 4,839,375
------------
$ 4,858,102
------------
BEVERAGES - 7.5%
Coca-Cola Company 127,968 $ 9,501,624
PepsiCo, Inc. 150,000 8,381,250
------------
$ 17,882,874
------------
BUILDING MATERIALS - 0.7%
Masco Corp. 55,540 $ 1,742,567
------------
CHEMICALS - 3.9%
Dow Chemical Company 13,917 $ 979,409
Monsanto Co.* 60,000 7,350,000
CBI Industries, Inc.* 25,200 828,450
------------
$ 9,157,859
------------
COMPUTER SOFTWARE - 0.7%
Novell Inc.* 115,500 $ 1,645,875
------------
COMPUTERS & BUSINESS EQUIPMENT - 0.4%
International Business Machines Corp. 11,094 $ 1,017,874
------------
DISTRIBUTION - 1.5%
Sysco Corp. 107,760 $ 3,502,200
------------
DRUGS - 11.5%
ASTRA AB - Series A ADR 250,000 $ 9,996,650
Merck & Co., Inc. 33,746 2,218,799
Pfizer Inc. 127,184 8,012,592
Schering-Plough Corp. 128,120 7,014,570
------------
$ 27,242,611
------------
ELECTRICAL EQUIPMENT - 3.9%
AMP Inc. 60,360 $ 2,316,315
Emerson Electric Co. 22,398 1,831,036
General Electric Co. 24,864 1,790,208
Lincoln Electric Co. 19,700 492,500
Lincoln Electric Co. Class A 19,700 472,800
General Signal Corp. 68,600 2,220,925
------------
$ 9,123,784
------------
ELECTRONIC INSTRUMENTS - 3.7%
Hewlett-Packard Co. 103,584 $ 8,675,160
------------
ELECTRONICS - SEMICONDUCTORS - 5.5%
Intel Corp. 230,240 $ 13,066,120
------------
FINANCIAL SERVICES - MISCELLANEOUS - 2.5%
Federal National Mortgage Association 47,800 $ 5,933,175
------------
FOOD - 2.0%
McCormick & Co. Inc., Nonvoting 199,598 $ 4,815,302
------------
HOUSEHOLD PRODUCTS - 3.4%
Colgate-Palmolive Co. 21,826 $ 1,533,276
Procter & Gamble Co. 80,000 6,640,000
------------
$ 8,173,276
------------
INDUSTRIAL EQUIPMENT - 0.8%
Parker-Hannifin Corp. 53,730 $ 1,840,253
------------
INFORMATION SERVICES - 6.1%
Automatic Data Processing Inc. 25,520 $ 1,894,860
Dun & Bradstreet Corp. 83,300 5,393,675
Reuters Holdings PLC 132,000 7,276,500
------------
$ 14,565,035
------------
INSURANCE - 9.6%
American International Group Inc. 136,008 $ 12,580,740
Marsh & McLennan Companies, Inc. 28,172 2,500,265
Providian Corp. 54,724 2,230,003
General Re Corp. 26,816 4,156,480
Seafield Capital Corp. 35,960 1,222,640
------------
$ 22,690,128
------------
MEDICAL PRODUCTS - 7.0%
Abbott Laboratories 80,000 $ 3,340,000
Baxter International Inc. 49,728 2,082,360
Johnson & Johnson 82,836 7,092,832
Medtronic, Inc. 72,000 4,023,000
------------
$ 16,538,192
------------
METALS - INDUSTRIAL - 1.7%
Inco Ltd. 124,000 $ 4,123,000
------------
OIL AND GAS - EQUIPMENT & SERVICES - 2.5%
Halliburton Co. 50,700 $ 2,566,688
Schlumberger Ltd. 49,246 3,410,286
------------
$ 5,976,974
------------
OIL AND GAS - EXPLORATION & PRODUCTION - 1.2%
Apache Corp. 56,440 $ 1,664,985
Louisiana Land & Exploration Co. 25,000 1,071,875
------------
$ 2,736,860
------------
OIL AND GAS - INTEGRATED - 3.4%
Amoco Corp. 47,928 $ 3,444,825
Murphy Oil Corp. 29,700 1,232,550
Phillips Petroleum Co. 100,000 3,412,500
------------
$ 8,089,875
------------
PRINTING AND BUSINESS FORMS - 1.8%
American Business Products Inc. - GA 146,497 $ 4,175,165
------------
PUBLISHING - 2.4%
Gannett Co., Inc. 93,400 $ 5,732,425
------------
RETAIL - SPECIALTY AND APPAREL - 3.1%
Home Depot, Inc. (The) 80,000 $ 3,830,000
Toys "R" Us, Inc.* 161,775 3,518,606
------------
$ 7,348,606
------------
SPECIALTY CHEMICALS AND MATERIALS - 7.0%
International Flavors & Fragrances 60,000 $ 2,880,000
Loctite Corp. 141,392 6,716,120
Millipore Corp.* 31,440 1,292,970
Minnesota Mining & Manufacturing Co. 26,288 1,741,580
Nalco Chemical Co. 129,840 3,911,430
------------
$ 16,542,100
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $34,895,445) $231,199,546
------------
- --------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 2.4%
- --------------------------------------------------------------------------
FACE AMOUNT
(000 OMITTED) VALUE
- --------------------------------------------------------------------------
Ford Motor Credit Corp., 5.92%,
01/03/96 at amortized cost $ 5,600 $ 5,598,158
------------
TOTAL INVESTMENTS - 99.9%
(IDENTIFIED COST, $40,493,603) $236,797,704
OTHER ASSETS, LESS LIABILITIES - 0.1% 234,599
------------
NET ASSETS - 100% $237,032,303
============
*Non-income producing security.
ADR - American Depository Receipt
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
December 31, 1995
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$40,493,603) $236,797,704
Cash 81,636
Dividends receivable 281,027
Miscellaneous receivable 11,494
Receivable for investments sold 3,405
------------
Total assets $237,175,266
LIABILITIES:
Payable for partnership shares redeemed $ 3,980
Payable to affiliates --
Investment adviser fee 118,369
Managing General Partners 3,103
Accrued expenses and other liabilities 17,511
----------
Total liabilities 142,963
------------
NET ASSETS for 681,962 shares of partnership interest
outstanding $237,032,303
============
NET ASSETS APPLICABLE TO SHARES OF PARTNERSHIP INTEREST OWNED BY:
Limited Partners (672,178 shares) $233,631,638
General Partners --
Managing Partners (547 shares) $ 190,123
Non-Managing Partner (9,237 shares) 3,210,542 3,400,665
---------- ------------
NET ASSETS (681,962 SHARES) $237,032,303
============
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) $ 54,423,777
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) 196,305,327
Undistributed net investment income 3,003,703
------------
Total $237,032,303
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF PARTNERSHIP INTEREST
($237,032,303 / 681,962 shares of partnership
interest outstanding) $347.57
=======
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
Year Ended December 31, 1995
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividends (net of foreign withholding tax of $38,802) $ 3,766,073
Interest 228,361
-----------
Total income $ 3,994,434
Expenses --
Investment adviser fee (Note 4) $ 1,266,428
Compensation of Managing General Partners not
members of the Non-Managing
General Partner's organization 8,538
Custodian fee (Note 4) 111,037
Legal and accounting services 33,601
Printing and postage 31,062
Transfer and dividend disbursing agent fees 10,179
Miscellaneous 25,396
-----------
Total expenses 1,486,241
-----------
Net investment income $ 2,508,193
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments and foreign
currency transactions, computed on
the basis of identified cost ($188,025 net
loss as computed for federal income
tax purposes) $ 9,325,132
Increase in unrealized appreciation of
investments and foreign currency 51,653,643
-----------
Net realized and unrealized gain on
investments and foreign currency
transactions 60,978,775
-----------
Net increase in net assets from operations $63,486,968
===========
See notes to financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------
1995 1994
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 2,508,193 $ 2,384,023
Net realized gain on investments and foreign
currency transactions 9,325,132 8,358,479
Increase (decrease) in unrealized
appreciation of investments and foreign
currency 51,653,643 (2,991,174)
------------ ------------
Increase in net assets from operations $ 63,486,968 $ 7,751,328
------------ ------------
Distributions to partners from net
investment income $ (2,400,734) $ (2,256,662)
------------ ------------
Net decrease from transactions in shares of
partnership interest (Note 2) $ (9,472,006) $ (8,614,936)
------------ ------------
Net increase (decrease) in net assets $ 51,614,228 $ (3,120,270)
NET ASSETS:
At beginning of year 185,418,075 188,538,345
------------ ------------
At end of year (including undistributed net
investment income of $3,003,703 and
$2,896,244, respectively) $237,032,303 $185,418,075
============ ============
See notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1995 1994 1993 1992 1991
---------- --------- --------- --------- ---------
NET ASSET VALUE,
beginning of year $259.490 $251.710 $246.130 $241.030 $181.960
-------- -------- -------- -------- --------
INCOME FROM OPERATIONS:
Net investment
income $ 3.800 $ 3.406 $ 3.141 $ 3.198 $ 3.743
Net realized and
unrealized gain on
investments 87.730 7.424 5.599 5.012 58.777
-------- -------- -------- -------- --------
Total income from
operations $ 91.530 $ 10.830 $ 8.740 $ 8.210 $ 62.520
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
From net investment
income $ (3.450) $ (3.050) $ (3.000) $ (3.050) $ (3.450)
From net realized
gain on investments -- -- (0.160) (0.060) --
-------- -------- -------- -------- --------
Total
distributions $ (3.450) $ (3.050) $ (3.160) $ (3.110) $ (3.450)
-------- -------- -------- -------- --------
NET ASSET VALUE, end
of year $347.570 $259.490 $251.710 $246.130 $241.030
======== ======== ======== ======== ========
TOTAL RETURN (1) 35.50% 4.39% 3.63% 3.50% 34.76%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year
(000's omitted) $237,032 $185,418 $188,538 $195,679 $201,607
Ratio of expenses to
average net assets 0.70% 0.71% 0.71% 0.71% 0.71%
Ratio of net investment
income to average
net assets 1.19% 1.31% 1.22% 1.31% 1.70%
PORTFOLIO TURNOVER 0% 3% 3% 5% 7%
(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.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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.
- ------------------------------------------------------------------------------
(2) SHARES OF PARTNERSHIP INTEREST
Transactions in shares of partnership interest were as follows:
<TABLE>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------
1995 1994
-------------------------------------------- --------------------------------------------
SHARES SHARES
-------------------------- --------------------------
GENERAL LIMITED GENERAL LIMITED
PARTNERS PARTNERS AMOUNT PARTNERS PARTNERS AMOUNT
------------ ------------ ---------------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
Redemptions -- (33,511) $(9,741,812) -- (35,476) $(8,859,649)
Issued to partners electing
to receive payment of
distributions in shares 109 815 269,806 114 894 244,713
--- ------ ----------- --- ------ -----------
Net increase (decrease) 109 (32,696) $(9,472,006) 114 (34,582) $(8,614,936)
=== ====== =========== === ====== ===========
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(3) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregated $25,679 and $2,388,053, respectively. In addition, investments
having an aggregate market value of $9,450,152 at dates of redemption were
distributed in payment for shares of partnership interest redeemed.
- ------------------------------------------------------------------------------
(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 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. The
custodian fee was paid to Investors Bank & Trust Company (IBT), for its
services as custodian of the Fund. Pursuant to the custodian agreement, IBT
receives a fee reduced by credits which are determined based on the average
daily cash balances the Fund maintains with IBT. All significant credit
balances are reported as a reduction of expenses in the Statement of
Operations. Prior to November 10, 1995, IBT was an affiliate of EVM. 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 year ended December 31, 1995, no significant amounts have been deferred.
- ------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Fund participates with other funds managed by EVM 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 year.
- ------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at December 31, 1995, as computed on a federal income tax basis, are as
follows:
Aggregate cost $ 40,493,603
============
Gross unrealized appreciation $196,528,471
Gross unrealized depreciation 224,370
------------
Net unrealized appreciation $196,304,101
============
- ------------------------------------------------------------------------------
(7) DISTRIBUTION
On January 2, 1996, the Managing General Partners of the Fund declared a
distribution from net investment income of $0.90 per share, payable on January
15, 1996, to holders of shares of record on January 2, 1996.
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------------------------
To the Partners of
Vance, Sanders Exchange Fund
(A California Limited Partnership):
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Vance, Sanders Exchange Fund (A California
Limited Partnership) as of December 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
the years ended December 31, 1995 and 1994, and the financial highlights for
each of the years in the five-year period ended December 31, 1995. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
December 31, 1995, by correspondence with the custodian. 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 Vance, Sanders
Exchange Fund (A California Limited Partnership) as of December 31, 1995, 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
January 26, 1996
<PAGE>
INVESTMENT MANAGEMENT
VANCE, SANDERS OFFICERS MANAGING GENERAL PARTNERS
EXCHANGE FUND THOMAS E. FAUST, JR. LANDON T. CLAY
(A California Vice President and Chairman, Eaton Vance Management
Limited Portfolio Manager
Partnership) DONALD R. DWIGHT
24 Federal Street JAMES L. O'CONNOR President, Dwight Partners, Inc.
Boston, MA 02110 Treasurer Chairman, Newspapers of New
England, Inc.
THOMAS OTIS
Secretary SAMUEL L. HAYES, III
Jacob H. Schiff Professor of
Investment Banking, Harvard
University Graduate School of
Business Administration
NORTON H. REAMER
President and Director, United
Asset Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
- --------------------------------------------------------------------------------
VANCE, SANDERS TRANSFER AND DIVIDEND
EXCHANGE FUND DISBURSING AGENT
24 Federal Street First Data Investor
Boston, MA 02110 Services Group, Inc.
BOS725
INVESTMENT ADVISER P.O. Box 1559
Eaton Vance Management Boston, MA 02104
24 Federal Street 800-262-1122
Boston, MA 02110
INDEPENDENT AUDITORS
CUSTODIAN Deloitte & Touche LLP
89 South Street 125 Summer Street
P.O. Box 1537 Boston, MA 02110
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 DECEMBER 31, 1995)
- -------------------------------------------------------------------------------
One year 35.5%
- -------------------------------------------------------------------------------
Five years 15.4%
- -------------------------------------------------------------------------------
Ten years 13.7%
- -------------------------------------------------------------------------------
Life of Fund (6/1/76) 13.5%
- -------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN
LIFE OF FUND
(6/1/76 TO 12/31/95)
- -------------------------------------------------------------------------------
Vance, Sanders Exchange Fund 1,092.2%
- -------------------------------------------------------------------------------
Dow Jones Industrial Average 1,136.4%
- -------------------------------------------------------------------------------
Standard & Poor's 500 1,255.5%
- -------------------------------------------------------------------------------
+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
2/96
