<PAGE>
To Shareholders
For the six months that ended June 30, 1995, EV Traditional Stock Fund had a
total return of 17.3 percent. That return reflected a change in net asset value
per share from $10.90 on December 31, 1994 to $12.64 on June 30, 1995 adjusted
for the reinvestment of $0.125 per share in income dividends. By comparison, the
Standard & Poor's 500, an unmanaged index of common stocks, had a total return
of 20.1 percent and the Lipper Growth and Income Fund Index, an unmanaged index
of 342 growth and income mutual funds, had a total return of 16.9 percent for
the same period.
The Federal Reserve raised short-term interest rates seven times between
February 1994 and February 1995. However, fearing that the economy had slowed to
a halt or even contracted, the Fed lowered the rate by a quarter percentage
point in early July.
During the first six months of 1995, the stock market generally treated
investors well. It was an especially good period for investments in large cap
stocks and companies with a strong international presence.
The decline of the dollar against world currencies caused some investor concern.
However, if the dollar stabilizes, investors are likely to become more confident
and the market may be buoyed by a surge in foreign investment.
The stock market's strong performance in 1995 has been led by stocks in the
technology sector. The Fund's positive performance during this period has been
helped by several technology holdings.
During the first six months of 1995, we have also continued the process, begun
last year, of reducing the number of stocks in the Portfolio. While past
performance is no guarantee of future results, we believe this strategy already
has been helpful in strengthening the Portfolio's performance. We expect to
continue pruning underperforming investments in the future.
Analysts remain uncertain whether the Fed will continue to lower interest rates
in its attempt to achieve a "soft landing" or perhaps even a rebound for the
economy. Regardless of the direction of these changes, we believe that the
Portfolio's combination of income-producing and growth stocks can perform well
for shareholders. We believe that this two-pronged approach, emphasizing stocks
that are chosen through a fundamental investment process, will produce a winning
total return combination over the long term for patient investors.
---------------------------- Sincerely,
/s/ James B. Hawkes
[Photo of James B. Hawkes] James B. Hawkes
President
August 4, 1995
----------------------------
--------------------------------------------------------------------------------
THE PORTFOLIO'S TOP 10
EQUITY HOLDINGS*
Eastman Kodak Co........................................ Photographic products
Texas Instruments....................................... Semiconductors
Intel Corp.............................................. Semiconductors
Comcast Corp. .......................................... Cable television
Corning Inc............................................. Consumer products
Exxon................................................... Oil, gas products
Progressive Corp........................................ Insurance
Praxair Inc............................................. Gases
Home Depot.............................................. Building supplies
Frontier Corp........................................... Telecommunications
*By market value as of June 30, 1995
--------------------------------------------------------------------------------
<PAGE>
Management Report
An interview with Duncan W. Richardson, Vice President and Manager of the
Stock Portfolio.
Q. DUNCAN, HOW HAVE THE FIRST SIX MONTHS OF 1995 SHAPED UP IN TERMS OF
EQUITY INVESTMENTS?
A. This has been a good period for most stocks. The stocks of large
companies have performed very well, while those of mid- and small-size
companies are up but have generally underperformed the market averages.
In terms of sectors, technology stocks have dominated the market, with
many financial stocks turning in strong performances as well.
Q. HOW DOES THAT TRANSLATE INTO PERFORMANCE FOR EV TRADITIONAL STOCK FUND?
A. We've done well during this six-month period. As you can see in the
figures on the previous page, we've not quite matched the S&P 500
average. The S&P is heavily skewed toward stocks of large companies. In a
market such as this one, in which large company stocks are pacing the
market, the average is quite difficult to match. In terms of our
Portfolio, we've seen strong performance because we've owned a large
number of technology and financial stocks. We've also managed to avoid
major problems. The market has been brutal to the stocks of companies
whose fundamentals have fallen. Our analysts have been great at
identifying problems early and getting us out of these stocks. That's not
to say we haven't had some losses, but we've used a strong selling
discipline to avoid large losses.
Q. IN TERMS OF ITS OVERALL HOLDINGS, HOW WOULD YOU ---------------------
DESCRIBE THE PORTFOLIO?
[Photo of
Duncan W. Richardson]
---------------------
A. It's really a mixture of several components. First, there is a
significant proportion of stocks of large corporations that display
growth characteristics. There is also a significant proportion of
income-producing stocks, such as convertible stocks. Finally, we have
what I call special situations.
Q. WHAT ARE SPECIAL SITUATION STOCKS?
A. As the name implies, these are companies in which we believe that,
because of some unusual situation, additional value in the stock will be
realized. One of the best examples is the Portfolio's largest holding,
Eastman Kodak. This is a well-known company with a strong global
franchise whose stock had not performed well over many years. Now it's
doing quite well as the company reaps the benefits of a major
restructuring initiated by its new chief executive, George Fisher.
Q. WHAT HOLDINGS IN TECHNOLOGY AND FINANCE HAVE PERFORMED WELL?
A. In technology, Intel rose 98 percent for the six-month period, while
Texas Instruments was up more than 78 percent. Both of these are
well-known, strong growth companies that have shown remarkable earnings
gains. Of course, past performance is no guarantee of future returns.
In the financial sector, all of our holdings were helped when interest
rates stopped rising. There are several stocks that were helped along for
other reasons, too. Shawmut National Bank was acquired by Fleet National,
MGIC, the Mortgage Guaranty Investment Corporation, saw a rise in stock
price because the strength of its earnings had been underappreciated.
Bank of Boston's stock price rose as the market started to recognize the
growth prospects for the company's extensive international banking
operation.
Q. HOW HAVE THE PORTFOLIO'S HOLDINGS IN OTHER SECTORS PERFORMED?
A. It's hard to generalize, so let's look at some specifics. Overall, the
retail sector of the market was generally poor during this period. In the
Portfolio, our retail stocks generally did better. Our shares in Sears
Roebuck performed well as investors anticipated the spin off of Allstate
Insurance. In the energy sector, Exxon was a strong performer for us,
rising 16 percent.
Q. WHAT TYPE OF SELLING DISCIPLINE DO YOU USE IN THE FUND?
A. We first try to be sensitive to price levels before we even purchase a
stock. We then carefully track its performance versus our expectations.
If it underperforms, we revisit the investment case and either sell, if
warranted, or recommit to the shares.
Q. HAS THERE BEEN A RECENT CASE WHERE YOUR FAITH IN A STOCK HAS BEEN
JUSTIFIED?
A. The best example is Bank of Boston. The bank does a significant volume of
business in South and Latin America. Its stock price fell in concert with
nearly all Latin American investments when the Mexican peso was devalued.
On our analyst's recommendation, we increased our holdings.
We believed most of Bank of Boston's operations would be unaffected by
the problems in Mexico. The stock became so inexpensive on fundamentals
that we also felt it could resurface as an acquisition candidate as the
banking industry consolidated. As it turned out, we were right about the
stock's value, and its price has risen nearly 45 percent during the
period.
Q. DO YOU HOLD ON TO ALL THE STOCKS WHOSE PRICES HAVE BEEN RISING?
A. While we'd love to never have to take any capital gains, at some point,
we have to decide whether a stock's price has reached its full potential.
If so, it may well be time to sell. The most recent six-month period
provides a good example. Many technology and financial stocks have become
fully valued on any fundamental earnings progress they are likely to make
over the next few years. We've been taking some profits and investing in
areas that may have more potential.
Q. HAVING SOLD THOSE STOCKS, WHAT ARE YOU BUYING IN THIS RECORD-SETTING
MARKET?
A. Recently, we have been acquiring some more stable "defensive" stocks,
particularly companies whose stock we believe to be undervalued. In
addition, we're continuing to balance the needs of our investors for both
growth and income. To increase income, we're buying stocks in such
industries as oil and chemicals and we've been buying some convertible
shares in the metal and mining companies. We've also acquired some food
and food processing stock, ConAgra and Archer-Daniels-Midland Co.
I am a bit wary about some of the valuations that I see in the stock
market right now. I think some estimates of corporate earnings are too
optimistic given the slowdown in the economy and if they are, we could
see some disappointment in the second half of the year. At a time like
this, it's important to be somewhat conservative and for us to be extra
diligent on stock valuations.
We've adopted some other strategies that allow us to be less dependent on
the U.S. economy. We're in some stocks that have an international
presence. Gains overseas could offset any declines in U.S. earnings.
We're also in some stocks whose fundamentals have a different cycle than
that of the U.S. economy, for example, publishing.
Q. WHAT DO YOU THINK THE ECONOMY IS GOING TO BE DOING DURING THE REST OF
1995?
A. We don't spend a great deal of time forecasting the economy, but the
Federal Reserve seems to have been successful for the time being in
curbing inflation and slowing the economy. While we could see two
consecutive quarters of negative growth in the gross domestic product,
technically a "recession," I think any slowdown or recession would be
mild. Our analysts don't report many signs of inflation from their
industries.
Q. IF AN INVESTOR IS LOOKING FOR BOTH GROWTH AND INCOME, WHAT IS THE BEST
WAY TO PROCEED?
A. The objective of the Portfolio is to achieve both growth and income.
While the current dividend yield of the market is at a historic low,
total return opportunities are constantly surfacing. We believe that
selection of a combination of income-producing and growth stocks should
produce a satisfactory long-term total return.
<PAGE>
EV TRADITIONAL STOCK FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
------------------------------------------------------------------------------
ASSETS:
Investment in Stock Portfolio (Portfolio), at value
(Note 1A) $92,973,770
Receivable for Fund shares sold and dividend
reinvestments 7,764
Deferred organization expenses (Note 1D) 9,402
-----------
Total assets $92,990,936
LIABILITIES:
Payable for Fund shares redeemed $25,583
Payable to affiliates --
Trustees fees 625
Custodian fees 381
Accrued organizational expense 1,669
Accrued expenses 34,781
-------
Total liabilities 63,039
-----------
NET ASSETS for 7,354,167 shares of beneficial
interest outstanding $92,927,897
===========
SOURCES OF NET ASSETS:
Proceeds from sales of shares (including shares
issued to shareholders electing to receive
payment of distributions in shares), less cost of
shares redeemed $73,569,731
Accumulated net realized gain on investments 4,769,677
Unrealized appreciation of investments 14,660,704
Accumulated distributions in excess of net
investment income (72,215)
-----------
Total net assets $92,927,897
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($92,927,897 / 7,354,167 shares of beneficial interest) $12.64
======
COMPUTATION OF OFFERING PRICE:
Offering price per share (100/95.25 of $12.64) $13.27
======
On sales of $100,000 or more, the offering price is
reduced.
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF OPERATIONS
------------------------------------------------------------------------------
For the Six Months Ended June 30, 1995 (Unaudited)
------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Dividend income allocated from Portfolio (net
of foreign withholding taxes of $8,069) $ 1,104,799
Interest allocated from Portfolio 204,542
Expenses allocated from Portfolio (333,259)
------------
Total investment income $ 976,082
Expenses --
Service fees (Note 5) $ 31,756
Custodian fees (Note 4) 5,863
Legal and accounting services 8,329
Transfer and dividend disbursing agent fees 34,041
Printing and postage 28,233
Registration fees 11,818
Amortization of organization expenses
(Note 1D) 1,140
Miscellaneous 1,915
-----------
Total expenses 123,095
------------
Net investment income $ 852,987
REALIZED AND UNREALIZED GAIN FROM PORTFOLIO:
Net realized gain on investments (identified
cost basis) -- $ 4,769,677
Change in unrealized appreciation of
investments 8,325,165
-----------
Net realized and unrealized gain on
investments 13,094,842
------------
Net increase in net assets resulting from
operations $13,947,829
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
JUNE 30, ENDED
1995 DECEMBER 31,
(UNAUDITED) 1994
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 852,987 $ 1,935,748
Net realized gain on investments 4,769,677 6,033,580
Increase/(Decrease) in unrealized appreciation
of investments 8,325,165 (11,860,323)
----------- ------------
Net increase (decrease) in net assets resulting
from operations $13,947,829 $ (3,890,995)
Distributions to shareholders --
From net investment income (852,987) (1,865,334)
In excess of net investment income (99,723) --
From net realized gains on investment
transactions -- (6,033,580)
In excess of net realized gains of investment
transactions -- (41,043)
Tax return of capital -- (27,542)
Net increase (decrease) from Fund share
transactions (Note 3) (4,365,967) (1,355,365)
----------- ------------
Total increase (decrease) in net assets $ 8,629,152 $(13,213,859)
NET ASSETS:
Beginning of year 84,298,745 97,512,604
----------- ------------
End of year (including undistributed net
investment income and accumulated
distributions in excess of net investment
income of $27,508 and $(72,215), respectively) $92,927,897 $ 84,298,745
=========== ============
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS (Continued)
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1995 ------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991
---------------- ------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE -- beginning
of year $10.900 $12.490 $13.480 $14.030 $13.070
------- ------- ------- ------- -------
Income from investment
operations:
Net investment income $ 0.112 $ 0.250 $ 0.270<F2> $ 0.312 $ 0.449
Net realized and
unrealized gain (loss)
on investments 1.753 (0.765) 0.270<F2> 0.658 2.191
------- ------- ------- ------- -------
Total income (loss)
from investment
operations $ 1.865 $ (0.515) $ 0.540 $ 0.970 $ 2.640
------- ------- ------- ------- -------
Less distributions:
From net investment
income $(0.112) $ (0.250) $(0.270) $(0.320) $(0.460)
In excess of net
investment income (0.013) -- -- -- --
From net realized gain on
investments -- (0.765) (1.260) (1.200) (1.220)
In excess of net realized
gains -- (0.060) -- -- --
Tax return of capital -- -- -- -- --
------- ------- ------- ------- -------
Total distributions $(0.125) $(1.075) $(1.530) $(1.520) $(1.680)
------- ------- ------- ------- -------
NET ASSET VALUE -- end of
year $12.640 $10.900 $12.490 $13.480 $14.030
======= ======= ======= ======= =======
TOTAL RETURN<F4> 17.26% (4.12)% 4.19% 6.93% 21.45%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000's omitted) $92,928 $84,299 $97,513 $91,299 $91,844
Ratio of expenses to
average net assets<F1> 1.05%<F2> 0.98% 0.96% 0.92% 0.94%
Ratio of net investment
income to average net assets 1.96%<F2> 2.09% 2.01% 2.29% 3.23%
PORTFOLIO TURNOVER<F3> -- 66% 105% 59% 42%
<FN>
<F1> Includes the Fund's share of Stock Portfolio's allocated expenses.
<F2> Computed on an annualized basis.
<F3> Portfolio Turnover represents the rate of portfolio activity for the period
while the Fund was making investments directly in securities. The portfolio
turnover for the period since the Fund transferred substantially all of its
investable assets to the Portfolio is shown in the Portfolio's financial
statements which are included elsewhere in this report.
<F4> 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 record date.
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
--------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Traditional Stock Fund (the Fund), a Massachusetts business trust, is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end, management investment company. The Fund is a series in
the Eaton Vance Securities Trust. On August 1, 1994, the Fund transferred
substantially all of its investable assets to the Stock Portfolio (the
Portfolio). Prior to this date the Fund's name was Eaton Vance Stock Fund. The
Fund invests all of its investable assets in interests in 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 (95.7% at June 30, 1995). The performance
of the Fund is directly affected by the performance of the Portfolio. The
financial statements of the Portfolio, including the portfolio of investments,
are included elsewhere in this report and should be read in conjunction with
the Fund's financial statements. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of
its financial statements. The policies are in conformity with generally
accepted accounting principles.
A. INVESTMENT VALUATIONS -- Valuations of securities by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INCOME -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund. Prior to the Fund's investment in the Portfolio,
the Fund held its investments directly.
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 income, including any
net realized gain on investments, options and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary.
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. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income and dividends to
shareholders are recorded on the ex-dividend date. Dividend income may include
dividends that represent returns of capital for federal tax purposes. Gains or
loss on the sale of investments is determined on the identified cost basis.
F. DISTRIBUTIONS -- Generally accepted accounting principles require that
differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
G. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating
to June 30, 1995 and for the period then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
(2) FUND SHARES
The Fund under its indenture of trust is authorized to issue unlimited shares
of $0.50 par value. Transactions in Fund shares were as follows:
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1994
----------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ----------- -------------
Sales 207,120 $ 2,458,035 446,055 $ 5,497,292
Shares issued in
reinvestment of
distributions 50,435 563,996 521,171 5,754,996
Shares issued for the net
assets of another
investment company -- -- -- --
Shares redeemed (634,529) (7,387,998) (1,045,062) (12,607,653)
------- ---------- --------- -----------
Net increase
(decrease) (376,974) $(4,365,967) (77,836) $ (1,355,365)
======== =========== ======= ============
------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio for the six
months ended June 30, 1995 aggregated $2,614,518 and $8,035,803 respectively.
------------------------------------------------------------------------------
(4) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Eaton Vance serves only 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 3 of the
Portfolio's Notes to Financial Statements which are included elsewhere in this
report. Except as to Trustees of the Fund and the Portfolio who are not
members of EVM's or BMR's organization, officers and Trustees receive
remuneration for their services to the Fund out of such investment adviser
fee.
Investors Bank & Trust Company (IBT), an affiliate of EVM, serves as
custodian of 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 cash balances the Fund or the Portfolio maintains with IBT.
Certain of the officers and Trustees of the Fund and Portfolio are officers
and directors/trustees of the above organizations.
------------------------------------------------------------------------------
(5) SERVICE PLAN
The Trustees of the Fund adopted a Service Plan on July 7, 1993 designed to
meet the requirements of Rule 12b-1 under the Investment Company Act of 1940
and the service fee requirements of the revised sales charge rule of The
National Association of Securities Dealers Inc. The Service Plan replaced the
Fund's distribution plan which became effective on December 27, 1990. The
Service Plan provides that the Fund may make service fee payments to the
Principal Underwriter, Eaton Vance Distributors, Inc., a subsidiary of Eaton
Vance Management, Authorized Firms or other persons in amounts not exceeding
0.25% of the Fund's average daily net assets for any fiscal year. The
Trustees have implemented the Service Plan by authorizing the Fund to make
quarterly service fee payments to the Principal Underwriter and Authorized
Firms in amounts not expected to exceed 0.25% of that portion of the Fund's
average daily net assets for any fiscal year which is attributable to shares
of the Fund sold on or after June 12, 1991 by such persons and remaining
outstanding for at least twelve months. Such payments are made for personal
services and/or the maintenance of shareholder accounts. During the six months
ended June 30, 1995 the Fund made payments of $31,756 under the Plan to the
Principal Underwriter and Authorized Firms.
<PAGE>
--------------------------------------------------------------------------
STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995
(UNAUDITED)
--------------------------------------------------------------------------
COMMON STOCKS -- 84.3%
--------------------------------------------------------------------------
SHARES SECURITY VALUE
--------------------------------------------------------------------------
ADVERTISING - 1.9%
30,000 Omnicom Group, Inc. $ 1,818,750
---------------
AEROSPACE & DEFENSE - 1.6%
40,000 General Motors Corp. Class H $ 1,580,000
---------------
AUTOMOTIVE - 1.0%
31,800 Ford Motor Co. $ 946,050
---------------
BANKS - 3.1%
45,000 Bank of Boston Corp. $ 1,687,500
6,853 Citicorp 396,646
30,000 Shawmut National Corp. 956,250
---------------
$ 3,040,396
---------------
BROADCASTING - 5.7%
35,000 CBS Inc. $ 2,345,000
170,000 Comcast Corp. Class A 3,155,625
---------------
$ 5,500,625
---------------
CAPITAL GOODS - 1.6%
25,000 Caterpillar Inc. $ 1,606,250
---------------
CHEMICALS - 5.1%
15,000 Dow Chemical Co. $ 1,078,125
20,000 DuPont (E.I.) deNemours & Co., Inc. 1,375,000
100,000 Praxair Inc. 2,500,000
---------------
$ 4,953,125
---------------
CONSUMER GOODS & SERVICES - 8.7%
40,000 American Brands, Inc. $ 1,590,000
55,000 Eastman Kodak Co. 3,334,375
40,000 PepsiCo, Inc. 1,825,000
12,100 Procter & Gamble Co. 869,688
25,000 Seagram Co. Ltd. 865,625
---------------
$ 8,484,688
---------------
DRUGS & MEDICAL - 3.6%
25,000 Abbott Laboratories, Inc. $ 1,012,500
15,000 Johnson & Johnson Co. 1,014,375
40,000 Upjohn Co. 1,515,000
---------------
$ 3,541,875
---------------
<PAGE>
--------------------------------------------------------------------------
COMMON STOCKS (Continued)
--------------------------------------------------------------------------
SHARES SECURITY VALUE
--------------------------------------------------------------------------
ENVIRONMENTAL SERVICES - 0.7%
25,000 WMX Technologies, Inc. $ 709,375
---------------
FINANCE & INSURANCE - 7.8%
50,000 American General Corp. $ 1,687,500
30,000 Block (H. & R.), Inc. 1,233,750
15,000 Kansas City Southern Industries 558,750
30,000 MGIC Investment Corp. Wisc. 1,406,250
70,000 Progressive Corp. 2,686,250
---------------
$ 7,572,500
---------------
FOOD - 1.4%
75,000 Archer Daniels Midland Co. $ 1,396,875
---------------
FOREST PRODUCTS - 1.1%
30,000 Rayonier Inc. $ 1,065,000
---------------
INTEGRATED OIL - 4.5%
40,000 Exxon Corp. $ 2,825,000
7,000 Royal Dutch Petroleum Co. 853,125
25,000 Unocal Corp. 690,625
---------------
$ 4,368,750
---------------
MANUFACTURING - DIVERSIFIED - 1.4%
25,000 Illinois Tool Works, Inc. $ 1,375,000
---------------
OIL & GAS EXPLORATION - 3.5%
35,000 Anadarko Petroleum Corp. $ 1,509,375
40,000 Triton Energy Corp. 1,855,000
---------------
$ 3,364,375
---------------
PUBLISHING - 5.5%
20,000 Harcourt General, Inc. $ 850,000
40,000 Houghton Mifflin Co. 2,110,000
25,000 McGraw-Hill, Inc. 1,896,875
20,000 New York Times Co. Class A 470,000
---------------
$ 5,326,875
---------------
REITS - 3.0%
16,000 Chelsea GCA Realty, Inc. $ 432,000
20,000 Equity Residential Properties Trust 557,500
20,000 Nationwide Health Properties, Inc. 780,000
10,000 Post Properties, Inc. 302,500
20,000 ROC Communities, Inc. 442,500
14,200 Trinet Corporate Realty Trust, Inc. 397,600
---------------
$ 2,912,100
---------------
RESTAURANTS & LODGING - 1.1%
30,000 Circus Circus Enterprises, Inc. $ 1,057,500
---------------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
--------------------------------------------------------------------------
COMMON STOCKS (Continued)
--------------------------------------------------------------------------
SHARES SECURITY VALUE
--------------------------------------------------------------------------
RETAILING - 3.7%
60,000 Home Depot, Inc. $ 2,437,500
20,000 Sears Roebuck & Co. 1,197,500
---------------
$ 3,635,000
---------------
SAVINGS & LOAN - 1.1%
50,000 Great Western Financial Corp. $ 1,031,250
---------------
SEMICONDUCTORS - 6.6%
50,000 Intel Corp. $ 3,165,625
24,000 Texas Instruments, Inc. 3,213,000
---------------
$ 6,378,625
---------------
SPECIALTY CHEMICALS - 5.4%
90,000 Corning Inc. $ 2,947,500
20,000 Loctite Corp. 910,000
50,000 Wellman Inc. 1,368,750
---------------
$ 5,226,250
---------------
TELECOMMUNICATIONS - 1.8%
25,000 Chipcom Inc. $ 593,750
30,000 Sprint Corp. 1,008,750
3,000 Telecom Corp. of New Zealand Ltd. ADR 181,875
---------------
$ 1,784,375
---------------
UTILITIES - NATURAL GAS - 0.9%
50,000 Western Gas Resources $ 862,500
---------------
UTILITIES - TELEPHONE - 2.5%
100,000 Frontier Corp. $ 2,400,000
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $66,589,023) $ 81,938,109
---------------
--------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS - 8.6%
--------------------------------------------------------------------------
15,000 Beverly Enterprises, 5.5s $ 783,750
24,370 Citicorp, $1.217, Series 15 493,493
60,000 Conagra Inc., Series E 2,122,500
10,000 Ford Motor Co., 8.4s 971,250
140,000 Freeport McMoRan Copper & Gold, 5% 3,027,500
10,000 Tejas Gas Corp., 5.25s 453,750
10,000 Valero Energy Corp., 6.5s 460,000
---------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST, $8,052,947) $ 8,312,243
---------------
<PAGE>
--------------------------------------------------------------------------
CONVERTIBLE BONDS - 2.7%
--------------------------------------------------------------------------
FACE
AMOUNT
(000
OMITTED) SECURITY VALUE
--------------------------------------------------------------------------
$ 500 Beverly Enterprises, 7.625s, 3/15/03 $ 477,500
1,920 INCO Ltd., 5.75s, 7/1/04 2,179,200
---------------
TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST, $2,488,750) $ 2,656,700
---------------
--------------------------------------------------------------------------
CORPORATE BOND - 0.0%
--------------------------------------------------------------------------
$ 50 H.P. Hood & Son, 7.50s, 2/1/01 $ 39,400
---------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST, $50,000) $ 39,400
---------------
--------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 0.1%
--------------------------------------------------------------------------
$ 55 U.S. Treasury Note, 4.25s, 11/30/95 $ 54,708
---------------
TOTAL U.S. TREASURY OBLIGATIONS -
(IDENTIFIED COST, $55,077) $ 54,708
---------------
--------------------------------------------------------------------------
SHORT TERM INVESTMENTS - 4.5%
--------------------------------------------------------------------------
$2,413 Ford Motor Credit Co., 5.95s, 7/10/95 $ 2,409,410
1,976 Melville Corp., 6.23s, 7/3/95 1,975,315
---------------
TOTAL SHORT TERM INVESTMENTS
AT AMORTIZED COST $ 4,384,725
---------------
TOTAL INVESTMENTS - 100.2%
(IDENTIFIED COST, $81,620,522) $ 97,385,885
OTHER ASSETS, LESS LIABILITIES - -0.2% (208,910)
---------------
NET ASSETS - 100% $ 97,176,975
===============
The accompanying notes are an integral part
of the financial statements
<PAGE>
STOCK PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$81,620,522) $97,385,885
Cash 1,234
Receivable for investments sold 830,972
Dividends receivable 223,575
Interest receivable 68,187
Deferred organization expenses (Note 1C) 13,357
-----------
Total assets $98,523,210
LIABILITIES:
Payable for investments purchased $ 176,940
Written options outstanding, at value (premiums
received, $296,672) (Note 1E) 1,160,000
Payable to affiliates --
Trustees fees 2,500
Custodian fees 2,984
Accrued expenses 3,811
----------
Total liabilities 1,346,235
-----------
NET ASSETS applicable to investors' interest in Portfolio $97,176,975
===========
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $82,274,940
Net unrealized appreciation of investments and
written options
(computed on the basis of identified cost) 14,902,035
-----------
Total net assets $97,176,975
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
------------------------------------------------------------------------------
For the six months ended June 30, 1995 (Unaudited)
------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$8,355) $ 1,138,155
Interest 210,344
-----------
Total income 1,348,499
Expenses --
Investment adviser fee (Note 3) $ 282,322
Compensation of directors, not members of the
Investment Adviser Organization (Note 3) 5,676
Custodian fee (Note 3) 34,046
Legal and audit fees 16,522
Amortization of organizational expenses
(Note 1C) 1,610
Miscellaneous 3,092
----------
Total expenses 343,268
-----------
Net investment income 1,005,231
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments (identified cost
basis) $4,922,340
----------
Change in unrealized appreciation/(depreciation) on:
Investment securities 9,441,804
Written option transactions (863,328)
----------
Net unrealized gain 8,578,476
Net realized and unrealized gain on
investments 13,500,816
-----------
Net increase in net assets resulting from operations $14,506,047
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994*
------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,005,231 $ 908,166
Net realized gain/(loss) on investment
transactions 4,922,340 (2,035,741)
Increase/(decrease) in unrealized
appreciation of investments and
written options 8,578,476 (1,601,217)
------------ -----------
Net increase/(decrease) in net assets
resulting from operations $ 14,506,047 $(2,728,792)
------------ -----------
Capital transactions--
Contributions $ 6,262,463 $ 2,390,694
Withdrawals (9,110,570) (5,494,445)
------------ -----------
Decrease in net assets resulting from
capital transactions $ (2,848,107) $(3,103,751)
------------ -----------
Total increase/(decrease) in net assets $ 11,657,940 $(5,832,543)
NET ASSETS:
At beginning of period 85,519,035 91,351,578
------------ -----------
At end of period $ 97,176,975 $85,519,035
============ ===========
------------------------------------------------------------------------------
SUPPLEMENTARY DATA
------------------------------------------------------------------------------
RATIOS (As a percentage of average net assets):
Expenses 0.77%+ 0.73%+
Net investment income 2.24%+ 2.45%+
PORTFOLIO TURNOVER 62% 28%
+Computed on an annualized basis.
*For the period from the start of business, August 1, 1994 to December 31, 1994.
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Stock Portfolio (the Portfolio) is registered under the Investment Company Act
of 1940 as a diversified open-end 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 beneficial 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. SECURITY VALUATIONS -- Investments in securities traded on a national
securities exchange or in the NASDAQ National Market are valued on the basis of
the last reported sales prices on the last business day of the period. If no
sale is reported on that date, a security is valued, if quoted on such a day, at
not lower than the old bid price nor higher than the asked prices. Prices on
such exchanges will not be used for valuing debt securities if in the Trustees
judgment, some other valuation method more accurately reflects the fair market
value of such a security. Securities for which over-the-counter market
quotations are readily available are valued on the basis of the mean between the
last bid and asked prices. Short-term securities are valued at cost, which
approximates market value. All other securities and assets are appraised to
reflect their fair value as determined in good faith by the Trustees.
B. 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 Code) in order for its investors to satisfy them. The Portfolio will
allocate at least annually among its investors each investors' distributive
share of the Portfolio's net investment income, net realized capital gains, and
any other items of income, gain, loss, deduction or credit.
C. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
D. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the ex-
dividend date. Realized gains and losses on the sale of investments are
determined on the identified cost basis.
E. WRITTEN OPTIONS -- The Fund may write call or put options for which premiums
are received and are recorded as liabilities, and are subsequently adjusted to
the current value of the options written. Premiums received from writing options
which expire are treated as realized gains. Premiums received from writing
options which are exercised or are closed are offset against the proceeds or
amount paid on the transaction to determine the realized gain or loss. If a put
option is exercised, the premium reduces the cost basis of the securities
purchased by the Fund. The Fund as a writer of an option may have no control
over whether the underlying securities may be sold (call) or purchased (put) and
as a result bears the market risk of an unfavorable change in the price of the
securities underlying the written option.
F. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
June 30, 1995 and for the six month period then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregrated $53,626,239 and $56,700,885, respectively.
------------------------------------------------------------------------------
(3) 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 at the annual rate of 5/8 of 1% of average daily net assets. For the six
months ended June 30, 1995, the fee amounted to $282,322. 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. Investors Bank & Trust Company (IBT), an
affiliate of EVM and BMR, 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. 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 six months ended June 30,
1995, no significant amounts have been deferred.
------------------------------------------------------------------------------
(4) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its 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 Portfolio
solely to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Interest is charged to each portfolio based on its borrowings
at an amount above either the bank's adjusted certificate of deposit rate, a
variable adjusted 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 on the daily unused portion of the $100 million
discretionary facility is allocated among the participating funds and portfolios
at the end of each quarter. The Portfolio did not have any significant
borrowings or allocated fees during the period. At June 30, 1995, the Fund did
not have an outstanding balance pursuant to the line of credit.
<PAGE>
------------------------------------------------------------------------------
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value
of the investments owned at June 30, 1995, as computed on a federal income tax
basis, are as follows:
Aggregate cost $81,620,522
===========
Gross unrealized appreciation $16,194,207
Gross unrealized depreciation 428,844
-----------
Net unrealized appreciation $15,765,363
===========
------------------------------------------------------------------------------
(6) FINANCIAL INSTRUMENTS
The Fund regularly trades in financial instruments with off-balance-sheet risk
in the normal course of its investing activities and to assist in managing
exposure to market risks such as interest rates and foreign currency exchange
rates. These financial instruments include written options. The notational or
contractual amounts of these instruments represent the investment the Fund 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 insruments is meaningful only when all related and
offsetting transactions are considered. A summary of obligations under these
financial instruments at June 30, 1995 is as follows:
Written Option Transactions
Transactions in written options for the period ended June 30, 1995 were as
follows:
PRINCIPAL AMOUNTS
OF CONTRACTS
(000 OMITTED) PREMIUMS
----------------- --------
Outstanding, beginning of period -- --
Options written 990 $296,672
Options exercised -- --
Options expired -- --
--- --------
Outstanding, end of period 990 $296,672
=== ========
<PAGE>
INVESTMENT MANAGEMENT
EV TRADITIONAL OFFICERS TRUSTEES
STOCK FUND JAMES B. HAWKES DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 DUNCAN W. RICHARDSON Chairman, Newspapers of
Vice President New England, Inc.
JAMES L. O'CONNOR SAMUEL L. HAYES, III
Treasurer Jacob H. Schiff Professor of
THOMAS OTIS Investment Banking, Harvard
Secretary University Graduate School of
Business Administration
NORTON H. REAMER
President, United Asset
Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
----------------------------------------------------------
STOCK PORTFOLIO OFFICERS TRUSTEES
24 Federal Street JAMES B. HAWKES DONALD R. DWIGHT
Boston, MA 02110 President, Trustee President, Dwight Partners, Inc.
DUNCAN W. RICHARDSON Chairman, Newspapers of
Vice President and New England, Inc.
Portfolio Manager SAMUEL L. HAYES, III
JAMES L. O'CONNOR Jacob H. Schiff Professor of
Treasurer Investment Banking, Harvard
THOMAS OTIS University Graduate School of
Secretary Business Administration
NORTON H. REAMER
President, United Asset
Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
INVESTMENT ADVISER OF
STOCK PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV TRADITIONAL STOCK 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
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
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.
EV TRADITIONAL STOCK FUND
24 FEDERAL STREET
BOSTON, MA 02110
T-STSRC
EV TRADITIONAL
STOCK
FUND
[Photo]
SEMI-ANNUAL
SHAREHOLDER REPORT
JUNE 30, 1995
