<PAGE>
TO SHAREHOLDERS
In the six months ended June 30, 1996, EV Marathon Total Return Fund had a total
return of 4.4%. This return combines an increase in net asset value from $10.07
per share to $10.35 per share with the reinvestment of $0.154 per share in
dividend income.
By comparison, the Lipper Utility Fund Index, an index of 30 mutual funds
primarily invested in utility stocks, gained 3.6% during this period. The
Standard & Poors Utility Index, an unmanaged index of utility stocks, had a
total return of 0.0% during the six-month period.*
RISING INTEREST RATES DEPRESSED RETURNS OF UTILITY STOCKS...
Better than anticipated economic growth, and the possibility that too rapid
growth would generate inflationary pressures were the primary causes of the bond
market's weakness in early 1996. At present, economists are divided. Some
contend that inflation is a real threat and that higher interest rates are in
prospect. Others argue that business activity will slow in the second half and
that increased productivity and the pressures of global competition will result
in controlled, relatively slow, growth with low inflation.
In the bond market, the yield on the 30-year Treasury Bond, which rises as
prices decline, increased from 6.0% at the end of December, 1995 to 7.0% by
mid-June, 1996. Utility stocks tend to perform poorly as long-term interest
rates rise. The stocks have relatively high yields and modest earnings growth,
and they compete in the capital markets for the available funds of
income-oriented investors. As a result, utility stock performance is closely
correlated with that of the bond market.
DEREGULATION IS AFFECTING BOTH ELECTRIC AND TELEPHONE COMPANIES...
Deregulation in the electric utility industry initially proceeded very slowly,
but the pace has begun to pick up. Legislative changes at the state level have
dismantled the formerly regulated monopolies and increased the number of mergers
and acquisitions. In 1995, seven mergers were announced involving electric
utility companies, in sharp contrast to the previous decade when the average was
between one and three mergers per year.
Telecommunications companies have begun to reposition themselves as a result of
the Telecommunications Reform Act of 1996. The landmark legislation, which
opened the $90 billion local telephone market to competition, will allow local
phone companies to sell long distance service. Analysts estimate that in each
market, up to 40% of the business could be serviced by new providers.
While utility indexes have shown disappointing performance in the last six
months compared to the stock market as a whole, EV Marathon Total Return Fund
has outperformed many of its peers. In the pages that follow, Portfolio Manager
Timothy P. O'Brien discusses his views on the industry and provides insights
into his active management of this fund.
[Photo of M. Dozier Gardner]
Sincerely,
/s/ M. Dozier Gardner
M. Dozier Gardner
President, Total Return Portfolio
August 5, 1996
*It is not possible to invest directly in these indexes.
<PAGE>
A PROFILE OF EV MARATHON TOTAL RETURN FUND
- ------------------------------------------------------------------------------
SECTOR WEIGHTINGS HAVE BEEN REALIGNED TO TAKE
ADVANTAGE OF GROWTH OPPORTUNITIES
AS OF JUNE 30, 1995 AS OF JUNE 30, 1996
Oil/Gas 3% REITs 4%
Other 7% Financial 6%
REITs 10% Cash/Commercial Paper 7%
Telephone Utilities 19% Telephone Utilities 19%
Electric Utilities 62% Other 21%
Electric Utilities 43%
By market value as of dates shown
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
THE FUND HAS OUTPERFORMED
MANY OF ITS PEERS
EV Marathon Dow Jones Lipper Utility
Total Return Utility Index Fund Index
-------------- ------------- --------------
6/30/95 10000 10000 10000
10244 10095 10128
10364 10013 10246
10849 10765 10692
10947 10778 10779
11114 10840 10989
11622 11486 11420
11883 11764 11622
11797 11181 11433
11735 11001 11376
11637 10863 11398
11935 10856 11504
6/30/96 12129 11552 11828
Based on a hypothetical investment of $10,000 with all dividends and capital
gains reinvested. It is not possible to invest in an index.
* Lipper Utility Fund Index is an unmanaged index of 30 mutual funds, which
invest primarily in utility common stocks, tracked by Lipper Analytical
Services.
+ Dow Jones Utility Average is an unmanaged index of 15 utility common stocks.
Source: Lipper Analytical Services; Towers Data Systems.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
EV MARATHON TOTAL RETURN FUND
TEN LARGEST EQUITY HOLDINGS BY MARKET VALUE AS OF JUNE 30, 1996
Frontier Corp.
National Power, PLC
Cinergy, Inc.
Edison International Corp.
DPL, Inc.
NIPSCO Industries, Inc.
FPL Group, Inc.
DQE, Inc.
Southern Company
Carolina Power & Light, Inc.
- ------------------------------------------------------------------------------
<PAGE>
MANAGEMENT DISCUSSION
An interview with Timothy P. O'Brien, Vice President and Portfolio Manager of
the Total Return Portfolio.
Q. TIM, HOW WOULD YOU DESCRIBE THE FIRST HALF OF 1996 FOR UTILITY STOCKS?
A. It was a challenging environment for both telephone and electric utilities,
because the interest rate environment was not favorable. Long-term interest
rates began rising at the beginning of the year, and continued to rise
through the last week of June. The 30-year Treasury rose roughly 100 basis
points from 6% to a little over 7%. Utilities, which are highly correlated
with long-term interest rates, were therefore fighting a headwind. The
Standard & Poors Utility Index was flat during this period, while our fund
returned 4.9%. Utility funds typically beat the index in a down market
because most have the ability to put some of their assets into non-utility
stocks. Also, stock selection is part of the picture - our electric and
telephone stocks outperformed the average electric and telephone stocks.
Q. WHY HAVE YOU SHIFTED THE PORTFOLIO AWAY FROM ELECTRIC UTILITIES AND INTO
TELEPHONE UTILITIES SINCE DECEMBER?
A. When I took over the portfolio at the end of 1994, it was weighted fairly
heavily towards higher yielding electric utilities. These paid high
dividends but performed poorly on a total return basis. Telephone stocks
were, in my opinion, underweighted - especially if you look at their 50%
weighting in the S&P Utility Index - and I wanted to align the portfolio
more closely with the relative weightings in this index.
[Photo of Timothy P. O'Brien]
TIMOTHY P. O'BRIEN
Q. DO YOU PLAN TO INCREASE THE PERCENTAGE OF FOREIGN UTILITIES?
A. Our holdings in foreign utilities are currently about 10% and may increase
somewhat going forward. My second largest position currently is National
Power, a British-based company. The opportunity with foreign utilities is
that their dividends can be higher than those in the U.S., even though the
payments are not as consistent. This helps increase our fund's yield. Also,
many foreign utilities, especially in the United Kingdom, are
overcapitalized and underleveraged. Some of these are beginning to leverage
their balance sheets to pay higher dividends.
Q. YOU HAVE HAD GREAT SUCCESS WITH BRITISH UTILITY COMPANIES - WHAT OTHER
COUNTRIES LOOK ATTRACTIVE TO YOU?
A. We have had some experience with investing in Denmark and the Philippines,
and so far we have been pleased with the results.
Q. WHAT EFFECTS HAVE DEREGULATION HAD ON THE ELECTRIC UTILITY STOCKS SO FAR?
A. Electric utility stock prices were hit pretty hard, starting in 1994, as the
talk of deregulation began in earnest. There has not been any federal
legislation impacting the electric companies since 1992. There has been
quite a lot of activity at the state level, however. States have much more
authority to regulate electric utilities than telephone utilities, because
an electric company's jurisdiction is typically local in nature (within the
state's boundaries), whereas telephone companies cross state lines and
therefore fall under federal jurisdiction. The federal government has
jurisdiction over about 25% of the telephone industry, and only 2-3% of the
electric utility industry. States have been increasingly more aggressive,
driven by industrial customers demanding and receiving lower electricity
rates.
Q. WHY DID YOU ADD EDISON INTERNATIONAL TO YOUR TOP HOLDINGS THIS YEAR?
A. Edison is a California utility that had a steep price decline which, in my
opinion, was excessive. The dividend had already been cut and will probably
not be cut again. While the stock's price decline was in line with that of
other California utilities, the company carried much less risk and,
therefore, represented a good value.
Q. HOW WILL THE TELECOMMUNICATIONS REFORM ACT OF 1996 AFFECT THE FUND?
A. This legislation broke down the barriers that segmented the functions of
local and long distance phone companies. Currently, telephone companies are
monopolies which control nearly all local telephone services. In the future,
there will probably be a handful of vertically and horizontally integrated,
full-service telecommunications firms providing one-stop shopping for local,
long-distance, wireless, foreign, domestic, cable, and more - all on one
bill. A lot of the recent jockeying for position is the messy process of
putting these full-service providers together, which involves a great deal
of consolidation among different players. We have also been buying some of
the long-distance resellers - a strategy of buying the predators rather than
the prey. These companies will make a good fit as part of a full-service
provider.
Q. WHAT IS YOUR OUTLOOK FOR ELECTRIC AND TELEPHONE STOCKS?
A. Electric companies face a transition period, and the challenge will be to
separate the winners from the losers. So far, we have been pretty successful
in doing that. Within the telephone sector, companies continue to earn
healthy rates of return, although the stocks do not yet reflect their full
potential. It will probably take some time to determine who the primary
competitors will be and what combination of services they will provide. Once
this becomes more clear, stock performance should improve. In the meantime,
we will continue to monitor the situation closely and to take advantage of
opportunities as they arise.
- --------------------------------------------------------------------------------
Fund shares are not guaranteed by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
<PAGE>
EV MARATHON TOTAL RETURN FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investment in Total Return Portfolio (Portfolio) at value
(Note 1A) $56,455,890
Receivable for Fund shares sold 9,610
Deferred organization expenses (Note 1E) 24,561
-----------
Total assets $56,490,061
LIABILITIES:
Payable for Fund shares redeemed $755,492
Payable to Affiliate --
Trustees' fees 415
Accrued expenses 47,489
--------
Total liabilities 803,396
-----------
NET ASSETS for 5,378,836 shares of beneficial interest
outstanding $55,686,665
===========
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 $46,144,362
Undistributed net investment income 59,742
Accumulated net realized gain on investment
transactions (computed on the basis of identified
cost) 1,501,132
Unrealized appreciation of investments (computed on
the basis of identified cost) 7,981,429
-----------
Total net assets $55,686,665
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($55,686,665 / 5,378,836 shares of beneficial interest) $10.35
======
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the Six Months Ended June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Dividend income allocated from Portfolio (net of
withholding tax expense of $9,785) $1,259,988
Interest income allocated from Portfolio 249,231
Expenses allocated from Portfolio (240,595)
----------
Total investment income $1,268,624
Expenses --
Compensation of Trustees not members of the
Investment Adviser's organization (Note 5) $ 782
Custodian fee (Note 1D) 3,567
Distribution fees (Note 4) 270,793
Transfer and dividend disbursing agent fees 32,101
Printing and postage 27,680
Legal and accounting services 5,656
Amortization of organization expenses (Note 1E) 1,224
Miscellaneous 7,594
----------
Total expenses 349,397
----------
Net investment income $ 919,227
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized gain on investment transactions
(identified cost basis) $3,494,282
Change in unrealized appreciation of investments (1,951,834)
----------
Net realized and unrealized gain on
investments 1,542,448
----------
Net increase in net assets resulting from
operations $2,461,675
==========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
------- ---------------------
INCREASE (DECREASE) IN NET
ASSETS:
From operations --
Net investment income $ 919,227 $ 1,124,607
Net realized gain from
Portfolio 3,494,282 262,729
Change in unrealized
appreciation from Portfolio (1,951,834) 10,654,107
----------- -----------
Net increase in net
assets resulting from
operations $ 2,461,675 $12,041,443
----------- -----------
Distributions to shareholders --
From net investment income $ (870,861) $(1,089,302)
In excess of net investment
income -- (306,098)
----------- -----------
Total distributions
to shareholders $ (870,861) $(1,395,400)
----------- -----------
Net increase (decrease) in net
assets from Fund share
transactions (Note 2) $(4,145,094) $ 1,272,878
----------- -----------
Contribution from Equity
Income Trust (Note 7) $ -- $20,111,136
----------- -----------
Net increase (decrease)
in net assets $(2,554,280) $32,030,057
NET ASSETS:
At beginning of period 58,240,945 26,210,888
----------- -----------
At end of period (including
undistributed net
investment income of $59,742
and $11,376, respectively) $55,686,665 $58,240,945
=========== ===========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 ----------------------------------
(UNAUDITED) 1995 1994 1993*
-------------- --------- --------- --------
NET ASSET VALUE --
Beginning of period $10.0700 $ 8.3000 $ 9.9300 $10.0000
-------- --------- --------- --------
Income from operations:
Net investment income $ 0.1630 $ 0.3157 $ 0.3638 $ 0.0409
Net realized and
unrealized gain (loss)
on investments 0.2710 1.8173 (1.5988) (0.0559)(1)
-------- --------- --------- --------
Total income (loss)
from operations $ 0.4340 $ 2.1330 $ (1.2350) $(0.0150)
-------- --------- --------- --------
Less distributions:
From net
investment income $(0.1540) $ (0.2834) $ (0.3535) $(0.0461)
In excess of net
investment income -- (0.0796) -- --
From tax return of
capital -- -- (0.0415) (0.0089)
-------- --------- --------- --------
Total distributions $(0.1540) $ (0.3630) $ (0.3950) $(0.0550)
-------- --------- --------- --------
NET ASSET VALUE -- End
of period $10.3500 $ 10.0700 $ 8.3000 $ 9.9300
======== ========= ========= ========
TOTAL RETURN(2) 4.36% 26.31% (12.70)% (0.15)%
RATIOS/SUPPLEMENTAL DATA:
(to average daily net
assets)**
Expenses(3) 2.08%+ 2.11% 2.07% 0.68%+
Net investment income 3.23%+ 3.37% 3.95% 3.38%+
NET ASSETS, END OF PERIOD
(000'S OMITTED) $55,687 $58,241 $26,210 $11,519
Note: Per share amounts have been computed using average shares outstanding
during the period.
+ Computed on an annualized basis.
* For the period from the start of business, November 1, 1993, to December 31,
1993.
(1) The per share amount for the period from the start of business, November 1,
1993 to December 31, 1993, is not in accord with the net realized and
unrealized gain for the period allocated to the Fund by the Portfolio due to
the timing of the sales of Fund shares and the amount of per share realized
and unrealized gains and losses at such time.
(2) 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. Total return is not computed on
an annualized basis.
(3) Includes the Fund's share of Total Return Portfolio's allocated expenses.
** The expenses related to the operation of the Fund reflect an allocation of
expenses to the administrator. Had such action not been taken, the ratios
would have been as follows:
Ratios (to average daily net assets)
Expenses -- -- -- 1.83%+
Net investment
income -- -- -- 2.23%+
The accompanying notes are an integral part of the financial statements
<PAGE>
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
- ------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Marathon Total Return Fund (the Fund) is a non-diversified entity of the type
commonly known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund is a series in the Eaton Vance Special Investment Trust. The
Fund invests all of its investable assets in interests in the Total Return
Portfolio (the Portfolio), a New York Trust, having the same investment
objective as the Fund. The value of the Fund's investment in the Portfolio
reflects the Fund's proportionate interest in the net assets of the Portfolio
(11.2% at June 30, 1996). 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.
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, option and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary. At
December 31, 1995, the Fund, for federal income tax purposes, had capital loss
carryovers of $1,964,752, which will reduce the Fund's taxable income arising
from future net realized gain on investment transactions, if any, to the extent
permitted by the Internal Revenue Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve the
Fund of any liability for federal income or excise tax. Such capital loss
carryovers will expire on December 31, 2001 ($610,251) and December 31, 2002
($1,354,501).
D. EXPENSE REDUCTION -- The Fund has entered into an arrangement with its
custodian agent whereby interest earned on uninvested cash balances are used to
offset custody fees. All significant reductions are reported as a reduction of
expenses in the Statement of Operations.
E. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over five
years.
F. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Distributions to shareholders are recorded on
the ex-dividend date. Dividend income may include dividends that represent
returns of capital for federal tax purposes.
G. 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. The tax treatment of distributions for the calendar year will be reported
to shareholders prior to February 1, 1997 and will be based on tax accounting
methods which may differ from amounts determined for financial statements
purposes.
H. USE OF ESTIMATES -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates. I. INTERIM FINANCIAL INFORMATION -- The interim financial
statements relating to June 30, 1996 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 the fair presentation of the
financial statements.
- ------------------------------------------------------------------------------
(2) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
Sales 364,752 $ 3,690,226 902,884 $ 8,079,706
Issued to shareholders
electing to receive
payment of
distribution in Fund
shares 68,336 687,834 126,264 1,149,832
Redemptions (840,605) (8,523,154) (876,373) (7,956,660)
Shares acquired in merger
(Note 7) -- -- 2,474,812 20,111,136
--------- ----------- --------- -----------
Net increase (407,517) $(4,145,094) 2,627,587 $21,384,014
========= =========== ========= ===========
- ------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$3,819,662 and $8,661,191, respectively.
- ------------------------------------------------------------------------------
(4) DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the Plan) pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The Plan requires the Fund to accrue amounts
daily to the principal underwriter, Eaton Vance Distributors, Inc. (EVD), equal
to 1/365th of 0.75% of the Fund's average daily net assets, for providing
ongoing distribution services and facilities to the Fund. The Fund will
automatically discontinue accruals to EVD during any period in which there are
no outstanding Uncovered Distribution Charges, which are approximately
equivalent to the sum of (i) 5% of the aggregate amount received by the Fund for
shares sold plus (ii) distribution fees calculated by applying the rate of 1%
over the prevailing prime rate to the outstanding balance of Uncovered
Distribution Charges of EVD, reduced by the aggregate amount of contingent
deferred sales charges (see Note 6) and amounts theretofore paid to EVD. The
amount payable to EVD with respect to each day is accrued on such day as a
liability of the Fund and, accordingly, reduces the Fund's net assets. Such
payments would cease upon termination of the distribution agreement (unless made
in accordance with another distribution agreement). As a result, the Fund does
not accrue amounts which may become payable to EVD in the future because the
conditions for recording any contingent liability under generally accepted
accounting principles have not been satisfied. EVD earned $213,269 for the six
months ended June 30, 1996, representing 0.75% of average daily net assets. At
June 30, 1996, the amount of Uncovered Distribution Charges of EVD calculated
under the Plan was approximately $1,309,050.
In addition, the Plan authorizes the Fund to make payments of service fees to
the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees have implemented the Plan by authorizing the Fund to make quarterly
payments of service fees to the Principal Underwriter and Authorized Firms in
amounts not expected to exceed 0.25% of the Fund's average daily net assets for
each fiscal year based on the value of Fund shares sold by such persons and
remaining outstanding for at least twelve months. During the six months ended
June 30, 1996, the Fund provided for $57,524 under the Plan to the Principal
Underwriter and Authorized Firms. Service fees are separate and distinct from
the sales commissions and distribution fees payable by the Fund to EVD, and, as
such, are not subject to automatic discontinuance where there are no outstanding
Uncovered Distribution Charges of EVD.
Certain of the officers of the Fund and Directors of the Corporation are
officers and directors of EVD.
- ------------------------------------------------------------------------------
(5) TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Mangement 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 of BMR's organization, officers and Trustees
receive remuneration for their services to the Fund out of such investment
adviser fee. Certain of the officers and Trustees of the Fund and Portfolio are
officers and directors/trustees of the above organizations.
- ------------------------------------------------------------------------------
(6) CONTINGENT DEFERRED SALES CHARGES
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon the
lower of the net asset value at date of redemption or date of purchase. No
charge is levied on shares acquired by reinvestment of dividends or capital gain
distributions. For Fund shares purchased prior to August 1, 1994, the CDSC was
imposed at declining rates that begin at 6% in the first year of redemption
after purchase, declining one percentage point each year. For Fund shares
purchased on or after August 1, 1994, the CDSC will be imposed at declining
rates beginning at 5% in the first and second years, of redemption after
purchase, declining one percentage point in each subsequent year. No CDSC is
levied on shares which have been sold to EVM or its affiliates or to their
respective employees or clients. CDSC charges are paid to EVD to reduce the
amount of Uncovered Distribution Charges calculated under the Fund's
Distribution Plan. CDSC charges received when no Uncovered Distribution Charges
exist will be credited to the Fund. EVD received approximately $125,660 of CDSC
paid by shareholders for the six months ended June 30, 1996.
- ------------------------------------------------------------------------------
(7) TRANSFER OF NET ASSETS
On November 3, 1995, EV Marathon Total Return Fund, a Fund in the series of the
Eaton Vance Special Investment Trust, received the net assets of the Equity
Income Trust, a Fund in the series of Eaton Vance Total Return Trust, pursuant
to an Agreement and Plan of Reorganization dated August 7, 1995. In accordance
with the agreement, EV Marathon Total Return Fund, at the closing, issued
2,474,812 shares of the Fund having an aggregate value of $20,111,136. As a
result, the Fund issued 1.2188 shares for each Equity Income share.
The transaction was structured for tax purposes to qualify as a tax-free
reorganization under the Internal Revenue Code. The Equity Income Fund's net
assets at that date were $23,814,445, including $4,073,088 of unrealized
appreciation. Directly after the merger the combined net assets in the EV
Marathon Total Return Fund were $55,709,159 with a net asset value of $9.60.
<PAGE>
- ----------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
- ----------------------------------------------------------------------
COMMON STOCKS - 74.6%
- ----------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- ----------------------------------------------------------------------
BUSINESS PRODUCTS & SERVICES - 0.4%
Checkpoint Systems Inc. 50,000 $ 1,718,750
------------
COMPUTER SOFTWARE - 0.2%
Edmark Corp.* 40,000 $ 800,000
------------
ELECTRIC UTILITIES - 43.0%
Carolina Power & Light Co. 300,000 $ 11,400,000
Central Louisiana Electric Co. 200,000 5,325,000
Cilcorp Inc. 58,900 2,517,975
Cinergy Corp. 675,000 21,600,000
DPL Inc. 650,000 15,843,750
DQE, Inc. 468,900 12,894,750
Edison International 950,000 16,743,750
FPL Group, Inc. 325,000 14,950,000
Houston Industries, Inc. 275,000 6,771,875
LG & E Energy Corp. 174,400 3,989,400
Long Island Lighting 100,000 1,675,000
National Grid Holdings* 706,155 1,870,746
National Power PLC ORD* 4,000,000 23,990,400
NIPSCO Industries, Inc. 375,000 15,093,750
Northern States Power Co. Minn. 50,000 2,468,750
PECO Energy Co. 200,000 5,200,000
Pinnacle West Capital Corp. 350,000 10,631,250
Portland General Electric Corp. 190,000 5,866,250
PowerGen ORD* 1,300,000 6,665,750
PowerGen PLC* 6,024 44,085
Sierra Pacific Resources 10,800 274,050
Southern Co. 475,000 11,696,875
Southern Electric* 100,000 1,109,410
Teco Energy, Inc. 300,000 7,575,000
Unicom Corporation 225,000 6,271,875
Union Electric Co. 50,000 2,012,500
WPS Resources Corp. 50,000 1,581,250
------------
$216,063,441
------------
FINANCIAL SERVICES - 6.0%
Bank Plus Corp.* 406,185 $ 3,554,119
Financial Federal Corp.* 120,000 1,875,000
First Defiance Financial Corp. 250,000 2,593,750
GCR Holdings Ltd. 350,000 9,275,000
PMI Group, Inc.* 40,400 1,717,000
Security First Network Bank* 75,000 2,475,000
Southern Pacific Funding 50,000 875,000
Student Loan Marketing Association 20,000 1,480,000
Surety Capital Corp.* 150,000 684,375
Wells Fargo & Co. 24,000 5,733,000
------------
$ 30,262,244
------------
HEALTHCARE SERVICES - 0.2%
Emeritus Corp.* 33,300 $ 586,913
Visible Genetics, Inc.* 62,000 604,500
------------
$ 1,191,413
------------
MEDIA - 0.4%
Ovation Inc.* 238,168 $ 2,214,962
------------
NATURAL GAS UTILITIES - 1.2%
K N Energy 100,000 $ 3,350,000
Wicor Inc. 75,000 2,831,250
------------
$ 6,181,250
------------
REITS - 4.0%
Cali Realty Corp. 150,000 $ 3,637,500
Health Care Property Investors, Inc. 100,000 3,375,000
Hospitalities Properties Trust 150,000 4,012,500
LTC Properties, Inc. 150,000 2,475,000
Redwood Trust, Inc. 125,000 3,500,000
Sun Communities Inc. 110,000 2,956,250
------------
$ 19,956,250
------------
TELECOMMUNICATIONS - 0.6%
Alcatel Alsthon Sponsored ADR 1 $ 16
American Telecasting Inc.* 180,000 2,385,000
Western Wireless Corp. Class A* 25,300 540,788
------------
$ 2,925,804
------------
TELEPHONE UTILITIES - 18.6%
ACC Corp. 85,000 $ 4,133,125
AT&T Corp. 100,000 6,200,000
American Portable Telecom* 25,000 262,500
Ameritech Corp. 75,000 4,453,125
Bellsouth Corp. 100,000 4,237,500
Brooks Fiber Properties Inc.* 30,000 990,000
CAI Wireless Systems, Inc.* 150,000 1,387,500
Clearnet Communications* 101,000 1,691,750
Comcast UK Cable Partners Ltd.* 85,000 1,083,750
Excel Communications, Inc.* 15,000 405,000
Frontier Corp. 800,000 24,500,000
GTE Corp. 125,000 5,593,750
Intercel Inc.* 190,000 3,800,000
Metromedia International Group, Inc.* 100,000 1,225,000
Midcom Communications, Inc.* 324,900 4,670,437
Nextel Communications Inc. 100,000 1,906,250
Omnipoint Corp. 30,000 780,000
Peoples Choice TV Corp.* 100,000 1,825,000
SBC Communications, Inc. 175,000 8,618,750
Sprint Corp. 10,000 420,000
Tele Save Holdings, Inc.* 250,000 5,312,500
Telephone & Data Systems, Inc. 50,000 2,250,000
Teleport Communications, Inc.* 22,000 420,750
Trescom International, Inc.* 350,000 3,500,000
U.S. West Inc. 125,000 3,984,375
------------
$ 93,651,062
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $298,760,882) 374,965,176
------------
- ----------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS - 6.2%
- ----------------------------------------------------------------------
Allstate Corp., 2.30s 40,000 $ 1,580,000
First Washington Realty Trust, 9.75s 45,000 1,136,250
Freeport McMoRan Copper & Gold 90,000 2,452,500
Philippines Long Distance Telephone, 7s 194,000 10,573,000
Prime Retail Inc. Series B 365,000 6,570,000
Sovereign Bancorp. Class B 30,500 1,730,875
Sun Co. Inc. 75,000 2,212,500
Walden Residential 200,000 5,000,000
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST, $37,166,820) $ 31,255,125
------------
- ----------------------------------------------------------------------
PREFERRED STOCKS - 1.4%
- ----------------------------------------------------------------------
Fidelity Federal Bank, 12s 250,000 $ 6,875,000
------------
TOTAL PREFERRED STOCKS
(IDENTIFIED COST, $6,262,500) $ 6,875,000
------------
- ----------------------------------------------------------------------
CONVERTIBLE BONDS - 10.5%
- ----------------------------------------------------------------------
FACE AMOUNT
NAME OF COMPANY (000 OMITTED) VALUE
- ----------------------------------------------------------------------
Assisted Living, 7s, 8/15/05 $ 2,000 $ 2,762,500
Bank Atlantic Banc, 6.75s, 7/1/06 5,000 5,000,000
Emeritus Corp., 6.25s, 1/1/06 5,000 5,062,500
Fort Bend Holdings Corp., 8s, 12/1/05 2,000 2,002,500
International Cabletel, Inc., 7s, 6/15/08 6,000 5,910,000
LTC Properties Inc., 7.75s, 1/1/02 5,000 5,037,500
Novacare Inc. 5.5s, 1/15/00 10,000 8,850,000
Ovation Inc., 9.75s, 2/22/01 2,000 2,000,000
Republic of Italy, 5s, 6/28/01 3,000 3,067,500
Sterling House, 6.75s, 6/30/06 3,500 3,482,500
Theratx Inc., 8s, 2/1/02 5,500 5,431,250
VLSI Technology, 8.25s, 10/1/05 5,000 4,418,750
------------
TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST, $44,601,651) $ 53,025,000
------------
- ----------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 4.9%
- ----------------------------------------------------------------------
Associates Corp. of North America,
5.51s, 7/1/06 $14,501 $ 14,501,000
Ford Motor Co., 5.37s, 7/3/96 10,000 9,997,017
------------
TOTAL SHORT-TERM OBLIGATIONS,
AT AMORTIZED COST $ 24,498,017
------------
TOTAL INVESTMENTS - 97.6%
(IDENTIFIED COST, $411,289,870) $490,618,318
OTHER ASSETS, LESS LIABILITIES - 2.4% 11,983,233
------------
NET ASSETS - 100% $502,601,551
============
* Non-income producing security
ADR-American Depository Receipt
REIT-Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements
<PAGE>
- ------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$411,289,870) $490,618,318
Cash 331
Receivable for investments sold 24,040,785
Dividends receivable 1,351,538
Interest receivable 1,005,065
Deferred organization expenses (Note 1G) 9,783
Foreign tax reclaim receivable 36,150
Other receivables 15,213
------------
Total assets $517,077,183
LIABILITIES:
Payable for investments purchased $14,344,497
Demand note payable 44,000
Payable to affiliate --
Trustees' fees 5,330
Accrued expenses and other liabilities 81,805
-----------
Total liabilities 14,475,632
------------
NET ASSETS applicable to investors' interest in Portfolio $502,601,551
============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $423,272,337
Unrealized appreciation of investments
(computed on the basis of identified cost) 79,329,214
------------
Total net assets $502,601,551
============
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the Six Months Ended June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income (net of withholding tax of
$86,123) $11,078,468
Interest income 2,207,695
-----------
Total income $13,286,163
Expenses --
Investment adviser fee (Note 3) $ 1,901,471
Compensation of Trustees not members of the
Investment Adviser's organization (Note 3) 10,938
Custodian fee (Note 1C) 105,131
Commitment fee 75,713
Legal and accounting services 33,712
Amortization of organization expenses (Note 1G) 2,047
Miscellaneous 3,014
------------
Total expenses 2,132,026
-----------
Net investment income $11,154,137
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis) $ 31,017,686
Change in unrealized appreciation of
investments (17,261,638)
------------
Net realized and unrealized gain (loss) on
investments 13,756,048
-----------
Net increase in net assets resulting from
operations $24,910,185
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 11,154,137 $ 24,296,939
Net realized gain on investment
transactions 31,017,686 16,628,404
Change in unrealized appreciation of
investments (17,261,638) 82,965,652
------------ -------------
Net increase in net assets from
operations $ 24,910,185 $ 123,890,995
------------ -------------
Capital transactions --
Contributions $ 11,044,019 $ 29,142,153
Withdrawals (55,022,978) (136,929,715)
------------ -------------
Decrease in net assets resulting from
capital transactions $(43,978,959) $(107,787,562)
------------ -------------
Total increase (decrease) in net
assets $(19,068,774) $ 16,103,433
NET ASSETS:
At beginning of period 521,670,325 505,566,892
------------ -------------
At end of period $502,601,551 $ 521,670,325
============ =============
- ------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 -----------------------------------------
(UNAUDITED) 1995 1994 1993*
------------- ---- ---- -----
<S> <C> <C> <C> <C>
RATIOS (to average daily net assets):
Expenses 0.71%+ 0.84% 0.85% 0.91%+
Net investment income 3.83%+ 4.83% 5.22% 4.57%+
PORTFOLIO TURNOVER 47% 103% 107% 16%
AVERAGE COMMISSION RATE PAID(1) $0.042 -- -- --
LEVERAGE ANALYSIS:
Average daily balance of debt
outstanding during period
(000's omitted) $ 30 $232 $3,137 $15,452
<FN>
+ Computed on an annualized basis.
* For the period from the start of business, October 28, 1993, to December 31, 1993.
(1) 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. 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.
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
- -------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Total Return 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. INVESTMENT VALUATIONS -- Securities listed on securities exchanges or in the
NASDAQ National Market are valued at closing sales prices or, if there has been
no sale, at the mean between the closing bid and asked prices. Unlisted
securities are valued at the mean between the latest available bid and asked
prices. Options and financial futures contracts are valued at the last sale
price, as quoted on the principal exchange or board of trade on which such
options or contracts are traded or, in the absence of a sale, the mean between
the last bid and asked prices. Short-term obligations, maturing in 60 days or
less, are valued at amortized cost, which approximates value. Securities for
which market quotations are unavailable are appraised at their fair value as
determined in good faith by or at the direction of 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. EXPENSE REDUCTION -- The Fund has entered into an arrangement with its
custodian agent whereby interest earned on uninvested cash balances are used to
offset custody fees. All significant reductions are reported as a reduction of
expenses in the Statement of Operations.
D. OPTION ACCOUNTING PRINCIPLES -- Upon the writing of a covered call option, an
amount equal to the premium received by the Portfolio is included in the
Statement of Assets and Liabilities as a liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written in accordance with the Portfolio's policies on investment
valuations discussed above. Premiums received from writing call options which
expire are treated as realized gains. Premiums received from writing call
options which are exercised or are closed are added to or offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. The Portfolio, as writer of a call option, may have no control over
whether the underlying securities may be sold and, as a result, bears the market
risk or an unfavorable change in the price of the securities underlying the
written option.
E. FINANCIAL FUTURES CONTRACTS -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit an amount ("initial margin")
either in cash or securities equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by the Portfolio ("margin maintenance") each day, dependent on the
daily fluctuations in the value of the underlying security, and are recorded for
book purposes as unrealized gains or losses by the Portfolio. When the Portfolio
enters into a closing transaction, the Portfolio will realize for book purposes
a gain or loss equal to the difference between the value of the financial
futures contract to sell and the financial futures contract to buy. The
Portfolio's investment in financial futures contracts is designed only to hedge
against anticipated future changes in interest rates, security prices, commodity
prices or currency exchange rates. Should interest rates, security prices,
commodity prices or currency exchange rates move unexpectedly, the Portfolio may
not achieve the anticipated benefits of the financial futures contracts and may
realize a loss.
F. DELAYED DELIVERY TRANSACTIONS -- The Fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take place
at a period in time after the date of the transaction. At the time the
transaction is negotiated, the price of the security will be delivered and paid
for are fixed. Losses may arise due to changes in the market value of the
underlying securities if the counterparty does not perform under the contract.
G. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
H. 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.
I. USE OF ESTIMATES -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
J. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
June 30, 1996 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 the fair presentation of the financial statements.
- ------------------------------------------------------------------------------
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregrated $432,444,947 and $478,664,674, 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 based upon a percentage of average daily net asets. For the six months ended
June 30, 1996, the fee was equivalent to 0.75% of the Portfolio's average net
assets for such period and amounted to $1,901,471. Except as to Trustees of the
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to the Portfolio out of such
investment adviser fee. Certain of the officers and Trustees of the Portfolio
are officers and directors/trustees of the above organizations. Trustees of the
Portfolio that are not affiliated with the Investment Adviser may elect to defer
receipt of all or a percentage of their annual fees in accordance with the terms
of the Trustees Deferred Compensation Plan. For the six months ended June 30,
1996, 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. The Portfolio expects to use the proceeds
of the advances primarily for leveraging purposes. Borrowings by the Portfolio
under the Credit Agreement will not exceed the lesser of 1/3 of the market value
of the net assets of the Portfolio or $60,000,000. 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. At June 30, 1996, the Portfolio
had a balance outstanding pursuant to this line of credit amounting to $44,000.
- ------------------------------------------------------------------------------
(5) 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 $411,289,870
============
Gross unrealized appreciation $ 83,388,515
Gross unrealized depreciation 4,060,067
------------
Net unrealized appreciation $ 79,328,448
============
- ------------------------------------------------------------------------------
(6) FINANCIAL INSTRUMENTS
The Portfolio may trade in financial instruments with off-balance sheet risk in
the normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts, and financial futures contracts and
may involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. The notional or contractual amounts
of these instruments represent the investment the Portfolio has in particular
classes of financial instruments and does not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions are
considered.
At June 30, 1996 there were no outstanding obligations under these financial
instruments.
<PAGE>
INVESTMENT MANAGEMENT
EV MARATHON OFFICERS TRUSTEES
TOTAL RETURN
FUND JAMES B. HAWKES M. DOZIER GARDNER
24 Federal Street President, Trustee President, EVM
Boston, MA 02110
JAMES L. O'CONNOR DONALD R. DWIGHT
Treasurer President, Dwight Partners, Inc.
Chairman, Newspapers of
THOMAS OTIS New England, Inc.
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
----------------------------------------------------------
TOTAL RETURN OFFICERS TRUSTEES
PORTFOLIO
M. DOZIER GARDNER DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 Chairman, Newspapers of
JAMES B. HAWKES New England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
TIMOTHY O'BRIEN Jacob H. Schiff Professor of
Vice President and Investment Banking, Harvard
Portfolio Manager University Graduate School
of Business Administration
JAMES L. O'CONNOR
Treasurer NORTON H. REAMER
President and Director, United
THOMAS OTIS Asset Management Corporation
Secretary
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
<PAGE>
INVESTMENT ADVISER OF
TOTAL RETURN PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF EV MARATHON
TOTAL RETURN FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
TRANSFER AGENT
First Data Investor Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
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 MARATHON TOTAL RETURN FUND
24 FEDERAL STREET
BOSTON, MA 02110
M-TMSRC-8/96
[logo]
EV MARATHON
TOTAL RETURN
FUND
SEMI-ANNUAL
SHAREHOLDER REPORT
JUNE 30, 1996
[Graphic omitted: man and child fishing]
