<PAGE>
To Shareholders
For the six months ended June 30, 1996, EV Classic Investors Fund had a total
return of 4.4%. This return combines an increase in net asset value to $12.20
per share from $11.74 per share with the reinvestment of $0.06 in shareholder
distributions. The return of the Lipper Balanced Fund Index* -- to which EV
Classic Investors Fund's return may properly be compared -- was 4.5%.
In the first half of 1996, the stock market continued to produce positive
returns for the sixth and seventh consecutive quarters. The Standard & Poors 500
Index*, an unmanaged index of large capitalization common stocks, had a total
return of 10.1%. In the bond market, prices declined during the past six months.
Total returns, after factoring in the reinvestment of interest income, were
slightly negative. The Lehman Brothers Government/Corporate Bond Index*, an
unmanaged bond index, had a total return of -1.9%.
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.
- -------------------------------------------------------------------------------
EV CLASSIC INVESTORS FUND
TEN LARGEST STOCK HOLDINGS, BY MARKET VALUE, AS OF 6/30/96
COMPANY INDUSTRY
Astra AB................................................ Drugs
Monsanto Corp........................................... Chemicals
Chase Manhattan......................................... Banking
PepsiCo................................................. Beverages
Reuters Holdings, PLC................................... Information Services
Deere & Co.............................................. Machinery
Federal Nat'l Mortgage Assn............................. Financial
Eastman Kodak........................................... Photography
Ameritech Corp.......................................... Telecommunications
General Re Corp......................................... Insurance
- -------------------------------------------------------------------------------
Regardless of which forecast proves correct, a well-managed balanced portfolio,
with a diversified mix of common stocks, bonds and short-term fixed income
investments is likely to produce favorable investment results with low
volatility. The record of EV Classic Investors Fund demonstrates the success of
this investment policy and, although historic returns are no guarantee of future
results, we expect the policy to serve the Fund's shareholders well in the
future.
Sincerely,
[Photo of M. Dozier Gardner]
/s/ M. Dozier Gardner
M. Dozier Gardner
President
August 5, 1996
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
*It is not possible to invest directly in these indexes.
<PAGE>
MANAGEMENT REPORT
An interview with Thomas E. Faust Jr., Vice President and Manager of Investors
Portfolio.
Q. TOM, HOW WOULD YOU SUMMARIZE THE FIRST HALF OF 1996 FOR THE STOCK AND BOND
MARKETS?
A. It has been a good six months for stocks, by almost any standard. The S&P
500 was up 10.1% in the first six months, matching the historical annual
return of this index.
On the bond side, the performance was not nearly as good, as shown by the
-1.9% total return of the Lehman Government/Corporate Bond Index. There are
a couple of key reasons for this weak bond market performance. First, there
was probably more optimism than was justified in December for the prospects
of serious budgetary reform, attacking in a structural way the chronic
budget deficit. And second, the economy was generally stronger than
expected, and a stronger economy typically causes concern in the bond
markets about inflation.
Q. WHAT TRENDS LED TO THE INCREASE IN THE EQUITY PERCENTAGE OF THE PORTFOLIO?
A. Well, my general bias in this fund is towards equities, so we will usually
be overweighted in stocks relative to bonds. I would consider a normal
weighting to be about 60% equities and 40% bonds and cash. We increased the
equity portion in this last period simply because we saw better
opportunities there. But the weighting also increased naturally by price
appreciation, so it was a combination. Quite simply, stocks have shown an
ability to perform, despite a sluggish bond market.
[Photo of Thomas E. Faust Jr.]
Thomas E. Faust Jr.
Q. ARE THERE ANY OTHER ECONOMIC TRENDS THAT MIGHT CAUSE YOU TO MAKE FURTHER
ADJUSTMENTS?
A. In my opinion, corporate America is in very good shape. The restructurings
and cost reductions that companies have made over the last several years
have resulted in a strong competitive position for U.S. industry, and a very
strong environment for growth in corporate profits. I do think, however,
that we will probably see a slowing in the economy in the second half of
this year or early in 1997, which will reduce the rate of growth in
corporate profits going forward. With stock valuations already at relatively
high levels, a slowdown in earnings growth would diminish the relative
attractiveness of stocks versus bonds. In such an environment, the Portfolio
could be expected to adjust its asset allocation in the direction of less
exposure to stocks and more towards bonds and cash.
Q. WHICH EQUITY SECTORS DID PARTICULARLY WELL IN THE PAST SIX MONTHS?
A. One sector that performed well is retail, after having performed horribly in
1994 and 1995. Some of the strength was a rebound from abnormally low
valuations, but generally the fundamental retail environment improved.
Circuit City is a new purchase, and Home Depot is another important retail
holding. Also strong were staple consumer and health care companies, such as
Coca-Cola, PepsiCo, and Amercan Home Products.
- -------------------------------------------------------------------------------
INVESTORS PORTFOLIO
INVESTMENT ALLOCATION
AS OF 6/30/96
Preferred Stock........................................................ 2.2%
Cash/Commercial Paper.................................................. 2.3%
U.S. Govt. Agencies.................................................... 4.9%
Corporate Bonds........................................................ 12.6%
U.S. Treasuries........................................................ 13.6%
Common Stock........................................................... 64.4%
- -------------------------------------------------------------------------------
Q. WHAT IS YOUR FEELING ABOUT ASTRA, YOUR LARGEST STOCK HOLDING, WHICH HAS HAD
SOME RECENT WELL-REPORTED EMPLOYEE RELATIONS PROBLEMS IN ITS U.S.
SUBSIDIARY?
A. I am satisfied with the parent company's response, which has been quick and
effective. It is important to note that Astra USA is less than 7% of
consolidated Astra sales, so the scope of the problem in relation to the
overall company is quite small.
Q. WHAT WAS YOUR REASON FOR REDUCING YOUR HOLDINGS IN REUTERS?
A. I reduced positions in several top holdings, including Reuters, Chase
Manhattan, and Astra. The reason was simply to diversify and not make too
big a bet on any one company. And by doing so, I can invest in other
companies that I find attractive.
Q. YOU HAVE HAD OBVIOUS SUCCESS WITH MONSANTO AND DEERE -- WHAT IS THE
INVESTMENT CASE FOR THESE STOCKS?
A. Monsanto and Deere are both part of an agriculture theme in which the Fund
is participating. The worldwide demand for corn and other grains is
increasing, inventories are very low, and prices are at all-time highs. Farm
incomes are on the rise, investment in capital equipment is greater and
demand for more environmentally benign, high-payback pesticides is
increasing. Monsanto is a leading provider of such pesticides and Deere is a
dominant provider of farm machinery, so both companies fit nicely into this
strategy. Also, the agricultural cycle is different from the economic cycle,
so it provides an important level of diversification.
Monsanto has probably contributed the most of any stock to the performance
of the fund over the past six months. It was up 33% in the first half of the
year, and now represents 3.4% of the Fund's equities. When we bought
Monsanto at the end of 1994, the company had a successful product in Roundup
herbicide, but a corporate history of under-performing relative to
potential. A new management team has made significant improvements in
numerous areas of the company's operations. Roundup continues to grow
rapidly, and the development of strains of crop seeds that are resistant to
Roundup is expected to further the product's growth. Monsanto has evolved
from a basic chemical company, with a mediocre reputation on Wall Street, to
a well-managed company with strong product franchises in agricultural
science and a full pipeline of interesting and innovative products.
Q. ARE THERE ANY OTHER STOCKS THAT YOU WOULD LIKE TO HIGHLIGHT?
A. Several of our top holdings have performed very well. One of these is Intel.
By virtue of a controlling position in microprocessors, Intel has benefited
from the decline in the prices of computer memory and personal computers.
Also, the company is incorporating more and more functions into its
microprocessors, capturing a greater share of the PC sales dollar and making
it harder and harder for the competition to keep pace. The stock is selling
at 13 times earnings, and earnings are projected to grow at 19% per year.
Q. WHAT ARE YOUR CRITERIA FOR INVESTING IN CORPORATE BONDS?
A. We are currently investing only in investment-grade bonds. Our criteria
encompass three main elements. First, we determine the asset allocation
among stocks, bonds and cash. Second, we set the duration -- a measure of
interest rate sensitivity. And third, we choose the individual securities.
We tend to favor corporate put bonds, in which the owner has the right on a
prescribed date to sell or "put" the bond back to the issuer at a specific
price. This acts as an insurance policy against a decline in bond prices.
Q. WHAT ARE THIS FUND'S MAJOR STRENGTHS?
A. We take a long-term approach and try to perform relatively well in both down
markets and up markets. While we push for returns, we are sensitive to risk.
A balanced approach, we have found, produces good returns with relatively
low volatility. For someone looking for a core fund around which to build an
investment program, EV Classic Investors Fund is a sound choice.
<PAGE>
-----------------------------------
EV CLASSIC INVESTORS FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investments in Investors Portfolio, (Portfolio) at
value (Note 1A) $6,714,043
Receivable for Fund shares sold 26,281
Receivable from administrator (Note 5) 1,772
Deferred organization expenses (Note 1E) 20,509
----------
Total assets $6,762,605
LIABILITIES:
Payable for Fund shares redeemed $20,144
Payable to affiliate --
Trustees' fees 45
Accrued expenses 20,785
-------
Total liabilities 40,974
----------
NET ASSETS for 550,881 shares of beneficial interest
outstanding $6,721,631
==========
SOURCES OF NET ASSETS:
Paid-in capital $5,594,673
Undistributed net investment income 24,548
Accumulated net realized gain on investments 366,666
Unrealized appreciation of investments 735,744
----------
Total net assets $6,721,631
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($6,721,631 / 550,881 shares of beneficial interest
outstanding) $12.20
======
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, 1996 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 90,893
Dividend income allocated from Portfolio (net of
withholding tax of $935) 57,631
Expenses allocated from Portfolio (24,708)
--------
Total investment income $123,816
Expenses --
Compensation of Trustees not members of the
Investment Adviser's organization (Note 5) $ 62
Custodian fee (Note 1C) 1,748
Distribution and service fees (Note 4) 35,161
Transfer agent fees 5,069
Printing and postage 14,282
Legal and accounting services 5,685
Registration fees 4,818
Amortization of organization expenses (Note 1E) 4,004
--------
Total expenses $ 70,829
Deduct-Preliminary allocation of expenses to the
administrator (Note 5) (1,772)
--------
Net expenses 69,057
--------
Net investment income $ 54,759
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized gain on investment transactions
(identified cost basis) $368,793
Change in unrealized appreciation of investments (118,937)
--------
Net realized and unrealized gain on investments $249,856
--------
Net increase in net assets resulting from
operations $304,615
========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1996 DECEMBER 31,
(UNAUDITED) 1995*
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 54,759 $ 55,685
Net realized gain from Portfolio 368,793 70,324
Change in unrealized appreciation
from Portfolio (118,937) 941,563
---------- ----------
Net increase in net assets from
operations $ 304,615 $1,067,572
---------- ----------
Distributions to shareholders --
From net investment income $ (35,749) $ (51,704)
From net realized gain on investment
transactions -- (64,717)
---------- ----------
Total distributions to shareholders $ (35,749) $ (116,421)
---------- ----------
Net increase (decrease) in net assets
from Fund share transactions (Note 2) $ (113,633) $3,542,031
---------- ----------
Net increase in net assets $ 155,233 $4,493,182
NET ASSETS:
At beginning of period 6,566,398 2,073,216
---------- ----------
At end of period (including
undistributed net investment income
of $24,548 and $5,538, respectively) $6,721,631 $6,566,398
========== ==========
*For the eleven month period ended December 31, 1995 (Note 7).
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JANUARY 31,
JUNE 30, 1996 YEAR ENDED -------------------------
(UNAUDITED) DECEMBER 31, 1995** 1995 1994***
---------------- ------------------- ----------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE -- Beginning of period $11.740 $ 9.610 $10.460 $10.000
------- ------- ------- -------
Income from operations:
Net investment income $ 0.095 $ 0.135 $ 0.215 $ 0.025
Net realized and unrealized gain
(loss) on investments 0.425 2.240 (0.810) 0.435
------- ------- ------- -------
Total income (loss) from operations $ 0.520 $ 2.375 $(0.595) $ 0.460
------- ------- ------- -------
Less distributions:
From net investment income $(0.060) $(0.128) $(0.166) $ --
In excess of net investment income -- -- (0.074) --
From net realized gain on investment transactions -- (0.117) (0.002) --
From paid in capital -- -- (0.013) --
------- ------- ------- -------
Total distributions $(0.060) $(0.245) $(0.255) $ 0.000
------- ------- ------- -------
NET ASSET VALUE -- End of period $12.200 $11.740 $ 9.610 $10.460
======= ======= ======= =======
TOTAL RETURN(2) 4.43% 24.94% (5.71)% 4.60%
RATIOS/SUPPLEMENTAL DATA (to average daily net assets):*
Expenses (1) 2.67%+ 3.27%+ 3.23% 1.68%+
Net investment income 1.56%+ 1.21%+ 1.49% 1.81%+
NET ASSETS, END OF YEAR (000 OMITTED) $ 6,722 $ 6,566 $ 2,073 $ 664
*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) 2.72%+ 3.59%+ 5.55% 4.97% +
Net investment income (loss) 1.51%+ 0.90%+ (0.83)% (1.46)%+
+Computed on an annualized basis.
**For the eleven month period ended December 31, 1995 (Note 7).
***For the period from the start of business, November 2, 1993, to January 31, 1994.
(1)Includes the Fund's share of Investors Portfolio's allocated expenses.
(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.
</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
EV Classic Investors Fund (the Fund) is a diversified series of Eaton Vance
Special Investment Trust (the Trust). The Trust is an entity of the type
commonly known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund invests all of its investable assets in interests
in the Investors 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 (2.3% 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 determined in accordance with generally accepted
accounting principles.
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. 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.
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. 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
statement purposes.
G. 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.
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 revenues and expense during the reporting period. Actual results
could differ from those estimates.
- --------------------------------------------------------------------------------
(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:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995* JANUARY 31, 1995
------------------------------ ----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ------------ -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sales 130,595 $1,555,032 538,857 $5,611,793 377,194 $3,749,789
Issued to shareholders electing to
receive payment of distributions
in Fund shares 2,871 34,781 10,392 114,271 4,769 45,716
Redemptions (142,041) (1,703,446) (205,441) (2,184,033) (229,784) (2,237,532)
------- ---------- ------- ---------- ------- ----------
Net increase (8,575) $ (113,633) 343,808 $3,542,031 152,179 $1,557,973
======= ========== ======= ========== ======= ==========
*For the eleven month period ended December 31, 1995. (Note 7)
</TABLE>
- --------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$1,556,544 and $1,766,134, 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 pay
the principal underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal
to 1/365th of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no
outstanding Uncovered Distribution Charges, which are equivalent to the sum of
(i) 6.25% of the aggregate amount received by the Fund for shares sold plus,
(ii) distribution fees calculated by applying the rate of 1% over the
prevailing prime rate to the outstanding balance of Uncovered Distribution
Charges of EVD, reduced by amounts theretofore paid to EVD. The 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. EVD earned $26,371 for
the six months ended June 30, 1996, representing 0.75% (annualized) of daily
average net assets. At June 30, 1996, the amount of Uncovered Distribution
Charges of EVD calculated under the Plan was approximately $774,070.
In addition, the Plan provides that the Fund may 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 of the Fund have initially implemented this
provision of the Plan by authorizing the Fund to make payments of service fees
to the Principal Underwriter, Authorized Firms and other persons in each
fiscal year of the Fund in amounts not exceeding 0.25% (per annum) of the
Fund's average daily net assets. Provision for service fee payments for the
six months ended June 30, 1996 amounted to $8,790. Such payments were made for
personal services and/or maintenance of shareholder accounts. Service fees are
separate and distinct from the sales commissions and distribution fees payable
by the Fund to EVD, and, as such, are not subject to automatic discontinuance
when there are no outstanding uncovered distribution charges of EVD.
- --------------------------------------------------------------------------------
(5) TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) 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. To enhance the net income of the Fund, $1,772 of
expenses related to the operations of the Fund were allocated on a preliminary
basis to EVM as Administrator. Except as to Trustees of the Fund and the
Portfolio who are not members of EVM's or BMR's organizations, 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
Shares purchased on or after January 30, 1995 and redeemed during the first year
after purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a contingent deferred sales charge
at a rate of one percent of redemption proceeds, exclusive of all reinvestments
and capital appreciation in the account. No contingent deferred sales charge is
imposed on exchanges for shares of other funds in the Eaton Vance Classic Group
of Funds or Eaton Vance Money Market Fund which are distributed with a
contingent deferred sales charge. CDSC charges amounted to $1,220 for the six
months ended June 30, 1996.
- --------------------------------------------------------------------------------
(7) CHANGE IN YEAR END
The Fund changed its fiscal year end from January 31 to December 31, effective
December 31, 1995.
<PAGE>
--------------------------------------------
INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
- -----------------------------------------------------------------------------
COMMON STOCKS - 64.1%
- -----------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- -----------------------------------------------------------------------------
BANKS - 3.5%
Banco Latinoamericano de Exportaciones 75,000 $ 4,218,750
Chase Manhattan Corp. 85,200 6,017,250
------------
$ 10,236,000
------------
BEVERAGES - 2.8%
Coca-Cola Co. 50,000 $ 2,443,750
PepsiCo Inc. 160,000 5,660,000
------------
$ 8,103,750
------------
CHEMICALS - 3.4%
Monsanto Corp. 200,000 $ 6,500,000
Praxair Inc. 80,000 3,380,000
------------
$ 9,880,000
------------
COMPUTER & BUSINESS EQUIPMENT - 3.1%
Hewlett Packard Co. 45,000 $ 4,483,125
Xerox Corp. 81,000 4,333,500
------------
$ 8,816,625
------------
DRUGS - 4.8%
Astra AB A Free Shares 190,000 $ 8,389,754
Pfizer Inc. 18,900 1,348,988
Smithkline Beecham PLC ADR 75,000 4,078,125
------------
$ 13,816,867
------------
ELECTRIC UTILITIES - 2.3%
New England Electric System 90,000 $ 3,273,750
The Southern Co. 140,000 3,447,500
------------
$ 6,721,250
------------
ELECTRICAL EQUIPMENT - 0.6%
AMP Inc. 45,000 $ 1,805,625
------------
ELECTRONICS - SEMICONDUCTORS - 2.7%
MEMC Electronic Materials, Inc. 89,000 $ 3,448,750
Intel Corp. 60,000 4,406,250
------------
$ 7,855,000
------------
ENTERTAINMENT - 0.6%
Walt Disney Co. 26,233 $ 1,649,400
------------
FINANCIAL - MISCELLANEOUS - 4.0%
Federal National Mortgage Association 160,000 $ 5,360,000
MBNA Corp. 100,000 2,850,000
MGIC Investment Corp. 60,000 3,367,500
------------
$ 11,577,500
------------
FOOD - 0.6%
Nestle SA* 1,620 $ 1,849,581
------------
FERTILIZER - 1.4%
Potash Corp. of Saskatchewan 60,000 $ 3,975,000
------------
HOUSEHOLD PRODUCTS - 0.8%
Kimberley Clark Corp. 31,200 $ 2,410,200
------------
INFORMATION SERVICES - 1.9%
Reuters Holdings, PLC ADR 75,000 $ 5,437,500
------------
INSURANCE - 4.9%
Allstate Corp. 90,000 $ 4,106,250
General Re Corp. 30,000 4,567,500
Mutual Risk Management Ltd. 57,200 1,787,500
Progressive Corp. 80,000 3,700,000
------------
$ 14,161,250
------------
MACHINERY - 1.9%
Deere & Co. 135,000 $ 5,400,000
------------
MEDICAL PRODUCTS - 2.8%
Boston Scientific Corp. 90,000 $ 4,050,000
Sofamor Danek Group, Inc.* 147,000 4,079,250
------------
$ 8,129,250
------------
METALS & MINING - 1.0%
J & L Specialty Steel, Inc. 200,000 $ 2,975,000
------------
OIL & GAS - EXPLORATION & PRODUCTION - 2.5%
Anadarko Petroleum Corp. 60,000 $ 3,480,000
Triton Energy Ltd. 79,800 3,880,275
------------
$ 7,360,275
------------
OIL & GAS - INTEGRATED - 2.1%
Exxon Corp. 43,640 $ 3,791,225
Mobil Corp. 20,000 2,242,500
------------
$ 6,033,725
------------
PAPER & FOREST PRODUCTS - 0.7%
Plum Creek Timber Co., L.P. 90,000 $ 2,148,750
------------
PHOTOGRAPHY - 1.8%
Eastman Kodak Co. 65,000 $ 5,053,750
------------
PUBLISHING - 1.3%
McGraw-Hill, Inc. 80,000 $ 3,660,000
------------
REAL ESTATE - 4.1%
Chateau Properties, Inc. 75,000 $ 1,668,750
Colonial Properties Trust 80,000 1,940,000
Equity Residential Properties Trust 101,400 3,333,525
ROC Communities, Inc. 116,250 2,775,468
Security Capital Industrial Trust 37,000 652,125
Shurgard Storage Centers, Inc. 61,000 1,540,250
------------
$ 11,910,118
------------
RETAIL - FOOD & DRUG - 1.3%
Melville Corp. 95,000 $ 3,847,500
------------
RETAIL - SPECIALTY - 2.8%
Circuit City Stores, Inc. 100,000 $ 3,612,500
Home Depot, Inc. 80,000 4,320,000
------------
$ 7,932,500
------------
SPECIALTY CHEMICALS & MATERIALS - 0.5%
Loctite Corp. 28,300 $ 1,315,950
------------
TELEPHONE UTILITIES - 2.6%
Ameritech Corp. 80,448 $ 4,776,600
Frontier Corp. 85,000 2,603,125
------------
$ 7,379,725
------------
TRANSPORTATION - 1.3%
Canadian National Railway 1,200 $ 22,050
Southwest Airlines Co. 125,000 3,640,625
------------
$ 3,662,675
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $123,734,707) $185,104,766
------------
- -----------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK - 1.2%
- -----------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- -----------------------------------------------------------------------------
Freeport McMoRan Copper & Gold 125,000 $ 3,406,250
------------
TOTAL CONVERTIBLE PREFERRED STOCK
(IDENTIFIED COST, $2,872,500) $ 3,406,250
------------
- -----------------------------------------------------------------------------
PREFERRED STOCK - 1.0%
- -----------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- -----------------------------------------------------------------------------
Bank of Boston Ser. C Adj. Rt. 37,600 $ 2,914,000
------------
TOTAL PREFERRED STOCK
(IDENTIFIED COST, $1,815,525) $ 2,914,000
------------
- -----------------------------------------------------------------------------
U.S. TREASURY/AGENCY OBLIGATIONS - 18.4%
- -----------------------------------------------------------------------------
FACE AMOUNT
NAME OF COMPANY (000 OMITTED) VALUE
- -----------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
8.10s, 12/15/04 $ 441 $ 443,938
Federal Home Loan Mortgage Corp., 9.70%,
1/15/16 2,296 2,337,036
Federal Home Loan Mortgage Corp.,
9s, 11/15/19 573 594,514
Federal Home Loan Mortgage Corp., 7.95%,
12/1/90 2,417 2,457,070
Federal Home Loan Mortgage Corp.,
10s, 5/15/20 2,375 2,530,848
Federal National Mortgage Association, 7.50s,
5/25/19 1,744 1,760,061
Federal National Mortgage Association, 8.50s,
7/25/19 1,917 1,933,898
Federal National Mortgage Association,
9s, 3/25/20 2,000 2,090,620
U.S. Treasury Bond, 7.875s, 2/15/21 2,000 2,194,060
U.S. Treasury Notes, 6.125s, 7/31/96 3,250 3,252,535
U.S. Treasury Notes, 7.375s, 11/15/97 1,800 1,832,057
U.S. Treasury Notes, 8.125s, 2/15/98 3,000 3,093,750
U.S. Treasury Notes, 7.125s, 9/30/99 17,000 17,371,790
U.S. Treasury Notes, 5.625s, 11/30/00 7,500 7,264,425
U.S. Treasury Notes, 6.875s, 5/15/06 4,000 4,044,360
------------
TOTAL U.S. TREASURY/AGENCY OBLIGATIONS
(IDENTIFIED COST, $53,525,887) $ 53,200,962
------------
- -----------------------------------------------------------------------------
CORPORATE BONDS - 12.6%
- -----------------------------------------------------------------------------
FACE AMOUNT
NAME OF COMPANY (000 OMITTED) VALUE
- -----------------------------------------------------------------------------
American General Finance Corp.,
8.125s, 8/15/09 $ 2,460 $ 2,592,446
Bell Telephone Co. PA, 8.35s, 12/15/30 3,000 3,421,260
Chesapeake Potomac Telephone VA,
8 3/8s, 10/1/29 1,500 1,678,980
Columbia/HCA Health, 8.36%, 5/15/24 900 957,960
Connecitcut Light & Power MBIA,
7.875%, 10/1/24 3,775 4,090,666
Dayton Hudson Medium Term Note,
9.50s, 6/10/15 650 733,057
Eaton Corp., 8s, 8/15/06 1,000 1,054,860
General Motors Corp. 8.80s, 3/1/21 3,130 3,507,760
General Motors Corp. Medium Term Notes,
9.45s, 11/1/11 3,000 3,447,600
Hertz Corp., 9%, 11/1/09 2,600 2,908,178
Inter American Development Bank,
8.875s, 6/1/09 2,000 2,292,960
Inter American Development Bank,
8.40s, 9/1/09 1,500 1,678,440
Johnson Controls, 7.70%, 3/1/15 1,360 1,423,743
Pitney Bowes Credit Corp., 9.25s, 6/15/08 1,650 1,908,126
Procter & Gamble Co., 8s, 10/26/29 2,345 2,493,954
Seagram (Joseph) & Sons, 9.65s, 8/15/18 1,030 1,245,754
TRW Inc., Medium Term Notes,
9.35%, 6/4/20 800 953,192
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST, $35,945,376) $ 36,388,936
------------
- -----------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 2.3%
- -----------------------------------------------------------------------------
FACE AMOUNT
NAME OF COMPANY (000 OMITTED) VALUE
- -----------------------------------------------------------------------------
Associates Corp. of North America,
5.51s, 7/1/96 $6,603 $ 6,603,000
------------
TOTAL SHORT-TERM OBLIGATIONS, AT
AMORTIZED COST $ 6,603,000
------------
TOTAL INVESTMENTS - 99.6%
(IDENTIFIED COST, $224,496,995) $287,617,914
OTHER ASSETS, LESS LIABILITIES - 0.4% 1,090,769
------------
NET ASSETS - 100% $288,708,683
============
*Non-income producing security.
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,
$224,496,995) $287,617,914
Cash 50,671
Foreign currency, at value (cost, $71,354) 72,575
Receivable for investments sold 1,739,732
Interest receivable 1,365,504
Dividends receivable 438,402
Deferred organization expenses (Note 1E) 7,384
Tax reclaim receivable 26,973
------------
Total assets $291,319,155
LIABILITIES:
Payable for investments purchased $ 2,576,510
Payable to affiliate --
Trustees' fees 3,840
Accrued expenses and other liabilities 30,122
-----------
Total liabilities 2,610,472
------------
NET ASSETS applicable to investors' interest
in Portfolio $288,708,683
============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $225,586,251
Unrealized appreciation of investments (computed
on the basis of identified cost) 63,122,432
------------
Total net assets $288,708,683
============
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):
Interest income $ 3,648,748
Dividend income (net of withholding tax of
$36,405) 2,302,332
-----------
Total income $ 5,951,080
Expenses --
Investment adviser fee (Note 3) $ 884,060
Compensation of Trustees not members of the
Investment Adviser's organization (Note 3) 6,225
Custodian fee (Note 1D) 75,919
Legal and accounting fees 19,817
Amortization of organization expenses (Note 1E) 1,593
Miscellaneous 3,992
-----------
Total expenses 991,606
-----------
Net investment income $ 4,959,474
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investment transactions
(identified cost basis) $14,445,274
Change in unrealized appreciation on investments (4,042,244)
-----------
Net realized and unrealized gain on
investments 10,403,030
-----------
Net increase in net assets resulting from
operations $15,362,504
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995**
-------- --------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 4,959,474 $ 8,692,310
Net realized gain on investment transactions 14,445,274 9,116,976
Change in unrealized appreciation of
investments (4,042,244) 43,494,132
------------ ------------
Net increase in net assets from
operations $ 15,362,504 $ 61,303,418
------------ ------------
Capital transactions --
Contributions $ 21,681,244 $ 32,319,917
Withdrawals (24,709,865) (34,406,030)
------------ ------------
Decrease in net assets resulting from
capital transactions $ (3,028,621) $ (2,086,113)
------------ ------------
Total increase in net assets $ 12,333,883 $ 59,217,305
NET ASSETS:
At beginning of period 276,374,800 217,157,495
------------ ------------
At end of period $288,708,683 $276,374,800
============ ============
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- ----------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED JANUARY 31,
JUNE 30, 1996 DECEMBER 31, ----------------------
(UNAUDITED) 1995** 1995 1994*
------------- ------------ ------ ------
<S> <C> <C> <C> <C>
RATIOS (to average daily net assets):
Expenses 0.70%+ 0.71%+ 0.70% 0.69%+
Net investment income 3.52%+ 3.83%+ 4.25% 3.69%+
PORTFOLIO TURNOVER 43% 47% 28% 15%
AVERAGE COMMISSION RATE PAID (1) $0.0598 -- -- --
<FN>
+ Computed on an annualized basis.
* For the period from the start of business, October 28, 1993, to January 31, 1994.
** For the eleven month period ended December 31, 1995. (Note 6)
(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
Investors Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940, as a diversified, open-end, management investment
company, which was organized as a trust under the laws of the State of New
York in 1992. The Declaration of Trust permits the Trustees to issue interests
in the Portfolio. The following is a summary of significant accounting
policies of the Portfolio. The policies are in conformity with generally
accepted accounting principles.
A. INVESTMENT VALUATIONS -- Securities listed on securities exchanges or in
the NASDAQ National Market are valued at closing sales prices. Listed or
unlisted investments for which closing sale prices are not available are
valued at the mean between latest bid and asked prices. Debt investments
(other than mortgage-backed "pass-through" securities) are valued at prices
furnished by a pricing service. Mortgage-backed "pass through" securities are
valued using a matrix pricing system which takes into account closing bond
valuations, yield differentials, anticipated prepayments and interest rates.
Short-term obligations maturing in 60 days or less, are valued at amortized
cost, which approximates value. All other investments are valued at fair value
using methods determined in good faith by or at the direction of the Trustees.
B. INCOME -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount on debt investments when
required for federal income tax purposes. Dividend income is recorded on the
ex-dividend date. Dividend income may include dividends that represent returns
of capital for federal income
tax purposes.
C. FEDERAL 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 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 taxable income, net realized capital gains, and any other
items of income, gain, loss, deduction or credit.
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 Portfolio in
connection with its organization are being amortized on the straight-line basis
over five years.
F. SECURITY TRANSACTIONS -- Investment transactions are accounted for on the
date the investments are purchased or sold. Realized gains and losses on the
sale of investments are determined on the identified cost basis.
G. 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.
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.
- --------------------------------------------------------------------------------
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $70,885,820 and $84,214,648, respectively.
Purchases and sales of U.S. Government securities aggregated $53,742,620 and
$30,593,906, 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 computed at the monthly rate of 5/96 of 1% (0.625% annually) of the
Portfolio's average daily net assets up to $300 million and at reduced rates
as daily net assets exceed that level. For the six months ended June 30, 1996,
the fee was equivalent to 0.625% (annualized) of the Portfolio's average net
assets for such period and amounted to $884,060. 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 service 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.
- --------------------------------------------------------------------------------
(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 or fund
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.
- --------------------------------------------------------------------------------
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/(depreciation) in the value of investments
owned at June 30, 1996, as computed on a federal income tax basis, are as
follows:
Aggregate cost $224,496,995
============
Gross unrealized appreciation $ 65,483,242
Gross unrealized depreciation 2,362,323
------------
Net unrealized appreciation $ 63,120,919
============
- --------------------------------------------------------------------------------
(6) CHANGE IN FISCAL YEAR END
The Portfolio changed its fiscal year end from January 31, to December 31,
effective December 31, 1995.
<PAGE>
-------------------------
INVESTMENT MANAGEMENT
EV CLASSIC OFFICERS TRUSTEES
INVESTORS FUND
24 Federal Street JAMES B. HAWKES M. DOZIER GARDNER
Boston, MA 02110 President, Trustee President, Eaton Vance
Management
JAMES L. O'CONNOR
Treasurer DONALD R. DWIGHT
President, Dwight
THOMAS OTIS Partners, Inc.
Secretary Chairman, Newspapers of
New England, Inc.
SAMUEL L. HAYES, III
Jacob H. Schiff Professor of
Investment Banking, Harvard
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
-----------------------------------------------------------
INVESTORS OFFICERS TRUSTEES
PORTFOLIO
24 Federal Street M. DOZIER GARDNER DONALD R. DWIGHT
Boston, MA 02110 President, Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of
JAMES B. HAWKES New England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
THOMAS E. FAUST, JR. Jacob H. Schiff Professor of
Vice President and Investment Banking, Harvard
Portfolio Manager University Graduate School of
Business Administration
MICHAEL B. TERRY
Vice President NORTON H. REAMER
President, United Asset
JAMES L. O'CONNOR Management Corporation
Treasurer
JOHN L. THORNDIKE
THOMAS OTIS Director, Fiduciary
Secretary Company Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
<PAGE>
INVESTMENT ADVISER OF
INVESTORS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV CLASSIC INVESTORS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
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 AND DIVIDEND
DISBURSING AGENT
First Data Investor Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
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 CLASSIC INVESTORS FUND
24 FEDERAL STREET
BOSTON, MA 02110
C-IFSRC-8/96
[LOGO]
[Graphic omitted: man, woman and child at seashore]
EV CLASSIC
INVESTORS
FUND
SEMI-ANNUAL SHAREHOLDER REPORT
JUNE 30, 1996
