<PAGE>
[LOGO OF EATON VANCE APPEARS HERE] [PHOTO OF FINANCIAL NEWSPAPER AND
Investing for the 21st Century CALCULATOR APPEARS HERE]
Semiannual Report June 30, 1997
EV
[PHOTO OF NYSE FLAG CLASSIC
APPEARS HERE]
TOTAL RETURN
FUND
Eaton Vance
Global Management-Global Distribution
[PHOTO OF NYSE APPEARS HERE]
Classic
<PAGE>
EV Classic Total Return Fund as of June 30, 1997
INVESTMENT UPDATE
[PHOTO OF TIMOTHY P. O'BRIEN PORTFOLIO MANAGER APPEARS HERE]
Timothy P. O'Brien
Portfolio Manager
Investment Environment
- --------------------------------------------------------------------------------
The Economy
. Economic conditions in the U.S. were very favorable in the first half of
1997. Gross Domestic Product (GDP) increased at an annualized rate of 4.9%
during the first quarter. In the second quarter, the economy slowed
somewhat, with advance estimates showing an annualized GDP increase of
2.2%.
. Unemployment remained low throughout the period, hitting a 24-year low of
4.8% in May and rising slightly to 5.0% in June.
. Inflation was low throughout the first half of the year despite continued
economic growth and a tight labor market. During the first half of 1997,
the Consumer Price Index (CPI) rose at an annual rate of only 1.4%, the
slowest rate of increase since 1986.
The Markets
. The sustained growth of the U.S. economy and low inflation have helped
propel prices of large capitalization stocks to record levels. In the six
months ended June 30, 1997, the S&P 500 Index had a total return of 20.6%.*
. An increase in volatility has accompanied higher stock valuations. Within a
six-week period in March and April, the S&P 500 Index declined almost 10%
and then fully recovered to reach new record highs.*
. Electric utility and telephone company stocks have lagged the broader stock
market. Both industries are experiencing significant change brought on by
deregulation.
- --------------------------------------------------------------------------------
Mutual fund shares are not insured 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.
- --------------------------------------------------------------------------------
The Fund
- --------------------------------------------------------------------------------
The Past Six Months
. During the six months ended June 30, 1997, EV Classic Total Return Fund had
a total return of 4.8%./1/ This return resulted from an increase in net
asset value to $10.36 per share on June 30, 1997 from $10.22 per share on
December 31, 1996, and the reinvestment of $0.114 per share in income
dividends and $0.220 per share in capital gains distributions./2/
. By comparison, the total return of the Standard &Poor's Utility Index, an
unmanaged index of utility stocks, was 2.3% during this period.*
Management Discussion
. In the first half of 1997, we have increased weightings in the
better-performing financial and real estate investment trust (REIT) groups.
This has added stability to the Fund and enhanced its performance. We have
also added to the Fund's telecommunications holdings - in particular, GTE,
which is now the Fund's top holding. GTE is a well-run, full-service
telecommunications provider and has been mentioned as a prime acquisition
candidate for one of the big long distance companies.
. The process of deregulating the electric utility and telecommunications
industries continues to be hindered by competing factions and prolonged
litigation. We focus on individual stock selection in an attempt to cull
out those companies which we feel have the strongest growth prospects.
- --------------------------------------------------------------------------------
/1/ This return does not include 1% contingent deferred sales charge (CDSC).
/2/ Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. SEC returns reflect a maximum 1%
contingent deferred sales charge (CDSC) deducted for redemptions made within
the first 12 months of investment. Past performance is no guarantee of
future results. The value of an investment in the Fund will fluctuate so
that shares, when redeemed, may be worth more or less than their original
cost.
/3/ Sector weighting and top 10 holdings are as of 6/30/97 and may not be
representative of the Portfolio's current or future investments. Top 10
holdings account for 38.7% of the Portfolio's investments, determined by
dividing the total market value of the holdings by the total net assets of
the Portfolio.
* It is not possible to invest directly in an index or average.
- --------------------------------------------------------------------------------
Fund Information
as of June 30, 1997
Average Annual Total Returns/2/
- -----------------------------------------
One Year 5.5%
Life of Fund (11/1/93) 5.4
SEC Average Annual Total Returns/2/
- -----------------------------------------
One Year 4.6%
Life of Fund (11/1/93) 5.4
Portfolio Sector Weighting/3/
- -----------------------------------------
As a percentage of total net assets
[PIE CHART APPEARS HERE]
Electric Utilities 36.2%
REITs 26.0%
Telephone Utilities 19.2%
Natural Gas Utilities 10.1%
Financial 4.1%
Cash/Other 4.4%
Ten Largest Holdings/4/
- -----------------------------------------
As a percentage of total net assets
GTE Corp. 4.9%
Criimi Mae, Inc. 4.9
Power Gen 4.2
ENI ADR 4.1
CINergy 3.7
NIPSCO Industries 3.7
Sonat, Inc. 3.7
DPL Inc. 3.5
Bellsouth Corp. 3.3
Fidelity Federal Bank 2.8
2
<PAGE>
EV Classic Total Return Fund as of June 30, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of June 30, 1997
Assets
- --------------------------------------------------------------------------
<S> <C>
Investment in Total Return Portfolio, at value (Note 1A)
(identified cost, $3,344,734) $3,900,632
Receivable for Fund shares sold 793
Receivable from Administrator (Note 4) 7,000
Deferred organization expenses (Note 1E) 15,531
- --------------------------------------------------------------------------
Total assets $3,923,956
- --------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------
Payable for Fund shares redeemed $ 3,000
Payable to affiliate for Trustees' fees (Note 4) 40
Accrued expenses 13,119
- --------------------------------------------------------------------------
Total liabilities $ 16,159
- --------------------------------------------------------------------------
Net Assets for 377,320 shares of
beneficial interest outstanding $3,907,797
- --------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------
Paid-in capital $3,237,179
Accumulated net realized gain on investments (computed
on the basis of identified cost) 101,163
Accumulated undistributed net investment income 13,557
Net unrealized appreciation of investments
contracts (computed on the basis of identified cost) 555,898
- --------------------------------------------------------------------------
Total $3,907,797
- --------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
- --------------------------------------------------------------------------
($3,907,797 / 377,320 shares of
beneficial interest outstanding) $ 10.36
- --------------------------------------------------------------------------
</TABLE>
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
June 30, 1997
- --------------------------------------------------------------------------
<S> <C>
Investment Income (Note 1B)
Dividend income allocated from Portfolio
(net of foreign withholding taxes, $920) $ 99,827
Interest income allocated from Portfolio 21,476
Expenses allocated from Portfolio (15,887)
- --------------------------------------------------------------------------
Total investment income from Portfolio $ 105,416
- --------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 79
Distribution and service fees (Note 5) 21,419
Printing and postage 13,070
Legal and accounting services 5,921
Amortization of organization expenses (Note 1E) 3,982
Registration fees 3,894
Transfer and dividend disbursing agent fees 2,472
Custodian fee (Note 1D) 1,250
Miscellaneous 881
- --------------------------------------------------------------------------
Total expenses $ 52,968
- --------------------------------------------------------------------------
Deduct --
Allocation of expenses to the Administrator (Note 4) $ 7,000
- --------------------------------------------------------------------------
Total expense reductions $ 7,000
- --------------------------------------------------------------------------
Net expenses $ 45,968
- --------------------------------------------------------------------------
Net investment income $ 59,448
- --------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------
Net realized gain --
Investment transactions (identified cost basis) $ 102,247
Foreign currency transactions 547
- --------------------------------------------------------------------------
Net realized gain on investment transactions $ 102,794
- --------------------------------------------------------------------------
Change in unrealized appreciation --
Investment transactions $ 18,857
Foreign currency transactions (55)
- --------------------------------------------------------------------------
Net change in unrealized appreciation of investments $ 18,802
- --------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 121,596
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations $181,044
- --------------------------------------------------------------------------
</TABLE>
See notes to financial statements
3
<PAGE>
EV Classic Total Return Fund as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) June 30, 1997 Year Ended
in Net Assets (Unaudited) December 31, 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment income $ 59,448 $ 218,534
Net realized gain on
investments 102,794 417,699
Net change in unrealized
appreciation
of investments 18,802 (374,115)
- -----------------------------------------------------------------------------
Net increase in net assets
from operations $ 181,044 $ 262,118
- -----------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income $ (47,484) $ (217,418)
From net realized gain on investments (88,833) --
- -----------------------------------------------------------------------------
Total distributions to shareholders $ (136,317) $ (217,418)
- -----------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3)--
Proceeds from sale of shares $ 520,854 $ 919,646
Net asset value of shares issued to
shareholders in payment of
distributions declared 121,526 187,328
Cost of shares redeemed (1,839,780) (1,796,372)
- -----------------------------------------------------------------------------
Net decrease in net assets from
Fund share transactions $(1,197,400) $ (689,398)
- -----------------------------------------------------------------------------
Net decrease in net assets $(1,152,673) $ (644,698)
- -----------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------
At beginning of period $ 5,060,470 $ 5,705,168
- -----------------------------------------------------------------------------
At end of period $ 3,907,797 $ 5,060,470
- -----------------------------------------------------------------------------
Accumulated
undistributed net
investment income
included in net assets
- -----------------------------------------------------------------------------
At end of period $ 13,557 $ 1,593
- -----------------------------------------------------------------------------
</TABLE>
See notes to financial statements
4
<PAGE>
EV Classic Total Return Fund as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1997 ---------------------------------------------------------
(Unaudited) 1996 1995 1994 1993*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 10.2200 $ 10.1400 $ 8.3800 $ 10.0300 $ 10.0000
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.1467 $ 0.4180 $ 0.2722 $ 0.3167 $ 0.0253
Net realized and unrealized gain (loss) on
investments 0.3273 0.0770 1.8068 (1.6077) 0.0577
- -------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.4740 $ 0.4950 $ 2.0790 $ (1.2910) $ 0.0830
- -------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.1140) $ (0.4150) $(0.2640) $ (0.3013) $ (0.0253)
In excess of net investment income -- -- (0.0550) -- --
From net realized gain on investments (0.2200) -- -- -- --
From tax return of capital -- -- -- (0.0577) (0.0277)
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.3340) $ (0.4150) $(0.3190) $ (0.3590) $ (0.0530)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 10.3600 $ 10.2200 $10.1400 $ 8.3800 $ 10.0300
- -------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 4.83% 4.99% 25.30% (12.26)% 0.83%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 3,908 $ 5,060 $ 5,705 $ 5,589 $ 3,461
Ratio of net expenses to average daily net 2.89%+ 2.83% 2.68% 2.66% 0.83%+
assets/(2)/
Ratio of net investment income to average daily 2.78%+ 3.95% 2.95% 3.32% 2.56%+
net assets
</TABLE>
+ The operating expenses of the Fund reflect an allocation of expenses to the
Administrator. Had such action not been taken, the ratios would have been
as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C> <C> <C> <C> <C>
Expenses/(2)/ 3.21%+ 3.11% 3.47% 3.70% 2.22%+
Net investment income 2.45%+ 3.67% 2.16% 2.29% 1.17%+
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, November 1, 1993, to December
31, 1993.
/(1)/ 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 payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of the Portfolio's allocated expenses.
See notes to financial statements
5
<PAGE>
EV Classic Total Return Fund as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
------------------------------------------------------------------------------
EV Classic 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
(0.9% at June 30, 1997). 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 -- Valuation of securities by the Portfolio is
discussed in Note 1A 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. Accordingly, no provision for federal income
or excise tax is necessary.
D Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Fund. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash
balances the Fund maintains with IBT. All significant credit balances used to
reduce the Fund's custodian fees are reported as a reduction of expenses on
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 a trade date basis.
G 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.
H Interim Financial Information -- The interim financial statements relating
to June 30, 1997 and 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 Distributions to Shareholders
------------------------------------------------------------------------------
The Fund's policy is to distribute monthly substantially all of the net
investment income allocated to the Fund by the Portfolio (less the Fund's
direct expenses) and to distribute at least annually substantially all of its
net realized capital gains. Distributions are paid in the form of additional
shares of the Fund or, at the election of the shareholder, in cash. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result in over distributions only for financial statement
purposes are classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital.
6
<PAGE>
EV Classic Total Return Fund as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
3 Shares of Beneficial Interest
------------------------------------------------------------------------------
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (with no par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
------------------------------------------------------------------------------
<S> <C> <C>
Sales 51,212 89,993
Issued to shareholders electing to
receive payment of distributions 12,326 18,507
in Fund shares
Redemptions (181,215) (176,244)
------------------------------------------------------------------------------
Net decrease (117,677) (67,744)
------------------------------------------------------------------------------
</TABLE>
4 Transactions with Affiliates
------------------------------------------------------------------------------
Eaton Vance Management (EVM) serves 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, the
administrator was allocated $7,000 of the Fund's expenses, on a preliminary
basis for the period ended June 30, 1997. Except as to Trustees of the Fund
and the Portfolio who are not members of EVM's or BMR's organization, officers
and Trustees receive remuneration for their services to the Fund out of the
investment adviser fee earned by BMR. Certain of the officers and Trustees of
the Fund and the Portfolio are officers and directors/trustees of the above
organizations.
5 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 1/365 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. 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 $16,064 for the six
months ended June 30, 1997, representing 0.75% (annualized) of average daily
net assets. At June 30, 1997, the amount of Uncovered Distribution Charges of
EVD calculated under the Plan was approximately $675,000.
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 any fiscal
year. The Trustees 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, 1997, amounted to $5,355.
Certain officers and Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
------------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) of 1% is imposed on any redemption
of Fund shares made within one year 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 gains distributions. No CDSC is levied on shares which have been
sold to EVD or its affiliates or to their respective employees. 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. For the
six months ended June 30, 1997, EVD received approximately $2,000 of CDSC paid
by shareholders.
7
<PAGE>
EV Classic Total Return Fund as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
7 Investment Transactions
------------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the six
months ended June 30, 1997, aggregated $555,612 and $1,973,026, respectively.
8
<PAGE>
Total Return Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited)
Common Stocks -- 89.4%
<TABLE>
<CAPTION>
Security Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Banks and Money Services -- 0.0%
- --------------------------------------------------------------------------------
Echelon International Corp.* 1 $ 20
- --------------------------------------------------------------------------------
$ 20
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 0.5%
- --------------------------------------------------------------------------------
Ovation, Inc. 238,168 $ 2,214,962
- --------------------------------------------------------------------------------
$ 2,214,962
- --------------------------------------------------------------------------------
Electric Utilities -- 36.1%
- --------------------------------------------------------------------------------
Carolina Power & Light Co. 200,000 $ 7,175,000
Central Louisiana Electric Co. 220,000 6,187,500
Cilcorp, Inc. 230,000 9,473,125
CINergy Corp. 450,000 15,665,625
DPL, Inc. 600,000 14,775,000
DQE, Inc. 400,000 11,300,000
Electric De Portugal ADR 4,000 144,000
Empresa Nacional Electric ADR 25,000 2,126,563
FPL Group, Inc. 150,000 6,909,375
LG & E Energy Corp. 198,000 4,368,375
Long Island Lighting Co. 400,000 9,200,000
National Grid Holdings 800,000 2,922,480
NIPSCO Industries, Inc. 375,000 15,492,188
Pinnacle West Capital Corp. 350,000 10,521,875
PowerGen PLC 1,500,000 17,849,550
Sierra Pacific Resources 150,000 4,800,000
Southern Electric 500,000 3,690,550
Teco Energy, Inc. 300,000 7,668,750
United Utilities PLC 200,000 2,198,540
- --------------------------------------------------------------------------------
$152,468,496
- --------------------------------------------------------------------------------
Financial - Miscellaneous -- 1.3%
- --------------------------------------------------------------------------------
Bank Plus Corp. 345,000 $ 3,751,875
Long Beach Financial Corp. 200,000 1,750,000
- --------------------------------------------------------------------------------
$ 5,501,875
- --------------------------------------------------------------------------------
Health Services -- 0.1%
- --------------------------------------------------------------------------------
American Retirement Corp.* 16,200 $ 287,550
- --------------------------------------------------------------------------------
$ 287,550
- --------------------------------------------------------------------------------
Natural Gas Utilities -- 10.1%
- --------------------------------------------------------------------------------
ENI ADR 300,000 $ 17,062,500
Enserch Corp. 240,500 5,351,125
K N Energy 114,000 4,802,250
Sonat, Inc. 300,000 15,375,000
- --------------------------------------------------------------------------------
$ 42,590,875
- --------------------------------------------------------------------------------
REITS -- 22.1%
- --------------------------------------------------------------------------------
Annaly Mortgage, Inc. 144A 350,000 $ 3,500,000
Beacon Properties Corp. 50,000 1,668,750
Cali Realty Corp. 300,000 10,200,000
Criimi Mae, Inc. 1,279,800 20,476,800
First Union Real Estate 350,000 4,965,625
LTC Properties, Inc. 200,000 3,625,000
Ocwen Asset Investment Corp. 575,000 11,643,750
Prime Retail, Inc. 200,000 2,693,740
Reckson Associates Realty Corp. 66,900 1,538,700
Redwood Trust, Inc. 175,000 8,181,250
Security Capital US Realty Trust* 600,000 8,970,000
Sunstone Hotel Investors, Inc. 525,000 7,612,500
Vornado Realty Trust 110,000 7,933,750
- --------------------------------------------------------------------------------
$ 93,009,865
- --------------------------------------------------------------------------------
Telephone Utilities -- 19.2%
- --------------------------------------------------------------------------------
ACC Corp. 240,000 $ 7,410,000
Ameritech Corp. 50,000 3,396,875
Bell Atlantic Corp. 50,000 3,793,750
Bellsouth Corp. 300,000 13,912,500
GTE Corp. 475,000 20,840,624
NYNEX Corp. 50,000 2,881,250
Qwest Communications International 45,000 1,226,250
SBC Communications, Inc. 100,000 6,187,500
Smartalk Teleservices, Inc.* 245,000 3,828,125
Tele Save Holdings, Inc. 190,000 2,897,500
Telecomunicacoes Brasileiras ADR 10,000 1,517,500
Trescom International, Inc.* 450,000 3,318,750
WorldCom, Inc. 300,000 9,600,000
- --------------------------------------------------------------------------------
$ 80,810,624
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $317,506,079) $376,884,267
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
9
<PAGE>
Total Return Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Convertible Preferred Stocks-- 4.0%
Security Shares Value
- --------------------------------------------------------------------------
<S> <C> <C>
REITS -- 4.0%
- --------------------------------------------------------------------------
Excel Realty 350,000 $ 9,537,500
Vornado Realty Trust 50,000 2,650,000
Walden Residential 153,000 4,437,000
- --------------------------------------------------------------------------
$ 16,624,500
- --------------------------------------------------------------------------
Total Convertible Preferred Stocks
(identified cost $15,075,000) $ 16,624,500
- --------------------------------------------------------------------------
<CAPTION>
Preferred Stocks -- 2.8%
Security Shares Value
- --------------------------------------------------------------------------
<S> <C> <C>
Banks and Money Services -- 2.8%
- --------------------------------------------------------------------------
Fidelity Federal Bank 425,000 $ 11,900,000
- --------------------------------------------------------------------------
$ 11,900,000
- --------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $11,018,750) $ 11,900,000
- --------------------------------------------------------------------------
<CAPTION>
Warrants -- 0.1%
Security Shares Value
- --------------------------------------------------------------------------
<S> <C> <C>
REITS -- 0.1%
- --------------------------------------------------------------------------
Homestead Village, Inc. Warrants 5,504 $ 46,784
Walden Residential Warrants 340,000 467,500
- --------------------------------------------------------------------------
$ 514,284
- --------------------------------------------------------------------------
Total Warrants
(identified cost $3,956) $ 514,284
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Convertible Bonds-- 3.3%
Principal
Amount
(000's
Security omitted) Value
- --------------------------------------------------------------------------
<S> <C> <C>
Midcom Communications, 8.25%, 8/15/03 $11,000 $ 7,370,000
Ovation, Inc., 9.75%, 2/23/01 2,000 2,000,000
Rent Way, Inc., 7.00%, 2/1/07 2,000 2,310,000
SA Telecommunications, 10.00%, 8/15/06 3,000 2,175,000
- --------------------------------------------------------------------------
Total Convertible Bonds
(identified cost $17,833,750) $ 13,855,000
- --------------------------------------------------------------------------
<CAPTION>
Corporate Bonds -- 0.3%
Principal
Amount
(000's
Security omitted) Value
- --------------------------------------------------------------------------
<S> <C> <C>
Life Savings Bank, 13.50%, 3/15/04 $ 1,500 $ 1,500,000
- --------------------------------------------------------------------------
Total Corporate Bonds
(identified cost $1,500,000) $ 1,500,000
- --------------------------------------------------------------------------
<CAPTION>
Commercial Paper -- 2.1%
Principal
Amount
(000's
Security omitted) Value
- --------------------------------------------------------------------------
<S> <C> <C>
Cut Group, 6.25%, 7/1/97 $ 8,688 $ 8,688,000
- --------------------------------------------------------------------------
Total Commercial Paper
(amortized cost $8,688,000) $ 8,688,000
- --------------------------------------------------------------------------
Total Investments -- 102.0%
(identified cost $371,625,535) $429,966,051
- --------------------------------------------------------------------------
Other Assets, Less Liabilities -- (2.0)% $ (8,248,005)
- --------------------------------------------------------------------------
Net Assets -- 100% $421,718,046
- --------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
See notes to financial statements
10
<PAGE>
Total Return Portfolio as of June 30, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of June 30, 1997
Assets
- --------------------------------------------------------------------------------
<S> <C>
Investments, at value (Note 1A)
(identified cost, $371,625,535) $429,966,051
Cash 2,416
Receivable for investments sold 10,829,601
Dividends and interest receivable 2,766,697
Miscellaneous receivable 15,213
Tax reclaim receivable 36,159
Deferred organization expenses (Note 1H) 5,539
- --------------------------------------------------------------------------------
Total assets $443,621,676
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased $ 21,849,611
Accrued expenses 54,019
- --------------------------------------------------------------------------------
Total liabilities $ 21,903,630
- --------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $421,718,046
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $363,365,887
Net unrealized appreciation of investments (computed
on the basis of identified cost) 58,352,159
- --------------------------------------------------------------------------------
Total $421,718,046
- --------------------------------------------------------------------------------
</TABLE>
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
June 30, 1997
Investment Income (Note 1B & 1I)
- --------------------------------------------------------------------------------
<S> <C>
Dividends (net of withholding taxes, $99,028) $ 10,148,838
Interest income 2,156,260
- --------------------------------------------------------------------------------
Total income $ 12,305,098
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment adviser fee (Note 3) $ 1,466,571
Compensation of Trustees not members of the Investment
Adviser's organization (Note 3) 600
Custodian fee 94,772
Legal and accounting services 20,651
Amortization of organization expenses (Note 1H) 2,082
Miscellaneous 6,615
- --------------------------------------------------------------------------------
Total expenses $ 1,591,291
- --------------------------------------------------------------------------------
Net investment income $ 10,713,807
- --------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- --------------------------------------------------------------------------------
Net realized gain --
Investment transactions (identified cost basis) $ 9,671,633
Foreign currency transactions 56,106
- --------------------------------------------------------------------------------
Net realized gain on investments $ 9,727,739
- --------------------------------------------------------------------------------
Change in unrealized appreciation --
Investments (identified cost basis) $ 3,463,218
Foreign currency (3,062)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation $ 3,460,156
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 13,187,895
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 23,901,702
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
11
<PAGE>
Total Return Portfolio as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) June 30, 1997 Year Ended
in Net Assets (Unaudited) December 31, 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment income $ 10,713,807 $ 29,247,918
Net realized gain on investments 9,727,739 46,868,346
Net change in unrealized appreciation 3,460,156 (41,698,849)
- ----------------------------------------------------------------------------------------
Net increase in net assets
from operations $ 23,901,702 $ 34,417,415
- ----------------------------------------------------------------------------------------
Capital transactions --
Contributions $ 22,591,605 $ 18,255,080
Withdrawals (79,842,256) (119,275,825)
- ----------------------------------------------------------------------------------------
Net decrease in net assets
from capital transactions $ (57,250,651) $(101,020,745)
- ----------------------------------------------------------------------------------------
Net decrease in net assets $ (33,348,949) $ (66,603,330)
- ----------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------
At beginning of period $ 455,066,995 $ 521,670,325
- ----------------------------------------------------------------------------------------
At end of period $ 421,718,046 $ 455,066,995
- ----------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
12
<PAGE>
Total Return Portfolio as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1997 ----------------------------------------------------
(Unaudited) 1996 1995 1994 1993*
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average daily net assets
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses 0.74%+ 0.85% 0.84% 0.85% 0.91%+
Net investment income 4.97%+ 5.94% 4.83% 5.22% 4.57%+
Portfolio Turnover 83% 166% 103% 107% 16%
- ---------------------------------------------------------------------------------------------------------------------
Average commission rate (per share) /(1)/ $ 0.0497 $ 0.0374 $ -- $ -- $ --
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
Leverage Analysis:
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average daily balance of debt outstanding
during period (000's omitted) $ 2,160 $ 217 $ 232 $ 3,137 $ 15,452
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $421,718 $455,067 $ 521,670 $505,567 $636,567
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, October 28, 1993, to December
31, 1993.
/(1)/ For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose its average commission rate per share for security
trades on which commissions are charged. Average commission rate paid is
computed by dividing the total dollar amount of commissions paid during
the fiscal year by the total number of shares purchased and sold during
the fiscal year for which commissions were charged.
See notes to financial statements
13
<PAGE>
Total Return Portfolio as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
------------------------------------------------------------------------------
Total Return 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 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 investor's
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 -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by credits which are based on the average daily cash balances
the Portfolio maintains with IBT. All significant credit balances used to
reduce the Portfolio's custodian fees are reported as a reduction of expenses
on 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 for 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.
14
<PAGE>
Total Return Portfolio as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
F Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to foreign currency rates are recorded
for financial statement purposes as net realized gains and losses on
investments. That portion of unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates are not separately
disclosed.
G Delayed Delivery Transactions -- The Portfolio 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 that 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.
H Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
I 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.
J 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.
K Interim Financial Information -- The interim financial statements relating
to June 30, 1997 and the six month period then ended have not been audited by
independent certified public accountants, but in the opinion of the
Portfolio'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,
aggregated $342,325,929 and $383,977,316, 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 assets. For the six month
period ended June 30, 1997, the fee was equivalent to 0.68%(annualized) of the
Portfolio's average net assets for such period and amounted to $1,466,571.
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 month period ended June 30, 1997, 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 group of banks. The Portfolio may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above the banks' adjusted certificate of deposit rate, eurodollar rate
or federal funds rate. In addition, a fee computed at an annual rate of 0.15%
on the daily unused portion of the line of credit is allocated among the
participating portfolios and funds at the end of each quarter. The Portfolio
did not have any significant borrowings or allocated fees during the six
months ended June 30, 1997.
15
<PAGE>
Total Return Portfolio as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
5 Federal Income Tax Basis of Investments
------------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investments
owned at June 30, 1997, as computed on a federal income tax basis, were as
follows:
<TABLE>
<S> <C>
Aggregate cost $ 371,625,535
------------------------------------------------------------------------------
Gross unrealized appreciation $ 64,936,435
Gross unrealized depreciation (6,595,919)
------------------------------------------------------------------------------
Net unrealized appreciation $ 58,340,516
------------------------------------------------------------------------------
</TABLE>
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, 1997 there
were no outstanding obligations under these financial instruments.
16
<PAGE>
EV Classic Total Return Fund as of June 30, 1997
INVESTMENT MANAGEMENT
<TABLE>
<CAPTION>
EV Classic Total Return Fund
<S> <C>
Officers Trustees
James B. Hawkes M. Dozier Gardner
Vice President and Trustee Vice Chairman, Eaton Vance Management
Edward E. Smiley, Jr. Donald R. Dwight
Vice President President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
James L. O'Connor
Treasurer Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Alan R. Dynner Banking, Harvard University Graduate School of
Secretary Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
<CAPTION>
Total Return Portfolio
<S> <C>
Officers Independent Trustees
M. Dozier Gardner Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
James B. Hawkes
Vice President and Trustee Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Timothy O'Brien Banking, Harvard University Graduate School of
Vice President and Business Administration
Portfolio Manager
Norton H. Reamer
James L. O'Connor President and Director, United Asset
Treasurer Management Corporation
Alan R. Dynner John L. Thorndike
Secretary Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
</TABLE>
17
<PAGE>
This Page Intentionally Left Blank
<PAGE>
This Page Intentionally Left Blank
<PAGE>
Investment Advisor of
Total Return Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Administrator of
EV Classic 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
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
EV Classic Total Return Fund
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
C-TMSRC-8/97
