<PAGE>
[LOGO OF EATON VANCE [PHOTO OF FINANCIAL NEWSPAPER
APPEARS HERE] AND CALCULATOR APPEARS HERE]
Investing for the 21st Century
Semiannual Report June 30, 1997
[PHOTO OF NYSE FLAG APPEARS HERE]
EV
TRADITIONAL
TOTAL RETURN
FUND
Eaton Vance
Global Management-Global Distribution
[PHOTO OF FLOOR OF NYSE APPEARS HERE]
Traditional
<PAGE>
EV Traditional Total Return Fund as of June 30, 1997
INVESTMENT UPDATE
[PHOTOGRAPH OF TIMOTHY P. O'BRIEN 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 Traditional Total Return Fund
had a total return of 5.5%./1/ This return resulted from a decrease in net
asset value to $8.54 per share on June 30, 1997 from $8.77 per share on
December 31, 1996, and the reinvestment of $0.156 per share in income
dividends and $0.515 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 Fund's 3.1% yield compares favorably to that of the broader market S&P
500 Index which, at 1.7%, is near an historical low./3/ With this yield
advantage, utility stocks are a compelling vehicle for investors seeking both
income and capital appreciation.
- --------------------------------------------------------------------------------
/1/ This return does not include the maximum 4.75% initial sales charge payable
by new investors.
/2/ Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. SEC average annual returns reflect
the maximum 4.75% sales charge. 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/ Yields are as of 6/30/97. The Fund's SEC yield is calculated, using an SEC
standardized formula, by dividing the net investment income per share of
the Fund during the 30-day period prior to 6/30/97 by the maximum offering
price per share on 6/30/97 and annualizing the resulting figure.
/4/ Sector weighting and top 10 holdings are as of 6/30/97 only 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
<TABLE>
<CAPTION>
Average Annual Total Returns/2/
- -------------------------------------------
<S> <C>
One Year 7.6%
Five Years 8.6
Ten Years 8.3
<CAPTION>
SEC Average Annual Total Returns/2/
- -------------------------------------------
<S> <C>
One Year 2.5%
Five Years 7.5
Ten Years 7.8
<CAPTION>
Portfolio Sector Weighting/4/
- -------------------------------------------
As a percentage of total net assets
[PIE CHART APPEARS HERE]
<S> <C>
Electric Utilities 36.2%
REITs 26.0%
Telephone Utilities 19.2%
Natural Gas Utilities 10.1%
Cash/Other 4.4%
Financial 4.1%
<CAPTION>
Ten Largest Holdings/4/
- -------------------------------------------
As a percentage of total net assets
<S> <C>
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
</TABLE>
2
<PAGE>
EV Traditional Total Return Fund as of June 30, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
As of June 30, 1997
<TABLE>
<CAPTION>
Assets
- --------------------------------------------------------------------------------
<S> <C>
Investment in Total Return Portfolio, at value
(Note 1A) (identified cost, $321,963,208) $ 373,561,178
- --------------------------------------------------------------------------------
Total assets $ 373,561,178
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 243,005
Payable to affiliate for Trustees' fees (Note 4) 840
Accrued expenses 309,805
- --------------------------------------------------------------------------------
Total liabilities $ 553,650
- --------------------------------------------------------------------------------
Net Assets for 43,658,017 shares of
beneficial interest outstanding $ 373,007,528
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $ 258,853,368
Accumulated net realized gain on investments
(computed on the basis of identified cost) 8,041,671
Accumulated undistributed net investment income 54,514,519
Net unrealized appreciation of investments (computed
on the basis of identified cost) 51,597,970
- --------------------------------------------------------------------------------
Total $ 373,007,528
- --------------------------------------------------------------------------------
Net Asset Value and Redemption
Price Per Share
- --------------------------------------------------------------------------------
($373,007,528 / 43,658,017 shares of
beneficial interest outstanding) $ 8.54
- --------------------------------------------------------------------------------
Computation of Offering Price
- --------------------------------------------------------------------------------
Offering price per share (100 / 95.25 of $8.54) $ 8.97
- --------------------------------------------------------------------------------
On sales of $100,000 or more, the offering price is reduced.
</TABLE>
Statement of Operations
For the Six Months Ended
June 30, 1997
<TABLE>
<CAPTION>
Investment Income (Note 1B)
- --------------------------------------------------------------------------------
<S> <C>
Dividend income allocated from
Portfolio (net of foreign withholding taxes, $87,614) $ 8,955,719
Interest income allocated from Portfolio 1,901,842
Expenses allocated from Portfolio (1,403,245)
- --------------------------------------------------------------------------------
Total investment income from Portfolio $ 9,454,316
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 1,635
Service fees (Note 5) 455,556
Transfer and dividend disbursing agent fees 192,723
Printing and postage 48,199
Custodian fee (Note 1C) 12,250
Registration fees 8,119
Legal and accounting services 6,221
Miscellaneous 30,754
- --------------------------------------------------------------------------------
Total expenses $ 755,457
- --------------------------------------------------------------------------------
Net investment income $ 8,698,859
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------
Net realized gain --
- --------------------------------------------------------------------------------
Investment transactions (identified cost basis) $ 8,492,308
Foreign currency transactions 49,596
- --------------------------------------------------------------------------------
Net realized gain on investment transactions $ 8,541,904
- --------------------------------------------------------------------------------
Change in unrealized appreciation --
Investment transactions $ 3,108,882
Foreign currency transactions (2,609)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation
of investments $ 3,106,273
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 11,648,177
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 20,347,036
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
3
<PAGE>
EV Traditional 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 $ 8,698,859 $ 24,041,832
Net realized gain on investments 8,541,904 41,791,324
Net change in unrealized appreciation 3,106,273 (37,254,680)
- --------------------------------------------------------------------------------
Net increase in net assets
from operations $ 20,347,036 $ 28,578,476
- --------------------------------------------------------------------------------
Distributions to shareholders
(Note 2) --
From net investment income $ (6,912,131) $ (23,803,563)
From net realized gain
on investments (22,291,993) (19,614,278)
- --------------------------------------------------------------------------------
Total distributions to shareholders $ (29,204,124) $ (43,417,841)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3)--
Proceeds from sale of shares $ 12,392,929 $ 7,148,549
Net asset value of shares
issued to shareholders
in payment of distributions declared 23,119,156 33,431,649
Cost of shares redeemed (55,621,384) (81,645,885)
- --------------------------------------------------------------------------------
Net decrease in net assets
from Fund share transactions $ (20,109,299) $ (41,065,687)
- --------------------------------------------------------------------------------
Net decrease in net assets $ (28,966,387) $ (55,905,052)
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ 401,973,915 $ 457,878,967
- --------------------------------------------------------------------------------
At end of period $ 373,007,528 $ 401,973,915
- --------------------------------------------------------------------------------
Accumulated
undistributed net
investment income
included in net assets
- --------------------------------------------------------------------------------
At end of period $ 54,514,519 $ 52,727,791
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
4
<PAGE>
EV Traditional 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 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value-- Beginning of period $ 8.7700 $ 9.1300 $ 7.6300 $ 9.1400 $ 9.3600 $ 9.7500
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.2545 $ 0.6260 $ 0.5235 $ 0.5458 $ 0.3626 $ 0.5113
Net realized and unrealized gain (loss)
on investments 0.1865 (0.0140)++ 1.5195 (1.6678) 0.5524 0.0937
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.4410 $ 0.6120 $ 2.0430 $(1.1220) $ 0.9150 $ 0.6050
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.1560) $ (0.5220) $ (0.3641) $(0.3880) $(0.4650) $ (0.5200)
In excess of net investment income -- -- (0.0389) -- -- --
From net realized gain on investments (0.5150) (0.4500) (0.0775) -- (0.6544) (0.4750)
In excess of net realized gain on investments -- -- (0.0625) -- (0.0156) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.6710) $ (0.9720) $ (0.5430) $(0.3880) $(1.1350) $ (0.9950)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of period $ 8.5400 $ 8.7700 $ 9.1300 $ 7.6300 $ 9.1400 $ 9.3600
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (1) 5.52% 7.00% 27.52% (12.28)% 9.49% 6.60%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 373,008 $ 401,974 $ 457,879 $445,133 $629,514 $ 564,912
Ratio of interest expense to average daily -- -- -- -- 0.20% 0.29%
net assets
Ratio of other expenses to average 1.14%+ 1.23% 1.19% 1.18% 1.11% 1.10%
daily net assets (2)
Ratio of net investment income to
average daily net assets 4.60%+ 5.59% 4.49% 4.90% 4.64% 5.43%
Portfolio Turnover (3) -- -- -- -- 63% 54%
- -----------------------------------------------------------------------------------------------------------------------------------
Leverage Analysis (4)
- -----------------------------------------------------------------------------------------------------------------------------------
Amount of debt outstanding at end of $ -- $ -- $ -- $ -- $ -- $ 47,045
period
Average daily balance of debt
outstanding during period -- -- -- -- $ 29,906(4) $ 27,764
Average weekly balance of shares
outstanding during period -- -- -- -- 61,377(4) 57,280
Average amount of debt per share during -- -- -- -- $ 0.487(4) $ 0.485
period
</TABLE>
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period because of timing of the sales of Fund shares and
the amount of per share realized and unrealized gains and losses at such
time.
(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.
(3) Portfolio Turnover represents the rate of portfolio activity for the period
while the Fund was making investments directly in securities. The portfolio
turnover rate for the period since the Fund transferred substantially all of
its investable assets to the Portfolio is shown in the Portfolio's financial
statements which are included elsewhere in this report.
(4) The Leverage Analysis is for the period January 1 to October 27, 1993, when
the Fund transferred the line of credit to the Portfolio. The analysis for
the six months ended June 30, 1997, three years ended December 31, 1996 and
the period October 28, 1993 to December 31, 1993 is shown in the Portfolio's
financial statements which are included elsewhere in this report.
See notes to financial statements
5
<PAGE>
EV Traditional Total Return Fund as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
----------------------------------------------------------------------------
EV Traditional 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 of the Eaton Vance
Special Investment Trust. The Fund invests all of its investable assets in
interests in the Portfolio, a New York Trust, having the same investment
objective as the Fund. The value of the Fund's investment in the Portfolio
reflects the Fund's proportionate interest in the net assets of the
Portfolio (88.6% 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 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.
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. Accordingly, no provision for federal
income or excise tax is necessary.
E Other -- Investment transactions are accounted for on a trade date basis.
F Use of Estimates -- The preparation of 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 income and expense during the reporting period. Actual results could
differ from those estimates.
G 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 Traditional 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 1,464,685 766,884
Issued to shareholders electing
to receive payment of
distributions in Fund shares 2,843,950 3,808,653
Redemptions (6,492,973) (8,867,665)
----------------------------------------------------------------------------
Net decrease (2,184,338) (4,292,128)
----------------------------------------------------------------------------
</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. Except as to Trustees of the Fund and the
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to the Fund out of such
investment adviser fee. Certain of the officers and Trustees of the Fund and
the Portfolio are officers and directors/trustees of the above
organizations.
5 Service Plan
----------------------------------------------------------------------------
The Fund adopted a Service Plan on July 7, 1993 designed to meet the
requirements of Rule 12b-1 under the Investment Company Act of 1940 and the
service fee requirements of the revised sales charge rule of The National
Association of Securities Dealers Inc.. The Service Plan replaced the Fund's
distribution plan which became effective on July 1, 1987. The Service Plan
provides that the Fund may make service fee payments to the Principal
Underwriter, Eaton Vance Distributors, Inc., a subsidiary of Eaton Vance
Management, Authorized Firms or other persons in amounts not exceeding 0.25%
of the Fund's average daily net assets for any fiscal year. The Trustees
have implemented the Service Plan by authorizing the Fund to make quarterly
service fee payments to the Principal Underwriter and Authorized Firms in
amounts not expected to exceed 0.25% of that portion of the Fund's average
daily net assets for any fiscal year which is attributable to shares of the
Fund sold by such persons and remaining outstanding for at least twelve
months. Such payments are made for personal services and/or maintenance of
shareholder accounts. During the six months ended June 30, 1997, the Fund
provided $455,556 under the Plan to the Principal Underwriter and Authorized
Firms.
6 Investment Transactions
----------------------------------------------------------------------------
Increases and decreases in the Fund's investments in the Portfolio for the
six months ended June 30, 1997, aggregated $20,027,277 and $66,677,099,
respectively.
7
<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
8
<PAGE>
Total Return Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
- -------------------------------------------
Convertible Preferred Stocks -- 4.0%
<TABLE>
<CAPTION>
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
- --------------------------------------------------------------------------
Preferred Stocks -- 2.8%
<CAPTION>
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
- --------------------------------------------------------------------------
Warrants -- 0.1%
<CAPTION>
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
- --------------------------------------------------------------------------
Corporate Bonds -- 0.3%
<CAPTION>
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
- --------------------------------------------------------------------------
Commercial Paper -- 2.1%
<CAPTION>
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
9
<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 2,082
(Note 1H)
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
10
<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
11
<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 *
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets
- ------------------------------------------------------------------------------------------------------------------------
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 $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------
Leverage Analysis:
- ------------------------------------------------------------------------------------------------------------------------
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
12
<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.
13
<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.
14
<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.
15
<PAGE>
EV Traditional Total Return Fund as of June 30, 1997
INVESTMENT MANAGEMENT
EV Traditional Total Return Fund
Officers Trustees
James B. Hawkes M. Dozier Gardner
President and Trustee Vice Chairman, Eaton Vance
Management
Edward E. Smiley, Jr.
Vice President Donald R. Dwight
President, Dwight Partners, Inc.
James L. O'Connor Chairman, Newspapers of New England, Inc.
Treasurer
Samuel L. Hayes, III
Alan R. Dynner Jacob H. Schiff Professor of Investment
Secretary Banking, Harvard University Graduate School of
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
Total Return Portfolio
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 Samuel L. Hayes, III
Trustee Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate School of
Timothy O'Brien Business Administration
Vice President and
Portfolio Manager Norton H. Reamer
President and Director, United Asset
James L. O'Connor Management Corporation
Treasurer
John L. Thorndike
Alan R. Dynner Formerly Director, Fiduciary Company Incorporated
Secretary
Jack L. Treynor
Investment Adviser and Consultant
16
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
Investment Advisor of
Total Return Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Administrator of
EV Traditional 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 Traditional 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.
- --------------------------------------------------------------------------------
T-TMSRC-8/97
