<PAGE>
[LOGO]
[PHOTO]
Semiannual Report June 30, 1999
EATON VANCE
BALANCED
FUND
Global Management-Global Distribution
[PHOTO]
<PAGE>
EATON VANCE BALANCED FUND AS OF JUNE 30, 1999
INVESTMENT UPDATE
[PHOTO]
Thomas E. Faust
Portfolio Manager
INVESTMENT ENVIRONMENT
- -----------------------------
THE ECONOMY
- - On the last day of June, the Federal Reserve Bank announced, as expected, that
it would raise the Federal Funds rate (the rate at which banks lend money to
each other overnight) by 25 basis points to 5.0%. At the same time, the Fed
indicated it had moved toward a neutral bias with regard to future rate
movements, causing stock and bond markets to rally.
- - Despite the Fed's neutral bias, Federal Reserve Chairman Greenspan has
reaffirmed the Fed's commitment to stifle any reoccurrence of inflation, and
has left open the possibility that he will tighten rates in the coming months.
- - During the just-ended second quarter, U.S. economic growth remained strong,
aided by the beginning of a recovery in the manufacturing sector. In May, the
index of leading economic indicators rose by 0.3%, an improvement over April's
0.1% increase, suggesting the period of sustained growth could continue into
the next year.
- - The nation's gross domestic product increased by a stronger-than-expected 4.6%
in the first quarter of 1999. Weak export demand was offset by robust
construction activity and strong consumer spending.
THE MARKETS
- - June was another record month for the S&P 500 and the NASDAQ Composite; both
indices hit new highs on the last day of trading. The Dow Jones Industrial
Average also had a solid first half, up 20.46% so far in 1999.(1) Investors
and analysts were also optimistic about second quarter earnings.
- - U.S. bond market conditions deteriorated in the first half of 1999, hurt by a
stronger economy in the U.S. and abroad, and the perception that inflationary
pressures may be starting to rise. The yield on the benchmark 30-year Treasury
bond increased from 5.09% at the end of 1998 to 5.95% as of June 30, 1999.
THE FUND
- -----------------------------
THE PAST SIX MONTHS
- - During the six months ended June 30, 1999, the Fund's Class A shares had a
total return of 3.78%.(2) This return was the result of an increase in net
asset value (NAV)to $8.21 on June 30, 1999 from $8.14 on December 31,
1998, and the reinvestment of $0.095 per share in dividends and $0.135 per
share in capital gains.
- - The Fund's Class B shares had a total return of 3.45%(2) during the period,
the result of an increase in NAV to $13.91 from $13.68, and the
reinvestment of $0.10 per share in dividends and $0.135 per share in
capital gains.
- - The Fund's Class C shares had a total return of 3.36%(2) during the period,
the result of an increase in NAV to $13.38 from $13.17, and the
reinvestment of $0.09 per share in dividends and $0.135 per share in
capital gains.
- - For comparison, during the six months ended June 30, 1999, the average return
of funds in the Lipper Balanced Fund category was 5.56%.(1)
ASSET ALLOCATION(4)
- -----------------------------
BY TOTAL NET ASSETS
[CHART]
<TABLE>
<S> <C>
Common Stocks 63.7%
Corporate Bonds 17.6%
U.S. Treasury Obligations 13.6%
Mortgage Pass-Throughs 2.0%
Commercial Paper 1.9%
Convertible Preferred Stock 0.6%
Other Assets 0.6%
</TABLE>
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
FUND INFORMATION
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Performance(3) Class A Class B Class C
- ----------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 6.51% 5.83% 5.64%
Five Years 16.66 15.45 14.54
Ten Years 12.59 N.A. N.A.
Life of Fund+ 10.25 12.69 12.15
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 0.38% 1.18% 4.71%
Five Years 16.66 15.45 14.54
Ten Years 11.92 N.A. N.A.
Life of Fund+ 10.16 12.58 12.15
</TABLE>
+Inception Dates - Class A: 4/1/32; Class B: 11/2/93; Class C:11/2/93
<TABLE>
<CAPTION>
Ten Largest Equity Holdings(4)
- -------------------------------------------
<S> <C>
Sepracor, Inc. 2.3%
Associates First Capital Corp. 2.1
Waste Management, Inc. 1.8
Safeway, Inc. 1.8
Tyson Foods, Inc. 1.7
Ameritech Corp. 1.7
Medtronic, Inc. 1.6
Unilever ADR 1.6
GTE Corp. 1.6
General Motors Corp., Class H 1.6
</TABLE>
(1) It is not possible to invest directly in an Index or a Lipper category.
(2) These returns do not include the 5.75% maximum sales charge for the Fund's
Class A shares or the applicable contingent deferred sales charges (CDSC) for
Class B and Class C shares. (3) Returns are historical and are calculated by
determining the percentage change in net asset value with all distributions
reinvested. SEC returns for Class A reflect the maximum 5.75% sales charge. SEC
returns for Class B reflect the applicable CDSC based on the following schedule:
5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th
year. SEC 1-Year return for Class C reflects 1% CDSC. (4) Holdings and asset
allocation are subject to change. Ten largest equity holdings accounted for
17.8% of the Fund's net assets.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
2
<PAGE>
EATON VANCE BALANCED FUND AS OF JUNE 30, 1999
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
<S> <C>
Assets
- -------------------------------------------------------
Investment in Balanced Portfolio, at
value
(identified cost, $276,700,428) $ 354,553,177
Receivable for Fund shares sold 206,930
- -------------------------------------------------------
TOTAL ASSETS $ 354,760,107
- -------------------------------------------------------
Liabilities
- -------------------------------------------------------
Payable for Fund shares redeemed $ 272,495
Payable to affiliate for Trustees' fees 1,327
Other accrued expenses 213,275
- -------------------------------------------------------
TOTAL LIABILITIES $ 487,097
- -------------------------------------------------------
NET ASSETS $ 354,273,010
- -------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------
Paid-in capital $ 272,174,923
Accumulated undistributed net realized
gain from Portfolio (computed on the
basis of identified cost) 3,567,460
Accumulated undistributed net investment
income 677,878
Net unrealized appreciation from
Portfolio (computed on the basis of
identified cost) 77,852,749
- -------------------------------------------------------
TOTAL $ 354,273,010
- -------------------------------------------------------
Class A Shares
- -------------------------------------------------------
NET ASSETS $ 267,202,916
SHARES OUTSTANDING 32,550,134
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 8.21
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 94.25 of $8.21) $ 8.71
- -------------------------------------------------------
Class B Shares
- -------------------------------------------------------
NET ASSETS $ 74,830,110
SHARES OUTSTANDING 5,381,469
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 13.91
- -------------------------------------------------------
Class C Shares
- -------------------------------------------------------
NET ASSETS $ 12,239,984
SHARES OUTSTANDING 914,944
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 13.38
- -------------------------------------------------------
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 1999
<S> <C>
Investment Income
- ------------------------------------------------------
Dividends allocated from Portfolio (net
of foreign taxes, $112,634) $ 2,088,383
Interest allocated from Portfolio 4,064,155
Expenses allocated from Portfolio (1,193,167)
- ------------------------------------------------------
NET INVESTMENT INCOME FROM PORTFOLIO $ 4,959,371
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Trustees fees and expenses $ 3,026
Distribution and service fees
Class A 172,554
Class B 341,671
Class C 56,433
Transfer and dividend disbursing agent
fees 156,006
Registration fees 26,018
Printing and postage 16,277
Custodian fee 15,195
Legal and accounting services 7,923
Amortization of organization expenses 180
Miscellaneous 6,825
- ------------------------------------------------------
TOTAL EXPENSES $ 802,108
- ------------------------------------------------------
NET INVESTMENT INCOME $ 4,157,263
- ------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 3,759,665
- ------------------------------------------------------
NET REALIZED GAIN $ 3,759,665
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments $ 4,893,640
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 4,893,640
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 8,653,305
- ------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 12,810,568
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
EATON VANCE BALANCED FUND AS OF JUNE 30, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
Increase (Decrease) JUNE 30, 1999 YEAR ENDED
in Net Assets (UNAUDITED) DECEMBER 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 4,157,263 $ 7,937,544
Net realized gain 3,759,665 56,088,133
Net change in unrealized appreciation
(depreciation) 4,893,640 (20,974,299)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 12,810,568 $ 43,051,378
- --------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (3,203,923) $ (6,508,416)
Class B (538,505) (993,141)
Class C (77,797) (137,056)
From net realized gain
Class A (4,538,312) (42,983,323)
Class B (720,243) (7,093,638)
Class C (115,910) (1,058,761)
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (9,194,690) $ (58,774,335)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial
interest --
Proceeds from sale of shares
Class A $ 7,624,558 $ 12,361,950
Class B 9,733,683 18,222,027
Class C 2,232,618 5,551,967
Issued in reorganization of EV
Marathon and Classic Investors
Funds
Class B -- 59,501,704
Class C -- 7,307,794
Net asset value of shares issued to
shareholders in payment of
distributions declared
Class A 5,300,898 36,065,386
Class B 1,132,155 7,242,661
Class C 182,786 1,135,545
Cost of shares redeemed
Class A (18,181,497) (26,590,459)
Class B (10,110,269) (11,838,168)
Class C (1,112,399) (3,112,669)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS $ (3,197,467) $ 105,847,738
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 418,411 $ 90,124,781
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
Net Assets (UNAUDITED) DECEMBER 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------
At beginning of period $ 353,854,599 $ 263,729,818
- --------------------------------------------------------------------------------
AT END OF PERIOD $ 354,273,010 $ 353,854,599
- --------------------------------------------------------------------------------
Accumulated
undistributed net
investment income
included in net assets
- --------------------------------------------------------------------------------
AT END OF PERIOD $ 677,878 $ 340,840
- --------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
EATON VANCE BALANCED FUND AS OF JUNE 30, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
(UNAUDITED) YEAR ENDED DECEMBER 31, 1998
------------------------------------- -------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of period $ 8.140 $ 13.680 $ 13.170 $ 8.700 $ 13.680 $ 13.240
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.102 $ 0.120 $ 0.110 $ 0.226 $ 0.231 $ 0.216
Net realized and unrealized gain 0.198 0.345 0.325 0.901 1.451 1.401
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.300 $ 0.465 $ 0.435 $ 1.127 $ 1.682 $ 1.617
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.095) $ (0.100) $ (0.090) $ (0.220) $ (0.215) $ (0.220)
From net realized gain (0.135) (0.135) (0.135) (1.467) (1.467) (1.467)
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.230) $ (0.235) $ (0.225) $ (1.687) $ (1.682) $ (1.687)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 8.210 $ 13.910 $ 13.380 $ 8.140 $ 13.680 $ 13.170
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1) 3.78% 3.45% 3.36% 13.43% 12.59% 12.51%
- ---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's
omitted) $267,203 $ 74,830 $ 12,240 $270,277 $ 72,836 $ 10,742
Ratios (As a percentage of average daily
net assets):
Expenses(2) 0.95%(3) 1.75%(3) 1.81%(3) 0.98% 1.81% 1.85%
Net investment income 2.58%(3) 1.77%(3) 1.71%(3) 2.45% 1.62% 1.58%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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
reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses for the
period the Fund was investing in the Portfolio.
(3) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
EATON VANCE BALANCED FUND AS OF JUNE 30, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED JANUARY 31,
------------------------------------- -----------------------
1997 1996 1995(1) 1995 1994
--------- --------- --------- --------- ---------
CLASS A CLASS A CLASS A CLASS A CLASS A
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of period $ 8.090 $ 8.150 $ 6.840 $ 7.600 $ 7.390
- -------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -------------------------------------------------------------------------------------------------------------
Net investment income $ 0.208 $ 0.254 $ 0.254 $ 0.283 $ 0.217
Net realized and unrealized gain (loss) 1.492 0.821 1.641 (0.623) 0.833
- -------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 1.700 $ 1.075 $ 1.895 $ (0.340) $ 1.050
- -------------------------------------------------------------------------------------------------------------
Less distributions
- -------------------------------------------------------------------------------------------------------------
From net investment income $ (0.200) $ (0.254) $ (0.248) $ (0.275) $ (0.307)
In excess of net investment income -- (0.001) -- -- (0.008)
From net realized gain (0.890) (0.880) (0.337) (0.145) (0.525)
- -------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (1.090) $ (1.135) $ (0.585) $ (0.420) $ (0.840)
- -------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 8.700 $ 8.090 $ 8.150 $ 6.840 $ 7.600
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURN(2) 21.60% 13.61% 28.36% (4.45)% 15.13%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's
omitted) $263,730 $240,217 $236,870 $200,419 $227,402
Ratios (As a percentage of average daily
net assets):
Expenses(3) 0.97% 0.93% 0.95%(4) 0.91% 0.90%
Net investment income 2.35% 3.03% 3.60%(4) 4.05% 4.07%
Portfolio turnover(5) -- -- -- -- 0.44%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the eleven-month period ended December 31, 1995.
(2) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.
(3) Includes the Fund's share of the Portfolio's allocated expenses for the
period the Fund was investing in the Portfolio.
(4) Annualized.
(5) 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 all of its
investable assets to the Portfolio is shown in the Portfolio's financial
statements which are included elsewhere in this report.
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE BALANCED FUND AS OF JUNE 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1 Significant Accounting Policies
- -------------------------------------------
Eaton Vance Balanced Fund (the "Fund") (formerly the Eaton Vance Investors
Fund) is a diversified series of Eaton Vance Special Investment Trust (the
"Trust"). The Trust is an entity of the type commonly known as a
Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The
Fund offers three classes of shares: Class A, Class B and Class C. Class A
shares are generally sold subject to a sales charge imposed at time of
purchase. Class B and Class C shares are sold at net asset value and are
subject to a contingent deferred sales charge (see Note 6). Each class
represents a pro rata interest in the Fund, but votes separately on
class-specific matters and (as noted below) is subject to different expenses.
Realized and unrealized gains and losses and net investment income, other
than class-specific expenses, are allocated daily to each class of shares
based on the relative net assets of each class to the total net assets of the
Fund. Each class of shares differs in its distribution plan and certain other
class-specific expenses. The Fund invests all of its investable assets in
interests in the Balanced 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 (99.9% at June 30, 1999). The performance of the
Fund is directly affected by the performance of the Portfolio. The financial
statements of the Portfolio, including the portfolio of investments, are
included elsewhere in this report and should be read in conjunction with the
Fund's financial statements.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuations -- Valuations of securities by the Portfolio are
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 determined in accordance with generally accepted
accounting principles. Prior to the Fund's investment in the Portfolio, the
Fund held its investments directly.
C Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal
income or excise tax is necessary.
D Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on a
straight-line basis over five years.
E 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.
F Interim Financial Statements -- The interim financial statements relating to
June 30, 1999 and for the six months 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.
G Other -- Investment transactions are accounted for on a trade-date basis.
2 Distributions to Shareholders
- -------------------------------------------
The Fund's present policy is to pay quarterly dividends from net investment
income allocated to the Fund by the Portfolio (less the Fund's direct
expenses) and to distribute at least annually all or substantially all of the
net realized capital gains (reduced by any available capital loss
carryforwards from prior years) so allocated. Shareholders may reinvest all
distributions in shares of the same class of the Fund at the per share net
asset value as of the close of business on the ex-dividend date. 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.
7
<PAGE>
EATON VANCE BALANCED FUND AS OF JUNE 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains. Permanent differences between book and tax accounting relating to
distributions are reclassified to paid-in-capital.
3 Shares of Beneficial Interest
- -------------------------------------------
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Such shares may be issued in a number of different classes.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
CLASS A (UNAUDITED) DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
Sales 942,450 1,343,770
Issued to shareholders electing to
receive payment of distributions in
Fund shares 665,548 4,456,369
Redemptions (2,257,275) (2,907,747)
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) (649,277) 2,892,392
- ------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
CLASS B (UNAUDITED) DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
Sales 714,514 1,253,930
Issued to shareholders electing to
receive payment of distributions in
Fund shares 83,449 535,537
Redemptions (740,152) (815,682)
Issued to EV Marathon Investors Fund
shareholders -- 4,349,873
- ------------------------------------------------------------------------------
NET INCREASE 57,811 5,323,658
- ------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
CLASS C (UNAUDITED) DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
Sales 169,861 399,045
Issued to shareholders electing to
receive payment of distributions in
Fund shares 14,050 87,300
Redemptions (84,912) (222,406)
Issued to EV Classic Investors Fund
shareholders -- 552,006
- ------------------------------------------------------------------------------
NET INCREASE 98,999 815,945
- ------------------------------------------------------------------------------
</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 2 of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report. Certain officers and Trustees of the
Fund and of the Portfolio are officers of the above organizations. Except as
to Trustees of the Fund and the Portfolio who are not members of EVM's or
BMR's organizations, officers and Trustees receive remuneration for their
services to the Fund out of such investment adviser fee. Eaton Vance
Distributors, Inc. ("EVD"), a subsidiary of EVM and the Fund's principal
underwriter, received $16,068 from the Fund as its portion of the sales
charge on sales of Class A shares for the six months ended June 30, 1999.
5 Distribution and Service Plans
- -------------------------------------------
The Fund has adopted distribution plans ("Class B Plan" and "Class C Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940 and a service
plan ("Class A Plan")(collectively, the "Plans"). The Class B Plan and Class
C Plan require the Fund to pay EVD amounts equal to 1/365 of 0.75% of the
Fund's daily net assets attributable to Class B and Class C shares 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) 5% and 6.25% of the aggregate amount received by the Fund
for the Class B and Class C shares sold, respectively, plus (ii) interest
calculated by applying the rate of 1% over the prevailing prime rate to the
outstanding balance of Uncovered Distribution Charges of EVD of each
respective class, reduced by the aggregate amount of contingent deferred
sales charges (see Note 6)
8
<PAGE>
EATON VANCE BALANCED FUND AS OF JUNE 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
and amounts theretofore paid to EVD by each respective class. The Fund paid
or accrued $273,780 and $42,325 for Class B and Class C shares, respectively,
to or payable to EVD for the six months ended June 30, 1999, representing
0.75% (annualized) of the average daily net assets for Class B and Class C
shares. At June 30, 1999, the amount of Uncovered Distribution Charges EVD
calculated under the Class B Plan and Class C Plan were approximately
$1,779,000 and $1,017,000 for Class B and Class C shares, respectively.
In addition, the Plans also authorize each class to make payments of service
fees to EVD, investment dealers and other persons in amounts not exceeding
0.25% of the Fund's average daily net assets attributable to Class A, Class B
and Class C shares for any fiscal year. The Trustees have initially
implemented the Plans by authorizing each class to make quarterly payments of
service fees to EVD and investment dealers in amounts not expected to exceed
0.25% per annum of the Fund's average daily net assets attributable to Class
A and Class B shares based on the value of Fund shares sold by such persons
and remaining outstanding for at least twelve months. The Class C Plan
requires the Fund to make monthly payments of service fees in amounts not
expected to exceed 0.25% of the Fund's average daily net assets attributable
to Class C shares for any fiscal year. Service fee payments are made for
personal services and/or the maintenance of shareholder accounts. Service
fees are separate and distinct from the sales commissions and distribution
fees payable by the Fund to EVD, and, as such are not subject to automatic
discontinuance when there are no outstanding Uncovered Distribution Charges
of EVD. Service fee payments for the six months ended June 30, 1999 amounted
to $172,554, $67,891, and $14,108 for Class A, Class B, and Class C shares,
respectively.
Certain officers and Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
- -------------------------------------------
A contingent deferred sales charge ("CDSC") generally is imposed on
redemptions of Class B shares made within six years of purchase and on
redemptions of Class C shares made within one year of purchase. A CDSC of 1%
is imposed on any redemption of Class A shares made within 12 months of
purchase that were acquired at net asset value if the purchase amount was $1
million or more. 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.
The Class B CDSC is imposed at declining rates that begin at 5% in the case
of redemptions in the first and second year after purchase, declining one
percentage point each subsequent year. Class C shares will be subject to a 1%
CDSC if redeemed within one year of purchase. No CDSC is levied on shares
which have been sold to EVM or its affiliates or to their respective
employees or clients and may be waived under certain other limited
circumstances. CDSC charges are paid to EVD to reduce the amount of Uncovered
Distribution Charges calculated under the Fund's Distribution Plans (see Note
5). CDSC charges received when no Uncovered Distribution Charges exist will
be retained by the Fund. EVD received approximately $98,000 and $382,000 of
CDSC paid by shareholders for Class B and Class C shares, respectively, for
the six months ended June 30, 1999.
7 Investment Transactions
- -------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the six
months ended June 30, 1999, aggregated $19,462,993 and $33,875,378,
respectively.
8 Transfer of Net Assets
- -------------------------------------------
On January 1, 1998, EV Traditional Investors Fund received the net assets of
the EV Marathon Investors Fund and EV Classic Investors Fund pursuant to an
Agreement and Plan of Reorganization dated June 23, 1997. In accordance with
the agreement, EV Traditional Investors Fund, at the closing, issued
4,349,873 Class B shares and 552,006 Class C shares of the Fund having an
aggregate value of $59,501,704 and $7,307,794, respectively. As a result the
Fund issued one Class B share and one Class C share for each share of EV
Marathon Investors Fund and EV Classic Investors Fund, respectively. The
transaction was structured for tax purposes to qualify as a tax free
reorganization under the Internal Revenue Code. The EV Marathon Investors
Fund's and EV Classic Investors Fund's net assets at the date of the
transaction were $59,501,704 and $7,307,794, respectively, including
$11,654,296 and $1,851,259 of unrealized appreciation. Directly after the
merger, the combined net assets of the Eaton Vance Investors Fund (formerly
"EV Traditional Investors Fund") were $330,539,316 with a net asset value of
$8.70, $13.68 and $13.24 for Class A, Class B and Class C, respectively.
9
<PAGE>
BALANCED PORTFOLIO AS OF JUNE 30, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED)
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 63.7%
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
Advertising and Marketing Services -- 1.2%
- --------------------------------------------------------------------------
Valassis Communications, Inc.(1) 120,000 $ 4,395,000
- --------------------------------------------------------------------------
$ 4,395,000
- --------------------------------------------------------------------------
Aerospace and Defense -- 1.6%
- --------------------------------------------------------------------------
General Motors Corp., Class H(1) 100,000 $ 5,625,000
- --------------------------------------------------------------------------
$ 5,625,000
- --------------------------------------------------------------------------
Auto and Parts -- 2.3%
- --------------------------------------------------------------------------
General Motors Corp. 60,000 $ 3,960,000
Magna International, Inc., Class A 75,000 4,256,250
- --------------------------------------------------------------------------
$ 8,216,250
- --------------------------------------------------------------------------
Banks - Regional -- 1.4%
- --------------------------------------------------------------------------
Wells Fargo & Co. 120,000 $ 5,130,000
- --------------------------------------------------------------------------
$ 5,130,000
- --------------------------------------------------------------------------
Banks and Money Services -- 0.6%
- --------------------------------------------------------------------------
Banco Latinoamericano de
Exportaciones(2) 75,000 $ 2,006,250
- --------------------------------------------------------------------------
$ 2,006,250
- --------------------------------------------------------------------------
Beverages -- 2.1%
- --------------------------------------------------------------------------
Anheuser-Busch Cos., Inc. 60,000 $ 4,256,250
PepsiCo, Inc. 80,000 3,095,000
- --------------------------------------------------------------------------
$ 7,351,250
- --------------------------------------------------------------------------
Broadcasting and Cable -- 0.9%
- --------------------------------------------------------------------------
MediaOne Group, Inc.(1) 45,000 $ 3,346,875
- --------------------------------------------------------------------------
$ 3,346,875
- --------------------------------------------------------------------------
Chemicals -- 1.1%
- --------------------------------------------------------------------------
Praxair, Inc. 80,000 $ 3,915,000
- --------------------------------------------------------------------------
$ 3,915,000
- --------------------------------------------------------------------------
Communications Services -- 4.6%
- --------------------------------------------------------------------------
Ameritech Corp. 80,896 $ 5,945,856
GTE Corp. 75,000 5,681,250
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
Communications Services (continued)
- --------------------------------------------------------------------------
MCI Worldcom, Inc.(1) 55,000 $ 4,743,750
- --------------------------------------------------------------------------
$ 16,370,856
- --------------------------------------------------------------------------
Drugs -- 5.8%
- --------------------------------------------------------------------------
Elan Corp., PLC ADR(1)(2) 130,000 $ 3,607,500
Pfizer, Inc. 37,800 4,148,550
Sepracor, Inc.(1) 100,000 8,125,000
Warner-Lambert Co. 65,000 4,509,375
- --------------------------------------------------------------------------
$ 20,390,425
- --------------------------------------------------------------------------
Electric Utilities -- 1.0%
- --------------------------------------------------------------------------
The Southern Co. 140,000 $ 3,710,000
- --------------------------------------------------------------------------
$ 3,710,000
- --------------------------------------------------------------------------
Electronics - Semiconductors -- 1.0%
- --------------------------------------------------------------------------
Intel Corp. 60,000 $ 3,570,000
- --------------------------------------------------------------------------
$ 3,570,000
- --------------------------------------------------------------------------
Environmental Services -- 1.8%
- --------------------------------------------------------------------------
Waste Management, Inc. 120,000 $ 6,450,000
- --------------------------------------------------------------------------
$ 6,450,000
- --------------------------------------------------------------------------
Financial - Miscellaneous -- 5.9%
- --------------------------------------------------------------------------
Associates First Capital Corp. 170,000 $ 7,533,125
Fannie Mae 45,000 3,076,875
MBNA Corp. 180,000 5,512,500
MGIC Investment Corp. 100,000 4,862,500
- --------------------------------------------------------------------------
$ 20,985,000
- --------------------------------------------------------------------------
Foods -- 3.3%
- --------------------------------------------------------------------------
Tyson Foods, Inc. 264,700 $ 5,955,750
Unilever ADR(2) 82,142 5,729,405
- --------------------------------------------------------------------------
$ 11,685,155
- --------------------------------------------------------------------------
Health Services -- 0.8%
- --------------------------------------------------------------------------
Health Management Associates, Inc.(1) 250,000 $ 2,812,500
- --------------------------------------------------------------------------
$ 2,812,500
- --------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
BALANCED PORTFOLIO AS OF JUNE 30, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Information Services -- 1.5%
- --------------------------------------------------------------------------
Reynolds & Reynolds, Inc., Class A 225,000 $ 5,245,313
- --------------------------------------------------------------------------
$ 5,245,313
- --------------------------------------------------------------------------
Insurance -- 4.3%
- --------------------------------------------------------------------------
American International Group, Inc. 41,950 $ 4,910,772
Berkshire Hathaway, Inc., Class B(1) 2,100 $ 4,722,900
Mutual Risk Management Ltd. 162,800 5,433,450
- --------------------------------------------------------------------------
$ 15,067,122
- --------------------------------------------------------------------------
Medical Products -- 1.6%
- --------------------------------------------------------------------------
Medtronic, Inc. 74,817 $ 5,826,374
- --------------------------------------------------------------------------
$ 5,826,374
- --------------------------------------------------------------------------
Metals and Minerals -- 1.5%
- --------------------------------------------------------------------------
Potash Corp. of Saskatchewan(2) 55,000 $ 2,846,250
Steel Dynamics Corp.(1) 150,000 2,320,320
- --------------------------------------------------------------------------
$ 5,166,570
- --------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 1.5%
- --------------------------------------------------------------------------
Anadarko Petroleum Corp. 140,000 $ 5,153,750
- --------------------------------------------------------------------------
$ 5,153,750
- --------------------------------------------------------------------------
Oil and Gas - Integrated -- 2.6%
- --------------------------------------------------------------------------
Exxon Corp. 67,280 $ 5,188,970
Mobil Corp. 40,000 3,960,000
- --------------------------------------------------------------------------
$ 9,148,970
- --------------------------------------------------------------------------
Paper and Forest Products -- 2.1%
- --------------------------------------------------------------------------
Longview Fibre Co. 285,500 $ 4,460,938
Plum Creek Timber Co., L.P. 90,000 2,801,250
- --------------------------------------------------------------------------
$ 7,262,188
- --------------------------------------------------------------------------
Publishing -- 1.5%
- --------------------------------------------------------------------------
Central Newspapers, Inc., Class A 140,000 $ 5,267,500
- --------------------------------------------------------------------------
$ 5,267,500
- --------------------------------------------------------------------------
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
REITS -- 2.1%
- --------------------------------------------------------------------------
Equity Residential Properties Trust 101,400 $ 4,569,338
Prologis Trust 150,000 3,037,500
- --------------------------------------------------------------------------
$ 7,606,838
- --------------------------------------------------------------------------
Retail - Food and Drug -- 3.3%
- --------------------------------------------------------------------------
CVS Corp. 100,000 $ 5,112,500
Safeway, Inc.(1) 130,000 6,435,000
- --------------------------------------------------------------------------
$ 11,547,500
- --------------------------------------------------------------------------
Retail - Specialty and Apparel -- 3.8%
- --------------------------------------------------------------------------
Autonation, Inc.(1) 270,000 $ 4,809,375
Circuit City Stores, Inc. 60,000 5,580,000
Home Depot, Inc. (The) 50,000 3,221,875
- --------------------------------------------------------------------------
$ 13,611,250
- --------------------------------------------------------------------------
Specialty Chemicals and Materials -- 2.5%
- --------------------------------------------------------------------------
Corning, Inc. 80,000 $ 5,610,000
Millipore Corp. 80,000 3,245,000
- --------------------------------------------------------------------------
$ 8,855,000
- --------------------------------------------------------------------------
Total Common Stocks
(identified cost $145,335,681) $ 225,717,936
- --------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK -- 0.6%
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
Metals - Gold -- 0.6%
- --------------------------------------------------------------------------
Freeport McMoRan Copper & Gold, 5%
Series CV 125,000 $ 2,343,750
- --------------------------------------------------------------------------
$ 2,343,750
- --------------------------------------------------------------------------
Total Convertible Preferred Stock
(identified cost $2,872,500) $ 2,343,750
- --------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
BALANCED PORTFOLIO AS OF JUNE 30, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<S> <C> <C>
CORPORATE BONDS -- 17.6%
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
Air Products and Chemicals, Inc., 7.34%,
6/15/26 $ 720 $ 746,698
Associates Corp., N.A., 5.96%, 5/15/37 4,280 4,281,840
Chesapeake Potomac Telephone Co.,
8.375%, 10/1/29 2,850 3,226,685
Commercial Credit Corp., 7.875%, 2/1/25 2,000 2,118,680
Commercial Credit Corp., 6.625%, 6/1/15 1,350 1,359,315
Dayton Hudson, MTN, 5.865%, 8/15/27 2,490 2,492,664
Grand Metropolitan Investments Corp.,
7.45%, 4/15/35 3,090 3,275,802
Intermediate American Development Bank,
8.40%, 9/1/09 3,690 4,201,360
Intermediate American Development Bank,
6.95%, 8/1/26 220 227,982
J.C. Penney, Inc., 7.40%, 4/1/37 3,500 3,572,485
Johnson Controls, Inc., 7.70%, 3/1/15 2,000 2,106,600
Lowe's Cos., Inc., 7.11%, 5/15/37 5,000 5,137,100
Mead Corp. (The), 6.84%, 3/1/37 2,000 1,982,180
Motorola, Inc., 6.50%, 9/1/25 3,000 2,972,250
Proctor and Gamble Co., 8.00%, 9/1/24 3,000 3,416,970
Seagram (Joseph) & Sons, Inc., 9.65%,
8/15/18 1,030 1,216,615
State Street Bank, 7.35%, 6/15/26 2,450 2,535,236
Tennessee Valley Power Authority,
6.235%, 7/15/45 700 702,653
Tennessee Valley Power Authority, 5.88%,
4/1/36 3,350 3,284,809
Times Mirror Co., 6.61%, 9/15/27 3,250 3,255,330
Tribune Co., 6.25%, 11/10/26 1,000 994,890
TRW, Inc., MTN, 9.35%, 6/4/20 1,045 1,219,316
Willamette Industries, 7.35%, 7/1/26 4,000 4,064,960
Xerox Corp., 5.90%, 5/5/37 3,000 2,998,860
Xerox Corp., 5.875%, 6/15/37 1,000 998,900
- --------------------------------------------------------------------------
Total Corporate Bonds
(identified cost $63,385,028) $ 62,390,180
- --------------------------------------------------------------------------
MORTGAGE PASS-THROUGHS -- 2.0%
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
FHLMC, PAC, CMO, Series 1627-PZ, 5.60%,
8/15/17 $ 4,495 $ 4,485,143
FHLMC, PAC, CMO, Series 1630-PE, 5.50%,
5/15/18 1,020 1,017,058
FHLMC, PAC, CMO, Series 34-C, 9.00%,
11/15/19 34 34,077
FHLMC, PAC, CMO, Series 41-F, 10.00%,
5/15/20 990 1,064,982
FNMA, PAC, CMO, Series 1990 24-E, 9.00%,
3/25/20 603 617,582
- --------------------------------------------------------------------------
Total Mortgage Pass-Throughs
(identified cost $7,120,470) $ 7,218,842
- --------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 13.6%
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
U.S. Treasury Bond, 7.50%, 11/15/16 $ 5,000 $ 5,635,150
U.S. Treasury Note, 6.25%, 2/15/07 3,000 3,056,730
U.S. Treasury Note, 6.625%, 4/30/02 10,000 10,265,599
U.S. Treasury Note, 6.375%, 5/15/00 2,000 2,018,120
U.S. Treasury Note, 5.75%, 11/30/02 18,000 18,036,539
U.S. Treasury Note, 6.125%, 9/30/00 4,000 4,034,360
U.S. Treasury Note, 8.50%, 2/15/00 5,000 5,102,350
- --------------------------------------------------------------------------
Total U.S. Treasury Obligations
(identified cost $49,253,129) $ 48,148,848
- --------------------------------------------------------------------------
COMMERCIAL PAPER -- 1.9%
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
Associates Corp., 5.75%, 7/1/99 $ 6,706 $ 6,706,000
- --------------------------------------------------------------------------
Total Commercial Paper
(amortized cost $6,706,000) $ 6,706,000
- --------------------------------------------------------------------------
Total Investments -- 99.4%
(identified cost $274,672,808) $ 352,525,556
- --------------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.6% $ 2,027,644
- --------------------------------------------------------------------------
Net Assets -- 100% $ 354,553,200
- --------------------------------------------------------------------------
</TABLE>
ADR - American Depositary Receipt
PAC - Planned Authorization Class
CMO - Collateralized Mortgage Obligations
REIT - Real Estate Investment Trust
(1) Non-income producing security.
(2) Foreign security.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
BALANCED PORTFOLIO AS OF JUNE 30, 1999
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
<S> <C>
Assets
- -------------------------------------------------------
Investments, at value (identified cost,
$274,672,808) $ 352,525,556
Cash 1,491
Interest and dividends receivable 1,988,825
Tax reclaim receivable 63,947
- -------------------------------------------------------
TOTAL ASSETS $ 354,579,819
- -------------------------------------------------------
Liabilities
- -------------------------------------------------------
Payable to affiliate for Trustees' fees $ 6,883
Other accrued expenses 19,736
- -------------------------------------------------------
TOTAL LIABILITIES $ 26,619
- -------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $ 354,553,200
- -------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $ 276,700,452
Net unrealized appreciation (computed on
the basis of identified cost) 77,852,748
- -------------------------------------------------------
TOTAL $ 354,553,200
- -------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 1999
<S> <C>
Investment Income
- ------------------------------------------------------
Dividends (net of foreign taxes,
$112,634) $ 2,088,383
Interest 4,064,156
- ------------------------------------------------------
TOTAL INVESTMENT INCOME $ 6,152,539
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Investment adviser fee $ 1,069,032
Trustees fees and expenses 15,401
Custodian fee 84,109
Legal and accounting services 21,718
Miscellaneous 2,907
- ------------------------------------------------------
TOTAL EXPENSES $ 1,193,167
- ------------------------------------------------------
NET INVESTMENT INCOME $ 4,959,372
- ------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 3,759,665
- ------------------------------------------------------
NET REALIZED GAIN $ 3,759,665
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 4,893,490
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 4,893,490
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 8,653,155
- ------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 13,612,527
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
BALANCED PORTFOLIO AS OF JUNE 30, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
Increase (Decrease) JUNE 30, 1999 YEAR ENDED
in Net Assets (UNAUDITED) DECEMBER 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 4,959,372 $ 9,645,705
Net realized gain 3,759,665 56,088,137
Net change in unrealized appreciation
(depreciation) 4,893,490 (20,974,301)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 13,612,527 $ 44,759,541
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $ 19,462,993 $ 38,451,067
Withdrawals (33,875,378) (57,564,792)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ (14,412,385) $ (19,113,725)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS $ (799,858) $ 25,645,816
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ 355,353,058 $ 329,707,242
- --------------------------------------------------------------------------------
AT END OF PERIOD $ 354,553,200 $ 355,353,058
- --------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
BALANCED PORTFOLIO AS OF JUNE 30, 1999
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JANUARY 31,
JUNE 30, 1999 ------------------------------------------------ -------------
(UNAUDITED) 1998 1997 1996 1995(1) 1995
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average daily net assets
- -----------------------------------------------------------------------------------------------------------------------------
Expenses 0.68%(2) 0.67% 0.69% 0.70% 0.71%(2) 0.70%
Net investment income 2.84%(2) 2.75% 2.62% 3.23% 3.83%(2) 4.25%
Portfolio turnover 23% 49% 37% 64% 47% 28%
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000'S
OMITTED) $354,553 $355,353 $329,707 $301,561 $276,375 $217,157
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the eleven-month period ended December 31, 1995.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
BALANCED PORTFOLIO AS OF JUNE 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1 Significant Accounting Policies
- -------------------------------------------
Balanced Portfolio (the "Portfolio") (formerly Investors Portfolio) is
registered under the Investment Company Act of 1940, as a diversified,
open-end, management investment company which was organized as a trust under
the laws of the State of New York in 1992. The Declaration of Trust permits
the Trustees to issue interests in the Portfolio. The following is a summary
of significant accounting policies of the Portfolio. The policies are in
conformity with generally accepted accounting principles.
A Investment Valuations -- Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Listed or unlisted securities for which
closing sale prices are not available are valued at the mean between latest
bid and asked prices. Debt securities (other than mortgage-backed "pass
through" securities and short-term obligations maturing in sixty days or
less), including listed securities and securities for which price quotations
are available and forward contracts, will normally be valued on the basis of
market valuations furnished by pricing services. Mortgage-backed, "pass
through" securities are valued using an independent matrix pricing system
applied by the adviser which takes into account closing bond valuations,
yield differentials, anticipated prepayments and interest rates provided by
dealers. Short-term obligations and money market securities maturing in 60
days or less are valued at amortized cost which approximates value. Non-U.S.
dollar denominated short-term obligations are valued at amortized cost as
calculated in the base currency and translated to U.S. dollars at the current
exchange rate. Investments for which valuations or market quotations are
unavailable are valued at fair value using methods determined in good faith
by or at the direction of the Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes. Dividend income is recorded on the ex-dividend date for
dividends received in cash and/or securities. However, if the ex-dividend
date has passed, certain dividends from foreign securities are recorded as
the Portfolio is informed of the ex-dividend date. Dividend income may
include dividends that represent returns of capital for federal income tax
purposes.
C Income Taxes -- The Portfolio has elected to be treated as a partnership for
United States 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 Internal Revenue 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. Withholding taxes on
foreign dividends and capital gains have been provided for in accordance with
the Portfolio's understanding of the applicable countries' tax rules and
rates.
D 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.
E 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 income and expense during the reporting period. Actual results could
differ from those estimates.
F Interim Financial Statements -- The interim financial statements relating to
June 30, 1999 and for the six months 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.
16
<PAGE>
BALANCED PORTFOLIO AS OF JUNE 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
G Other -- Investment transactions are accounted for on a trade date basis.
2 Investment Adviser Fee and Other Transactions with Affiliates
- -------------------------------------------
The investment adviser fee is earned by Boston Management and Research
("BMR"), a wholly-owned subsidiary of Eaton Vance Management ("EVM"), as
compensation for management and investment advisory services rendered to the
Portfolio. The fee is computed at the monthly rate of 5/96 of 1% (0.625%
annually) of the Portfolio's average daily net assets up to $300 million and
at reduced rates as daily net assets exceed that level. For the six months
ended June 30, 1999, the fee was equivalent to 0.61% (annualized) of the
Portfolio's average net assets for such period and amounted to $1,069,032.
Except as to Trustees of the Portfolio who are not members of EVM's or BMR's
organization, officers and Trustees receive remuneration for their service to
the Portfolio out of such investment adviser fee. Certain officers and
Trustees of the Portfolio are officers 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 portion of their annual fees in accordance
with the terms of the Trustees Deferred Compensation Plan. For the six months
ended June 30, 1999, no significant amounts have been deferred.
3 Investment Transactions
- -------------------------------------------
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $44,178,618 and $67,621,665, respectively.
Purchases and sales of U.S. Government/agency securities aggregated
$36,373,203 and $24,578,848, respectively.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation (depreciation) in the value of
investments owned at June 30, 1999, as computed on a federal income tax
basis, are as follows:
<TABLE>
<S> <C>
AGGREGATE COST $ 274,672,808
- -------------------------------------------------------
Gross unrealized appreciation $ 89,367,247
Gross unrealized depreciation (11,514,499)
- -------------------------------------------------------
NET UNREALIZED APPRECIATION $ 77,852,748
- -------------------------------------------------------
</TABLE>
5 Line of Credit
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The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $130 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 Eurodollar rate or federal funds rate. In addition, a fee
computed at an annual rate of 0.10% 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, 1999.
6 Risk Associated with Foreign Investments
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Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those
not subject to the disclosure and reporting requirements of the U.S.
securities laws. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and standards of
practice comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitation on the removal of funds or other assets of the
Portfolio, political or financial instability or diplomatic and other
developments which could affect such investments. Foreign stock markets,
while growing in volume and sophistication, are generally not as developed as
those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and
more volatile than securities of comparable U.S. companies. In general, there
is less overall governmental supervision and regulation of foreign securities
markets, broker-dealers and issuers than in the United States.
17
<PAGE>
EATON VANCE BALANCED FUND AS OF JUNE 30, 1999
INVESTMENT MANAGEMENT
EATON VANCE BALANCED FUND
Officers
James B. Hawkes
President and Trustee
Edward E. Smiley, Jr.
Vice President
Michael B. Terry
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate
School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
BALANCED PORTFOLIO
Officers
James B. Hawkes
President and Trustee
Thomas E. Faust, Jr.
Vice President and
Portfolio Manager
Michael B. Terry
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate
School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law, Georgetown
University Law Center
Jack L. Treynor
Investment Adviser and Consultant
18
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<PAGE>
INVESTMENT ADVISER OF
BALANCED PORTFOLIO
BOSTON MANAGEMENT AND RESEARCH
The Eaton Vance Building
255 State Street
Boston, MA 02109
ADMINISTRATOR OF
EATON VANCE BALANCED FUND
EATON VANCE MANAGEMENT
The Eaton Vance Building
255 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
EATON VANCE DISTRIBUTORS, INC.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, MA 02116
TRANSFER AND DIVIDEND
DISBURSING AGENT
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
EATON VANCE BALANCED FUND
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
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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.
- --------------------------------------------------------------------------------
3-4260 BALSRC-7/99
