<PAGE>
[LOGO OF EATON VANCE APPEARS HERE] [ARTWORK APPEARS HERE]
Annual Report December 31, 1998
[ARTWORK OF NYSE FLAG EATON VANCE
APPEARS HERE] BALANCED
FUND
Global Management-Global Distribution
[ARTWORK OF TRADING FLOOR APPEARS HERE]
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
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Letter to Shareholders
[PHOTO OF JAMES B. HAWKES APPEARS HERE]
James B. Hawkes
President
Eaton Vance Balanced Fund, Class A shares, had a total return of 13.4% during
the year ended December 31, 1998. That return was the result of a decrease in
net asset value per share (NAV) from $8.70 on December 31, 1997 to $8.14 on
December 31, 1998, and the reinvestment of $0.22 per share in income dividends
and $1.467 per share in capital gains distributions./1/
Class B shares had a total return of 12.6% for the same period, the result of an
unchanged NAV of $13.68, and the reinvestment of $0.215 per share in income
dividends and $1.467 per share in capital gains distributions./1/
Class C shares had a total return of 12.5% for the same period, the result of a
decrease in NAV from $13.24 to $13.17, and the reinvestment of $0.22 per share
in income dividends and $1.467 per share in capital gains distributions./1/
By comparison, average total return performance of funds in the Lipper Balanced
Funds category was 13.5% for the same time period./2/
This year saw extreme gyrations in the stock market. After an impressive rally
in the first half of 1998, the market posted heavy losses from August to early
October, then performed strongly in the fourth quarter. Investor confidence was
bolstered by the Federal Reserve Board's interest rate cuts, modest economic
growth, and low inflation. Stock prices moved upwards, despite the looming
impeachment trial of President Clinton and signs of weakness in corporate
profits. The four-year period ending in 1998 marked the first time in history
that the S&P 500 achieved four consecutive years of annual total returns of at
least 20%.
The bond markets were also quite volatile. With interest rates falling and
inflation nowhere in sight, U.S. Treasury bonds posted strong returns. However,
bonds of lower quality, including corporate bonds and mortgage-backed
securities, dramatically underperformed Treasury issues in 1998.
Looking forward, the factors that precipitated the turbulence in stock and bond
markets in 1998 remain present: Asian economies, while stabilized, are still not
strong; corporate earnings have been lackluster; and ongoing currency crises
worldwide continue to worry the credit markets.
Eaton Vance believes that such market fluctuations underscore the benefits of a
balanced approach to investing. On the following pages, Portfolio Manager Thomas
Faust discusses the past 12 months and offers his outlook for the year ahead.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
February 1, 1999
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Performance/3/ Class A Class B Class C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 13.4% 12.6% 12.5%
Five Years 14.8 13.6 12.9
Ten Years 13.3 N.A. N.A.
Life of Fund+ 10.3 13.3 12.7
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 6.9% 7.6% 11.5%
Five Years 13.5 13.4 12.9
Ten Years 12.7 N.A. N.A.
Life of Fund+ 10.2 13.1 12.7
+Inception Dates - Class A: 4/01/32; Class B: 11/02/93; Class C: 11/02/93
Ten Largest Equity Holdings/4/
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Sepracor, Inc. 2.5%
Unilever ADR 2.1
Sofamor Danek Group, Inc. 2.1
SunAmerica, Inc. 2.1
Mutual Risk Management Ltd. 2.1
Warner-Lambert Co. 1.7
Tyson Foods, Inc. 1.6
Waste Management, Inc. 1.6
CVS Corp. 1.5
Reynolds & Reynolds, Inc. Class A 1.5
/1/ 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. /2/ It is not possible to invest directly in an
Index or Lipper average. /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 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/ As of 12/31/98. Ten
largest equity holdings accounted for 18.8% of the Portfolio's net assets.
Holdings are subject to change.
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
2
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Eaton Vance Balanced Fund as of December 31, 1998
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Management Discussion
An interview with Thomas E. Faust Jr., Vice President and Portfolio Manager of
the Balanced Portfolio
[PHOTO OF THOMAS E. FAUST JR. APPEARS HERE]
Thomas E. Faust Jr.
Portfolio Manager
Q: Tom, how would you summarize the performance of the stock market in 1998?
A: They said it couldn't be done, but this is the fourth year in a row of
20%-plus returns for the S&P 500 Index, which is unprecedented. This was a
strange year, though, in a lot of ways. It was very tough to beat the S&P
500, which was up 28.5% (market cap weighted). More than half of the
Index's returns came from just 15 stocks - each of which is a
large-capitalization stock with a market value of more than $60 billion.
Out of the 500 Index stocks, fewer than 145 stocks did as well as the Index
itself, and a majority underperformed the Index by more than 20%.
Market leadership was concentrated in a small number of stocks,
particularly expensive large cap stocks, with an emphasis on technology. If
you owned those, it was the best of times. If you owned other things, it
was much rockier. It was particularly difficult to compete with any sort of
a value orientation. I can't recall another year when the performance
disparity among large-cap, mid-cap, and small-cap growth stocks was as
dramatic as it was in 1998.
Q: Was there a similar split performance in the other major asset class of
this Portfolio, bonds?
A: Overall, it was a decent year for bonds. The total return performance of
the Lehman Brothers Government/Corporate Index was about 9.5%, consisting
of interest income plus some price appreciation. But again, it was a tale
of two markets on the bond side. The Treasury market did quite well, but
the corporate bond market did rather poorly. Investors became more
risk-averse due to the financial collapse in Russia, concerns about Brazil,
major problems in Southeast Asia, and the corporate sector's exposure to
these hotspots. So, it was an uneven year in the bond market as well.
Q: How does the Balanced Portfolio weather this kind of volatility in both the
stock and bond markets?
A: The Balanced Portfolio is a fairly conservative core Portfolio that
combines investments in stocks and bonds. Investing in both stocks and
bonds can minimize volatility, as compared to investing strictly in stocks.
Our performance over time has tended to be intermediate between the returns
of the stock market and bond market returns, and that's where we were in
1998.
Portfolio Allocation+
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As a percentage of total net assets
[PIE CHART APPEARS HERE]
Common Stocks 62.5%
Corp. Bonds 22.4%
U.S. Treasuries 12.8%
Other 2.3%
+ Portfolio allocation subject to change due to active management.
3
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
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Management Discussion
Q: Did you maintain large weightings in the finance and healthcare sectors
this year?
A: Yes, we did. We ended the year with approximately 13% of the equity portion
of the Portfolio invested in financial stocks, mostly in insurance but with
exposure to banks and various financial companies. It's a sector that
generally has performed well and provided the Fund with good returns.
However, financials did have some problems during the course of the year,
and exposure to credit concerns in various places did hurt the financial
companies. Nonetheless, financial stocks came back in the fourth quarter
from losses in the third quarter. So, it was a bit of a volatile year.
Healthcare stocks, at about 16% of the equity portion of the Portfolio,
also generally performed well, and certainly a number of our stand-out
performers in the Fund came from the healthcare sector. Sepracor, our
largest holding, was a significant contributor to performance at the end of
the year. Another successful holding was Sofamor-Danek, the subject of a
takeover that was completed in early 1999. Through our research and
analysis, we had identified both companies as highly promising, and each
produced very strong returns for the Portfolio in 1998.
Q: What more can you tell us about the Portfolio's largest holding, Sepracor?
A: Sepracor is a drug development company with a twist: they develop improved
versions of existing drugs. Many major drugs on the market today are
"racemic mixtures," which means there are two parts: one therapeutic, and
the other often producing certain undesirable side effects. Sepracor
employs a drug development and production technology that could separate
these two parts. They are in the early stages of rolling out these
potentially blockbuster drugs that are follow-on products to some of
today's largest selling drugs.
Typically, Sepracor enters into royalty and profit-sharing arrangements
with the developer and marketer of the original compound. One of the
compounds they have in development is a successor to Claritin, the major
antihistamine from Schering-Plough; the arrangement was announced toward
the beginning of the year. Then, near the end of the year, another
arrangement was announced with Eli Lilly for a successor product to Prozac.
Those are two blockbuster products, so this company could be very
profitable in 3 or 4 years' time. It's a great recipe for success in the
drug business.
Q: You mentioned another large holding, Sofamor-Danek. Why is this stock a
strong performer in the Portfolio?
A: Sofamor-Danek has been one of our largest holdings over the last several
years. In 1998, the company entered into a merger agreement with Medtronic,
which is the largest cardio-vascular device company in the U.S.
Sofamor-Danek will become their orthopedic/neurological arm. The stock has
been a great winner for us. Four or five years ago, it was widely viewed as
a company in trouble due to regulatory and legal problems. Today, the
company has come back to the point that it has been acquired by an industry
leader, and everything looks pretty good for the company.
Q: What concerns do you have for the stock market in 1999?
A: Certainly, stock valuations are my biggest concern. Simply put, stocks are
expensive. Not all stocks, but there's a tier, particularly of internet
stocks and technology stocks, where the valuation begs the question, Does
this make sense? The answer is often no, but in many cases these are stocks
that were big leaders last year, so momentum is in their favor. I do worry
that a return to more rational valuation levels for some of these
market-leading companies could potentially put the market at some risk. I
don't think it's a huge risk - there are still positive things in this
market, the biggest one probably being low interest rates. The fact is that
stocks still look like a relatively good place to put your money. But
overall, I would say that I'm somewhat cautious of the equity market.
4
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
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Management Discussion
Q: What is your outlook for the bond market in 1999?
A: There is a particular area I'll be keeping my eye on. It's pretty clear
that there's been a major push around the world among policy makers and
central banks to try and stimulate various economies. So, there's been an
enormous growth in money supply around the world. I think there's some
potential that we will see increasing concerns about inflation as the year
goes on, and that's going to worry bond investors. Therefore, I'm a little
cautious on both sides: there's a lot of risk related to valuations on the
stock side, and there's risk on the bond side related to money supply
growth and aggressive efforts to fight deflation in the U.S., Europe,
Japan, and Southeast Asia. I should emphasize that I'm not bearish, just
cautious near-term. Our focus remains long-term; ours is a measured
approach and we try not to take big risks.
Eaton Vance Balanced Fund, Class A vs.
Standard & Poor's 500
Date Fund/NAV Fund/MOP S&P
---- -------- -------- ---
12/31/88 $10,000 $9,422 $10,000
1/31/89 $10,456 $9,852 $10,711
2/28/89 $10,298 $9,703 $10,401
3/31/89 $10,413 $9,812 $10,708
4/30/89 $10,790 $10,166 $11,244
5/31/89 $11,002 $10,366 $11,639
6/30/89 $11,078 $10,437 $11,651
7/31/89 $11,635 $10,963 $12,680
8/31/89 $11,727 $11,049 $12,877
9/30/89 $11,757 $11,078 $12,896
10/31/89 $11,681 $11,006 $12,572
11/30/89 $11,835 $11,151 $12,780
12/31/89 $12,076 $11,378 $13,159
1/31/90 $11,530 $10,864 $12,253
2/28/90 $11,709 $11,032 $12,358
3/31/90 $11,758 $11,079 $12,761
4/30/90 $11,514 $10,848 $12,418
5/31/90 $12,209 $11,504 $13,560
6/30/90 $12,226 $11,520 $13,560
7/31/90 $12,430 $11,712 $13,489
8/31/90 $11,740 $11,062 $12,217
9/30/90 $11,550 $10,883 $11,705
10/31/90 $11,481 $10,818 $11,627
11/30/90 $11,935 $11,246 $12,324
12/31/90 $12,199 $11,494 $12,749
1/31/91 $12,428 $11,709 $13,278
2/28/91 $12,802 $12,062 $14,172
3/31/91 $12,944 $12,196 $14,594
4/30/91 $12,998 $12,246 $14,599
5/31/91 $13,233 $12,469 $15,162
6/30/91 $12,959 $12,210 $14,562
7/31/91 $13,398 $12,624 $15,216
8/31/91 $13,695 $12,903 $15,515
9/30/91 $13,824 $13,025 $15,340
10/31/91 $14,083 $13,269 $15,522
11/30/91 $13,896 $13,093 $14,840
12/31/91 $14,795 $13,940 $16,617
1/31/92 $14,448 $13,613 $16,286
2/28/92 $14,546 $13,705 $16,442
3/31/92 $14,331 $13,503 $16,199
4/30/92 $14,487 $13,650 $16,651
5/31/92 $14,751 $13,898 $16,667
6/30/92 $14,872 $14,012 $16,507
7/31/92 $15,255 $14,374 $17,157
8/31/92 $15,316 $14,430 $16,745
9/30/92 $15,397 $14,507 $17,027
10/31/92 $15,234 $14,353 $17,063
11/30/92 $15,482 $14,587 $17,580
12/31/92 $15,749 $14,839 $17,881
1/31/92 $15,792 $14,879 $18,007
2/28/93 $16,094 $15,164 $18,196
3/31/93 $16,288 $15,347 $18,659
4/30/93 $16,180 $15,245 $18,185
5/31/93 $16,234 $15,296 $18,598
6/30/93 $16,502 $15,549 $18,748
7/31/93 $16,592 $15,633 $18,648
8/31/93 $17,266 $16,268 $19,290
9/30/93 $17,470 $16,460 $19,230
10/31/93 $17,560 $16,545 $19,603
11/30/93 $17,115 $16,126 $19,350
12/31/93 $17,511 $16,499 $19,675
1/31/94 $18,181 $17,130 $20,314
2/28/94 $17,723 $16,699 $19,704
3/31/94 $17,023 $16,039 $18,935
4/30/94 $17,119 $16,130 $19,153
5/31/94 $17,156 $16,165 $19,391
6/30/94 $16,783 $15,813 $19,016
7/31/94 $17,331 $16,329 $19,615
8/31/94 $17,658 $16,638 $20,353
9/30/94 $17,256 $16,259 $19,946
10/31/94 $17,407 $16,401 $20,362
11/30/94 $17,041 $16,056 $19,558
12/31/94 $17,193 $16,200 $19,942
1/31/95 $17,371 $16,367 $20,426
2/28/95 $18,046 $17,003 $21,163
3/31/95 $18,481 $17,413 $21,878
4/30/95 $18,917 $17,824 $22,490
5/31/95 $19,662 $18,526 $23,306
6/30/95 $19,973 $18,819 $23,959
7/31/95 $20,413 $19,233 $24,721
8/31/95 $20,779 $19,578 $24,713
9/30/95 $21,066 $19,848 $25,858
10/31/95 $21,092 $19,873 $25,729
11/30/95 $21,668 $20,416 $26,785
12/31/95 $22,297 $21,009 $27,409
1/31/96 $22,653 $21,344 $28,303
2/28/96 $22,732 $21,418 $28,500
3/31/96 $22,898 $21,574 $28,879
4/30/96 $23,063 $21,730 $29,267
5/31/96 $23,324 $21,976 $29,936
6/30/96 $23,519 $22,160 $30,172
7/31/96 $22,739 $21,424 $28,791
8/31/96 $23,225 $21,883 $29,333
9/30/96 $23,957 $22,572 $31,097
10/31/96 $24,435 $23,022 $31,910
11/30/96 $25,548 $24,071 $34,251
12/31/96 $25,333 $23,869 $33,686
1/31/97 $26,397 $24,872 $35,752
2/28/97 $26,457 $24,928 $35,964
3/31/97 $25,670 $24,186 $34,595
4/30/97 $26,552 $25,017 $36,616
5/31/97 $27,716 $26,114 $38,761
6/30/97 $28,555 $26,904 $40,622
7/31/97 $30,361 $28,607 $43,795
8/31/97 $29,101 $27,419 $41,279
9/30/97 $30,269 $28,520 $43,660
10/31/97 $30,010 $28,275 $42,154
11/30/97 $30,465 $28,705 $44,034
12/31/97 $30,806 $29,025 $44,909
1/31/98 $31,160 $29,359 $45,365
2/28/98 $32,766 $30,873 $48,560
3/31/98 $33,942 $31,980 $51,160
4/30/98 $34,405 $32,416 $51,624
5/31/98 $33,691 $31,743 $50,652
6/30/98 $34,049 $32,081 $52,844
7/31/98 $33,655 $31,710 $52,230
8/31/98 $30,686 $28,912 $44,615
9/30/98 $32,271 $30,406 $47,598
10/31/98 $33,243 $31,322 $51,419
11/30/98 $34,201 $32,224 $54,460
12/31/98 $34,942 $32,922 $57,717
Performance** Class A Class B Class C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 13.4% 12.6% 12.5%
Five Years 14.8 13.6 12.9
Ten Years 13.3 N.A. N.A.
Life of Fund+ 10.3 13.3 12.7
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 6.9% 7.6% 11.5%
Five Years 13.5 13.4 12.9
Ten Years 12.7 N.A. N.A.
Life of Fund+ 10.2 13.1 12.7
+Inception Dates - Class A: 4/01/32; Class B: 11/02/93; Class C: 11/02/93
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced
4/01/32. Index information is available only at month-end; therefore, the
line comparison begins at the next month-end following the commencement of
the Fund's investment operations.
The chart compares the Fund's total return with those of the S&P 500 Index
and the Lehman Brothers Government/Corporate Bond Index. The S&P 500 is an
unmanaged index of 500 common stocks commonly used as a measure of U.S.
stock performance. The Lehman Brothers Corporate/Government Index is a
diversified, unmanaged index of corporate and U.S. government bonds.
Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. The lines on the chart represent
the total returns of $10,000 hypothetical investments in the Fund, the S&P
500 Index and the Lehman Brothers Corporate/Government Bond Index. An
investment in the Fund's Class B and Class C shares on 11/30/93 at net
asset value would have grown to $19,274 and $18,624 on December 31, 1998,
respectively. The Indices' total returns do not reflect any commissions or
expenses that would have been incurred if an investor individually
purchased or sold the securities represented in them. It is not possible to
invest directly in an Index.
** 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 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.
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.
5
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of December 31, 1998
Assets
- --------------------------------------------------------------------------------
Investment in Balanced Portfolio, at value
(identified cost, $282,393,927) $355,353,036
Receivable for Fund shares sold 207,543
Deferred organization expenses 180
- --------------------------------------------------------------------------------
Total assets $355,560,759
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Dividends payable $ 11,435
Payable for Fund shares redeemed 1,454,891
Payable to affiliate for Trustees' fees 983
Other accrued expenses 238,851
- --------------------------------------------------------------------------------
Total liabilities $ 1,706,160
- --------------------------------------------------------------------------------
Net Assets $353,854,599
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $275,372,390
Accumulated undistributed net realized gain from
Portfolio (computed on the basis of identified cost) 5,182,260
Accumulated undistributed net investment income 340,840
Net unrealized appreciation from Portfolio (computed
on the basis of identified cost) 72,959,109
- --------------------------------------------------------------------------------
Total $353,854,599
- --------------------------------------------------------------------------------
Class A Shares
- --------------------------------------------------------------------------------
Net Assets $270,276,766
Shares Outstanding 33,199,411
Net Asset Value and Redemption Price Per Share
(net assets / shares of beneficial interest $ 8.14
outstanding)
Maximum Offering Price Per Share
(100 / 94.25 of $8.14) $ 8.64
- --------------------------------------------------------------------------------
Class B Shares
- --------------------------------------------------------------------------------
Net Assets $ 72,835,536
Shares Outstanding 5,323,658
Net Asset Value, Offering Price and Redemption Price
Per Share
(net assets / shares of beneficial interest
outstanding) $ 13.68
- --------------------------------------------------------------------------------
Class C Shares
- --------------------------------------------------------------------------------
Net Assets $ 10,742,297
Shares Outstanding 815,945
Net Asset Value, Offering Price and Redemption Price
Per Share
(net assets / shares of beneficial interest $ 13.17
outstanding)
- --------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced.
Statement of Operations
For the Year Ended
December 31, 1998
Investment Income
- --------------------------------------------------------------------------------
Dividends allocated from Portfolio (net of
foreign taxes, $48,178) $ 4,082,039
Interest allocated from Portfolio 7,922,884
Expenses allocated from Portfolio (2,359,218)
- --------------------------------------------------------------------------------
Net investment income from Portfolio $ 9,645,705
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Trustees fees and expenses $ 3,351
Distribution and service fees
Class A 348,565
Class B 643,803
Class C 85,805
Transfer and dividend disbursing agent fees 451,426
Printing and postage 44,275
Registration fees 34,378
Custodian fee 33,122
Legal and accounting services 20,977
Amortization of organization expenses 16,060
Miscellaneous 26,399
- --------------------------------------------------------------------------------
Total expenses $ 1,708,161
- --------------------------------------------------------------------------------
Net investment income $ 7,937,544
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 56,088,133
- --------------------------------------------------------------------------------
Net realized gain $ 56,088,133
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments $(20,974,299)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $(20,974,299)
- --------------------------------------------------------------------------------
Net realized and unrealized gain $ 35,113,834
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 43,051,378
- --------------------------------------------------------------------------------
See note to financial statements
6
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Increase (Decrease) Year Ended Year Ended
in Net Assets December 31, 1998 December 31, 1997
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 7,937,544 $ 6,043,945
Net realized gain 56,088,133 20,676,352
Net change in unrealized
appreciation (depreciation) (20,974,299) 23,123,556
- --------------------------------------------------------------------------------
Net increase in net assets
from operations $ 43,051,378 $ 49,843,853
- --------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (6,508,416) $ (5,802,058)
Class B (993,141) --
Class C (137,056) --
From net realized gain
Class A (42,983,323) (25,427,692)
Class B (7,093,638) --
Class C (1,058,761) --
- --------------------------------------------------------------------------------
Total distributions to shareholders $(58,774,335) $ (31,229,750)
- --------------------------------------------------------------------------------
Transactions in shares of
beneficial interest --
Proceeds from sale of shares
Class A $ 12,361,950 $ 8,832,967
Class B 18,222,027 --
Class C 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 36,065,386 22,842,764
Class B 7,242,661 --
Class C 1,135,545 --
Cost of shares redeemed
Class A (26,590,459) (26,777,414)
Class B (11,838,168) --
Class C (3,112,669) --
- --------------------------------------------------------------------------------
Net increase in net assets from
Fund share transactions $105,847,738 $ 4,898,317
- --------------------------------------------------------------------------------
Net increase in net assets $ 90,124,781 $ 23,512,420
- --------------------------------------------------------------------------------
Year Ended Year Ended
Net Assets December 31, 1998 December 31, 1997
- --------------------------------------------------------------------------------
At beginning of year $263,729,818 $ 240,217,398
- --------------------------------------------------------------------------------
At end of year $353,854,599 $ 263,729,818
- --------------------------------------------------------------------------------
Accumulated
undistributed net
investment income
included in net assets
- --------------------------------------------------------------------------------
At end of year $ 340,840 $ 205,985
- --------------------------------------------------------------------------------
See notes to financial statements
7
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Year Ended December 31, Year Ended December 31, Year Ended January 31,
1998 1997 1996 1995(1) 1995 1994
Class A Class B Class C Class A Class A Class A Class A Class A
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of year $ 8.700 $ 13.680 $ 13.240 $ 8.090 $ 8.150 $ 6.840 $ 7.600 $ 7.390
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.226 $ 0.231 $ 0.216 $ 0.208 $ 0.254 $ 0.254 $ 0.283 $ 0.217
Net realized and unrealized gain (loss) 0.901 1.451 1.401 1.492 0.821 1.641 (0.623) 0.833
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 1.127 $ 1.682 $ 1.617 $ 1.700 $ 1.075 $ 1.895 $(0.340) $ 1.050
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.220) $(0.215) $(0.220) $ (0.200) $ (0.254) $(0.248) $(0.275) $(0.307)
In excess of net investment income -- -- -- -- (0.001) -- -- (0.008)
From net realized gain (1.467) (1.467) (1.467) (0.890) (0.880) (0.337) (0.145) (0.525)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $(1.687) $(1.682) $(1.687) $ (1.090) $ (1.135) $(0.585) $(0.420) $(0.840)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 8.140 $ 13.680 $ 13.170 $ 8.700 $ 8.090 $ 8.150 $ 6.840 $ 7.600
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (2) 13.43% 12.59% 12.51% 21.60% 13.61% 28.36% (4.45)% 15.13%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $270,277 $ 72,836 $ 10,742 $263,730 $240,217 $236,870 $200,419 $227,402
Ratios (As a percentage of average daily
net assets): 0.98% 1.81% 1.85% 0.97% 0.93% 0.95%(4) 0.91% 0.90%
Expenses (3)
Net investment income 2.45% 1.62% 1.58% 2.35% 3.03% 3.60%(4) 4.05% 4.07%
Portfolio turnover (5) -- -- -- -- -- -- -- 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
8
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
NOTES TO FINANCIAL STATEMENTS
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 shares are sold subject to a sales charge
imposed at the 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). All classes of shares have equal rights to assets and voting privileges.
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 (100% at December 31, 1998). 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. Pursuant to Section 852 of the Internal
Revenue Code, the Fund designates $51,135,722 as a long-term capital gain
distribution for its taxable year ended December 31, 1998.
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 Other -- Investment transactions are accounted for on a trade-date basis.
F Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Actual results
could differ from those estimates.
2 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 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. 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.
9
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
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). Transactions in Fund shares were as follows:
Year Ended December 31,
---------------------------------
Class A 1998 1997
-----------------------------------------------------------------------------
Sales 1,343,770 1,006,180
Issued to shareholders
electing to receive
payments of 4,456,369 2,664,443
distributions in Fund
shares
Redemptions (2,907,747) (3,051,117)
-----------------------------------------------------------------------------
Net increase 2,892,392 619,506
-----------------------------------------------------------------------------
Year Ended
Class B December 31, 1998
-----------------------------------------------------------------------------
Sales 1,253,930
Issued to shareholders electing to receive
payment of distributions in Fund shares 535,537
Redemptions (815,682)
Issued to EV Marathon Investors Fund shareholders 4,349,873
-----------------------------------------------------------------------------
Net increase 5,323,658
-----------------------------------------------------------------------------
Year Ended
Class C December 31, 1998
-----------------------------------------------------------------------------
Sales 399,045
Issued to shareholders electing to receive
payment of distributions in Fund shares 87,300
Redemptions (222,406)
Issued to EV Classic Investors Fund shareholders 552,006
-----------------------------------------------------------------------------
Net increase 815,945
-----------------------------------------------------------------------------
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. 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 $25,178 from the Fund
as its portion of the sales charge on sales of Class A shares for the year
ended December 31, 1998.
Certain of the officers and Trustees of the Fund and Portfolio are officers
and directors/trustees of the above organizations.
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 Plans require the
Fund to pay the principal underwriter, 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) and amounts theretofore paid to or
payable to EVD. The amount payable to EVD with respect to each day is
accrued on such day as a liability of the Fund and, accordingly, reduces the
Fund's net assets attributable to Class B and Class C shares, respectively.
The Fund paid or accrued $503,630 and $64,354 for Class B and Class C
shares, respectively, to EVD for the year ended December 31, 1998,
representing
10
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
0.75% of the average daily net assets for Class B and Class C shares. At
December 31, 1998, the amount of Uncovered Distribution Charges EVD
calculated under the Plan was approximately $1,718,000 and $1,271,000 for
Class B and Class C shares, respectively.
In addition, the Plans also authorize each class to make payments of service
fees to EVD, Authorized Firms 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 each fiscal year. The Trustees have initially
implemented the Plans by authorizing each class to make quarterly payments
of service fees to EVD and Authorized Firms 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 one year. 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 will be 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 year ended December 31, 1998 amounted
to $348,565, $140,173, and $21,451 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) is imposed on any redemption of
Class B shares made within six years of purchase. A CDSC of 1% is imposed
on any redemption 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. 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. No CDSC is levied on
shares which have been sold to EVM or its affiliates or to their respective
employees or clients. CDSC charges are paid to EVD to reduce the amount of
Uncovered Distribution Charges calculated under each Fund's Distribution
Plan (see Note 5). CDSC charges received when no Uncovered Distribution
Charges exist will be retained by the Fund. EVD received approximately
$106,000 and $3,000 of CDSC paid by shareholders for Class B and Class C
shares, respectively, for the year ended December 31, 1998.
7 Investment Transactions
-----------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the
year ended December 31, 1998, aggregated $38,451,067 and $57,564,792,
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 Name Change
-----------------------------------------------------------------------------
Effective January 1, 1998, EV Traditional Investors Fund changed its name to
Eaton Vance Investors Fund. Effective May 1, 1998, Eaton Vance Investors
Fund changed its name to Eaton Vance Balanced Fund.
11
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
INDEPENDENT ACCOUNTANTS' REPORT
To the Trustees and Shareholders
of Eaton Vance Balanced Fund:
- --------------------------------------------------------------------------------
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and supplementary
data present fairly, in all material respects, the financial position of Eaton
Vance Balanced Fund (the Fund) (formerly EV Traditional Investors Fund) at
December 31, 1998, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 5, 1999
12
<PAGE>
Balanced Portfolio as of December 31, 1998
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Common Stocks 62.5%
Security Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Aerospace and Defense -- 1.5%
- --------------------------------------------------------------------------------
General Motors Corp., Class H(1) 130,000 $ 5,159,375
- --------------------------------------------------------------------------------
$ 5,159,375
- --------------------------------------------------------------------------------
Auto and Parts -- 2.5%
- --------------------------------------------------------------------------------
General Motors Corp. 60,000 $ 4,293,750
Magna International, Inc., Class A 75,000 4,650,000
- --------------------------------------------------------------------------------
$ 8,943,750
- --------------------------------------------------------------------------------
Banks - Regional -- 2.3%
- --------------------------------------------------------------------------------
BankBoston Corp. 90,000 $ 3,504,375
Wells Fargo & Co. 120,000 4,792,500
- --------------------------------------------------------------------------------
$ 8,296,875
- --------------------------------------------------------------------------------
Banks and Money Services -- 0.3%
- --------------------------------------------------------------------------------
Banco Latinoamericano de
Exportaciones(2) 75,000 $ 1,246,875
- --------------------------------------------------------------------------------
$ 1,246,875
- --------------------------------------------------------------------------------
Beverages -- 0.9%
- --------------------------------------------------------------------------------
PepsiCo, Inc. 80,000 $ 3,275,000
- --------------------------------------------------------------------------------
$ 3,275,000
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 1.2%
- --------------------------------------------------------------------------------
MediaOne Group, Inc.(1) 90,000 $ 4,230,000
- --------------------------------------------------------------------------------
$ 4,230,000
- --------------------------------------------------------------------------------
Chemicals -- 0.8%
- --------------------------------------------------------------------------------
Praxair, Inc. 80,000 $ 2,820,000
- --------------------------------------------------------------------------------
$ 2,820,000
- --------------------------------------------------------------------------------
Distribution Services -- 1.2%
- --------------------------------------------------------------------------------
Bergen Brunswig Corp., Class A 120,000 $ 4,185,000
- --------------------------------------------------------------------------------
$ 4,185,000
- --------------------------------------------------------------------------------
Drugs -- 6.8%
- --------------------------------------------------------------------------------
Elan Corp., PLC ADR(1)(2) 65,000 $ 4,521,563
Pfizer, Inc. 37,800 4,741,538
Sepracor, Inc.(1) 100,000 8,812,499
Warner-Lambert Co. 80,000 6,015,000
- --------------------------------------------------------------------------------
$ 24,090,600
- --------------------------------------------------------------------------------
Electric Utilities -- 1.1%
- --------------------------------------------------------------------------------
The Southern Co. 140,000 $ 4,068,750
- --------------------------------------------------------------------------------
$ 4,068,750
- --------------------------------------------------------------------------------
Electronics - Semiconductors -- 1.0%
- --------------------------------------------------------------------------------
Intel Corp. 30,000 $ 3,556,875
- --------------------------------------------------------------------------------
$ 3,556,875
- --------------------------------------------------------------------------------
Environmental Services -- 1.6%
- --------------------------------------------------------------------------------
Waste Management, Inc. 120,000 $ 5,595,000
- --------------------------------------------------------------------------------
$ 5,595,000
- --------------------------------------------------------------------------------
Financial - Miscellaneous -- 2.9%
- --------------------------------------------------------------------------------
Fannie Mae 45,000 $ 3,330,000
MBNA Corp. 180,000 4,488,750
MGIC Investment Corp. 65,000 2,587,813
- --------------------------------------------------------------------------------
$ 10,406,563
- --------------------------------------------------------------------------------
Foods -- 3.7%
- --------------------------------------------------------------------------------
Tyson Foods, Inc. 264,700 $ 5,624,875
Unilever ADR(2) 92,000 7,630,250
- --------------------------------------------------------------------------------
$ 13,255,125
- --------------------------------------------------------------------------------
Health Services -- 0.7%
- --------------------------------------------------------------------------------
HCR Manor Care, Inc.(1) 90,000 $ 2,643,750
- --------------------------------------------------------------------------------
$ 2,643,750
- --------------------------------------------------------------------------------
Information Services -- 1.5%
- --------------------------------------------------------------------------------
Reynolds & Reynolds, Inc., Class A 225,000 $ 5,160,938
- --------------------------------------------------------------------------------
$ 5,160,938
- --------------------------------------------------------------------------------
Insurance -- 7.6%
- --------------------------------------------------------------------------------
Allstate Corp. (The) 80,000 $ 3,090,000
Berkshire Hathaway, Inc., Class B(1) 2,100 4,935,000
</TABLE>
See notes to financial statements
13
<PAGE>
Balanced Portfolio as of December 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Security Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Insurance (continued)
- --------------------------------------------------------------------------------
Mercury General Corp. 100,000 $ 4,381,250
Mutual Risk Management Ltd. 186,600 7,300,725
SunAmerica, Inc. 90,000 7,301,250
- --------------------------------------------------------------------------------
$ 27,008,225
- --------------------------------------------------------------------------------
Medical Products -- 4.2%
- --------------------------------------------------------------------------------
Baxter International, Inc. 55,000 $ 3,537,188
Boston Scientific Corp.(1) 150,000 4,021,875
Sofamor Danek Group, Inc.(1) 60,300 7,341,525
- --------------------------------------------------------------------------------
$ 14,900,588
- --------------------------------------------------------------------------------
Metals and Minerals -- 1.5%
- --------------------------------------------------------------------------------
Potash Corp. of Saskatchewan(2) 55,000 $ 3,513,125
Steel Dynamics Corp.(1) 150,000 1,762,500
- --------------------------------------------------------------------------------
$ 5,275,625
- --------------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 0.4%
- --------------------------------------------------------------------------------
Rowan Companies, Inc.(1) 140,000 $ 1,400,000
- --------------------------------------------------------------------------------
$ 1,400,000
- --------------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 1.0%
- --------------------------------------------------------------------------------
Anadarko Petroleum Corp. 70,000 $ 2,161,250
Triton Energy, Ltd.(1)(2) 190,000 1,508,125
- --------------------------------------------------------------------------------
$ 3,669,375
- --------------------------------------------------------------------------------
Oil and Gas - Integrated -- 2.4%
- --------------------------------------------------------------------------------
Exxon Corp. 67,280 $ 4,919,850
Mobil Corp. 40,000 3,485,000
- --------------------------------------------------------------------------------
$ 8,404,850
- --------------------------------------------------------------------------------
Paper and Forest Products -- 0.7%
- --------------------------------------------------------------------------------
Plum Creek Timber Co., L.P. 90,000 $ 2,345,625
- --------------------------------------------------------------------------------
$ 2,345,625
- --------------------------------------------------------------------------------
Publishing -- 1.4%
- --------------------------------------------------------------------------------
Central Newspapers, Inc., Class A 70,000 $ 5,000,625
- --------------------------------------------------------------------------------
$ 5,000,625
- --------------------------------------------------------------------------------
REITS -- 2.8%
- --------------------------------------------------------------------------------
Equity Office Properties Trust 110,000 $ 2,640,000
Equity Residential Properties Trust 101,400 4,100,363
Prologis Trust 150,000 3,112,500
- --------------------------------------------------------------------------------
$ 9,852,863
- --------------------------------------------------------------------------------
Retail - Food and Drug -- 4.0%
- --------------------------------------------------------------------------------
Albertson's, Inc. 80,000 $ 5,095,000
CVS Corp. 100,000 5,500,000
Safeway, Inc.(1) 60,000 3,656,250
- --------------------------------------------------------------------------------
$ 14,251,250
- --------------------------------------------------------------------------------
Retail - Specialty and Apparel -- 2.0%
- --------------------------------------------------------------------------------
Home Depot, Inc. (The) 50,000 $ 3,059,375
Republic Industries, Inc.(1) 270,000 3,982,500
- --------------------------------------------------------------------------------
$ 7,041,875
- --------------------------------------------------------------------------------
Specialty Chemicals and Materials -- 1.7%
- --------------------------------------------------------------------------------
Corning, Inc. 80,000 $ 3,600,000
Millipore Corp. 80,000 2,275,000
- --------------------------------------------------------------------------------
$ 5,875,000
- --------------------------------------------------------------------------------
Telecommunications Services -- 2.8%
- --------------------------------------------------------------------------------
Ameritech Corp. 80,896 $ 5,126,784
GTE Corp. 75,000 4,875,000
- --------------------------------------------------------------------------------
$ 10,001,784
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $152,703,403) $221,962,161
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
14
<PAGE>
Balanced Portfolio as of December 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Convertible Preferred Stock -- 0.5%
Security Shares Value
- --------------------------------------------------------------------------------
Metals - Gold -- 0.5%
- --------------------------------------------------------------------------------
Freeport McMoRan Copper & Gold,
5% Series CV 125,000 $ 1,859,375
- --------------------------------------------------------------------------------
$ 1,859,375
- --------------------------------------------------------------------------------
Total Convertible Preferred Stock
(identified cost $2,872,498) $ 1,859,375
- --------------------------------------------------------------------------------
Rights -- 0.0%
Security Shares Value
- --------------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 0.0%
- --------------------------------------------------------------------------------
Triton Energy, Ltd.(1)(2) 13,680 $ 0
- --------------------------------------------------------------------------------
Total Rights
(identified cost $0) $ 0
- --------------------------------------------------------------------------------
Corporate Bonds -- 22.4%
Principal
Amount
(000's
Security Omitted) Value
- --------------------------------------------------------------------------------
Air Products and Chemicals, Inc., 7.34%,
6/15/26 $ 720 $ 808,078
Associates Corp., N.A., 5.96%,
5/15/37 4,280 4,277,988
Bell Telephone Co., 8.35%, 12/15/30 3,000 3,905,550
Chesapeake Potomac Telephone Co.,
8.375%, 10/1/29 2,850 3,700,098
Commercial Credit Corp., 7.875%,
2/1/25 2,000 2,359,540
Commercial Credit Corp., 6.625%,
6/1/15 1,350 1,431,081
Connecticut Light and Power Co., 7.875%,
10/1/24 3,775 4,565,447
Dayton Hudson, MTN, 5.865%, 8/15/27 2,490 2,579,018
General Motors Corp., 9.45%, 11/1/11 3,000 3,932,250
Grand Metropolitan Investments
Corp.,
7.45%, 4/15/35 3,090 3,574,728
Intermediate American Development
Bank, 8.40%, 9/1/09 3,690 4,543,755
Intermediate American Development
Bank, 6.95%, 8/1/26 220 246,640
International Finance Corp., MTN,
5.067%, 4/20/03 5,000 4,944,450
J.C. Penney, Inc., 7.40%, 4/1/37 3,500 3,805,060
Johnson Controls, Inc., 7.70%,
3/1/15 1,360 1,508,226
Lowe's Cos., Inc., 7.11%, 5/15/37 5,000 5,472,350
Mead Corp. (The), 6.84%, 3/1/37 2,000 2,083,040
Proctor and Gamble Co., 8.00%,
9/1/24 3,000 3,770,580
Seagram (Joseph) & Sons, Inc., 9.65%,
8/15/18 1,030 1,238,287
State Street Bank, 7.35%, 6/15/26 2,450 2,734,543
Tennessee Valley Power Authority,
6.235%, 7/15/45 700 733,439
Tennessee Valley Power Authority, 5.88%,
4/1/36 3,350 3,554,819
Times Mirror Co., 6.61%, 9/15/27 3,250 3,244,703
Tribune Co., 6.25%, 11/10/26 1,000 994,960
TRW, Inc., MTN, 9.35%, 6/4/20 995 1,307,370
Willamette Industries, 7.35%, 7/1/26 4,000 4,250,560
Xerox Corp., 5.90%, 5/5/37 3,000 3,077,610
Xerox Corp., 5.875%, 6/15/37 1,000 1,024,620
- --------------------------------------------------------------------------------
Total Corporate Bonds
(identified cost $75,378,545) $ 79,668,790
- --------------------------------------------------------------------------------
Mortgage Pass-Throughs -- 1.1%
Principal
Amount
(000's
Security Omitted) Value
- --------------------------------------------------------------------------------
FHLMC, PAC, CMO, Series 1630-PE,
5.50%, 5/15/18 $ 1,407 $ 1,404,417
FHLMC, PAC, CMO, Series 34-C, 9.00%,
11/15/19 125 126,008
FHLMC, PAC, CMO, Series 41-F, 10.00%,
5/15/20 1,279 1,388,475
FNMA, PAC, CMO, Series 1990 24-E,
9.00%, 3/25/20 941 973,538
- --------------------------------------------------------------------------------
Total Mortgage Pass-Throughs
(identified cost $3,710,787) $ 3,892,438
- --------------------------------------------------------------------------------
U.S. Treasury Obligations -- 11.7%
Principal
Amount
(000's
Security Omitted) Value
- --------------------------------------------------------------------------------
U.S. Treasury Note, 5.75%, 11/30/02 $18,000 $ 18,660,959
U.S. Treasury Note, 7.125%, 9/30/99 3,000 3,053,430
U.S. Treasury Note, 6.125%, 9/30/00 4,000 4,098,120
U.S. Treasury Note, 8.50%, 2/15/00 15,000 15,616,349
- --------------------------------------------------------------------------------
Total U.S. Treasury Obligations
(identified cost $41,187,131) $ 41,428,858
- --------------------------------------------------------------------------------
See notes to financial statements
15
<PAGE>
Balanced Portfolio as of December 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Commercial Paper -- 1.1%
Principal
Amount
(000's
Security Omitted) Value
- --------------------------------------------------------------------------------
General Electric Capital Corp.,
5.50%, 1/4/99 $ 3,891 $ 3,889,217
- --------------------------------------------------------------------------------
Total Commercial Paper
(amortized cost $3,889,217) $ 3,889,217
- --------------------------------------------------------------------------------
Total Investments -- 99.3%
(identified cost $279,741,581) $352,700,839
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.7% $ 2,652,219
- --------------------------------------------------------------------------------
Net Assets -- 100% $355,353,058
- --------------------------------------------------------------------------------
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
16
<PAGE>
Balanced Portfolio as of December 31, 1998
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of December 31, 1998
Assets
- --------------------------------------------------------------------------------
Investments, at value (identified cost, $279,741,581) $352,700,839
Cash 392,256
Interest and dividends receivable 2,282,453
Tax reclaim receivable 4,163
- --------------------------------------------------------------------------------
Total assets $355,379,711
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable to affiliate for Trustees' fees $ 4,881
Other accrued expenses 21,772
- --------------------------------------------------------------------------------
Total liabilities $ 26,653
- --------------------------------------------------------------------------------
Net Assets applicable to investors' interest in
Portfolio $355,353,058
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $282,393,800
Net unrealized appreciation (computed on the basis
of identified cost) 72,959,258
- --------------------------------------------------------------------------------
Total $355,353,058
- --------------------------------------------------------------------------------
Statement of Operations
For the Year Ended
December 31, 1998
Investment Income
- --------------------------------------------------------------------------------
Dividends (net of foreign taxes, $48,178) $ 4,082,039
Interest 7,922,884
- --------------------------------------------------------------------------------
Total investment income $ 12,004,923
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment adviser fee $ 2,132,133
Trustees fees and expenses 19,251
Custodian fee 171,124
Legal and accounting services 30,398
Amortization of organization expenses 2,113
Miscellaneous 4,199
- --------------------------------------------------------------------------------
Total expenses $ 2,359,218
- --------------------------------------------------------------------------------
Net investment income $ 9,645,705
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss)
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 56,088,137
- --------------------------------------------------------------------------------
Net realized gain $ 56,088,137
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $(20,974,301)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $(20,974,301)
- --------------------------------------------------------------------------------
Net realized and unrealized gain $ 35,113,836
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 44,759,541
- --------------------------------------------------------------------------------
See notes to financial statements
17
<PAGE>
Balanced Portfolio as of December 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Increase (Decrease) Year Ended Year Ended
in Net Assets December 31, 1998 December 31, 1997
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 9,645,705 $ 8,365,076
Net realized gain 56,088,137 24,802,364
Net change in unrealized
appreciation (20,974,301) 29,330,948
(depreciation)
- --------------------------------------------------------------------------------
Net increase in net assets
from operations $ 44,759,541 $ 62,498,388
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $ 38,451,067 $ 27,019,040
Withdrawals (57,564,792) (61,370,968)
- --------------------------------------------------------------------------------
Net decrease in net assets
from capital transactions $(19,113,725) $(34,351,928)
- --------------------------------------------------------------------------------
Net increase in net assets $ 25,645,816 $ 28,146,460
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of year $329,707,242 $301,560,782
- --------------------------------------------------------------------------------
At end of year $355,353,058 $329,707,242
- --------------------------------------------------------------------------------
See notes to financial statements
18
<PAGE>
Balanced Portfolio as of December 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Year Ended
Year Ended December 31, January 31,
----------------------------------------------------------------- ----------------
1998 1997 1996 1995(1) 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average daily net assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses 0.67% 0.69% 0.70% 0.71%(2) 0.70%
Net investment income 2.75% 2.62% 3.23% 3.83%(2) 4.25%
Portfolio Turnover 49% 37% 64% 47% 28%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $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
19
<PAGE>
Balanced Portfolio as of December 31, 1998
NOTES TO FINANCIAL STATEMENTS
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 Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on a straight-line
basis over five years.
F Other -- Investment transactions are accounted for on a trade date basis.
G Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of income and expense during the reporting period. Actual results
could differ from those estimates.
20
<PAGE>
Balanced Portfolio as of December 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
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 year ended
December 31, 1998 the fee was equivalent to 0.61% of the Portfolio's average
net assets for such period and amounted to $2,132,133. Except as to Trustees
of the Portfolio who are not members of EVM's or BMR's organization,
officers and Trustees receive remuneration for their service to the
Portfolio out of such investment adviser fee. Certain of the officers and
Trustees of the Portfolio are officers and directors/trustees of the above
organizations. 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 year ended December 31, 1998, no significant
amounts have been deferred.
3 Investments Transaction
- --------------------------------------------------------------------------------
Purchases and sales of investments, other than U.S. Government securities
and short-term obligations, aggregated $108,317,908 and $119,710,077,
respectively. Purchases and sales of U.S. Government/agency securities
aggregated $56,534,907 and $57,471,292, respectively.
4 Federal Income Tax Basis of Investments
- --------------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in the value of
investments owned at December, 31 1998, as computed on a federal income tax
basis, are as follows:
Aggregate cost $279,741,581
----------------------------------------------------------------------------
Gross unrealized appreciation
$91,503,496
Gross unrealized depreciation (18,544,238)
----------------------------------------------------------------------------
Net unrealized appreciation $72,959,258
----------------------------------------------------------------------------
5 Line of Credit
- --------------------------------------------------------------------------------
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 period.
6 Risk Associated with Foreign Investments
- --------------------------------------------------------------------------------
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.
7 Name Change
- --------------------------------------------------------------------------------
Effective May 1, 1998, the Investors Portfolio changed its name to the
Balanced Portfolio.
21
<PAGE>
Balanced Portfolio as of December 31, 1998
INDEPENDENT ACCOUNTANTS' REPORT
To the Trustees and Shareholders
of Balanced Portfolio:
- --------------------------------------------------------------------------------
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and supplementary data present fairly, in all material
respects, the financial position of Balanced Portfolio (the Portfolio) (formerly
Investors Portfolio) at December 31, 1998, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the supplementary data for each of the three years then
ended, the eleven-month period ended December 31, 1995 and for the year ended
January 31, 1995, in conformity with generally accepted accounting principles.
These financial statements and supplementary data (hereafter referred to as
financial statements) are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 5, 1999
22
<PAGE>
Eaton Vance Balanced Fund as of December 31, 1998
INVESTMENT MANAGEMENT
Eaton Vance Balanced Fund
Officers Independent Trustees
James B. Hawkes Jessica M. Bibliowicz
President and Trustee President and Chief Operating Officer,
John A. Levin & Co.
Edward E. Smiley, Jr Director, Baker, Fentress & Company
Vice President
Donald R. Dwight
James L. O'Connor President, Dwight Partners, Inc.
Treasurer
Samuel L. Hayes, III
Alan R. Dynner Jacob H. Schiff Professor of Investment
Secretary 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
John L. Thorndike
Formerly Director, Fiduciary Company
Incorporated
Jack L. Treynor
Investment Adviser and Consultant
Balanced Portfolio
Officers Independent Trustees
James B. Hawkes Jessica M. Bibliowicz
President and Trustee President and Chief Operating Officer,
John A. Levin & Co.
Thomas E. Faust, Jr. Director, Baker, Fentress & Company
Vice President and
Portfolio Manager Donald R. Dwight
President, Dwight Partners, Inc.
James L. O'Connor
Treasurer Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Alan R. Dynner Banking, Emeritus, Harvard University
Secretary 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
John L. Thorndike
Formerly Director, Fiduciary Company
Incorporated
Jack L. Treynor
Investment Adviser and Consultant
23
<PAGE>
Investment Adviser of
Balanced Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Administrator of
Eaton Vance Balanced Fund
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street, 16th Floor
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
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
Eaton Vance Balanced 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.
- --------------------------------------------------------------------------------
BALSRC-2/99
