FIDUCIARY
EXCHANGE FUND
An Eaton Vance
Exchange Fund
Annual Report
December 31, 1995
<PAGE>
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To Shareholders
FIDUCIARY EXCHANGE FUND HAD A TOTAL RETURN OF 35.1% DURING THE YEAR ENDED
DECEMBER 31, 1995. That return represented an increase in net asset value per
share to $188.44 from $141.16, and the reinvestment of $2.10 in income
dividends. By comparison, the S&P 500 Index, an unmanaged index of common
stocks, had a return of 37.6% and the Lipper Growth Fund Index, an index of 30
growth funds, had a return of 31.5% during the same period.
SHAREHOLDERS RECEIVED INCOME DIVIDENDS TOTALING $2.10 DURING THE 12 MONTHS ENDED
DECEMBER 31, 1995.
THE STOCK MARKET PERFORMED VERY WELL DURING THE YEAR, REACHING RECORD LEVELS ON
SEVERAL OCCASIONS. The market's behavior was a positive response to an improved
interest rate environment and prospects for continuing economic growth. The
crucial issue during the first half of the year was whether the Federal
Reserve's previous tightening of its target federal funds rate would cause a
recession or would provide a "soft landing" for the economy. As the year
progressed, it became clear that the Fed had succeeded in engineering the soft
landing that it had sought.
CONCERNED ABOUT THE ECONOMY SLOWING TOO MUCH, THE FED LOWERED ITS RATE BY A
QUARTER OF A PERCENTAGE POINT IN JULY, THE FIRST DOWNWARD CHANGE SINCE SEPTEMBER
1992. Another quarter-point decrease was announced in December. The stock market
reacted positively to both these changes, which, combined with an overall lack
of inflationary pressure, helped the economy continue to advance slowly but
steadily.
THIS HAS BEEN A PERIOD OF STRONG PERFORMANCE FOR A WIDE RANGE OF STOCKS. Large
capitalization stocks led the market surge early in the period. Many major
corporations saw sharply escalating profits, reflecting a favorable economy and
the substantial cost-reduction and productivity initiatives they have undertaken
in recent years.
AMONG THE STRONGER SECTORS OF THE STOCK MARKET DURING MOST OF 1995 WERE
TECHNOLOGY, HEALTH CARE AND FINANCIAL SERVICES. The Fund's performance was
helped by an overweighting in the healthcare sector and by strong performance by
some of its major holdings.
THE LARGEST GAIN WAS POSTED BY INTEL CORP., THE SECOND-LARGEST HOLDING IN THE
FUND, WHICH WAS UP 76%. The largest holding, Exxon Corp., gained 32%. Other
solid performers among the Fund's largest holdings were Dionex Corp., up 53%;
Dover Corp., up nearly 42%; and Chubb Corp., up 24%. Among healthcare stocks,
Merck & Co., Inc., gained nearly 70%, while Pfizer, Inc. gained 63% and Johnson
& Johnson was up more than 55%. The Fund's top performers also included MGIC
Investment Corp., a new holding, up 61% for the year.
"REGARDLESS OF SHORT-TERM MARKET CONDITIONS, WE BELIEVE THAT A STRATEGY OF
INVESTING IN A PORTFOLIO OF HIGH-QUALITY COMMON STOCKS IS LIKELY TO PROVIDE
SOLID LONG-TERM PERFORMANCE."
[Photo of Landon T. Clay]
LOOKING TO 1996, WE CONTINUE TO HAVE A BASICALLY POSITIVE OUTLOOK ABOUT STOCK
INVESTMENTS BECAUSE OF THE CONTINUED PROSPECTS FOR LOW INFLATION AND STEADY
ECONOMIC GROWTH. However, the market may be more vulnerable than usual to a
correction because of the recent strong runup in stock prices.
REGARDLESS OF SHORT-TERM MARKET CONDITIONS, WE BELIEVE THAT A STRATEGY OF
INVESTING IN A PORTFOLIO OF HIGH-QUALITY COMMON STOCKS IS LIKELY TO PROVIDE
SOLID LONG-TERM PERFORMANCE. Because this remains the strategy of Fiduciary
Exchange Fund, I am confident that the Fund will continue to participate in the
growth of the economy.
Sincerely,
/s/Landon T. Clay
LANDON T. CLAY
President
February 21, 1996
<PAGE>
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FIDUCIARY EXCHANGE FUND, INC.
DECEMBER 31, 1995
(UNAUDITED)
INVESTMENT CHANGES
SIX MONTHS ENDED DECEMBER 31, 1995
==============================================================================
Shares Owned
6/30/95 12/31/95
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INCREASES
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Anadarko Petroleum Corp. -- 11,000
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Nucor Corp. -- 15,000
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DECREASES*
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Chubb Corp. 35,960 26,380
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Dionex Corp. 50,000 42,160
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Gannet Co., Inc. 40,000 37,050
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Gould Pumps 56,469 31,709
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Intel Corp. 91,288 52,958
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Johnson & Johnson 37,344 33,054
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Nanometrics, Inc. 119,500 --
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Northern Telecom Ltd. 20,450 20,000
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Stanley Works 32,445 20,245
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Wal-Mart Stores, Inc. 115,450 105,690
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*Includes investments paid-in kind on redemptions.
OTHER CHANGES
==============================================================================
Shares
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31,500 Dover Corp. in a 2 for 1 stock split
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9,308 Pfizer Inc. in a 2 for 1 stock split
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41,640 Texas Instruments Inc. in a 2 for 1 stock split
5,250 shares paid in kind on redemptions
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<PAGE>
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PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
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COMMON STOCKS - 98.7%
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Name of Company Shares Value
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ADVERTISING - 3.1%
Interpublic Group Co., Inc. 40,000 $ 1,735,000
-----------
AIR TRANSPORTATION - 1.8%
FlightSafety International, Inc. A 20,000 $ 1,005,000
-----------
BUSINESS PRODUCTS & SERVICES - 2.6%
Automatic Data Processing Inc. 20,000 $ 1,485,000
-----------
COMMUNICATIONS - 1.5%
Northern Telecom Ltd. 20,000 $ 860,000
-----------
COMPUTER & BUSINESS EQUIPMENT - 2.9%
Reuters Holdings PLC, ADR 29,670 $ 1,635,559
-----------
CONSUMER PRODUCTS - 3.8%
McCormick & Co., Inc., Non-Voting 54,000 $ 1,302,750
Stride Rite Corp. 109,640 822,300
-----------
$ 2,125,050
-----------
DRUGS & MEDICAL - 20.4%
Bausch & Lomb, Inc. 56,924 $ 2,255,613
Bristol-Myers Squibb Co. 27,860 2,392,477
Johnson & Johnson 33,054 2,830,249
Merck & Co., Inc. 42,894 2,820,280
Pfizer Inc. 18,616 1,172,808
-----------
$11,471,427
-----------
ELECTRONICS - 4.2%
Dionex Corp.* 42,160 $ 2,392,580
-----------
ENERGY - 1.1%
Anadarko Petroleum Corp. 11,000 $ 595,375
-----------
FOOD DISTRIBUTION - 2.9%
Super Valu Stores Inc. 51,506 $ 1,622,439
-----------
HARDWARE & TOOLS - 1.8%
Stanley Works 20,245 $ 1,042,617
-----------
INSURANCE - 7.8%
Chubb Corp. 26,380 $ 2,552,265
St. Paul Companies, Inc. 8,440 469,475
MGIC Investment Corp. 25,000 1,356,250
-----------
$ 4,377,990
-----------
MACHINERY & EQUIPMENT - 1.4%
Gould Pumps, Inc. 31,709 $ 792,725
-----------
MANUFACTURING - 4.1%
Dover Corp. 63,000 $ 2,323,125
-----------
METALS & MINING - 1.5%
Nucor Corp. 15,000 $ 856,875
-----------
PETROLEUM - 8.9%
Exxon Corp. 39,000 $ 3,124,875
Mobil Corp. 16,835 1,885,520
-----------
$ 5,010,395
-----------
PUBLISHING AND PRINTING - 8.2%
Dun & Bradstreet Corp. 17,160 $ 1,111,110
Gannett Co., Inc. 37,050 2,273,944
Harcourt General, Inc. 30,000 1,256,250
-----------
$ 4,641,304
-----------
RETAIL - 6.5%
Toys "R" Us, Inc.* 60,000 $ 1,305,000
Wal-Mart Stores, Inc. 105,690 2,364,814
-----------
$ 3,669,814
-----------
SEMI-CONDUCTORS - 8.7%
Intel Corp. 52,958 $ 3,005,367
Texas Instruments, Inc. 36,390 1,883,183
-----------
$ 4,888,550
-----------
SPECIALTY CHEMICALS - 5.5%
Ecolab Inc. 62,820 $ 1,884,600
Nalco Chemical Co. 40,000 1,205,000
-----------
$ 3,089,600
-----------
TOTAL COMMON STOCKS
(Identified cost, $12,956,513) $55,620,425
-----------
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SHORT-TERM OBLIGATION - 1.1%
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Face Amount
Name of Company (000 Omitted) Value
- --------------------------------------------------------------------------
Ford Motor Credit Corp. 5.92%
due 1/03/96 at amortized cost $600 $ 599,803
-----------
TOTAL INVESTMENTS - 99.8%
(identified cost, $13,556,316) $56,220,228
OTHER ASSETS, LESS LIABILITIES - 0.2% 110,542
-----------
NET ASSETS - 100% $56,330,770
===========
*Non-income producing security.
See notes to financial statements
<PAGE>
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FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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December 31, 1995
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ASSETS:
Investments, at value (Note 1A) (identified
cost, $13,556,316) $56,220,228
Cash 55,394
Dividends receivable 100,810
-----------
Total assets $56,376,432
LIABILITIES:
Federal tax on undistributed net realized long-term
gains, payable on behalf of shareholders (Note 1B) $33,033
Payable for capital stock redeemed 740
Payable to affiliate --
Directors' fees 1,396
Accrued expenses 10,493
-------
Total liabilities 45,662
-----------
NET ASSETS for 298,938 shares of capital stock outstanding $56,330,770
===========
SOURCES OF NET ASSETS:
Accumulated net realized gain on investment transactions
(computed on the basis of identified cost), less the
excess of cost of capital stock redeemed over proceeds
from sales of capital stock (including shares issued to
shareholders electing to receive payment of distributions
in capital stock) $23,385,295
Accumulated distributions of net realized gain on
investments as computed for federal income tax purposes (606,077)
Unrealized appreciation of investments (computed on
the basis of identified cost) 42,663,912
Federal tax on undistributed net realized long-term
capital gain, paid on behalf of shareholders (9,172,557)
Undistributed net investment income 60,197
-----------
Total $56,330,770
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($56,330,770 / 298,938 shares of capital stock outstanding) $188.44
=======
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF OPERATIONS
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For the Year Ended December 31, 1995
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividends (net of foreign withholding tax of
$5,883) $ 1,064,060
Interest 56,057
-----------
Total income $ 1,120,117
Expenses --
Investment adviser fee (Note 4) $ 346,898
Compensation of Directors not members of the
Investment Adviser's organization 5,853
Custodian fee (Note 4) 36,383
Printing and postage 17,004
Legal and accounting services 28,274
Transfer and dividend disbursing agent fees 16,821
Miscellaneous 5,499
----------
Total expenses $ 456,732
Deduct --
Reduction of custodian fee (Note 4) 4,421
----------
Net expenses 452,311
-----------
Net investment income $ 667,806
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments, computed on
the basis of identified cost($94,600 net gain
as computed for federal income tax purposes) $7,662,357
Increase in unrealized appreciation of
investments 8,140,251
----------
Net realized and unrealized gain on
investments 15,802,608
-----------
Net increase in net assets from operations $16,470,414
===========
See notes to financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
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YEAR ENDED DECEMBER 31,
------------------------
1995 1994
---------- ------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 667,806 $ 722,752
Net realized gain on investment transactions 7,662,357 5,475,540
Increase (decrease) in unrealized appreciation
of investments 8,140,251 (8,742,281)
----------- -----------
Increase (decrease) in net assets from
operations $16,470,414 $(2,543,989)
----------- -----------
Distributions to shareholders --
From net investment income $ (667,806) $ (673,964)
In excess of net investment income (8,476) --
----------- -----------
Total distributions to shareholders $ (676,282) $ (673,964)
----------- -----------
Provision for federal tax on undistributed net
realized long-term gain (Note 1B) $ (33,033) $ (44,389)
----------- -----------
Net decrease from capital stock transactions
(Note 2) $(8,263,018) $(6,018,443)
----------- -----------
Net increase (decrease) in net assets $ 7,498,081 $(9,280,785)
NET ASSETS:
At beginning of year 48,832,689 58,113,474
----------- -----------
At end of year (including undistributed net
investment income of $60,197 and $68,673,
respectively) $56,330,770 $48,832,689
=========== ===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year $141.160 $149.470 $151.610 $148.620 $104.510
-------- -------- -------- -------- --------
INCOME FROM OPERATIONS:
Net investment income $ 2.103 $ 1.997 $ 1.639 $ 1.570 $ 1.770
Net realized and unrealized gain (loss) on investments 47.388 (8.329) (1.168) 3.180 44.340
-------- -------- -------- -------- --------
Total income (loss) from operations $ 49.491 $ (6.332) $ 0.471 $ 4.750 $ 46.110
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
From net investment income $(2.074) $(1.850) $(1.600) $(1.760) $(1.650)
In excess of net investment income (0.026) -- -- -- --
From net realized gain on investments -- -- (0.900) -- (0.140)
-------- -------- -------- -------- --------
Total distributions $(2.100) $(1.850) $(2.500) $(1.760) $(1.790)
-------- -------- -------- -------- --------
PROVISION FOR FEDERAL TAX ON UNDISTRIBUTED NET REALIZED
LONG-TERM GAIN (NOTE 1B) $(0.111) $(0.128) $(0.111) $ 0.000 $(0.210)
-------- -------- -------- -------- --------
NET ASSET VALUE, end of year $188.440 $141.160 $149.470 $151.610 $148.620
======== ======== ======== ======== ========
TOTAL RETURN<F1> 35.10% (4.33)% 0.28% 3.28% 44.18%
RATIOS/SUPPLEMENTAL DATA (TO AVERAGE DAILY NET ASSETS):
Net assets at end of period (000's omitted) $ 56,331 $ 48,833 $ 58,113 $ 60,653 $ 62,793
Expenses 0.82% 0.83% 0.81% 0.83% 0.82%
Net investment income 1.20% 1.37% 1.11% 1.11% 1.38%
PORTFOLIO TURNOVER 3% 5% 6% 5% 5%
<FN>
<F1> Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset
value on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at the net
asset value on the payable date.
</TABLE>
See notes to financial statements
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
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(1) SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management investment company. 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 -- Investments listed on security exchanges or in the
NASDAQ National Market are valued at closing sale prices. Listed or unlisted
investments for which closing sale prices are not available are valued at
closing bid prices. Short-term obligations, maturing in 60 days or less, are
valued at amortized cost, which approximates value.
B. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders each year all of its taxable income from dividends,
interest, and net realized short-term capital gain. Accordingly, no provision
for federal income or excise tax is necessary on such income. The Fund generally
designates as undistributed any taxable net realized long-term gain (but
reserves the right to distribute such gain in any year) and pays the federal
tax thereon on behalf of shareholders. Provision for such tax is recorded on
the Fund's records on the last business day of the Fund's fiscal year because
the Internal Revenue Code provides that such tax is allocated among
shareholders of record on that date.
C. OTHER -- Investment transactions are accounted for on a trade date basis.
Dividend income and dividends to shareholders are recorded on the ex-dividend
date.
D. DISTRIBUTIONS -- Generally accepted accounting principles require that
differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
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(2) CAPITAL STOCK
At December 31, 1995, there were 5,005,000 shares of $1.00 par value capital
stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1995 1994
------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- --------- ------------
<S> <C> <C> <C> <C>
Redemptions 880 $ 153,851 (43,865) $(6,161,648)
Issued to shareholders electing to receive payment of
dividends in capital stock (47,886) (8,416,869) 1,000 143,205
------- ----------- ------- -----------
Net decrease (47,006) $(8,263,018) (42,865) $(6,018,443)
======= =========== ======= ===========
</TABLE>
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(3) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregated $1,650,225 and $823,070, respectively. In addition, investments
having an aggregate market value of $8,287,068 at dates of redemption were
distributed in payment for capital stock redeemed.
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(4) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee, computed at the monthly rate of 5/96 of 1% (5/8 of
1% annually) of the Fund's average monthly net assets, was paid to Eaton Vance
Management (EVM) as compensation for management and investment advisory services
rendered to the Fund. Except as to directors of the Fund who are not members of
EVM's organization, officers and directors receive remuneration for their
services to the Fund out of such investment adviser fee. The custodian fee was
paid to Investors Bank & Trust Company (IBT) for its services as custodian of
the Fund. Pursuant to the custodian agreement, IBT receives a fee reduced by
credits which are determined based on the average daily cash balances the Fund
maintains with IBT. All significant credit balances are reported as a reduction
of expenses in the statement of operations. Prior to November 10, 1995, IBT was
an affiliate of EVM. Certain of the officers and directors of the Fund are
officers and directors/trustees of the above organizations. Directors of the
Fund 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 Trustee Deferred Compensation Plan. For the year ended December 31, 1995, no
significant amounts have been deferred.
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(5) LINE OF CREDIT
The Fund participates with other funds managed by EVM in a $120 million
unsecured line of credit agreement with a bank. The line of credit consists of
a $20 million committed facility and a $100 million discretionary facility.
Borrowings will be made by the Fund solely to facilitate the handling of
unusual and/or unanticipated short-term cash requirements. Interest is charged
to each fund based on its borrowings at an amount above either the bank's
adjusted certificate of deposit rate, a variable adjusted certificate of
deposit rate, or a federal funds effective rate. In addition, a fee computed
at an annual rate of 1/4 of 1% on the $20 million committed facility and on
the daily unused portion of the $100 million discretionary facility is
allocated among the participating funds at the end of each quarter. The Fund
did not have any significant borrowings or allocated fees during the year.
- ------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at December 31, 1995, as computed on a federal income tax basis, are as
follows:
Aggregate cost $13,556,316
===========
Gross unrealized appreciation $42,663,912
Gross unrealized depreciation --
-----------
Net unrealized appreciation $42,663,912
===========
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(7) ANNUAL SHAREHOLDER MEETING
Fiduciary Exchange Fund, Inc. (the Fund) held its annual shareholder meeting
on April 12, 1995. On February 23, 1995, the record date of the meeting, the
Fund had 342,811.991 shares outstanding, of which 220,044.297 shares were
represented at the meeting. The votes at the meeting were as follows:
Item 1: The election of Landon T. Clay, Donald R. Dwight, Samuel L. Hayes,
III, Peter F. Kiely, Norton H. Reamer, John L. Thorndike, and Jack L.
Treynor as Directors of the Fund.
NUMBER OF SHARES
NOMINEES FOR ----------------------
DIRECTOR AFFIRMATIVE WITHHELD
- ------------ ----------- --------
Landon T. Clay 220,044.297 0.000
Donald R. Dwight 220,044.297 0.000
Samuel L. Hayes, III 220,044.297 0.000
Peter F. Kiely 220,044.297 0.000
Norton H. Reamer 220,044.297 0.000
John L. Thorndike 220,044.297 0.000
Jack L. Treynor 220,044.297 0.000
Item 2: The ratification of the selection of Deloitte & Touche LLP as
independent certified public accountants to the Fund.
NUMBER OF SHARES
----------------
Affirmative 220,044.297
Against 0.000
Abstain 0.000
<PAGE>
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF FIDUCIARY EXCHANGE FUND, INC.:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments of Fiduciary Exchange Fund, Inc. as of
December 31, 1995 and the related statement of operations for the year then
ended, the statement of changes in net assets for the years ended December 31,
1995 and 1994, and the financial highlights for each of the years in the five-
year period ended December 31, 1995. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights present
fairly, in all material respects, the financial position of Fiduciary Exchange
Fund, Inc. as of December 31, 1995, the results of its operations, changes in
its net assets and its financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
JANUARY 26, 1996
<PAGE>
FIDUCIARY EXCHANGE
FUND, INC.
PERFORMANCE RESULTS+
- -----------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(STANDARDIZED SEC PERFORMANCE DATA
FOR THE PERIODS ENDED DECEMBER 31, 1995)
- -----------------------------------------------------------------------------
One year 35.1%
- -----------------------------------------------------------------------------
Five years 14.0%
- -----------------------------------------------------------------------------
Ten years 13.1%
- -----------------------------------------------------------------------------
Life of Fund (3/17/67) 10.5%
- -----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN
LIFE OF FUND
(3/17/67 TO 12/31/95)
- -----------------------------------------------------------------------------
Fiduciary Exchange Fund 1,683.0%
- -----------------------------------------------------------------------------
Dow Jones Industrial Average 1,890.5%
- -----------------------------------------------------------------------------
Standard & Poor's 500 1,967.1%
- -----------------------------------------------------------------------------
+Past performance is no guarantee of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
The Dow Jones Industrial Average and the Standard &Poor's 500 are unmanaged
lists of common stocks.
This report must be preceded or accompanied by a prospectus which contains more
complete information on the Fund including its distribution plan, sales charges
and expenses. Please read the prospectus carefully before investing.
[LOGO]
EATON VANCE
The Boston Tradition
Funds offered through
Eaton Vance Distributors, Inc.
24 Federal Street, Boston, Massachusetts 02110
2/96
