<PAGE>
To Shareholders
EV Traditional Total Return Fund had a total return of 9.2 percent for the six
months that ended June 30, 1995. That return includes an increase in net asset
value per share from $7.63 to $8.15 on June 30, 1995 and the reinvestment of
$0.174 per share in income dividends.
DECLINING INTEREST RATES PROVE HELPFUL FOR UTILITIES...
As the first six months of the year progressed, interest rates declined. The
yields of long-term U.S. Treasury bonds fell below 6.5 percent after rising to
nearly 8 percent on December 31, 1994.
Generally utility stock prices increase as interest rates decline, because their
behavior closely parallels that of long-term fixed-income securities, and,
indeed, utility stocks performed favorably during the first half of 1995.
Early in the year, there were concerns that the electric utility sector would
quickly be confronted with a dramatic increase in competition, and that the
market would severely punish utility companies, particularly those companies
with higher-cost power generating plants and those serving large industrial
customers with powerful bargaining positions.
As the period progressed, however, it became clear that the regulatory,
legislative and competitive developments were moving more slowly than first
feared. Only companies streamlined to operate in the new environment will
thrive. But now, utility companies have more time to bring their costs down and
their prices more in line with the demands of the market.
MERGERS IN THE UTILITY SECTOR IN FUTURE YEARS...
The merger of Northern States Power and Wisconsin Energy was announced during
this period. This merger of equals was unusual -- two healthy companies coming
together to produce a company that should be competitive for a long time. The
merger provides early evidence that over the long-term there will be a smaller
number of large, more efficient utility companies in which to invest.We believe
that ultimately, this will be a positive development for investors.While we
continue to monitor the sector closely for further changes, we expect that
utilities are likely to continue to provide an attractive investment for
investors concerned with current income and total return.
[PHOTO OF M. DOZIER GARDNER]
Sincerely,
/S/ M. Dozier Gardner
M. Dozier Gardner
President, Total Return Portfolio
August 4, 1995
<PAGE>
Page 2, entitled "A Profile of EV Traditional Total Return Fund"
Top of page. This is a chart entitled, "Changes in common stock holdings* show
Fund's response to changing investment conditions." The asterisk refers to a
footnote that reads, "By market value as of dates shown." The chart consists
of two pies.
The left pie, entitled "As of December 31, 1994," reads as follows: Electric
Utilities, 66.5%; REITs, 19.8%; Telephone Utilities, 7.4%; Oil/Gas, 5.8%; and
Other, .5%.
The right-hand pie, entitled "As of June 30, 1995," reads as follows:
Electric Utilities, 61.6%; Telephone Utilities, 18.9%; REITs, 9.9%;
Other, 7.1%; and Oil/Gas, 2.5%.
Lower left quadrant. This is a line chart entitled, "Utility stock prices
rebounded as interest rates leveled." The left-hand vertical axis is labeled:
"Dow Jones Utility Average*" and extends from 15 to 250. The right-hand
vertical axis is labeled: "30-year Treasury Yields+". The asterisk footnote
for the left-hand axis reads as follows: "Dow Jones Utility Average (blue
line, left axis) is an unmanaged index of 15 utility common stocks." The
dagger footnote for the right-hand axis reads: "U.S. Treasury Yields (black
line, right axis) refer to yields on 30-year Treasury bonds. The horizontal
axis marks the passage of time from 12/93 on the left side of the chart to
6/95 on the right. This axis is marked as follows: 12/93; 6/94; 12/94; 6/95.
In another footnote, the sources cited for the data are Towers Data Systems
and the Wall Street Journal.
End-of-month plot points for this chart are as follows:
30-Year Dow Jones
Date Treasury Bonds Utility Average
12/93 6.28 229.3
1/94 6.29 226.01
2/94 6.65 210.45
3/94 6.92 196.28
4/94 7.31 199.38
5/94 7.31 186.07
6/94 7.58 177.17
7/94 7.53 186.4
8/94 7.46 189.16
9/94 7.78 181,45
10/94 7.92 181.39
11/94 8.1 179.54
12/94 7.85 181.52
1/95 7.82 193.12
2/95 7.6 193.91
3/95 7.37 187.65
4/95 7.37 194.5
5/95 6.9 206.43
6/95 6.61 202.08
The chart in the lower right quadrant consists entirely of text:
<PAGE>
EV TRADITIONAL TOTAL RETURN FUND
THE PORTFOLIO'S 10 LARGEST
EQUITY HOLDINGS**
Frontier Corp.
CINergy Corp
FPL Group, Inc.
DPL Inc.
J.C. Penney
Carolina Power & Light Co.
DQE
NIPSCO Industries, Inc.
Southern Co.
Central Louisiana Electric
**By market value as of 6/30/95.
Management Discussion
An interview with Timothy P. O'Brien, Vice President and Portfolio Manager of
the Total Return Portfolio.
Q. TIM, AFTER A VERY DIFFICULT 1994, HOW HAS THE UTILITY SECTOR PERFORMED IN
1995?
A. As utility investors know, 1994 was difficult because of a rise in interest
rates through most of the year. But 1995 has been much better; interest rates
have declined significantly. The result has been good for utility stocks.
At the same time, we've seen indications that the competitive pressures --
the need to become more efficient -- that we know are coming will not arrive
as quickly as first thought. This will not affect utility companies that
already find themselves in strong competitive positions, but it gives the
others -- those that need to become more efficient and to cut costs -- some
time to accomplish those goals.
Q. IN TERMS OF MANAGING THE PORTFOLIO, HOW HAVE YOU RESPONDED TO THIS
ENVIRONMENT?
A. In general, we're trying to reduce the risk profile of the Portfolio in terms
of competitive risk. We want to include utilities that are in a strong
competitive position in terms of the rates they charge.
The Fund's performance was adversely affected by its holdings of real estate
investment trusts, or REITS, which significantly underperformed both the
overall market and utility stocks. Performance also was adversely affected by
holding cash in a rising market.
We've decreased the proportion of the Portfolio's investments in REITs. These
stocks constituted nearly 20 percent of the Portfolio at the beginning of
1995, but at the end of the period, they comprised less than 10 percent of
the Portfolio.
[PHOTO OF TIMOTHY P. O'BRIEN]
Telephone stocks represented around 16.5 percent, while electric utility
stocks amounted to 50.4 percent.
Q. WHY SUCH A LARGE CHANGE IN THE AMOUNT OF REITS WITHIN THE PORTFOLIO?
A. While long-term prospects for REITs seem to be fairly good, we simply were
not comfortable holding nearly 20 percent of the Portfolio in REITs at a time
when the performance of utility stocks was beginning to improve.
The behavior of REIT prices during this six-month period has been
interesting. When interest rates caused utility stock prices to drop, we were
among a number of utility mutual funds that purchased REITs because of the
significant income stream that they offer. At a time when we felt it wise to
buy utilities, a large number of REITs were coming on the market, which I
believe is one reason why REITs have been underperforming the market this
year.
Q. HOW DO YOU FEEL ABOUT FOREIGN UTILITY COMPANIES?
A. Some foreign utilities can be exceptional investments, and we've increased
steadily the proportion of foreign companies in the Portfolio during this
period. One such company is Philippine Long Distance. This company operates
in a market that is being opened to competition, but the company has such a
strong position that we expect it to do well. The Philippines is a country
that has been underpenetrated by telephone companies, so there are solid
long-term growth prospects.
There's another interesting twist to the Philippine Long Distance story that
has made the stock a winner. The Philippine peso had risen markedly against
the U.S. dollar, which happened solely because of direct foreign investment
in the Philippines. Then the Philippine peso declined because of the decline
in the Mexican peso. Philippine Long Distance figures its costs in pesos but
denominates its revenues in U.S. dollars. As a result, investors benefited
not only from growth but from the devaluation of the peso. Naturally,
investing in foreign stocks involves additional risks, including currency
fluctuations, shifting political climates and uneven economic growth rates.
Q. WHAT ABOUT U.S. TELEPHONE COMPANIES?
A. We've bought some U.S. telephone stocks. We've tried to target diversified
companies with strong competitive positions, because, like the electric
utilities, telephone companies face competition and change, and in the
telecommunications industry, change can happen very quickly. Frontier Corp.
is one such company that we feel is a good fit for the Portfolio. This is a
diversified, acquisition-minded telecommunications company based in
Rochester, N.Y. Its strategy is to provide integrated communications services
for its customers, including long distance, wireless and local telephone
service. We believe Frontier will be a solid performer in the future.
Q. WHAT OTHER STRATEGIES ARE YOU USING TO GENERATE INCOME?
A. One is to purchase selected convertible bonds, which generally pay good
income and can be converted to company common stock at some future time. For
example, we bought convertible notes issued by Worldcom, a long distance
company, when the outlook for the company was modest.The price was depressed
because of low expectations. More recently, this investment has performed
well.
Q. WHAT IS THE OUTLOOK FOR UTILITY SECTORS?
A. As usual, interest rates are the dominant influence on utility stock prices.
While past trends don't guarantee future results, a continuation of the
current stable interest rate environment could mean a continued favorable
climate. At a time when all portions of the sector are confronted with
change, we'll continue to seek out stocks we believe have prospects for
earnings and dividend growth, and may provide attractive opportunities for
solid long-term total returns.
<PAGE>
EV TRADITIONAL TOTAL RETURN FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
------------------------------------------------------------------------------
ASSETS:
Investment in Total Return Portfolio (Portfolio) at value
(Note 1A) $438,138,398
Receivable for Fund shares sold and dividend reinvestments 8,354
Deferred organization expenses (Note 1D) 23,697
------------
Total assets $438,170,449
LIABILITIES:
Payable for Fund shares redeemed $1,018,120
Payable to affiliates --
Trustees' fees 1,250
Custodian fee 1,000
Distributions payable 387
Accrued expenses 310,708
----------
Total liabilities 1,331,465
------------
NET ASSETS for 53,609,948 shares of beneficial interest
outstanding $436,838,984
============
SOURCES OF NET ASSETS:
Proceeds from sales of shares (including shares
issued to shareholders electing to receive
payment of distributions in shares), less cost
of shares redeemed (Note 2) $354,332,283
Accumulated net realized losses on investments
and financial futures transactions
(computed on the basis of idenitified cost) (13,454,548)
Undistributed net investment income 54,122,291
Unrealized appreciation of investments 41,838,958
------------
Total net assets $436,838,984
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($436,838,984 / 53,609,948 shares of beneficial interest) $8.15
=====
COMPUTATION OF OFFERING PRICE:
Offering price per share (100/95.25 of $8.15) $8.56
=====
On sales of $100,000 or more, the offering price is reduced.
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
-------------------------------------------------------------------------------
For the Six Months Ended June 30, 1995 (Unaudited)
-------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Dividend income allocated from Portfolio (net of
foreign withholding tax of $73,901) $11,181,968
Interest income allocated from Portfolio 1,345,993
Expenses allocated from Portfolio (1,828,087)
-----------
Total investment income $10,699,874
Expenses --
Compensation of Directors not members of the
investment adviser's organization $ 2,030
Service fees (Note 4) 413,079
Custodian fees 12,518
Transfer and dividend disbursing agent fees 183,838
Printing and postage 83,951
Registration fees 13,303
Legal and accounting services 7,297
Amortization of organization expenses (Note 1D) 1,539
Miscellaneous 36,353
-----------
Total expenses 753,908
-----------
Net investment income $ 9,945,966
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized gain (loss)
(identified cost basis)--
Investment transactions $ 7,495,207
Financial futures contracts (7,388,428)
-----------
Net realized gain on investment
transactions and financial futures
contracts (identified cost basis) $ 106,779
Change in unrealized appreciation of investments 28,240,862
-----------
Net realized and unrealized gain on
investments 28,347,641
-----------
Net increase in net assets resulting from operations $38,293,607
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 9,945,966 $ 25,272,198
Net realized gain (loss) on investments 106,779 (11,690,881)
Change in unrealized appreciation
(depreciation) from Portfolio 28,240,862 (89,379,420)
------------ -------------
Net increase (decrease) in net assets
resulting from operations $ 38,293,607 $ (75,798,103)
------------ -------------
Distributions to shareholders from net
investment income $ (9,736,062) $ (24,976,010)
------------ -------------
Net decrease in net assets from Fund share
transactions (Note 2) $(36,851,931) $ (83,606,054)
------------ -------------
Net decrease in net assets $ (8,294,386) $(184,380,167)
NET ASSETS:
At beginning of period 445,133,370 629,513,537
------------ -------------
At end of period $436,838,984 $ 445,133,370
============ =============
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1995 -------------------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (for a share
outstanding throughout each year):
NET ASSET VALUE -- Beginning of year $ 7.6300 $ 9.1400 $ 9.3600 $ 9.7500 $ 9.0700 $ 9.9400
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income $ 0.1750 $ 0.5458 $ 0.3626 $ 0.5113 $ 0.5204 $ 0.5026
Net realized and unrealized
gain (loss) on investments 0.5190 (1.6678) 0.5524 0.0937 1.4896 (0.5226)
-------- -------- -------- -------- -------- --------
Total income (loss) from
investment operations $ 0.6940 $(1.1220) $ 0.9150 $ 0.6050 $ 2.0100 $(0.0200)
-------- -------- -------- -------- -------- --------
Less distributions declared to
shareholders:
From net investment income $(0.1740) $(0.3880) $(0.4650) $(0.5200) $(0.5200) $(0.5500)
From realized gain -- -- (0.6544) (0.4750) (0.8100) (0.3000)
In excess of net realized gain
on investment transactions -- -- (0.0156) -- -- --
-------- -------- -------- -------- -------- --------
Total distributions $(0.1740) $(0.3880) $(1.1350) $(0.9950) $(1.3300) $(0.8500)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE -- End of year $ 8.1500 $ 7.6300 $ 9.1400 $ 9.3600 $ 9.7500 $ 9.0700
======== ======== ======== ======== ======== ========
TOTAL RETURN<F4> 9.22% (12.28)% 9.49% 6.60% 23.61% 0.15%
RATIOS/SUPPLEMENTAL DATA: (to average
daily net assets)
Interest expense<F1> -- -- 0.20% 0.29% 0.38% 0.08%
Other expenses<F1> 1.19%<F3> 1.18% 1.11% 1.10% 1.13% 1.19%
Net investment income before
credit for taxes 4.57%<F3> 4.90% 4.64% 5.43% 5.60% 5.49%
PORTFOLIO TURNOVER<F4> -- -- 63% 54% 69% 52%
NET ASSETS AT END OF YEAR
(000'S OMITTED) $436,839 $445,133 $629,514 $564,912 $545,731 $491,253
LEVERAGE ANALYSIS:
Amount of debt outstanding at
end of period (000's omitted) -- -- -- $ 47,045 $ 56,370 --
Average daily balance of debt
outstanding during period
(000's omitted) -- -- $ 29,906<F5> $ 27,764 $ 25,901 $ 3,793
Average weekly balance of shares
outstanding during period
(000's omitted) -- -- 61,377<F5> 57,280 53,281 53,078
Average amount of debt per
share during period -- -- $ 0.487<F5> $ 0.485 $ 0.486 $ 0.071
<FN>
<F1> Includes the Fund's share of Total Return Portfolio's allocated expenses for the six months ended June 30, 1995, the year
ended December 31, 1994 and the period from October 28, 1993, to December 31, 1993.
<F2> Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments directly in
securities. The portfolio turnover for the period since the Fund transferred substantially all of its investable assets to the
Portfolio is shown in the Portfolio's financial statements which are included elsewhere in this report.
<F3> Annualized.
<F4> Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on
the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset
value on the record date.
<F5> The Leverage Analysis is for the period January 1 to October 27, 1993 when the Fund transferred the line of credit to the
Portfolio. The analysis for the year ended December 31, 1994 and the period October 28, 1993 to December 31, 1993 is shown
in the Portfolio's financial statements which are included elsewhere in this report.
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
-------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Traditional Total Return Fund (the Fund), is a diversified entity of the
type commonly known as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund is a series in the Eaton Vance Total Trust. The
Fund invests all of its investable assets in interests in the Portfolio, a New
York Trust, having the same investment objective as the Fund. The value of the
Fund's investment in the Portfolio reflects the Fund's proportionate interest
in the net assets of the Portfolio (87.7% at June 30, 1995). 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 is
discussed in Note 1 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. 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, options and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary. At
December 31, 1994, the Fund, for federal income tax purposes, had a capital
loss carryover of $14,485,410, which will reduce the Fund's taxable income
arising from future net realized gain on investment transactions, if any, to
the extent permitted by the Internal Revenue Code, and thus will reduce the
amount of the distributions to shareholders which would otherwise be necessary
to relieve the Fund of any liability for federal income or excise tax. Such
capital loss carryover will expire on December 31, 2002.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization, are being amortized on the straight-line basis over
five years.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income and dividends to
shareholders are recorded on the ex-dividend date. Dividend income may include
dividends that represent returns of capital for federal tax purposes.
F. 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.
G. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating
to June 30, 1995 and for the period then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
------------------------------------------------------------------------------
(2) SHARES OF BENEFICIAL INTEREST
The 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:
SIX MONTHS ENDED
JUNE 30, 1995
(UNAUDITED) YEAR ENDED DECEMBER 31, 1994
------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- -------------
Sales 910,567 $ 7,102,364 3,279,972 $ 26,885,455
Issued to
shareholders
electing to
receive payment of
distributions in
Fund shares 932,224 7,267,131 2,334,236 18,717,592
Redemptions (6,555,520) (51,221,426) (16,175,890) (129,209,101)
--------- ------------ ---------- -------------
Net increase
(decrease) (4,712,729) $(36,851,931) (10,561,682) $ (83,606,054)
========= ============ ========== =============
--------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investments in the Portfolio aggregated
$8,683,735 and $55,892,595, respectively.
------------------------------------------------------------------------------
(4) SERVICE PLAN
The Fund adopted a Service Plan on July 7, 1993 designed to meet the
requirements of Rule 12b-1 under the Investment Company Act of 1940 and the
service fee requirements of the revised sales charge rule of The National
Association of Securities Dealers Inc. The Service Plan replaced the Fund's
distribution plan which became effective on July 1, 1987. The Service Plan
provides that the Fund may make service fee payments to the Principal
Underwriter, Eaton Vance Distributors, Inc., a subsidiary of Eaton Vance
Management, Authorized Firms or other persons in amounts not exceeding 0.25%
of the Fund's average daily net assets for any fiscal year. The Trustees have
implemented the Service Plan by authorizing the Fund to make quarterly service
fee payments to the Principal Underwriter and Authorized Firms in amounts not
expected to exceed 0.25% of that portion of the Fund's average daily net
assets for any fiscal year which is attributable to shares of the Fund sold by
such persons and remaining outstanding for at least twelve months. Such
payments are made for personal services and/or the maintenance of shareholder
accounts. During the six months ended June 30, 1995 the Fund provided for
$413,079 under the Plan to the Principal Underwriter and Authorized Firms.
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995
------------------------------------------------------------------------------
COMMON STOCKS - 81.5%
------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
------------------------------------------------------------------------------
BANKS - 0.3%
BankAmerica Corp. 25,000 $ 1,315,625
------------
ELECTRIC UTILITIES - 50.2%
Baltimore Gas & Electric Co. 135,000 $ 3,375,000
Carolina Power & Light Co. 600,000 18,150,000
Central Louisiana Electric Co. 547,200 12,859,200
CINergy Corp. 900,000 23,625,000
DPL Inc. 950,000 21,018,750
DQE, Inc. 590,000 13,865,000
FPL Group, Inc. 600,000 23,175,000
General Public Utilities Corp. 280,000 8,330,000
Houston Industries, Inc. 100,000 4,212,500
IPALCO Enterprises, Inc. 320,000 10,200,000
LG & E Energy Corp. 125,000 4,875,000
Midlands Electricity PLC 225,000 2,255,085
National Power PLC 400,000 1,097,720
National Power PLC ADR 347,500 4,300,313
NIPSCO Industries, Inc. 400,000 13,600,000
Norweb Ord PLC 300,000 3,245,430
Ohio Edison Co. 350,000 7,918,750
PacifiCorp 583,200 10,935,000
PECO Energy Co. 200,000 5,525,000
Pinnacle West Capital Corp. 300,000 7,350,000
Portland General Electric Corp. 340,000 7,522,500
Southern Co. 600,000 13,425,000
Southern Electric PLC 200,000 2,042,700
Teco Energy, Inc. 410,000 8,968,750
Union Electric Co. 80,000 2,980,000
Wisconsin Energy Corp. 150,400 4,211,200
Wisconsin Power & Light
Holdings, Inc. 200,000 5,725,000
WPS Resources Corp. 200,000 5,850,000
------------
$250,637,898
------------
NATURAL GAS UTILITIES - 1.4%
KN Energy 200,000 $ 5,075,000
MCN Corp. 87,000 1,718,250
------------
$ 6,793,250
------------
OIL - 0.7%
BP Prudhoe Bay Rty Tr Unit Ben Int. 200,000 $ 3,400,000
------------
REITS - 8.0%
Apartment Investment
& Management Co. Class A 100,000 $ 2,025,000
<PAGE>
------------------------------------------------------------------------------
COMMON STOCKS (Continued)
------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
------------------------------------------------------------------------------
Associated Estates Realty Corp. 180,000 $ 3,802,500
Bradley Real Estate Trust 72,750 1,173,094
Cali Realty Corp. 150,000 2,906,250
Camden Properties Trust SBI 200,000 4,375,000
Glimcher Realty Trust 30,000 622,500
Health Care Property Investors, Inc. 126,000 4,032,000
Healthcare Realty Trust 315,000 6,378,750
LTC Properties, Inc. 150,000 1,968,750
Macerich Co. 10,700 209,987
Meditrust Sh Ben Int. 90,000 3,071,250
Mid America Apartment
Communities, Inc. 42,000 1,050,000
Simon Property Group, Inc. 150,000 3,768,750
Southwestern Property Trust, Inc. 162,900 1,873,350
Sun Communities Inc. 110,000 2,750,000
Walden Residential Properties 10,000 183,750
------------
$ 40,190,931
------------
RETAIL - 3.9%
Ingles Markets Class A 20,000 $ 215,000
Penny J.C. Co. 400,000 19,200,000
------------
$ 19,415,000
------------
TELECOMMUNICATIONS - 1.1%
Alcatel Alsthom Sponsored ADR 200,000 $ 3,625,000
Boston Technologies Corp. 42,500 791,562
NERA AS ADR 35,000 984,375
------------
$ 5,400,937
------------
TELEPHONE UTILITIES - 15.4%
ALC Communications Corp. 40,000 $ 1,805,000
Ameritech Corp. 250,000 11,000,000
AT&T Corp. 150,000 7,968,750
Frontier Corp. 1,125,000 27,000,000
Globolstar Telecommunications 90,000 1,192,500
GTE Corp. 100,000 3,412,500
Mannesmann A.G. Ord 10,000 3,052,476
SBC Communications, Inc. 225,000 10,715,625
Tele Danmark A/S 100,000 2,800,000
Telecom Corp. New Zealand Ltd. ADR 100,000 6,062,500
U.S. West Inc. 40,000 1,665,000
------------
$ 76,674,351
------------
OTHER - 0.5%
Sonat Inc. 90,000 $ 2,745,000
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $366,294,354) $406,572,992
------------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS - 6.1%
------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
------------------------------------------------------------------------------
Allstate Corp., 230s 100,000 $ 4,075,000
American General Corp., 3s 25,000 1,296,875
Browning Ferris, 7.25s 45,000 1,642,500
Freeport McMoRan Copper & Gold 40,000 865,000
Oasis Residential, Inc., 9s 60,000 1,515,000
Philippines Long Distance Telephone, 7s 189,000 12,166,875
Prime Retail Inc. Series B 30,000 558,750
Sovereign Bancorp. Class B 105,000 5,656,875
St. Paul Capital 25,000 1,306,250
Stone Container, 1.75s, Series E 59,900 1,452,575
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST, $26,732,677) $ 30,535,700
------------
------------------------------------------------------------------------------
CONVERTIBLE BONDS - 7.2%
------------------------------------------------------------------------------
FACE AMOUNT
(000 OMITTED)
------------------------------------------------------------------------------
Alberto Culver Co., 5.5s, 6/30/05 $ 1,900 $ 1,904,750
Danka Business, 6.75s, 4/1/02 4,000 4,210,000
LDDS Communications, Inc., 5s, 8/15/03 4,000 3,820,000
Novacare Inc., 5.5s, 1/15/00 11,000 9,515,000
Theratx Inc., 8s, 2/1/02 5,000 4,556,250
Time Warner, Inc., 8.75s, 1/10/15 10,000 10,462,500
U.S. Cellular Corp., 0%, 6/15/15 5,000 1,575,000
------------
TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST, $34,374,987) $ 36,043,500
------------
------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 4.9%
------------------------------------------------------------------------------
Melville Corp., 6.23s, 7/3/95 $16,757 $ 16,751,200
Prudential Funding Corp.,
5.97s, 7/6/95 7,707 7,700,610
------------
TOTAL SHORT-TERM OBLIGATIONS, AT
AMORTIZED COST $ 24,451,810
------------
TOTAL INVESTMENTS -- 99.7%
(IDENTIFIED COST, $451,853,828) $497,604,002
OTHER ASSETS, LESS LIABILITIES - 0.3% 1,515,392
------------
NET ASSETS -- 100% $499,119,394
============
The accompanying notes are an integral part
of the financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------
June 30, 1995
------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$451,853,828) $497,604,002
Cash 8,989
Receivable for investments sold 7,920,584
Dividends receivable 1,887,245
Deferred organization expenses (Note 1E) 13,946
Foreign tax reclaim receivable 94,677
Interest receivable 804,380
------------
Total assets $508,333,823
LIABILITIES:
Payable for investments purchased $9,182,125
Payable to affiliates --
Trustees' fees 8,000
Custodian fee 9,100
Accrued expenses 15,204
----------
Total liabilities 9,214,429
------------
NET ASSETS applicable to investors' interest in Portfolio $499,119,394
============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $453,369,220
Unrealized appreciation of investments
(computed on the basis of identified cost) 45,750,174
------------
Total net assets $499,119,394
============
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF OPERATIONS
------------------------------------------------------------------------------
For the Six Months Ended June 30, 1995
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income (net of foreign taxes,
$84,200) $12,715,048
Interest income 1,531,926
-----------
Total income $14,246,974
Expenses --
Investment adviser fee (Note 3) $ 1,876,440
Compensation of trustees not members of
the investment adviser's organization
(Note 3) 13,090
Custodian fee (Note 3) 75,972
Commitment fee 75,001
Legal and accounting services 34,430
Amortization of deferred organization
expenses (Note 1E) 2,081
Printing 272
Registration fees 125
Miscellaneous 4,189
-----------
Total expenses 2,081,600
-----------
Net investment income $12,165,374
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
(identified cost basis) --
Investment transactions $ 8,541,756
Financial futures contracts (8,405,750)
-----------
Net realized gain on investments
and financial futures
(identified cost basis) $ 136,006
Change in unrealized appreciation
Investment transactions $29,972,474
Financial futures contracts 2,152,500
----------
Net change in unrealized appreciation
on investments and financial
futures contracts 32,124,974
-----------
Net realized and unrealized gain on investments 32,260,980
-----------
Net increase in net assets resulting from operations $44,426,354
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income
$ 12,165,374 $ 28,785,986
Net realized gain (loss) on investment
transactions and financial
futures contracts 136,006 (15,151,998)
Increase in unrealized appreciation
(depreciation) of investments 32,124,974 (89,492,365)
------------- -------------
Net increase (decrease) in net assets
resulting from operations $ 44,426,354 $(75,858,377)
------------- -------------
Capital transactions --
Contributions 15,560,607
$ $ 97,021,559
Withdrawals (66,434,459) (152,162,876)
------------- -------------
Decrease in net assets resulting from
capital transactions $(50,873,852) $(55,141,317)
------------- -------------
Total decrease in net assets $ (6,447,498) $(130,999,694)
NET ASSETS:
At beginning of period 505,566,892 636,566,586
------------- -------------
At end of period $ 499,119,394 $ 505,566,892
============= =============
------------------------------------------------------------------------------
SUPPLEMENTARY DATA
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1995 1994 1993*
------------- ----------------------
RATIOS (As a percentage of
average net assets):
Expenses 0.84%+ 0.85% 0.91%+
Net investment income 4.90%+ 5.22% 4.57%+
PORTFOLIO TURNOVER 47% 107% 16%
LEVERAGE ANALYSIS:
Average daily balance of
debt outstanding during
period (000's omitted) -- $3,137 $15,452
+ Computed on an annualized basis.
* For the period from the start of business, October 28, 1993, to December 31,
1993.
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
-------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Total Return Portfolio (the Portfolio) is registered under the Investment
Company Act of 1940 as a diversified open-end investment company which was
organized as a trust under the laws of the State of New York on May 1, 1992.
The Declaration of Trust permits the Trustees to issue beneficial interests in
the Portfolio. The following is a summary of significant accounting policies
of the Portfolio. The policies are in conformity with generally accepted
accounting principles.
A. INVESTMENT VALUATIONS -- Securities listed on securities exchanges or in the
NASDAQ National Market are valued at closing sales prices or, if there has been
no sale, at the mean between the closing bid and asked prices. Unlisted
securities are valued at the mean between the latest available bid and asked
prices. Options and financial futures contracts are valued at the last sale
price, as quoted on the principal exchange or board of trade on which such
options or contracts are traded or, in the absence of a sale, the mean between
the last bid and asked prices. Short-term obligations, maturing in 60 days or
less, are valued at amortized cost, which approximates value. Securities for
which market quotations are unavailable are appraised at their fair value as
determined in good faith by or at the direction of the Trustees.
B. INCOME TAXES -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally must
satisfy the applicable source of income and diversification requirements (under
the Code) in order for its investors to satisfy them. The Portfolio will
allocate at least annually among its investors each investors' distributive
share of the Portfolio's net investment income, net realized capital gains, and
any other items of income, gain, loss, deduction or credit.
C. OPTION ACCOUNTING PRINCIPLES -- Upon the writing of a covered call option, an
amount equal to the premium received by the Portfolio is included in the
Statement of Assets and Liabilities as a liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written in accordance with the Portfolio's policies on investment
valuations discussed above. Premiums received from writing call options which
expire are treated as realized gains. Premiums received from writing call
options which are exercised or are closed are added to or offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. The Portfolio, as writer of a call option, may have no control over
whether the underlying securities may be sold and, as a result, bears the market
risk or an unfavorable change in the price of the securities underlying the
written option.
D. FINANCIAL FUTURES CONTRACTS -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit an amount ("initial margin")
either in cash or securities equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by the Portfolio ("margin maintenance") each day, dependent on the
daily fluctuations in the value of the underlying security, and are recorded for
book purposes as unrealized gains or losses by the Portfolio. When the Portfolio
enters into a closing transaction, the Portfolio will realize for book purposes
a gain or loss equal to the difference between the value of the financial
futures contract to sell and the financial futures contract to buy. The
Portfolio's investment in financial futures contracts is designed only to hedge
against anticipated future changes in interest rates, security prices, commodity
prices or currency exchange rates. Should interest rates, security prices,
commodity prices or currency exchange rates move unexpectedly, the Portfolio may
not achieve the anticipated benefits of the financial futures contracts and may
realize a loss.
<PAGE>
--------------------------------------------------------------------------------
E. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line basis
over five years.
F. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the
ex-dividend date. Realized gains and losses on the sale of investments are
determined on the identified cost basis.
--------------------------------------------------------------------------------
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregrated $224,407,749 and $280,139,532, respectively.
--------------------------------------------------------------------------------
(3) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to the Portfolio. The fee
is based upon a percentage of average daily net asets. For the six months ended
June 30, 1995, the fee was equivalent to 0.74% of the Portfolio's average net
assets for such period and amounted to $1,876,440. Except as to Trustees of the
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to the Portfolio out of such
investment adviser fee. Investors Bank & Trust Company (IBT), an affiliate of
EVM and BMR, serves as custodian of the Portfolio. Pursuant to the custodian
agreement, IBT receives a fee reduced by credits which are determined based on
the average daily cash balances the Portfolio maintains with IBT. Certain of the
officers and Trustees of the Portfolio are officers and directors/trustees of
the above organizations. Trustees of the Portfolio that are not affiliated with
the Investment Adviser may elect to defer receipt of all or a percentage of
their annual fees in accordance with the terms of the Trustees Deferred
Compensation Plan. For the six months ended June 30, 1995, no significant
amounts have been deferred.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
(4) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $120 million unsecured line of credit agreement with
a bank. The line of credit consists of a $20 million committed facility and a
$100 million discretionary facility. The Portfolio expects to use the proceeds
of the advances primarily for leveraging purposes. Borrowings by the Portfolio
under the Credit Agreement will not exceed the lesser of 1/3 of the market value
of the net assets of the Portfolio or $60,000,000. Interest is charged to each
portfolio based on its borrrowings 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 and portfolios at the end of each quarter. At June 30, 1995 there were no
outstanding loans under the line of credit.
--------------------------------------------------------------------------------
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at June 30, 1995, as computed on a federal income tax basis, are as
follows:
Aggregate cost $451,853,828
============
Gross unrealized appreciation $ 51,709,094
Gross unrealized depreciation 5,958,920
------------
Net unrealized appreciation $ 45,750,174
============
<PAGE>
------------------------------------------------------------------------------
(6) FINANCIAL INSTRUMENTS
The Portfolio may trade in financial instruments with off-balance sheet risk in
the normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts, and financial futures contracts and
may involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. The notional or contractual amounts
of these instruments represent the investment the Portfolio has in particular
classes of financial instruments and does not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions are
considered.
At June 30, 1995 there were no outstanding obligations under these
financial instruments.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Trustees and Investors of
Total Return Portfolio:
We have audited the accompanying statement of assets and liabilities of Total
Return Portfolio, including the portfolio of investments, as of June 30, 1995,
the related statement of operations for the six months then ended and the
statement of changes in net assets and supplementary data for the six months
ended June 30, 1995, and for the period from the start of business, October 28,
1993, to December 31, 1994. These financial statements and supplementary data
are the responsibility of the Portfolio's management. Our responsibility is to
express an opinion on these financial statements and supplementary data 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 supplementary
data 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 June
30, 1995 by correspondence with the custodian and brokers. 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 supplementary data referred to
above present fairly, in all material respects, the financial position of Total
Return Portfolio as of June 30, 1995, the results of its operations for the six
months then ended, and the changes in its net assets and the supplementary data
for the six months ended June 30, 1995, and for the period from the start of
business, October 28, 1993, to December 31, 1994, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
August 4, 1995
<PAGE>
INVESTMENT MANAGEMENT
<TABLE>
<S> <C> <C>
EV TRADITIONAL OFFICERS TRUSTEES
TOTAL RETURN FUND M. DOZIER GARDNER DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 LANDON T. CLAY Chairman, Newspapers of
Vice President, Trustee New England, Inc.
JAMES L. O'CONNOR JAMES B. HAWKES
Treasurer Executive Vice President,
THOMAS OTIS Eaton Vance Management
Secretary SAMUEL L. HAYES, III
Jacob H. Schiff Professor of
Investment Banking, Harvard
University Graduate School of
Business Administration
NORTON H. REAMER
President and Director,
United Asset Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
--------------------------------------------------------------
TOTAL RETURN OFFICERS TRUSTEES
PORTFOLIO M. DOZIER GARDNER DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 LANDON T. CLAY Chairman, Newspapers of
Vice President, Trustee New England, Inc.
TIMOTHY O'BRIEN SAMUEL L. HAYES, III
Vice President and Jacob H. Schiff Professor of
Portfolio Manager Investment Banking, Harvard
JAMES B. HAWKES University Graduate School of
Vice President, Trustee Business Administration
JAMES L. O'CONNOR NORTON H. REAMER
Treasurer President and Director,
THOMAS OTIS United Asset Management
Secretary Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
</TABLE>
<PAGE>
INVESTMENT ADVISER OF
TOTAL RETURN PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF EV TRADITIONAL
TOTAL RETURN FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
(LOGO)
EV TRADITIONAL
TOTAL RETURN
FUND
SEMI-ANNUAL
SHAREHOLDER REPORT
JUNE 30, 1995
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
EV TRADITIONAL TOTAL RETURN FUND
24 FEDERAL STREET
BOSTON, MA 02110
T-TMSRC
