<PAGE>
TO SHAREHOLDERS
Eaton Vance Equity-Income Trust, a spoke of Total Return Portfolio, had a total
return of 0.79 percent during the three-month period ended December 31, 1994.
That return was the result of a decline in net asset value per share to $10.11
from $10.12 on September 30, 1993, adjusted for the reinvestment of $0.09 per
share in income dividends. The return does not include the effect on a redeeming
shareholder of the Fund's contin-gent deferred sales charge. For comparison, the
Dow Jones Utility Average - an unmanaged index of utility common stocks - had a
total return of -15.1 percent for the same period.
RISING INTEREST RATES AND INCREASED COMPETITION...
1994 proved to be a tumultuous year for the electric utility sector. Rising
interest rates, increased competition, a shifting regulatory climate, and a rash
of dividend cuts created a difficult environ-ment for the industry and for
investors. A jump in interest rates posed the most immediate threat to investors
as long-term bond yields rose to nearly 8 percent on December 31, 1994 from 6.3
percent a year ago. Because utilities closely track long-term fixed-income
securities, the group trended lower through much of the year. On the other hand,
interest rates remained well below the levels of the 1980s, and that affected
the companies' abilities to obtain rate requests. In 1994, utilities filed a
record low $1.1 billion in rate hikes.
The prospect of deregulation has made the utilities sector - historically one of
the most predictable of industries - one of the fastest-changing sectors in the
economy. For a possible sign of things to come, many analysts have looked to
California, where the Public Utilities Commission has advocated the complete
deregulation of the electric utilities industry by the year 2002. The likelihood
of heightened competition was an additional factor in the decline of utility
stocks. Price competition clearly hurts companies with higher-cost power plants.
This is especially true of utilities with a large commercial customer base, as
large business customers are increasingly demanding - and receiving - special
rates.
AMID INCREASED COMPETITION, SOME POSITIVES FOR THE UTILITY SECTOR...
While there are major hurdles ahead for the utility industry, there are some
positives for the industry as well. First, demand for electricity continues to
rise around 2 percent annually, consistent with a growing population and
increased industrial demand. Second, energy prices have remained low. Fuel
represents a significant portion of utilities' cost structures, and low fuel
prices have helped in utilities' efforts to contain costs. Finally, full
deregulation is likely to occur only gradually, which should give companies
ample time to adjust to changing conditions. Unquestionably, this period of
rapid changes poses major questions for industry officials and investors alike.
However, looking ahead, utilities are likely to remain a favored vehicle for
income and total return-minded investors.
[PHOTOGRAPH OF M. DOZIER GARDNER]
Sincerely,
/s/M. Dozier Gardner
M. Dozier Gardner
President
February 21, 1995
<PAGE>
A PROFILE OF EATON VANCE EQUITY-INCOME TRUST
Chart at top left of page 2
EQUITY-INCOME TRUST:
COMMON STOCK HOLDINGS
Label A B C D
Equity-Income
Trust
Label Pie
1 electric 66.5
2 REITs 19.8
3 telephones 7.4
4 Oil/Gas 5.8
5 Other 0.5
6
7 A pie chart showing the Fund Holdings according to
8 industry sector on 12/31/94
Based on market value as of December 31, 1994
Chart at top right of page 2
...FOCUSING ON COMPANIES WITH GOOD FINANCIAL FLEXIBILITY...
THE PORTFOLIO'S 10 LARGEST HOLDINGS*:
Dividend yield+
CINergy Corp. 7.4%
Southern Company 5.9%
Carolina Power & Light Co. 6.6%
FPL Group, Inc. 4.8%
DPL Inc. 5.8%
Wisconsin Energy Corp. 5.4%
Ameritech Corp. 5.0%
Northern States Power Co. 6.0%
Union Electric Co. 6.9%
NIPSCO Industries, Inc. 5.2%
*By market value as of 12/31/94.
+ Dividend yield represents the annualized yield based on most recent indicated
dividend and stock price at December 31, 1994.
Chart at bottom of page 3
IN 1994, CHANGING INDUSTRY CONDITIONS AND SHARPLY HIGHER INTEREST RATES EXACTED
A HEAVY TOLL ON ELECTRIC UTILITY STOCKS.
Label A B C
Dow Jones 30-year
Label Utility Average* Treasury Yields+
1 Dec93 229.3 6.35
2 Jan94 226.01 6.245
3 Feb94 210.45 6.66
4 Mar94 196.28 7.09
5 Apr94 199.43 7.3
6 May94 186.07 7.43
7 Jun94 177.17 7.61
8 Jul94 186.4 7.39
9 Aug94 189.16 7.45
10 Sep94 181.45 7.82
11 Oct94 181.39 7.97
12 Nov94 179.54 8
13 Dec94 181.52 7.88
14
15 A graph showing the relationship
16 between the performance of the
17 Dow Jones Util Average and the
18 movement in 30-year treasury yields
*Dow Jones Average (blue line, left axis) is an unmanaged index of 15 utility
common stocks.
+U.S. Treasury yields (black line, right axis) refers to yields on 30-year
Treasury bonds.
Sources: Eaton Vance Management, Bloomberg.
<PAGE>
MANAGEMENT DISCUSSION
An interview with Timothy P. O'Brien, Vice President and Portfolio Manager of
the Total Return Portfolio.
Q. TIM, 1994 WAS A CHALLENGING YEAR FOR THE UTILITIES SECTOR AND FOR THE FUND.
HOW WOULD YOU EVALUATE THE INDUSTRY?
A. Clearly, 1994 was a difficult year, primarily because of the rise in
interest rates. Moreover, with the likelihood of increased competition in
the future, the fundamental outlook has changed markedly. With interest
rates having declined significantly since the 1980s, utilities' earnings
power has been eroded. Many companies have exacerbated the problem by
continuing to raise their dividends even while earnings have stagnated. With
payouts thus unsustainably high, those companies eventually found themselves
with very little financial flexibility. Given lower allowed rates of return
and little room for earnings growth, many companies have been forced to
reduce dividends. For that reason, we have been increasingly selective in
our electric utility investments.
Q. HOW, THEN, HAVE YOU POSITIONED THE PORTFOLIO?
A. The Portfolio has reduced its electric utility holdings to around 62 percent
of investments from 83 percent on December 31, 1993. I've concentrated
electric utility investments on low cost operators, such as Southern
Company, which have maintained their financial flexibility and have
relatively low payout ratios. In addition, many of the Portfolio's electric
utility investments tend to have a smaller commercial customer base and
therefore may be less vulnerable to competition from wholesale wheeling.
[PHOTOGRAPH OF TIMOTHY P. O'BRIEN]
Elsewhere, the Portfolio has significantly increased its investments in real
estate investment trusts (REITs), from 5 percent a year ago to around 18.4
percent at December 31. Telephone stocks represented around 6.9 percent,
while energy stocks comprised another 5 percent. Over the longer term, I'll
likely supplement the Portfolio's domestic electric holdings with some
attractive foreign companies, as well as expand into some sectors not
currently represented in the Portfolio, such as water companies.
Q. REITS COMPRISE A GOOD PORTION OF THE PORTFOLIO. WHAT DO YOU LIKE ABOUT THEM?
A. The fundamentals of the real estate industry are relatively strong. In the
wake of the overbuilding of the 1980s, there has been relatively little new
construction of offices, apartments, hotels, or warehouses. While much of
that surplus inventory has been eliminated, some properties remain on the
market at a significant discount to replacement value. As long as that is
the case, we won't see an acceleration in the construction of commercial
real estate in the near future. REITs currently offer yields comparable to
utility yields and, with a strong economic recovery under way, real estate
stocks have enjoyed good earnings momentum. Naturally, this sector is
subject to some risk, including a degree of interest rate sensitivity as
well as the possibility of a downturn in the real estate sector. Because
these stocks tend to be small and fairly illiquid, the Portfolio has widely
diversified its investments according to asset class and geographical mix.
The Portfolio's holdings comprise a broad range of properties, including
office buildings, residential apartments, shopping centers, and nursing
homes.
Q. WHAT ABOUT THE TELEPHONE SECTOR?
A. Like the electric utilities, telephone companies are vulnerable to
competitive inroads and changing industry dynamics. It's clear that long
distance companies are targeting local telephone business, while local
companies covet long distance business. In addition, some telephone
companies have been active in diversifying into businesses such as wireless
and cellular. While those moves will fuel growth in the future, they tend to
have a dilutive effect on current earnings. I have focused on telephone
companies such as Ameritech that are less vulnerable to competition and less
likely to dilute earnings through diversification.
Q. WHAT'S COMPELLING ABOUT FOREIGN UTILITIES?
A. Foreign electric utilities tend to be regulated on a price cap basis, which
places fewer limitations on what the companies may earn. That's a far cry
from the U.S., where regulation uses an allowed rate of return method. The
foreign companies are therefore less exposed to many of the trends that have
afflicted the domestic industry. One foreign Portfolio investment, Norweb,
is a British electric power distribution company. Unlike U.S. companies,
which are vertically integrated to include generation as well as delivery,
Norweb concentrates solely on distribution. In the foreign telephone sector,
Portfolio holding TeleDanmark, the Danish telephone company, has superior
earnings growth, a competitive yield, and is able to sustain a high rate of
dividend growth. Telecom New Zealand is similarly well-positioned.
Q. WHAT IS YOUR OUTLOOK FOR THE UTILITY SECTORS?
A. Despite the troubling fundamentals of the electric sector, interest rates
remain the dominant influence on utility stock prices. Moreover, there is a
good likelihood that interest rates will stabilize and that the recent bond
rally will continue well into 1995. While past performance is naturally no
guarantee of future results, a more stable interest rate environment would
present a more favorable climate for these sectors. In an increasingly
challenging period for the utilities sectors, the Portfolio will continue to
search for stocks we believe have prospects for earnings and dividend growth
and provide attractive opportunities for solid long-term total returns.
Chart top of Page 5
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE
EQUITY-INCOME TRUST AND THE S&P 500 STOCK INDEX
From October 31, 1987 through December 31, 1994
Average
Annual 3 5 Life of
Returns Months+ Years Trust*
- -------- ------ ----- -------
With Maximum
5% CDSC -4.2% 1.2% 5.5%
Without CDSC 0.8% 1.6% 5.5%
Eq. Inc. S&P 500
10/87 10000 10000
11/87 9690 9147
12/87 10013 9901
1/88 10063 10301
2/88 9962 10732
3/88 9791 10464
4/88 9822 10563
5/88 9945 10596
6/88 10088 11157
7/88 10016 11097
8/88 9891 10669
9/88 10150 11193
10/88 10414 11483
11/88 10467 11266
12/88 10507 11534
1/89 10914 12354
2/89 10914 11997
3/89 11245 12350
4/89 11788 12969
5/89 12168 13424
6/89 12408 13438
7/89 13035 14625
8/89 13211 14852
9/89 13147 14875
10/89 12857 14500
11/89 13058 14740
12/89 13581 15178
1/90 13057 14133
2/90 13022 14254
3/90 13139 14718
4/90 12832 14323
5/90 13375 15640
6/90 13115 15640
7/90 13115 15559
8/90 12361 14091
9/90 12493 13501
10/90 12784 13411
11/90 12857 14214
12/90 12931 14705
1/91 12919 15315
2/91 13337 16346
3/91 13597 16833
4/91 13497 16839
5/91 13634 17488
6/91 13296 16796
7/91 13762 17550
8/91 14139 17894
9/91 14231 17694
10/91 14193 17903
11/91 13683 17117
12/91 14456 19166
1/92 14444 18784
2/92 14302 18964
3/92 14199 18684
4/92 14329 19205
5/92 14355 19223
6/92 14135 19040
7/92 14581 19789
8/92 14279 19314
9/92 14227 19639
10/92 14147 19681
11/92 14359 20276
12/92 14605 20624
1/93 14901 20769
2/93 15411 20987
3/93 15802 21522
4/93 15544 20975
5/93 15395 21451
6/93 15902 21624
7/93 16093 21508
8/93 16723 22249
9/93 17054 22180
10/93 16695 22611
11/93 15700 22319
12/93 15674 22693
1/94 15884 23431
2/94 15604 22727
3/94 15056 21840
4/94 15013 22092
5/94 14971 22366
6/94 14514 21933
7/94 14714 22624
8/94 14699 23475
9/94 14528 23005
10/94 14528 23486
11/94 14485 22558
12/94 14671 23001
Past performance is not indicative 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. Source: Towers Data Systems,
Bethesda, MD.
+Due to a change in the Trust's fiscal year-end from 9/30 to 12/31, the 3-month
total return figures refer to the three-month period from 9/30/94 - 12/31/94.
*Investment operations commenced on 10/21/87
<PAGE>
FUND PERFORMANCE
In accordance with guidelines issued by the Securities and Exchange Commission,
we are including a performance chart that compares your Trust's total return
with that of a broad-based investment index. The lines on the chart represent
the total returns of $10,000 hypothetical investments in Eaton Vance Equity
Income Trust and the unmanaged S&P 500 Index.
TOTAL RETURN FIGURES
The solid line on the chart represents the Trust's performance at net asset
value. The Trust's total return figure reflects Trust expenses and transaction
costs, and assumes the reinvestment of income dividends and capital gain
distributions.
The dotted black line represents the performance of the S&P 500 Index, a
broad-based, widely recognized unmanaged index of 500 common stocks. The Index's
total return does not reflect any commissions or expenses that would be incurred
if an investor individually purchased or sold the securities represented in the
Index.
<PAGE>
EV EQUITY-INCOME TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
December 31, 1994
- -------------------------------------------------------------------------------
ASSETS:
Investment in Total Return Portfolio (Portfolio)
at value (Note 1A) $27,624,478
Receivable for fund shares sold and dividend reinvestments 166,073
-----------
Total assets $27,790,551
LIABILITIES:
Payable for Trust shares redeemed $115,706
Accrued expenses 24,512
-------
Total liabilities 140,218
-----------
NET ASSETS for 2,733,924 shares of beneficial interest outstanding $27,650,333
===========
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 $28,332,530
Accumulated net realized loss on
investment and financial futures
transactions (1,632,186)
Undistributed net investment income 24,899
Unrealized appreciation of investments and open
financial futures contracts (computed on the
basis of identified cost) 925,090
-----------
Total $27,650,333
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($27,650,333/2,733,924 shares of
beneficial interest) $10.11
======
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the period from start of business, October 1, 1994, to December 31, 1994
- -------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Dividend income allocated from Portfolio $ 440,931
Interest income allocated from Portfolio 36,752
Expenses allocated from Portfolio (60,382)
---------
Total investment income $ 417,301
Expenses --
Compensation of Trustees not members of
the Investment Adviser's organization $ 419
Distribution fees (Note 4) 53,776
Custodian fee 2,121
Legal and accounting services 33,101
Service fee 16,359
Printing and postage 17,318
Transfer and dividend disbursing agent fees 7,246
Registration fees 8,325
Miscellaneous 9,250
-------
Total expenses 147,915
---------
Net investment income $ 269,386
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized gain (loss) (identified cost basis) --
Investment transactions $(383,660)
Financial futures contracts 158,424
Net realized loss on investment
transactions and financial futures
(identified cost basis) (225,236)
Change in unrealized appreciation
of investments and financial
futures contracts 173,127
-------
Net realized and unrealized loss
on investments (52,109)
---------
Net decrease in net assets resulting
from operations $ 217,277
=========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
FOR THE PERIOD
FROM START OF
BUSINESS OCTOBER YEAR ENDED
1, 1994, TO SEPTEMBER
DECEMBER 31, 1994 30, 1994
----------------- ---------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 269,386 $ 1,140,520
Net realized gain on investments (225,236) 129,629
Increase (decrease) in unrealized
appreciation of investments 173,127 (8,168,493)
------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 217,277 $ (6,898,344)
------------ ------------
Distributions to shareholders from (Note 4)
Net investment income $ (245,154) $ (1,140,520)
In excess of net investment income- - (294,126)
------------ ------------
Total distributions to shareholders $ (245,154) $ (1,434,646)
------------ ------------
Net decrease in net assets from Fund
share transactions (Note 2) $ (2,448,016) $(11,481,772)
------------ ------------
Net decrease in net assets $ (2,475,893) $(19,814,762)
NET ASSETS:
At beginning of year 30,126,226 49,940,988
------------ ------------
At end of year $ 27,650,333 $ 30,126,226
------------ ------------
------------ ------------
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
FROM START OF
BUSINESS OCTOBER YEAR ENDED SEPTEMBER 30,
1, 1994, TO ----------------------------------------------------
DECEMBER 31, 1994 1994<F3> 1993<F3> 1992<F3> 1991<F3>
----------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (for a share outstanding throughout
the period):
NET ASSET VALUE -- Beginning of period $ 10.120 $ 12.340 $ 10.730 $ 11.180 $ 10.290
--------- --------- -------- --------- ---------
Income from investment operations:
Net investment income $ 0.094 $ 0.326 $ 0.440 $ 0.374 $ 0.442
Net realized and unrealized gain
(loss) on investments (0.014) (2.136) 1.640 (0.344) 0.958
--------- --------- -------- --------- ---------
Total income (loss) from investment operations $ 0.080 $ (1.810) $ 2.080 $ 0.030 $ 1.400
--------- --------- -------- --------- ---------
Less distributions declared to shareholders:
From net investment income $ (0.090) $ (0.326) $ (0.330) $ (0.413) $ (0.510)
In excess of net investment income- -- (0.084) (0.140) -- --
Net realized gain on investment transactions -- -- -- --
Paid-in capital -- -- -- (0.067) --
--------- --------- -------- --------- ---------
Total distributions $ (0.090) $ (0.410) $ (0.470) $ (0.480) $ (0.510)
NET ASSET VALUE -- End of period $ 10.110 $ 10.120 $ 12.340 $ 10.730 $ 11.180
TOTAL RETURN<F2> 0.79% (14.82)% 19.88% (0.03)% 13.91
--------- --------- -------- --------- ---------
--------- --------- -------- --------- ---------
RATIOS/SUPPLEMENTAL DATA: (to average daily net assets)
Expenses<F1> 2.98%<F4> 2.18% 2.30% 2.40% 2.26%
Net investment income 3.85%<F4> 2.91% 2.88% 3.22% 3.96%
Portfolio Turnover<F5> 119% 87% 158% 151%
NET ASSETS AT END OF PERIOD (000'S OMITTED $27,650 $30,126 $49,941 $48,219 $55,364
<FN>
<F1> Includes the Fund's share of Total Return Portfolio's allocated expenses for the period from October 1, 1994,
to December 31, 1994.
<F2> 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.
<F3> Audited by previous auditors.
<F4>Computed on an annualized basis.
<F5>Portfolio turnover represents the rate of portfolio activity for the period when 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.
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Equity-Income Trust (the Fund) is a non-diversified entity of the type
commonly known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund is a series in the Eaton Vance Total Return Trust. On October
1, 1994, the fund transferred substantially all of its investable assets to the
Total Return Portfolio (the Portfolio). The Fund invests all of its investable
assets in interests in the Total Return 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 (5.4% at December 31, 1994). 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.
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 eachyear all of its taxable income, including any net
realized gain oninvestments, option and financial futures transactions.
Accordingly, no provision for federal income or excise tax is neces-sary. At
December 31, 1994, the Fund, for federal income tax purposes, had capital loss
carryovers of $1,740,353, 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
carryovers will expire on December 31, 2001 ($1,376,736) and on December 31,
2002 ($363,617).
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. Distributions to shareholders are recorded on
the ex-dividend date.
F. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale of Fund
shares and other distribution costs are charged to operations. For tax purposes,
commissions paid were charged to paid-in capital prior to November 16, 1994 and
subsequently charged to operations. The change in the tax accounting practice
was prompted by a recent Internal Revenue Service ruling and has no effect on
either the Fund's current yield or total return (Note 4).
G. 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.
- -------------------------------------------------------------------------------
(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 Trust shares were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM START OF
BUSINESS OCTOBER
1, 1994, TO YEAR ENDED
DECEMBER 31, 1994 SEPTEMBER 30, 1994
--------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Sales 103,367 $ 1,038,730 411,383 $4,564,751
Issued to share-holders 18,691 189,156 104,509 1,126,202
electing to receive payment of
distribution in Trust shares
Redemptions (365,004) (3,675,902) (1,584,537) (17,172,725)
-------- ----------- ---------- ------------
Net decrease (242,946) $(2,448,016) (1,068,645) $(11,481,772)
-------- ----------- ---------- ------------
-------- ----------- ---------- ------------
</TABLE>
- -------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$31,309,316 and $4,093,233, respectively.
- -------------------------------------------------------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(4) DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the Plan) pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The Plan requires the Fund to accrue amounts
daily to the principal underwriter, Eaton Vance Distributors, Inc. (EVD), equal
to 1/365th of 0.75% of the Fund's average daily net assets, for providing
ongoing distribution services and facilities to the Fund. The Fund will
automatically discontinue accruals to EVD during any period in which there are
no outstanding Uncovered Distribution Charges, which are approximately
equivalent to the sum of (i) 5% of the aggregate amount received by the Fund for
shares sold plus (ii) distribution fees calculated by applying the rate of 1%
over the prevailing prime rate to the outstanding balance of Uncovered
Distribution Charges of EVD, reduced by the aggregate amount of contingent
deferred sales charges (see Note 6) and amounts theretofore paid 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. Such
payments would cease upon termination of the distribution agreement (unless made
in accordance with another distribution agreement). As a result, the Fund does
not accrue amounts which may become payable to EVD in the future because the
conditions for recording any contingent liability under generally accepted
accountingprinciples have not been satisfied. EVD earned $53,776 forthe period
from the start of business, October 1, 1994, to December 31, 1994, representing
0.75% of average daily net assets. At December 31, 1994, the amount of Uncovered
Distribution Charges of EVD calculated under the Plan was approximately
$541,466.
In addition, the Plan authorizes the Fund to make payments of service fees
to the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees have implemented the plan by authorizing the Fund to make quarterly
payments of service fees to the Principal Underwriter and Authorized Firms in
amounts not expected to exceed 0.25% of the Fund's average daily net assets for
each fiscal year based on the value of Fund shares sold by such persons and
remaining outstanding for at least twelve months. 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 where there are
no outstanding Uncovered Distribution Charges of EVD. Provision for service fees
amounted to $16,359 for the period from the start of business, October 1, 1994,
to December 31, 1994.
Certain of the officers of the Fund and Directors of the Corporation are
officers and directors of EVD.
- -------------------------------------------------------------------------------
(5) CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. 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 gain
distributions. The CDSC is imposed at declining rates that begin at 6% in the
first year of redemption after purchase, declining one percentage pointeach
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 the Fund's
Distribution Plan. CDSC charges received when no Uncovered Distribution Charges
exist will be retained by the Fund. EVD received approximately $72,219 of CDSC
paid by shareholders for the period from October 1, 1994, to December 31, 1994.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
EV Equity-Income Trust, a series of Eaton Vance Total Return Trust:
We have audited the accompanying statement of assets and liabilities of EV
Equity-Income Trust, a series of Eaton Vance Total Return Trust, as of December
31, 1994, and the related statement of operations, changes in net assets and the
financial highlights for the period from start of business, October 1, 1994 to
December 31, 1994. 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
audit. The statement of changes for the year ended September 30, 1994 and the
financial highlights for each of the four years in the period ended September
30, 1994, presented herein, were audited by other auditors whose report dated
November 2, 1994, expressed an unqualified opinion on such financial highlights.
We conducted our audit 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, 1994 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of EV
Equity-Income Trust, a series of Eaton Vance Total Return Trust, as of December
31, 1994, the results of its operations, changes in its net assets, and the
financial highlights for the period from the start of business October 1, 1994
to December 31, 1994, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 3, 1995
<PAGE>
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
- -------------------------------------------------------------------------------
COMMON STOCKS -- 93.4%
- -------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 62.1%
American Electric Power Co. Inc. 200,000 $ 6,575,000
Baltimore Gas & Electric Co. 150,000 3,318,750
Carolina Power & Light Co. 750,000 19,968,750
Central & South West Corp. 479,994 10,859,864
Central Louisiana Electric Co. 326,800 7,720,650
Cinergy Corp. 1,250,250 29,224,594
Dominion Resources, Inc. 200,000 7,150,000
DPL Inc. 950,000 19,475,000
DQE, Inc. 400,000 11,850,000
Duke Power Co. 270,000 10,293,750
FPL Group, Inc. 560,000 19,670,000
General Public Utilities Corp. 320,000 8,400,000
IPALCO Enterprises, Inc. 350,000 10,500,000
Kansas City Power & Light Co. 181,900 4,251,913
LG & E Energy Corp. 125,000 4,609,375
New England Electric System 100,000 3,212,500
NIPSCO Industries, Inc. 400,000 11,900,000
Northern States Power Co. Minn. 322,800 14,203,200
Norweb Ord PLC 200,000 2,690,940
Ohio Edison Co. 200,000 3,700,000
PacifiCorp 583,200 10,570,500
PECO Energy Co. 200,000 4,900,000
Pinnacle West Capital Corp. 300,000 5,925,000
Portland General Corp. 350,000 6,737,500
Public Service Co. of New Mexico* 565,300 7,348,900
Southern Co. 1,072,460 21,449,200
Teco Energy, Inc. 410,000 8,251,250
Union Electric Co. 346,500 12,257,438
United Illuminating Co. 110,200 3,250,900
Western Resources, Inc. 200,000 5,725,000
Wisconsin Energy Corp. 689,650 17,844,694
------------
$313,834,668
------------
OIL & GAS -- 5.4%
Amoco Corp. 165,000 $ 9,755,625
BP Prudhoe Bay Rty Tr Unit Ben Int. 437,000 7,429,000
Mobil Corp. 120,000 10,110,000
------------
$ 27,294,625
------------
REITS -- 18.5%
Apartment Investment & Management Co. Class A 200,000 $ 3,450,000
Associated Estates Realty Corp. 200,000 4,200,000
<PAGE>
- -------------------------------------------------------------------------------
COMMON STOCKS -- (Continued)
- -------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
Avalon Properties, Inc. 165,000 $ 3,795,000
Bay Apartment Communities 213,400 4,294,675
Bradley Real Estate Trust 72,750 1,109,437
Cali Realty Corp. 150,000 2,400,000
Camden Properties Trust SBI 200,000 4,975,000
Columbus Realty Trust 140,000 2,590,000
Developers Diversified Realty Corp. 170,000 5,312,500
Duke Realty Investments, Inc. 40,000 1,130,000
Equity Residential Properties Trust 80,000 2,400,000
Health Care Property Investors, Inc. 140,000 4,217,500
Healthcare Realty Trust 350,000 7,350,000
LTC Properties, Inc. 490,000 6,492,500
Macerich Co. 175,000 3,740,625
Meditrust Sh Ben Int. 100,000 3,025,000
Mid America Apartment Communities, Inc. 164,500 4,400,375
Nationwide Health Properties, Inc. 320,000 11,440,000
Oasis Residential, Inc. 225,000 5,512,500
Post Properties Inc. 100,000 3,150,000
Simon Property Group, Inc. 150,000 3,637,500
Southwestern Property Trust, Inc. 180,000 2,205,000
Sun Communities Inc. 110,000 2,475,000
------------
$ 93,302,612
------------
TELEPHONE UTILITIES -- 6.9%
Ameritech Corp. 380,000 $ 15,342,500
Bell Atlantic Corp. 100,000 4,975,000
Southern New England Telecommunications 50,000 1,606,250
Southwestern Bell Corp. 150,000 6,056,250
Tele Danmark A/S* 63,000 1,606,500
Telecom Corp. New Zealand Ltd. ADR 100,000 5,137,500
------------
$ 34,724,000
------------
OTHER -- 0.5%
British Sky Broadcasting Group PLC ADR* 25,000 $ 600,000
Sonat Inc. 71,000 1,988,000
------------
$ 2,588,000
------------
TOTAL COMMON STOCKS (identified cost, $455,294,874) $471,743,905
------------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
- -------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK -- 2.0%
- -------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
Freeport McMoRan Copper & Gold 40,000 $ 830,000
Kenetech Corp., 8.25s 200,000 3,075,000
Philippines Long Distance Telephone, 7s 112,000 6,062,000
------------
$ 9,967,000
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(identified cost, $10,549,225) $ 9,967,000
------------
- -------------------------------------------------------------------------------
CONVERTIBLE BONDS -- 0.1%
- -------------------------------------------------------------------------------
FACE AMOUNT
(000 OMITTED)
- -------------------------------------------------------------------------------
IDB Communications Group, Inc., 5s,
8/15/03 (identified cost, $858,750 $1,000 $ 762,500
------------
- -------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 1.5%
- -------------------------------------------------------------------------------
U.S. Treasury Bill, 0s, 3/5/95+
(identified cost, $7,696,456) $ 7,780 $ 7,703,600
------------
- -------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS -- 1.5%
- -------------------------------------------------------------------------------
CXC Inc., 5.95s, 1/3/95 $ 3,499 $ 3,497,265
American Express Credit Corp., 5.80s, 1/5/95 4,294 4,290,541
-------------
TOTAL SHORT-TERM OBLIGATIONS, AT AMORTIZED COST $ 7,787,806
-------------
TOTAL INVESTMENTS -- 98.5%
(identified cost, $482,187,111) $497,964,811
OTHER ASSETS, LESS LIABILITIES -- 1.5% 7,602,081
-------------
NET ASSETS -- 100.0% $505,566,892
============
+Collateral for futures held at December 31, 1994 (see Note 6)
*Non-income producing security
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
December 31, 1994
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified
cost, $482,187,111) $497,964,811
Cash 2,597
Receivable for investments sold 8,994,384
Dividends receivable 2,364,639
Receivable for daily variation margin on
financial futures contracts 975,000
Deferred organization expenses (Note 1E) 16,027
Foreign tax reclaim receivable 25,565
Interest receivable 29,754
------------
Total assets $510,372,777
LIABILITIES:
Payable for investments purchased $ 4,775,774
Trustees fees payable 5,160
Custodian fee payable 8,403
Accrued expenses 16,548
------------
Total liabilities 4,805,885
------------
NET ASSETS applicable to investors' interest in Portfolio $505,566,892
============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $491,941,692
Unrealized appreciation of investments and open
futures contracts (computed on the basis of
identified cost) 13,625,200
------------
Total net assets $505,566,892
============
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the Year Ended December 31, 1994
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income $ 32,158,717
Interest income 1,330,065
-------------
Total income $ 33,488,782
Expenses --
Investment adviser fee (Note 3) $ 4,106,857
Compensation of trustees not members of
the investment adviser's organization
(Note 3) 20,687
Custodian fee (Note 3) 159,872
Interest expense 187,106
Commitment fee 143,450
Audit and legal fees 46,657
Printing and postage fees 14,129
Amortization of deferred organizational
expenses (Note 1E) 4,197
Miscellaneous 19,841
-------------
Total expenses 4,702,796
-------------
Net investment income $ 28,785,986
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) (identified
cost basis) --
Investment transactions $ (21,035,623)
Financial futures contracts 5,883,625
-------------
Net realized loss on investments
and financial futures
(identified cost basis) $ (15,151,998)
Change in unrealized appreciation on
investments and financial futures contracts (89,492,365)
-------------
Net realized and unrealized loss on investments (104,644,363)
-------------
Net decrease in net assets resulting from operations $ (75,858,377)
=============
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993<F1>
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 28,785,986 $ 5,227,429
Net realized loss on investment transactions and (15,151,998) (3,109,783)
financial futures contracts
Decrease in unrealized appreciation of investments (89,492,365) (31,858,504)
------------- -------------
Net decrease in net assets resulting from operations $ (75,858,377) $ (29,740,858)
------------- -------------
Capital transactions --
Contributions $ 97,021,559 $ 700,057,818
Withdrawals (152,162,876) (33,850,394)
------------- -------------
Increase (decrease) in net assets
resulting from capital transactions $ (55,141,317) $ 666,207,424
------------- -------------
Total increase (decrease) in net assets $(130,999,694) $ 636,466,566
NET ASSETS:
At beginning of period 636,566,586 100,020
------------ -------------
At end of period $ 505,566,892 $ 636,566,586
============= =============
<FN>
<F1> For the period from the start of business, October 28, 1993, to December 31, 1993.
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------
1994 1993*
--------- ------------
RATIOS (As a percentage of average net assets):
Expenses 0.85% 0.91%+
Net investment income 5.22% 4.57%+
PORTFOLIO TURNOVER 107% 16%
LEVERAGE ANALYSIS:
Amount of debt outstanding at end of period
(000's omitted) -- --
Average daily balance of debt outstanding
during period (000 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
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
(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. Investment operations began on October 28, 1993, with the acquisition
of net assets of $668,641,088 in exchange for an interest in the Portfolio by
one of the Portfolio's investors. 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 of 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>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
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,
aggregated $574,395,813 and $620,810,869,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
manage- ment and investment advisory services rendered to the Portfolio. The fee
is based upon a percentage of average daily net assets. For the year ended
December 31, 1994, the fee was equivalent to 0.74% of the Portfolio's average
net assets for such period and amounted to $4,106,857. 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. 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.
- --------------------------------------------------------------------------------
(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 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 and portfolios at the end of each quarter. The average daily loan balance
for the year ended December 31, 1994 was $3,137,134 and the average interest
rate was 5.96%. The maximum borrowings outstanding at any month end during the
year ended December 31, 1994, was $26,083,000.
- --------------------------------------------------------------------------------
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at December 31, 1994, as computed on a federal income tax basis, are as
follows:
Aggregate cost $482,915,174
============
Gross unrealized appreciation $ 28,239,363
Gross unrealized depreciation 13,189,726
------------
Net unrealized appreciation $ 15,049,637
============
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(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
notational 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 off-setting transactions are considered.
A summary of obligations under these financial instruments at December 31, 1994
is as follows:
NET
FUTURES CONTRACT UNREALIZED
EXPIRATION DATE CONTRACTS POSITION DEPRECIATION
- --------------- --------- -------- ------------
3/95 600 S&P 500 Futures Short $2,152,500
At December 31, 1994, the Portfolio has sufficient cash and/or securities to
cover margin requirements on open futures contracts.
<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 December 31,
1994, the related statement of operations for the year then ended and the
statement of changes in net assets and supplementary data for the year ended
December 31, 1994, and for the period from the start of business, October 28,
1993, to December 31, 1993. 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
December 31, 1994 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 December 31, 1994, the results of its operations for the
year then ended, and the changes in its net assets and the supplementary data
for the year ended December 31, 1994, and for the period from the start of
business, October 28, 1993, to December 31, 1993, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 3, 1995
<PAGE>
INVESTMENT MANAGEMENT
<TABLE>
<S> <C> <C>
EV EQUITY-INCOME TRUST OFFICERS TRUSTEES
24 Federal Street JAMES B. HAWKES DONALD R. DWIGHT
Boston, MA 02110 President, Trustee President, Dwight Partners, Inc.
PETER F. KIELY Chairman, Newspapers of New England, Inc.
Vice President, Trustee SAMUEL L. HAYES, III
EDWIN W. BRAGDON Jacob H. Schiff Professor of Investment
Vice President Banking, Harvard University Graduate School of
A. WALKER MARTIN Business Administration
Vice President NORTON H. REAMER
JAMES L. O'CONNOR President and Director, United Asset
Treasurer Management Corporation
THOMAS OTIS JOHN L. THORNDIKE
Secretary Director, Fiduciary Trust Company
WILLIAM J. AUSTIN, JR. JACK L. TREYNOR
Assistant Treasurer Investment Adviser and
JANET E. SANDERS Consultant
Assistant Treasurer and
Assistant Secretary
TOTAL RETURN PORTFOLIO OFFICERS INDEPENDENT TRUSTEES
24 Federal Street M. DOZIER GARDNER DONALD R. DWIGHT
Boston, MA 02110 President, Trustee President, Dwight Partners, Inc. Chairman,
LANDON T. CLAY Newspapers of New England, Inc.
Vice President, Trustee SAMUEL L. HAYES, III
EDWIN W. BRAGDON Jacob H. Schiff Professor of Investment
Vice President Banking, Harvard University Graduate School of
JAMES B. HAWKES Business Administration
Vice President, Trustee NORTON H. REAMER
A. WALKER MARTIN President and Director, United Asset
Vice President Management Corporation
JAMES L. O'CONNOR JOHN L. THORNDIKE
Treasurer Director, Fiduciary Trust Company
THOMAS OTIS JACK L. TREYNOR
Secretary Investment Adviser and
WILLIAM J. AUSTIN, JR. Consultant
Assistant Treasurer
JANET E. SANDERS
Assistant Treasurer and
Assistant Secretary
PORTFOLIO MANAGER
TIMOTHY O'BRIEN
</TABLE>
<PAGE>
INVESTMENT ADVISER OF
TOTAL RETURN PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF EATON VANCE
EQUITY-INCOME TRUST
Eaton Vance Managment
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
(800) 262-1122
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
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.
EATON VANCE
EQUITY-INCOME TRUST
24 FEDERAL STREET
BOSTON, MA 02110
M-EISRC
EATON VANCE
EQUITY-INCOME
TRUST
ANNUAL
SHAREHOLDER REPORT
DECEMBER 31, 1994
