<PAGE>
Performance Highlights
* A CONSISTENT YIELD ADVANTAGE
IN ITS INITIAL MONTHS OF OPERATION, THE FUND HAS PRODUCED AN ATTRACTIVE YIELD
ADVANTAGE OVER 3-MONTH BANK CDS.
EFFECTIVE YIELD SPREAD OVER 3-MONTH CD RATES
PRIME
RATE
EFFECTIVE YIELD RESERVES CDS SPREAD
March 1995 .......... 8.83% 4.38% 4.00%
April 1995 .......... 7.85% 4.34% 3.51%
May 1995 ............ 7.85% 4.36% 3.49%
June 1995 ........... 7.85% 4.27% 3.58%
Average Yield Advantage during the period of 3.65%
This bar chart shows the spread between the effective month-end yields of EV
Classic Senior Floating-Rate Fund and CD yields from March 31 through
June 30, 1995.
Sources: Eaton Vance, Wall Street Journal
All figures are as of 6/30/95. EV Classic Senior Floating-Rate Fund figure
represents effective yield (distribution for the latest 30-day period,
annualized, divided by the net asset value per share at the end of the period,
and then compounded over a 12-month period). The Fund is not insured nor does it
offer a fixed rate of return like bank certificates of deposit or bank money
market funds, and does not attempt to maintain a constant net asset value per
share, as do money market funds. Past performance is no guarantee of future
results. Principal value and investment return will fluctuate with changes in
market conditions.
Sources: Eaton Vance Management, The Wall Street Journal
--------------------------------------------------------------------------------
* RELATIVE STABILITY OF NET ASSET VALUE
DESPITE LINGERING QUESTIONS ABOUT THE ECONOMY AND A ROLLER-COASTER BOND MARKET,
THE FUND MAINTAINED A RELATIVELY STABLE SHARE PRICE IN ITS INITIAL MONTHS OF
OPERATION.
MONTH-END NET ASSET VALUE PER SHARE
EV CLASSIC SENIOR FLOATING-RATE FUND NAV
February 1995 ..................................... 10.00%
March 1995 ........................................ 10.00%
April 1995 ........................................ 9.99%
May 1995 .......................................... 9.99%
June 1995 ......................................... 9.99%
This line chart uses month-end data to show the relative stability of the share
price of EV Classic Senior Floating Rate Fund.
Source: Eaton Vance Management
<PAGE>
To Shareholders
During the period from inception on February 24, 1995 through June 30, 1995,
shareholders of EV Classic Senior Floating-Rate Fund realized a significant
yield advantage over other short-term investments as the Fund's investment in a
portfolio of senior, secured, floating rate loans met the Fund's objective of
maintaining a high level of current income with a relatively stable net asset
value.
THE ECONOMY CONTINUED TO GROW IN THE FIRST HALF, ALBEIT AT A SLOWER PACE...
The Federal Reserve's inflation-fighting efforts extended into February of this
year, with a final increase in the Federal funds rate, a key short-term interest
rate barometer. However, with few current signs of inflation to date, the
pressure on interest rates has since mitigated. Rising business inventories
contributed to a significant slowdown in the second quarter, with GDP rising a
modest 0.5 percent. Convinced that inflation posed no immediate threat to the
economy, the Fed lowered short-term rates at its July open market meeting.
EV CLASSIC SENIOR FLOATING-RATE FUND MAINTAINED A YIELD ADVANTAGE OVER OTHER
SHORT-TERM FIXED INCOME INVESTMENTS...
The Fund paid shareholders distributions from net investment income totaling
$0.268 during the period. As the chart on page 4 illustrates, the Fund had an
effective yield of 7.85 percent at June 30. The Fund's yield continued to
represent a significant advantage over money market mutual funds, 3-month
certificates of deposit, and bank money market accounts, which offered rates of
5.61 percent, 4.27 percent, and 3.43 percent, respectively. Of course, unlike
bank certificates of deposit, the Fund is not insured and does not offer a fixed
rate of return; and unlike money market accounts, the Fund's principal value and
return can fluctuate with market conditions.
RELATIVE STABILITY SERVED OUR SHAREHOLDERS WELL IN AN OTHERWISE VOLATILE FIXED
INCOME MARKET...
While the fixed income markets have shown significant volatility in recent
months, EV Classic Senior Floating-Rate Fund has maintained a relatively stable
share price, a major consideration for investors in short-term instruments. Of
course, past performance is no guarantee of future returns. But EV Classic
Senior Floating-Rate Fund will continue its pursuit of attractive yields and
relative price stability in senior floating rate loans as well as its efforts to
maintain purchasing power for its shareholders.
Sincerely,
[PHOTO OF JAMES B. HAWKES] /S/ James B. Hawkes
James B. Hawkes
President
August 21, 1995
<PAGE>
Management Report
Questions and answers with Jeffrey S. Garner, Vice President and Portfolio
Manager, Senior Debt Portfolio.
Q: JEFF, IN THE BRIEF PERIOD SINCE ITS INCEPTION, THE FUND'S RETURN SURPASSED
MOST OTHER SHORT-TERM VEHICLES. TO WHAT DO YOU ATTRIBUTE THE FUND'S
PERFORMANCE?
A: The Fund has benefited from the relative stability of interest rates.
Interest rates on the floating rate loans in which the Portfolio invests are
generally pegged to LIBOR - the London Interbank Offered Rate. While U.S.
interest rates have moved lower during the past six months, LIBOR has
remained quite stable. That has resulted in a stable rate structure for the
Portfolio.
Complementing the yield performance has been a relatively stable net asset
value. The healthy economy has resulted in no significant credit weakenings,
which has further buttressed the market.
Q: HOW WOULD YOU CHARACTERIZE THE LOAN MARKET TO DATE IN 1995?
A: Loan demand has been brisk so far in 1995, for several major reasons. First,
with a fundamentally sound economy, the need for financing of new plant and
equipment has continued to grow. Second, corporate acquisition activity has
also picked up. Finally, there is growing enthusiasm and activity among the
major investment banks within the loan market, including such participants as
Merrill Lynch and Goldman Sachs.
Q: IS THE GROWTH IN LOAN VOLUME CREATING MORE OPPORTUNITIES FOR THE PORTFOLIO?
A: Yes. Rising volume of loan transactions should improve --------------
opportunities for selectivity as well as diversification. [PHOTO OF
The Portfolio currently has investments in 61 borrowers JEFFREY S.
and 25 industries. That is consistent with our belief in GARNER]
a broad but prudent diversification. --------------
Jeffrey S. Garner
-----------------
At Eaton Vance, we believe that diversification should span a relatively wide
range of industries while maintaining consistent credit standards among our
borrowers. We ensure that each analyst is responsible for a limited number of
borrowers. We will not compromise the analysts' ability to monitor the
Portfolio's investments for the sake of further marginal diversification.
Q: CAN YOU GIVE SOME EXAMPLES OF YOUR INVESTMENT FOCUS IN THE FUND'S FIRST
MONTHS OF OPERATION?
A: The Portfolio has established relatively large weightings in the paper,
retail, and manufacturing sectors. Each of those segments has benefited from
the growing economy and each has witnessed a growing participation in the
loan market. An area where the Portfolio has established large commitments is
the broadcast media sector, as represented by loans involving broadcasters
and cable television operators.
EV CLASSIC SENIOR FLOATING-RATE FUND:
THE FUND MAINTAINED A SIZABLE YIELD ADVANTAGE OVER OTHER POPULAR SHORT-TERM
INVESTMENT VEHICLES.
EV Classic Senior Floating-Rate Fund .......................... 7.85%
Money markets ................................................. 5.61%
3-month CDs ................................................... 4.27%
Bank money market accounts .................................... 3.43%
All figures are as of 6/30/95. EV Classic Senior Floating-Rate Fund figure
represents effective yield (Distribution for the latest 30-day period,
annualized, divided by the net asset value per share at the end of the period,
and then compounded over a 12-month period). The Fund is not insured by the FDIC
nor does it offer a fixed rate of return like bank certificates of deposit or
bank money market funds, and does not attempt to maintain a constant net asset
value per share, as do money market funds. Past performance is no guarantee of
future results. Principal value and investment return will fluctuate with
changes in market conditions.
Sources: Eaton Vance Management, The Wall Street Journal
Q: IN YOUR VIEW, FOR WHAT KIND OF INVESTOR IS THE FUND MOST SUITED?
A: I believe that the Fund is most suited to those investors who are
"yield-hungry, but risk-averse." And I think that is especially true in
today's investment climate. We've seen a bond market rally of large
proportions in 1995, and many investors fear that a correction may be due.
Their uneasiness is amplified by the historically high levels of the stock
market. That's especially unnerving for investors for whom capital
preservation is an important goal.
The Fund may represent a good complement to bonds and bond funds in the
current environment. First, the Fund's distribution rate represents an
attractive yield when compared to bonds. Second, - and this is especially
important for the conservative investor - the relative stability of the
Fund's share price is a welcome change from the recent volatility of the bond
market. Just consider the harrowing rollercoaster ride of the past 18 months.
Q: THERE HAS BEEN A LOT OF TALK ABOUT A "SOFT LANDING" FOR THE ECONOMY. COULD
THE DECLINE IN INTEREST RATES BE NEAR AN END?
A: If the Fed has indeed been successful in engineering a soft landing, there is
not likely to be much more near-term pressure to lower interest rates.
Chairman Greenspan has indicated that he is not likely to push for another
rate cut in the immediate future. Much anecdotal evidence suggests that the
economy is firming a bit. Absent a recession, the Fed will be careful not to
add too much fuel to the economy. Especially, given the Fed's oft-stated goal
of discouraging inflation.
PORTFOLIO HIGHLIGHTS
June 30, 1995
GENERAL PORTFOLIO INFORMATION
Total net assets . . . . . . . . . . . . . . . . . . . $955 million
Assets invested in loan interests . . . . . . . . . . $842 million
Number of borrowers . . . . . . . . . . . . . . . . . . . . . 61
Industries represented . . . . . . . . . . . . . . . . . . . 25
FUNDAMENTAL CHARACTERISTICS OF PORTFOLIO LOANS
Senior . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
Secured . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
Floating rate . . . . . . . . . . . . . . . . . . . . . . . . 100%
Commercial & industrial . . . . . . . . . . . . . . . . . . . 100%
AVERAGE PORTFOLIO STATISTICS (DOLLAR-WEIGHTED)
Collateral coverage ratio . . . . . . . . . . . . . . . . . . 1.5 to 1*
Days to interest-rate reset . . . . . . . . . . . . . . . . . 49
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 years
Size per borrower . . . . . . . . . . . . . . . . . . . . . $13.8 million
Average size as percent of total net assets . . . . . . . . . 1.45%
* At time of purchase
Source: Eaton Vance Management
Q: HOW MIGHT THAT IMPACT THE FUND?
A: If the interest rate environment remains stable, the Fund should continue to
enjoy a yield advantage over short-term rates. However, a stronger economy
would bring still higher rates which should be reflected over time in the
Fund's returns. The floating rate loan agreements in which the Portfolio has
invested have interest rate reset provisions. The interest rates paid by
borrowers are typically reset every 30, 60 or 90 days, thus quickly
reflecting changes in the prevailing interest rate environment. If interest
rates rise in general, the rates paid by the borrowers will also rise.
Because the average interest rate reset period is a short 49 days at (June
30), the Portfolio typically responds promptly to a change in interest rates.
That represents a major advantage over traditional fixed income investments
such as bonds, whose interest rates remain fixed and whose prices decline as
rates rise.
Q: WHAT IS YOUR OUTLOOK FOR THE LOAN MARKET?
A: In my view, we should see growth in the loan market as the economy expands
and the underwriting activity continues to increase. Naturally, past trends
will not necessarily be repeated in the future. But if the soft landing is
followed by another leg upward in the economy, floating rate loan investors
are very likely to be beneficiaries of rising interest rate resets. That
unique feature sets this investment apart from other short-term vehicles, and
makes it a compelling choice for investors.
<PAGE>
EV CLASSIC SENIOR FLOATING-RATE FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
ASSETS:
Investment in Senior Debt Portfolio at value (Note 1A)
(identified cost, $145,758,391) $145,702,419
Receivable for Fund shares sold 6,636,334
Other assets 1,138
Deferred organization expenses (Note 1D) 281,631
------------
Total assets $152,621,522
LIABILITIES:
Dividends payable $195,260
Custodian fee payable 3,000
Accrued expenses 48,570
--------
Total liabilities 246,830
------------
NET ASSETS for 15,250,762 shares of beneficial
interest outstanding $152,374,692
============
SOURCES OF NET ASSETS:
Paid-in capital $152,387,300
Net realized gain on investment transactions
(computed on the basis of identified cost) 38,801
Undistributed net investment income 4,563
Unrealized depreciation of investments from
Portfolio (computed on the basis of identified cost) (55,972)
------------
Total $152,374,692
============
NET ASSET VALUE PER SHARE (NOTE 6)
($152,374,692 / 15,250,762 shares of beneficial interest) $9.99
=====
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
------------------------------------------------------------------------------
For the period from the start of business,
February 24, 1995, to June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Income allocated from Portfolio $1,839,837
Expenses allocated from Portfolio (228,188)
----------
Total investment income $1,611,649
Expenses --
Administration fee (Note 4) $48,149
Service fee (Note 5) 31,245
Custodian fees (Note 4) 3,000
Registration costs 25,610
Transfer and dividend disbursing agent fees 13,226
Amortization of organization expense (Note 1D) 13,382
Legal and accounting 3,787
Printing and postage 315
Miscellaneous 4,938
-------
Total expenses $ 143,652
----------
Net investment income $1,467,997
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from Portfolio on investment
transactions (identified cost basis) $ 38,801
Unrealized depreciation on investments (55,972)
----------
Net realized and unrealized loss $ (17,171)
----------
Net increase in net assets from operations $1,450,826
==========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------
For the period from the start of business,
February 24, 1995, to June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES --
Purchase of Interests in Senior Debt Portfolio $(145,609,632)
Withdrawal of interests in Senior Debt Portfolio 1,601,681
Operating expenses paid (374,841)
-------------
Net cash used for operating activities $(144,382,792)
-------------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES --
Proceeds from shares sold $ 144,962,286
Payments for shares reacquired in tender offers (418,739)
Cash distributions paid (excluding
reinvestments of distributions of $1,107,419) (160,755)
-------------
Net cash provided by financing activities $ 144,382,792
-------------
Net increase in cash $ --
CASH AT BEGINNING OF PERIOD --
-------------
CASH AT END OF PERIOD $ --
=============
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM
OPERATIONS TO NET CASH USED FOR OPERATING ACTIVITIES:
Net increase in net assets from operations $ 1,450,826
Increase in other assets (1,138)
Increase in deferred organization expenses (281,631)
Increase in payable to affiliates 3,000
Increase in accrued expenses and other liabilities 48,570
Net increase in investments (145,602,419)
-------------
Net cash used for operating activities $(144,382,792)
=============
See notes to financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the period from the start of business,
February 24, 1995, to June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,467,997
Net realized gain on investments 38,801
Unrealized depreciation of investments (55,972)
------------
Net increase in net assets from operations $ 1,450,826
------------
Distributions to shareholders (Note 2) --
From net investment income $ (1,463,434)
------------
Total distributions to shareholders $ (1,463,434)
------------
Transactions in shares of beneficial interest (Note 3) --
Proceeds from sales of shares $151,598,620
Net asset value of shares issued to share-
holders in payment of distributions declared 1,107,419
Cost of shares reacquired in tender offer (418,739)
------------
Increase in net assets from Trust share
transactions $152,287,300
------------
Net increase in net assets $152,274,692
NET ASSETS:
At beginning of period 100,000
------------
At end of period (including undistributed net
investment income of $4,563) $152,374,692
============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
For the period from the start of business,
February 24, 1995, to June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
NET ASSET VALUE, beginning of period $ 10.000
------------
INCOME FROM OPERATIONS:
Net investment income(1) $ 0.268
Net realized and unrealized loss on
investments (0.010)
------------
Total income from operations $ 0.258
------------
LESS DISTRIBUTIONS:
From net investment income $ (0.268)
------------
Total distributions $ (0.268)
------------
NET ASSET VALUE, end of period $ 9.990
============
TOTAL RETURN(2) 2.61%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of period (000's omitted) $152,375
Ratio of net expenses to average daily net
assets(1) 1.74%+
Ratio of net investment income to average
daily net assets 6.88%+
+Computed on an annualized basis.
(1)Includes the Trust's share of Senior Debt Portfolio's allocated expenses.
(2)Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
the period reported. Dividends and distributions, if any, are assumed to be
invested at the net asset value on the payable date.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Classic Senior Floating-Rate Fund (formerly Eaton Vance Senior Short-Term
Trust) (the Trust) was formed under a Declaration of Trust dated August 5,
1993, amended and restated December 7, 1994. The Trust is an entity of the
type commonly known as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as a non-diversified closed-
end management investment company. The Trust invests all of its investable
assets in interests in the Senior Debt Portfolio (the Portfolio), a New York
Trust, having the same investment objective as the Trust. The value of the
Trust's investment in the Portfolio reflects the Trust's proportionate
interest in the net assets of the Portfolio (15.3% at June 30, 1995). The
performance of the Trust 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 Trust's financial statements. The following is a summary
of significant accounting policies consistently followed by the Trust in the
preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
A. INVESTMENT VALUATION -- Valuation 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 Trust's net investment income consists of the Trust's pro
rata share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Trust determined in accordance with generally accepted
accounting practices.
C. FEDERAL TAXES -- The Trust's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal income
or excise tax is necessary.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Trust in connection
with its organization, including registration costs, are being amortized on
the straight-line basis over five years.
E. OTHER -- Investment transactions are accounted for on a trade date basis.
F. 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 Trust's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
--------------------------------------------------------------------------------
(2) DISTRIBUTIONS TO SHAREHOLDERS
The net investment income of the Trust is determined daily, and substantially
all of the net investment income so determined is declared daily as a dividend
to shareholders of record at the time of declaration. Such daily dividends
will be paid monthly. Distributions of realized capital gains, if any, are
made at least annually. Shareholders may reinvest capital gain distributions
in additional shares of the Trust at the net asset value as of the ex-dividend
date. Distributions are paid in the form of additional shares of the Trust or,
at the election of the shareholder, in cash. The Trust distinguishes between
distributions on a tax basis and a financial reporting basis. Generally
accepted accounting principles require that only distributions in excess of
tax basis earnings and profits be reported in the financial statements as a
return of capital. Differences in the recognition or classification of income
between the financial statements and tax earnings and profits which result in
over-distributions for financial statement purposes only are classified as
distributions in excess of net investment income or accumulated net realized
gains. Permanent differences between book and tax accounting relating to
distributions are reclassified to paid-in capital.
--------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). The
Trust may from time to time, at its discretion, make tender offers at net
asset value for the purchase of all or a portion of its shares. The price will
be established at the close of business on the last day the tender offer is
open. (An early withdrawal charge will be imposed on most shares accepted for
tender which have been held less than one year.) (See Note 6). The Trustees
approved a tender offer for the period from April 24, 1995 to May 19, 1995 and
July 24, 1995 to August 18, 1995. Transactions in Trust shares for the period
from the start of business, February 24, 1995, to June 30, 1995 were as
follows:
Sales 15,171,830
Issued to shareholders electing to receive payments
of distributions in Trust shares 110,848
Reacquired in tender offer (41,916)
----------
Net increase 15,240,762
==========
--------------------------------------------------------------------------------
(4) TRANSACTIONS WITH AFFILIATES
The administration fee was earned by Eaton Vance Management (EVM) as
compensation for administrative services necessary to conduct the Trust's
business. The fee is computed monthly in the amount of 1/48 of 1% (equivalent
to 0.25% annually) of the average daily gross assets of the Portfolio
attributable to the Trust. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services.
See Note 2 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
Except as to Trustees of the Trust and the Portfolio who are not members of
EVM's or BMR's organization, officers and Trustees receive remuneration for
their services to the Trust out of such investment adviser fee. Investors Bank &
Trust Company (IBT), an affiliate of EVM, serves as custodian of the Trust and
the Portfolio. Pursuant to the respective custodian agreements, IBT receives a
fee reduced by credits which are determined based on the average cash balances
the Trust or the Portfolio maintains with IBT. Certain of the officers and
Trustees of the Trust and Portfolio are officers and/or directors/trustees of
the above organizations (Note 5).
--------------------------------------------------------------------------------
(5) SERVICE PLAN
The Trust has adopted a service plan (the Plan) 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 provides that the Trust may make service fee payments to
the Principal Underwriter, Eaton Vance Distributors, Inc. (EVD), a subsidiary
of Eaton Vance Management, Authorized Firms or other persons in amounts not
exceeding 0.25% of the Trust's average daily net assets for any fiscal year.
The Trustees have initially implemented the Plan by authorizing the Trust to
make quarterly service fee payments to the Principal Underwriter and
Authorized Firms in amounts not exceeding 0.15% of the Trust's average daily
net assets for each fiscal year. The Trust paid or accrued service fees to or
payable to EVD for the period from the start of business, February 24, 1995,
to June 30, 1995, in the amount of $31,245. Service fee payments are made for
personal services and/or the maintenance of shareholder accounts.
Certain of the officers and Trustees of the Trust are officers or directors
of EVD.
--------------------------------------------------------------------------------
(6) EARLY WITHDRAWAL CHARGE
Eaton Vance Distributors, Inc. (EVD), a subsidiary of Eaton Vance Management,
serves as the Trust's principal underwriter. EVD compensates authorized firms
at a rate of 1% of the purchase price of shares purchased through such firms
consisting of 0.85% of sales commissions and 0.15% service fee (for the first
year's service). EVD also pays additional compensation to each firm equal to
0.60% per annum of the value of Trust shares sold by such firm that are
outstanding for more than one year. A 1% early withdrawal charge to recover
distribution expenses will be charged to tendering shareholders and paid to
EVD in connection with most shares held for less than one year which are
accepted by the Trust for repurchase pursuant to tender offers. The early
withdrawal charge will be imposed on those shares accepted for tender, the
value of which exceeds the aggregate value at the time the tender is accepted
of: (a) all shares in the account purchased more than one year prior to such
acceptance, (b) all shares in the account acquired through reinvestment of
distributions, and (c) the increase, if any, in value of all other shares in
the account (namely those purchased within the one year preceding the
acceptance) over the purchase price of such shares. In determining whether an
early withdrawal charge is payable, it is assumed that the acceptance of a
repurchase offer would be made from the earliest purchase of shares. The total
early withdrawal charges received by EVD for the period from the start of
business, February 24, 1995 to June 30, 1995 amounted to $4,100.
<PAGE>
--------------------------------------------------------------------------------
(7) INVESTMENT TRANSACTIONS
Increases and decreases in the Trust's investment in the Portfolio for the
period from February 24, 1995 to June 30, 1995 aggregated $145,609,632 and
$1,601,681, respectively.
<PAGE>
SENIOR DEBT PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------
SENIOR, SECURED, FLOATING-RATE INTERESTS - 88.2%
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT BORROWER/BUSINESS DESCRIPTION VALUE
--------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 2.3%
TRACOR, INC.
$ 1,596,609 Term loan, maturing October 31, 1998 $ 1,596,609
9,950,000 Term loan, maturing February 28, 2001 9,950,000
Technical services to defense companies
VSI INDUSTRIES, INC.
10,502,130 Term loan, maturing March 31, 1997 10,502,130
Aerospace and specialty fasteners, and
plastics industry tooling systems
------------
$ 22,048,739
------------
AIRLINES - 3.3%
NORTHWEST AIRLINES CORPORATION
$12,443,942 Term loan, maturing December 15, 1998 $ 12,443,942
13,949,160 Term loan, maturing December 15, 1999 13,949,160
5,303,423 Term loan, maturing December 15, 2000 5,303,423
Passenger airline carrier
------------
$ 31,696,525
------------
AUTO PARTS - 1.3%
EXIDE CORPORATION
$ 4,987,437 Term loan, maturing September 30, 2001 $ 4,987,437
Automobile batteries
STANADYNE AUTOMOTIVE CORP.
7,500,000 Term loan, maturing December 31, 2001 7,500,000
Auto and light truck fuel injection
equipment
------------
$ 12,487,437
------------
BROADCAST MEDIA - 4.4%
CLASSIC CABLE, INC.
$ 4,000,000 Term loan, maturing March 31, 2003 $ 4,000,000
7,000,000 Term loan, maturing March 31, 2004 7,000,000
Cable television provider
COAXIAL COMMUNICATIONS, INC.
9,966,667 Term loan, maturing December 31, 1999 9,966,667
Midwest cable television provider
ELLIS COMMUNICATIONS, INC.
10,365,333 Term loan, maturing March 31, 2003 10,365,333
Broadcast television operator
NORTHLAND CABLE TELEVISION, INC.
7,500,000 Term loan, maturing March 31, 2002 7,500,000
3,500,000 Term loan, maturing September 30, 2003 3,500,000
Cable television provider
------------
$ 42,332,000
------------
CHEMICALS - 3.0%
FREEDOM CHEMICAL COMPANY
$13,200,000 Term loan, maturing June 30, 2002 $ 13,200,000
Organic dyes, pigments, textile chemicals,
and other specialty chemicals
HARRIS SPECIALTY CHEMICALS, INC.
1,531,067 Term loan, maturing December 31, 1999 1,531,067
5,702,847 Term loan, maturing December 31, 2001 5,702,847
Construction chemicals
INDSPEC CHEMICAL CORP.
8,622,653 Term loan, maturing December 2, 2000 8,622,653
Resorcinol and other specialty chemical
products
------------
$ 29,056,567
------------
COMMERCIAL SERVICES - 3.8%
AVIALL, INC.
$ 5,000,000 Term loan, maturing November 30, 2000 $ 5,000,000
Turbine engine repair and parts
distribution
HOSIERY CORP. OF AMERICA
3,433,544 Term loan, maturing October 17, 1999 3,433,544
4,937,500 Term loan, maturing July 31, 2001 4,937,500
Women's hosiery
IRON MOUNTAIN INFORMATION SERVICES
4,488,750 Term loan, maturing October 31, 2002 4,488,750
Document archive services
PSI ACQUISITION CORPORATION
3,149,177 Term loan, maturing December 31, 1998 3,149,177
5,000,000 Term loan, maturing December 31, 2000 5,000,000
Diversified consulting services
SELECT BEVERAGES, INC.
4,000,000 Term loan, maturing June 30, 2001 4,000,000
6,000,000 Term loan, maturing June 30, 2002 6,000,000
Soft drink bottler
------------
$ 36,008,971
------------
CONGLOMERATES - 1.3%
SPALDING & EVENFLO COMPANIES, INC.
$12,395,833 Term loan, maturing October 13, 2002 $ 12,395,833
Sporting goods and infant products ------------
CONTAINERS - METAL & GLASS - 0.8%
SILGAN CORP.
$ 7,480,213 Term loan, maturing September 15, 1996 $ 7,480,213
Metal and plastic packaging products ------------
CONTAINERS - PAPER - 9.5%
IVEX PACKAGING CORP.
$ 9,631,266 Term loan, maturing December 31, 1999 $ 9,631,266
Plastic and paper packaging products
JEFFERSON SMURFIT CORP.
19,107,296 Term loan, maturing April 30, 2001 19,107,296
22,120,676 Term loan, maturing April 30, 2002 22,120,676
Liner board and other paper board product
STONE CONTAINER CORP.
39,885,000 Term loan, maturing April 1, 2000 39,885,000
Commodity pulp, paper and packaging
products
------------
$ 90,744,238
------------
COSMETICS - 0.8%
MARY KAY COSMETICS, INC.
$ 7,500,000 Term loan, maturing June 6, 2001 $ 7,500,000
Cosmetics, skin and hair care, and perfume
products
ELECTRONICS - INSTRUMENTATION - 3.3%
BERG ELECTRONICS, INC.
$11,850,000 Term loan, maturing March 31, 2001 $ 11,850,000
Electronic connectors
ELSAG BAILEY, INC
12,891,667 Term loan, maturing June 25, 2002 12,891,667
Electronic process control systems
SPERRY MARINE, INC.
6,541,487 Term loan, maturing December 31, 2000 6,541,487
Marine navigational equipment
------------
$ 31,283,154
------------
FOOD WHOLESALERS - 3.4%
CATERAIR HOLDINGS CORP.
$12,496,766 Term loan, maturing December 31, 1996 $ 12,496,766
Food service to airlines
KRAFT FOODSERVICE, INC.
5,000,000 Term loan, maturing March 31, 2002 5,000,000
Food producer and distributor
U.S. FOODSERVICE, INC.
14,679,787 Term loan, maturing June 30, 2000 14,679,787
Food distributor to business
------------
$ 32,176,553
------------
FOODS - 2.3%
SPECIALTY FOODS CORP.
$21,774,760 Term loan, maturing August 31, 1999 $ 21,774,760
Bread and cheese products ------------
LEISURE - 1.4%
SIX FLAGS THEME PARKS, INC.
$12,950,000 Term loan, maturing June 23, 2003 $ 12,950,000
Amusement parks ------------
MANUFACTURING - DIVERSIFIED - 6.2%
INTERLAKE CORP.
$ 8,235,788 Term loan, maturing September 27, 1996 $ 8,235,788
Engineered materials
INTERMETRO INDUSTRIES CORP.
3,569,044 Term loan, maturing June 30, 2001 3,569,044
5,113,939 Term loan, maturing December 31, 2002 5,113,939
Shelving
INTERNATIONAL WIRE GROUP, INC.
10,000,000 Term loan, maturing September 30, 2002 10,000,000
Manufactures and markets copper wire and
harnesses
INTESYS TECHNOLOGIES, INC.
5,000,000 Term loan, maturing December 31, 2001 5,000,000
Plastic injection molding and fabricated
battery packs
MOSLER, INC.
1,817,964 Term loan, maturing June 1, 1998 1,817,964
Safes, vaults, electronic security systems
THERMADYNE HOLDINGS CORP.
14,459,063 Term loan, maturing February 1, 2001 14,459,063
Cutting and welding products and floor
cleaning equipment
WATERS CORP.
6,218,750 Term loan, maturing November 30, 2001 6,218,750
4,353,125 Term loan, maturing November 30, 2002 4,353,125
Manufacturer of high performance liquid
chromatography instruments
------------
$ 58,767,673
------------
PAPER AND FOREST PRODUCTS - 7.3%
FORT HOWARD CORP.
$15,000,000 Term loan, maturing March 8, 2002 $ 15,000,000
15,000,000 Term loan, maturing December 31, 2002 15,000,000
Sanitary tissue paper products
SDW ACQUISITION CORP.
40,000,000 Term loan, maturing December 20, 2002 40,000,000
Major U.S. producer of coated free paper
------------
$ 70,000,000
------------
PUBLISHING - 4.7%
KRUEGER RINGIER, INC.
$ 9,052,569 Term loan, maturing December 31, 1997 $ 9,052,569
6,096,786 Term loan, maturing December 31, 1998 6,096,786
Printers and binders of mass market and
hardcover books
ZIFF-DAVIS PUBLISHING COMPANY
15,367,647 Term loan, maturing December 31, 2001 15,367,647
14,632,353 Term loan, maturing December 31, 2002 14,632,353
Computer publications publisher
------------
$ 45,149,355
------------
PUBLISHING - NEWSPAPERS - 2.6%
AMERICAN MEDIA OPERATIONS, INC.
$ 4,477,500 Term loan, maturing September 30, 2002 $ 4,477,500
Weekly periodical publisher
JOURNAL NEWS, INC.
20,000,000 Term loan, maturing December 31, 2001 20,000,000
Suburban newspaper
------------
$ 24,477,500
------------
RESTAURANTS - 4.0%
AMERICA'S FAVORITE CHICKEN COMPANY
$21,906,050 Term loan, maturing November 5, 1998 $ 21,906,050
Church's Fried Chicken and Popeye's
restaurants
LONG JOHN SILVER'S RESTAURANTS, INC.
16,718,464 Term loan, maturing December 31, 1996 16,718,464
Fish restaurants
------------
$ 38,624,514
------------
RETAIL - SPECIALTY - 3.2%
CAMELOT MUSIC, INC.
$ 4,987,186 Term loan, maturing February 28, 2001 $ 4,987,186
Music stores
GRIFFITH CONSUMERS COMPANY
10,847,222 Term loan, maturing December 31, 2002 10,847,222
Retail petroleum distributor
QVC, INC.
15,000,000 Term loan, maturing January 31, 2004 15,000,000
Home shopping retailer
------------
$ 30,834,408
------------
RETAIL STORES - DRUG STORES - 1.7%
DUANE READE, INC.
$ 5,016,667 Term loan, maturing December 31, 1997 $ 5,016,667
Retail drug stores
THRIFTY PAYLESS, INC.
11,562,509 Term loan, maturing March 31, 2000 11,562,509
Retail drug stores
------------
$ 16,579,176
------------
RETAIL STORES - FOOD CHAINS - 12.5%
DOMINICK'S FINER FOODS, INC.
$ 3,325,574 Term loan, maturing March 31, 2002 $ 3,325,574
8,255,854 Term loan, maturing March 31, 2003 8,255,854
9,255,854 Term loan, maturing September 30, 2003 9,255,854
Supermarket chain in Chicago
GRAND UNION COMPANY
26,628,890 Term loan, maturing June 15, 2002 26,628,890
Supermarket chain in the Northeast
PATHMARK STORES, INC.
34,650,000 Term loan, maturing October 31, 1999 34,650,000
Supermarket chain in mid-Atlantic states
RALPHS GROCERY COMPANY
7,666,667 Term loan, maturing June 15, 2002 7,666,667
7,666,667 Term loan, maturing June 15, 2003 7,666,667
7,666,667 Term loan, maturing June 15, 2004 7,666,667
Third largest supermarket chain in Southern
California
STAR MARKET COMPANY, INC.
10,105,263 Term loan, maturing December 31, 2001 10,105,263
4,421,053 Term loan, maturing December 31, 2002 4,421,053
Supermarket chain in Massachusetts
------------
$119,642,489
------------
STEEL - 1.3%
UCAR INTERNATIONAL, INC.
$ 6,090,848 Term loan, maturing January 31, 2003 $ 6,090,848
3,201,600 Term loan, maturing July 31, 2003 3,201,600
3,201,600 Term loan, maturing January 31, 2004 3,201,600
Processing materials for steel industry
------------
$ 12,494,048
------------
TELECOMMUNICATIONS - 1.6%
PAGING NETWORK, INC.
$15,000,000 Term loan, maturing March 31, 2002 $ 15,000,000
Paging service provider ------------
TEXTILES - 2.2%
BLACKSTONE CAPITAL COMPANY II, L.L.C.
$ 5,000,000 Term loan, maturing January 13, 1997 $ 5,000,000
Automotive products, residential upholstery
fabrics, and wallcoverings
LONDON FOG INDUSTRIES, INC.
9,582,314 Term loan, maturing May 31, 2002 8,911,552
1,971,219 Term loan, maturing May 31, 2002 * 1,655,824
Outerwear
WASSERSTEIN/C & A HOLDINGS, L.L.C.
5,000,000 Term loan, maturing January 13, 1997 5,000,000
Automotive products, residential upholstery
fabrics, and wallcoverings
------------
$ 20,567,376
------------
TOTAL LOAN INTERESTS (IDENTIFIED COST,
$843,764,660) $842,071,529
------------
--------------------------------------------------------------------------------
PREFERRED STOCKS - 0.8%
--------------------------------------------------------------------------------
SHARES SECURITY VALUE
--------------------------------------------------------------------------------
54,895 America's Favorite Chicken Company, 8% $ 4,035,880
Preferred Stock
5,845,956 London Fog Industries, Inc., 17.5% Preferred
Stock* 3,178,220
------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST,
$10,014,473) $ 7,214,100
------------
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 10.5%
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION
--------------------------------------------------------------------------------
$23,000,000 CXC,Inc., 6.25%, 7/3/95 $ 22,992,014
39,347,000 Corporate Receivables Corp., 6.20%, 7/3/95 39,333,447
2,824,000 Melville Corp., 6.23%, 7/3/95 2,823,023
35,373,000 Prudential Funding Corp., 5.97%, 7/6/95 35,343,670
------------
TOTAL SHORT-TERM INVESTMENTS, AT AMORTIZED
COST $100,492,154
------------
TOTAL INVESTMENTS (IDENTIFIED COST,
$954,271,287) - 99.5% $949,777,783
OTHER ASSETS, LESS LIABILITIES - 0.5% 4,809,543
------------
TOTAL NET ASSETS - 100% $954,587,326
============
*Non-income producing security.
Note: The description of the principal business for each security set forth
above is unaudited.
See notes to financial statements
<PAGE>
SENIOR DEBT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
June 30, 1995
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$954,271,287) $949,777,783
Cash 3,184,749
Receivable for investments sold 398,047
Interest receivable 5,371,248
Deferred organization expenses (Note 1D) 38,948
Prepaid expenses 798,758
------------
Total assets $959,569,533
LIABILITIES:
Deferred facility fee income (Note 1B) $4,869,498
Payable to affiliate -- Custodian fee 8,907
Accrued expenses 103,802
----------
Total liabilities 4,982,207
------------
NET ASSETS applicable to investors' interest in Portfolio $954,587,326
============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $959,080,830
Unrealized depreciation of investments (computed
on the basis of identified cost) (4,493,504)
------------
Total $954,587,326
============
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the period from the start of business, February 22, 1995, to June 30, 1995
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Interest income $24,104,032
Facility fees earned 1,323,580
-----------
Total income $25,427,612
Expenses --
Investment adviser fee (Note 2) $2,523,771
Custodian fee (Note 2) 105,144
Interest expense 373,538
Legal and accounting services 14,716
Amortization of organization expenses (Note 1D) 2,282
Miscellaneous 182,242
----------
Total expenses 3,201,693
-----------
Net investment income $22,225,919
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions $1,095,155
Change in unrealized depreciation of investments (1,768,577)
----------
Net realized and unrealized loss on
investments (673,422)
-----------
Net increase in net assets from operations $21,552,497
===========
See notes to financial statements
<PAGE>
STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------
For the period from the start of business, February 22, 1995, to June 30, 1995
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES --
Purchase of Loan Interests and investments $(401,348,374)
Proceeds from sales and principal repayments 134,261,432
Interest received 25,307,620
Facility fees received 2,569,699
Interest paid (284,791)
Operating expenses paid (2,738,970)
Net increase in short-term investments (53,583,815)
-------------
Net cash used for operating activities $(295,817,199)
-------------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES --
Proceeds from capital contributions $ 353,435,714
Payments for capital withdrawals (54,633,766)
-------------
Net cash provided by financing activities $ 298,801,948
-------------
Net increase in cash $ 2,984,749
CASH AT BEGINNING OF PERIOD 200,000
-------------
CASH AT END OF PERIOD $ 3,184,749
=============
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM
OPERATIONS TO NET CASH USED FOR OPERATING ACTIVITIES:
Net increase in net assets from operations $ 21,552,497
Increase in receivable for investments sold (245,089)
Decrease in interest receivable 1,504,933
Increase in prepaid expenses (219,142)
Increase in deferred organization expenses (38,948)
Increase in deferred facility fee income 1,164,165
Increase in payable to affiliate -- custodian fee 8,907
Increase in accrued expenses 84,403
Net increase in investments (319,628,925)
-------------
Net cash used for operating activities $(295,817,199)
=============
See notes to financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the period from the start of business, February 22, 1995, to June 30, 1995
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 22,225,919
Net realized gain on investment transactions 1,095,155
Change in unrealized depreciation of investments (1,768,577)
-------------
Net increase in net assets from operations $ 21,552,497
-------------
Capital transactions --
Contributions $987,468,595
Withdrawals (54,633,766)
-------------
Increase in net assets resulting from capital
transactions $932,834,829
-------------
Total increase in net assets $954,387,326
NET ASSETS:
At beginning of period 200,000
-------------
At end of period $954,587,326
============
--------------------------------------------------------------------------------
SUPPLEMENTARY DATA
--------------------------------------------------------------------------------
For the period from the start of business,
February 22, 1995, to June 30, 1995
--------------------------------------------------------------------------------
RATIOS (As a percentage of average daily net assets):
Operating expenses 1.06%+
Interest expense 0.14%+
Net investment income 8.35%+
PORTFOLIO TURNOVER 21%
+Annualized.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
Senior Debt Portfolio (the Portfolio) is registered under the Investment Company
Act of 1940 as a non-diversified closed-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 interests in the Portfolio.
Investment operations began on February 22, 1995, with the acquisition of
securities with a value of $583,240,521, including unrealized depreciation of
$2,724,927, 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 accounting
principles generally accepted in the United States of America.
A. INVESTMENT VALUATION -- The Portfolio's investments in interests in loans
(Loan Interests) are valued at fair value by the Portfolio's investment adviser,
Boston Management and Research, under procedures established by the Trustees as
permitted by Section 2(a)(41) of the Investment Company Act of 1940. Such
procedures include the consideration of relevant factors, data and information
relating to fair value, including (i) the characteristics of and fundamental
analytical data relating to the Loan Interest, including the cost, size, current
interest rate, period until next interest rate reset, maturity and base lending
rate of the Loan Interest, the terms and conditions of the loan and any related
agreements and the position of the loan in the borrower's debt structure; (ii)
the nature, adequacy and value of the collateral, including the Portfolio's
rights, remedies and interests with respect to the collateral; (iii) the
creditworthiness of the borrower, based on evaluations of its financial
condition, financial statements and information about the borrower's business,
cash flows, capital structure and future prospects; (iv) information relating to
the market for the Loan Interest including price quotations for and trading in
the Loan Interest and interests in similar loans and the market environment and
investor attitudes towards the Loan Interest and interests in similar loans; (v)
the reputation and financial condition of the agent bank and any intermediate
participant in the loan; and (vi) general economic and market conditions
affecting the fair value of the Loan Interest. Other portfolio securities (other
than short-term obligations, but including listed issues) may be valued on the
basis of prices furnished by one or more pricing services which determine prices
for normal, institutional-sized trading units of such securities using market
information, transactions for comparable securities and various relationships
between securities which are generally recognized by institutional traders. In
certain circumstances, portfolio securities will be valued at the last sales
price on the exchange that is the primary market for such securities, or the
last quoted bid price for those securities for which the over-the-counter market
is the primary market or for listed securities in which there were no sales
during the day. The value of interest rate swaps will be determined in
accordance with a discounted present value formula and then confirmed by
obtaining a bank quotation. Short-term obligations which mature in sixty days or
less are valued at amortized cost, if their original term to maturity when
acquired by the Portfolio was 60 days or less, or are valued at amortized cost
using their value on the 61st day prior to maturity, if their original term to
maturity when acquired by the Portfolio was more than 60 days, unless in each
case this is determined not to represent fair value. Repurchase agreements are
valued at cost plus accrued interest. Other portfolio securities for which there
are no quotations or valuations are valued at fair value as determined in good
faith by or on behalf of the Trustees.
B. INCOME -- Interest income from Loan Interests is recorded on the accrual
basis at the then-current interest rate, while all other interest income is
determined on the basis of interest accrued, adjusted for amortization of
premium or discount when required for federal income tax purposes. Facility fees
received are recognized as income over the expected term of the loan.
C. 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 Internal Revenue Code) in order for its investors to satisfy them. The
Portfolio will allocate at least annually among its investors each investor's
distributive share of the Portfolio's net investment income, net realized
capital gains, and any other items of income, gain, loss, deductions or credit.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line basis
over five years.
--------------------------------------------------------------------------------
(2) INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The investment advisory fee is earned by Boston Management and Research (BMR) as
compensation for investment advisory services rendered to the Portfolio. The fee
is computed at the monthly rate of 19/240 of 1% (0.95% per annum) of the
Portfolio's average daily gross assets up to and including $1 billion and at
reduced rates as daily gross assets exceed that level. For the period from the
start of business, February 22, 1995, to June 30, 1995, the effective annual
rate, based on average daily gross assets, was 0.95% (annualized) and amounted
to $2,523,771. Except as to Trustees of the Portfolio who are not members of
BMR's organization, officers and Trustees receive remuneration for their
services to the Portfolio out of such investment advisory fee. Investors Bank &
Trust Company (IBT), an affiliate of BMR, serves as custodian of the Portfolio.
Pursuant to the custodian agreement, IBT receives a fee reduced by credits which
are determined based on 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 Advisor 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 period from the start of business,
February 22, 1995, to June 30, 1995, no significant amounts have been deferred.
--------------------------------------------------------------------------------
(3) INVESTMENTS
The Portfolio invests primarily in Loan Interests. The ability of the issuers of
the Loan Interests to meet their obligations may be affected by economic
developments in a specific industry. The cost of purchases and the proceeds from
principal repayments and sales of Loan Interests for the period from the start
of business, February 22, 1995, to June 30, 1995, aggregated $401,348,374 and
$134,506,521, respectively.
--------------------------------------------------------------------------------
(4) SHORT-TERM DEBT AND CREDIT AGREEMENTS
The Portfolio participates with other funds and portfolios managed by BMR and
Eaton Vance Management (EVM) in a $120 million unsecured line of credit
agreement with a bank. The line of credit consists of a $20 million committed
facility and a $100 million discretionary facility. Borrowings will be made by
the Portfolio solely to facilitate the handling of unusual and/or unanticipated
short-term cash requirements. 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 Portfolio did not have any
significant borrowings or allocated fees under this agreement during the period.
The Portfolio has also entered into a revolving credit agreement, that will
allow the Portfolio to borrow an additional $245 million to support the issuance
of commercial paper and to permit the Portfolio to invest in accordance with its
investment practices. Interest is charged under the revolving credit agreement
at the bank's base rate or at an amount above either the bank's adjusted Libor
rate or adjusted certificate of deposit rate. Interest expense includes a
commitment fee of approximately $210,512 which is computed at the annual rate of
1/4 of 1% on the unused portion of the revolving credit agreement. There were no
borrowings under this agreement during the period. As of June 30, 1995, the
Portfolio had no commercial paper outstanding.
------------------------------------------------------------------------------
(5) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and unrealized appreciation/depreciation in the value of investments
owned at June 30, 1995, as computed on a federal income tax basis, were as
follows:
Aggregate cost $954,271,287
============
Gross unrealized depreciation $ 4,493,504
Gross unrealized appreciation --
-----------
Net unrealized depreciation $ 4,493,504
============
<PAGE>
INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------
To the Trustees and Investors of
Senior Debt Portfolio:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Senior Debt Portfolio as of June 30, 1995, and
the related statement of operations, the statement of cash flows, the statement
of changes in net assets and the supplementary data for the period from the
start of business, February 22, 1995, to June 30, 1995 (all expressed in United
States dollars). 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
audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 and Loan Interests owned at June 30, 1995 by correspondence with the
custodian and selling or agent banks; where replies were not received from
selling or agent banks, we performed other auditing procedures. 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, such financial statements and supplementary data present fairly,
in all material respects, the financial position of Senior Debt Portfolio as of
June 30, 1995, the results of its operations and its cash flows, the changes in
its net assets, and its supplementary data for the period from the start of
business, February 22, 1995, to June 30, 1995, in conformity with accounting
principles generally accepted in the United States of America.
As discussed in Note 1A, the financial statements include Loan Interests and
certain other securities held by Senior Debt Portfolio valued at $849,285,629
(89% of net assets of the Portfolio), which values are fair values determined by
the Portfolio's investment adviser in the absence of actual market values.
Determination of fair value involves subjective judgment, as the actual market
value of a particular Loan Interest or security can be established only by
negotiation between the parties in a sales transaction. We have reviewed the
procedures established by the Trustees and used by the Portfolio's investment
adviser in determining the fair values of such Loan Interests and securities and
have inspected underlying documentation, and in the circumstances, we believe
that the procedures are reasonable and the documentation appropriate.
DELOITTE & TOUCHE
Grand Cayman, Cayman Islands
British West Indies
August 11, 1995
<PAGE>
INVESTMENT MANAGEMENT
EV CLASSIC OFFICERS INDEPENDENT TRUSTEES
SENIOR JAMES B. HAWKES DONALD R. DWIGHT
FLOATING-RATE President and Trustee President, Dwight Partners, Inc.
FUND M. DOZIER GARDNER Chairman, Newspapers of
24 Federal Street Vice President and Trustee New England, Inc.
Boston, MA 02110 JEFFREY S. GARNER SAMUEL L. HAYES, III
Vice President Jacob H. Schiff Professor of
JAMES L. O'CONNOR Investment Banking,
Treasurer Harvard University
THOMAS OTIS Graduate School of
Secretary 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
--------------------------------------------------------------
SENIOR DEBT OFFICERS INDEPENDENT TRUSTEES
PORTFOLIO JAMES B. HAWKES DONALD R. DWIGHT
24 Federal Street President and Trustee President, Dwight Partners, Inc.
Boston, MA 02110 M. DOZIER GARDNER Chairman, Newspapers of
Vice President and Trustee New England, Inc.
JEFFREY S. GARNER SAMUEL L. HAYES, III
Vice President and Jacob H. Schiff Professor of
Portfolio Manager Investment Banking,
WILLIAM CHISHOLM Harvard University
Vice President Graduate School of
RAYMOND O'NEILL Business Administration
Vice President NORTON H. REAMER
MICHEL NORMANDEAU President and Director, United Asset
Vice President Management Corporation
THOMAS OTIS JOHN L. THORNDIKE
Secretary Director, Fiduciary Company
JAMES L. O'CONNOR Incorporated
Treasurer JACK L. TREYNOR
Investment Adviser and Consultant
<PAGE>
INVESTMENT ADVISER OF
SENIOR DEBT PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF EV CLASSIC
SENIOR FLOATING-RATE FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
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
BANKING COUNSEL
Mayer, Brown & Platt
787 Seventh Avenue
New York, NY 10019
EV CLASSIC
SENIOR FLOATING-RATE FUND
24 Federal Street
Boston, MA 02110 C-SFRSRC
[LOGO]
EV CLASSIC
SENIOR FLOATING-RATE
FUND
SEMI-ANNUAL SHAREHOLDER REPORT
JUNE 30, 1995
