<PAGE>
EV TRADITIONAL SPECIAL EQUITIES FUND
EV TRADITIONAL SPECIAL EQUITIES FUND (THE "FUND") IS A MUTUAL FUND SEEKING
GROWTH OF CAPITAL. THE FUND INVESTS ITS ASSETS IN SPECIAL INVESTMENT PORTFOLIO
(THE "PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND
MANAGING ITS OWN PORTFOLIO OF SECURITIES AS WITH HISTORICALLY STRUCTURED MUTUAL
FUNDS. THE FUND IS A SERIES OF EATON VANCE SPECIAL INVESTMENT TRUST (THE
"TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of some
or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated April 1, 1995 for the Fund, as supplemented from
time to time, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. This Statement of Additional Information is
available without charge from the Fund's principal underwriter, Eaton Vance
Distributors, Inc. (the "Principal Underwriter"), 24 Federal Street, Boston, MA
02110 (telephone (800) 225-6265). The Fund's investment adviser is Boston
Management and Research (the "Investment Adviser"), a wholly-owned subsidiary of
Eaton Vance Management, and Eaton Vance Management is the administrator (the
"Administrator") of the Fund. The offices of the Investment Adviser and the
Administrator are located at 24 Federal Street, Boston, MA 02110.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROS-
PECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses ..................... 2 How to Redeem Fund Shares ..................... 12
The Fund's Financial Highlights ................... 3 Reports to Shareholders ....................... 13
The Fund's Investment Objective ................... 4 The Lifetime Investing Account/Distribution
How the Fund and the Portfolio Invest Options ..................................... 13
their Assets; Investment Risks .................. 4 The Eaton Vance Exchange Privilege ............ 14
Organization of the Fund and the Portfolio ........ 5 Eaton Vance Shareholder Services .............. 15
Management of the Fund and the Portfolio .......... 8 Distributions and Taxes ....................... 17
Service Plan ....................................... 9 Performance Information ....................... 18
Valuing Fund Shares ................................ 9 Statement of Intention and Escrow Agreement ... 18
How to Buy Fund Shares ............................ 10
</TABLE>
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PROSPECTUS DATED APRIL 1, 1995
<PAGE>
SHAREHOLDER AND FUND EXPENSES \1/
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SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as
a percentage of offering price) 4.75%
Sales Charges Imposed on Reinvested Distributions None
Redemption Fees None
Fees to Exchange Shares None
Contingent Deferred Sales Charges (on purchases
of $1 million or more) Imposed on Redemptions
During the First Eighteen Months (as a
percentage of redemption proceeds exclusive of all
reinvestments and capital appreciation in the account)\2/ 1.00%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES
(as a percentage of average daily net assets)
Investment Adviser Fee\3/ 0.625%
Rule 12b-1 Fees (Service Plan) 0.071%
Other Expenses 0.324%
-----
Total Operating Expenses 1.020%
=====
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
An investor would pay the following
expenses (including maximum initial
sales charge) on a $1,000 investment,
assuming (a) 5% annual return and
(b) redemption at the end of each time
period: $57 $78 $101 $166
Notes:
\1/ The purpose of the above table and Example is to summarize the aggregate
expenses of the Fund and the Portfolio and to assist investors in
understanding the various costs and expenses that investors in the Fund will
bear directly or indirectly. The Trustees of the Trust believe that over
time the aggregate per share expenses of the Fund and the Portfolio should
be approximately equal to the per share expenses which the Fund would incur
if the Trust retained the services of an investment adviser and the assets
of the Fund were invested directly in the type of securities being held by
the Portfolio. The costs and expenses included in the table and Example are
based on the Fund's fiscal year ended December 31, 1994, and reflect the
Fund's current policy of investing in the Portfolio. The Example should not
be considered a representation of past or future expenses, and actual
expenses may be greater or less than those shown. The Example assumes a 5%
annual return and the Fund's actual performance may result in an annual
return greater or less than 5%. For further information regarding the
expenses of both the Fund and the Portfolio, see "The Fund's Financial
Highlights", "Organization of the Fund and the Portfolio", "Management of
the Fund and the Portfolio" and "How to Redeem Fund Shares".
\2/ If shares have been purchased at net asset value with no initial sales
charge by virtue of the purchase having been in the amount of $1 million or
more and are redeemed within 18 months after the end of the calendar month
in which the purchase was made, a contingent deferred sales charge of 1%
will be imposed on such redemption. See "How to Buy Fund Shares", "How to
Redeem Fund Shares" and "Eaton Vance Shareholder Services".
\3/ As of the close of business on August 1, 1994, the Fund transferred its
assets to the Portfolio in exchange for an interest in the Portfolio. Prior
to such date, the Fund retained Eaton Vance Management as its investment
adviser.
\4/ Other investment companies with different distribution arrangements and fees
are investing in the Portfolio and additional such companies may do so in
the future. See "Organization of the Fund and the Portfolio".
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
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The following information should be read in conjunction with the audited
financial statements included in the Statement of Additional Information, all of
which has been so included in reliance upon the report of Coopers & Lybrand
L.L.P., independent accountants, as experts in acounting and auditing, which
report is contained in the Statement of Additional Information. The financial
highlights for each of the seven years in the period ended December 31, 1991,
presented here, were audited by other auditors whose report dated January 21,
1992, expressed an unqualified opinion on such financial highlights. Further
information regarding the performance of the Fund is contained in the Fund's
annual report to shareholders which may be obtained without charge by contacting
the Principal Underwriter.
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<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------------------
1994 1993 1992 1991<F1> 1990<F1> 1989<F1> 1988<F1> 1987<F1> 1986<F1> 1985<F1>
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of year ... $ 8.430 $ 8.990 $ 9.520 $ 6.810 $ 7.050 $ 6.080 $ 5.470 $ 5.380 $ 6.527 $ 6.297
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income
(loss) ............. $ (0.013) $ (0.018) $ 0.006 $ 0.004 $ 0.033 $ 0.032 $ 0.050 $ 0.005 $ 0.025 $ 0.061
Net realized and
unrealized gain
(loss) on
investments ........ (0.807) 0.108 0.239 3.776 0.130 1.382 0.560 0.109 (0.115) 0.949
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total income (loss)
from investment
operations ....... $ (0.820) $ 0.090 $ 0.245 $ 3.780 $ 0.163 $ 1.414 $ 0.610 $ 0.114 $ (0.090) $ 1.010
LESS DISTRIBUTIONS:
From net investment
income ............. (0.727) -- -- -- -- -- -- -- (0.017) (0.017)
From net realized gain
(loss) on
investments ........ (0.003) (0.650) (0.775) (1.070) (0.403) (0.444) -- (0.024) (1.040) (0.763)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions -- (0.650) (0.775) (1.070) (0.403) (0.444) -- (0.024) (1.057) (0.780)
NET ASSET VALUE, end of
year ................. $ 6.880 $ 8.430 $ 8.990 $ 9.520 $ 6.810 $ 7.050 $ 6.080 $ 5.470 $ 5.380 $ 6.527
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN<F4> ...... (9.60%) 1.14% 2.71% 57.33% 2.50% 23.57% 11.21% 2.04% (1.67%) 18.51%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
year (000's
omitted) ........... $63,852 $78,132 $76,544 $77,324 $50,094 $53,488 $34,231 $33,313 $37,358 $48,786
Ratio of expenses to
average daily net
assets ............. 1.02%<F3> 1.01% 0.96% 0.94% 1.06% 1.22% 1.24% 1.16% 0.99% 1.01%
Ratio of net
investment income
(loss) to average
daily net assets ... (0.17%) (0.30%) 0.07% 0.05% 0.48% 0.45% 0.87% 0.07% 0.41% 1.01%
Portfolio turnover
rate<F5> ............. 37% 73% 48% 41% 47% 57% 33% 54% 58% 45%
<FN>
<F1> Audited by previous auditors.
<F2> Computed on an average share basis.
<F3>Includes the Fund's share of Special Investment Portfolio's allocated expenses for the period from August 1, 1994, to
December 31, 1994.
<F4>Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on
the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value
on the record date.
<F5>Portfolio turnover represents the rate of portfolio activity for the period while the Fund was making investments directly in
securities. The portfolio turnover for the period since the Fund transferred its assets to the Portfolio is shown in the
Portfolio's financial statements which are in the Fund's Annual Report.
</TABLE>
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
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EV TRADITIONAL SPECIAL EQUITIES FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE GROWTH
OF CAPITAL. The Fund currently seeks to meet its investment objective by
investing its assets in the Special Investment Portfolio, a separate registered
investment company that invests primarily in quality growth securities. The
Fund's and the Portfolio's investment objectives are nonfundamental and may be
changed when authorized by a vote of the Trustees of the Trust or the Portfolio,
respectively, without obtaining the approval of the Fund's shareholders or the
investors in the Portfolio, as the case may be. The Trustees of the Trust have
no present intention to change the Fund's objective and intend to submit any
proposed material change in the investment objective to shareholders in advance
for their approval.
HOW THE FUND AND THE PORTFOLIO INVEST THEIR
ASSETS; INVESTMENT RISKS
- --------------------------------------------------------------------------------
THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING IN THE
PORTFOLIO. Although there is no formula as to the percentage of assets that will
be invested in any one type of security, the policy of the Portfolio is to
invest principally (i.e., at least 65% of its total assets during normal
investment conditions) in equity securities, including common stocks and
securities convertible into common stocks, of publicly held companies combining
characteristics of both growth and quality sought by the Portfolio. Any income
received will be incidental to the Portfolio's objective of capital growth. The
criteria for investments in convertible debt are the same as those used for the
common stock of the issuer. The Portfolio does not currently intend to invest
more than 5% of its net assets in convertible debt. The Portfolio may invest in
companies that have market capitalizations of $250 million or less. Investment
in the securities of such companies may be characterized as involving greater
relative risk due to their smaller size. From time to time, the Portfolio may
also invest in bonds, notes and certificates of indebtedness if in the
Investment Adviser's judgment such investments are consistent with the
Portfolio's objective; however, the Portfolio does not currently intend to
invest more than 5% of its net assets in each of such investments and currently
intends to limit its investments in non-convertible debt to non-convertible debt
rated investment grade (i.e., rated Baa or higher by Moody's Investors Service,
Inc. or BBB or higher by Standard & Poor's Ratings Group) or, if unrated,
determined to be of comparable quality by the Portfolio's Investment Adviser.
Realization of the Portfolio's objective will depend to a large extent on the
accuracy of earnings projections, which are not subject to exact prediction. If,
in the opinion of BMR, market conditions are such that a more conservative
approach to investments is deemed desirable, the Portfolio may temporarily make
substantial investments in investment grade fixed-income obligations of all
types and U.S. Government obligations, or in bonds, notes or other certificates
of indebtedness.
In the view of the Investment Adviser, a growth security is an equity
security of a company which has shown relative gains in earning power over a
period of years substantially above that achieved by the economy as a whole and
which, the Investment Adviser expects, will continue to show such gains. It is
the intention of the Portfolio that its portfolio will be concentrated in
securities of companies which, in the Investment Adviser's judgment, seem likely
to double their earning power within a five-year period. To achieve this
objective, a company would require minimum average annual compound rates of
growth over such period of at least 15%. There is, of course, no assurance that
the Investment Adviser will be successful in selecting securities of companies
which meet these standards. In recommending portfolio investments on behalf of
the Portfolio, the Investment Adviser will consider that the quality of a
security depends upon the ability, motivation, depth and integrity of the
issuer's management, the importance of the enterprise in its industry and the
relative importance of the industry within the broad economic framework, the
current financial strength of the enterprise in terms of ability to cushion
adversity and to fund the expansion of activities, and the reliability of final
demand characteristics for products or services. The Portfolio would generally
expect to hold its securities until BMR's judgment of the issuing company's
prospects is altered and/or the price of the company's securities appears to
over-discount prospective earnings progress as compared with other issues with
similar characteristics.
The Portfolio may invest in securities issued by foreign companies
(including American Depository Receipts and Global Depository Receipts). Such
investments may be subject to various risks such as fluctuations in currency and
exchange rates, foreign taxes, social, political and economic conditions in the
countries in which such companies operate, and changes in governmental, economic
or monetary policies both here and abroad. There may be less publicly available
information about a foreign company than about a comparable domestic company.
Because the securities markets in many foreign countries are not as developed as
those in the United States, the securities of many foreign companies are less
liquid and their prices are more volatile than securities of comparable domestic
companies. In order to hedge against possible variations in foreign exchange
rates pending the settlement of foreign securities transactions, the Portfolio
may buy or sell foreign currencies.
An investment in the Fund entails the risk that the principal value of Fund
shares may not increase or may decline. The Portfolio's investments in equity
securities are subject to the risk of adverse developments affecting particular
companies or industries and the stock market generally. Investments in bonds are
subject to the risk that the issuer may default on its obligations to pay
principal and interest. The value of bonds tends to increase during periods of
falling interest rates and to decline during periods of rising interest rates.
The Fund and the Portfolio have adopted certain fundamental investment
restrictions which are enumerated in detail in the Statement of Additional
Information and which may not be changed unless authorized by a shareholder vote
and an investor vote, respectively. Except for such enumerated restrictions and
as otherwise indicated in this Prospectus, the investment objective and policies
of the Fund and the Portfolio are not fundamental policies and accordingly may
be changed by the Trustees of the Trust and the Portfolio without obtaining the
approval of the Fund's shareholders or the investors in the Portfolio, as the
case may be. If any changes were made in the Fund's investment objective, the
Fund might have an investment objective different from the objective which an
investor considered appropriate at the time the investor became a shareholder of
the Fund.
- --------------------------------------------------------------------------------
THE FUND IS NOT INTENDED TO BE A COMPLETE INVESTMENT PROGRAM, AND
PROSPECTIVE INVESTORS SHOULD TAKE INTO ACCOUNT THEIR OBJECTIVES AND OTHER
INVESTMENTS WHEN CONSIDERING THE PURCHASE OF FUND SHARES. THE FUND CANNOT
ELIMINATE RISK OR ASSURE ACHIEVEMENT OF ITS OBJECTIVE.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- --------------------------------------------------------------------------------
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE SPECIAL INVESTMENT TRUST, A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF
TRUST DATED MARCH 27, 1989, AS AMENDED, AND IS THE SUCCESSOR TO A CORPORATION
WHICH COMMENCED OFFERING ITS SHARES TO THE PUBLIC IN APRIL, 1968. THE TRUST IS A
MUTUAL FUND -- AN OPEN-END MANAGEMENT INVESTMENT COMPANY. The Trustees of the
Trust are responsible for the overall management and supervision of its affairs.
The Trust may issue an unlimited number of shares of beneficial interest (no par
value per share) in one or more series and because the Trust can offer separate
series (such as the Fund) it is known as a "series company". Each share
represents an equal proportionate beneficial interest in the Fund. When issued
and outstanding, the shares are fully paid and nonassessable by the Trust and
redeemable as described under "How to Redeem Fund Shares". Shareholders are
entitled to one vote for each full share held. Fractional shares may be voted
proportionately. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of the Fund, shareholders are
entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW
YORK AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The
Portfolio, as well as the Trust, intends to comply with all applicable Federal
and state securities laws. The Portfolio's Declaration of Trust provides that
the Fund and other entities permitted to invest in the Portfolio (e.g., other
U.S. and foreign investment companies, and common and commingled trust funds)
will each be liable for all obligations of the Portfolio. However, the risk of
the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio itself
is unable to meet its obligations. Accordingly, the Trustees of the Trust
believe that neither the Fund nor its shareholders will be adversely affected by
reason of the Fund investing in the Portfolio.
SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in
the Fund should be aware that the Fund, unlike mutual funds which directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objective by investing its assets in an interest in the Portfolio
(although the Fund may temporarily hold a de minimus amount of cash), which is a
separate investment company with an identical investment objective. Therefore,
the Fund's interest in the securities owned by the Portfolio is indirect. In
addition to selling an interest to the Fund, the Portfolio may sell interests to
other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the various funds that invest in the Portfolio. Such
differences in returns are also present in other mutual fund structures,
including funds that have multiple classes of shares. For information regarding
the investment objective, policies and restrictions, see "The Fund's Investment
Objective" and "How the Fund and the Portfolio Invest their Assets; Investment
Risks". Further information regarding investment practices may be found in the
Statement of Additional Information.
The Trustees of the Trust have considered the advantages and disadvantages
of investing the assets of the Fund in the Portfolio, as well as the advantages
and disadvantages of the two-tier format. The Trustees believe that the
structure offers opportunities for substantial growth in the assets of the
Portfolio, and affords the potential for economies of scale for the Fund. The
public shareholders of the Fund have previously approved the policy of investing
the Fund's assets in an interest in the Portfolio.
The Fund may withdraw (completely redeem) all its assets from the Portfolio
at any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. The investment objective and the
nonfundamental investment policies of the Fund and the Portfolio may be changed
by the Trustees of the Trust and the Portfolio without obtaining the approval of
the shareholders of the Fund or the investors in the Portfolio, as the case may
be. Any such change of the investment objective will be preceded by thirty days'
advance written notice to the shareholders of the Fund or the investors in the
Portfolio, as the case may be. In the event the Fund withdraws all of its assets
from the Portfolio, or the Board of Trustees of the Trust determines that the
investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, such Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets from the Portfolio.
Information regarding other pooled investment entities or funds which invest
in the Portfolio may be obtained by contacting Eaton Vance Distributors, Inc.
(the "Principal Underwriter" or "EVD"), 24 Federal Street, Boston, MA 02110,
(617) 482-8260. Smaller investors in the Portfolio may be adversely affected by
the actions of larger investors in the Portfolio. For example, if a large
investor withdraws from the Portfolio, the remaining investors may experience
higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio may become less diverse, resulting in increased
portfolio risk, and experience decreasing economies of scale. However, this
possibility exists as well for historically structured funds which have large or
institutional investors.
Until recently, the Administrator sponsored and advised historically
structured funds. Funds which invest all their assets in interests in a separate
investment company are a relatively new development in the mutual fund industry
and, therefore, the Fund may be subject to additional regulations than
historically structured funds.
The Declaration of Trust of the Portfolio provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for Federal income tax purposes. See
"Distributions and Taxes" for further information. Whenever the Fund as an
investor in the Portfolio is requested to vote on matters pertaining to the
Portfolio (other than the termination of the Portfolio's business, which may be
determined by the Trustees of the Portfolio without investor approval), the Fund
will hold a meeting of Fund shareholders and will vote its interest in the
Portfolio for or against such matters proportionately to the instructions to
vote for or against such matters received from Fund shareholders. The Fund shall
vote shares for which it receives no voting instructions in the same proportion
as the shares for which it receives voting instructions. Other investors in the
Portfolio may alone or collectively acquire sufficient voting interests in the
Portfolio to control matters relating to the operation of the Portfolio, which
may require the Fund to withdraw its investment in the Portfolio or take other
appropriate action. Any such withdrawal could result in a distribution "in kind"
of portfolio securities (as opposed to a cash distribution from the Portfolio).
If securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Trustees of the Trust, including a majority of the noninterested
Trustees, have approved written procedures designed to identify and address any
potential conflicts of interest arising from the fact that the Trustees of the
Trust and the Trustees of the Portfolio are the same. Such procedures require
each Board to take action to resolve any conflict of interest between the Fund
and the Portfolio, and it is possible that the creation of separate Boards may
be considered. For further information concerning the Trustees and officers of
the Trust and the Portfolio, see the Statement of Additional Information.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the
Portfolio, BMR manages the Portfolio's investments and affairs. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of 5/96 of 1% (equivalent to 0.625% annually) of the average daily
net assets of the Portfolio. For the period from the start of business, August
1, 1994, to December 31, 1994, the Portfolio paid BMR advisory fees equivalent
to 0.625% (annualized) of the Portfolio's average daily net assets for such
period. Prior to the close of business on August 1, 1994 (when the Fund
transferred its assets to the Portfolio in exchange for an interest in the
Portfolio), the Fund retained Eaton Vance as its investment adviser. For the
period from January 1, 1994, to August 1, 1994, the Fund paid Eaton Vance
advisory fees equivalent to 0.625% (annualized) of the Fund's average daily net
assets for such period.
BMR also furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. BMR places the portfolio transactions of the
Portfolio with many broker-dealer firms and uses its best efforts to obtain
execution of such transactions at prices which are advantageous to the Portfolio
and at reasonably competitive commission rates. Subject to the foregoing, BMR
may consider sales of shares of the Fund or of other investment companies
sponsored by BMR or Eaton Vance as a factor in the selection of broker-dealer
firms to execute portfolio transactions.
Clifford H. Krauss has acted as the portfolio manager of the Portfolio
since it commenced operations. Mr. Krauss has been a Vice President of Eaton
Vance since 1987 and of BMR since 1992.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $15 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly-held holding company. Eaton Vance Corp., through its
subsidiaries and affiliates, engages in investment management and marketing
activities, fiduciary and banking services, oil and gas operations, real estate
investment, consulting and management, and development of precious metals
properties.
The Trust has retained the services of Eaton Vance to act as Administrator
of the Fund. The Trust has not retained the services of an investment adviser
since the Trust seeks to achieve the investment objective of the Fund by
investing the Fund's assets in the Portfolio. As Administrator, Eaton Vance
provides the Fund with general office facilities and supervises the overall
administration of the Fund. For these services Eaton Vance currently receives no
compensation. The Trustees of the Trust may determine, in the future, to
compensate Eaton Vance for such services.
The Portfolio and the Fund, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
BMR under the investment advisory agreement, by Eaton Vance under the
administrative services agreement, or by EVD under the distribution agreement.
Such costs and expenses to be borne by the Portfolio and the Fund, as the case
may be, include, without limitation: custody and transfer agency fees and
expenses, including those incurred for determining net asset value and keeping
accounting books and records; expenses of pricing and valuation services; the
cost of share certificates; membership dues in investment company organizations;
expenses of acquiring, holding and disposing of securities and other
investments; fees and expenses of registering under the securities laws and the
governmental fees; expenses of reporting to shareholders and investors; proxy
statements and other expenses of shareholders' or investors' meetings; insurance
premiums; printing and mailing expenses; interest, taxes and corporate fees;
legal and accounting expenses; compensation and expenses of Trustees not
affiliated with BMR or Eaton Vance; and investment advisory fees, and, if any,
administrative services fees. The Portfolio and the Fund will also each bear
expenses incurred in connection with litigation in which the Portfolio or the
Fund, as the case may be, is a party and any legal obligation to indemnify its
respective officers and Trustees with respect thereto.
SERVICE PLAN
- --------------------------------------------------------------------------------
In addition to advisory fees and other expenses, the Fund pays service fees
pursuant to 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 PLAN PROVIDES THAT THE FUND MAY MAKE SERVICE FEE
PAYMENTS FOR PERSONAL SERVICES AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS TO
THE PRINCIPAL UNDERWRITER, FINANCIAL SERVICE FIRMS ("AUTHORIZED FIRMS") AND
OTHER PERSONS IN AMOUNTS NOT EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET
ASSETS FOR ANY FISCAL YEAR. The Trustees of the Trust have implemented the Plan
by authorizing the Fund to make quarterly service fee payments to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% of that
portion of the Fund's average daily net assets for any fiscal year which is
attributable to shares of the Fund sold on or after June 12, 1989 and remaining
outstanding for at least twelve months. During the fiscal year ended December
31, 1994, the Fund made payments under the Plan equivalent to 0.071% of the
Fund's average daily net assets for such year. The Plan is described further in
the Statement of Additional Information.
VALUING FUND SHARES
- --------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT") (as
agent for the Fund), in the manner authorized by the Trustees of the Trust. Net
asset value is computed by dividing the value of the Fund's total assets, less
its liabilities, by the number of shares outstanding. Because the Fund invests
its assets in an interest in the Portfolio, the Fund's net asset value will
reflect the value of its interest in the Portfolio (which, in turn, reflects the
underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share and the public offering price
based thereon. It is the Authorized Firms' responsibility to transmit orders
promptly to the Principal Underwriter, which is a wholly-owned subsidiary of
Eaton Vance.
The Portfolio's net asset value is also determined as of the close of
regular trading on the Exchange by IBT (as custodian and agent for the
Portfolio) in the manner authorized by the Trustees of the Portfolio. The net
asset value is computed by subtracting the liabilities of the Portfolio from the
value of its total assets. Securities listed on securities exchanges or in the
NASDAQ National Market are valued at closing sale prices. For further
information regarding the valuation of the Portfolio's assets, see
"Determination of Net Asset Value" in the Statement of Additional Information.
Eaton Vance Corp. owns 77.3% of the outstanding stock of IBT, the Fund's and the
Portfolio's custodian.
- --------------------------------------------------------------------------------
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
- --------------------------------------------------------------------------------
HOW TO BUY FUND SHARES
- --------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the effective public offering price, which price is based on the effective
net asset value per share plus the applicable sales charge. The Fund receives
the net asset value, while the sales charge is divided between the Authorized
Firms and the Principal Underwriter. The Principal Underwriter will furnish the
names of Authorized Firms to an investor upon request. The Fund may suspend the
offering of shares at anytime and may refuse an order for the purchase of
shares.
The sales charge may vary depending on the size of the purchase and the
number of shares of Eaton Vance funds the investor may already own, any
arrangement to purchase additional shares during a 13-month period, or special
purchase programs. Complete details of how investors may purchase shares at
reduced sales charges under a Statement of Intention, Right of Accumulation, or
various employee benefit plans are available from Authorized Firms or the
Principal Underwriter.
The current sales charges are:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER DISCOUNT
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT INVESTED OFFERING PRICE OFFERING PRICE
AMOUNT OF PURCHASE --------------- -------------- --------------
<S> <C> <C> <C>
Less than $100,000 .............................................. 4.99% 4.75% 4.00%
$100,000 but less than $250,000 ................................. 3.90 3.75 3.15
$250,000 but less than $500,000 ................................. 2.83 2.75 2.30
$500,000 but less than $1,000,000 ............................... 2.04 2.00 1.70
$1,000,000 or more .............................................. 0<F1> 0<F1> 0<F2>
<FN>
<F1> No sales charge is payable at the time of purchase on investments of $1
million or more. A contingent deferred sales charge ("CDSC") of 1% will be
imposed on such investments, as described below, in the event of certain
redemption transactions within 18 months of purchase.
<F2> The Principal Underwriter may pay a commission to Authorized Firms who
initiate and are responsible for purchases of $1 million or more as
follows: 1.00% on sales up to $2 million, plus 0.80% on the next $1
million, 0.20% on the next $2 million, and 0.08% on the excess over $5
million.
</TABLE>
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge, such
Firms may be deemed to be underwriters as that term is defined in the Securities
Act of 1933. The Principal Underwriter may, from time to time, at its own
expense, provide additional incentives to Authorized Firms which employ
registered representatives who sell a minimum dollar amount of the Fund's shares
and/or shares of other funds distributed by the Principal Underwriter. In some
instances, such additional incentives may be offered only to certain Authorized
Firms whose representatives are expected to sell significant amounts of shares.
An initial investment in the Fund must be at least $1,000. Once an account
has been established the investor may send investments of $50 or more at any
time directly to the Fund's Transfer Agent (the "Transfer Agent") as follows:
The Shareholder Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104.
The $1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
Shares of the Fund may be sold at net asset value to current and retired
Directors and Trustees of Eaton Vance funds, including the Portfolio; to
officers and employees and clients of Eaton Vance and its affiliates; to
registered representatives and employees of Authorized Firms and bank employees
who refer customers to registered representatives of Authorized Firms; and to
such persons' spouses and children under the age of 21 and their beneficial
accounts. Shares may also be issued at net asset value (1) in connection with
the merger of an investment company with the Fund, (2) to investors making an
investment as part of a fixed fee program whereby an entity unaffilated with the
Investment Adviser provides multiple investment services, such as management,
brokerage and custody and (3) where the amount invested represents redemption
proceeds from a mutual fund unaffiliated with Eaton Vance, if the redemption
occurred no more than 60 days prior to the purchase of Fund shares and the
redeemed shares were subject to a sales charge.
No initial sales charge and no contingent deferred sales charge will be
payable or imposed with respect to shares of the Fund purchased by retirement
plans qualified under Section 401, 403(b) or 457 of the Internal Revenue Code of
1986, as amended (the "Code") ("Eligible Plans"). In order to purchase Shares
without a sales charge, the plan sponsor of an Eligible Plan must notify the
Transfer Agent of the Fund of its status of an Eligible Plan. Participant
accounting services (including trust fund reconciliation services) will be
offered only through third party recordkeepers and not by EVD. The Fund's
Principal Underwriter may pay commissions to Authorized Firms who initiate and
are responsible for purchases of shares of the Fund by Eligible Plans of up to
1.00% of the amount invested in such shares.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Administrator, in exchange for
Fund shares at the applicable public offering price as shown above. The minimum
value of securities (or securities and cash) accepted for deposit is $5,000.
Securities accepted will be sold by IBT as agent for the account of their owner
on the day of their receipt by IBT or as soon thereafter as possible. The number
of Fund shares to be issued in exchange for securities will be the aggregate
proceeds from the sale of such securities, divided by the applicable public
offering price per Fund share on the day such proceeds are received. Eaton Vance
will use reasonable efforts to obtain the then current market price for such
securities but does not guarantee the best available price. Eaton Vance will
absorb any transaction costs, such as commissions, on the sale of the
securities.
Securities determined to be acceptable should be transferred via book entry
or physically delivered, in proper form for transfer, through an Authorized
Firm, together with a completed and signed Letter of Transmittal in approved
form (available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Traditional Special Equities Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Traditional Special Equities Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, are advised to contact Eaton Vance to determine
whether the securities are acceptable before forwarding such securities to IBT.
Eaton Vance reserves the right to reject any securities. Exchanging securities
for Fund shares may create a taxable gain or loss. Each investor should consult
his or her tax adviser with respect to the particular Federal, state and local
tax consequences of exchanging securities for Fund shares.
- --------------------------------------------------------------------------------
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
- --------------------------------------------------------------------------------
HOW TO REDEEM FUND SHARES
- --------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES BY DELIVERING TO THE SHAREHOLDER SERVICES
GROUP, INC., BOS725, P.O. BOX 1559, BOSTON, MASSACHUSETTS 02104, during its
business hours a written request for redemption in good order, plus any share
certificates with executed stock powers. The redemption price will be based on
the net asset value per Fund share next computed after such delivery. Good order
means that all relevant documents must be endorsed by the record owner (s)
exactly as the shares are registered and the signature(s) must be guaranteed by
a member of either the Securities Transfer Association's STAMP program or the
New York Stock Exchange's Medallion Signature Program, or certain banks, savings
and loan institutions, credit unions, securities dealers, securities exchanges,
clearing agencies and registered securities associations as required by a
regulation of the Securities and Exchange Commission (the "Commission") and
acceptable to The Shareholder Services Group, Inc. In addition, in some cases,
good order may require the furnishing of additional documents such as where
shares are registered in the name of a corporation, partnership or fiduciary.
Within seven days after receipt of a redemption request in good order by The
Shareholder Services Group, Inc., the Fund will make payment in cash for the net
asset value of the shares as of the date determined above, reduced by the amount
of any Federal income tax required to be withheld. Although the Fund normally
expects to make payment in cash for redeemed shares, the Trust, subject to
compliance with applicable regulations, has reserved the right to pay the
redemption price of shares of the Fund, either totally or partially, by a
distribution in kind of readily marketable securities withdrawn by the Fund from
the Portfolio. The securities so distributed would be valued pursuant to the
Portfolio's valuation procedures. If a shareholder received a distribution in
kind, the shareholder could incur brokerage or other charges in converting the
securities to cash.
To sell shares at their net asset value through an Authorized Firm (a
repurchase), a shareholder can place a repurchase order with the Authorized
Firm, which may charge a fee. The value of such shares is based upon the net
asset value calculated after EVD, as the Fund's agent, receives the order. It is
the Authorized Firm's responsibility to transmit promptly repurchase orders to
EVD. Throughout this Prospectus, the word "redemption" is generally meant to
include a repurchase.
If shares were recently purchased, the proceeds of redemption (or
repurchase) will not be sent until the check (including a certified or cashier's
check) received for the shares purchased has cleared. Payment for shares
tendered for redemption may be delayed up to 15 days from the purchase date when
the purchase check has not yet cleared. Redemptions or repurchases may result in
a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem accounts with balances of less than $1,000. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. Thus, an investor making an initial investment of $1,000
would not be able to redeem shares without being subject to this policy.
However, no such redemption would be required by the Fund if the cause of the
low account balance was a reduction in the net asset value of Fund shares.
Contingent Deferred Sales Charge. If shares have been purchased at net asset
value with no initial sales charge by virtue of the purchase having been in the
amount of $1 million or more and are redeemed within 18 months after the end of
the calendar month in which the purchase was made, a CDSC of 1% will be imposed
on such redemption. The CDSC will be retained by the Principal Underwriter. The
CDSC will be imposed on an amount equal to the lesser of the current market
value or the original purchase price of the shares redeemed. Accordingly, no
CDSC will be imposed on increases in account value above the initial purchase
price, including any distributions that have been reinvested in additional
shares. In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate
being charged. Accordingly, it will be assumed that redemptions are made first
from any shares in the shareholder's account that are not subject to a CDSC. The
CDSC is waived for redemptions involving certain liquidation, merger or
acquisition transactions involving other investment companies. If a shareholder
reinvests redemption proceeds within the 30-day period and in accordance with
the conditions set forth under "Eaton Vance Shareholder Services -- Reinvestment
Privilege," the shareholder's account will be credited with the amount of any
CDSC paid on such redeemed shares.
REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent accountants. Shortly after the end of each
calendar year, the Fund will furnish all shareholders with information necessary
for preparing Federal and state tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUND'S TRANSFER
AGENT, THE SHAREHOLDER SERVICES GROUP, INC., WILL SET UP A LIFETIME INVESTING
ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a complete
record of all transactions between the investor and the Fund which at all times
shows the balance of shares owned. The Fund will not issue share certificates
except upon request.
Each time a transaction takes place in a shareholder's account, the
shareholder will receive a statement showing complete details of the transaction
and the current balance in the account. (Under certain investment plans,
statements may be sent only quarterly). THE LIFETIME INVESTING ACCOUNT ALSO
PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A
CHECK FOR $50 OR MORE to The Shareholder Services Group, Inc.
Any questions concerning a shareholder's account or services available may
be directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2 or in writing to The Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, Massachusetts 02104. (Please provide the name of the
shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME
INVESTING ACCOUNTS and may be changed as often as desired by written notice to
the Fund's dividend-disbursing agent, The Shareholder Services Group, Inc.,
BOS725, P.O. Box 1559, Boston, MA 02104. The currently effective option will
appear on each confirmation statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash; and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option, will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under Federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or
capital gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more will
be reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares of the Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the account,
or to obtain information about the account. The transfer of shares in a "street
name" account to an account with another dealer or to an account directly with
the Fund involves special procedures and will require the beneficial owner to
obtain historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an investment
firm, or transferring the account to another investment firm, an investor
wishing to reinvest distributions should determine whether the firm which will
hold the shares allows reinvestment of distributions in "street name" accounts.
- --------------------------------------------------------------------------------
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL
INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE.
- --------------------------------------------------------------------------------
THE EATON VANCE EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shares of the Fund currently may be exchanged for shares of any of the following
funds: Eaton Vance Cash Management Fund, Eaton Vance Income Fund of Boston,
Eaton Vance Municipal Bond Fund L.P., Eaton Vance Tax Free Reserves and any fund
in the Eaton Vance Traditional Group of Funds on the basis of net asset value
per share of each fund at the time of the exchange, provided that such exchange
offers are available only in states where shares of the fund being acquired may
be legally sold.
Each exchange must involve shares which have a net asset value of $1,000.
The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Fund does not permit the
exchange privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
Shares of the Fund which are subject to a CDSC may be exchanged into any of
the above funds without incurring the CDSC. The shares acquired in an exchange
may be subject to a CDSC upon redemption. For purposes of computing the CDSC
payable upon the redemption of shares acquired in an exchange, the holding
period of the original shares is added to the holding period of the shares
acquired in the exchange.
The Shareholder Services Group, Inc. makes exchanges at the next determined
net asset value after receiving an exchange request in good order (see "How to
Redeem Fund Shares"). Consult The Shareholder Services Group, Inc. for
additional information concerning the exchange privilege. Applications and
prospectuses of the other funds are available from Authorized Firms or the
Principal Underwriter The prospectus for each fund describes its investment
objectives and policies, and shareholders should obtain a prospectus and
consider these objectives and policies carefully before requesting an exchange.
Shares of certain other funds for which Eaton Vance acts as investment
adviser or administrator may be exchanged for Fund shares on the basis of the
net asset value per share of each fund at the time of the exchange (plus, in the
case of an exchange made within six months of the date of purchase, an amount
equal to the difference, if any, between the sales charge previously paid on the
shares being exchanged and the sales charge payable on the Fund shares being
acquired). Any such exchange is subject to any restrictions or qualifications
set forth in the current prospectus of any such fund.
Telephone exchanges are accepted by The Shareholder Services Group, Inc.,
provided that the investor has not disclaimed in writing the use of the
privilege. To effect such exchanges, call The Shareholder Services Group, Inc.
at 800-262-1122 or, within Massachusetts, 617-573-9403, Monday through Friday,
9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone
exchange must be registered in the same name(s) and with the same address as the
shares being exchanged. Neither the Fund, the Principal Underwriter nor The
Shareholder Services Group, Inc. will be responsible for the authenticity of
exchange instructions received by telephone; provided that reasonable procedures
to confirm that instructions communicated are genuine have been followed.
Telephone instructions will be tape recorded. In times of drastic economic or
market changes, a telephone exchange may be difficult to implement. An exchange
may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of the Fund
may be mailed directly to The Shareholder Services Group, Inc., BOS725, P.O. Box
1559, Boston, MA 02104 at any time -- whether or not distributions are
reinvested. The name of the shareholder, the Fund and the account number should
accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
STATEMENT OF INTENTION: Purchases of $100,000 or more made over a 13-month
period are eligible for reduced sales charges. See "Statement of Intention and
Escrow Agreement."
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges when the
current market value of holdings (shares at current offering price), plus new
purchases, reach $100,000 or more. Shares of the Eaton Vance funds mentioned
below under "The Eaton Vance Exchange Privilege" may be combined under the
Statement of Intention and Right of Accumulation.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks in the amount specified by the shareholder. A
minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES MAY
REINVEST ANY PORTION OR ALL OF THE REPURCHASE OR REDEMPTION PROCEEDS (PLUS THAT
AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO ROUND OFF THE PURCHASE TO THE
NEAREST FULL SHARE), IN SHARES OF THE FUND, or, provided that the shares
repurchased or redeemed have been held for at least 30 days, in shares of any of
the other funds offered by the Principal Underwriter subject to an initial sales
charge, at net asset value, provided that the reinvestment is effected within 30
days after such repurchase or redemption. Shares are sold to a reinvesting
shareholder at the next determined net asset value following timely receipt of a
written purchase order by the Principal Underwriter or by the fund whose shares
are to be purchased (or by such fund's transfer agent). The privilege is also
available to holders of shares of the other funds offered subject to an initial
sales charge by the Principal Underwriter who wish to reinvest such redemption
or repurchase proceeds in shares of the Fund. If a shareholder reinvests
redemption proceeds within the 30-day period the shareholder's account will be
credited with the amount of any CDSC paid on such redeemed shares. To the extent
that any shares of the Fund are sold at a loss and the proceeds are reinvested
in shares of the Fund (or other shares of the Fund are acquired within the
period beginning 30 days before and ending 30 days after the date of the
redemption) some or all of the loss generally will not be allowed as a tax
deduction. Special rules may apply to the computation of gain or loss and to the
deduction of loss on a repurchase or redemption followed by a reinvestment. See
"Distributions and Taxes". Shareholders should consult their tax advisers
concerning the tax consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS: Shares of the Fund are available for purchase
in connection with the following tax-sheltered retirement plans:
--Pension and Profit Sharing Plans for self-employed individuals,
corporations and non-profit organizations;
-- Individual Retirement Account Plans for individuals and their non-
employed spouses; and
-- 403(b) Retirement Plans for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Code.
Detailed information concerning these plans, including certain exceptions to
minimum investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
Federal income tax consequences of establishing a plan. Under all plans,
dividends and distributions will be automatically reinvested in additional
shares.
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
It is the present policy of the Fund to pay at least annually dividends from net
investment income allocated to the Fund by the Portfolio, less the Fund's direct
and allocated expenses and to distribute at least annually any realized net
capital gains (the Fund's realized net capital gains generally consist of the
net realized capital gains from the sale of portfolio securities allocated to
the Fund by the Portfolio).
Shareholders may reinvest dividends, if any, in shares of the Fund at the
current net asset value per share as of the ex-dividend date and may accumulate
capital gains distributions, if any, in additional shares of the Fund also at
the current net asset value per share as of the ex-dividend date.
Distributions by the Fund of ordinary income and net short-term capital
gains allocated to the Fund by the Portfolio will be taxable to the Fund's
shareholders as ordinary income, whether received in cash or reinvested in
additional shares of the Fund. Shareholders reinvesting such distributions
should treat the amount of the entire distribution as the tax cost basis of the
additional shares acquired by reason of such reinvestment. Distributions of net
long-term capital gains are taxable to shareholders as such, whether received in
cash or reinvested in additional shares of the Fund, and regardless of the
length of time shares have been owned by shareholders. If shares are purchased
shortly before the record date of a distribution, the shareholder will pay the
full price for the shares and then receive some portion of the price back as a
taxable distribution. Certain distributions which are declared in October,
November or December and paid the following January will be reportable by
shareholders as if received on December 31 of the year in which they are
declared.
Sales charges paid upon a purchase of shares of the Fund cannot be taken
into account for purposes of determining gain or loss on a redemption or
exchange of the shares before the 91st day after their purchase to the extent
shares of the Fund or of another fund are subsequently acquired pursuant to the
Fund's reinvestment or exchange privilege. In addition, losses realized on a
redemption of Fund shares may be disallowed under certain "wash sale" rules if
within a period beginning 30 days before and ending 30 days after the date of
redemption other shares of the Fund are acquired. Any disregarded or disallowed
amounts will result in an adjustment to the shareholder's tax basis in some or
all of any other shares acquired.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of reporting on their Federal and state tax returns
for the prior calendar year's distributions, proceeds from the redemption or
exchange of Fund shares, and Federal income tax (if any) withheld by the Fund's
Transfer Agent.
In order to qualify as a regulated investment company under the Code, the
Fund must satisfy certain requirements relating to the sources of its income,
the distribution of its income, and the diversification of its assets. In
satisfying these requirements, the Fund will treat itself as owning its
proportionate share of each of the Portfolio's assets and as entitled to the
income of the Portfolio properly attributable to such share.
- --------------------------------------------------------------------------------
AS A REGULATED INVESTMENT COMPANY UNDER THE CODE, THE FUND DOES NOT PAY
FEDERAL INCOME OR EXCISE TAXES TO THE EXTENT THAT IT DISTRIBUTES TO
SHAREHOLDERS ITS NET INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS IN
ACCORDANCE WITH THE TIMING REQUIREMENTS IMPOSED BY THE CODE. AS A
PARTNERSHIP UNDER THE CODE, THE PORTFOLIO DOES NOT PAY FEDERAL INCOME OR
EXCISE TAXES.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compounded rate of return
(including capital appreciation/depreciation, and dividends and distributions
paid and reinvested) for the stated period and annualizing the result. The
calculation assumes the maximum sales charge is deducted from the initial $1,000
purchase order and that all dividends and distributions are reinvested at net
asset value on the reinvestment dates during the period. The Fund may also
publish annual and cumulative total return figures from time to time.
The Fund may also furnish total return calculations based on investments at
various sales charge levels or at net asset value. Any performance data which is
based on the Fund's net asset value per share would be reduced if a sales charge
were taken into account.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's total return for any prior period
should not be considered as a representation of what an investment may earn or
what an investor's total return may be in any future period.
STATEMENT OF INTENTION AND ESCROW AGREEMENT
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TERMS OF ESCROW. If the investor, on an application, makes a Statement of
Intention to invest a specified amount over a thirteen-month period, then out of
the initial purchase (or subsequent purchases if necessary) 5% of the dollar
amount specified on the application shall be held in escrow by the escrow agent
in the form of shares (computed to the nearest full share at the public offering
price applicable to the initial purchase hereunder) registered in the investor's
name. All income dividends and capital gains distributions on escrowed shares
will be paid to the investor or to the investor's order.
When the minimum investment so specified is completed, the escrowed shares
will be delivered to the investor. If the investor has an accumulation account
the shares will remain on deposit under the investor's account.
If total purchases under this Statement of Intention are less than the
amount specified, the investor will promptly remit to EVD any difference between
the sales charge on the amount specified and on the amount actually purchased.
If the investor does not within 20 days after written request by EVD or the
Authorized Firm pay such difference in sales charge, the escrow agent will
redeem an appropriate number of the escrowed shares in order to realize such
difference. Full shares remaining after any such redemption together with any
excess cash proceeds of the shares so redeemed will be delivered to the investor
or to the investor's order by the escrow agent.
In signing the application, the investor irrevocably constitutes and
appoints the escrow agent the investor's attorney to surrender for redemption
any or all escrowed shares with full power of substitution in the premises.
PROVISION FOR RETROACTIVE PRICE ADJUSTMENT. If total purchases made under this
Statement are large enough to qualify for a lower sales charge than that
applicable to the amount specified, all transactions will be computed at the
expiration date of this Statement to give effect to the lower charge. Any
difference in sales charge will be refunded to the investor in cash, or applied
to the purchase of additional shares at the lower charge if specified by the
investor. This refund will be made by the Authorized Firm and by EVD. If at the
time of the recomputation a firm other than the original firm is placing the
orders, the adjustment will be made only on those shares purchased through the
firm then handling the account.
<PAGE>
INVESTMENT ADVISER OF
SPECIAL INVESTMENT PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV TRADITIONAL SPECIAL EQUITIES 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
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV TRADITIONAL SPECIAL EQUITIES FUND
24 FEDERAL STREET
BOSTON, MA 02110
T-SEP
EV TRADITIONAL
SPECIAL EQUITIES FUND
Prospectus
April 1, 1995
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
April 1, 1995
EV TRADITIONAL SPECIAL EQUITIES FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides information about EV Traditional Special Equities Fund (the "Fund") and
certain other series of Eaton Vance Special Investment Trust (the "Trust").Part
II provides information solely about the Fund. Where appropriate, Part I
includes cross-references to therelevant sections of Part II that provide
additional, Fund-specific information.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PART I
Investment Objective, Policies and Restrictions ........................... 2
Other Investment Features ................................................. 4
Trustees and Officers ..................................................... 5
Investment Adviser and Administrator ...................................... 6
Custodian ................................................................. 9
Service for Withdrawal .................................................... 9
Determination of Net Asset Value .......................................... 9
Investment Performance .................................................... 10
Taxes ..................................................................... 11
Portfolio Security Transactions ........................................... 12
Other Information ......................................................... 14
Independent Accountants ................................................... 15
PART II
Fees and Expenses ......................................................... a-1
Services for Accumulation ................................................. a-1
Principal Underwriter ..................................................... a-2
Service Plan .............................................................. a-3
Performance Information ................................................... a-4
Additional Tax Matters .................................................... a-4
Control Persons and Principal Holders of Securities ....................... a-4
Financial Statements ...................................................... a-5
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE PROSPECTUS OF EV TRADITIONAL SPECIAL EQUITIES FUND DATED
APRIL 1, 1995, AS SUPPLEMENTED FROM TIME TO TIME. THIS STATEMENT OF ADDITIONAL
INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH
MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE
"PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND PHONE NUMBER).
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART I
The following provides information about the Fund and certain other series
of the Trust.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The investment objective of the Fund, a diversified series of the Trust, is
to seek growth of capital. The Fund currently seeks to achieve its investment
objective by investing its assets in the Special Investment Portfolio (the
"Portfolio"), a separate registered investment company with the same investment
objective as the Fund and substantially the same investment policies and
restrictions as the Fund. The Portfolio seeks to achieve its investment
objective by investing primarily in growth securities.
The Trustees of the Trust may withdraw the Fund's investment from the
Portfolio at any time, if they determine that it is in the best interests of the
Fund to do so. Upon any such withdrawal, the Fund's assets would be invested in
another investment company with substantially the same investment objective,
policies and restrictions as those of the Fund or directly in investment
securities in accordance with the Portfolio's investment policies, as described
below. Except as indicated below, the approval of the Fund's shareholders would
not be required to change the Portfolio's investment policies discussed below,
including those concerning security transactions.
The Portfolio's investment policies may involve a portfolio turnover rate
(and corresponding brokerage expenses) somewhat greater than that of other
investment companies. Such turnover can result from portfolio transactions
reflecting Boston Management and Research's ("BMR" or the "Investment Adviser")
view of a change or prospective changes in the earnings growth rate of a
company, what it considers a more favorable investment opportunity, and other
circumstances bearing on the desirability of continuing a given investment.
The following investment restrictions have been adopted by the Fund and may
be changed only by the vote of a majority of the Fund's outstanding voting
securities as defined in the Investment Company Act of 1940 (the "1940 Act").
As a matter of fundamental policy, the Fund may not:
(1) With respect to 75% of its total assets, invest more than 5% of its
total assets (taken at current value) in the securities of any one issuer or in
more than 10% of the outstanding voting securities of any one issuer, except
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment companies;
(2) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(3) Purchase any securities on margin (but the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities);
(4) Underwrite securities of other issuers;
(5) Concentrate its investments in any particular industry, but, if deemed
appropriate for the Fund's objective, up to 25% of the value of its assets may
be invested in securities of companies in any one industry (although more than
25% may be invested in securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities);
(6) Invest in real estate (although it may purchase and sell securities
which are secured by real estate and securities of companies which invest or
deal in real estate), invest in commodities or commodity contracts for the
purchase or sale of physical commodities; or
(7) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements, and (c) lending portfolio securities.
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing numbered investment restrictions adopted by the
Fund; such restrictions cannot be changed without the approval of a "majority of
the outstanding voting securities" of the Portfolio, which as used in this
Statement of Additional Information means the lesser of (a) 67% of the
outstanding voting securities of the Portfolio present or represented by proxy
at a meeting if the holders of more than 50% of the outstanding voting
securities of the Portfolio are present or represented at the meeting or (b)
more than 50% of the outstanding voting securities of the Portfolio. The term
"voting securities" as used in this paragraph has the same meaning as in the
1940 Act. Whenever the Trust is requested to vote on a change in the investment
restrictions of the Portfolio, the Trust will hold a meeting of Fund
shareholders and will cast its vote as instructed by the shareholders.
The Fund and the Portfolio have each adopted the following nonfundamental
investment policies which may be changed with respect to the Fund by the
Trustees of the Trust without approval by the Fund's shareholders or may be
changed with respect to the Portfolio by the Trustees of the Portfolio without
the approval of the Fund or the Portfolio's other investors. As a matter of
nonfundamental policy, neither the Fund nor the Portfolio may: (a) invest more
than 15% of net assets in investments which are not readily marketable,
including restricted securities and repurchase agreements maturing in more than
seven days. Restricted securities for the purposes of this limitation do not
include securities eligible for resale pursuant to Rule 144A of the Securities
Act of 1933 that the Board of Trustees of the Trust or the Portfolio or its
delegate, determine to be liquid, based upon the trading markets for the
specific security; (b) invest in put or call options, except that the Fund or
the Portfolio is authorized to engage in the writing and sale of call option
contracts and the purchase of call options as described below under "Writing
Covered Call Options" and the Fund or the Portfolio may invest in warrants where
the grantor thereof is the issuer of the underlying securities; (c) invest in
the securities of an issuer when any officer or Trustee of the Trust or the
Portfolio, the Investment Adviser, or any officer or trustee of the Investment
Adviser, owns in excess of 1/2 of 1% of the issuer's securities if such owners
together own more than 5% of such securities; (d) purchase securities of
companies which, including predecessors, have not been in continuous operation
for at least three years, except that 5% of total assets (taken at market value)
may be invested in certain issuers not in such continuous operation but
substantially all of whose assets are (i) securities of one or more issuers
which have had a record of three years' continuous operation or (ii) assets of
an independent division of an issuer which division has had a record of three
years' continuous operation; provided, however, that exempted from this
restriction are U.S. Government securities, securities of issuers which are
rated by at least one nationally recognized statistical rating organization,
municipal obligations and obligations issued or guaranteed by any foreign
government or its agencies or instrumentalities; (e) sell or contract to sell a
security which it does not own, unless by virtue of its ownership of other
securities it has at the time of sale a right to obtain securities equivalent in
kind and amount to the securities sold and provided that if such right is
conditional the sale is made upon the same conditions; (f) invest in interests
in oil, gas or other mineral exploration or development programs (this
restriction does not, however, prevent investment in securities of companies
engaged in such activities); or (g) purchase warrants in excess of 2% of net
assets, except that if such warrants are listed on the New York or American
Stock Exchanges, the percentage restriction is 5% of net assets. Any such
warrants shall be valued at the lower of cost or market except that warrants
acquired by the Fund or the Portfolio attached to portfolio securities shall be
deemed to be without value for the purpose of this restriction.
In order to permit the sale of shares of the Fund in certain states, the
Fund may make commitments more restrictive than the policies described above.
Should the Fund determine that any such commitment is no longer in the best
interests of the Fund and its shareholders, it will revoke the commitment by
terminating sales of its shares in the state(s) involved. For example, the Fund
has agreed that it will not pledge, mortgage or hypothecate its portfolio
securities to the extent that on a per share basis the percentage of such
pledged, mortgaged or hypothecated assets would exceed 15% of the Fund's net
assets.
OTHER INVESTMENT FEATURES
LENDING OF PORTFOLIO SECURITIES
The Portfolio may seek to increase its income by lending portfolio
securities. Under present regulatory policies, including those of the Board of
Governors of the Federal Reserve System and the Securities and Exchange
Commission, such loans may be made to member firms of the New York Stock
Exchange, and would be required to be secured continuously by collateral in cash
or cash equivalents maintained on a current basis at an amount at least equal to
the market value of the securities loaned. The Portfolio would have the right to
call a loan and obtain the securities loaned at any time on five days' notice.
During the existence of a loan, the Portfolio would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and would also receive the interest on investment of the collateral. The
Portfolio would not, however, have the right to vote any securities having
voting rights during the existence of the loan, but would call the loan in
anticipation of an important vote to be taken among holders of the securities or
of the giving or withholding of their consent on a material matter affecting the
investment. As with other extensions of credit there are risks of delay in
recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. However, the loans would be made only to firms
deemed by the Investment Adviser to be of good standing, and when, in its
judgment, the consideration which can be earned currently from securities loans
of this type justifies the attendant risk.
If the Investment Adviser determines to make securities loans, it is not
intended that the value of the securities loaned would exceed 30% of the
Portfolio's total assets. As of the present time, the Trustees have not made a
determination to engage in this activity, and have no present intention of
making such a determination during the current fiscal year.
WRITING COVERED CALL OPTIONS
The Portfolio may engage in the writing of call option contracts on
securities which are owned by the Portfolio ("covered call options") when, in
the opinion of the Trustees, such activity is advisable and appropriate.
A call option written by the Portfolio obligates the Portfolio to sell
specified securities to the holder of the option at a specified price at any
time before the expiration date. The Portfolio will write a covered call option
on a security for the purpose of increasing its return on such security and/or
to partially hedge against a decline in the value of the security. In
particular, when the Portfolio writes an option which expires unexercised or is
closed out by the Portfolio at a profit, it will retain the premium paid for the
option, which will increase its gross income and will offset in part the reduced
value of the portfolio security underlying the option, or the increased cost of
acquiring the security for its portfolio. However, if the price of the
underlying security moves adversely to the Portfolio's position, the option may
be exercised and the Portfolio will be required to sell the underlying security
at a disadvantageous price, which may only be partially offset by the amount of
the premium, if at all. The Portfolio does not intend to write a covered option
on any security if after such transaction more than 25% of its net assets, as
measured by the aggregate value of the securities underlying all covered calls
written by the Portfolio, would be subject to such options.
The Portfolio may terminate its obligations under a call option by
purchasing an option identical to the one it has written. Such purchases are
referred to as "closing purchase transactions."
An options position may be closed out only on an options exchange which
provides a secondary market for an option of the same series. Although the
Portfolio will generally purchase or write only those options for which there
appears to be an active secondary market, there is no assurance that a liquid
secondary market on an exchange will exist for any particular option, or at any
particular time. For some options no secondary market on an exchange may exist.
In such event, it might not be possible to effect closing transactions in
particular options, with the result that the Portfolio would have to exercise
its options in order to realize any profit and would incur transaction costs
upon the sale of underlying securities pursuant to the exercise of put options.
If the Portfolio as a covered call option writer is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange include
the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
the Options Clearing Corporation may not at all times be adequate to handle
current trading volume; or (vi) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that exchange (or in that class or series of options)
would cease to exist, although outstanding options on that exchange that had
been issued by the Options Clearing Corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms.
The Portfolio will pay brokerage commissions in connection with writing
options and effecting closing purchase transactions, as well as for sales of
underlying securities. The writing of options could result in significant
increases in the Portfolio's portfolio turnover rate, especially during periods
when market prices of the underlying securities appreciate.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain of the facilities of
the Options Clearing Corporation inadequate, and thereby result in the
institution by an exchange of special procedures which may interfere with the
timely execution of customers' orders.
The amount of the premiums which the Portfolio may pay or receive may be
adversely affected as new or existing institutions, including other investment
companies, engage in or increase their option purchasing and writing activities.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Portfolio's investment
adviser, Boston Management and Research ("BMR" or the "Investment Adviser"), a
wholly-owned subsidiary of Eaton Vance ("Eaton Vance"); of Eaton Vance's parent,
Eaton Vance Corp. ("EVC"); and of BMR's and Eaton Vance's trustee, Eaton Vance,
Inc. ("EV"). Eaton Vance and EV are both wholly-owned subsidiaries of EVC. Those
Trustees and officers who are "interested persons" of the Trust, the Portfolio,
BMR, Eaton Vance, EVC or EV as defined in the 1940 Act by virtue of their
affiliation with any one or more of the Trust, the Portfolio, BMR, Eaton Vance,
EVC or EV, are indicated by an asterisk (*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (53), PRESIDENT AND TRUSTEE*
Executive Vice President of BMR, Eaton Vance, EVC and EV, and a Director of EVC
and EV. Director or Trustee and officer of various investment companies
managed by Eaton Vance or BMR.
LANDON T. CLAY (69), TRUSTEE*
Chairman of BMR, Eaton Vance, EVC and EV and a Director of EVC and EV. Director
or Trustee and officer of various investment companies managed by Eaton Vance
or BMR.
DONALD R. DWIGHT (64), TRUSTEE
President of Dwight Partners, Inc. (a corporate relations and communications
company) founded in 1988; Chairman of the Board of Newspapers of New England,
Inc. since 1983. Director or Trustee of various investment companies managed
by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (60), TRUSTEE
Jacob J. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (59), TRUSTEE
President and Director, United Asset Management Corporation (a holding company
owning institutional investment management firms); Chairman, President and
Director, The Regis Fund, Inc. (mutual fund). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (68), TRUSTEE
Director of Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (65), TRUSTEE
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
PETER F. KIELY (58), VICE PRESIDENT*
Vice President of BMR, Eaton Vance and EV. Director or Trustee and officer of
various investment companies managed by Eaton Vance or BMR. Mr. Kiely was
elected Trustee of the Trust on December 16, 1991.
CLIFFORD H. KRAUSS (40), VICE PRESIDENT*
Vice President of BMR, Eaton Vance and EV.
JAMES L. O'CONNOR (49), TREASURER*
Vice President of BMR, Eaton Vance, and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
WILLIAM J. AUSTIN, JR. (43), ASSISTANT TREASURER*
Assistant Vice President of BMR, Eaton Vance and EV. Officer of various
investment companies managed by Eaton Vance or BMR. Mr. Austin was elected
Assistant Treasurer of the Trust on December 16, 1991.
THOMAS OTIS (63), SECRETARY*
Vice President and Secretary of BMR, Eaton Vance, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (59), ASSISTANT TREASURER AND ASSISTANT SECRETARY*
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Messrs. Thorndike (Chairman), Hayes and Reamer are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolio. The
Special Committee's functions include a continuous review of the Trust's
contractual relationship with the Administrator, the Portfolio's contractual
relationship with the Investment Adviser, making recommendations to the Trustees
regarding the compensation of those Trustees who are not members of the Eaton
Vance organization, and making recommendations to the Trustees regarding
candidates to fill vacancies, as and when they occur, in the ranks of those
Trustees who are not "interested persons" of the Trust, the Portfolio, or the
Eaton Vance organization.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust and of the Portfolio. The Audit Committee's
functions include making recommendations to the Trustees regarding the selection
of the independent accountants, and reviewing with such accountants and the
Treasurer of the Trust and of the Portfolio matters relative to accounting and
auditing practices and procedures, accounting records, internal accounting
controls, and the functions performed by the custodian and transfer agent of the
Trust and of the Portfolio.
Trustees of the Portfolio who are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual fees
in accordance with the terms of a Trustees Deferred Compensation Plan (the
"Plan"). Under the Plan, an eligible Trustee may elect to have his deferred fees
invested by the Portfolio in the shares of one or more funds in the Eaton Vance
Family of Funds, and the amount paid to the Trustees under the Plan will be
determined based upon the performance of such investments. Deferral of Trustees'
fees in accordance with the Plan will have a negligible effect on the
Portfolio's assets, liabilities, and net income per share, and will not obligate
the Portfolio to retain the services of any Trustee or obligate the Portfolio to
pay any particular level of compensation to the Trustee.
For the compensation earned by the Trustees of the Trust and the Portfolio,
see "Fees and Expenses" in Part II of this Statement of Additional Information.
INVESTMENT ADVISER AND ADMINISTRATOR
The Portfolio engages BMR as its investment adviser pursuant to an
Investment Advisory Agreement dated August 1, 1994. BMR or Eaton Vance acts as
investment adviser to investment companies and various individual and
institutional clients with combined assets under management of approximately $15
billion.
Eaton Vance, its affiliates and its predecessor companies have been
managing assets of individuals and institutions since 1924 and managing
investment companies since 1931. They maintain a large staff of experienced
fixed-income and equity investment professionals to service the needs of its
clients. The fixed-income division focuses on all kinds of taxable investment-
grade and high-yield securities, tax-exempt investment-grade and high-yield
securities, and U.S. Government securities. The equity division covers stocks
ranging from blue chip to emerging growth companies.
BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the Portfolio
investment research, advice and supervision, furnishes an investment program and
determines what securities will be purchased, held or sold by the Portfolio and
what portion, if any, of the Portfolio's assets will be held uninvested. The
Investment Advisory Agreement requires BMR to pay the salaries and fees of all
officers and Trustees of the Portfolio who are members of the BMR organization
and all personnel of BMR performing services relating to research and investment
activities. The Portfolio is responsible for all expenses not expressly stated
to be payable by BMR under the Investment Advisory Agreement, including, without
implied limitation, (i) expenses of maintaining the Portfolio and continuing its
existence, (ii) registration of the Portfolio under the 1940 Act, (iii)
commissions, fees and other expenses connected with the acquisition, holding and
disposition of securities and other investments, (iv) auditing, accounting and
legal expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses
of issue, sale and redemption of interests in the Portfolio, (viii) expenses of
registering and qualifying the Portfolio and interests in the Portfolio under
Federal and state securities laws and of preparing and printing registration
statements or other offering statements or memoranda for such purposes and for
distributing the same to investors, and fees and expenses of registering and
maintaining registrations of the Portfolio and of the Portfolio's placement
agent as broker-dealer or agent under state securities laws, (ix) expenses of
reports and notices to investors and of meetings of investors and proxy
solicitations therefor, (x) expenses of reports to governmental officers and
commissions, (xi) insurance expenses, (xii) association membership dues, (xiii)
fees, expenses and disbursements of custodians and subcustodians for all
services to the Portfolio (including without limitation safekeeping of funds,
securities and other investments, keeping of books, accounts and records, and
determination of net asset values, book capital account balances and tax capital
account balances), (xiv) fees, expenses and disbursements of transfer agents,
dividend disbursing agents, investor servicing agents and registrars for all
services to the Portfolio, (xv) expenses for servicing the accounts of
investors, (xvi) any direct charges to investors approved by the Trustees of the
Portfolio, (xvii) compensation and expenses of Trustees of the Portfolio who are
not members of BMR's organization, and (xviii) such non-recurring items as may
arise, including expenses incurred in connection with litigation, proceedings
and claims and the obligation of the Portfolio to indemnify its Trustees,
officers and investors with respect thereto.
Under the Investment Advisory Agreement with the Portfolio, BMR receives a
monthly advisory fee of 5/96 of 1% (equivalent to 0.625% annually) of average
daily net assets of the Portfolio. As at December 31, 1994, the Portfolio had
net assets of $64,442,372. For the period from the start of business, August 1,
1994, to December 31, 1994, BMR received advisory fees of $175,012 (equivalent
to 0.625% (annualized) of the Portfolio's average daily net assets).
The Investment Advisory Agreement with BMR remains in effect until February
28, 1996. It may be continued indefinitely thereafter so long as such
continuance after February 28, 1996 is approved at least annually (i) by the
vote of a majority of the Trustees of the Portfolio who are not interested
persons of the Portfolio or of BMR cast in person at a meeting specifically
called for the purpose of voting on such approval and (ii) by the Board of
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio. The Agreement may be terminated at any time without
penalty on sixty days' written notice by the Board of Trustees of either party
or by vote of the majority of the outstanding voting securities of the
Portfolio, and the Agreement will terminate automatically in the event of its
assignment. The Agreement provides that BMR may render services to others and
may permit other fund clients and other corporations and organizations to use
the words "Eaton Vance" or "Boston Management and Research" in their names. The
Agreement also provides that BMR shall not be liable for any loss incurred in
connection with the performance of its duties, or action taken or omitted under
that Agreement, in the absence of willful misfeasance, bad faith, gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties thereunder, or for any losses sustained
in the acquisition, holding or disposition of any security or other investment.
As indicated in the Prospectus, Eaton Vance serves as Administrator of the
Fund, but receives no compensation for providing administrative services to the
Fund. Under its agreement with the Fund, Eaton Vance has been engaged to
administer the Fund's affairs, subject to the supervision of the Trustees of the
Trust, and shall furnish for the use of the Fund office space and all necessary
office facilities, equipment and personnel for administering the affairs of the
Fund.
The Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii) registration
of the Trust under the 1940 Act, (iii) commissions, fees and other expenses
connected with the purchase or sale of securities and other investments, (iv)
auditing, accounting and legal expenses, (v) taxes and interest, (vi)
governmental fees, (vii) expenses of issue, sale, repurchase and redemption of
shares, (viii) expenses of registering and qualifying the Fund and its shares
under federal and state securities laws and of preparing and printing
prospectuses for such purposes and for distributing the same to shareholders and
investors, and fees and expenses of registering and maintaining registrations of
the Fund and of the Fund's principal underwriter, if any, as broker-dealer or
agent under state securities laws, (ix) expenses of reports and notices to
shareholders and of meetings of shareholders and proxy solicitations therefor,
(x) expenses of reports to governmental officers and commissions, (xi) insurance
expenses, (xii) association membership dues, (xiii) fees, expenses and
disbursements of custodians and subcustodians for all services to the Fund
(including without limitation safekeeping of funds, securities and other
investments, keeping of books and accounts and determination of net asset
values), (xiv) fees, expenses and disbursements of transfer agents, dividend
disbursing agents, shareholder servicing agents and registrars for all services
to the Fund, (xv) expenses for servicing shareholder accounts, (xvi) any direct
charges to shareholders approved by the Trustees of the Trust, (xvii)
compensation and expenses of Trustees of the Trust who are not members of the
Eaton Vance organization, and (xviii) such non-recurring items as may arise,
including expenses incurred in connection with litigation, proceedings and
claims and the obligation of the Trust to indemnify its Trustees and officers
with respect thereto.
A commitment has been made to a state securities authority that Eaton Vance
will take certain actions, if necessary, so that the Fund's expenses will not
exceed expense limitation requirements of such state. The commitment may be
amended or rescinded by Eaton Vance in response to changes in the requirements
of the state or for other reasons.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are
both wholly-owned subsidiaries of EVC. BMR and Eaton Vance are both
Massachusetts business trusts, and EV is the trustee of BMR and Eaton Vance. The
Directors of EV are Landon T. Clay, H. Day Brigham, Jr., M. Dozier Gardner,
James B. Hawkes and Benjamin A. Rowland, Jr. The Directors of EVC consist of the
same persons and John G. L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman,
and Mr. Gardner is president and chief executive officer, of EVC, BMR, Eaton
Vance and EV. All of the issued and outstanding shares of Eaton Vance and of EV
are owned by EVC. All of the issued and outstanding shares of BMR are owned by
Eaton Vance. All shares of the outstanding Voting Common Stock of EVC are
deposited in a Voting Trust, which expires December 31, 1996, the Voting
Trustees of which are Messrs. Brigham, Clay, Gardner, Hawkes and Rowland. The
Voting Trustees have unrestricted voting rights for the election of Directors of
EVC. All of the outstanding voting trust receipts issued under said Voting Trust
are owned by certain of the officers of BMR and Eaton Vance who are also
officers or Directors of EVC and EV. As of February 28, 1995, Messrs. Clay,
Gardner and Hawkes each owned 24% of such voting trust receipts, and Messrs.
Rowland and Brigham owned 15% and 13%, respectively, of such voting trust
receipts. Messrs. Clay, Hawkes and Otis, who are officers or Trustees of the
Trust and the Portfolio, are members of the EVC, Eaton Vance, BMR and EV
organizations. Messrs. Austin, Kiely, Krauss and O'Connor and Ms. Sanders are
officers of the Trust and the Portfolio and are also members of the BMR, Eaton
Vance and EV organizations. BMR will receive the fees paid under the Investment
Advisory Agreement.
Eaton Vance owns all of the stock of Energex Corporation, which is engaged
in oil and gas operations. EVC owns all of the stock of Marblehead Energy Corp.
(which is engaged in oil and gas operations) and 77.3% of the stock of Investors
Bank & Trust Company, the custodian of the Fund and the Portfolio, which
provides custodial, trustee and other fiduciary services to investors, including
individuals, employee benefit plans, corporations, investment companies, savings
banks and other institutions. In addition, Eaton Vance owns all of the stock of
Northeast Properties, Inc., which is engaged in real estate investment,
consulting and management. EVC owns all of the stock of Fulcrum Management, Inc.
and MinVen, Inc., which are engaged in the development of precious metal
properties. EVC, BMR, Eaton Vance and EV may also enter into other businesses.
EVC and its affiliates and its officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, Investors Bank & Trust Company. It is Eaton Vance's opinion that
the terms and conditions of such transactions were not and will not be
influenced by existing or potential custodial or other relationships between the
Fund or the Portfolio and such banks.
CUSTODIAN
Investors Bank & Trust Company ("IBT"), 24 Federal Street, Boston,
Massachusetts, (a 77.3% owned subsidiary of EVC) acts as custodian for the
Fund and the Portfolio. IBT has the custody of all cash and securities
representing the Fund's interest in the Portfolio, has custody of all the
Portfolio's assets, maintains the general ledger of the Portfolio and the
Fund, and computes the daily net asset value of interests in the Portfolio and
the net asset value of shares of the Fund. In such capacity it attends to
details in connection with the sale, exchange, substitution, transfer or other
dealings with the Portfolio's investments, receives and disburses all funds,
and performs various other ministerial duties upon receipt of proper
instructions from the Fund and the Portfolio. IBT charges fees which are
competitive within the industry. A portion of the fee relates to custody,
bookkeeping and valuation services and is based upon a percentage of Fund and
Portfolio net assets and a portion of the fee relates to activity charges,
primarily the number of portfolio transactions. These fees are then reduced by
a credit for cash balances of the particular investment company at the
custodian equal to 75% of the 91-day, U.S. Treasury Bill auction rate applied
to the particular investment company's average daily collected balances for
the week. In view of the ownership of EVC in IBT, the Portfolio is treated as
a self-custodian pursuant to Rule 17f-2 under the 1940 Act, and the
Portfolio's investments held by IBT as custodian are thus subject to
additional examinations by the Portfolio's independent auditors as called for
by such Rule. For the period from the start of business, August 1, 1994, to
December 31, 1994, the Portfolio paid IBT $20,710. For the custody fees that
the Fund paid to IBT, see "Fees and Expenses" in Part II of this Statement of
Additional Information.
SERVICE FOR WITHDRAWAL
By a standard agreement, the Trust's Transfer Agent will send to the
shareholder regular monthly or quarterly payments of any permitted amount
designated by the shareholder (see "Eaton Vance Shareholder Services --
Withdrawal Plan" in the Fund's current Prospectus) based upon the value of the
shares held. The checks will be drawn from share redemptions and hence are a
return of principal. Income dividends and capital gain distributions in
connection with withdrawal accounts will be credited at net asset value as of
the record date for each distribution. Continued withdrawals in excess of
current income will eventually use up principal, particularly in a period of
declining market prices.
To use this service, at least $5,000 in cash or shares at the public
offering price will have to be deposited with the Transfer Agent. The
maintenance of a withdrawal plan concurrently with purchases of additional
Fund shares would be disadvantageous if a sales charge is included in such
purchases. A shareholder may not have a withdrawal plan in effect at the same
time he or she has authorized Bank Automated Investing or is otherwise making
regular purchases of Fund shares. Either the shareholder, the Transfer Agent
or the Principal Underwriter will be able to terminate the withdrawal plan at
any time without penalty.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Portfolio and of shares of the Fund is
determined by the custodian, IBT, (as agent for the Fund and the Portfolio) in
the manner described under "Valuing Fund Shares" in the Fund's current
Prospectus. The Fund and the Portfolio will be closed for business and will not
price their respective shares or interests on the following business holidays:
New Year's Day, Presidents' Day, Good Friday (a New York Stock Exchange
holiday), Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Securities listed on securities exchanges or in the NASDAQ National Market
are valued at closing sale prices. Unlisted or listed securities for which
closing sale prices are not available are valued at the mean between the latest
bid and asked prices. Securities for which market quotations are unavailable,
including any security the disposition of which is restricted under the
Securities Act of 1933, and other assets will be appraised at their fair value
as determined in good faith by or at the direction of the Trustees of the
Portfolio. Short-term obligations maturing in sixty days or less are valued at
original cost which, when combined with amortized discount or accrued interest,
the Trustees of the Portfolio have determined approximates fair market value.
Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange (the "Portfolio Valuation Time"). The value of
each investor's interest in the Portfolio will be determined by multiplying the
net asset value of the Portfolio by the percentage, determined on the prior
Portfolio Business Day, which represented that investor's share of the aggregate
interests in the Portfolio on such prior day. Any additions or withdrawals for
the current Portfolio Business Day will then be recorded. Each investor's
percentage of the aggregate interest in the Portfolio will then be recomputed as
a percentage equal to a fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the Portfolio Valuation Time on the
prior Portfolio Business Day plus or minus, as the case may be, the amount of
any additions to or withdrawals from the investor's investment in the Portfolio
on the current Portfolio Business Day and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of the Portfolio Valuation Time on
the prior Portfolio Business Day plus or minus, as the case may be, the amount
of the net additions to or withdrawals from the aggregate investment in the
Portfolio on the current Portfolio Business Day by all investors in the
Portfolio. The percentage so determined will then be applied to determine the
value of the investor's interest in the Portfolio for the current Portfolio
Business Day.
INVESTMENT PERFORMANCE
The average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and dividends and distributions
paid and reinvested) for the stated period and annualizing the result. The
calculation assumes that all dividends from net investment income and capital
gain distributions are reinvested at net asset value on the reinvestment dates
during the period (and either (i) the deduction of the maximum sales charge from
the initial $1,000 purchase order, or (ii) a complete redemption of the
investment and, if applicable, the deduction of any contingent deferred sales
charge at the end of the period). For information concerning the total return of
the Fund, see "Performance Information" in Part II of this Statement of
Additional Information.
The Fund's total return may be compared to the Consumer Price Index and
various domestic securities indices, for example: Standard & Poor's 400 Stock
Index, Standard & Poor's 500 Stock Index, NASDAQ National Market System, Merrill
Lynch U.S. Treasury (15-year plus) Index, Lehman Brothers Government/ Corporate
Bond Index, and the Dow Jones Industrial Average. The Fund's total return and
comparisons with these indices may be used in advertisements and in information
furnished to present or prospective shareholders.
Information used in advertisements and in materials furnished to present or
prospective shareholders may include statistics, data and performance studies
prepared by independent organizations, (e.g., Ibbotson Associates, Standard &
Poor's Ratings Group, Merrill Lynch, Pierce, Fenner & Smith, Inc., Bloomberg,
L.P., Dow Jones & Company, Inc., and The Federal Reserve Board) or included in
various publications (e.g., The Wall Street Journal, Barron's and The Decade:
Wealth of Investments in U.S. Stocks, Bonds, Bills & Inflation) reflecting the
investment performance or return achieved by various classes and types of
investments (e.g., common stocks, small company stocks, long-term corporate
bonds, long-term government bonds, intermediate-term government bonds, U.S.
Treasury bills) over various periods of time. This information may be used to
illustrate the benefits of long-term investments in common stocks.
From time to time, information about the portfolio allocation and holdings
of the Portfolio may be included in advertisements and other material furnished
to present and prospective shareholders.
The Portfolio's asset allocation on January 31, 1995 was as follows:
PERCENT OF NET ASSETS
---------------------
Common stocks 93.2%
Preferred stocks 0.1%
Cash & equivalents 6.7%
------
Total 100%
The Portfolio's ten largest common stock holdings on January 31, 1995
were:
COMPANY PERCENT OF NET ASSETS
------- ---------------------
Boston Scientific Corp. 3.9%
Wabash National Corp. 3.5%
FIserv Incorporated 3.5%
Federal National Mortgage Association 3.4%
Mylan Labs. Inc. 3.3%
Consolidated Stores Corp. 2.8%
Dallas Semiconductor Corp. 2.7%
MFS Communications Co., Inc. 2.7%
Home Depot 2.6%
Loctite Corp. 2.4%
-----
Total 30.8%
From time to time, evaluations of the Fund's performance made by
independent sources (e.g., Lipper Analytical Services, Inc., CDA/Wiesenberger
and Morningstar, Inc.) may be used in advertisements and in information
furnished to present or prospective shareholders. See "Performance Information"
in Part II of this Statement of Additional Information.
Information used in advertisements and in materials furnished to present
and prospective shareholders may include statements or illustrations relating to
the appropriateness of types of securities and/or mutual funds which may be
employed to meet specific financial goals, such as (1) funding retirement, (2)
paying for children's education, and (3) financially supporting aging parents.
These three financial goals may be referred to in such advertisements or
materials as the "Triple Squeeze."
TAXES
See "Distributions and Taxes" in the Fund's current Prospectus and
"Additional Tax Matters" in Part II of this Statement of Additional Information.
Each series of the Trust is treated as a separate entity for Federal income
tax purposes. The Fund will elect to be treated and intends to qualify each year
as a regulated investment company ("RIC") under the Internal Revenue Code of
1986, as amended (the "Code"). Accordingly, the Fund intends to satisfy certain
requirements relating to sources of its income and diversification of its assets
and to distribute its net investment income and net realized capital gains in
accordance with the timing requirements imposed by the Code, so as to avoid any
Federal income or excise tax to the Fund. Because the Fund invests its assets in
the Portfolio, the Portfolio normally must satisfy the applicable source of
income and diversification requirements in order for the Fund to satisfy them.
The Portfolio will allocate at least annually among its investors, including the
Fund, the Portfolio's net investment income, net realized capital gains, and any
other items of income, gain, loss, deduction or credit. The Portfolio will make
allocations to the Fund in accordance with the Code and applicable regulations
and will make moneys available for withdrawal at appropriate times and in
sufficient amounts to enable the Fund to satisfy the tax distribution
requirements that apply to the Fund and that must be satisfied in order to avoid
Federal income and/or excise tax on the Fund. For purposes of applying the
requirements of the Code regarding qualification as a RIC, the Fund will be
deemed (i) to own its proportionate share of each of the assets of the Portfolio
and (ii) to be entitled to the gross income of the Portfolio attributable to
such share.
In order to avoid Federal excise tax, the Code requires that the Fund
distribute by December 31 of each calendar year at least 98% of its ordinary
income (not including tax-exempt income) for such year, and at least 98% of the
excess of its realized capital gains over its realized capital losses, after
reduction by any available capital loss carryforwards, and 100% of any income
from the prior year (as previously computed) that was not paid out during such
year and on which the Fund paid no Federal income tax. Further, under current
law, provided that the Fund qualifies as a RIC for Federal income tax purposes
and the Portfolio is treated as a partnership for Massachusetts and Federal tax
purposes, neither the Fund nor the Portfolio is liable for any income, corporate
excise or franchise tax in the Commonwealth of Massachusetts.
The Portfolio's transactions in options will be subject to special tax
rules that may affect the amount, timing and character of distributions to
shareholders. For example, certain positions held by the Portfolio that
substantially diminish the Portfolio's risk of loss with respect to other
positions in its portfilio may constitute "straddles," which are subject to tax
rules that may cause deferral of Portfolio losses, adjustments in the holding
period of portfolio securities and conversion of short-term into long-term
capital losses.
Distributions of net investment income and the excess of net short-term
capital gains over net long-term capital losses earned by the Portfolio and
allocated to the Fund are taxable to shareholders of the Fund as ordinary income
whether received in cash or in additional shares. Distributions of the excess of
net long-term capital gains over net short-term capital losses (including any
capital losses carried forward from prior years) earned by the Portfolio and
allocated to the Fund are taxable to shareholders as long-term capital gains,
whether received in cash or in additional shares and regardless of the length of
time their shares of the Fund have been held. Certain distributions declared in
October, November or December and paid the following January will be taxed to
shareholders as if received on December 31 of the year in which they are
declared.
A portion of distributions made by the Fund which are derived from
dividends received by the Portfolio from domestic corporations and allocated to
the Fund may qualify for the dividends-received deduction for corporations. The
dividends-received deduction for corporate shareholders is reduced to the extent
the shares of the Fund with respect to which the dividends are received are
treated as debt-financed under the Federal income tax law and is eliminated if
the shares are deemed to have been held for less than 46 days. Receipt of
certain distributions qualifying for the deduction may result in reduction of
the tax basis of the corporate shareholder's shares. Distributions eligible for
the dividends-received deduction may give rise to or increase an alternative
minimum tax for corporations.
Any loss realized upon the redemption or exchange of shares of the Fund
within a tax-holding period of 6 months or less will be treated as a long-term
capital loss to the extent of any distribution of net long-term capital gains
with respect to such shares. In addition, a loss realized on a redemption of
Fund shares may be disallowed under certain "wash sale" rules if other shares of
the Fund are acquired within a period beginning 30 days before and ending 30
days after the date of such redemption. Any disallowed loss will result in an
adjustment to the shareholder's tax basis in some or all of the other shares
acquired.
The Portfolio may be subject to foreign withholding taxes with respect to
income on certain foreign securities. These taxes may be reduced or eliminated
under the terms of an applicable U.S. income tax treaty. As it is not expected
that more than 50% of the value of the total assets of the Fund, taking into
account its allocable share of the Portfolio's total assets, at the close of any
taxable year of the Fund will consist of securities issued by foreign
corporations, the Fund will not be eligible to pass through to shareholders
their proportionate share of any foreign taxes paid by the Portfolio and
allocated to the Fund, with the result that shareholders of the Fund will not be
entitled to take any foreign tax credits or deductions for foreign taxes paid by
the Portfolio and allocated to the Fund. Certain foreign exchange gains and
losses realized by the Portfolio and allocated to the Fund will be treated as
ordinary income and losses. Certain uses of foreign currency and investments by
the Portfolio in certain "passive foreign investment companies" may be limited
or a tax election may be made if available, in order to preserve the Fund's
qualification as a RIC and/or to avoid imposition of a tax on the Fund.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and
other retirement plans and persons investing through such plans should consult
their tax advisers for more information. The deductibility of such contributions
may be restricted or eliminated for particular shareholders.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number and
certain required certifications, as well as shareholders with respect to whom
the Fund has received notification from the Internal Revenue Service or a
broker, may be subject to "backup" withholding of Federal income tax from the
Fund's dividends and distributions and the proceeds of redemptions (including
repurchases and exchanges) at a rate of 31%. An individual's taxpayer
identification number is generally his or her social security number.
Non-resident alien individuals and certain foreign corporations and other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax treaty. Distributions from the
excess of the Fund's net long-term capital gain over its net short-term capital
loss received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. Federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisers regarding the U.S. and foreign tax consequences of an investment in the
Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as retirement plans, tax-exempt entities,
insurance companies and financial institutions. Shareholders should consult
their own tax advisers with respect to special tax rules that may apply in their
particular situations, as well as the state, local or foreign tax consequences
of investing in the Fund.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions of
the Portfolio, including the selection of the market and the broker-dealer firm,
are made by BMR. BMR is also responsible for the execution of transactions for
all other accounts managed by it.
BMR places the security transactions of the Portfolio and of all other
accounts managed by it for execution with many broker-dealer firms. BMR uses its
best efforts to obtain execution of portfolio transactions at prices which are
advantageous to the Portfolio and (when a disclosed commission is being charged)
at reasonably competitive commission rates. In seeking such execution, BMR will
use its best judgment in evaluating the terms of a transaction, and will give
consideration to various relevant factors, including without limitation the size
and type of the transaction, the general execution and operational capabilities
of the broker-dealer, the nature and character of the market for the security,
the confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition of
the broker-dealer, the value and quality of services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission,
if any. Transactions on United States stock exchanges and other agency
transactions involve the payment by the Portfolio of negotiated brokerage
commissions. Such commissions vary among different broker-dealer firms, and a
particular broker-dealer may charge different commissions according to such
factors as the difficulty and size of the transaction and the volume of business
done with such broker-dealer. Transactions in foreign securities usually involve
the payment of fixed brokerage commissions, which are generally higher than
those in the United States. There is generally no stated commission in the case
of securities traded in the over-the-counter markets, but the price paid or
received by the Portfolio usually includes an undisclosed dealer markup or
markdown. In an underwritten offering the price paid by the Portfolio often
includes a disclosed fixed commission or discount retained by the underwriter or
dealer. Although commissions paid on portfolio security transactions will, in
the judgment of BMR, be reasonable in relation to the value of the services
provided, commissions exceeding those which another firm might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Portfolio and BMR's other clients in part for providing brokerage and
research services to BMR.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if BMR
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided. This determination may be
made on the basis of either that particular transaction or on the basis of the
overall responsibilities which BMR and its affiliates have for accounts over
which they exercise investment discretion. In making any such determination, BMR
will not attempt to place a specific dollar value on the brokerage and research
services provided or to determine what portion of the commission should be
related to such services. Brokerage and research services may include advice as
to the value of securities, the advisability of investing in, purchasing, or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement); and the "Research
Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealer
firms which execute portfolio transactions for the clients of such advisers and
from third parties with which these broker-dealers have arrangements. Consistent
with this practice, BMR receives Research Services from many broker-dealer firms
with which BMR places the Portfolio transactions and from third parties with
which these broker-dealers have arrangements. These Research Services include
such matters as general economic and market reviews, industry and company
reviews, evaluations of securities and portfolio strategies and transactions,
recommendations as to the purchase and sale of securities and other portfolio
transactions, financial, industry and trade publications, news and information
services, pricing and quotation equipment and services, and research oriented
computer hardware, software, data bases and services. Any particular Research
Service obtained through a broker-dealer may be used by BMR in connection with
client accounts other than those accounts which pay commissions to such
broker-dealer. Any such Research Service may be broadly useful and of value to
BMR in rendering investment advisory services to all or a significant portion of
its clients, or may be relevant and useful for the management of only one
client's account or of a few clients' accounts, or may be useful for the
management of merely a segment of certain clients' accounts, regardless of
whether any such account or accounts paid commissions to the broker-dealer
through which such Research Service was obtained. The advisory fee paid by the
Portfolio is not reduced because BMR receives such Research Services. BMR
evaluates the nature and quality of the various Research Services obtained
through broker-dealer firms and attempts to allocate sufficient commissions to
such firms to ensure the continued receipt of Research Services which BMR
believes are useful or of value to it in rendering investment advisory services
to its clients.
Subject to the requirement that BMR shall use its best efforts to seek to
execute Portfolio security transactions at advantageous prices and at reasonably
competitive commission rates or spreads, BMR is authorized to consider as a
factor in the selection of any broker-dealer firm with whom Portfolio orders may
be placed the fact that such firm has sold or is selling shares of the Fund or
of other investment companies sponsored by BMR or Eaton Vance. This policy is
not inconsistent with a rule of the National Association of Securities Dealers,
Inc., which rule provides that no firm which is a member of the Association
shall favor or disfavor the distribution of shares of any particular investment
company or group of investment companies on the basis of brokerage commissions
received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by BMR or its affiliates. BMR
will attempt to allocate equitably portfolio security transactions among the
Portfolio and the portfolios of its other investment accounts whenever decisions
are made to purchase or sell securities by the Portfolio and one or more of such
other accounts simultaneously. In making such allocations, the main factors to
be considered are the respective investment objectives of the Portfolio and such
other accounts, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Portfolio
and such accounts, the size of investment commitments generally held by the
Portfolio and such accounts and the opinions of the persons responsible for
recommending investments to the Portfolio and such accounts. While this
procedure could have a detrimental effect on the price or amount of the
securities available to the Portfolio from time to time, it is the opinion of
the Trustees of the Trust and the Portfolio that the benefits available from the
BMR organization outweigh any disadvantage that may arise from exposure to
simultaneous transactions. For the period from the start of business, August 1,
1994, to December 31, 1994, the Portfolio paid brokerage commissions of $36,041
on portfolio securities transactions. Of the total brokerage commissions paid,
approximately $31,811 was paid in respect of portfolio transactions aggregating
approximately $12,822,000 to firms which provided some research services to BMR
(although many of such firms may have been selected in any particular
transaction primarily because of their execution capabilities).
OTHER INFORMATION
On July 21, 1992, the Trust changed its name from Eaton Vance Special
Equities Fund to Eaton Vance Special Investment Trust. The Trust is organized as
a business trust under the laws of the Commonwealth of Massachusetts under a
Declaration of Trust dated March 27, 1989, as amended. The Trust is the
successor to a corporation which commenced offering its shares to the public in
April, 1968. The Trust changed its name from Eaton & Howard Growth Fund, Inc. on
September 24, 1982. Eaton Vance, pursuant to its agreement with the Trust,
controls the use of the words "Eaton Vance" in the Trust's name and may use the
words "Eaton Vance" in other connections and for other purposes.
The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust affected by the amendment. The Trustees may also amend the Declaration of
Trust without the vote or consent of shareholders to change the name of the
Trust or to make such other changes as do not have a materially adverse effect
on the rights or interests of shareholders or if they deem it necessary to
conform the Declaration to the requirements of applicable Federal laws or
regulations. The Trust's by-laws provide that the Fund will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with any litigation or proceeding in which they may be involved because of their
offices with the Trust. However, no indemnification will be provided to any
Trustee or officer for any liability to the Trust or its shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. Moreover, the Trust's By-laws also provide for indemnification out
of the property of the Fund of any shareholder held personally liable solely by
reason of being or having been a shareholder for all loss or expense arising
from such liability. The assets of the Fund are readily marketable and will
ordinarily substantially exceed its liabilities. In light of the nature of the
Fund's business and the nature of its assets, management believes that the
possibility of the Fund's liability exceeding its assets, and therefore the
shareholder's risk of personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees of the
Portfolio holding office have been elected by investors. In such an event the
Trustees then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interests
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The right to redeem can be suspended and the payment of the redemption
price deferred when the Exchange is closed (other than for customary weekend
and holiday closings), during periods when trading on the Exchange is
restricted as determined by the Securities and Exchange Commission, or during
any emergency as determined by the Commission which makes it impracticable for
the Portfolio to dispose of its securities or value its assets, or during any
other period permitted by order of the Commission for the protection of
investors.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts,
are the independent accountants for the Fund and the Portfolio, providing audit
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the Securities and Exchange Commission.
For the financial statements of the Fund and the Portfolio see "Financial
Statements" in Part II of this Statement of Additional Information.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV TRADITIONAL SPECIAL EQUITIES
FUND. On July 27, 1994 the Fund became a series of the Trust and redesignated
its name from Eaton Vance Special Equities Fund to EV Traditional Special
Equities Fund.
FEES AND EXPENSES
INVESTMENT ADVISER
Prior to the close of business on August 1, 1994 (when the Fund transferred
its assets to the Portfolio in exchange for an interest in the Portfolio), the
Fund retained Eaton Vance as its investment adviser. For the period from January
1, 1994, to August 1, 1994, the Fund paid Eaton Vance advisory fees of $270,926
(equivalent to 0.625% (annualized) of the Fund's average daily net assets for
such period). For the fiscal years ended December 31, 1993 and 1992, the Fund
paid Eaton Vance advisory fees of $494,163 and $443,781, respectively.
SERVICE PLAN
During the fiscal year ended December 31, 1994, the Fund made payments
under the Plan aggregating $47,013, of which $24,434 was paid to Authorized
Firms and the balance was retained by the Principal Underwriter for such
services.
CUSTODIAN
During the fiscal year ended December 31, 1994, the Fund paid IBT $38,880.
BROKERAGE COMMISSIONS
During the period from January 1, 1994, to August 1, 1994, the Fund paid
brokerage commissions of $69,381 on portfolio security transactions, of which
$50,931 was paid in respect of portfolio security transactions aggregating
approximately $26,553,300. During the Fund's fiscal years ended December 31,
1993 and 1992, the Fund paid brokerage commissions of $114,097 and $75,996,
respectively, on portfolio security transactions. Of the total brokerage
commissions of $114,097 paid during the fiscal year ended December 31, 1993,
approximately $83,113 was paid in respect of portfolio security transactions
aggregating approximately $40,945,726 to firms which provided some research
services to Eaton Vance (although many of such firms may have been selected in
any particular transaction primarily because of their execution capabilities).
TRUSTEES
<TABLE>
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization are paid by the Fund (and
the other series of the Trust) and the Portfolio, respectively. During the
fiscal year ended December 31, 1994, the Trustees of the Trust and the Portfolio
earned the following compensation in their capacities as Trustees from the
Trust, the Portfolio and the other funds in the Eaton Vance fund complex<F1>:
<CAPTION>
AGGREGATE AGGREGATE RETIREMENT TOTAL COMPENSATION
COMPENSATION COMPENSATION BENEFIT ACCRUED FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FROM FUND COMPLEX FUND COMPLEX
- ---- ---------------- ---------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Donald R. Dwight $ 930 $297<F2> $8,750 $135,000
Samuel L. Hayes, III 984 302<F3> 8,865 142,500
Norton H. Reamer 986 318 -- 0 -- 135,000
John L. Thorndike 1,039 338 -- 0 -- 140,000
Jack L. Treynor 994 301 -- 0 -- 140,000
<F1> The Eaton Vance fund complex consists of 201 registered investment
companies or series thereof.
<F2> Includes $98 of deferred compensation.
<F3> Includes $101 of deferred compensation.
</TABLE>
SERVICES FOR ACCUMULATION
The following services are voluntary, involve no extra charge other than the
sales charge included in the offering price, and may be changed or discontinued
without penalty at any time.
INTENDED QUANTITY INVESTMENT--STATEMENT OF INTENTION. If it is anticipated that
$100,000 or more of Fund shares and shares of the other continuously offered
open-end funds listed under "The Eaton Vance Exchange Privilege" in the current
Prospectus of the Fund will be purchased within a 13-month period, a Statement
of Intention should be signed so that shares may be obtained at the same reduced
sales charge as though the total quantity were invested in one lump sum. Shares
held under Right of Accumulation (see below) as of the date of the Statement
will be included toward the completion of the Statement. The Statement
authorizes the Transfer Agent to hold in escrow sufficient shares (5% of the
dollar amount specified in the Statement) which can be redeemed to make up any
difference in sales charge on the amount intended to be invested and the amount
actually invested. Execution of a Statement does not obligate the shareholder to
purchase or the Fund to sell the full amount indicated in the Statement, and
should the amount actually purchased during the 13-month period be more or less
than that indicated on the Statement, price adjustments will be made. For sales
charges and other information on quantity purchases, see "How to Buy Fund
Shares" in the Fund's current Prospectus. Any investor considering signing a
Statement of Intention should read it carefully.
RIGHT OF ACCUMULATION -- CUMULATIVE QUANTITY DISCOUNT. The applicable sales
charge level for the purchase of Fund shares is calculated by taking the dollar
amount of the current purchase and adding it to the value (calculated at the
maximum current offering price) of the shares the shareholder owns in his
account(s) in the Fund and in the other continuously offered open-end funds
listed under "The Eaton Vance Exchange Privilege" in the current Prospectus of
the Fund for which Eaton Vance acts as adviser or administrator at the time of
purchase. The sales charge on the shares being purchased will then be at the
rate applicable to the aggregate. For example, if the shareholder owned shares
valued at $80,000 in EV Traditional Investors Fund, and purchased an additional
$20,000 of Fund shares, the sales charge for the $20,000 purchase would be at
the rate of 3.75% of the offering price (3.90% of the net amount invested) which
is the rate applicable to single transactions of $100,000. For sales charges on
quantity purchases, see "How to Buy Fund Shares" in the Fund's current
Prospectus. Shares purchased (i) by an individual, his spouse and their children
under the age of twenty-one, and (ii) by a trustee, guardian or other fiduciary
of a single trust estate or a single fiduciary account, will be combined for the
purpose of determining whether a purchase will qualify for the Right of
Accumulation and if qualifying, the applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or his of her Authorized Firm must provide Eaton Vance Distributors,
Inc. (the "Principal Underwriter") (in the case of a purchase made through a
financial service firm (an "Authorized Firm")) or the Transfer Agent (in the
case of an investment made by mail) with sufficient information to permit
verification that the purchase order qualifies for the accumulation privilege.
Corfirmation of the order is subject to such verification. The Right of
Accumulation privilege may be amended or terminated at any time as to purchases
occurring thereafter.
PRINCIPAL UNDERWRITER
Shares of the Fund may be continuously purchased at the public offering
price through certain Authorized Firms which have agreements with the Principal
Underwriter. The Principal Underwriter is a wholly-owned subsidiary of Eaton
Vance.
The public offering price is the net asset value next computed after receipt
of the order, plus, where applicable, a variable percentage (sales charge)
depending upon the amount of purchase as indicated by the sales charge table set
forth in the Prospectus.
Such table is applicable to purchases of the Fund alone or in combination
with purchases of the other funds offered by the Principal Underwriter, made at
a single time by (i) an individual, or an individual, his or her spouse and
their children under the age of twenty-one, purchasing shares for his or their
own account; and (ii) a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account.
The table is also presently applicable to (1) purchases of Fund shares,
alone or in combination with purchases of any of the other funds offered by the
Principal Underwriter through one dealer aggregating $100,000 or more made by
any of the persons enumerated above within a thirteen-month period starting with
first purchase pursuant to a written Statement of Intention, in the form
provided by the Principal Underwriter, which includes provisions for a price
adjustment depending upon the amount actually purchased within such period (a
purchase not made pursuant to such Statement may be included thereunder if the
Statement is filed within 90 days of such purchase); or (2) purchases of the
Fund pursuant to the Right of Accumulation and declared as such at the time of
purchase.
Subject to the applicable provisions of the 1940 Act, the Fund may issue
shares at net asset value in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is merged
or consolidated with or acquired by the Fund. Normally no sales charges will be
paid in connection with an exchange of Fund shares for the assets of such
investment company.
Shares may be sold at net asset value to any officer, director, trustee,
general partner or employee of the Fund, the Portfolio or any investment company
for which Eaton Vance or BMR acts as investment adviser, any investment
advisory, agency, custodial or trust account managed or administered by Eaton
Vance or by any parent, subsidiary or other affiliate of Eaton Vance, or any
officer, director or employee of any parent, subsidiary or other affiliate of
Eaton Vance. The terms "officer," "director," "trustee," "general partner" or
"employee" as used in this paragraph include any such person's spouse and minor
children, and also retired officers, directors, trustees, general partners and
employees and their spouses and minor children. Shares of the Fund may also be
sold at net asset value to registered representatives and employees of certain
Authorized Firms and to such persons' spouses and children under the age of 21
and their beneficial accounts.
The Trust reserves the right to suspend or limit the offering of shares of
the Fund to the public at any time.
The Principal Underwriter acts as principal in selling shares of the Fund
under the distribution agreement with the Trust on behalf of the Fund. The
expenses of printing copies of prospectuses used to offer shares to financial
service firms or investors and other selling literature and of advertising are
borne by the Principal Underwriter. The fees and expenses of qualifying and
registering and maintaining qualifications and registrations of the Fund and its
shares under Federal and state securities laws are borne by the Fund. The
distribution agreement is renewable annually by the Board of Trustees of the
Trust (including a majority of its Trustees who are not interested persons of
the Principal Underwriter or the Trust), may be terminated on six months' notice
by either party, and is automatically terminated upon assignment. The Principal
Underwriter distributes Fund shares on a "best efforts" basis under which it is
required to take and pay for only such shares as may be sold. The Principal
Underwriter allows Authorized Firms discounts from the applicable public
offering price which are alike for all Firms. In the case of the maximum sales
charge the Authorized Firm retains 4% of the public offering price (4.20% of the
net amount invested) and the Principal Underwriter retains 0.75% of the public
offering price (0.79% of the net amount invested). However, the Principal
Underwriter may allow, upon notice to all Authorized Firms with whom it has
agreements, discounts up to the full sales charge during the periods specified
in the notice. During periods when the discount includes the full sales charge,
such Firms may be deemed to be underwriters as that term is defined in the
Securities Act of 1933. The total sales charges for sales of shares of the Fund
during the fiscal years ended December 31, 1994, 1993 and 1992, were $28,572,
$64,936 and $177,048, respectively, of which $3,588, $6,734 and $16,005,
respectively, was received by the Principal Underwriter. For the fiscal years
ended December 31, 1994, 1993 and 1992, Authorized Firms received $24,989,
$58,202 and $161,043, respectively, from the total sales charges.
SERVICE PLAN
The Trust on behalf of the Fund has adopted a Service Plan (the "Plan")
designed to meet the requirements of Rule 12b-1 (the "Rule") 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.
(Management believes service fee payments are not distribution expenses governed
by the Rule, but has chosen to have the Plan approved as if the Rule were
applicable.) The following supplements the discussion of the Plan contained in
the Fund's Prospectus.
The Plan remains in effect through April 28, 1995, and from year to year
thereafter, provided such continuance is approved by a vote of both a majority
of (i) those Trustees who are not interested persons of the Trust and who have
no direct or indirect financial interest in the operation of the Plan or any
agreements related to it (the "Rule 12b-1 Trustees") and (ii) all of the
Trustees then in office, cast in person at a meeting (or meetings) called for
the purpose of voting on this Plan. The Plan may be terminated any time by vote
of the Rule 12b-1 Trustees or by a vote of a majority of the outstanding voting
securities of the Fund.
Under the Plan, the President or a Vice President of the Trust shall
provide to the Trustees for their review, and the Trustees shall review at least
quarterly, a written report of the amount expended under the Plan and the
purposes for which such expenditures were made. The Plan may not be amended to
increase materially the payments described herein without approval of the
shareholders of the Fund, and all material amendments of the Plan must also be
approved by the Trustees of the Trust in the manner described above. So long as
the Plan is in effect, the selection and nomination of Trustees who are not
interested persons of the Trust shall be committed to the discretion of the
Trustees who are not such interested persons. The Trustees have determined that
in their judgment there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders.
PERFORMANCE INFORMATION
The tables below indicate the total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment of $1,000 in the
Fund covering the ten, five and one year periods ended December 31, 1994.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
Total Return Total Return
Excluding Sales Charge Including Sales Charge
Value of ---------------------- ----------------------
Investment Amount of Investment Average Average
Investment Period Date Investment* on 12/31/94 Cumulative Annual Cumulative Annual
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended 12/31/94 12/31/84 $952.60 $2,357.25 147.45% 9.48% 135.70% 8.95%
5 Years Ended 12/31/94 12/31/89 $952.25 $1,442.13 51.44% 8.66% 44.25% 7.60%
1 Year Ended 12/31/94 12/31/93 $952.54 $ 861.11 -9.60% -9.60% -13.89% -13.89%
*Initial investment less the current maximum sales charge of 4.75%
<CAPTION>
PERCENTAGE CHANGES
December 31, 1985 -- December 31, 1994
Net Asset Value to Net Asset Value Maximum Offering Price to Net Asset Value
Fiscal with all Distributions Reinvested with all Distributions Reinvested
Year ---------------------------------------- -------------------------------------------
Ended Annual Cumulative Average Annual Annual Cumulative Average Annual
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 18.51% 18.51% 18.51% 12.88% 12.88% 12.88%
12/31/86 -1.67 16.53 7.95 -6.34 10.99 5.35
12/31/87 2.04 18.91 5.94 -2.81 13.26 4.24
12/31/88 11.21 32.24 7.24 5.93 25.95 5.94
12/31/89 23.57 63.40 10.32 17.70 55.64 9.25
12/31/90 2.50 67.48 8.98 -2.37 59.53 8.10
12/31/91 57.33 163.49 14.84 49.85 150.98 14.05
12/31/92 2.71 170.64 13.25 -2.17 157.78 12.57
12/31/93 1.14 173.73 11.84 -3.66 160.73 11.24
12/31/94 -9.60 147.45 9.48 -13.89 135.70 8.95
</TABLE>
Past performance is not indicative of future results. Investment return and
principal value will fluctuate shares, when redeemed, may be worth more or less
than their original cost.
ADDITIONAL TAX MATTERS
The Fund qualified as a regulated investment company under the Code for its
fiscal year ended December 31, 1994 (see Notes to Financial Statements).
As of the close of business on August 1, 1994, the Fund contributed its
assets to the Portfolio in exchange for an interest in the Portfolio. The Trust
has obtained an opinion of tax counsel to the effect that, although there is no
judicial authority directly on point, this contribution will not result in the
recognition of gain or loss by the Fund for Federal income tax purposes. The
Trust intends to file the Fund's Federal income tax return for its taxable year
ending December 31, 1994 reporting such contribution of assets in a manner
consistent with such opinion. If it were determined that this contribution by
the Fund was a taxable transaction, the Fund could be required to recognize gain
on the transfer of its assets to the Portfolio and to make additional
distributions to its shareholders in order to avoid Fund- level Federal income
taxes, and any such distributions would be taxable to the shareholders who
receive them; and in such case, the Fund might also be required to pay penalties
and/or interest to the IRS.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of February 28, 1995, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. To the Trust's knowledge, no person owns of record or beneficially 5% or
more of the Fund's outstanding shares on such date.
<PAGE>
EV TRADITIONAL SPECIAL EQUITIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1994
- --------------------------------------------------------------------------------
ASSETS:
Investment in Special Investment Portfolio (Portfolio),
at value (Note 1A) $63,763,414
Receivable for Fund shares sold and dividend reinvestments 185,637
Deferred organization expenses (Note 1E) 10,542
-----------
Total assets 63,959,593
LIABILITIES:
Payable for Fund shares redeemed $81,391
Accrued directors fees 1,520
Accrued distribution fees 12,870
Accrued transfer agent fees 4,025
Accrued organization expenses 2,942
Accrued expenses 4,543
-------
Total liabilities 107,291
-----------
NET ASSETS for 9,277,415 shares of beneficial interest
outstanding $63,852,302
===========
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 $53,674,709
Unrealized appreciation of investments 10,177,593
-----------
Total net assets $63,852,302
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($63,852,302 / 9,277,415 shares of beneficial interest) $ 6.88
======
COMPUTATION OF OFFERING PRICE:
Offering price per share (100/95.25 of $6.88) $ 7.22
======
On sales of $100,000 or more, the offering price is reduced.
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 (NOTE 1B):
Dividend income $ 199,753
Interest income 138,477
Dividend income allocated from Portfolio 129,925
Interest income allocated from Portfolio 133,258
Expenses allocated from Portfolio (207,783)
-----------
Total investment income 393,630
Expenses --
Investment adviser fee (Note 5) $ 270,926
Service fees (Note 6) 50,704
Compensation of Trustees not members of the
Investment Adviser's organization 6,292
Custodian fees (Note 5) 38,880
Legal and accounting services 20,265
Transfer and dividend disbursing agent fees 56,755
Printing and postage 28,421
Registration fees 29,018
Amortization of organization expenses
(Note 1E) 958
Miscellaneous 11,734
-----------
Total expenses 513,953
-----------
Net investment loss (120,323)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (identified cost basis) --
Investment transactions 7,209,586
Net realized loss from Portfolio (identified
cost basis) --
Investment transactions (985,337)
-----------
Net realized gain on investments
($6,183,757 net gain as computed for
federal income tax purposes) 6,224,249
Change in unrealized appreciation of investments (13,248,458)
-----------
Net realized and unrealized loss on
investments (7,024,209)
-----------
Net decrease in net assets resulting from
operations $(7,144,532)
===========
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
------------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment loss $ (120,323) $ (239,079)
Net realized gain on investments 6,224,249 6,026,583
Decrease in unrealized appreciation of investments (13,248,458) (4,246,587)
------------ -----------
Net increase (decrease) in net assets resulting
from operations $ (7,144,532) $ 1,540,917
Undistributed net investment income included in
price of shares sold and shares reacquired -- 350,353
Distributions to shareholders --
From net realized gains on investment
transactions (6,183,757) (6,183,828)
Tax return of capital (30,146) --
Net increase (decrease) from Fund share
transactions (Note 3) (921,158) 5,880,577
------------ -----------
Total increase (decrease) in net assets $(14,279,593) $ 1,588,019
------------ -----------
NET ASSETS:
Beginning of year 78,131,895 76,543,876
------------ -----------
End of year $ 63,852,302 $78,131,895
============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1994 1993 1992 1991<F4> 1990<F4>
<S> <C> <C> <C> <C> <C>
------- ------- ------- ------- -------
NET ASSET VALUE -- Beginning of year $ 8.430 $ 8.990 $ 9.520 $ 6.810 $ 7.050
------- ------- ------- ------- -------
Income from investment
operations:
Net investment income (loss) $(0.013) $(0.018) $ 0.006 $ 0.004 $ 0.033
Net realized and unrealized
gain (loss) on investments (0.807) 0.108 0.239 3.776 0.130
------- -------- ------- ------- --------
Total income (loss) from
investment operations $(0.820) $ 0.090 $ 0.245 $ 3.780 $ 0.163
------- -------- ------- ------- --------
Less distributions:
From net realized gain on
investments (0.727) (0.650) (0.775) (1.070) (0.403)
Tax return of capital (0.003) -- -- -- --
------- -------- ------- ------- -------
NET ASSET VALUE -- End of year $ 6.880 $ 8.430 $ 8.990 $ 9.520 $ 6.810
======= ======== ======= ======= =======
TOTAL RETURN (9.60)% 1.14% 2.71% 57.33% 2.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's
omitted) $63,852 $78,132 $76,544 $77,324 $50,094
Ratio of expenses to average net
assets<F1> 1.02% 1.01% 0.96% 0.94% 1.06%
Ratio of net investment income
to average net assets (0.17)% (0.30)% 0.07% 0.05% 0.48%
PORTFOLIO TURNOVER<F3> 37% 73% 48% 41% 47%
<FN>
<F1>Includes the Fund's share of Special Investment Portfolio's allocated expenses for the period from August
1, 1994, to December 31, 1994.
<F2>Computed on an average share basis.
<F3>Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments directly in
securities. The portfolio turnover for the period since the Fund transferred substantially all of its investable assets to
the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in this report.
<F4>Audited by previous auditors.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Traditional Special Equities Fund (the Fund), a Massachusetts business trust,
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end, management investment company. The Fund is a series in
the Eaton Vance Special Investment Trust. On August 2, 1994, the Fund
transferred substantially all of its investable assets to the Special Investment
Portfolio (the Portfolio). Prior to this date the Fund's name was Eaton Vance
Special Equities Fund. The Fund invests all of its investable assets in
interests in the Portfolio, a New York Trust, having the same investment
objective as the Fund. The value of the Fund's investment in the Portfolio
reflects the Fund's proportionate interest in the net assets of the Portfolio
(98.9% 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. Prior to the Fund's investment in the Portfolio, the Fund
held its investments directly.
C. EQUALIZATION -- Prior to January 1, 1994, the Fund followed the accounting
practice known as equalization by which a portion of the proceeds from the sales
and costs of reacquisitions of Fund shares was allocated to undistributed net
investment income. As a result, undistributed net investment income per share
was unaffected by sales or reacquisitions of Fund shares. As of January 1, 1994,
the Fund discontinued the use of equalization. This change had no effect on the
Fund's net assets, net asset value per share, or its net increase or (decrease)
in net assets from operations. Discontinuing the use of equalization will result
in a simpler and more meaningful financial statement presentation.
D. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments, options and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary.
E. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund 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 and dividends to shareholders
are recorded on the ex-dividend date. Dividend income may include dividends that
represent returns of capital for federal tax purposes. Gains or loss on the sale
of investments is determined on the identified cost basis.
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(2) LINE OF CREDIT
Through August 1, 1994, the Fund participated with other funds managed by EVM in
a $120 million unsecured line of credit with a bank. The line of credit consists
of a $20 million committed facility and a $100 million discretionary facility.
Borrowings will be made by the Fund solely to facilitate the handling of unusual
and/or unanticipated short-term cash requirements. Interest is charged to each
fund based on its borrowings at an amount above either the bank's adjusted
certificate of deposit rate, a variable adjusted certificate of deposit rate, or
a federal funds effective rate. In addition, a fee computed at an annual rate of
1/4 of 1% on the $20 million committed facility and/or the daily unused portion
of the $100 million discretionary facility is allocated among the participating
funds at the end of each quarter. The Fund did not have any significant
borrowings or allocated fees during the period. At December 31, 1994, the Fund
had no outstanding balance. This line of credit was assumed by the Portfolio as
of August 2, 1994 (see Note 4 of the Portfolios financial statements).
- ------------------------------------------------------------------------------
(3) FUND SHARES
The Fund under its indenture of trust is authorized to issue unlimited shares of
$0.50 par value. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1993
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
--------- ----------- --------- -----------
Sales 23,121,866 $181,853,726 20,019,093 $167,330,920
Shares issued in reinvestment of
distributions 785,094 5,336,802 629,883 5,050,505
Shares issued for the net assets of
another investment company -- -- 812,931 6,744,651
Shares redeemed (23,895,612) (188,111,686) (20,706,918) (173,245,499)
----------- ------------ ----------- ------------
Net increase (decrease) 11,348 $ (921,158) 754,989 $ 5,880,577
=========== ============ =========== =============
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
(4) INVESTMENT TRANSACTIONS
On August 2, 1994, the Fund transferred substantially all of its assets to the
Portfolio in exchange for an interest in the Portfolio. Increases and decreases
in the Fund's investments for the period from January 1, 1994 to August 1, 1994
aggregated $24,746,464 and $32,758,520, respectively. Increases and decreases in
the Fund's investments in the Portfolio for the period from August 2, 1994 to
December 31, 1994 aggregated $34,816,259 and $43,392,065, respectively.
- -------------------------------------------------------------------------------
(5) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Prior to August 2, 1994 (when the Fund transferred substantially all of its
assets to the Portfolio in exchange for an interest in the Portfolio), the Fund
retained Eaton Vance Management (EVM) as its investment adviser. The investment
adviser fee was earned by EVM as compensation for management and investment
advisory services rendered to the Fund. The fee was computed at the annual rate
of 5/8 of 1% of the Fund's average daily net assets. For the period from January
1 to August 1, 1994, the fee for such period amounted to $270,926. Since August
2, 1994, Eaton Vance has served only as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services. See
Note 3 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report. Except as to Trustees of the Fund and the Portfolio
who are not members of EVM's or BMR's organization, officers and Trustees
receive remuneration for their services to the Fund out of such investment
adviser fee. Investors Bank & Trust Company (IBT), an affiliate of EVM, serves
as custodian of the Fund 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 Fund or the Portfolio maintains with IBT. Certain
of the officers and Trustees of the Fund, Portfolio are officers and
directors/trustees of the above organizations.
- ------------------------------------------------------------------------------
(6) SERVICE PLAN
The Trustees of the Fund adopted a Service Plan on July 7, 1993 designed to meet
the requirements of Rule 12b-1 under the Investment Company Act of 1940 and the
service fee requirements of the revised sales charge rule of The National
Association of Securities Dealers Inc. The Service Plan replaced the Fund's
distribution plan which became effective on June 12, 1989. The Service Plan
provides that the Fund may make service fee payments to the Principal
Underwriter, Eaton Vance Distributors, Inc., a subsidiary of Eaton Vance
Management, Authorized Firms or other persons in amounts not exceeding .25% of
the Fund's average daily net assets for any fiscal year. The Trustees have
implemented the Service Plan by authorizing the Fund to make quarterly service
fee payments to the Principal Underwriter and Authorized Firms in amounts not
expected to exceed .25% of that portion of the Fund's average daily net assets
for any fiscal year which is attributable to shares of the Fund sold on or after
June 12, 1989 by such persons and remaining outstanding for at least twelve
months. Such payments are made for personal services and/or the maintenance of
shareholder accounts. During the fiscal year ended December 31, 1994 the Fund
made payments of $50,704 under the Plan to the Principal Underwriter and
Authorized Firms.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
EV Traditional Special Equities Fund, a series of Eaton Vance
Special Investment Trust:
We have audited the accompanying statement of assets and liabilities of EV
Traditional Special Equities Fund (formerly Eaton Vance Special Equities Fund),
a series of Eaton Vance Special Investment Trust, as of December 31, 1994, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the three years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights for each of the two years in the period ended December 31, 1991,
presented herein, were audited by other auditors whose report dated January 21,
1992, expressed an unqualifed opinion on such financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of EV
Traditional Special Equities Fund, a series of Eaton Vance Special Investment
Trust, as of December 31, 1994, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the three years in the
period then ended, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 3, 1995
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL INVESTMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
COMMON STOCKS - 93.3%
- --------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- --------------------------------------------------------------------------------
BUSINESS SERVICES - 6.8%
Accustaff Inc.* 20,000 $ 277,500
Provider of specialized temporary staffing
services to major corporations.
BISYS Corp.* 40,000 885,000
Services financial institutions with
computer, administrative and marketing
support data processing services.
Danka Business Systems PLC, ADR 20,000 432,500
An independent provider of maintenance and
service for office copying machines.
FIserv Incorporated* 103,500 2,225,250
Provider of data processing services to
banks and savings institutions, benefiting
from outsourcing trend.
G&K Services, Inc. 35,000 581,875
Rents and launders uniforms and other
textile products.
-----------
$ 4,402,125
-----------
COMMUNICATIONS - 6.2%
Comcast Corp. 55,000 $ 862,812
Cable TV and cellular telephone operator.
Comcast UK Cable Partners 40,000 640,000
Operator of integrated cable television,
residential telephone and business
telecommunications services in the
United Kingdom. Intelcom Group, Inc.* 17,300 229,030
Provider of alternative access
telecommunication services and
international satellite uplink teleports.
MFS Communications Co., Inc* 45,000 1,473,750
Provider of fiber-optic based
telecommunications services primarily to
businesses.
Paging Network, Inc.* 10,000 340,000
Provider of paging services in U.S.
Telephone & Data Systems, Inc. 10,000 461,250
A provider of local telephone service in
smaller communities, as well as
cellular and paging services.
-----------
$ 4,006,842
-----------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
COMMON STOCKS - (Continued)
- --------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- --------------------------------------------------------------------------------
COMPUTER EQUIPMENT - 2.7%
EMC Corp. Mass. 55,000 $ 1,189,375
Manufacturer of data storage products for
midrange and mainframe computer systems.
Motorola Inc. 10,000 578,750
Leading worldwide producer of wireless
communication systems and equipment,major
manufacturer of semiconductors.
-----------
$ 1,768,125
-----------
CONSUMER SOFTWARE - 6.4%
Banyan Inc.* 70,000 $ 1,251,250
Provider of networking software products for
large, complex computer networks.
Lotus Development Corp.* 10,000 411,250
Provider of business application software
including (1-2-3), graphics (Freelance)
and communications (Notes) products.
Novell, Inc.* 70,000 1,198,750
Leading provider of network software
systems.
Silicon Graphics, Inc.* 40,000 1,235,000
Produces computer systems used for the
design analysis and simulation of three
dimensional objects.
-----------
$ 4,096,250
-----------
CONSUMER PRODUCTS - 2.2%
Sunbeam Oster, Inc. 55,000 $ 1,416,250
Manufacturer of outdoor, household, and -----------
specialty consumer products under Sunbeam
and Oster brand names.
ELECTRONICS & INSTRUMENTATION - 7.3%
Cisco Systems, Inc.* 35,000 $ 1,229,375
Manufacturer of routers that connect
computer networks.
Dallas Semiconductor Corp.* 110,000 1,828,750
Specialty semiconductor supplier focusing on
CMOS integrated circuits.
Linear Technology Corp. 15,000 742,500
Manufacturer of high performance linear
integrated circuits.
Xilinx Inc.* 15,000 888,750
Leading world-wide supplier of CMOS
programmable logic semiconductors.
-----------
$ 4,689,375
-----------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
COMMON STOCKS - (Continued)
- --------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- --------------------------------------------------------------------------------
ENTERTAINMENT - 2.5%
Carnival Corp. 60,000 $ 1,275,000
World's largest cruise ship company
operating primarily as Carnival and
Holland America cruise lines.
Gaylord Entertainment 16,000 364,000
Diversified cable entertainment/broadcasting
company focused in the country music
industry.
-----------
$ 1,639,000
-----------
ENVIRONMENTAL SERVICES - 0.4%
United Waste Systems, Inc.* 10,000 $ 250,000
Integrated provider of solid waste -----------
management services to residential,
commercial and industrial customers.
FINANCE - 7.5%
Federal National Mortgage Association 30,000 $ 2,186,250
Leading factor in the secondary mortgage
market.
Franklin Resources, Inc. 45,000 1,603,125
One of the largest mutual fund organizations
in the U.S.
T. Rowe Price Associates, Inc. 35,000 1,050,000
Investment adviser to mutual funds,
institutions and individuals.
-----------
$ 4,839,375
-----------
HEALTHCARE - 11.9%
Boston Scientific Corp.* 134,000 $ 2,328,250
Medical device manufacturer focusing
primarily on disposable products in less
invasive surgery procedures.
Genesis Health Ventures, Inc.* 35,000 1,106,875
Provider of geriatric health services.
Horizon Healthcare Corp.* 25,000 700,000
Manager of long-term care and specialty
healthcare facilities focusing on
geriatric care.
Mylan Laboratories, Inc. 75,000 2,025,000
Leading manufacturer of generic drugs.
U.S. Healthcare, Inc. 15,000 618,750
Operates health management organization
serving over 1.5 million members.
Ventritex Inc.* 25,500 688,500
Developer of new generation implantable
heart defibrillator.
Vitalink Pharmacy Services, Inc.* 12,500 178,125
Provider of pharmacy services to nursing
homes and sub-acute care medical
facilities.
-----------
$ 7,645,500
-----------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
COMMON STOCKS - (Continued)
- --------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- --------------------------------------------------------------------------------
INDUSTRIAL PRODUCTS - 9.8%
J & L Specialty Steel, Inc. 40,000 $ 785,000
Manufacturer of stainless steel.
Loctite Corp. 34,400 1,599,600
International manufacturer of adhesives,
sealants and related products.
Union Switch & Signal, Inc.* 45,000 613,125
Manufacturer of advanced signaling, control
and automatic systems for railroads and
transit authorities.
Wabash National Corp. 85,000 3,315,000
Manufacturer of specialy truck trailers
benefiting from innovative new products.
-----------
$ 6,312,725
-----------
INSURANCE - 7.1%
American International Group 10,000 $ 980,000
One of the world's leading insurance
companies, operating in 130 countries.
HCC Insurance Holdings, Inc.* 47,700 1,001,700
Specialty insurer focusing on complex
international markets.
Mutual Risk Management Ltd. 55,000 1,443,750
Specialty insurer focusing on workmen's
compensation.
UNUM Corp. 30,000 1,132,500
Leading provider of long-term disability
insurance.
-----------
$ 4,557,950
-----------
PUBLISHING -1.2%
Scholastic Corp.* 15,000 $ 765,000
Publisher/distributor of children's books, -----------
magazines and related educational
materials.
RESTAURANTS - 5.5%
Bertucci's Holding Corp.* 95,000 $ 1,045,000
Rapidly growing operator of Italian style
restaurants featuring wood burning brick
ovens.
Brinker International, Inc.* 70,000 1,268,750
Operator of Chili's, Grady's and other
dinnerhouse restaurants growing through
new unit expansion.
Buffets Inc.* 100,000 987,500
Chain of value-oriented Old Country Buffet
restaurants growing through new unit
expansion.
Quality Dining, Inc.* 16,900 209,138
Midwestern U.S. franchise operator of Burger
King and Chili's restaurants.
-----------
$ 3,510,388
-----------
<PAGE>
COMMON STOCKS - (Continued)
- --------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- --------------------------------------------------------------------------------
RETAILING - 9.3%
Ann Taylor Stores Corp.* 20,000 $ 687,500
Specialty retailer of better quality women's
apparel, shoes and accessories.
Consolidated Stores Corp.* 95,000 1,769,375
Chain of close-out merchandise stores
operating primarily under the Odd/Big Lots
name.
Gap (The) Inc. 25,000 762,500
Specialty apparel retailer offering high-
quality, modestly priced private-label
sportswear under six brand names.
Home Depot Inc. 35,000 1,610,000
Operator of a chain of retail warehouse-type
stores selling building supply and home
improvement products.
Michaels Stores Inc.* 30,000 1,042,500
Leading arts and crafts retailer in the U.S.
Sports Authority (The)* 6,600 138,600
Largest operator of large-format sporting
goods stores in the United States.
-----------
$ 6,010,475
-----------
SPECIALTY CHEMICALS - 2.9%
Great Lakes Chemical Corp. 20,000 $ 1,140,000
Leading producer of flame retardant and
specialty intermediate chemicals.
Millipore Corp. 15,000 725,625
Manufacturer of membrane technology products
used for chemical analysis and
purification.
-----------
$ 1,865,625
-----------
TRANSPORTATION - 3.6%
Greenbrier Companies,Inc. 45,500 $ 750,750
Leading manufacturer of intermodal railcars
used to transport container freight.
M.S. Carriers, Inc.* 40,000 870,000
Irregular route truckload carrier.
Werner Enterprises, Inc. 30,000 708,750
Nationwide truckload transportation carrier.
-----------
$ 2,329,500
-----------
TOTAL COMMON STOCKS
IDENTIFIED COST, $49,823,351) $60,104,505
-----------
<PAGE>
- --------------------------------------------------------------------------------
PREFERRED STOCK - 0.1%
- --------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- --------------------------------------------------------------------------------
Concentric Data Systems, Inc.
1983 Class B Pfd.+
Software company providing data management
programs for microcomputers. 43,750 $ 87,500
------------
TOTAL PREFERRED STOCK
(IDENTIFIED COST, $175,000) $ 87,500
------------
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 6.9%
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
CXC Inc., 5.95s, 1/3/95 $2,958 $ 2,956,842
General Electric Capital Corp., 5.82s, 1/9/95 1,485 1,483,080
-----------
TOTAL SHORT-TERM OBLIGATIONS, AT
AMORTIZED COST $ 4,439,922
-----------
TOTAL INVESTMENTS (IDENTIFIED COST,
$54,438,273) $64,631,927
OTHER ASSETS, LESS LIABILITIES - (0.3%) $ (189,555)
-----------
TOTAL NET ASSETS - 100% $64,442,372
===========
*Non-income producing security.
+Not readily marketable 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,
$54,438,273) $64,631,927
Cash 1,875
Dividends receivable 28,262
Deferred organization expenses (Note 1D) 14,476
-----------
Total assets $64,676,540
LIABILITIES:
Payable for investments purchased $229,889
Custodian fee payable 1,929
Accrued expenses 2,350
--------
Total liabilities 234,168
-----------
NET ASSETS applicable to investors' interest
in Portfolio $64,442,372
===========
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $54,248,718
Unrealized appreciation of investments (identified
cost) 10,193,654
-----------
Total net assets $64,442,372
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the period from the start of business,
August 1, 1994, to December 31, 1994
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income $ 130,332
Interest income 133,617
----------
Total income 263,949
Expenses --
Investment adviser fee (Note 3) $ 175,012
Custodian fee (Note 3) 20,710
Legal and accounting 8,231
Registration fees 2,642
Amortization of organization expenses (Note 1D) 1,196
Printing 173
Miscellaneous 348
----------
Total expenses 208,312
----------
Net investment income 55,637
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (identified cost
basis) $ (986,284)
Change in unrealized appreciation on investments 4,288,639
----------
Net realized and unrealized gain on
investments 3,302,355
----------
Net increase in net assets resulting from operations $3,357,992
==========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period from the start of business,
August 1, 1994, to December 31, 1994
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 55,637
Net realized loss on investment transactions (986,284)
Increase in unrealized appreciation of investments 4,288,639
------------
Net increase in net assets from operations $ 3,357,992
------------
Capital transactions--
Contributions $104,495,403
Withdrawals (43,411,023)
------------
Increase in net assets resulting from capital transactions $ 61,084,380
------------
Total increase in net assets $ 64,442,372
NET ASSETS:
At beginning of period --
------------
At end of period $ 64,442,372
============
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
RATIOS (As a percentage of average net assets):
Expenses 0.74%+
Net investment income 0.20%+
PORTFOLIO TURNOVER 19%
+Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Special Investment 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 August 1, 1994, with the acquisition
of net assets of $69,001,817 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. SECURITY VALUATIONS -- Investments in securities traded on a national
securities exchange or in the NASDAQ National Market are valued on the basis of
the last reported sales prices on the last business day of the period. If no
sale is reported on that date, a security is valued, if quoted on such a day, at
not lower than the old bid price nor higher than the asked prices. Prices on
such exchanges will not be used for valuing debt securities if in the Trustees
judgment, some other valuation method more accurately reflects the fair market
value of such a security. Securities for which over-the-counter market
quotations are readily available are valued on the basis of the mean between the
last bid and asked prices. Short-term securities are valued at cost, which
approximates market value. All other securities and assets are appraised to
reflect their fair value as determined in good faith by 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. 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.
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 TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregrated $11,947,002 and $14,500,376, respectively.
<PAGE>
- --------------------------------------------------------------------------------
(3) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to the Portfolio. The fee
is at the annual rate of 5/8 of 1% of average daily net assets. For the period
from the start of business, August 1, 1994 to December 31, 1994, the fee
amounted to $175,012. Except as to Trustees of the Portfolio who are not members
of EVM's or BMR's organization, officers and Trustees receive remuneration for
their services to the Portfolio out of such investment adviser fee. Investors
Bank & Trust Company (IBT), an affiliate of EVM and BMR, serves as custodian of
the Portfolio. Pursuant to the custodian agreement, IBT receives a fee reduced
by credits which are determined based on the average daily cash balances the
Portfolio maintains with IBT. Certain of the officers and Trustees of the
Portfolio are officers and directors/trustees of the above organizations.
- --------------------------------------------------------------------------------
(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 $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 during the period. At December 31, 1994, the Fund
did not have an outstanding balance pursuant to the line of credit.
- --------------------------------------------------------------------------------
(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 $54,436,173
===========
Gross unrealized appreciation $12,351,693
Gross unrealized depreciation 2,158,039
-----------
Net unrealized appreciation $10,193,654
===========
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Trustees and Investors of
Special Investment Portfolio:
We have audited the accompanying statement of assets and liabilities of Special
Investment Portfolio, including the portfolio of investments, as of December 31,
1994, the related statement of operations, changes in net assets and
supplementary data for the period from August 1, 1994 (start of business) to
December 31, 1994. These financial statements and supplementary data are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and supplementary data based on our
audit.
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 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 audit provides 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
Special Investment Portfolio as of December 31, 1994, the results of its
operations, changes in its net assets and supplementary data for the period from
August 1, 1994 (start of business) to December 31, 1994, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 3, 1995
<PAGE>
INVESTMENT ADVISER OF
SPECIAL INVESTMENT PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV TRADITIONAL SPECIAL EQUITIES 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
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV TRADITIONAL SPECIAL EQUITIES FUND
24 FEDERAL STREET
BOSTON, MA 02110
T-SESAI
EV TRADITIONAL
SPECIAL EQUITIES
FUND
Statement of
Additional
Information
April 1, 1995
