<PAGE>
TO SHAREHOLDERS
During the period from the Fund's inception on November 17, 1994 until December
31, 1994, EV Classic Special Equities Fund had a total return of -1.2 percent.
That return was the result of a decline in net asset value to $9.88 per share
from $10.00 per share at the time of inception. By comparison, the S&P 500, an
unmanaged index of common stocks, had a total return of -0.2 percent for the
same period.
The economy continued to grow solidly throughout the year, although investors
found the period to be extremely difficult. During the year, the stock market
watched nervously for signs of rising inflation as the Federal Reserve increased
short term rates a total of six times. Overall, the interest rate increase was
greater than many analysts anticipated. But inflation remained in the range of
2.7 percent for the year.
The increasing interest rates had a significant negative effect on
interest-sensitive stocks, such as those of financial service companies. Growth
stocks also were affected. The year also was characterized by great volatility
both in the prices of individual stocks and entire sectors of the market.
Cyclical stocks were among the better performers during the first half of the
year. During the second six months, growth stocks rallied for the first time in
more than a year.
EV CLASSIC SPECIAL EQUITIES FUND
10 LARGEST HOLDINGS*
Wabash National Corp. ......................... Truck trailers
Boston Scientific Corp. ....................... Medical devices
FIserv Inc. ................................... Data processing services
Federal National Mortgage Corp. ............... Housing finance
Mylan Laboratories Inc. ....................... Pharmaceuticals
Dallas Semiconductor Corp. .................... High performance circuits
Consolidated Stores ........................... Closeout merchandise
Home Depot Inc. ............................... Building supplies
Franklin Resources Inc. ....................... Investment manager
Loctite Corp. ................................. Chemical sealants
*As of 12/31/94
During 1994, some sectors that had done well for the Fund in the past
experienced severe downturns, affecting the Fund's performance in the process.
Gaming stocks, for example, did poorly because of a slowdown in the growth of
new jurisdictions that plan to allow gambling, as well as a more competitive
environment for all gaming companies. In response, the Portfolio's gaming
investments were sold during the year.
During 1994, there also was a pullback in some consumer sectors, most notably
restaurants and retail, both of which have traditionally been strongly
represented in the Portfolio.
Of course, past performance is no guarantee of future returns, but we believe
that growth stocks will provide a satisfactory long term total return.
Sincerely,
s/s James B. Hawkes
James B. Hawkes
President
February 21, 1995
<PAGE>
MANAGEMENT REPORT
An interview with Clifford H. Krauss, Vice President and manager of EV Special
Equities Portfolio.
Q. CLIFF, HOW WOULD YOU DESCRIBE THE PAST YEAR FOR THE FUND?
A. Simply put, it was a bad year. The Fed increased interest rates six times,
which depressed stock prices in several sectors. During the first half of the
year, cyclicals did well, while during the second half, growth stocks did
better. In fact, during the third quarter of 1994, when growth stocks
rallied, the Fund's performance improved markedly, though not enough to
offset earlier losses. It also was a nervous market that could punish a stock
for even the slightest bit of bad news.
Q. IN TERMS OF THE HOLDINGS IN THE PORTFOLIO, WHAT SECTORS WERE HURT THE MOST?
A. The Portfolio has significant restaurant and retail holdings which did poorly
in 1994. For example, the stocks of Bertucci's Holding Corp. and Buffets
Inc., two restaurant companies, were down by large margins. Gaming stocks did
poorly as a group, and we sold our gaming holdings during the year even
though these stocks performed very well for us in previous years.
Q. HOW WILL YOU BE DEALING WITH THESE DEVELOPMENTS IN 1995?
A. Our strategy will change only slightly, because we still firmly believe in
the long-term value of investing in growth stocks. We still look for
companies with rapidly growing earnings and solid financial strength. In
1995, we expect that, when opportunities present themselves, we'll build our
holdings in smaller-capitalization companies. In addition, we've already
added to our technology holdings.
Q. CAN YOU CITE SOME EXAMPLES OF INTERESTING TECHNOLOGY STOCKS IN THE PORTFOLIO?
A. Three come to mind immediately. EMC Corp. is a data storage company whose
stock has performed well for us thus far. Silicon Graphics is a manufacturer
of extremely sophisticated workstations that are used for multimedia
applications. And Cisco Systems is a networking company.
Q. YOU DESCRIBE THE MARKET AS NERVOUS. HOW DID THIS AFFECT INDIVIDUAL STOCKS?
A. In some cases, companies were punished for only meeting expectations. In
other cases, a piece of bad news about one company caused investors to flee
an entire segment of the market, depressing the prices of many stocks within
that segment. In addition to looking at the fundamentals of their prospective
investments, investors found themselves wondering how each stock would be
viewed by other investors as the year progressed. As I said, it was a very
difficult environment.
Q. WHAT ARE SOME OF THE FUND'S SUCCESS STORIES THIS YEAR?
A. There were a number of stocks that performed well for us. Earlier I said that
retail was a tough sector this year, but here's an exception. We bought stock
in Consolidated Stores, a merchandiser of closeouts, at a very advantageous
price. It's done well for us. Wabash National, the Portfolio's largest
holding, also did very well. This is a company that is manufacturing railroad
cars and truck trailers in innovative ways. It's the kind of company -- one
that's bringing new technology to the marketplace -- that we'd like to invest
in during 1995. Linear Technology is a company that is involved in the
digital-to-analog conversion process. It's shown consistent growth. Boston
Scientific, a medical device company, also did well.
Q. ARE THERE OTHER STOCKS IN THE PORTFOLIO FOR WHICH YOU HAVE HIGH HOPES?
A. One is MFS Communications. This is what's called a competitive access
provider. It provides businesses with an alternative local telephone loop at
discount. We believe this company should perform well in 1995. We also hold
stock in three companies that should benefit from the aging of the American
population. Demographic trends show our population of older people
increasingly needs subacute care, and all three -- Genesis Health Ventures,
Horizon Health Care and Vitalink Pharmacy Services -- are in the business of
providing the elderly with lower-cost solutions to their medical needs. We're
enthusiastic about two companies in the transportation sector. One is
Greenbrier Companies, a major provider of double-stack railroad cars. The
other is Union Switch & Signal, which provides switching equipment and other
engineering services to railroads. They are now spending more money on
upgrading such systems.
Q. DO YOU HAVE GOALS FOR THE FUND IN 1995?
A. Yes. We want to be increasingly nimble in looking for investment
opportunities. As I mentioned earlier, the area of mid and
smaller-capitalization companies may be fertile ground for us if we find the
investments at the appropriate time.
Q. THERE ARE THOSE ANALYSTS WHO BELIEVE THAT WE'RE ABOUT TO ENTER A PERIOD WHEN
GROWTH STOCKS ARE STRONGER. ARE YOU AMONG THEM?
A. This certainly could happen, given the right conditions. Traditionally,
growth stocks do not do well at times of interest rate increases, so if
interest rates level off, there could be a rally in growth stocks during
1995. That's because under those circumstances, investors are going to be
looking at the basic value that these stocks represent. In addition, some of
the political proposals now on the table would be very interesting for growth
stocks. I'm thinking particularly of a cut in the capital gains tax, which
would be very positive. And certainly any possibility of getting the budget
deficit further under control would be positive as well.
<PAGE>
Comparison of Change in Value of a $10,000 Investment in EV Classic Special
Equities Fund and the S&P 500 Stock Index
From December 1, 1994, through December 31, 1994
Cumulative Total Return
-----------------------
Life of Fund* -1.2%
Classic
Special
Equities S&P 500
11/94 10000 10000
12/94 10186 10197
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
*Investment operations commenced on 11/17/94.
THE FUND'S PERFORMANCE
In accordance with guidelines issued by the Securities and Exchange Commission,
the above chart compares the Fund's total return with that of a broad-based
securities market index. The lines on the chart represent the total returns of
$10,000 hypothetical investments in the Fund and the S&P Stock Index.
THE TOTAL RETURN FIGURES
The solid line on the chart represents the Fund's performance. The Fund's total
return figure reflects Fund expenses, fees and Portfolio transaction costs, and
assumes the reinvestment of income dividends and capital gain distributions.
The dotted line represents the performance of the S&P 500 Stock Index, a
broad-based, widely recognized unmanged index of 500 common stocks. The Index's
total return does not reflect any commissions or expenses that would be incurred
if an investor individually purchased or sold the securities represented in the
Index.
<PAGE>
-----------------------------------
EV CLASSIC SPECIAL EQUITIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
December 31, 1994
- ------------------------------------------------------------------------------
ASSETS:
Investments in Special Investment Portfolio
(Portfolio), at value (Note 1A) $120,839
Deferred organization expenses (Note 1D) 37,071
Receivable from Administrator (Note 5) 2,870
--------
Total assets 160,780
LIABILITIES:
Accrued organization expenses $37,995
Accrued expenses 849
-------
Total liabilities 38,844
--------
NET ASSETS for 12,340 shares of beneficial interest
outstanding $121,936
========
SOURCES OF NET ASSETS:
Proceeds from sales of shares, less cost of shares
redeemed $115,036
Accumulated net realized loss on investments (21)
Unrealized appreciation of investments 6,921
--------
Total net assets $121,936
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($121,936 / 12,340 shares of beneficial interest) $ 9.88
======
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 November 17, 1994 to December 31, 1994
----------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Dividend income allocated from Portfolio $ 37
Interest income allocated from Portfolio 30
Expenses allocated from Portfolio (43)
------
Total investment income 24
Expenses --
Distribution fees (Note 4) $ 63
Custodian fee 167
Registration fees 350
Transfer and dividend disbursing agent fees 598
Amortization of organization expenses (Note 1D) 924
Miscellaneous 831
------
Total expenses 2,933
Deduct --
Allocation of expenses by the Administrator (Note 5) 2,870
------
Net expenses 63
------
Net investment loss (39)
REALIZED AND UNREALIZED GAIN FROM PORTFOLIO:
Net realized gain on investments (identified cost basis) 2
Change in unrealized appreciation of investments 6,921
------
Net realized and unrealized gain on investments 6,923
------
Net increase in net assets resulting from operations $6,884
======
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 November 17, 1994 to
December 31, 1994
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment loss $ (39)
Net realized gain from Portfolio 2
Unrealized appreciation from Portfolio 6,921
--------
Net increase in net assets resulting from operations 6,884
--------
Net increase in net assets from Fund share transactions (Note 2) 115,042
--------
Net increase in net assets 121,926
NET ASSETS:
Beginning of period 10
--------
End of period (including undistributed net investment loss of $21) $121,936
========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
For the period from the start of business November 17, 1994 to
December 31, 1994
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (for a share outstanding throughout the period):
NET ASSET VALUE -- Beginning of period $10.000
-------
Income from investment operations:
Net investment loss $(0.003)
Net realized and unrealized gain on investments (0.117)
-------
Total loss from investment operations $(0.120)
=======
NET ASSET VALUE -- End of period $ 9.880
=======
TOTAL RETURN (1.20)%
RATIOS/SUPPLEMENTAL DATA: (to average daily net assets)**
Expenses* 1.60 %+
Net investment loss (0.59)%+
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 122
+ Computed on an annualized basis.
*Includes the Fund's share of Special Investment Portfolio's allocated expenses
for the period from November 17, 1994 to December 31, 1994.
**The expenses related to the operation of the Fund reflect an assumption of
expenses by the administrator. Had such action not been taken, the ratios
would have been as follows:
Ratios (to average daily net assets)
Expenses 45.05 %+
Net investment loss (44.04)%+
The accompanying notes are an integral part of the financial statements
<PAGE>
--------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Classic 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. The Fund invests all of its investable
assets in interests in the Special Investment Portfolio (the Portfolio), a New
York Trust, having the same investment objective as the Fund. The value of the
Fund's investment in the Portfolio reflects the Fund's proportionate interest in
the net assets of the Portfolio (0.2% at December 31, 1994). The performance of
the Fund is directly affected by the performance of the Portfolio. The financial
statements of the Portfolio, including the portfolio of investments, are
included elsewhere in this report and should be read in conjunction with the
Fund's financial statements. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles.
A. INVESTMENT VALUATIONS -- Valuations of securities by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INCOME -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments, option and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary. At
December 31, 1994, the Fund, for federal income tax purposes, had a capital loss
carryover of $21, which will reduce the Fund's taxable income arising from
future net realized gain on investment transactions, if any, to the extent
permitted by the Internal Revenue Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve the
Fund of any liability for federal income or excise tax. Such capital loss
carryover will expire on December 31, 2002.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over five
years.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Distributions to shareholders are recorded on
the ex-dividend date.
F. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale of Fund
shares and other distribution costs are charged to operations. For tax purposes,
commissions paid were charged to paid-in capital prior to November 23, 1994 and
subsequently charged to operations. The change in the tax accounting practice
was prompted by a recent Internal Revenue Service ruling and has no effect on
either the Fund's current yield or total return (Note 4).
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(2) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares from the start of business, November 17, 1994, to
December 31, 1994 were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
------ ------
<S> <C> <C>
Sales 12,440 $116,000
Issued to shareholders electing to receive payment of distribution in Fund shares -- --
Redemptions (100) (958)
------- --------
Net increase 12,340 $115,042
======= ========
</TABLE>
- --------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$116,020 and $2,118, respectively.
- --------------------------------------------------------------------------------
(4) DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay the
principal underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to
1/365th of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
Uncovered Distribution Charges, which are equivalent to the sum of (i) 6.25% of
the aggregate amount received by the Fund for shares sold plus, (ii)
distribution fees calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of EVD,
reduced by amounts theretofore paid to EVD.
The amount payable to EVD with respect to each day is accrued on such day as a
liability of the Fund and, accordingly, reduces the Fund's net assets. Such
payments would cease upon termination of the distribution agreement (unless made
in accordance with another distribution agreement). As a result, the Fund does
not accrue amounts which may become payable to EVD in the future because the
conditions for recording any contingent liability under generally accepted
accounting principles have not been satisfied. EVD earned $47 for the period
from the start of business, November 17, 1994 to December 31, 1994 representing
0.75% (annualized) of average daily net assets. At December 31, 1994, the amount
of Uncovered Distribution Charges of EVD calculated under the Plan was
approximately $7,186.
In addition, the Plan provides that the Fund may make payments of service fees
to the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees of the Fund have initially implemented this provision of the Plan by
authorizing the Fund to make payments of service fees to the Principal
Underwriter, Authorized Firms and other persons in each fiscal year of the Fund
in amounts not exceeding 0.25% (per annum) of the Fund's average daily net
assets. Provision for service fee payments for the period from the start of
business, November 17, 1994, to December 31, 1994 amounted to $16.
Certain of the officers and Trustees of the Fund are officers or directors of
EVD.
<PAGE>
- --------------------------------------------------------------------------------
(5) ADMINISTRATOR
The administrator assumed $2,870 of the Fund's expenses in the period from
November 17, 1994, to December 31, 1994. Investment Adviser fee and other
transactions with affiliates are discussed in Note 3 of the Portfolio's Notes to
Financial Statements which are included elsewhere in this report.
- --------------------------------------------------------------------------------
(6) SUBSEQUENT EVENT
Shares purchased on or after January 30, 1995 and redeemed during the first year
after purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a contingent deferred sales charge
at a rate of one percent of redemption proceeds, exclusive of all reinvestments
and capital appreciation in the account. No contingent deferred sales charge is
imposed on exchanges for shares of other funds in the Eaton Vance Classic Group
of Funds or Eaton Vance Money Market which are distributed with a contingent
deferred sales charge.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------------------------------
To the Shareholders and Trustees of
EV Classic Special Equities Fund, a series of Eaton Vance Special Investment
Trust:
We have audited the accompanying statement of assets and liabilities of EV
Classic Special Equities Fund, a series of Eaton Vance Special Investment Trust,
as of December 31, 1994, the related statement of operations, changes in net
assets and financial highlights for the period from November 17, 1994 (start of
business) to December 31, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1994 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of EV
Classic Special Equities Fund, a series of Eaton Vance Special Investment Trust,
as of December 31, 1994, the results of its operations, changes in its net
assets and financial highlights for the period from November 17, 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>
- --------------------------------------------------------------------------------
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>
- --------------------------------------------------------------------------------
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>
PORTFOLIO OF INVESTMENTS (Continued)
- --------------------------------------------------------------------------------
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) VALUE
- --------------------------------------------------------------------------------
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
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
(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 MANAGEMENT
EV CLASSIC OFFICERS TRUSTEES
SPECIAL EQUITIES JAMES B. HAWKES LANDON T. CLAY
FUND President, Trustee Chairman, Eaton Vance
24 Federal Street PETER F. KIELY Management
Boston, MA 02110 Vice President DONALD R. DWIGHT
CLIFFORD H. KRAUSS President,
Vice President and Dwight Partners, Inc.
Portfolio Manager Chairman, Newspapers of
JAMES L. O'CONNOR New England, Inc.
Treasurer SAMUEL L. HAYES, III
THOMAS OTIS Jacob H. Schiff Professor of
Secretary Investment Banking,
WILLIAM J. AUSTIN, JR. Harvard University
Assistant Treasurer Graduate School of
DOUGLAS C. MILLER Business Administration
Assistant Treasurer NORTON H. REAMER
JANET E. SANDERS President and Director, United
Assistant Treasurer and Asset Management Corporation
Assistant Secretary JOHN L. THORNDIKE
Director, Fiduciary Trust
Company
JACK L. TREYNOR
Investment Adviser and
Consultant
------------------------------------------------------------
SPECIAL OFFICERS TRUSTEES
INVESTMENT JAMES B. HAWKES LANDON T. CLAY
PORTFOLIO President, Trustee Chairman, Eaton Vance
24 Federal Street PETER F. KIELY Management
Boston, MA 02110 Vice President DONALD R. DWIGHT
CLIFFORD H. KRAUSS President,
Vice President and Dwight Partners, Inc.
Portfolio Manager Chairman, Newspapers of
JAMES L. O'CONNOR New England, Inc.
Treasurer SAMUEL L. HAYES, III
THOMAS OTIS Jacob H. Schiff Professor of
Secretary Investment Banking,
WILLIAM J. AUSTIN, JR. Harvard University
Assistant Treasurer Graduate School of
JANET E. SANDERS Business Administration
Assistant Treasurer and NORTON H. REAMER
Assistant Secretary President and Director, United
Asset Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Trust
Company
JACK L. TREYNOR
Investment Adviser and
Consultant
<PAGE>
INVESTMENT ADVISER OF
SPECIAL INVESTMENT PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV CLASSIC
SPECIAL EQUITIES FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P
One Post Office Square
Boston, MA 02109
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
EV CLASSIC SPECIAL EQUITIES FUND
24 FEDERAL STREET
BOSTON, MA 02110
C-SESRC
EV CLASSIC
SPECIAL EQUITIES
FUND
ANNUAL SHAREHOLDER REPORT
DECEMBER 31, 1994
