<PAGE>
To Shareholders
EV Traditional Special Equities Fund had a total return of 9.3 percent for the
six months that ended June 30, 1995. That return reflected a change in net asset
value per share from $6.88 on December 31, 1994 to $7.52 on June 30, 1995.
The Federal Reserve raised short-term interest rates seven times between
February 1994 and February 1995. However, fearing that the economy had slowed to
a halt or even contracted, the Fed lowered the rate by a quarter of a percentage
point in early July.
During the first six months of 1995, the stock market generally treated
investors well. It was an especially good period for investments in large
capitalization stock and companies with a strong international presence.
Medium-sized companies such as those in which the Portfolio invests, posted
gains, but generally did not perform as well as the large-cap stocks. Of course,
past performance is no guarantee of future results.
While large company stocks have performed well for some time, we believe it may
well be time for the stocks of mid-size companies to begin to catch up. The
prices of mid-cap stocks are quite reasonable overall, creating buying
opportunities for opportunistic investors.
The decline of the dollar against world currencies caused some investor concern.
However, if the dollar stabilizes, investors are likely to become more confident
and the market may be buoyed by a surge in foreign investment.
---------------------------------------------------
THE PORTFOLIO'S TOP 10 HOLDINGS*
BOSTON SCIENTIFIC CORP ........... Medical devices
FEDERAL NATIONAL MORTGAGE ........ Mortgage finance
FISERV INC. ...................... Data processing
MUTUAL RISK
MANAGEMENT LTD ................... Insurance
CIRCUS CIRCUS ENTERPRISES ........ Gaming
TRITON ENERGY CORP. .............. Oil exploration
CISCO SYSTEMS INC. ............... Computer systems
CERIDIAN CORP. ................... Computer services
CONSOLIDATED STORES CORP. ........ Closeout stores
ADVANCED MICRO DEVICES ........... Semiconductors
*By market value as of June 30, 1995
---------------------------------------------------
During the first six months of 1995, we have tried to add value to the Portfolio
by identifying and taking advantage of special investment situations. For
example, we have added gaming stocks to the Portfolio. We were active in this
sector a year ago, but sold our investments as the industry went through a
shake-out. We have now returned because we believe that selective investments in
strong gaming companies could be highly rewarding.
Even though market averages were at very high levels at the end of this period,
small- to mid-cap stocks may outpace the rest of the market in the near future.
This could, in turn, have a significantly positive effect on the Fund's
performance. In short, the Fund's investment philosophy is likely to continue to
remain rewarding for patient investors.
Sincerely,
[Photo of James B. Hawkes]
/s/ James B. Hawkes
James B. Hawkes
President
August 4, 1995
<PAGE>
Management Report
An interview with Clifford H. Krauss, Vice President and Manager of Special
Equities Portfolio.
Q. CLIFF, HOW HAVE THE FIRST SIX MONTHS OF 1995 TREATED STOCK INVESTORS?
A. Generally, this has been a good time to invest in stocks, although, as
always, some categories of stocks did better than others. For example, this
was an especially good time for investors who were in large companies.
Large-capitalization stocks outperformed mid-cap stocks, which is generally
the kind of stock in which we invest. We consider mid-cap companies to be
those with capitalizations of between $250 million and $3 billion.
Q. WHY THE DIFFERENCE?
A. It's difficult to pin the difference on any one reason, but there are some
theories. One likely reason is that large companies are more likely to have
an international presence. Thats been a big advantage recently because, on
the consumer side, the performance of the U.S. economy has been spotty.
Multinational companies are showing strong earnings outside the United
States, which makes them attractive investments. Another possibility is that
investors have been attracted to a number of high-profile large companies
that have had successful turnarounds in the last year, companies such as
IBM, Digital Equipment and Kodak.
Q. IN TERMS OF SIZE, HOW WOULD YOU DESCRIBE THE COMPANIES IN THE PORTFOLIO?
A. We're predominately in mid-cap stocks, with a few large-cap exceptions. This
is the most prominent reason why the Portfolio's performance has lagged
behind the performance of common indicators such as the S&P 500. Mid-cap
companies simply have not done as well as large-cap issues in this market.
Of course, past performance is no guarantee of future returns.
---------------------
[Photo of
Clifford H. Krauss]
---------------------
CLIFFORD H. KRAUSS
------------------
Q. BUT YOU DO HAVE SOME LARGE-CAP HOLDINGS?
A. Yes. The most obvious example happens to be the Portfolio's second-largest
holding right now, Fannie Mae. The Federal National Mortgage Corporation is
a leading force in America's secondary mortgage market. The company
experienced a slowdown when interest rates were rising, but the company has
surged since interest rates started to drop. We bought while the stock was
relatively inexpensive and it's been a strong performer for us.
Q. HAVE YOU ADOPTED ANY SPECIAL STRATEGIES TO PRODUCE GAINS IN THE PORTFOLIO?
A. In general, we're always looking for companies that demonstrate growth. We
spend our time studying the fundamentals of the companies that we consider
for the Portfolio because we want to learn as much about those businesses as
we can. Having said that, there are a number of strategies that we've used
to pick investments.
<PAGE>
One is to find companies where we believe the stock market has overreacted
to bad news about a fundamentally strong company. A great example is Harley
Davidson. This company makes high-quality motorcycles and is constantly
backlogged with orders. The company also has a growing parts and accessories
business. The problem, from Wall Streets point of view, is a recreational
vehicle company that Harley bought a while back. It hasn't done well and the
stock's price dropped because of it. We bought on a correction. While the
price hadn't really taken off yet as of the end of the first six months of
1995, we look for good things from this company because it has a very strong
franchise in the motorcycle business.
Q. WHAT ABOUT TECHNOLOGY HOLDINGS?
A. We've done well with Dallas Semiconductor Corp. This is a leading
manufacturer of semiconductors used in specialized applications. You might
say they're a little less high-tech than some other semiconductors. For
example, the semiconductors produced by this company are used for some
relatively simple applications such as identification and the clocks that
run in personal computers. While not as high-profile as some other
companies, this is a strong business and a company that is demonstrating a
strong growth rate.
We've also acquired stock in some companies whose long-term prospects are
good and whose core technologies are strong, but that have been hurt by
near-term problems. Chipcom is a good example. Its price declined because of
what we believe are short-term problems. We bought more of its stock because
we believe in the company's future.
Q. HOW DO YOU VIEW THE GAMING SECTOR, IN WHICH YOU USED TO HAVE SIGNIFICANT
INVESTMENTS?
A. We invested in gaming very early, when we first recognized that gambling was
going to move beyond the traditional venues of Las Vegas and Atlantic City.
But there came a time of investor over-enthusiasm and last year, in
response, there was a correction. Recently the situation has changed. Some
weaker companies are gone and those that remain are establishing strategies
to capture the continuing growth in the market. At the same time, Las Vegas
has grown up and is viewed not only as a place to gamble but as a center for
family-oriented entertainment. In sum, the decline in stock prices created
some good values and we've taken advantage of them by adding stocks to the
Portfolio.
Q. WHAT'S THE OUTLOOK FOR EQUITY INVESTORS?
A. I remain cautiously optimistic. If the economy continues to grow at
moderated rates -- if we achieve the so-called soft landing -- that would be
very good news. On the other hand, if there's a recession, we could see
earnings disappointments that would hurt stock prices. The key for any
investor is to adopt a long-term point of view, as we have in the Portfolio.
We believe this philosophy makes the most sense for wise investors.
<PAGE>
EV TRADITIONAL SPECIAL EQUITIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
ASSETS:
Investment in Special Investment Portfolio (Portfolio), at
value (Note 1A) $65,981,009
Receivable for Fund shares sold and dividend reinvestments 515
Deferred organization expenses (Note 1D) 11,107
-----------
Total assets $65,992,631
LIABILITIES:
Payable for Fund shares redeemed $53,477
Payable to affiliates -
Trustees 625
Custodian 273
Accrued organization expenses 2,942
Accrued expenses 27,072
-------
Total liabilities 84,389
-----------
NET ASSETS for 8,760,783 shares of beneficial interest
outstanding $65,908,242
===========
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 $49,953,970
Accumulated net realized gain on investments
(computed on the basis of identified cost) 2,132,934
Accumulated undistributed net investment loss (16,906)
Unrealized appreciation of investments 13,838,244
-----------
Total net assets $65,908,242
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($65,908,242 / 8,760,783 shares of beneficial interest) $7.52
=====
COMPUTATION OF OFFERING PRICE:
Offering price per share (100/95.25 of $7.52) $7.90
=====
On sales of $100,000 or more, the offering price is reduced.
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Dividend income allocated from Portfolio $ 177,794
Interest income allocated from Portfolio 163,600
Expenses allocated from Portfolio (252,014)
----------
Total investment income $ 89,380
Expenses --
Service fees (Note 4) $ 22,892
Custodian fees 3,756
Legal and accounting services 6,335
Transfer and dividend disbursing agent fees 30,010
Printing and postage 25,508
Registration fees 14,556
Amortization of organization expenses (Note 1D) 1,140
Miscellaneous 2,089
----------
Total expenses 106,286
----------
Net investment loss $ (16,906)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS FROM PORTFOLIO:
Net realized gain on investments (identified cost
basis) $2,132,934
Change in unrealized appreciation of investments 3,660,651
----------
Net realized and unrealized gain on
investments 5,793,585
----------
Net increase in net assets resulting from
operations $5,776,679
==========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment loss $ (16,906) $ (120,323)
Net realized gain on investments 2,132,934 6,224,249
Increase (decrease) in unrealized
appreciation of investments 3,660,651 (13,248,458)
------------- ------------
Net increase (decrease) in net assets
resulting from operations $ 5,776,679 $ (7,144,532)
Distributions to shareholders --
From net realized gains on investment
transactions -- (6,183,757)
Tax return of capital -- (30,146)
Net decrease from Fund share transactions
(Note 2) (3,720,739) (921,158)
------------- ------------
Total increase (decrease) in net assets $ 2,055,940 $(14,279,593)
------------- ------------
NET ASSETS:
Beginning of year 63,852,302 78,131,895
------------- ------------
End of year $ 65,908,242 $ 63,852,302
============= ============
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1995 -------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991*** 1990***
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE -- Beginning of year $ 6.880 $ 8.430 $ 8.990 $ 9.520 $ 6.810 $ 7.050
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss) $(0.002) $(0.013) $(0.018) $ 0.006 $ 0.004 $ 0.033
Net realized and unrealized gain
(loss) on investments 0.642 (0.807) 0.108 0.239 3.776 0.130
------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations $ 0.640 $(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 $ 7.520 $ 6.880 $ 8.430 $ 8.990 $ 9.520 $ 6.810
======= ======= ======= ======= ======= =======
TOTAL RETURN 9.30% (9.60)% 1.14% 2.71% 57.33% 2.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted) $65,908 $63,852 $78,132 $76,544 $77,324 $50,094
Ratio of expenses to average net assets* 1.11%+ 1.02% 1.01% 0.96% 0.94% 1.06%
Ratio of net investment income to
average net assets (0.05)%+ (0.17)% (0.30)% 0.07% 0.05% 0.48%
PORTFOLIO TURNOVER** -- 37% 73% 48% 41% 47%
<FN>
* Includes the Fund's share of Special Investment Portfolio's allocated expenses for the period subsequent to
August 1, 1994.
** 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.
*** Audited by previous auditors.
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
--------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Traditional 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 (97.6% at June 30,
1995). The performance of the Fund is directly affected by the performance of
the Portfolio. The financial statements of the Portfolio, including the
portfolio of investments, are included elsewhere in this report and should be
read in conjunction with the Fund's financial statements. The following is a
summary of significant accounting policies consistently followed by the Fund in
the preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Valuations of securities by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INCOME -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund. Prior to the Fund's investment in the Portfolio, the Fund
held its investments directly.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments, options and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization, are being amortized on the straight-line basis over five
years.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income and dividends to shareholders
are recorded on the ex-dividend date. Dividend income may include dividends that
represent returns of capital for federal tax purposes. Gains or loss on the sale
of investments is determined on the identified cost basis.
F. DISTRIBUTIONS -- Generally accepted accounting principles require that
differences in the recognition or classification of income between the financial
statements and tax earnings and profits which result in temporary over-
distributions for financial statement purposes, are classified as distributions
in excess of net investment income or accumulated net realized gains.
G. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
June 30, 1995 and for the period then ended have not been audited by independent
certified public accountants, but in the opinion of the Fund's management,
reflect all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of the financial statements.
<PAGE>
--------------------------------------------------------------------------------
(2) 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:
SIX MONTHS ENDED
JUNE 30, 1995 FOR THE YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
----------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- -------------
Sales 627,376 $ 4,473,189 23,121,866 $ 181,853,726
Shares issued in
reinvestment of
distributions -- -- 785,094 5,336,802
Shares redeemed (1,144,008) (8,193,928) (23,895,612) (188,111,686)
--------- ----------- ---------- -------------
Net increase
(decrease) (516,632) $(3,720,739) 11,348 $ (921,158)
========== =========== =========== ============
--------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$4,659,547 and $8,324,916, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
(4) 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 0.25% of
the Fund's average daily net assets for any fiscal year. The Trustees have
implemented the Service Plan by authorizing the Fund to make quarterly service
fee payments to the Principal Underwriter and Authorized Firms in amounts not
expected to exceed 0.25% of that portion of the Fund's average daily net assets
for any fiscal year which is attributable to shares of the Fund sold 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 six months ended June 30, 1995 the Fund made
payments of $22,892 under the Plan to the Principal Underwriter and Authorized
Firms.
<PAGE>
--------------------------------------------
SPECIAL INVESTMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995
(UNAUDITED)
--------------------------------------------------------------------------------
COMMON STOCKS - 86.6%
--------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
--------------------------------------------------------------------------------
BUSINESS SERVICES - 9.7%
BISYS Corp.* 22,000 $ 489,500
Services financial institutions with
computer, administrative and marketing
support data processing services.
Ceridan Corp. 40,000 1,475,000
Provides payroll processing and other
employer services, media and market
research.
Danka Business Systems PLC, ADR 20,000 483,750
An independent provider of maintenance and
service for office copying machines.
FIserv Incorporated* 93,500 2,629,688
Provider of data processing services to
banks and savings institutions, benefiting
from outsourcing trend.
Franklin Quest Co. 30,000 720,000
Provides time management products and
training seminars to corporations,
government agencies and the general
public.
G&K Services, Inc. 39,200 764,400
Rents and launders uniforms and other
textile products.
-----------
$ 6,562,338
-----------
COMMUNICATIONS - 6.6%
Boston Technology, Inc. 60,000 $ 1,117,500
Develops, markets and supports a broad range
of voice processing and communication
systems.
Comcast Corp. 55,000 1,020,938
Cable TV and Cellular telephone operator.
Frontier Corp. 50,000 1,200,000
Formerly Rochester Telephone Corp., provides
local telephone and communications
services.
Intelcom Group, Inc. 50,000 446,875
Provider of alternative access
telecommunication services and
international satellite uplink teleports.
MFS Communications Co., Inc.* 20,000 645,000
Provider of fiber-optic based
telecommunications services primarily to
businesses.
-----------
$ 4,430,313
-----------
COMPUTER EQUIPMENT - 2.3%
Compaq Computer Corp. 20,000 $ 907,500
Leading maker of high-performance, IBM PC-
compatible portable and desk top
computers.
Motorola Inc. 10,000 671,250
Leading worldwide producer of wireless
communication systems and equipment, major
manufacturer of semiconductors.
-----------
$ 1,578,750
-----------
<PAGE>
COMPUTER SOFTWARE - 5.3%
Banyan Inc.* 80,000 $ 1,100,000
Provider of networking software products for
large, complex computer networks.
Chipcom Corp. 20,000 475,000
Designs, manufactures and distributes
intelligent hubs and other computer
networking products.
Novell, Inc.* 50,000 996,875
Leading provider of network software
systems.
Silicon Graphics, Inc.* 25,000 996,875
Produces computer systems used for the
design analysis and simulation of three
dimensional objects.
-----------
$ 3,568,750
-----------
CONSUMER PRODUCTS - 1.1%
Sunbeam Corp. 55,000 $ 763,125
Manufacturer of outdoor, household, and -----------
specialty consumer products under Sunbeam
and Oster brand names.
ELECTRONICS & INSTRUMENTATION - 9.3%
Advanced Micro Devices, Inc. 40,000 $ 1,455,000
Leading manufacturer of semiconductors and
microprocessors for computers and
telecommunications industries.
Cisco Systems, Inc.* 30,000 1,516,875
Manufacturer of routers that connect
computer networks.
Dallas Semiconductor Corp.* 60,000 1,230,000
Specialty semiconductor supplier focusing on
CMOS integrated circuits.
Intel Corp. 20,000 1,266,250
World's leading semiconductor manufacturer,
also produces microcomputer components,
modules and systems.
Linear Technology Corp. 12,500 825,000
Manufacturer of high performance linear
integrated circuits.
-----------
$ 6,293,125
-----------
ENERGY - 4.3%
Anadarko Petroleum Corp. 30,000 $ 1,293,750
A leading independent company in oil and gas
exploration, development and production.
Triton Energy Corp. 35,000 1,623,125
Independent oil and gas exploration and
production company focusing on
international prospects especially in
major Colombian oil discovery.
-----------
$ 2,916,875
-----------
ENTERTAINMENT - 6.7%
Circus Circus Enterprises, Inc. 47,000 $ 1,656,750
Major casino facilities in Las Vegas. Also
operates hotels.
Harley Davidson, Inc. 40,000 975,000
Only U.S. manufacturer of motorcycles. Also
makes recreational and commercial
vehicles.
Players International, Inc. 42,500 850,000
Operates riverboat casinos in Louisiana and
Illinois and a racetrack in Kentucky.
Plans new casino in Mesquite, Nevada.
Primadonna Resorts, Inc. 20,000 480,000
Owns and operates casinos and hotels.
Station Casinos, Inc. 35,000 603,750
Owner and operator of gaming enterprises.
-----------
$ 4,565,500
-----------
FINANCE - 8.7%
Federal National Mortgage Association 30,000 $ 2,831,250
Leading factor in the secondary mortgage
market.
Franklin Resources, Inc. 20,000 890,000
One of the largest mutual fund organizations
in the U.S.
MBNA Corp. 30,000 1,012,500
Bank holding company and world's leading
issuer Gold MasterCards.
T. Rowe Price Associates, Inc. 30,000 1,155,000
Investment adviser to mutual funds,
institutions and individuals.
-----------
$ 5,888,750
-----------
HEALTHCARE - 6.1%
Boston Scientific Corp.* 90,000 $ 2,868,750
Medical device manufacturer focusing
primarily on disposable products in less
invasive surgery procedures.
Horizon Healthcare Corp. 25,000 446,875
Manager of long-term care and specialty
healthcare facilities focussing on
geriatric care.
Sofamor Danek Group, Inc. 26,000 588,250
Leading developer/manufacturer of spinal
implant devices. Company markets products
internationally.
Vitalink Pharmacy Services, Inc.* 12,500 209,375
Provider of pharmacy services to nursing
homes and sub-acute care medical
facilities.
-----------
$ 4,113,250
-----------
HOMEBUILDING - 0.9%
Southern Energy Homes, Inc. 44,500 $ 623,000
Produces customized manufactured homes in -----------
facilities located in Alabama and Texas.
Homes are sold in 24 states.
INDUSTRIAL PRODUCTS - 4.6%
Greenfield Industries, Inc. 30,000 $ 870,000
A leading manufacturer of expendable cutting
tools and related products used in
industrial applications.
Loctite Corp. 20,600 937,300
International manufacturer of adhesives,
sealants and related products.
Union Switch & Signal, Inc.* 27,400 344,212
Manufacturer of advanced signaling, control
and automatic systems for railroads and
transit authorities.
Wabash National Corp. 30,000 933,750
Manufacturer of specialy truck trailers
benefiting from innovative new products.
-----------
$ 3,085,262
-----------
INSURANCE - 4.4%
American International Group 10,000 $ 1,140,000
One of the world's leading insurance
companies, operating in 130 countries.
Mutual Risk Management Ltd. 55,000 1,842,500
Specialty insurer focusing on workmen's
compensation.
-----------
$ 2,982,500
-----------
<PAGE>
PUBLISHING - 2.0%
Houghton Mifflin Co. 10,000 $ 527,500
Publishes textbooks, college material,
general and reference works.
Scholastic Corp.* 15,000 813,750
Publisher/distributor of children's books,
magazines and related educational
materials.
-----------
$ 1,341,250
-----------
RESTAURANTS - 2.8%
Brinker International, Inc.* 70,000 $ 1,207,500
Operator of Chili's, Grady's and other
dinnerhouse restaurants growing through
new unit expansion.
Buffets Inc.* 50,000 687,500
Chain of value-oriented Old Country Buffet
restaurants growing through new unit
expansion.
-----------
$ 1,895,000
-----------
RETAILING - 4.7%
Consolidated Stores Corp.* 70,000 $ 1,461,250
Chain of close-out merchandise stores
operating primarily under the Odd/Big Lots
name.
Gap (The) Inc. 25,000 871,875
Specialty apparel retailer offering high-
quality, modestly priced private-label
sportswear under six brand names.
Home Depot Inc. 20,000 812,500
Operator of a chain of retail warehouse-type
stores selling building supply and home
improvement products.
-----------
$ 3,145,625
-----------
SPECIALTY CHEMICALS - 4.5%
Great Lakes Chemical Corp. 20,000 $ 1,205,000
Leading producer of flame retardant and
specialty intermediate chemicals.
Lawter International, Inc. 70,000 840,000
Manufactures printing ink vehicles, wax
compounds and powders, synthetic and
hydrocarbon resins, thermographic and
rota-matic machines.
Millipore Corp. 15,000 1,012,500
Manufacturer of membrane technology products
used for chemical analysis and
purification.
-----------
$ 3,057,500
-----------
TRANSPORTATION - 2.6%
Greenbrier Companies, Inc.* 46,400 $ 609,000
Leading manufacturer of intermodal railcars
used to transport container freight.
Kansas City Southern Industries 25,000 931,250
Business segments include rail operations,
mutual funds and real estate.
M.S. Carriers, Inc.* 10,000 190,000
Irregular route truckload carrier.
-----------
$ 1,730,250
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $44,615,056) $58,541,163
-----------
<PAGE>
--------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 13.7%
--------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED) VALUE
--------------------------------------------------------------------------------
Ford Motor Credit Co., 5.95s, 7/10/95 $3,000 $ 2,995,537
General Electric Capital Corp.,
5.93s, 7/5/95 1,747 1,745,849
Melville Corp., 6.23s, 7/3/95 2,555 2,554,116
Prudential Funding Corp., 5.94s, 7/5/95 2,000 1,998,680
-----------
TOTAL SHORT-TERM OBLIGATIONS, AT
AMORTIZED COST $ 9,294,182
-----------
TOTAL INVESTMENTS
(IDENTIFIED COST, $53,909,238) $67,835,345
OTHER ASSETS, LESS LIABILITIES - (0.3%) $ (220,821)
-----------
TOTAL NET ASSETS - 100% $67,614,524
===========
*Non-income producing security.
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$53,909,238) $67,835,345
Cash 1,615
Receivable for investments sold 1,257,115
Dividends receivable 22,038
Deferred organization expenses (Note 1D) 12,910
-----------
Total assets $69,129,023
LIABILITIES:
Payable for investments purchased $1,507,260
Payable to affiliates --
Trustees 2,500
Custodian 2,286
Accrued expenses 2,453
----------
Total liabilities 1,514,499
-----------
NET ASSETS applicable to investors' interest in
Portfolio $67,614,524
===========
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $53,688,417
Unrealized appreciation of investments
(identified cost) 13,926,107
-----------
Total net assets $67,614,524
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the six months ended June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income $ 180,981
Interest income 166,550
----------
Total income $ 347,531
Expenses --
Investment adviser fee (Note 3) $ 208,207
Compensation of Directors not members of the
Investment Adviser's organization (Note 3) 5,676
Custodian fee (Note 3) 27,601
Legal and accounting 10,106
Registration fees 1,125
Amortization of organization expenses (Note 1D) 1,566
Miscellaneous 2,504
----------
Total expenses 256,785
----------
Net investment income $ 90,746
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments (identified cost
basis) $2,168,567
Change in unrealized appreciation on investments 3,732,453
----------
Net realized and unrealized gain on
investments 5,901,020
----------
Net increase in net assets resulting from operations $5,991,766
==========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994*
------------- ------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 90,746 $ 55,637
Net realized gain (loss) on investment
transactions 2,168,567 (986,284)
Increase in unrealized appreciation of
investments 3,732,453 4,288,639
------------ ------------
Net increase in net assets from
operations $ 5,991,766 $ 3,357,992
------------ ------------
Capital transactions--
Contributions $ 6,599,057 $104,495,403
Withdrawals (9,418,671) (43,411,023)
------------ ------------
Increase (decrease) in net assets
resulting from capital transactions $ (2,819,614) $ 61,084,380
------------ ------------
Total increase in net assets $ 3,172,152 $ 64,442,372
NET ASSETS:
At beginning of period 64,442,372 --
------------ ------------
At end of period $ 67,614,524 $ 64,442,372
============ ============
--------------------------------------------------------------------------------
SUPPLEMENTARY DATA
--------------------------------------------------------------------------------
RATIOS (As a percentage of average net assets):
Expenses 0.78%+ 0.74%+
Net investment income 0.27%+ 0.20%+
PORTFOLIO TURNOVER 42% 19%
+Computed on an annualized basis.
*For the period from the start of business, August 1, 1994 to December 31,
1994.
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
(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. 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.
E. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating
to June 30, 1995 and for the period then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
------------------------------------------------------------------------------
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term
obligations, aggregrated $25,400,107 and $32,949,623, respectively.
------------------------------------------------------------------------------
(3) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to the Portfolio. The fee
is at the annual rate of 5/8 of 1% of average daily net assets. For the six
months ended June 30, 1995, the fee amounted to $208,207. Except as to
Trustees of the Portfolio who are not members of EVM's or BMR's organization,
officers and Trustees receive remuneration for their services to the Portfolio
out of such investment adviser fee. Investors Bank & Trust Company (IBT), an
affiliate of EVM and BMR, serves as custodian of the Portfolio. Pursuant to
the custodian agreement, IBT receives a fee reduced by credits which are
determined based on the average daily cash balances the Portfolio maintains
with IBT. Certain of the officers and Trustees of the Portfolio are officers
and directors/trustees of the above organizations. Trustees of the Portfolio
that are not affiliated with the Investment Adviser may elect to defer receipt
of all or a percentage of their annual fees in accordance with the terms of
the Trustees Deferred Compensation Plan. For the six months ended June 30,
1995, no significant amounts have been deferred.
------------------------------------------------------------------------------
(4) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $120 million unsecured line of credit agreement
with a bank. The line of credit consists of a $20 million committed facility and
a $100 million discretionary facility. 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 June 30,
1995, 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 June 30, 1995, as computed on a federal income tax basis, are as
follows:
Aggregate cost $53,909,233
===========
Gross unrealized appreciation $15,612,570
Gross unrealized depreciation 1,686,463
-----------
Net unrealized appreciation $13,926,107
===========
<PAGE>
INVESTMENT MANAGEMENT
EV TRADITIONAL OFFICERS TRUSTEES
SPECIAL EQUITIES
FUND JAMES B. HAWKES LANDON T. CLAY
24 Federal Street President, Trustee Chairman, Eaton Vance Management
Boston, MA 02110
CLIFFORD H. KRAUSS
Vice President DONALD R. DWIGHT
President, Dwight Partners, Inc.
JAMES L. O'CONNOR Chairman, Newspapers of
Treasurer New England, Inc.
THOMAS OTIS SAMUEL L. HAYES, III
Secretary Jacob H. Schiff Professor of
Investment Banking,
Harvard University
Graduate School of
Business Administration
NORTON H. REAMER
President and Director, United Asset
Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
----------------------------------------------------------
SPECIAL INVESTMENT OFFICERS TRUSTEES
PORTFOLIO
24 Federal Street JAMES B. HAWKES LANDON T. CLAY
Boston, MA 02110 President, Trustee Chairman, Eaton Vance Management
CLIFFORD H. KRAUSS
Vice President and DONALD R. DWIGHT
Portfolio Manager President, Dwight Partners, Inc.
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,
Harvard University
Graduate School of
Business Administration
NORTON H. REAMER
President and Director, United Asset
Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
<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
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT AND DIVIDEND DISBURSING 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 TRADITIONAL
SPECIAL EQUITIES FUND
24 FEDERAL STREET
BOSTON, MA 02110
T-SESRC
[LOGO]
EV TRADITIONAL
SPECIAL EQUITIES
FUND
[Photo]
SEMI-ANNUAL
SHAREHOLDER REPORT
JUNE 30, 1995
