<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
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
TRANSFER AND DIVIDEND
DISBURSING AGENT
First Data Investor 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-2/96
[LOGO]
EV CLASSIC
Special Equities
Fund
Annual Shareholder Report
December 31, 1995
<PAGE>
To Shareholders
During the year ending December 31, 1995, EV Classic Special Equities Fund had a
total return of 18.7%. That return was the result of an increase in net asset
value to $11.63 per share from $9.88 per share and the reinvestment of $0.09 per
share in capital gain distributions. By comparison, the S&P500, an unmanaged
index of common stocks, had a total return of 37.4% for the same period.
The United States economy remained remarkably steady during 1995, bringing
investors into a favorable period of slow growth and low inflation. The nation's
annualized rate of economic growth was 2.7% in the first quarter and 1.3% in the
second quarter of the year, rising to 4.2% in the third quarter. It was expected
to decline below 3% during the fourth quarter.
The crucial issue during the first half of the year was whether the
FederalReserve's previous tightening of its target federal funds rate would
cause a recession or would merely slow the economy's growth. As the year
progressed, it became clear that the Fed successfully engineered a "soft
landing."
In July the Fed lowered the federal funds rate by a quarter of a percentage
point, the first downward change since September, 1992. Another quarter-point
decrease was announced in December. These changes helped the economy continue to
advance at a slow but steady pace and provided impetus for the stock market.
The Fund's underperformance can be attributed in part to the fact that mid-cap
stocks, which the Portfolio targets, somewhat underperformed the market. The
underperformance also was caused by the selection of several stocks, some in the
technology sector, that posted earnings results lower than were generally
anticipated. Portfolio Manager Clifford H. Krauss will discuss these results in
greater detail on the pages that follow this letter.
While past trends cannot guarantee future performance, we believe that an
investment in growth stocks will provide a satisfactory long term total return.
Sincerely,
/s/ James B. Hawkes
- -------------------
James B. Hawkes,
President
February 21, 1996
- ----------------------------------------------------
EV CLASSIC SPECIAL EQUITIES FUND
10 LARGEST COMMON STOCK HOLDINGS*
Federal National Mortgage Assn......Housing finance
FIserv Inc.................Data processing services
Boston Scientific Corp..............Medical devices
Anadarko Petroleum Corp.........Oil/gas exploration
Triton Energy Corp..............Oil/gas exploration
Cisco Systems Inc.........Computer network products
Mutual Risk Mgmnt. Ltd. ............Risk management
Ceridian Corp.............Computer/finance services
Frontier Corp........Diversified telecommunications
Scholastic Corp...............Educational publisher
*By market value as of 12/31/95
- ----------------------------------------------------
<PAGE>
Management Report
An interview with Clifford H. Krauss, Vice President and Manager of
Special Equities Portfolio.
Q. CLIFF, HOW WOULD YOU DESCRIBE THE INVESTMENT CLIMATE OF THE PAST YEAR?
A. This was a remarkable market for stock investors. The S&P 500, an unmanaged
index of large-capitalization common stocks, rose 37.4%, the index's best
year since 1958. During the first half of the year, technology stocks were
the top performers. During the second half of the year, the market became
more selective, punishing companies for earnings disappointments. Late in
the year, technology stocks declined, while biotechnology and oils posted
large gains.
Q. HOW DID THE FUND PERFORM IN THIS ENVIRONMENT?
A. In absolute terms and in most markets, the Fund's performance during 1995
would be considered good. However, when compared with the high returns
posted by the S&P 500, the Fund did poorly. There were two principal reasons
for this. First, we were somewhat late in adding technology issues. And
second, some companies that we held, including some technology issues,
reported earnings shortfalls that neither we nor Wall Street in general
anticipated. Those shortfalls caused the prices of those stocks to decline.
Q. WHAT KIND OF PROBLEMS DID THOSE STOCKS ENCOUNTER?
A. The example of Wabash National demonstrates what can go wrong. Long-term
investors know that in the past, we've been enthusiastic about this company,
which manufactures truck trailers that can be carried on railroad cars.
However, the economic slowdown hit the company more than it anticipated. We
had been trimming our holdings in any case, but still held some stock when
the company announced lower-than-expected earnings. The stock's price fell
on that bad news.
Q. DID YOU HAVE ANY SUCCESSES WITH TECHNOLOGY STOCKS DURING THE YEAR?
A. We were happy with the performance of FIserv, a company that provides data
processing for banks, and Cisco Systems, a company that is a leader in
developing switching systems for computer networks.
Q. WHAT OTHER SUCCESSFUL STOCKS WERE AMONG THE HOLDINGS THIS YEAR?
A. We've held one, Boston Scientific, for a number of years.In fact, we bought
a position in this company when it first went public. We went through a
period when the stock underperformed, and increased our position because we
believed that it eventually would do well. That long-term outlook was
rewarded during 1995, when the price of Boston Scientific increased more
than 183%.
<PAGE>
Q. DID THE INTEREST RATE DECLINE HAVE A DIRECT EFFECT ON ANY HOLDINGS?
A. While the market in general gained when the Federal Reserve lowered its
rates, there is a whole category of interest rate sensitive stocks -- the
financial sector -- that benefits even more when interest rates drop.
Federal National Mortgage Association performed very well, especially when
interest rates dropped more than expected.
Q. DID YOU MOVE INTO ANY NEW SECTORS DURING 1995?
A. Yes. We built up a position in the energy sector for the first time in
several years. We've invested in companies focused on exploration, companies
that are creative in their efforts. Triton EnergyCorp. has performed
especially well. Triton has conducted successful explorations for oil in
Colombia and for natural gas in Thailand. It should generate significant
cash flow in the future and the stock's value is rising accordingly.
Q. ARE THERE OTHER ENERGY STOCKS THAT LOOK PROMISING?
A. Yes. Anadarko Petroleum Corp. has done well because its exploration for oil
in Algeria has been a real success. It's possible that full development of
what Anadarko has found inAlgeria may actually exceed the company's current
earnings and cash flow.
Q. HOW ABOUT OTHER SECTORS?
A. We believe there may be some opportunities in the entertainment and
communications sectors, so we'll be considering the possibility of
selectively picking stocks in those sectors.We already held stock in
Comcast, a cable television company, and during 1995 we added a position in
Gaylord Entertainment, which owns The Nashville Network, among other
properties.
Another promising sector is environmental services, and here we've acquired
stocks in three companies,Sanifill, USA Waste and United Waste Systems. All
are strong companies within their geographic areas, have strong operational
teams and are continuing to acquire smaller companies in their areas.
Q. HOW DO YOU VIEW 1996 IN TERMS OF THE FUND'S INVESTMENTS?
A. Overall economic conditions remain favorable for stock investors. Inflation
continues to be low and the economy is growing slowly. However, there
appears to be a considerable amount of volatility in the market because
prices are at all-time highs. I expect that at times, you'll see
profit-taking, which will cause price fluctuations.
While it seems unlikely that the market could experience as positive a year
as it did in 1995, we believe that those who invest in stocks that
demonstrate the potential for growth will be rewarded in the long term.
<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 November 30, 1994, through December 31, 1995
- ---------------------------------------
AVG. ANNUAL 1 Life of
RETURNS Year Fund*
- ---------------------------------------
With CDSC 17.7% 15.3%
- ---------------------------------------
Without CDSC 18.7% 15.3%
- ---------------------------------------
Label A B
- ----------------------------------------
Label Date C. Spec Equ S&P 500
- ----------------------------------------
1 11/94+ 10000 10000
2 12/94 10186 10197
3 1/95 10082 10444
4 2/95 10402 10821
5 3/95 10629 11186
6 4/95 10619 11499
7 5/95 10691 11917
8 6/95 10918 12251
9 7/95 11485 12640
10 8/95 11773 12636
11 9/95 11732 13221
12 10/95 11278 13155
13 11/95 11711 13695
14 12/95 12085 14015
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.
+ Index information is available only at month-end; therefore, the line
comparison begins at the next month-end following the commencement of the
Fund's investment operations.
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 500 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
Fund also has a 1% contingent deferred sales charge (CDSC) that is deducted for
redemptions made within the first 12 months of purchase.
The dotted line represents the performance of the S&P 500 Stock Index, a
broad-based, widely recognized unmanaged index of 500 common stocks. The Index's
total return does not reflect any commissions or expenses that would be incurred
if an investor individually purchased or sold the securities represented in the
Index.
<PAGE>
EV CLASSIC SPECIAL EQUITIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
December 31, 1995
- ------------------------------------------------------------------------------
ASSETS:
Investments in Special Investment
Portfolio (Portfolio), at value (Note 1A) $2,115,046
Receivable for Fund shares sold 61
Receivable from Administrator (Note 6) 49,912
Deferred organization expenses (Note 1D) 31,111
----------
Total assets $2,196,130
LIABILITIES:
Payable for Fund shares redeemed $13,267
Payable to affiliate --
Trustees' fees 23
Accrued organization expenses 37,995
Accrued expenses 6,345
-------
Total liabilities 57,630
----------
NET ASSETS for 183,927 shares of beneficial
interest outstanding $2,138,500
==========
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 $1,836,237
Unrealized appreciation ofinvestments
from Portfolio 302,263
----------
Total net assets $2,138,500
==========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE ($2,138,500 / 183,927
shares of beneficial interest) $11.63
======
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the Year Ended December 31, 1995
- ------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Dividend income allocated from Portfolio
(net of foreign taxes, $6) $ 6,369
Interest income allocated from Portfolio 5,449
Expenses allocated from Portfolio (9,838)
--------
Total investment income $ 1,980
Expenses --
Compensation of Directors not members of the
Investment Adviser's organization $ 23
Custodian fees 3,335
Distribution fees (Note 4) 13,088
Transfer and dividend disbursing agent fees 1,117
Printing and postage 20,243
Legal and accounting services 15,172
Registration fees 21,750
Amortization of organization expenses (Note 1D) 7,665
Miscellaneous 2,921
--------
Total expenses $ 85,314
Deduct --
Allocation of expenses by the Administrator (Note 6) 49,912
--------
Net expenses 35,402
--------
Net investment loss $(33,422)
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized loss on investments
(identified cost basis) $(13,011)
Change in unrealized appreciation of investments 295,342
--------
Net realized and unrealized gain on investments 282,331
--------
Net increase in net assets resulting
from operations $248,909
========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------
1995 1994*
------------ ----------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment loss $ (33,422) $ (39)
Net realized gain (loss) from Portfolio (13,011) 2
Unrealized appreciation from Portfolio 295,342 6,921
---------- --------
Net increase in net assets resulting from
operations $ 248,909 6,884
---------- --------
Distributions to shareholders --
In excess of realized loss $ (16,544) $ --
---------- --------
Total distributions to shareholders $ (16,544) $ --
---------- --------
Net increase in net assets from Fund share
transactions (Note 2) 1,784,199 115,042
---------- --------
Net increase in net assets $2,016,564 $121,926
NET ASSETS:
At beginning of year 121,936 10
---------- --------
At end of year $2,138,500 $121,936
========== ========
* For the period from the start of business, November 17, 1994 to December 31,
1994.
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994*
------- -------
NET ASSET VALUE -- Beginning of year $ 9.880 $10.000
------- -------
INCOME FROM OPERATIONS:
Net investment loss $(0.182) $(0.003)
Net realized and unrealized gain (loss) on
investments 2.022 (0.117)
------- -------
Total income (loss) from investment
operations $ 1.840 $(0.120)
------- -------
LESS DISTRIBUTIONS:
In excess of net realized loss $(0.090) $ --
------- -------
Total distributions $(0.090) $ --
------- -------
NET ASSET VALUE -- End of year $11.630 $ 9.880
======= =======
TOTAL RETURN (2) 18.65 % (1.20)%
RATIOS/SUPPLEMENTAL DATA: (to average daily net assets)**
Expenses (1) 3.44 % 1.60 %
Net investment loss (2.54)% (0.59)%
NET ASSETS AT END OF YEAR (000'S OMITTED) $ 2,139 $ 122
** The expenses related to the operation of the Fund reflect an assumption of
expenses by the administrator. Had such action not been taken, net
investment loss per share and the ratios would have been as follows:
Net investment loss per share $(0.453) $(0.236)
Ratios (to average daily net assets)
Expenses 7.23 % 45.05 %+
Net investment loss (6.34)% (44.04)%
* For the period from the start of business, November 17, 1994, to December
31, 1994.
+ Computed on an annualized basis.
(1) Includes the Fund's share of Special Investment Portfolio's allocated
expenses.
(2) Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
(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 (2.9% at December 31, 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.
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.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates $8,416
as capital gain dividends for its taxable year ended December 31, 1995.
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.
- --------------------------------------------------------------------------------
(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 were as follows:
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1995 1994*
----------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
------- ---------- ------ --------
Sales 198,284 $2,076,166 12,440 $116,000
Issued to shareholders
electing to receive
payment of distribution
in Fund shares 1,363 15,433 -- --
Redemptions (28,060) (307,400) (100) (958)
------- ---------- ------ --------
Net increase 171,587 $1,784,199 12,340 $115,042
======= ========== ====== ========
*From the start of business, November 17, 1994 to December 31, 1994.
- --------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$2,078,975 and $369,079, 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 $9,816 for the year
ended December 31, 1995 representing 0.75% (annualized) of average daily net
assets. At December 31, 1995, the amount of Uncovered Distribution Charges of
EVD calculated under the Plan was approximately $132,975.
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 year ended December 31, 1995
amounted to $3,272.
Certain of the officers and Trustees of the Fund are officers or directors of
EVD.
- --------------------------------------------------------------------------------
(5) CONTINGENT DEFERRED SALES CHARGE (CDSC)
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. There was no CDSC paid by shareholders for the year ended
December 31, 1995.
- ------------------------------------------------------------------------------
(6) ADMINISTRATOR
The administrator assumed $49,912 of the Funds expenses in the year ended
December 31, 1995 on a preliminary basis. Investment Adviser fees 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.
<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, 1995, the related statement of operations, changes in net
assets and financial highlights for the year then ended and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and 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, 1995 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of EV
Classic Special Equities Fund, a series of Eaton Vance Special Investment Trust,
as of December 31, 1995, the results of its operations, changes in its net
assets and financial highlights for the year then ended and 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 2, 1996
<PAGE>
- -------------------------------------------------------------
SPECIAL INVESTMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- -------------------------------------------------------------
COMMON STOCKS - 92.4%
- -------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- -------------------------------------------------------------
BUSINESS SERVICES - 9.9%
BISYS Group, Inc.* 22,000 $ 676,500
Services financial institutions with
computer, administrative and
marketing support data processing
services.
Ceridian Corp.* 40,000 1,650,000
Provides payroll processing and other
employer services, media and market
research.
Corestaff Inc.* 10,000 365,000
Temporary employment services agency.
Danka Business Systems PLC, ADR 20,000 740,000
An independent provider of
maintenance and service for office
copying machines.
FIserv Incorporated* 93,500 2,805,000
Provider of data processing services
to banks and savings institutions,
benefiting from outsourcing trend.
G&K Services, Inc. 42,200 1,076,100
Rents and launders uniforms and other
textile products.
-----------
$ 7,312,600
-----------
COMMUNICATIONS - 9.4%
Cellular Communications of Puerto 15,000 $ 416,250
Rico*
Provider of wireless cellular
telephone services.
Comcast Corp. 70,000 1,273,125
Cable TV and Cellular telephone
operator.
Evergreen Media Corp. Class A* 35,000 1,120,000
Operator of major market AM and FM
radio stations.
Frontier Corp. 55,000 1,650,000
Formerly Rochester Telephone Corp.,
provides local telephone and
communications services.
Intelcom Group, Inc.* 50,000 618,750
Provider of alternative access
telecommunication services and
international satellite uplink
teleports.
MFS Communications Co., Inc.* 20,000 1,065,000
Provider of fiber-optic based
telecommunications services
primarily to businesses.
Nokia Corp. 20,000 777,500
International wireless handset and
infrastructure equipment
manufacturer.
-----------
$ 6,920,625
-----------
COMPUTER EQUIPMENT - 1.1%
Motorola Inc. 15,000 $ 855,000
Leading worldwide producer of -----------
wireless communication systems and
equipment, major manufacturer of
semiconductors.
COMPUTER SOFTWARE - 8.7%
Banyan Inc.* 75,000 $ 768,750
Provider of networking software
products for large, complex
computer networks.
Checkfree Corp.* 2,000 43,000
Provider of electronic banking
software products and services.
3Com Corp.* 21,200 988,450
Designs, manufactures and distributes
intelligent hubs and other computer
networking products.
Davidson & Associates, Inc.* 25,000 550,000
Developer and distributor of
educational software products.
DST Systems, Inc.* 8,500 242,250
Provider of software and back office
computer services to the mutual
fund industry.
Inso Corp.* 20,000 850,000
Developer of software tools used for
proofing, reference and information
management.
Interleaf Inc.* 35,000 354,375
Provider of software used to compare,
edit and print complex documents.
Intersolv Inc.* 55,000 708,125
Provider of software development
tools.
Novell, Inc.* 40,000 570,000
Leading provider of network software
systems.
Objective Systems Integrator* 10,000 547,500
Provider of object-oriented, client
server software for network
operations, support and management.
Silicon Graphics, Inc.* 30,000 825,000
Produces computer systems used for
the design, analysis, and
simulation of three dimensional
objects.
-----------
$ 6,447,450
-----------
CONSUMER PRODUCTS - 0.3%
Boston Beer Co. Class A* 4,600 $ 109,250
Leading micro-brewery primarily under
the Samuel Adams brand-name.
Estee Lauder Companies* 3,800 132,525
International cosmetics company.
-----------
$ 241,775
-----------
ELECTRONICS & INSTRUMENTATION - 10.0%
Cisco Systems, Inc.* 25,000 $ 1,865,625
Manufacturer of routers that connect
computer networks.
Intel Corp. 25,000 1,418,750
World's leading semiconductor
manufacturer, also produces
microcomputer components, modules
and systems.
Linear Technology Corp. 20,000 785,000
Manufacturer of high performance
linear integrated circuits.
MEMC Electronic Materials, Inc.* 25,000 815,625
Leading producer of silicon wafers
used to create integrated circuits.
Mentor Graphics Corp.* 80,000 1,460,000
Developer of electronic design
automation systems used in complex
electronic products.
Microchip Technology, Inc.* 20,000 730,000
Leading producer of field
programmable micro-controllers.
Zoran Corp.* 15,000 311,250
Developer and marketer of integrated
circuits for digital video and
audio compression applications.
-----------
$ 7,386,250
-----------
ENERGY - 7.5%
Anadarko Petroleum Corp. 40,000 $ 2,165,000
A leading independent company in oil
and gas exploration, development
and production.
Pogo Producing Co. 50,000 1,412,500
Independent oil and gas exploration
and production company active in
the U.S. and Thailand
Triton Energy Corp. 35,000 2,008,125
Independent oil and gas exploration
and production company focusing on
international prospects especially
a major Colombian oil discovery.
-----------
$ 5,585,625
-----------
ENTERTAINMENT - 5.7%
Circus Circus Enterprises, Inc.* 47,000 $ 1,310,125
Major casino facilities in Las Vegas.
Also operates hotels.
Gaylord Entertainment 30,000 832,500
Producer of The Nashville Network and
Country Music Television Network
and operator of the Opryland
amusement park.
Mirage Resorts, Inc.* 25,000 862,500
Nevada based gaming resort operator.
Players International, Inc.* 42,500 454,219
Operates riverboat casinos in
Louisiana and Illinois and a
racetrack in Kentucky. Plans new
casino in Mesquite, Nevada.
Station Casinos, Inc.* 50,000 731,250
Owner and operator of gaming
enterprises.
-----------
$ 4,190,594
-----------
ENVIROMENTAL SERVICES - 2.6%
Sanfill Inc.* 26,000 $ 867,750
Operator of primarily solid-waste
facilities in 16 states.
United Waste Systems, Inc.* 10,000 372,500
Provider of collection and solid-
waste disposal services primarily
in secondary markets.
U.S.A. Waste Services, Inc.* 35,000 660,625
Operator of solid-waste land fills
and collection services,
integrating several large recent
acquisitions.
-----------
$ 1,900,875
-----------
FINANCE - 9.9%
Federal National Mortgage Association 30,000 $ 3,723,750
Leading factor in the secondary
mortgage market.
Franklin Resources, Inc. 20,000 1,007,500
One of the largest mutual fund
organizations in the U.S.
MBNA Corp. 30,000 1,106,250
Bank holding company and world's
leading issuer of Gold MasterCards.
T. Rowe Price Associates, Inc. 30,000 1,477,500
Investment adviser to mutual funds,
institutions and individuals.
-----------
$ 7,315,000
-----------
HEALTHCARE - 8.0%
Astra AB ADR Series B* 25,000 $ 992,118
Swedish based, multinational
pharmaceutical company.
Boston Scientific Corp.* 50,000 2,450,000
Medical device manufacturer focusing
primarily on disposable products
used in less invasive surgery
procedures.
MiniMed Inc.* 60,000 750,000
Developer and manufacturer of medical
devices focusing on diabetics.
Sofamor Danek Group, Inc.* 50,000 1,418,750
Leading developer/manufacturer of
spinal implant devices. Company
markets products internationally.
Vitalink Pharmacy Services, Inc.* 12,500 290,625
Provider of pharmacy services to
nursing homes and sub-acute care
medical facilities.
-----------
$ 5,901,493
-----------
HOMEBUILDING - 1.3%
Southern Energy Homes, Inc.* 55,625 $ 973,437
Produces customized manufactured -----------
homes in facilities located in
Alabama and Texas. Homes are sold
in 24 states.
HOTELS & RESTAURANTS - 0.5%
LaQuinta Inns, Inc. 15,000 $ 410,625
Owner/operator of modestly priced -----------
lodging chain.
INDUSTRIAL PRODUCTS - 2.6%
Greenfield Industries, Inc. 30,000 $ 937,500
A leading manufacturer of expendable
cutting tools and related products
used in industrial applications.
Loctite Corp. 20,600 978,500
International manufacturer of
adhesives, sealants and related
products.
-----------
$ 1,916,000
-----------
INSURANCE - 5.0%
American International Group 15,000 $ 1,387,500
One of the world's leading insurance
companies, operating in 130
countries.
Mutual Risk Management Ltd. 40,000 1,830,000
Specialty insurer focusing on
workmen's compensation.
Renaissance Re Holdings Ltd. 15,500 470,812
Provider of catastrophy reinsurance
services.
-----------
$ 3,688,312
-----------
PUBLISHING - 2.1%
Scholastic Corp.* 20,000 $ 1,555,000
Publisher/distributor of children's -----------
books.
RETAILING - 3.4%
Consolidated Stores Corp.* 70,000 $ 1,522,500
Chain of close-out merchandise stores
operating primarily under the Odd/
Big Lots name.
Home Depot Inc. 20,000 957,500
Operator of a chain of retail
warehouse-type stores selling
building supply and home
improvement products.
-----------
$ 2,480,000
-----------
SPECIALTY CHEMICALS - 3.6%
Great Lakes Chemical Corp. 20,000 $ 1,440,000
Leading producer of flame retardant
and specialty intermediate
chemicals.
Millipore Corp. 30,000 1,233,750
Manufacturer of membrane technology
products used for chemical analysis
and purification.
-----------
$ 2,673,750
-----------
TRANSPORTATION - 0.8%
Midwest Express Holdings* 20,100 $ 557,775
-----------
Business oriented airline with primary hub in Milwaukee.
TOTAL COMMON STOCKS
(IDENTIFIED COST, $47,644,606) $68,312,186
-----------
- -------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 7.6%
- -------------------------------------------------------------
PRINCIPAL AMOUNT
(000'S OMITTED) VALUE
- -------------------------------------------------------------
Ford Motor Credit Co., 58s, 1/3/96 $2,641 $ 2,640,142
Melville Corp., 5.9s, 1/2/96 2,955 2,954,522
-----------
TOTAL SHORT-TERM OBLIGATIONS, AT
AMORTIZED COST $ 5,594,664
-----------
TOTAL INVESTMENTS (IDENTIFIED COST,
$53,239,270) $73,906,850
OTHER ASSETS, LESS LIABILITIES - 0.0% $ 33,425
-----------
TOTAL NET ASSETS - 100% $73,940,275
===========
*Non-income producing security.
ADR -- American Depositary Receipt.
The accompanying notes are an
integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1995
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$53,239,270) $73,906,850
Cash 2,862
Dividends receivable 32,795
Deferred organization expenses (Note 1D) 11,318
-----------
Total assets $73,953,825
LIABILITIES:
Payable to affiliate --
Trustees' fees $ 1,400
Accrued expenses 12,150
-------
Total liabilities 13,550
-----------
NET ASSETS applicable to investors' interest in Portfolio $73,940,275
===========
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $53,272,695
Unrealized appreciation of investments (computed on
the basis of identified cost) 20,667,580
-----------
Total net assets $73,940,275
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------------------
For the Year Ended December 31, 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividend income (net of foreign taxes, $244) $ 360,263
Interest income 308,573
-----------
Total income $ 668,836
Expenses --
Investment adviser fee (Note 3) $ 435,400
Compensation of Directors not members of the Investment
Adviser's organization
(Note 3) 7,486
Custodian fee (Note 3) 58,731
Printing and postage 620
Legal and accounting services 23,951
Amortization of organization expenses (Note 1D) 3,158
Miscellaneous 4,754
-----------
Total expenses 534,100
-----------
Net investment income 134,736
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments (identified cost basis) $ 4,131,300
Change in unrealized appreciation on investments 10,473,926
-----------
Net realized and unrealized gain on investments 14,605,226
-----------
Net increase in net assets resulting from operations $14,739,962
===========
The accompanying notes are an integral part of the financial statements
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994*
------------ -------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 134,736 $ 55,637
Net realized gain (loss) on
investment transactions 4,131,300 (986,284)
Change in unrealized appreciation
of investments 10,473,926 4,288,639
----------- ------------
Net increase in net assets from
operations $14,739,962 $ 3,357,992
----------- ------------
Capital transactions --
Contributions $14,400,870 $104,495,403
Withdrawals (19,642,929) (43,411,023)
----------- ------------
Increase (decrease) in net
assets resulting from capital
transactions $(5,242,059) $ 61,084,380
----------- ------------
Total increase in net assets $ 9,497,903 $ 64,442,372
NET ASSETS:
At beginning of year 64,442,372 --
----------- ------------
At end of year $73,940,275 $ 64,442,372
=========== ============
- ----------------------------------------------------------------------------
SUPPLEMENTARY DATA
- ------------------------------------------------------------------------------
RATIOS (As a percentage of average net assets):
Expenses 0.77% 0.74%+
Net investment income 0.19% 0.20%+
PORTFOLIO TURNOVER 81% 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
DECEMBER 31, 1995
(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.
- ------------------------------------------------------------------------------
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregated $52,362,032 and $58,838,098, 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 year
ended December 31, 1995, the fee amounted to $435,400. 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), serves as
custodian of the Portfolio. Prior to November 10, 1995, IBT was an affiliate
of EVM. 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. All significant credit balances are reported as
a reduction of expenses in the statement of operations. 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 year ended December 31, 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 year. At December 31,
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 December 31, 1995, as computed on a federal income tax basis, are as
follows:
Aggregate cost $53,239,270
===========
Gross unrealized appreciation $22,100,411
Gross unrealized depreciation 1,432,881
-----------
Net unrealized appreciation $20,667,580
===========
<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, 1995, the related statement of operations, changes in net assets
and supplementary data for the year then ended and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
supplementary data are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and supplementary data referred to
above present fairly, in all material respects, the financial position of
Special Investment Portfolio as of December 31, 1995, the results of its
operations, changes in its net assets and supplementary data for the year then
ended and 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 2, 1996
<PAGE>
INVESTMENT MANAGEMENT
EV CLASSIC OFFICERS TRUSTEES
SPECIAL EQUITIES
FUND JAMES B. HAWKES M. DOZIER GARDNER
24 Federal Street President, Trustee President, Eaton
Boston, MA 02110 Vance Management
PETER F. KIELY
Vice President DONALD R. DWIGHT
President, Dwight
CLIFFORD H. KRAUSS Partners, Inc.
Vice President and Chairman, Newspapers
Portfolio Manager of New England, Inc.
JAMES L. O'CONNOR SAMUEL L. HAYES, III
Treasurer Jacob H. Schiff
Professor of
THOMAS OTIS Investment Banking,
Secretary 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 M. DOZIER GARDNER
Boston, MA 02110 President, Trustee President, Eaton
Vance Management
CLIFFORD H. KRAUSS
Vice President and DONALD R. DWIGHT
Portfolio Manager President, Dwight
Partners, Inc.
JAMES L. O'CONNOR Chairman, Newspapers
Treasurer of 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