<PAGE>
To Shareholders
I am pleased to report that during the 11 months ended December 31, 1995, EV
Traditional Investors Fund had a total return of 28.4%. That return reflects an
increase in net asset value to $8.15 per share from $6.84 per share and the
reinvestment of distributions totaling $0.585.
Because of a change to allow the Fund's fiscal year to close at the end of
December rather than January, this Annual Report covers a period of 11 months.
During the last 11 months of 1995, strong returns were achieved for both stocks
and bonds. The S&P 500, an unmanaged index of large-capitalization common
stocks, had a total return of 33.9%. On the bond side, the Lehman Brothers
Government/Corporate Bond Index, an unmanaged bond market index, had a total
return of 17.0%. The average performance of the universe of balanced funds
tracked by Lipper AnalyticalServices, Inc. for the 11-month period was 23.6%.
The returns of the Fund exceeded this average by 4.8 percentage points.
As a whole, 1995 ranks as the best year for the Fund since 1958 and the
seventh-best year in the Fund's 63-year history. The S&P 500 had its strongest
year since 1958, and the Lehman BrothersGovernment/Corporate Bond Index had its
best year since 1985.
Both stocks and bonds benefited from an environment of slow but positive
economic growth, low inflation and increased optimism about the U.S.
government's ability to address its chronic budgetary deficit. Stocks also
benefited from exceptionally strong earnings, driven in part by cost-cutting and
restructuring activities.
While past performance cannot guarantee future returns, we believe that a
diversified portfolio of stocks and bonds will continue to produce desirable
long-term results. That remains our goal.
[Photo of M. Dozier Gardner]
Sincerely,
/s/ M. Dozier Gardner
M. Dozier Gardner
President
February 21, 1996
EV TRADITIONAL INVESTORS FUND
10 LARGEST STOCK HOLDINGS*
Astra AB.................................................Drugs
Chase Manhattan Corp.....................................Banking
Reuters Holdings PLC.....................................Information services
Fed'l Nat'l Mortgage Assn................................Housing finance
Monsanto Corp............................................Chemicals
Anadarko Petroleum Corp..................................Oil, gas exploration
Deere & Co...............................................Farm machinery
Ameritech Corp...........................................Telecommunications
Exxon Corp...............................................Petroleum products
General Re Corp..........................................Reinsurance
* By market value as of 12/31/95
<PAGE>
Management Report
An interview with Thomas E. Faust, Jr., Vice President and Manager of Investors
Portfolio.
Q. TOM, HOW WOULD YOU DESCRIBE 1995 IN TERMS OF INVESTING?
A. It was a remarkable year in many ways. Stocks experienced the best year
since 1958, as measured by the returns of the S&P 500, an unmanaged index of
common stocks. And bond investors, who found most of 1994 to be an awful
time for investing, saw the rally of late 1994 continue through 1995.
In short, the economic climate was particularly good for investing and was
helped along by the Federal Reserve, which lowered short-term interest rates
twice during the year.
Q. WHAT KINDS OF STOCK INVESTMENTS PERFORMED PARTICULARLY WELL?
A. During the first half of 1995, the market was driven by gains in technology
stocks. Later in the year, technology stocks fell out of favor, and market
leadership shifted to the healthcare, financial services, capital goods and
consumer non-durables sectors.
Q. WHAT WERE SOME OF THE LARGER STOCK POSITIONS?
A. Astra AB is our largest position. This Swedish pharmaceutical company
entered into a joint venture with Merck, the U.S. pharmaceutical giant, for
the U.S. market late in 1994.This should result in an increase in profits
coming out of the U.S. in the next several years. The holdings inAstra
performed well during the year, up nearly 58% for the last 11 months of
1995.
[Photo of Thomas E. Faust, Jr.]
THOMAS E. FAUST, JR.
The second-largest holding is Chase Manhattan Corp., a New York-based global
money center bank that has agreed to merge with Chemical Banking
Corporation. Reflecting in part the anticipated merger synergies and in part
a strong banking environment, Chase Manhattan was an excellent performer for
the Portfolio, increasing in price by 82.3% during the last 11 months of
1995.
The third-largest position is Reuters Holdings PLC, a United Kingdom-based
provider of global financial information and trading systems. The company is
a strong, steady grower and its stock posted a gain of 31.6% during the last
11 months of 1995.
Q. WHAT OTHER STRONG PERFORMERS WERE AMONG THE PORTFOLIO'S LARGEST HOLDINGS?
A. We were fortunate to have a number of other very strong performers among the
holdings, reflecting the widespread strength of the market and a
particularly good period for the Portfolio in its stock picking. Among the
other strong performers during the 11-month period were Federal National
Mortgage Association, up 73.2%, Monsanto Co., up 66.7%, and Sofamor Danek
Group, Inc., up 75.8%.
- -------------------------------------------
INVESTORS PORTFOLIO
INVESTMENT ALLOCATION
AS OF 12/31/95
COMMON STOCK 59.6%
U.S. TREASURIES/AGENCIES 18.5%
CORPORATE BONDS 14.2%
SHORT-TERM OBLIGATIONS 5.0%
CONVERTIBLE BONDS & PREFERRED STOCK 2.7%
- -------------------------------------------
Q. WHAT WERE THE LARGEST INDUSTRY SECTORS IN WHICH THE PORTFOLIO WAS INVESTED?
A. The largest sector at the end of the year was financial stocks, accounting
for nearly 16% of the common stock portfolio. Next were utilities, basic
materials and energy, each of which comprised between 11% and 12%.
Q. WHAT ARE THE PORTFOLIO'S LARGEST HOLDINGS IN THE ENERGY SECTOR?
A. The largest position is in Anadarko Petroleum Corp.Anadarko is an oil and
gas exploration and production company with major areas of activity in
Algeria and offshore in the Gulf of Mexico. During the last 11 months of
1995, its stock was up 41.5%.
The other energy stock among our largest holdings is Exxon Corp., a
diversified energy company that is among the world leaders in the
production, refining and sale of petroleum products. We expect that Exxon
will benefit from growing demand for energy products around the world, with
particularly strong growth coming from emerging markets. Its stock was up by
28.2% during the last 11 months of 1995.
Q. DO YOU SEE ANY MAJOR ECONOMIC TRENDS THAT HAVE INFLUENCED YOUR CHOICE OF
INVESTMENTS?
A. Yes. A couple of our choices are tied to what we believe is a worldwide
trend, and that is greater demand for grains and other food products. If you
believe there will be increased demand for agricultural products, there
should be increased demand for the materials and equipment used by
agriculture.
That's a major reason we've taken a position inDeere & Co., the leading
manufacturer of farm equipment. We believe that farmers in the U.S. are in
the middle of an equipment replacement cycle, which should help companies
like Deere. This stock increased 30% during the portion of the year that it
was one of the holdings.
Another company that should benefit from the increased demand for
agricultural products -- though for a different reason -- is MonsantoCo. It
has a large and exceptionally profitable franchise in agricultural
chemicals, led by the herbicide Roundup, which is experiencing rapid growth.
Q. AFTER A VERY STRONG PERFORMANCE IN 1995, WHAT SHOULD FUND INVESTORS EXPECT
IN 1996?
A. Looking forward, it is highly unlikely that the Fund will be able to sustain
the level of investment returns achieved during 1995. Average returns in
future years are more likely to be similar to the 10% average annual returns
achieved by the Fund over its history.
As seen in 1995 (and in 1994, on the downside), results in any year can vary
significantly from that average. Naturally, the Fund's past performance does
not guarantee future results.
Q. HAVING SAID THAT, WHAT DO YOU EXPECT THE INVESTMENT CLIMATE IN 1996 TO BE
LIKE?
A. The most likely scenario for the U.S. economy in 1996 seems to be continued
slow growth with low inflation. Coupled with continued progress from
Washington in tackling the budgetary deficits, I believe this should set the
stage for another good year in the bond markets.
Stocks should benefit from the decline in interest rates that this scenario
suggests, but seem unlikely to get widespread support from rising earnings
expectations and positive earnings surprises such as were experienced in
1995. With valuations for stocks already at high levels on most measures,
this suggests a somewhat more cautious outlook for the stock market for
1996.
Q. HAVE YOU CHANGED YOUR INVESTMENT GOALS IN ANY WAY?
A. No. The goal of Investors Fund is to provide growth of capital and current
income, both of which are achieved through conservative investment
strategies. As a balanced fund, the Fund remains a sensible way for the
conservative investor to participate in the stock and bond markets.
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV TRADITIONAL
INVESTORS FUND (INCLUDING SALES CHARGE), THE LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX AND THE S&P 500 STOCK INDEX
From December 31, 1985, through December 31, 1995
- -----------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS 1 Year 5 Year 10 Year
- -----------------------------------------------------------------------------
Incl. Max. Sales Charge 23.5% 11.7% 10.5%
Excl. Max. Sales Charge 28.4% 12.8% 11.0%
- -----------------------------------------------------------------------------
Date T. Investors S&P 500 Lehman G/C 90 Treasury
- -----------------------------------------------------------------------------
12/85 9528 10000 10000 10000
1/86 9539 10024 10058 10000
2/86 9948 10740 10481 10000
3/86 10291 11404 10852 10165
4/86 10254 11243 10901 10165
5/86 10540 11808 10686 10165
6/86 10664 12074 10995 10323
7/86 10291 11365 11067 10323
8/86 10858 12174 11359 10323
9/86 10178 11235 11217 10456
10/86 10417 11849 11380 10456
11/86 10506 12104 11519 10456
12/86 10413 11862 11561 10600
1/87 11272 13425 11719 10600
2/87 11565 13920 11796 10600
3/87 11719 14391 11732 10747
4/87 11439 14226 11419 10747
5/87 11511 14312 11369 10747
6/87 11921 15109 11510 10900
7/87 12275 15838 11485 10900
8/87 12748 16392 11421 10900
9/87 12548 16106 11175 11072
10/87 11031 12601 11594 11072
11/87 10567 11526 11667 11072
12/87 11002 12476 11827 11233
1/88 11229 12980 12233 11233
2/88 11622 13523 12373 11233
3/88 11360 13186 12251 11393
4/88 11442 13310 12179 11393
5/88 11542 13352 12098 11393
6/88 11874 14059 12371 11578
7/88 11857 13983 12301 11578
8/88 11705 13444 12333 11578
9/88 11941 14104 12602 11787
10/88 12126 14470 12825 11787
11/88 12007 14197 12680 11787
12/88 12177 14534 12723 12026
1/89 12733 15568 12893 12026
2/89 12540 15117 12795 12026
3/89 12681 15562 12863 12291
4/89 13139 16342 13136 12291
5/89 13398 16916 13459 12291
6/89 13490 16933 13897 12544
7/89 14169 18430 14187 12544
8/89 14280 18715 13967 12544
9/89 14317 18744 14028 12791
10/89 14224 18272 14383 12791
11/89 14412 18574 14513 12791
12/89 14705 19125 14534 13040
1/90 14041 17809 14335 13040
2/90 14259 17961 14367 13040
3/90 14318 18547 14368 13296
4/90 14020 18048 14236 13296
5/90 14868 19708 14649 13296
6/90 14888 19708 14886 13554
7/90 15137 19605 15071 13554
8/90 14296 17756 14852 13554
9/90 14065 17013 14976 13796
10/90 13981 16899 15175 13796
11/90 14534 17912 15506 13796
12/90 14855 18530 15740 14018
1/91 15134 19299 15917 14018
2/91 15589 20597 16054 14018
3/91 15763 21211 16164 14220
4/91 15828 21219 16350 14220
5/91 16115 22037 16427 14220
6/91 15781 21165 16409 14417
7/91 16315 22114 16616 14417
8/91 16676 22549 16998 14417
9/91 16834 22296 17353 14601
10/91 17150 22560 17508 14601
11/91 16922 21569 17683 14601
12/91 18016 24151 18279 14742
1/92 17594 23670 18008 14742
2/92 17713 23897 18104 14742
3/92 17452 23543 18004 14891
4/92 17641 24200 18112 14891
5/92 17963 24223 18464 14891
6/92 18110 23992 18735 15024
7/92 18577 24937 19215 15024
8/92 18650 24338 19386 15024
9/92 18750 24748 19649 15127
10/92 18551 24800 19348 15127
11/92 18853 25550 19331 15127
12/92 19178 25988 19663 15249
1/93 19230 26171 20092 15249
2/93 19598 26446 20510 15249
3/93 19835 27120 20580 15362
4/93 19703 26430 20739 15362
5/93 19769 27031 20728 15362
6/93 20096 27248 21199 15479
7/93 20205 27103 21334 15479
8/93 21026 28036 21825 15479
9/93 21273 27950 21901 15591
10/93 21384 28492 21991 15591
11/93 20842 28124 21966 15591
12/93 21324 28596 22063 15710
1/94 22140 29525 22394 15710
2/94 21582 28638 21905 15710
3/94 20729 27521 21369 15848
4/94 20847 27838 21191 15848
5/94 20892 28183 21153 15848
6/94 20437 27639 21105 16014
7/94 21104 28509 21527 16014
8/94 21503 29581 21536 16014
9/94 21013 28989 21210 16206
10/94 21197 29594 21187 16206
11/94 20751 28425 21149 16206
12/94 20937 28984 21289 16431
1/95 21153 29688 21697 16431
2/95 21975 30759 22201 16431
3/95 22506 31798 22349 16663
4/95 23036 32687 22660 16663
5/95 23944 33874 23610 16663
6/95 24322 34823 23799 16886
7/95 24857 35929 23799 16886
8/95 25303 35918 24103 16886
9/95 25653 37582 24349 17103
10/95 25684 37395 24707 17103
11/95 26386 38930 25115 17103
12/95 27152 39837 25484 17313
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.
FUND PERFORMANCE
The chart above compares the Fund's return with that of a broad-based market
index. The lines on the chart represent the total returns of $10,000
hypothetical investments in the Fund, the S&P 500 and the Lehman Brothers
Government/ Corporate Bond Index.
TOTAL RETURN FIGURES
The solid colored line represents the Fund's performance and includes the Fund's
maximum current sales charge of 4.75%. The Fund's total return figure reflects
Fund expenses, fees and portfolio transaction costs, and assumes the
reinvestment of income dividends and capital gain distributions.
The dotted line represents the performance of the S&P 500, a broad-based, widely
recognized unmanaged index of 500 common stocks.
The black solid line represents the performance of the Lehman Brothers
Government/Corporate Bond Index, a diversified, unmanaged index of corporate and
U.S. government bonds. The Indices' total return figures do not reflect any
commissions or expenses that would be incurred if an investor individually
purchased or sold the securities in the Indices.
The dashed line represents the performance of 90-Day U.S. Treasury Bills. It is
included to indicate how the Fund has performed relative to a portfolio of cash
equivalents. Principal and interest payments of Treasury Bills are guaranteed by
the U.S. Government.
<PAGE>
EV TRADITIONAL INVESTORS FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
December 31, 1995
- ------------------------------------------------------------------------------
ASSETS:
Investment in Investors Portfolio, (Portfolio) at
value (Note 1A) $236,674,279
Receivable for Fund shares sold 464,552
------------
Total assets $237,138,831
LIABILITIES:
Payable for Fund shares redeemed $175,881
Payable to affiliate --
Trustees' fees 1,500
Accrued expenses and other liabilities 91,034
--------
Total liabilities 268,415
------------
NET ASSETS for 29,062,199 shares of beneficial
interest outstanding $236,870,416
============
SOURCES OF NET ASSETS:
Paid-in capital $173,478,584
Undistributed net investment income 373,801
Accumulated net realized gain on investment
transactions 705,288
Unrealized appreciation of investments 62,312,743
------------
Total net assets $236,870,416
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($236,870,416 / 29,062,199 shares of beneficial
interest outstanding) $8.15
=====
COMPUTATION OF OFFERING PRICE:
Offering price per share (100/95.25 of $8.15) $8.56
=====
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
- ------------------------------------------------------------------------------
YEAR ENDED
--------------------------
DECEMBER 31, JANUARY 31,
1995* 1995
----------- ------------
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 5,559,283 $ 6,199,563
Dividend income allocated from Portfolio (net
of withholding tax expense of
$40,875 and $22,305, respectively) 3,606,255 4,181,063
Expenses allocated from Portfolio (1,434,773) (1,472,705)
----------- ------------
Total investment income $ 7,730,765 $ 8,907,921
Expenses --
Compensation of Trustees not members of the
Investment Adviser's organization
(Note 4) $ 3,161 $ 4,125
Custodian fee (Note 4) 28,231 15,287
Service fees (Note 5) 149,371 127,233
Transfer agent fees 155,998 163,423
Printing and postage 78,009 89,404
Legal and accounting services 20,158 806
Registration fees 21,541 20,134
Amortization of organization expenses
(Note 1D) 16,089 3,103
Miscellaneous 14,656 13,908
----------- ------------
Total expenses 487,214 437,423
----------- ------------
Net investment income $ 7,243,551 $ 8,470,498
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized gain on investment transactions
(identified cost basis) $ 8,706,988 $ 1,556,290
Change in unrealized appreciation of
investments 38,309,383 (20,258,131)
----------- ------------
Net realized and unrealized gain (loss)
on investments $47,016,371 $(18,701,841)
----------- ------------
Net increase (decrease) in net assets
resulting from operations $54,259,922 $(10,231,343)
=========== ============
*For the eleven month period ended December 31, 1995 (Note 6).
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED JANUARY 31,
DECEMBER 31, ---------------------------
1995* 1995 1994
---------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 7,243,551 $ 8,470,498 $ 8,792,766
Net realized gain from
Portfolio 8,706,988 1,556,290 14,753,334
Change in unrealized
appreciation from Portfolio 38,309,383 (20,258,131) 7,187,013
------------ ------------ ------------
Net increase (decrease)
in net assets from
operations $ 54,259,922 $(10,231,343) $ 30,733,113
Undistributed net
investment income
included in price of
shares redeemed and
sold (Note 1F) $ -- $ -- $ (56,231)
------------ ------------ ------------
Distributions to shareholders --
From net investment
income $ (7,060,919) $ (8,249,107) $ (8,792,766)
In excess of net
investment income -- -- (233,579)
From net realized gain on
investment transactions (9,517,875) (4,372,413) (15,055,322)
------------ ------------ ------------
Total distributions to
shareholders $(16,578,794) $(12,621,520) $(24,081,667)
------------ ------------ ------------
Net increase (decrease) in
net assets from Fund
share transactions
(Note 2) $ (1,229,666) $ (4,130,436) $ 8,262,238
------------ ------------ ------------
Net increase (decrease)
in net assets $ 36,451,462 $(26,983,299) $ 14,857,453
NET ASSETS:
At beginning of year 200,418,954 227,402,253 212,544,800
------------ ------------ ------------
At end of year (including
undistributed net
investment income of
$373,801, $263,835 and
$43,881, respectively) $236,870,416 $200,418,954 $227,402,253
============ ============ ============
*For the eleven month period ended December 31, 1995 (Note 6).
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED JANUARY 31,
DECEMBER 31, -------------------------------------------------------------------------
1995<F5> 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE --
Beginning of year $ 6.840 $ 7.600 $ 7.390 $ 7.500 $ 7.060 $ 7.180
------- ------- ------- ------- ------- -------
Income (loss) from operations:
Net investment income $ 0.254 $ 0.283 $ 0.217 $ 0.342 $ 0.364 $ 0.417
Net realized and unrealized
gain (loss) on investments 1.641 (0.623) 0.833 0.318 0.736 0.103
------- ------- ------- ------- ------- -------
Total income (loss) from
operations $ 1.895 $(0.340) $ 1.050 $ 0.660 $ 1.100 $ 0.520
------- ------- ------- ------- ------- -------
Less distributions:
From net investment income $(0.248) $(0.275) $(0.307) $(0.360) $(0.360) $(0.430)
In excess of net investment
income -- -- (0.008) -- -- --
From net realized gain on
investments (0.337) (0.145) (0.525) (0.410) (0.300) (0.198)
From paid-in capital -- -- -- -- -- (0.012)
------- ------- ------- ------- ------- -------
Total distributions $(0.585) $(0.420) $(0.840) $(0.770) $(0.660) $(0.640)
------- ------- ------- ------- ------- -------
NET ASSET VALUE -- End of year $ 8.150 $ 6.840 $ 7.600 $ 7.390 $ 7.500 $ 7.060
======= ======= ======= ======= ======= =======
TOTAL RETURN<F2> 28.36% (4.45%) 15.13% 9.30% 16.26% 7.78%
RATIOS/SUPPLEMENTAL DATA
(to average daily net assets):
Expenses<F1> 0.95%<F4> 0.91% 0.90% 0.89% 0.86% 0.89%
Net investment income 3.60%<F4> 4.05% 4.07% 4.62% 4.96% 5.99%
PORTFOLIO TURNOVER<F3> -- -- 44% 32% 51% 66%
NET ASSETS, end of year (000's omitted) $236,870 $200,419 $227,402 $212,545 $210,197 $198,066
<FN>
<F1> Includes the Fund's share of Investors Portfolio's allocated expenses for
the eleven month period ended December 31, 1995, the year ended January 31,
1995 and the period from October 28, 1993 to January 31, 1994.
<F2> Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the record date. Total return is not
calculated on an annualized basis.
<F3> Portfolio Turnover represents the rate of portfolio activity for the period
while the Fund was making investments directly in securities. The Portfolio
Turnover for the period since the Fund transferred substantially all of its
investable assets to the Portfolio is shown in the Portfolio's financial
statements which are included elsewhere in this report.
<F4> Computed on an annualized basis.
<F5> For the eleven month period ended December 31, 1995 (See Note 6).
</TABLE>
As of February 1, 1994, the Fund discontinued the use of equalization
accounting (see Note 1F).
The accompanying notes are an integral part of the financial statements
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Traditional Investors Fund (the Fund) is a diversified series of Eaton
Vance Special Investment Trust (the Trust). The Trust is an entity of the type
commonly known as a Massachusetts business trust and is registered under the
Invesment Company Act of 1940, as amended, as an open-end management
investment company. On October 28, 1993, the Fund transferred substantially
all of its investable assets to the Investors Portfolio (the Portfolio). 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 (85.6% 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 determined in accordance with generally accepted
accounting principles.
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.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$8,706,840 as a long term 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 were amortized on a straight-line basis over five years.
E. DISTRIBUTIONS -- Generally accepted accounting principles require that
differences in the recognition of classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial purposes, are classified as distributions in
excess of net investment income or accumulated net realized gains.
F. EQUALIZATION -- Prior to February 1, 1994, the Fund followed the accounting
practice known as equalization by which a portion of the proceeds from the
sales and costs of reacquisitions of Fund shares was allocated to
undistributed net investment income. As a result, undistributed net investment
income per share was unaffected by sales or reacquisitions of Fund shares. As
of February 1, 1994, the Fund discontinued the use of equalization. This
change had no effect on the Fund's net assets, net asset value per share, or
its net increase or (decrease) in net assets from operations. Discontinuing
the use of equalization will result in a simpler and more meaningful financial
statement presentation.
- ------------------------------------------------------------------------------
(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:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED JANUARY 31,
------------------------------- ----------------------------------------------------------------
1995<F1> 1995 1994
------------------------------- ------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales 1,091,531 $ 8,545,882 1,384,961 $ 9,717,293 1,816,533 $ 13,478,305
Issued to shareholders
electing to receive
payment of distributions
in Fund shares 1,346,249 10,484,714 1,050,557 7,289,379 2,029,328 14,792,216
Redemptions (2,666,931) (20,260,262) (3,061,441) (21,137,108) (2,708,671) (20,008,283)
--------- ------------ --------- ------------ --------- ------------
Net increase (decrease) (229,151) $ (1,229,666) (625,923) $ (4,130,436) 1,137,190 $ 8,262,238
========= ============ ========= ============ ========= ============
<FN>
<F1> For the eleven month period ended December 31, 1995.
</TABLE>
- ------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio for the
eleven month period ended December 31, 1995 aggregated $8,482,458 and
$27,263,468, respectively.
- ------------------------------------------------------------------------------
(4) TRANSACTIONS WITH AFFILIATES Eaton Vance Management (EVM) serves only as the
administrator of the Fund, but receives no compensation. The Portfolio has
engaged Boston Management and Research (BMR), a subsidiary of EVM, to render
investment advisory services. See Note 3 of the Portfolio's Notes to Financial
Statements which are included elsewhere in this report. Except as to Trustees of
the Fund and the Portfolio who are not members of EVM's or BMR's organizations,
officers and Trustees receive remuneration for their services to the Fund out of
such investment adviser fee. Investors Bank & Trust Company (IBT), prior to
November 10, 1995, IBT was an affiliate of EVM, serves as custodian of the Fund
and the Portfolio. Pursuant to their respective custodian agreements, IBT
receives a fee reduced by credits which are determined based on the average cash
balances the Fund or the Portfolio maintains with IBT. All significant credit
balances are reported as a reduction of expenses in the Statement of Operations.
Certain of the officers and Trustees of the Fund and Portfolio are officers and
directors/trustees of the above organizations.
- ------------------------------------------------------------------------------
(5) SERVICE PLAN
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 July 1, 1989. The Service Plan
provides that the Fund may make service fee payments to the Principal
Underwriter, Eaton Vance Distributors, Inc., a subsidiary of Eaton Vance
Management, Authorized Firms or other persons in amounts not exceeding .25% of
the Fund's average daily net assets for any fiscal year. The Trustees have
implemented the Service Plan by authorizing the Fund to make quarterly service
fee payments to the Principal Underwriter and Authorized Firms in amounts not
expected to exceed .25% of that portion of the Fund's average daily net assets
for any fiscal year which is attributable to shares of the Fund sold by such
persons and remaining outstanding for at least twelve months. Such payments
are made for personal services and/or maintenance of shareholder accounts.
During the eleven month period ended December 31, 1995 the Fund paid or
accrued $149,371 under the Plan to the Principal Underwriter and Authorized
Firms.
- ------------------------------------------------------------------------------
(6) CHANGE IN YEAR END
The Fund changed its fiscal year end from January 31 to December 31, effective
December 31, 1995.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF EV TRADITIONAL INVESTORS FUND, A
SERIES OF EATON VANCE SPECIAL INVESTMENT TRUST:
We have audited the accompanying statement of assets and liabilities of EV
Traditional Investors Fund (formerly Eaton Vance Investors Trust), a series of
Eaton Vance Special Investment Trust, as of December 31, 1995, and the related
statement of operations for the eleven month period then ended and for the
year ended January 31, 1995, the statement of changes in net assets for the
eleven month period then ended, and for the two years ended January 31, 1995,
and the financial highlights for the eleven month period then ended and each
of the five years in the period ended January 31, 1995. 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
Traditional Investors Fund, a series of Eaton Vance Special Investment Trust,
as of December 31, 1995, the results of its operations for the eleven month
period then ended, and for the year ended January 31, 1995, the changes in its
net assets for the eleven month period then ended and for the two years ended
January 31, 1995 and the financial highlights for the eleven month period then
ended and for each of the five years in the period ended January 31, 1995, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 2, 1996
<PAGE>
INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- -----------------------------------------------------------------------------
COMMON STOCKS - 59.2%
- -----------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- -----------------------------------------------------------------------------
AUTOMOTIVE - 1.3%
Ford Motor Co. 120,000 $ 3,480,000
------------
BANKS - 3.5%
Chase Manhattan Corp. 100,000 $ 6,062,500
Chemical Banking Corp. 61,200 3,595,500
------------
$ 9,658,000
------------
BEVERAGES - 2.7%
Coca-Cola Co. 40,000 $ 2,970,000
PepsiCo, Inc. 80,000 4,470,000
------------
$ 7,440,000
------------
BROADCASTING & CABLE - 1.1%
Capital Cities/ABC, Inc. 25,000 $ 3,084,375
------------
CHEMICALS - 3.0%
Monsanto Corp. 40,000 $ 4,900,000
Praxair, Inc. 100,000 3,362,500
------------
$ 8,262,500
------------
COMPUTER & BUSINESS EQUIPMENT - 1.3%
Xerox Corp. 27,000 $ 3,699,000
------------
COMPUTER SOFTWARE - 0.5%
Novell, Inc.* 98,500 $ 1,403,625
------------
DRUGS - 3.8%
Astra AB, A Free Shares 230,000 $ 9,196,919
Pfizer, Inc. 18,900 1,190,700
------------
$ 10,387,619
------------
ELECTRIC UTILITIES - 2.5%
New England Electric System 90,000 $ 3,566,250
The Southern Co. 140,000 3,447,500
------------
$ 7,013,750
------------
ELECTRICAL EQUIPMENT - 1.0%
AMP, Inc. 70,000 $ 2,686,250
------------
ELECTRONICS - SEMICONDUCTORS - 2.3%
MEMC Electronic Materials, Inc.* 89,000 $ 2,903,625
Intel Corp. 60,000 3,405,000
------------
$ 6,308,625
------------
FINANCIAL - MISCELLANEOUS - 4.3%
Federal National Mortgage Association 40,000 $ 4,965,000
MBNA Corp. 100,000 3,687,500
MGIC Investment Corp. 60,000 3,255,000
------------
$ 11,907,500
------------
FOOD - 0.7%
Nestle SA 1,620 $ 1,790,179
------------
HOUSEHOLD PRODUCTS - 0.9%
Kimberly Clark Corp. 31,200 $ 2,581,800
------------
INFORMATION SERVICES - 2.0%
Reuters Holdings, PLC, ADR 100,000 $ 5,512,500
------------
INSURANCE - 1.7%
General Re Corp. 30,000 $ 4,650,000
------------
MACHINERY - 1.7%
Deere & Co. 135,000 $ 4,758,750
------------
MEDICAL PRODUCTS - 1.6%
Sofamor Danek Group, Inc.* 160,000 $ 4,540,000
------------
METALS & MINING - 1.2%
J & L Specialty Steel, Inc. 175,000 $ 3,281,250
------------
NATURAL GAS UTILITIES - 1.2%
National Fuel Gas Co. 100,000 $ 3,362,500
------------
OIL & GAS - EXPLORATION & PRODUCTION - 3.4%
Anadarko Petroleum Corp. 90,000 $ 4,871,250
Triton Energy Corp. 80,000 4,590,000
------------
$ 9,461,250
------------
OIL & GAS - INTEGRATED - 3.6%
Exxon Corp. 58,640 $ 4,698,530
Mobil Corp. 20,000 2,240,000
Phillips Petroleum Co. 90,000 3,071,250
------------
$ 10,009,780
------------
PAPER & FOREST PRODUCTS - 1.5%
Plum Creek Timber Co. LP 90,000 $ 2,148,750
Rayonier, Inc. 60,000 2,002,500
------------
$ 4,151,250
------------
PHOTOGRAPHY - 1.6%
Eastman Kodak Co. 65,000 $ 4,355,000
------------
PUBLISHING - 1.3%
McGraw-Hill, Inc. 40,000 $ 3,485,000
------------
REITS - 4.3%
Chateau Properties, Inc. 75,000 $ 1,687,500
Colonial Properties Trust 80,000 2,040,000
Equity Residential Properties Trust 101,400 3,105,375
ROC Communities, Inc. 116,250 2,790,000
Security Capital Industrial Trust 37,000 647,500
Shurgard Storage Centers, Inc. 61,000 1,647,000
------------
$ 11,917,375
------------
RETAIL - SPECIALTY - 1.4%
The Home Depot, Inc. 80,000 $ 3,830,000
------------
SPECIALTY CHEMICALS & MATERIALS - 0.5%
Loctite Corp. 28,300 $ 1,344,250
------------
TELEPHONE UTILITIES - 3.3%
Ameritech Corp. 80,448 $ 4,746,433
Frontier Corp. 150,000 4,500,000
------------
$ 9,246,433
------------
TRANSPORTATION - 0.0%
Canadian National Railway* 1,200 $ 18,000
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $103,848,344) $163,626,561
------------
- -----------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK - 1.2%
- -----------------------------------------------------------------------------
NAME OF COMPANY
- -----------------------------------------------------------------------------
Freeport McMoRan Copper & Gold, 5% 125,000 $ 3,406,250
------------
TOTAL CONVERTIBLE PREFERRED STOCK
(IDENTIFIED COST, $2,872,500) $ 3,406,250
------------
- -----------------------------------------------------------------------------
PREFERRED STOCK - 1.1%
- -----------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- -----------------------------------------------------------------------------
Bank of Boston, Series C,
Adjustable Rate 37,600 $ 3,083,200
------------
TOTAL PREFERRED STOCK
(IDENTIFIED COST, $1,815,525) $ 3,083,200
------------
- ----------------------------------------------------------------------------
CONVERTIBLE BOND - 0.4%
- ----------------------------------------------------------------------------
FACE AMOUNT
NAME OF COMPANY (000'S OMITTED) VALUE
- ----------------------------------------------------------------------------
Browning Ferris Industries,
6.25s, 8/15/12 $ 1,000 $ 1,002,500
------------
TOTAL CONVERTIBLE BOND
(IDENTIFIED COST, $897,856) $ 1,002,500
------------
- ----------------------------------------------------------------------------
U.S. TREASURY/AGENCY OBLIGATIONS - 18.4%
- ----------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Series 1033-E, PAC, 8.10s, 12/15/04 $ 723 $ 732,340
Federal Home Loan Mortgage Corp.,
Series 59-D, PAC, 9.70%, 1/15/16 3,147 3,237,431
Federal Home Loan Mortgage Corp.,
Series 34-C, PAC, 9s, 11/15/19 681 706,649
Federal Home Loan Mortgage Corp.,
7.95%, 5/15/20 3,236 3,279,768
Federal Home Loan Mortgage Corp.,
Series 41-F, PAC, 10s, 5/15/20 2,325 2,587,283
Federal National Mortgage Association,
7.50s, 5/25/19 2,678 2,714,839
Federal National Mortgage Association,
Series 1990 82-K, PAC,
8.50s, 7/25/19 2,924 2,963,186
Federal National Mortgage Association,
Series 1990 24-E, PAC, 9s, 3/25/20 2,000 2,153,120
U.S. Treasury Notes, 4.625s, 2/15/96 2,750 2,748,268
U.S. Treasury Notes, 7.875s, 2/15/96 10,500 10,536,078
U.S. Treasury Notes, 7.625s, 4/30/96 3,000 3,022,500
U.S. Treasury Notes, 7.375s, 11/15/97 1,800 1,868,058
U.S. Treasury Notes, 8.125s, 2/15/98 3,000 3,172,500
U.S. Treasury Notes, 7.5s, 5/15/02 10,000 11,087,500
------------
TOTAL U.S. TREASURY/AGENCY OBLIGATIONS
(IDENTIFIED COST, $49,456,986) $ 50,809,520
------------
- ----------------------------------------------------------------------------
CORPORATE BONDS - 14.1%
- ----------------------------------------------------------------------------
FACE AMOUNT
NAME OF COMPANY (000'S OMITTED) VALUE
- ----------------------------------------------------------------------------
American General Finance Corp.,
8.125s, 8/15/09 $ 2,460 $ 2,823,440
Bell Telephone Co. PA, 8.35s, 12/15/30 3,000 3,768,420
Chesapeake Potomac Telephone MD,
8s, 10/15/29 1,500 1,794,690
Chesapeake Potomac Telephone MD, 8.30s,
8/1/31 1,975 2,420,935
Chesapeake Potomac Telephone VA,
8.38s, 10/1/29 1,500 1,878,570
Dayton Hudson, Medium Term Note, 9.50s,
6/10/15 650 828,035
Dayton Hudson, Medium Term Note, 9.35s,
6/16/20 2,590 3,191,890
Eaton Corp., 8s, 8/15/06 1,000 1,148,930
General Electric Capital Corp.,
8.625s, 6/15/08 330 400,947
General Motors Corp., 8.80s, 3/1/21 2,000 2,465,060
General Motors Corp., Medium Term Note,
9.45s, 11/1/11 3,000 3,774,540
Inter American Development Bank,
8.875s, 6/1/09 3,000 3,827,040
Inter American Development Bank,
8.40s, 9/1/09 500 614,740
New England Telephone & Telegraph Co.,
7.875s, 11/15/29 360 423,666
Pitney Bowes Credit Corp.,
9.25s, 6/15/08 1,650 2,069,711
Pitney Bowes Credit Corp.,
8.55%, 9/15/09 500 604,495
Procter & Gamble Co., 8s, 10/15/29 2,345 2,798,476
Seagram (Joseph) & Sons, 9.65s, 8/15/18 1,400 1,813,630
Torchmark Corp., 8.25s, 8/15/09 1,000 1,147,140
TRW Inc., Medium Term Note,
9.35%, 6/4/20 800 1,065,240
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST, $34,731,739) $ 38,859,595
------------
- ----------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 5.0%
- ----------------------------------------------------------------------------
FACE AMOUNT
NAME OF COMPANY (000'S OMITTED) VALUE
- ----------------------------------------------------------------------------
Ford Motor Credit Corp., 5.91s, 1/3/96 $4,600 $ 4,597,731
General Electric Capital Corp.,
5.8s, 1/3/96 5,780 5,777,206
Melville Corp., 5.9s, 1/2/96 3,420 3,418,879
------------
TOTAL SHORT-TERM OBLIGATIONS, AT
AMORTIZED COST $ 13,793,816
------------
TOTAL INVESTMENTS - 99.4%
(IDENTIFIED COST, $207,416,766) $274,581,442
OTHER ASSETS, LESS LIABILITIES - 0.6% 1,793,358
------------
NET ASSETS - 100% $276,374,800
============
*Non-income producing security.
ADR -- American Depository Receipt.
REIT -- Real Estate Investment Trust.
PAC -- Planned Amortization Class.
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,
$207,416,766) $274,581,442
Cash 3,199
Interest receivable 1,344,421
Dividends receivable 454,486
Tax reclaim receivable 5,786
Deferred organization expenses (Note 1D) 8,977
------------
Total assets $276,398,311
LIABILITIES:
Payable to affiliates --
Trustees' fees $ 5,000
Accrued expenses and other liabilities 18,511
-------
Total liabilities 23,511
------------
NET ASSETS applicable to investors' interest in Portfolio $276,374,800
============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $209,210,124
Unrealized appreciation of investments (computed on
the basis of identified cost) 67,164,676
------------
Total net assets $276,374,800
============
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
YEAR ENDED
---------------------------
DECEMBER 31, JANUARY 31,
1995* 1995
------------ -------------
INVESTMENT INCOME (NOTE 1B):
Interest income $ 6,252,081 $ 6,511,359
Dividend income (net of withholding tax of
$45,080 and $23,221, respectively) 4,053,689 4,385,712
------------ ------------
Total income $ 10,305,770 $ 10,897,071
------------ ------------
Expenses --
Investment adviser fee (Note 3) $ 1,418,502 $ 1,375,751
Compensation of Trustees not members of the
Investment Adviser's
organization (Note 3) 11,324 15,858
Custodian fee (Note 3) 126,583 114,290
Printing 195 1,811
Legal and accounting services 40,902 31,953
Registration fees 635 273
Amortization of organization expenses
(Note 1D) 2,922 3,194
Miscellaneous 12,397 1,995
------------ ------------
Total expenses 1,613,460 1,545,125
------------ ------------
Net investment income $ 8,692,310 $ 9,351,946
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investment transactions
(identified cost basis) $ 9,116,976 $ 1,467,119
Change in unrealized appreciation on
investments 43,494,132 (20,681,070)
------------ ------------
Net realized and unrealized gain (loss) on
investments 52,611,108 (19,213,951)
------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 61,303,418 $ (9,862,005)
============ ============
*For the eleven month period ended December 31, 1995 (Note 6).
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED JANUARY 31,
YEAR ENDED ------------------------------
DECEMBER 31, 1995** 1995 1994*
-------------------- -------------- --------------
INCREASE (DECREASE) IN
NET ASSETS:
From operations --
Net investment
income $ 8,692,310 $ 9,351,946 $ 2,135,513
Net realized gain on
investment transactions 9,116,976 1,467,119 3,127,776
Change in unrealized
appreciation of
investments 43,494,132 (20,681,070) 3,139,232
------------ ------------ ------------
Net increase
(decrease) in
net assets from
operations $ 61,303,418 $ (9,862,005) $ 8,402,521
------------ ------------ ------------
Capital transactions --
Contributions $ 32,319,917 $ 29,380,822 $230,439,927
Withdrawals (34,406,030) (32,695,351) (8,608,439)
------------ ------------ ------------
Increase
(decrease) in
net assets
resulting from
capital
transactions $ (2,086,113) $ (3,314,529) $221,831,488
------------ ------------ ------------
Total increase
(decrease) in
net assets $ 59,217,305 $(13,176,534) $230,234,009
NET ASSETS:
At beginning of year 217,157,495 230,334,029 100,020
------------ ------------ ------------
At end of year $276,374,800 $217,157,495 $230,334,029
============ ============ ============
- ------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- ------------------------------------------------------------------------------
YEAR ENDED JANUARY 31,
YEAR ENDED ------------------------------
DECEMBER 31, 1995** 1995 1994*
-------------------- -------------- --------------
RATIOS (to average daily
net assets):
Expenses 0.71%+ 0.70% 0.69%+
Net investment income 3.83%+ 4.25% 3.69%+
PORTFOLIO TURNOVER 47% 28% 15%
+ Computed on an annualized basis.
* For the period from the start of business, October 28, 1993, to
January 31, 1994.
** For the eleven month period ended December 31, 1995 (Note 6).
The accompanying notes are an integral part of the financial statements
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
- ------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Investors Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940, as a diversified, open-end, management investment
company, which was organized as a trust under the laws of the State of New
York in 1992. The Declaration of Trust permits the Trustees to issue interests
in the Portfolio. Investment operations began on October 28, 1993, with the
acquisition of securities and other assets of $221,294,780 in exchange for an
interest in the Portfolio by one of the Portfolio's investors. The following
is a summary of significant accounting policies of the Portfolio. The policies
are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Securities listed on securities exchanges or in the
NASDAQ National Market are valued at closing sales prices. Listed or unlisted
investments for which closing sale prices are not available are valued at the
mean between latest bid and asked prices. Debt investments (other than
mortgage-backed "pass-through" securities) are valued at prices furnished by a
pricing service. Mortgage-backed "pass through" securities are valued using a
matrix pricing system which takes into account closing bond valuations, yield
differentials, anticipated prepayments and interest rates. Short-term
obligations maturing in 60 days or less, are valued at amortized cost, which
approximates value. All other investments are valued at fair value using methods
determined in good faith by or at the direction of the Trustees.
B. INCOME -- Interest income is determined on the basis of interest accrued,
adjusted for accretion or amortization of premium or discount on debt
investments. Dividend income is recorded on the ex-dividend date. Dividend
income may include distributions that represent returns of capital for federal
income tax purposes.
C. FEDERAL 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 must satisfy
the applicable source of income and diversification requirements (under the
Internal Revenue Code) in order for its investors to satisfy them. The Portfolio
will allocate at least annually among its investors each investors' distributive
share of the Portfolio's net taxable income, net realized capital gains, and any
other items of income, gain, loss, deduction or credit.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on a straight-line basis
over five years.
E. SECURITY TRANSACTIONS -- Investment transactions are accounted for on the
date the investments are purchased or sold. Realized gains and losses on the
sale of investments are determined on the identified cost basis.
- -----------------------------------------------------------------------------
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $81,054,092 and $82,289,447, respectively.
Purchases and sales of U.S. Government securities aggregated $31,432,461 and
$31,781,676, 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 computed at the monthly rate of 5/96 of 1% (0.625% annually) of the
Portfolio's average daily net assets up to $300 million and at reduced rates as
daily net assets exceed that level. For the eleven month period ended December
31, 1995, the fee was equivalent to 0.625% (annualized) of the Portfolio's
average daily net assets for such period and amounted to $1,418,502. 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 service 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.
- ------------------------------------------------------------------------------
(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 or fund
based on its borrowings at an amount above either the bank's adjusted
certificate of deposit rate, a variable adjusted certificate of deposit rate,
or a federal funds effective rate. In addition, a fee computed at an annual
rate of 1/4 of 1% on the $20 million committed facility and 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.
- ------------------------------------------------------------------------------
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in the value of investments
owned at December 31, 1995, as computed on a federal income tax basis, are as
follows:
Aggregate cost $206,943,275
============
Gross unrealized appreciation $ 68,284,609
Gross unrealized depreciation 646,442
------------
Net unrealized appreciation $ 67,638,167
============
- ------------------------------------------------------------------------------
(6) CHANGE IN FISCAL YEAR END
The Portfolio changed its fiscal year end from January 31, to December 31,
effective December 31, 1995.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND INVESTORS OF
INVESTORS PORTFOLIO:
We have audited the accompanying statement of assets and liabilities of
Investors Portfolio, including the portfolio of investments, as of December 31,
1995, the related statement of operations for the eleven month period then ended
and for the year ended January 31, 1995 and the statement of changes in net
assets and supplementary data for the eleven month period then ended, for the
year ended January 31, 1995, and for the period from October 28, 1993 (start of
business) to January 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. 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
Investors Portfolio as of December 31, 1995, the results of its operations for
the eleven months then ended and for the year ended January 31, 1995, and the
changes in its net assets and the supplementary data for the eleven month period
then ended, for the year ended January 31, 1995 and for the period from October
28, 1993 (start of business) to January 31, 1994, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 2, 1996
<PAGE>
INVESTMENT MANAGEMENT
EV TRADITIONAL OFFICERS TRUSTEES
INVESTORS FUND JAMES B. HAWKES M. DOZIER GARDNER
24 Federal Street President, Trustee President, Eaton Vance
Boston, MA 02110 CLIFFORD H. KRAUSS Management
Vice President DONALD R. DWIGHT
JAMES L. O'CONNOR President, Dwight
Treasurer Partners, Inc.
THOMAS OTIS Chairman, Newspapers of
Secretary New England, Inc.
SAMUEL L. HAYES, III
Jacob H. Schiff
Professor of
Investment Banking,
Harvard
University Graduate
School of
Business Administration
NORTON H. REAMER
President, United Asset
Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary
Company Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
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INVESTORS OFFICERS TRUSTEES
PORTFOLIO M. DOZIER GARDNER DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight
Boston, MA 02110 JAMES B. HAWKES Partners, Inc.
Vice President, Trustee Chairman, Newspapers of
THOMAS E. FAUST, JR. New England, Inc.
Vice President and SAMUEL L. HAYES, III
Portfolio Manager Jacob H. Schiff
MICHAEL B. TERRY Professor of
Vice President Investment Banking,
JAMES L. O'CONNOR Harvard
Treasurer University Graduate
THOMAS OTIS School of
Secretary Business Administration
NORTON H. REAMER
President, United Asset
Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
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INVESTMENT ADVISER OF
INVESTORS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV TRADITIONAL INVESTORS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
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
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV
Traditional
Investors
Fund
ANNUAL
SHAREHOLDER REPORT
DECEMBER 31, 1995
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 INVESTORS FUND
24 FEDERAL STREET
BOSTON, MA 02110 T-IFSRC-2/96
