<PAGE>
[LOGO OF EATON Investing [PHOTO OF FINANCIAL
VANCE MUTUAL for the NEWSPAPER & CALCULATOR
FUNDS APPEARS 21st APPEARS HERE]
HERE] Century
Semiannual Report June 30, 1997
[PHOTO OF EV
NYSE FLAG MARATHON
APPEARS SPECIAL
HERE] EQUITIES FUND
Eaton Vance
Global management-Global Distribution
[PHOTO OF NYSE APPEARS HERE]
Marathon
<PAGE>
EV Marathon Special Equities Fund as of June 30, 1997
INVESTMENT UPDATE
[PHOTO OF EDWARD E. SMILEY,
PORTFOLIO MANAGER OMITTED]
Investment Environment
- --------------------------------------------------------------------------------
The Economy
. Economic conditions in the U.S. were very favorable in the first half of 1997.
Gross Domestic Product (GDP) increased at an annualized rate of 4.9% during
the first quarter. In the second quarter, the economy slowed somewhat, with
advance estimates showing an annualized GDP increase of 2.2%.
. Unemployment remained low throughout the period, hitting a 24-year low of
4.8% in May and rising slightly to 5.0% in June.
. Inflation was low throughout the first half of the year, despite continued
economic growth and a tight labor market. During the first half of 1997, the
Consumer Price Index (CPI) rose at an annual rate of only 1.4%, the slowest
rate of increase since 1986.
The Markets
. The sustained growth of the U.S. economy and low inflation have helped propel
prices of large capitalization stocks to record levels. In the six months
ended June 30, 1997, the S&P 500 Index had a total return of 20.6%.*
. An increase in volatility has accompanied higher stock valuations in the first
half of 1997. Within a six-week period in March and April, the Dow Jones
Industrial Average declined almost 10%, and then fully recovered to reach new
record highs.*
. While the performance of large capitalization stocks has surged in the current
economic environment, investors have not showed as much enthusiasm for the
small and mid-capitalization sectors. The total returns of the S&P 400 Mid Cap
Index and the Russell 2000 Stock Index during the first half of the year were
13.0% and 10.2%, respectively.*
- --------------------------------------------------------------------------------
Mutual fund shares are not insured by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
The Fund
- --------------------------------------------------------------------------------
The Past Six Months
. During the six months ended June 30, 1997, EV Marathon Special Equities Fund
had a total return of 4.6%./1/
. This return resulted from a decrease in net asset value to $13.46 per share on
June 30, 1997 from $13.76 per share on December 31, 1996, and the reinvestment
of $0.80 per share in capital gains distributions./2/
. By comparison, the average total return for mutual funds in the Lipper Growth
Fund Category was 14.3% during this period.*
Management Discussion
. The Fund remains focused on the small- and mid-capitalization companies that
we view as future industry leaders. The Fund's concentrations include the
networking, specialty software, and communications equipment sectors,
industries in which order rates remain especially strong in the current
climate.
. In the media sector, the Fund had an investment in A.H. Belo Corp. A well-
managed operator of broadcast and newspaper holdings, Belo includes The Dallas
Morning News, The Providence Journal, and several West Coast television
stations in its portfolio.
. The Fund also maintained a relatively strong exposure to the oil service
sector and supply sectors through its investments in Camco, Inc., Ensco, Inc.
and Noble Drilling. In a period of weak oil prices, these service and supply
companies have fared better than exploration companies and have benefited from
a consolidation following the industry woes of the late 1980s.
- --------------------------------------------------------------------------------
/1/ This return does not include the maximum applicable 5% contingent deferred
sales charge (CDSC).
/2/ Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5%-1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is no
guarantee of future results. The value of an investment in the Fund will
fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
/3/ Industry sectors and top 10 holdings are as of 6/30/97 and may not be
representative of the Portfolio's current or future investments. Top 10
holdings account for 13.94% of the Portfolio's investments, determined by
dividing the total market value of the holdings by the total net assets of
the Portfolio.
* It is not possible to invest directly in an index, average, or Lipper
Category.
- --------------------------------------------------------------------------------
Fund Information
as of June 30, 1997
Average Annual Total Returns/2/
- --------------------------------------------
One Year 13.6%
Life of Fund (8/22/94) 14.5
SEC Average Annual Total Returns/2/
- --------------------------------------------
One Year 8.6%
Life of Fund (8/22/94) 13.4
Five Largest Industry Sectors/3/
- --------------------------------------------
As a percentage of total net assets
Information Services 19.3%
Health Services 8.2%
Oil & Gas 7.9%
Business Products & Services 5.4%
Drugs 5.2%
Ten Largest Equity Holdings/3/
- --------------------------------------------
As a percentage of total net assets
A.H. Belo Corp. 1.6%
Vanstar Corp. 1.5
Genzyme Corp. 1.5
BISYS Group 1.4
MGM Grand 1.4
Mutual Risk Management 1.4
Sofomor Danek 1.3
Bed Bath & Beyond 1.3
Strayer Education 1.3
Paychex, Inc. 1.3
2
<PAGE>
EV Marathon Special Equities Fund as of June 30, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of June 30, 1997
Assets
- --------------------------------------------------------------------------------
<S> <C>
Investment in Special Investment Portfolio, at value
(Note 1A) (identified cost, $3,118,454) $3,298,902
Receivable for Fund shares sold 59,787
Receivable from Administrator (Note 4) 13,500
Deferred organization expenses (Note 1E) 21,821
- --------------------------------------------------------------------------------
Total assets $3,394,010
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 32
Payable to affiliate for Trustees' fees (Note 4) 23
Accrued expenses 4,488
- --------------------------------------------------------------------------------
Total liabilities $ 4,543
- --------------------------------------------------------------------------------
Net Assets for 251,854 shares of
beneficial interest outstanding $3,389,467
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $2,912,220
Accumulated undistributed net realized gain on investments
(computed on the basis of identified cost) 332,641
Accumulated of net investment loss (35,842)
Net unrealized appreciation of investments (computed
on the basis of identified cost) 180,448
- --------------------------------------------------------------------------------
Total $3,389,467
- --------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
- --------------------------------------------------------------------------------
($3,389,467 / 251,854 shares of
beneficial interest outstanding) $ 13.46
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
June 30, 1997
Investment Income
- --------------------------------------------------------------------------------
<S> <C>
Dividend income allocated from Portfolio $ 1,979
Interest income allocated from Portfolio 7,891
Expenses allocated from Portfolio (10,749)
- --------------------------------------------------------------------------------
Total investment loss $ (879)
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Distribution and service fees (Note 5) $ 13,287
Registration fees 10,673
Printing and postage 10,248
Legal and accounting services 5,921
Amortization of organization expenses (Note 1E) 5,204
Transfer and dividend disbursing agent fees 1,879
Custodian fee (Note 1C) 1,251
- --------------------------------------------------------------------------------
Total expenses $ 48,463
- --------------------------------------------------------------------------------
Deduct --
Preliminary allocation of expenses to the
Administrator (Note 4) $ 13,500
- --------------------------------------------------------------------------------
Total expense reductions $ 13,500
- --------------------------------------------------------------------------------
Net expenses $ 34,963
- --------------------------------------------------------------------------------
Net investment loss $ (35,842)
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------
Net realized gain --
Investment transactions (identified cost basis) $ 334,456
- --------------------------------------------------------------------------------
Net realized gain on investment transactions $ 334,456
- --------------------------------------------------------------------------------
Change in unrealized appreciation --
Investment transactions $ (155,413)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation of investments $ (155,413)
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 179,043
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 143,201
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
3
<PAGE>
EV Marathon Special Equities Fund as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) June 30, 1997 Year Ended
in Net Assets (Unaudited) December 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment loss $ (35,842) $ (51,838)
Net realized gain on investments 334,456 245,636
Net change in unrealized appreciation
(depreciation) of investments (155,413) 157,020
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 143,201 $ 350,818
- --------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net realized gain on investments $ (175,515) $ (44,253)
- --------------------------------------------------------------------------------
Total distributions to shareholders $ (175,515) $ (44,253)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares $1,177,833 $ 2,882,662
Net asset value of shares issued to
shareholders in payment of
distributions declared 158,966 41,241
Cost of shares redeemed (724,867) (1,806,992)
- --------------------------------------------------------------------------------
Net increase in net assets from
Fund share transactions $ 611,932 $ 1,116,911
- --------------------------------------------------------------------------------
Net increase in net assets $ 579,618 $ 1,423,476
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $2,809,849 $ 1,386,373
- --------------------------------------------------------------------------------
At end of period $3,389,467 $ 2,809,849
- --------------------------------------------------------------------------------
Accumulated net investment loss
included in net assets
- --------------------------------------------------------------------------------
At end of period $ (35,842) $ --
- --------------------------------------------------------------------------------
</TABLE>
See notes to fnancial statements
4
<PAGE>
EV Marathon Special Equities Fund as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1997 ---------------------------------------------
(Unaudited) 1996 1995 1994*
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value -- Beginning of period $13.760 $ 11.660 $ 9.810 $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss $(0.142) $ (0.254) $(0.165) $ (0.021)
Net realized and unrealized gain (loss) on investments 0.642 2.579 2.090 (0.169)
- --------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.500 $ 2.325 $ 1.925 $ (0.190)
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions
- --------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments $(0.800) $ (0.225) $ -- $ --
In excess of net realized gain on investments -- -- (0.075) --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.800) $ (0.225) $(0.075) $ --
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $13.460 $ 13.760 $11.660 $ 9.810
- --------------------------------------------------------------------------------------------------------------------------------
Total Return /(1)/ 4.58% 20.02% 19.64% (1.90)%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data ++
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 3,389 $ 2,810 $ 1,386 $ 623
Ratio of net expenses to average daily net assets /(2)/ 3.20%+ 3.41% 3.21% 3.05%+
Ratio of net investment loss to average daily net assets /(2)/ (2.51)%+ (2.49)% (2.31)% (2.00)%+
</TABLE>
++ The operating expenses of the Fund and the Portfolio may reflect a
reduction of the Investment Adviser fee, an allocation of expenses to the
Administrator, or both. Had such actions not been taken, the ratios and
net investment income (loss) per share would have been as follows:
<TABLE>
<CAPTION>
Ratios (As a percentage of average daily net assets):
<S> <C> <C> <C> <C>
Expenses /(2)/ 4.14%+ 4.94% 9.54% 9.55%+
Net investment loss /(2)/ (3.45)%+ (0.96)% (8.65)% (8.50)%+
Net investment loss per share $(0.196) $ (0.410) $(0.617) $ (0.092)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, August 22, 1994, to December
31, 1994.
/(1)/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 payable date. Total return is not
computed on an annualized basis.
/(2)/Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
See notes to financial statements
5
<PAGE>
EV Marathon Special Equities Fund as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
1 Significant Accounting Policies
------------------------------------------------------------------------------
EV Marathon 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 (4.1% at June 30,
1997). 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 1A 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 Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Fund. Pursuant to the custodian agreement, IBT receives a
fee reduced by credits which are determined based on the average daily cash
balances the Fund maintains with IBT. All significant credit balances used
to reduce the Fund's custodian fees are reported as a reduction of expenses
on the Statement of Operations.
D Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including
any net realized gain on investments, option and financial futures
transactions. Accordingly, no provision for federal income or excise tax is
necessary.
E Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over
five years.
F Other -- Investment transactions are accounted for on a trade date basis.
G Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of income and expense during the reporting period. Actual results
could differ from those estimates.
2 Distributions to Shareholders
------------------------------------------------------------------------------
The Fund's present policy is to make a distribution at least annually of the
net investment income allocated to the Fund by the Portfolio (less the Fund's
direct and allocated expenses) and to distribute at least annually any net
realized capital gains so allocated. Distributions are paid in the form of
additional shares of the Fund or, at the election of the shareholder, in cash.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result in overdistributions only for financial statement
purposes are classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital.
6
<PAGE>
EV Marathon Special Equities Fund as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
3 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>
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
(Unaudited)
------------------------------------------------------------------------------
<S> <C> <C>
Sales 90,729 227,080
Issued to shareholders electing
to receive payments of
distributions in Fund shares 13,738 3,138
Redemptions (56,831) (144,920)
------------------------------------------------------------------------------
Net increase 47,636 85,298
------------------------------------------------------------------------------
</TABLE>
4 Transactions with Affiliates
------------------------------------------------------------------------------
Eaton Vance Management (EVM) serves 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. To reduce the net operating loss of the Fund for the
six months ended June 30, 1997, $13,500 of expenses related to its operation
were allocated, on a preliminary basis, to EVM. Except as 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 the investment adviser fee. Certain of the officers and Trustees of the
Fund and Portfolio are officers and directors/trustees of the above
organizations.
5 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 accrue
amounts daily to the principal underwriter, Eaton Vance Distributors, Inc.
(EVD) equal to 1/365 of 0.75% of the Fund's average daily net assets, for
providing ongoing distribution services and facilities to the Fund. The Fund
will automatically discontinue accruals to EVD during any period in which
there are no outstanding Uncovered Distribution Charges, which are equivalent
to the sum of (i) 5% of the aggregate amount received by the Fund for the
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 the aggregate amount of contingent
deferred sales charges (see Note 6) and 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 $10,726 for the six
months ended June 30, 1997, representing 0.75% (annualized) of average daily
net assets. At June 30, 1997, the amount of Uncovered Distribution Charges to
EVD calculated under the Plan was approximately $74,000.
In addition, the Plan authorizes the Fund to 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 have implemented the Plan by authorizing the Fund to make
quarterly payments of service fees to the Principal Underwriter and Authorized
Firms in amounts not expected to exceed 0.25%, of the Fund's average daily net
assets for each fiscal year based on the value of Fund shares sold by such
persons and remaining outstanding for at least twelve months. During the six
months ended June 30, 1997, the Fund provided for $2,561 under the Plan to the
Principal Underwriter and Authorized Firms. Service fees are separate and
distinct from the sales commissions and distribution fees payable by the Fund
to EVD, and, as such, are not subject to automatic discontinuance where there
are no outstanding Uncovered Distribution Charge of EVD.
Certain of the officers of the Fund and Directors of the Corporation are
officers or directors of EVD.
6 Contingent Deferred Sales Charges
------------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon
the lower of the net asset value at date of redemption or date of purchase. No
charge is levied on shares acquired by
7
<PAGE>
EV Marathon Special Equities Fund as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
reinvestment of dividends or capital gain distributions. The CDSC is imposed
at declining rates that begin at 5% in the first and second year of redemption
after purchase, declining one percentage point each year. No CDSC is levied on
shares which have been sold to EVM or its affiliates or to their respective
employees or clients. CDSC charges are paid to EVD to reduce the amount of
Uncovered Distribution Charges calculated under the Fund's Distribution Plan.
CDSC charges received when no Uncovered Distribution Charges exist will be
retained by the Fund. EVD received approximately $6,000 of CDSC paid by
shareholders for the six months ended June 30, 1997.
7 Investment Transactions
------------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio aggregated
$1,178,867 and $817,461, respectively.
8
<PAGE>
Special Investment Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited)
<TABLE>
<CAPTION>
Common Stocks -- 91.8%
Security Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Advertising -- 1.5%
- --------------------------------------------------------------------------------
Catalina Marketing Corp. 14,000 $ 673,750
Specialized market research.
Outdoor Systems, Inc. 14,940 571,455
Dominant operator of outdoor advertising.
- --------------------------------------------------------------------------------
$ 1,245,205
- --------------------------------------------------------------------------------
Banks - Regional -- 0.6%
- --------------------------------------------------------------------------------
Colonial Bancgroup, Inc. 21,000 $ 509,250
Emerging banking company in the
Southeastern U.S.
- --------------------------------------------------------------------------------
$ 509,250
- --------------------------------------------------------------------------------
Banks and Money Services -- 1.6%
- --------------------------------------------------------------------------------
Bank United, Corp., Class A 12,000 $ 456,000
Operates 70 branch bank system in Texas.
First USA Paymentech, Inc.* 28,000 810,250
Payment processor of merchant credit
card transactions.
- --------------------------------------------------------------------------------
$ 1,266,250
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 2.7%
- --------------------------------------------------------------------------------
Emmis Broadcasting Corp., Class A* 15,000 $ 654,375
Diversified media company.
Jacor Communications, Inc.* 16,500 631,125
Rapidly growing operator of radio stations
and syndicated programming.
Lin Television Corp.* 20,000 882,500
Commercial television broadcast company.
- --------------------------------------------------------------------------------
$ 2,168,000
- --------------------------------------------------------------------------------
Building Materials -- 0.9%
- --------------------------------------------------------------------------------
Texas Industries, Inc. 28,000 $ 743,750
Regional producer of building products
in the Southwest.
- --------------------------------------------------------------------------------
$ 743,750
- --------------------------------------------------------------------------------
Business Products and Services -- 5.4%
- --------------------------------------------------------------------------------
CN Maximus, Inc.* 950 $ 16,981
Management consulting group.
Ecolab, Inc. 9,000 429,750
Producer of industrial cleaning products
G and K Services, Inc. 23,000 856,750
Rents and launders uniforms and other
textile products.
Gartner Group, Inc.-Class A* 8,500 305,469
Leading consultant on high tech
equipment purchases.
Personnel Group of America, Inc.* 15,000 432,188
Temporary employment company.
Precision Response Corp.* 28,000 462,000
Inbound calling marketing company.
Teletech Holdings, Inc.* 26,000 682,500
Inbound calling marketing company.
Vanstar Corp.* 85,000 1,200,624
Value added reseller providing
corporations with computing solutions.
- --------------------------------------------------------------------------------
$ 4,386,262
- --------------------------------------------------------------------------------
Communication Services -- 2.0%
- --------------------------------------------------------------------------------
Sterling Commerce, Inc.* 25,000 $ 821,875
Provides electronic data interchange services.
Transition Systems, Inc.* 45,000 818,438
Healthcare information systems.
- --------------------------------------------------------------------------------
$ 1,640,313
- --------------------------------------------------------------------------------
Communications Equipment -- 4.2%
- --------------------------------------------------------------------------------
Ascend Communications, Inc.* 15,000 $ 590,625
Manufacturer of high speed
telecommunications products.
Brooktrout Technology, Inc.* 33,000 391,875
Provides telecom equipment specialty
products.
Comverse Technology, Inc.* 8,000 416,000
Specialized communications products.
Davox Corp. 7,500 268,125
Designs and manufactures specialized
telecom products.
ECI Telecommunications 20,000 595,000
A company that produces advanced
telecommunications equipment.
</TABLE>
See notes to financial statements
9
<PAGE>
Special Investment Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Security Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Communications Equipment (continued)
- --------------------------------------------------------------------------------
Glenayre Technologies, Inc. 27,010 $ 442,289
Leading supplier of wireless
communications equipment.
Mosaix, Inc.* 30,000 408,750
Manufacturer of specialized
telecommunications products.
Natural Microsystems Corp. 8,000 288,000
Manufacturer of specialized
telecommunications products.
- --------------------------------------------------------------------------------
$ 3,400,664
- --------------------------------------------------------------------------------
Consumer Services -- 1.3%
- --------------------------------------------------------------------------------
Strayer Education, Inc. 27,910 $ 1,060,580
Specialized supplemental education services.
- --------------------------------------------------------------------------------
$ 1,060,580
- --------------------------------------------------------------------------------
Drugs -- 5.2%
- --------------------------------------------------------------------------------
Curative Health Services, Inc.* 25,000 $ 718,750
Operator of specialty burn unit clinics.
Elan Corp., PLC ADR* 17,000 769,250
Specialty pharmaceutical.
Genzyme Corp.* 40,000 405,000
Leading researcher in gene therapy.
Genzyme Corp. Class A 43,000 1,193,249
Diversified biotechnology pharmaceuticals.
Parexel International Corp. 23,000 730,250
Contract research services for large
drug companies.
Roberts Pharmaceutical Corp.* 40,000 447,500
Diversified health care products.
- --------------------------------------------------------------------------------
$ 4,263,999
- --------------------------------------------------------------------------------
Electrical Equipment -- 1.5%
- --------------------------------------------------------------------------------
Chicago Minature Lamp, Inc. 7,000 $ 174,125
Niche marketer of lighting products.
Level One Communications, Inc.* 8,000 307,500
Designs and sells integrated circuits.
Linear Technology Corp. 14,000 724,500
Manufacturer of high performance
linear integrated circuits.
- --------------------------------------------------------------------------------
$ 1,206,125
- --------------------------------------------------------------------------------
Electronics - Semiconductors -- 0.8%
- --------------------------------------------------------------------------------
Cypress Semiconductor Corp.* 45,000 $ 652,500
Innovative semiconductor manufacturer.
- --------------------------------------------------------------------------------
$ 652,500
- --------------------------------------------------------------------------------
Entertainment -- 3.4%
- --------------------------------------------------------------------------------
MGM Grand, Inc.* 31,000 $ 1,146,999
Operator of MGM Grand Hotel in Las Vegas.
Mirage Resorts, Inc. 32,000 808,000
Nevada based gaming resort operator.
Regal Cinemas 17,000 561,000
Rapidly growing theater chain.
Speedway Motorsports* 13,500 293,625
Large operator of NASCAR tracks.
- --------------------------------------------------------------------------------
$ 2,809,624
- --------------------------------------------------------------------------------
Financial - Miscellaneous -- 0.6%
- --------------------------------------------------------------------------------
Capital One Financial Corp. 12,000 $ 453,000
Leading credit card services specialists.
- --------------------------------------------------------------------------------
$ 453,000
- --------------------------------------------------------------------------------
Health Services -- 8.2%
- --------------------------------------------------------------------------------
American Retirement Corp.* 40,000 $ 710,000
Assisted living services.
Express Scripts, Inc., Class A* 15,000 626,250
Rapidly growing pharmacy specialist.
Genesis Health Ventures, Inc.* 30,000 1,012,500
Nursing home chain.
Health Management Associates, Inc. 31,000 883,500
Class A*
Hospital chain.
MiniMed, Inc.* 29,000 772,125
Developer and manufacturer of
medical devices focusing on diabetics.
National Surgery Centers, Inc.* 12,000 424,500
Operator of independent surgery units.
Omnicare, Inc. 27,000 847,125
Provides pharmacy services to retirement
centers.
Pediatrix Medical Group, Inc.* 22,000 1,007,875
Operates pediatric care units.
PhyCor, Inc.* 13,000 447,688
Physicians practice management.
- --------------------------------------------------------------------------------
$ 6,731,563
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
10
<PAGE>
Special Investment Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Security Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Household Products -- 0.7%
- --------------------------------------------------------------------------------
Sola International* 17,000 $ 569,500
Specialty eye care products.
- --------------------------------------------------------------------------------
$ 569,500
- --------------------------------------------------------------------------------
Information Services -- 19.3%
- --------------------------------------------------------------------------------
Acxiom Corp. 23,000 $ 471,500
Database information services.
Affiliated Computer Services, Inc. Class A 30,000 840,000
Nationwide provider of information
processing services.
Aspect Development, Inc.* 5,988 156,062
Information processing services specialist.
Aspen Technologies, Inc. 27,000 1,015,875
Specialty software for upgrading
manufacturing plants.
BISYS Group, Inc.* 28,000 1,168,999
Services financial institutions with computer,
administrative and marketing support data
processing services.
Cambridge Technology Partners, Inc.* 31,000 992,000
Software consulting company.
CCC Information Services Group* 37,000 721,500
Automotive repair information specialist.
Claremont Technology Group, Inc.* 17,000 403,750
Management consulting services.
Cognos, Inc.* 30,000 933,750
Computer tool developer and supporter.
FIserv, Inc.* 22,300 995,138
Provider of data processing services to banks
and savings institutions, benefiting from
outsourcing trend.
Harbinger, Corp. 27,000 756,000
Electronic Data Interchange products and
services.
IDX Systems Corp.* 21,000 724,500
Healthcare information systems.
Medic Computer Systems, Inc. 24,000 534,000
Physicians information company.
National Data Corp. 10,000 433,125
Information technology services provider.
Nova Corp. Georgia* 36,000 933,750
Nation's largest bankcard processor
Paychex, Inc. 27,000 1,026,000
Payroll and corporate information services.
Pegasystems, Inc.* 26,000 815,750
Marketing information specialist.
PRI Automation, Inc. 14,000 531,125
Material handling equipment for high cost
semiconductor wafers.
Information Services (continued)
Scopus Technology, Inc. 35,018 783,528
A leading provider of software.
SunGard Data Systems, Inc.* 20,000 930,000
Data storage and emergency back up products.
Veritas Software Co. 12,000 603,000
Provides communications companies with
software measuring systems.
- --------------------------------------------------------------------------------
$15,769,352
- --------------------------------------------------------------------------------
Insurance -- 3.3%
- --------------------------------------------------------------------------------
CRA Managed Care, Inc.* 15,000 $ 782,813
Workers compensation company.
HCC Insurance Holdings, Inc. 30,000 800,625
Emerging specialty insurance provider.
Mutual Risk Management Ltd. 24,003 1,101,151
Specialty insurer focusing on workmen's
compensation.
- --------------------------------------------------------------------------------
$ 2,684,589
- --------------------------------------------------------------------------------
Investment Services -- 3.7%
- --------------------------------------------------------------------------------
Centura Banks, Inc. 17,500 $ 802,813
Growing Southeastern bankers.
PMI Group, Inc. 15,000 935,625
Specialty financial products.
Sovereign Bancorp, Inc. 50,000 762,500
A thrift holding company.
The Money Store, Inc. 18,000 516,375
Diversified finance specialist.
- --------------------------------------------------------------------------------
$ 3,017,313
- --------------------------------------------------------------------------------
Leisure Equipment -- 0.4%
- --------------------------------------------------------------------------------
Cannondale Corp.* 17,000 $ 301,750
Designer and manufacturer of high end bikes.
- --------------------------------------------------------------------------------
$ 301,750
- --------------------------------------------------------------------------------
Lodging and Gaming -- 1.6%
- --------------------------------------------------------------------------------
Promus Hotel Corp.* 23,000 $ 891,250
Owner and operator of Embassy Suite and
Hampton Inn hotels.
Station Casinos, Inc.* 50,000 418,750
Operates casinos in Nevada and Kansas City.
- --------------------------------------------------------------------------------
$ 1,310,000
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
11
<PAGE>
Special Investment Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Security Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Machinery -- 0.9%
- --------------------------------------------------------------------------------
Camco International, Inc. 14,000 $ 766,500
Oilfield services.
- --------------------------------------------------------------------------------
$ 766,500
- --------------------------------------------------------------------------------
Medical Products -- 4.4%
- --------------------------------------------------------------------------------
Acuson Corp.* 25,000 $ 575,000
Medical testing equipment.
Arterial Vascular Engineering, Inc.* 25,000 804,688
Growing provider of stents in Europe.
Heartstream, Inc.* 39,000 341,250
Portable defibrillator products.
Invacare Corp. 19,000 444,125
Provider of diverse medical products.
Physio-Control International Corp.* 22,000 330,000
Portable defibrillator products.
Sofamor Danek Group, Inc.* 24,000 1,098,000
Leading developer/manufacturer of spinal
Implant devices. Company markets products
internationally.
- --------------------------------------------------------------------------------
$ 3,593,063
- --------------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 0.6%
- --------------------------------------------------------------------------------
Ensco International, Inc.* 10,000 $ 527,500
Largest operator of premium jackup oil rigs.
- --------------------------------------------------------------------------------
$ 527,500
- --------------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 7.3%
- --------------------------------------------------------------------------------
Abacan Resources Corp. 50,000 $ 159,375
International oil exploration.
American Exploration Co. 37,000 541,125
Merging with Louis Dreyfus Natural Gas.
Anadarko Petroleum Corp. 11,000 660,000
A leading independent company in
oil and gas exploration,
development and production.
Cairn Energy USA, Inc. 43,000 564,375
Energy company that is exploring sale
of company.
Louisiana Land & Exploration Corp. 14,000 799,750
Undervalued medium sized diversified
energy exploration.
Noble Affiliates, Inc. 17,000 657,688
An independent energy company that
specializes in oil and gas
exploration and production.
Noble Drilling, Inc. 33,000 744,563
Oil and gas well drilling.
Nuevo Energy Co. 14,000 574,000
Diversified energy exploration with
aggressive drilling program.
Swift Energy Co. 24,000 573,000
Emerging energy exploration company
focusing on Texas properties.
Triton Energy Ltd. 15,000 687,188
International oil and gas exploration
and development.
- --------------------------------------------------------------------------------
$ 5,961,064
- --------------------------------------------------------------------------------
Publishing -- 2.0%
- --------------------------------------------------------------------------------
A.H. Belo Corp. 31,927 $ 1,328,969
Publishes Dallas Morning News and
Providence Journal; also operates
T.V. and radio properties.
Franklin Covey Co.* 13,000 329,063
Time management seminars and products.
- --------------------------------------------------------------------------------
$ 1,658,032
- --------------------------------------------------------------------------------
Retail - Food and Drug -- 2.3%
- --------------------------------------------------------------------------------
Papa John's International, Inc. 25,000 $ 918,750
Rapidly growing restaurant chain.
Starbucks Corp. 25,000 973,438
High quality specialty retailer.
- --------------------------------------------------------------------------------
$ 1,892,188
- --------------------------------------------------------------------------------
Retail - Specialty and Apparel -- 4.2%
- --------------------------------------------------------------------------------
Ann Taylor Stores Corp.* 16,000 $ 312,000
Leading vendor of women's apparel.
Bed Bath and Beyond, Inc.* 35,000 1,063,125
Specialty retailer.
Claires Stores, Inc. 40,000 700,000
Fashion items for teenagers.
Gadzooks, Inc.* 12,000 234,000
Specialty retailer of teenage apparel.
K&G Mens Center, Inc. 9,000 195,750
Innovative retailer of men's clothing
Pacific Sunwear of California, Inc. 5,000 161,250
Specialty retailer of teenage apparel.
Polo Ralph Lauren Corp., Class A* 3,700 101,288
A designer of men's and women's clothing.
The Mens Wearhouse, Inc.* 21,000 661,500
Specialty apparel chain.
- --------------------------------------------------------------------------------
$ 3,428,913
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
12
<PAGE>
Special Investment Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Security Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Transportation -- 1.2%
- --------------------------------------------------------------------------------
Comair Holdings, Inc. 36,000 $ 996,750
Regional airline holding company.
- --------------------------------------------------------------------------------
$ 996,750
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $61,601,380) $75,013,599
- --------------------------------------------------------------------------------
<CAPTION>
Commercial Paper -- 7.4%
Principal
Amount
(000
Security Omitted) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Cut Group, 6.25%, 7/1/97 $2,524 $ 2,523,562
Ford Motor Credit Co., 5.56%, 7/9/97 3,500 3,492,432
- --------------------------------------------------------------------------------
Total Commercial Paper
(amortized cost $6,015,994) $ 6,015,994
- --------------------------------------------------------------------------------
Total Investments -- 99.2%
(identified cost $67,617,374) $81,029,593
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.8% $ 659,157
- --------------------------------------------------------------------------------
Net Assets -- 100% $81,688,750
- --------------------------------------------------------------------------------
</TABLE>
ADR -- American Depositary Receipt
* Non-income producing security.
See notes to financial statements
13
<PAGE>
Special Investment Portfolio as of June 30, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of June 30, 1997
Assets
- --------------------------------------------------------------------------------
<S> <C>
Investments, at value (Note 1A)
(identified cost, $67,617,374) $81,029,593
Cash 1,219
Receivable for investments sold 801,973
Interest and dividends receivable 7,009
Deferred organization expenses (Note 1E) 6,604
- --------------------------------------------------------------------------------
Total assets $81,846,398
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased $ 141,972
Payable to affiliate for Trustees' fees (Note 3) 1,700
Accrued expenses 13,976
- --------------------------------------------------------------------------------
Total liabilities $ 157,648
- --------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $81,688,750
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $68,276,531
Net unrealized appreciation of investments
(computed on the basis of identified cost) 13,412,219
- --------------------------------------------------------------------------------
Total $81,688,750
- --------------------------------------------------------------------------------
<CAPTION>
Statement of Operations
For the Six Months Ended
June 30, 1997
Investment Income (Note 1B & 1D)
- --------------------------------------------------------------------------------
<S> <C>
Dividend income $ 52,062
Interest income 211,694
- --------------------------------------------------------------------------------
Total income $ 263,756
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment adviser fee (Note 3) $ 237,360
Compensation of Trustees not members of the
Investment Adviser's organization (Note 3) 2,632
Custodian fee (Note 1C) 33,133
Legal and accounting services 9,020
Amortization of organization expenses (Note 1E) 1,549
Miscellaneous 1,679
- --------------------------------------------------------------------------------
Total expenses $ 285,373
- --------------------------------------------------------------------------------
Net investment loss $ (21,617)
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- --------------------------------------------------------------------------------
Net realized gain --
Investment transactions (identified cost basis) $ 9,737,492
- --------------------------------------------------------------------------------
Net realized gain on investments $ 9,737,492
- --------------------------------------------------------------------------------
Change in unrealized appreciation --
Investments (identified cost basis) $(5,492,823)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation $(5,492,823)
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 4,244,669
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 4,223,052
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
14
<PAGE>
Special Investment Portfolio as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) June 30, 1997 Year Ended
in Net Assets (Unaudited) December 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment income (loss) $ (21,617) $ 135,724
Net realized gain on investments 9,737,492 18,226,741
Net change in unrealized
appreciation of investments (5,492,823) (1,762,538)
- --------------------------------------------------------------------------------
Net increase in net assets
from operations $ 4,223,052 $ 16,599,927
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $ 13,232,554 $ 10,738,468
Withdrawals (18,714,130) (18,331,396)
- --------------------------------------------------------------------------------
Net decrease in net assets
from capital transactions $ (5,481,576) $ (7,592,928)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets $ (1,258,524) $ 9,006,999
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ 82,947,274 $ 73,940,275
- --------------------------------------------------------------------------------
At end of period $ 81,688,750 $ 82,947,274
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
15
<PAGE>
Special Investment Portfolio as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1997 ----------------------------------------------
(Unaudited) 1996 1995 1994*
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ratios to average daily net assets
- ------------------------------------------------------------------------------------------------------------------------
Expenses 0.76%+ 0.76% 0.77% 0.74%+
Net investment income (loss) (0.06)%+ 0.18% 0.19% 0.20%+
Portfolio Turnover 110% 91% 81% 19%
- ------------------------------------------------------------------------------------------------------------------------
Average commission rate (per share)/(1)/ $ 0.0590 $ 0.0579 $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $ 81,689 $ 82,947 $ 73,940 $ 64,442
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, August 1, 1994, to December 31,
1994.
/(1)/Average commission rate paid is computed by dividing the total dollar
amount of commissions paid during the fiscal year by the total number of
shares purchased and sold during the fiscal year for which commissions were
charged. For fiscal years beginning on or after September 1, 1995, a
Portfolio is required to disclose its average commission rate per share for
security trades on which commissions were charged.
See notes to financial statements
16
<PAGE>
Special Investment Portfolio as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
------------------------------------------------------------------------------
Special Investment Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940 as a diversified open-end investment company
which was organized as a trust under the laws of the State of New York on May
1, 1992. The Declaration of Trust permits the Trustees to issue 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 -- Securities listed on foreign or U.S. securities
exchanges or in the NASDAQ National Market System generally are valued at
closing sales prices or, if there were no sales, at the mean between the
closing bid and asked prices therefor on the exchange where such securities
are principally traded or on such National Market System. Unlisted or listed
securities for which closing sales prices are not available are valued at the
mean between the latest available bid and asked prices on the principal market
where the security was traded. An option is valued at the last sale price as
quoted on the principal exchange or board of trade on which such option or
contract is traded or, in the absence of a sale, at the mean between the last
bid and asked prices. Futures positions on securities or currencies are
generally valued at closing settlement prices. Short-term debt securities with
a remaining maturity of 60 days or less are valued at amortized cost. If
securities were acquired with a remaining maturity of more than 60 days, their
amortized cost value will be based on their value on the sixty-first day prior
to maturity. Other fixed income and debt securities, including listed
securities and securities for which price quotations are available, will
normally be valued on the basis of valuations furnished by a pricing service.
Securities for which market quotations are unavailable, including any security
the disposition of which is restricted under the Securities Act of 1933, and
other assets will be appraised at their fair market value as determined in
good faith by or at the direction of the Trustees of the Portfolio.
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 investor's
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 Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by credits which are determined based on the average daily cash
balances the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reported as a reduction of
expenses on the Statement of Operations.
D Other -- Investment transactions are accounted for on the date the
investments are purchased and sold. Dividend income is recorded on ex-dividend
date. Realized gains and losses on the sale of investments are determined on
the identified cost basis.
E Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization, including registration costs, are being
amortized on the straight-line basis over five years.
F Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of income and expense during the reporting period. Actual results
could differ from those estimates.
2 Investment Transactions
------------------------------------------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $76,640,196 and $74,324,273, 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
17
<PAGE>
Special Investment Portfolio as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
rate of 5/8 of 1% of average daily net assets. For the six months ended
June 30, 1997, the fee was equivalent to 0.625% (annualized) of the
Portfolio's average net assets for such period and amounted to $237,360.
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. 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 period ended June
30, 1997, 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 committed $120 million unsecured line of
credit agreement with a group of banks. The Portfolio may temporarily borrow
from the line of credit to satisfy redemption requests or settle investment
transactions. Interest is charged to each portfolio or fund based on its
borrowings at an amount above the bank's adjusted certificate of deposit
rate, Eurodollar rate or federal funds rate. In addition, a fee computed at
an annual rate of 0.15% on the daily unused portion of the line of credit is
allocated among the participating Portfolios and funds 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 value of the
investments owned at June 30, 1997, as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
Aggregate cost $67,617,374
------------------------------------------------------------------------------
Gross unrealized appreciation $15,042,798
Gross unrealized depreciation 1,630,579
------------------------------------------------------------------------------
Net unrealized appreciation $13,412,219
------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
EV Marathon Special Equities Fund as of June 30, 1997
INVESTMENT MANAGEMENT
EV Marathon Special Equities Fund
Officers Trustees
James B. Hawkes M. Dozier Gardner
President and Trustee Vice Chairman, Eaton Vance
Management
Edward E. Smiley, Jr
Vice President Donald R. Dwight
President, Dwight Partners, Inc.
James L. O'Connor Chairman, Newspapers of New England, Inc.
Treasurer
Samuel L. Hayes, III
Alan R. Dynner Jacob H. Schiff Professor of Investment
Secretary Banking, Harvard University Graduate
School of Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company
Incorporated
Jack L. Treynor
Investment Adviser and Consultant
Special Investment Portfolio
Officers Trustees
James B. Hawkes M. Dozier Gardner
President and Trustee Vice Chairman, Eaton Vance
Management
Edward E. Smiley, Jr
Vice President Donald R. Dwight
President, Dwight Partners, Inc.
James L. O'Connor Chairman, Newspapers of New England, Inc.
Treasurer
Samuel L. Hayes, III
Alan R. Dynner Jacob H. Schiff Professor of Investment
Secretary Banking, Harvard University Graduate
School of Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company
Incorporated
Jack L. Treynor
Investment Adviser and Consultant
19
<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
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer and Dividend Disbursing Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
EV Marathon Special Equities Fund
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
M-SESRC-8/97
