<PAGE>
[EATON VANCE LOGO]
[PHOTO OF STOCK PAGE IN NEWSPAPER & CALCULATOR]
[PHOTO OF N.Y. STOCK EXCHANGE FLAG & OUTSIDE OF BUILDING]
Semiannual Report June 30, 1999
EATON VANCE
SPECIAL
EQUITIES
FUND
Global Management-Global Distribution
[PHOTO OF NEW YORK STOCK EXCHANGE FLOOR]
<PAGE>
Eaton Vance Special Equities Fund as of June 30, 1999
INVESTMENT UPDATE
[PHOTO OF EDWARD JACK SMILEY, JR.] Investment Environment
Edward E. (Jack) Smiley, Jr. ------------------------------
Portfolio Manager The Economy
- - Despite lower export demand from troubled Asian nations, the U.S. economy
remained on track in the first half of 1999. Consumer spending was very
strong -- Americans registered a negative savings rate for much of the
period. Manufacturing also rebounded strongly, especially in electronics,
construction, and machinery.
- - Gross Domestic Product increased by a stronger-than-expected 4.6% in the
first quarter of 1999, while the unemployment rate was 4.1%, close to a
25-year low.
- - Inflation remained well under control, although higher energy prices and
signs of wage pressures caught the attention of the Federal Reserve. A
tight labor market has threatened to exert inflationary pressures in some
employment sectors.
The Fund
- -----------------------------------------------------------------------------
Performance for the Past Six Months
- - The Fund's Class A shares had a total return of 7.18% during the six
months ended June 30, 1999.(1) This return resulted from an increase in
net asset value per share (NAV) to $7.83 on June 30, 1999 from $7.50 on
December 31, 1998, and the reinvestment of $0.185 in capital gain
distributions.
- - The Fund's Class B shares had a total return of 6.87% during the same
period.(1) This return resulted from an increase in NAV to $15.63 from
$14.82, and the reinvestment of $0.185 in capital gain distributions.
- - The Fund's Class C shares had a total return of 6.71% during the same
period.(1) This return resulted from an increase in NAV to $11.53 from
$11.00 and the reinvestment of $0.185 in capital gain distributions.
The Stock Market
- - The U.S. stock market surged to new highs in the first six months of the
year, with the S&P 500 Index logging a total return of 12.36%.(2) By
comparison, the S&P SmallCap 600 Index rose just 5.04% during the
six-month period.(2)
- - Although small-capitalization stocks -- the Fund's investment
universe -- again underperformed large-capitalization stocks, there are
signs that a recovery in small stocks may be underway. Increasingly,
investors have focused on market valuations. The ratio of small-cap
price-earnings multiples to large-cap multiples is the smallest in nearly
20 years. Yet, while companies in the S&P 500 are likely to grow earnings
just 9-10% in 1999, some forecasts expect the small-cap segment to post
earnings growth in the 30% range.
Management Discussion
- - Information services and software companies remained a major focus of the
Fund. Acxiom Corp. provides data management and warehousing services that
aid companies in their marketing strategies. The company's second quarter
earnings rose 34%. Elsewhere in the group, Veritas Software produces
software that helps companies store data while preventing data loss or
file corruption.
- - Energy stocks, which were weak performers early in the year, have rallied
sharply in recent months, as energy prices have recovered. Newfield
Exploration, which explores and develops oil and natural gas properties
in the Gulf of Mexico, benefited from a significant increase in
production output.
- - In the semiconductor sector, the Fund maintained an investment in Vitesse
Semiconductor Corp. The company is a leader in the manufacture of high
bandwidth circuits for telecom applications and announced the development
of new low-cost transceivers during the period. Vitesse reported
excellent second quarter earnings on sharply higher sales.
- ------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Fund Information
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Performance(3) Class A Class B Class C
- -------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 10.36% 10.41% 11.16%
Five Years 18.22 N.A. N.A.
Ten Years 13.64 N.A. N.A.
Life of Fund+ 9.36 14.66 15.40
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- -------------------------------------------------------------------------------
One Year 4.01% 5.41% 10.16%
Five Years 16.81 N.A. N.A.
Ten Years 12.98 N.A. N.A.
Life of Fund+ 9.15 14.42 15.40
</TABLE>
+Inception dates: Class A: 4/22/68; Class B: 8/22/94; Class C: 11/17/94
<TABLE>
<CAPTION>
Ten Largest Equity Holdings(4)
- -------------------------------------------------------------------------------
<S> <C>
MiniMed, Inc. 1.9%
Veritas SoftwareCo. 1.8
Swift Transportation Co., Inc. 1.7
Ethan Allen Interiors, Inc. 1.7
Vitesse Semiconductors Corp. 1.6
Applied Microcircuits Corp. 1.5
Acxiom Corp. 1.5
Cross Timber Oil Co. 1.5
Central Newspapers, Inc. Class A 1.5
Mutual Risk Management Ltd. 1.4
</TABLE>
(1)These returns do not include the 5.75% maximum sales charge for the Fund's
Class A shares or the applicable contingent deferred sales charges (CDSC)
for Class B and Class C shares. (2)It is not possible to invest directly in
an Index. (3)Returns are historical and are calculated by determining the
percentage change in net asset value with all distributions reinvested.
SEC average annual returns for Class A reflect a 5.75% sales charge; for
Class B, returns reflect applicable CDSC based on the following schedule:
5%-1st and 2nd years; 4%-3rd year; 3%-4th year; 2%-5th year; 1%-6th year.
1-year SEC return for Class C shares include a 1% CDSC. (4)Based on market
value. Ten largest holdings represent 16.1% of the Portfolio's net assets.
Holdings are subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
2
<PAGE>
SPECIAL EQUITIES PORTFOLIO AS OF JUNE 30, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED)
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 96.4%
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------------------
Advertising -- 3.9%
- -----------------------------------------------------------------------------------
Catalina Marketing Corp.(1) 12,000 $ 1,104,000
Specialized market research.
Harte-Hanks Communications, Inc. 35,000 949,375
Owns and operates an international direct
marketing company.
Outdoor Systems, Inc.(1) 31,000 1,131,500
Dominant operator of outdoor advertising.
- -----------------------------------------------------------------------------------
$ 3,184,875
- -----------------------------------------------------------------------------------
Banks - Regional -- 2.4%
- -----------------------------------------------------------------------------------
City National Corp. 23,000 $ 861,063
Offers a wide variety of personal and business
banking services.
Cullen/Frost Bankers, Inc. 40,000 1,102,500
The largest independent bank holding company
in Texas.
- -----------------------------------------------------------------------------------
$ 1,963,563
- -----------------------------------------------------------------------------------
Banks and Money Services -- 1.0%
- -----------------------------------------------------------------------------------
Bank United Corp. 21,000 $ 843,938
Operates 70 branch bank system in Texas.
- -----------------------------------------------------------------------------------
$ 843,938
- -----------------------------------------------------------------------------------
Biotechnology -- 1.9%
- -----------------------------------------------------------------------------------
Human Genome Sciences, Inc.(1) 11,000 $ 434,500
Researches and develops pharmaceutical and
diagnostic products.
Sepracor, Inc.(1) 14,000 1,137,500
Develops pharmaceutical drugs.
- -----------------------------------------------------------------------------------
$ 1,572,000
- -----------------------------------------------------------------------------------
Broadcasting and Cable -- 2.3%
- -----------------------------------------------------------------------------------
Emmis Broadcasting Corp., Class A(1) 9,000 $ 444,375
Diversified media company.
Entercom Communications Corp.(1) 14,000 598,500
Radio station operator.
Hispanic Broadcasting Corp.(1) 11,000 834,625
The largest Spanish-language radio
broadcasting company in the United States.
- -----------------------------------------------------------------------------------
$ 1,877,500
- -----------------------------------------------------------------------------------
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------------------
Business Products and Services -- 3.5%
- -----------------------------------------------------------------------------------
Abacus Direct Corp.(1) 9,000 $ 823,500
Provider of specialized marketing programs.
Apollo Group, Inc.(1) 26,000 690,625
Adult education services.
CN Maximus, Inc.(1) 26,750 769,063
Management consulting group.
Sylvan Learning Systems, Inc.(1) 21,000 570,938
Operates specialized educational tutoring and
testing centers.
- -----------------------------------------------------------------------------------
$ 2,854,126
- -----------------------------------------------------------------------------------
Business Services - Miscellaneous -- 6.3%
- -----------------------------------------------------------------------------------
Diamond Technology Partners(1) 19,000 $ 425,125
Management consulting firm.
Exodus Communications, Inc.(1) 6,000 719,625
Offers services that allow businesses to
outsource the management of their internet
sites.
Iron Mountain, Inc.(1) 14,000 400,750
One of the largest record management
companies in the U.S.
National Data Corp. 27,000 1,154,249
Provides information services to health care
and electronic payment system markets.
On Assignment, Inc.(1) 17,000 444,125
Provides temporary scientific and
environmental professionals to laboratories.
Pegasus Systems, Inc.(1) 20,000 748,750
Transaction processing for the hotel industry.
Provant, Inc.(1) 30,000 466,875
Offers classroom instruction and training
programs.
Whittman-Hart, Inc.(1) 26,000 825,500
Information technology consulting and system
integration services.
- -----------------------------------------------------------------------------------
$ 5,184,999
- -----------------------------------------------------------------------------------
Business Services - Rental & Leasing -- 0.4%
- -----------------------------------------------------------------------------------
Superior Consultant Holdings(1) 13,000 $ 320,938
Provides consulting services to health care
organizations.
- -----------------------------------------------------------------------------------
$ 320,938
- -----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
SPECIAL EQUITIES PORTFOLIO AS OF JUNE 30, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
Communications Equipment -- 0.8%
- -----------------------------------------------------------------------------------
Comverse Technology, Inc.(1) 9,000 $ 679,500
Specialized communications products.
- -----------------------------------------------------------------------------------
$ 679,500
- -----------------------------------------------------------------------------------
Computer Software -- 3.2%
- -----------------------------------------------------------------------------------
Brio Technology, Inc.(1) 20,500 $ 410,000
Produces software for information analysis.
Exchange Applications, Inc.(1) 8,000 326,000
Marketing automation software.
HNC Software, Inc.(1) 17,000 523,813
Provides software which detects debit and
credit card fraud and manages retail
inventories.
International Integration, Inc.(1) 29,000 652,500
Provides application migration and custom
software development services.
National Computer System, Inc. 20,000 675,000
Creates, tests and scores tests, applications and
profiles.
Razorfish, Inc.(1) 800 29,650
Specializes in high-end Internet development.
- -----------------------------------------------------------------------------------
$ 2,616,963
- -----------------------------------------------------------------------------------
Consumer Services -- 1.2%
- -----------------------------------------------------------------------------------
Strayer Education, Inc. 32,065 $ 983,995
Specialized supplemental education services.
- -----------------------------------------------------------------------------------
$ 983,995
- -----------------------------------------------------------------------------------
Distribution -- 1.3%
- -----------------------------------------------------------------------------------
United Stationers(1) 48,000 $ 1,056,000
Wholesaler of office supplies and equipment.
- -----------------------------------------------------------------------------------
$ 1,056,000
- -----------------------------------------------------------------------------------
Education -- 1.5%
- -----------------------------------------------------------------------------------
Career Education Corp.(1) 13,000 $ 439,563
Operates and owns private, post secondary
institutions.
Devry, Inc.(1) 36,000 805,500
Higher education company.
- -----------------------------------------------------------------------------------
$ 1,245,063
- -----------------------------------------------------------------------------------
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------------------
Electrical Equipment -- 1.2%
- -----------------------------------------------------------------------------------
Micrel, Inc.(1) 13,000 $ 962,000
Designs and sells analog integrated circuits.
- -----------------------------------------------------------------------------------
$ 962,000
- -----------------------------------------------------------------------------------
Electronics - Instruments -- 2.5%
- -----------------------------------------------------------------------------------
Cognex Corp.(1) 27,000 $ 852,188
Provides machine vision systems which are
used to automate the manufacturing process.
Helix Technology Corp. 16,025 383,598
Develops technology used in the manufacturing
of electronic components.
Sanmina Corp.(1) 11,000 834,625
Operates contract manufacturing facilities for
high tech companies.
- -----------------------------------------------------------------------------------
$ 2,070,411
- -----------------------------------------------------------------------------------
Electronics - Semiconductors -- 7.8%
- -----------------------------------------------------------------------------------
Applied Micro Circuits Corp.(1) 15,000 $ 1,233,749
Provides semiconductor chips which move large
amounts of information at high speeds.
Dallas Semiconductor Corp. 20,000 1,010,000
Designs, manufactures, and markets electronic
chips and chip-based subsystems.
Linear Technologies Corp. 7,000 470,750
Designs and manufactures chips which
translate information from analog form.
Microchip Technology, Inc.(1) 22,000 1,042,250
Manufactures specialized semiconductors.
PMC-Sierra, Inc.(1) 7,000 412,563
Provides high speed internetworking
component solutions.
Qlogic Corp.(1) 7,000 924,000
Manufactures circuits and adapter boards.
Vitesse Semiconductor Corp.(1) 19,000 1,281,312
Provides digital circuits used for
communications products.
- -----------------------------------------------------------------------------------
$ 6,374,624
- -----------------------------------------------------------------------------------
Entertainment -- 2.2%
- -----------------------------------------------------------------------------------
Cinar Films, Inc., Class B(1) 21,000 $ 514,500
Develops, produces, and distributes educational
and entertainment TV shows and films for
children and families.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
SPECIAL EQUITIES PORTFOLIO AS OF JUNE 30, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
Entertainment (continued)
- -----------------------------------------------------------------------------------
MGM Grand, Inc.(1) 6,000 $ 294,000
Develops, owns, and runs hotels and casinos
worldwide.
Speedway Motorsports, Inc.(1) 25,000 982,813
Owns and operates "Atlanta Motor
Speedway", "Bristol Motor Speedway,"
"Charlotte Motor Speedway", "Texas Motor
Speedway", and "600 Racing".
- -----------------------------------------------------------------------------------
$ 1,791,313
- -----------------------------------------------------------------------------------
Financial - Miscellaneous -- 0.1%
- -----------------------------------------------------------------------------------
E*Trade Group, Inc.(1) 2,000 $ 79,875
Innovative, high quality electronic internet
stock brokerage firm.
- -----------------------------------------------------------------------------------
$ 79,875
- -----------------------------------------------------------------------------------
Foods -- 0.5%
- -----------------------------------------------------------------------------------
Lance, Inc. 25,249 $ 394,516
Produces single-serve packages of snack foods
and bakery products.
- -----------------------------------------------------------------------------------
$ 394,516
- -----------------------------------------------------------------------------------
Health Services -- 7.0%
- -----------------------------------------------------------------------------------
Biomatrix, Inc.(1) 17,000 $ 367,625
Develops and manufactures products used for
orthopedics and ophthalmology.
Express Scripts, Inc., Class A(1) 7,900 475,481
Rapidly growing pharmacy specialist.
MedQuist, Inc.(1) 24,500 1,071,875
Provides electronic transcription and data
management services to the healthcare
industry.
MiniMed, Inc.(1) 20,100 1,546,443
Developer and manufacturer of medical devices
focusing on diabetics.
Province Healthcare Co.(1) 27,000 526,500
Acquires and operates rural hospitals.
Renal Care Group, Inc.(1) 44,000 1,138,500
One of the largest providers of renal
treatment centers.
Sunrise Assisted Living, Inc.(1) 18,000 627,750
One of the leading operators of assisted care
facilities for senior citizens.
- -----------------------------------------------------------------------------------
$ 5,754,174
- -----------------------------------------------------------------------------------
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------------------
Information Services -- 14.6%
- -----------------------------------------------------------------------------------
Acxiom Corp.(1) 49,000 $ 1,221,937
Database information services.
Affiliated Computer Services, Inc., Class A(1) 28,000 1,417,499
Nationwide provider of information
processing services.
BISYS Group, Inc. (The)(1) 19,000 1,111,500
Services financial institutions with computer,
administrative and marketing support data
processing services.
Brocade Communications Systems, Inc.(1) 8,400 810,075
Network storage specialist.
CAIS Internet, Inc.(1) 3,500 64,313
Producer of phone jacks which allow internet
connections for multiple dwellers.
Cambridge Technology Partners, Inc.(1) 35,000 614,688
Software consulting company.
Dendrite International(1) 23,000 830,875
Produces marketing software.
Digital Island, Inc.(1) 12,900 231,394
Network service provider.
Eclipsys Corp.(1) 10,000 239,375
Markets healthcare information.
IDX Systems Corp.(1) 25,000 564,063
Healthcare information systems.
Marimba Software(1) 200 10,538
Makes software that allows companies to
install and update software applications.
Medical Manager Corp.(1) 17,150 758,888
Provides the Medical Manager physician
practice management system.
Mobius Management Systems, Inc.(1) 10,000 82,500
Makes data management software for
financial, health care and retail markets.
Peregrine Systems, Inc.(1) 23,000 590,813
Creates software to aid in managing and
monitoring business through the use
of a network.
Phoenix Technology Ltd.(1) 15,000 268,125
Provider of software that controls the
communication between computer hardware
and operating systems.
Remedy Corp.(1) 8,300 223,063
Help desk management software.
Sapient Corp.(1) 7,000 396,375
Provides custom based software.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
SPECIAL EQUITIES PORTFOLIO AS OF JUNE 30, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
Information Services (continued)
- -----------------------------------------------------------------------------------
Siebel Systems, Inc.(1) 16,000 $ 1,062,000
Supplies sales, marketing, and customer
service information systems.
Veritas Software Co.(1) 15,250 1,447,796
Provides communications companies with
software measuring systems.
- -----------------------------------------------------------------------------------
$ 11,945,817
- -----------------------------------------------------------------------------------
Insurance -- 2.3%
- -----------------------------------------------------------------------------------
Mutual Risk Management Ltd. 34,506 $ 1,151,637
Specialty insurer focusing on
workmen's compensation.
Reinsurance Group of America, Inc. 21,000 703,500
Provides life reinsurance in North America.
- -----------------------------------------------------------------------------------
$ 1,855,137
- -----------------------------------------------------------------------------------
Investment Services -- 0.8%
- -----------------------------------------------------------------------------------
Centura Banks, Inc. 10,000 $ 563,750
Growing Southeastern bankers.
PIMCO Advisors Holdings L.P. 3,000 89,250
Provides investment management services.
- -----------------------------------------------------------------------------------
$ 653,000
- -----------------------------------------------------------------------------------
Machinery -- 0.7%
- -----------------------------------------------------------------------------------
Varco International, Inc.(1) 52,000 $ 568,750
International manufacturer of oil and gas
equipment.
- -----------------------------------------------------------------------------------
$ 568,750
- -----------------------------------------------------------------------------------
Medical Products -- 3.3%
- -----------------------------------------------------------------------------------
Entremed, Inc.(1) 7,000 $ 157,500
Develops drugs which inhibit the abnormal
growth of new blood vessels.
Haemonetics Corp.(1) 36,000 722,250
Designs and manufactures equipment for the
collection, processing and surgical salvage
of blood.
Millennium Pharmaceuticals(1) 7,000 252,000
Develops treatments and diagnostics for such
conditions as obesity, diabetes, asthma and
cancer.
Osteotech, Inc.(1) 9,425 270,969
Markets products to facilitate in the healing of
the bones and muscles.
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------------------
Medical Products (continued)
- -----------------------------------------------------------------------------------
Resmed, Inc.(1) 18,000 $ 597,375
Makes devices that help diagnose and treat
obstructive sleep apnea.
Xomed Surgical Products, Inc.(1) 15,000 730,313
Provides surgical products for the ear, nose and
throat market.
- -----------------------------------------------------------------------------------
$ 2,730,407
- -----------------------------------------------------------------------------------
Metals - Industrial -- 0.5%
- -----------------------------------------------------------------------------------
Stillwater Mining Co.(1) 12,000 $ 392,250
Explores, develops and mines platinum
and palladium.
- -----------------------------------------------------------------------------------
$ 392,250
- -----------------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 7.2%
- -----------------------------------------------------------------------------------
Cross Timbers Oil Co. 80,000 $ 1,189,999
Emerging growth energy company with good
exploration track record.
Louis Dreyfus Natural Gas(1) 45,940 990,581
Niche developer and driller of gas properties.
Newfield Exploration Co.(1) 38,000 1,080,625
Acquires and develops energy properties in
domestic U.S.
Noble Affiliates, Inc. 32,000 902,000
Explores and produces oil and gas in the United
States, Canada and Africa.
Nuevo Energy Co.(1) 45,000 596,250
Explores and produces natural gas and oil.
Santa Fe Snyder Corp.(1) 28,700 218,838
Explores and develops oil and gas fields in the
United States and Mexico.
Stone Energy Corp.(1) 14,000 593,250
Acquires and develops oil and natural gas in the
Gulf Coastal basin.
Vintage Petroleum, Inc. 31,000 333,250
Buys oil producing properties in the U.S. and
South America.
- -----------------------------------------------------------------------------------
$ 5,904,793
- -----------------------------------------------------------------------------------
Other Financial -- 1.0%
- -----------------------------------------------------------------------------------
Waddell & Reed Financial, Inc., Class A 30,000 $ 823,125
Asset management services.
- -----------------------------------------------------------------------------------
$ 823,125
- -----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
SPECIAL EQUITIES PORTFOLIO AS OF JUNE 30, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
Publishing -- 1.5%
- -----------------------------------------------------------------------------------
Central Newspapers, Inc., Class A 31,600 $ 1,188,949
Publishes the Arizona Republic, the Arizona
Business Gazette, the Indianapolis Star, the
Indianapolis News, and community newspapers
in Indiana and Louisiana.
- -----------------------------------------------------------------------------------
$ 1,188,949
- -----------------------------------------------------------------------------------
Retail - Food and Drug -- 3.5%
- -----------------------------------------------------------------------------------
Applebees International, Inc. 25,000 $ 753,125
Casual dining restaurant chain.
Papa John's International, Inc.(1) 24,000 1,072,500
Rapidly growing restaurant chain.
Sonic Corp.(1) 24,000 783,000
Largest chain of service drive-ins in the U.S.
Wild Oats Markets, Inc.(1) 7,000 212,407
Natural foods supermarket chain.
- -----------------------------------------------------------------------------------
$ 2,821,032
- -----------------------------------------------------------------------------------
Retail - Specialty and Apparel -- 6.8%
- -----------------------------------------------------------------------------------
99 Cents Only Stores(1) 10,000 $ 499,375
Discount retailer.
Bed Bath and Beyond, Inc.(1) 26,000 1,001,000
Specialty retailer.
Childrens Place(1) 15,000 607,500
Children's clothing retailer.
Ethan Allen Interiors, Inc. 37,500 1,415,624
Manufactures home furnishings.
O'Reilly Automotive, Inc.(1) 16,000 806,000
Supplier of automotive equipment and accessories.
The Buckle, Inc.(1) 15,000 431,250
Specialty apparel retailer to the 12 to 25 year
old age group.
The Mens Wearhouse, Inc.(1) 32,000 816,000
Specialty apparel chain.
- -----------------------------------------------------------------------------------
$ 5,576,749
- -----------------------------------------------------------------------------------
Semiconductor Equipment -- 0.4%
- -----------------------------------------------------------------------------------
PRI Automation, Inc.(1) 10,000 $ 362,500
Material handling equipment for high cost
semiconductor wafers.
- -----------------------------------------------------------------------------------
$ 362,500
- -----------------------------------------------------------------------------------
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------------------
Software Services -- 0.6%
- -----------------------------------------------------------------------------------
Great Plains Software, Inc.(1) 11,000 $ 519,063
Manufactures accounting programs for small to
midsized companies.
- -----------------------------------------------------------------------------------
$ 519,063
- -----------------------------------------------------------------------------------
Solid Waste -- 0.5%
- -----------------------------------------------------------------------------------
Casella Waste Systems, Inc., Class A(1) 15,000 $ 390,000
Collects non-hazardous waste.
- -----------------------------------------------------------------------------------
$ 390,000
- -----------------------------------------------------------------------------------
Transportation -- 1.7%
- -----------------------------------------------------------------------------------
Swift Transportation Co., Inc.(1) 64,800 $ 1,425,599
Regional truckload carrier offering
computerized tracking services.
- -----------------------------------------------------------------------------------
$ 1,425,599
- -----------------------------------------------------------------------------------
Total Common Stocks
(identified cost $55,510,340) $ 78,967,544
- -----------------------------------------------------------------------------------
COMMERCIAL PAPER -- 3.3%
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -----------------------------------------------------------------------------------
Associates Corp., 5.75%, 7/1/99 $ 2,708 $ 2,708,000
- -----------------------------------------------------------------------------------
Total Commercial Paper
(identified cost $2,708,000) $ 2,708,000
- -----------------------------------------------------------------------------------
Total Investments -- 99.7%
(identified cost $58,218,340) $ 81,675,544
- -----------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.3% $ 239,172
- -----------------------------------------------------------------------------------
Net Assets -- 100% $ 81,914,716
- -----------------------------------------------------------------------------------
</TABLE>
(1) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
SPECIAL EQUITIES PORTFOLIO AS OF JUNE 30, 1999
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
<S> <C>
Assets
- ------------------------------------------------------
Investments, at value
(identified cost, $58,218,340) $ 81,675,544
Cash 712
Receivable for investments sold 3,337,313
Interest and dividends receivable 6,332
Deferred organization expenses 272
- ------------------------------------------------------
TOTAL ASSETS $ 85,020,173
- ------------------------------------------------------
Liabilities
- ------------------------------------------------------
Payable for investments purchased $ 3,090,520
Payable to affiliate for Trustees' fees 1,172
Other accrued expenses 13,765
- ------------------------------------------------------
TOTAL LIABILITIES $ 3,105,457
- ------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $ 81,914,716
- ------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $ 58,457,512
Net unrealized appreciation (computed on
the basis of identified cost) 23,457,204
- ------------------------------------------------------
TOTAL $ 81,914,716
- ------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 1999
<S> <C>
Investment Income
- -----------------------------------------------------
Dividends $ 113,569
Interest 53,856
- -----------------------------------------------------
TOTAL INVESTMENT INCOME $ 167,425
- -----------------------------------------------------
Expenses
- -----------------------------------------------------
Investment adviser fee $ 237,170
Trustees fees and expenses 3,982
Custodian fee 32,707
Legal and accounting services 11,222
Amortization of organization expenses 1,583
Miscellaneous 3,363
- -----------------------------------------------------
TOTAL EXPENSES $ 290,027
- -----------------------------------------------------
NET INVESTMENT LOSS $ (122,602)
- -----------------------------------------------------
Realized and Unrealized
Gain (Loss)
- -----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 2,085,187
- -----------------------------------------------------
NET REALIZED GAIN $ 2,085,187
- -----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 3,574,160
- -----------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 3,574,160
- -----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 5,659,347
- -----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 5,536,745
- -----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
SPECIAL EQUITIES PORTFOLIO AS OF JUNE 30, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
Increase (Decrease) JUNE 30, 1999 YEAR ENDED
in Net Assets (UNAUDITED) DECEMBER 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------
From operations --
Net investment loss $ (122,602) $ (198,515)
Net realized gain 2,085,187 8,602,338
Net change in unrealized appreciation
(depreciation) 3,574,160 3,223,464
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 5,536,745 $ 11,627,287
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $ 4,417,349 $ 5,783,708
Withdrawals (6,789,703) (16,629,759)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ (2,372,354) $ (10,846,051)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 3,164,391 $ 781,236
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ 78,750,325 $ 77,969,089
- --------------------------------------------------------------------------------
AT END OF PERIOD $ 81,914,716 $ 78,750,325
- --------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
SPECIAL EQUITIES PORTFOLIO AS OF JUNE 30, 1999
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 ----------------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994(1)
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average daily net assets
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses 0.77%(2) 0.76% 0.75% 0.76% 0.77% 0.74%(2)
Net investment income (loss) (0.33)%(2) (0.26)% (0.10)% 0.18% 0.19% 0.20%(2)
Portfolio Turnover 41% 116% 156% 91% 81% 19%
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000'S
OMITTED) $ 81,915 $ 78,750 $ 77,969 $ 82,947 $ 73,940 $ 64,442
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, August 1, 1994, to December 31,
1994.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
SPECIAL EQUITIES PORTFOLIO AS OF JUNE 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1 Significant Accounting Policies
- -------------------------------------------
Special Equities Portfolio (formerly Special Investment 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 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 Investment 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 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 bid and asked prices. 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 -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes. Dividend income is recorded on the ex-dividend date for
dividends received in cash and/or securities. However, if the ex-dividend
date has passed, certain dividends from foreign securities are recorded as
the Portfolio is informed of the ex-dividend date.
C Income Taxes -- The Portfolio has elected to be 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 Internal Revenue 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. Withholding taxes on foreign dividends and
capital gains have been provided for in accordance with the Portfolio's
understanding of the applicable countries' tax rules and rates.
D Other -- Investment transactions are accounted for on a trade date basis.
E Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
F Use of Estimates -- The preparation of 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 revenue and expense during the reporting period. Actual results could
differ from those estimates.
G Interim Financial Statements -- The interim financial statements relating to
June 30, 1999 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the
Portfolio's management, reflect all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
17
<PAGE>
SPECIAL EQUITIES PORTFOLIO AS OF JUNE 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
2 Investment Adviser Fee and Other Transactions with Affiliates
- -------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to the Portfolio.
The fee is at the annual rate of 5/8 of 1% of average daily net assets. For
the six months ended June 30, 1999, the fee was equivalent to 0.625%
(annualized) of the Portfolio's average net assets for such period and
amounted to $237,170. 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 of the above organizations. Trustees of the Portfolio that are not
affiliated with the Investment Adviser may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of the Trustees
Deferred Compensation Plan. For the six months ended June 30, 1999, no
significant amounts have been deferred.
3 Investment Transactions
- -------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $30,815,289 and $34,203,443, respectively.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investments
owned at June 30, 1999, as computed on a federal income tax basis, were as
follows:
<TABLE>
<S> <C>
AGGREGATE COST $ 58,218,340
- ------------------------------------------------------
Gross unrealized appreciation $ 24,291,444
Gross unrealized depreciation (834,240)
- ------------------------------------------------------
NET UNREALIZED APPRECIATION $ 23,457,204
- ------------------------------------------------------
</TABLE>
5 Line of Credit
- -------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $130 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 Eurodollar rate or Federal Funds rate. In addition, a fee
computed at an annual rate of 0.10% 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 six months ended June 30, 1999.
6 Risk Associated with Foreign Investments
- -------------------------------------------
Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those
not subject to the disclosure and reporting requirements of the U.S.
securities laws. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and standards of
practice comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitation on the removal of funds or other assets of the
Portfolio, political or financial instability or diplomatic and other
developments which could affect such investments. Foreign stock markets,
while growing in volume and sophistication, are generally not as developed as
those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and
more volatile than securities of comparable U.S. companies. In general, there
is less overall governmental supervision and regulation of foreign securities
markets, broker-dealers and issuers than in the United States.
7 Financial Instruments
- -------------------------------------------
The Portfolio may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options, forward foreign currency exchange contracts, and financial futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes. The notional or
contractual amounts of these instruments represent the investment the
Portfolio has in particular classes of financial instruments and does not
necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. At June 30, 1999
there were no outstanding obligations under these financial instruments.
8 Name Change
- -------------------------------------------
On May 1, 1999, Special Investment Portfolio changed its name to Special
Equities Portfolio.
18
<PAGE>
EATON VANCE SPECIAL EQUITIES FUND AS OF JUNE 30, 1999
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
<S> <C>
Assets
------------------------------------------------------------------------------------
Investment in Special Equities Portfolio, at value
(identified cost, $58,457,491) $ 81,914,691
Deferred organization expenses 4,206
------------------------------------------------------------------------------------
TOTAL ASSETS $ 81,918,897
------------------------------------------------------------------------------------
Liabilities
------------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 33,130
Payable to affiliate for Trustees' fees 175
Other accrued expenses 51,977
------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 85,282
------------------------------------------------------------------------------------
NET ASSETS $ 81,833,615
------------------------------------------------------------------------------------
Sources of Net Assets
------------------------------------------------------------------------------------
Paid-in capital $ 56,864,343
Accumulated undistributed net realized gain from Portfolio (computed
on the basis of identified cost) 1,801,766
Accumulated net investment loss (289,694)
Net unrealized appreciation from Portfolio (computed on the basis of
identified cost) 23,457,200
------------------------------------------------------------------------------------
TOTAL $ 81,833,615
------------------------------------------------------------------------------------
Class A Shares
------------------------------------------------------------------------------------
NET ASSETS $ 77,054,976
SHARES OUTSTANDING 9,835,698
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of beneficial interest outstanding) $ 7.83
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 94.25 of $7.83) $ 8.31
------------------------------------------------------------------------------------
Class B Shares
------------------------------------------------------------------------------------
NET ASSETS $ 3,753,853
SHARES OUTSTANDING 240,110
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of beneficial interest outstanding) $ 15.63
------------------------------------------------------------------------------------
Class C Shares
------------------------------------------------------------------------------------
NET ASSETS $ 1,024,786
SHARES OUTSTANDING 88,913
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of beneficial interest outstanding) $ 11.53
------------------------------------------------------------------------------------
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 1999
<S> <C>
Investment Income
------------------------------------------------------------------------------------
Dividends allocated from Portfolio $ 113,569
Interest allocated from Portfolio 53,856
Expenses allocated from Portfolio (290,027)
------------------------------------------------------------------------------------
NET INVESTMENT LOSS FROM PORTFOLIO $ (122,602)
------------------------------------------------------------------------------------
Expenses
------------------------------------------------------------------------------------
Trustees fees and expenses $ 952
Distribution and service fees
Class A 42,541
Class B 17,110
Class C 4,058
Transfer and dividend disbursing agent fees 35,155
Registration fees 27,150
Legal and accounting services 11,794
Amortization of organization expenses 9,548
Custodian fee 7,874
Printing and postage 6,755
Miscellaneous 4,155
------------------------------------------------------------------------------------
TOTAL EXPENSES $ 167,092
------------------------------------------------------------------------------------
NET INVESTMENT LOSS $ (289,694)
------------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
------------------------------------------------------------------------------------
Net realized gain (loss)--
Investment transactions (identified cost basis) $ 2,085,187
------------------------------------------------------------------------------------
NET REALIZED GAIN $ 2,085,187
------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)--
Investments $ 3,574,159
------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 3,574,159
------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 5,659,346
------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 5,369,652
------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
EATON VANCE SPECIAL EQUITIES FUND AS OF JUNE 30, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
Increase (Decrease) 1999 DECEMBER 31,
in Net Assets (UNAUDITED) 1998
<S> <C> <C>
---------------------------------------------------------------------------------------------------
From operations --
Net investment loss $ (289,694) $ (600,344)
Net realized gain 2,085,187 8,602,335
Net change in unrealized
appreciation (depreciation) 3,574,159 3,223,462
---------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 5,369,652 $ 11,225,453
---------------------------------------------------------------------------------------------------
Distributions to shareholders--
From net realized gain
Class A $ (1,839,486) $ (5,187,831)
Class B (43,204) (142,469)
Class C (14,288) (33,753)
---------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (1,896,978) $ (5,364,053)
---------------------------------------------------------------------------------------------------
Transactions in shares of
beneficial interest--
Proceeds from sale of shares
Class A $ 2,949,194 $ 1,893,610
Class B 492,675 1,665,734
Class C 359,223 1,827,760
Issued in reorganization of EV Marathon and EV Classic Special
Equities Funds
Class B -- 3,498,869
Class C -- 1,401,510
Net asset value of shares issued to shareholders in payment of
distributions declared
Class A 1,645,573 4,613,846
Class B 39,329 130,570
Class C 14,166 33,747
Cost of shares redeemed
Class A (4,680,582) (11,222,902)
Class B (892,941) (1,730,770)
Class C (116,086) (2,566,571)
---------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS $ (189,449) $ (454,597)
---------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 3,283,225 $ 5,406,803
---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1999 DECEMBER 31,
Net Assets (UNAUDITED) 1998
<S> <C> <C>
---------------------------------------------------------------------------------------------------
At beginning of period $ 78,550,390 $ 73,143,587
---------------------------------------------------------------------------------------------------
AT END OF PERIOD $ 81,833,615 $ 78,550,390
---------------------------------------------------------------------------------------------------
Accumulated
net investment
loss included
in net assets
---------------------------------------------------------------------------------------------------
AT END OF PERIOD $ (289,694) --
---------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
EATON VANCE SPECIAL EQUITIES FUND AS OF JUNE 30, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
(UNAUDITED)(1)
-----------------------------------
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value-- Beginning of period $ 7.500 $14.820 $11.000
- -----------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------
Net investment loss $ (0.026) $(0.112) $(0.084)
Net realized and unrealized gain (loss) 0.541 1.107 0.799
- -----------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.515 $ 0.995 $ 0.715
- -----------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------
From net realized gain $ (0.185) $(0.185) $(0.185)
In excess of net realized gain -- -- --
From tax return of capital -- -- --
- -----------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.185) $(0.185) $(0.185)
- -----------------------------------------------------------------------------------
NET ASSET VALUE-- END OF PERIOD $ 7.830 $15.630 $11.530
- -----------------------------------------------------------------------------------
TOTAL RETURN(2) 7.18% 6.87% 6.71%
- -----------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 77,055 $ 3,754 $ 1,025
Ratios (As a percentage of average daily net
assets):
Expenses(3) 1.17%(4) 2.03%(4) 2.04%(4)
Net investment loss (0.72)%(4) (1.59)%(4) (1.60)%(4)
Portfolio turnover(5) -- -- --
- -----------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
---------------------------- ---------- ---------- --------- ---------
CLASS A CLASS B CLASS C CLASS A CLASS A CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------
Net asset value-- Beginning of period $ 6.990 $13.320 $ 9.960 $ 8.950 $ 7.980 $ 6.880 $ 8.430
- -----------------------------------------------
Income (loss) from operations
- -----------------------------------------------
Net investment loss $ (0.055) $(0.162) $(0.241) $ (0.032) $ (0.009) $ (0.009) $ (0.013)
Net realized and unrealized gain (loss) 1.126 2.223 1.842 0.922 1.874 1.599 (0.807)
- -----------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 1.071 $ 2.061 $ 1.601 $ 0.890 $ 1.865 $ 1.590 $ (0.820)
- -----------------------------------------------
Less distributions
- -----------------------------------------------
From net realized gain $ (0.561) $(0.561) $(0.561) $ (2.706) $ (0.895) $ (0.490) $ (0.727)
In excess of net realized gain -- -- -- (0.144) -- -- --
From tax return of capital -- -- -- -- -- -- (0.003)
- -----------------------------------------------
TOTAL DISTRIBUTIONS $ (0.561) $(0.561) $(0.561) $ (2.850) $ (0.895) $ (0.490) $ (0.730)
- -----------------------------------------------
NET ASSET VALUE-- END OF PERIOD $ 7.500 $14.820 $11.000 $ 6.990 $ 8.950 $ 7.980 $ 6.880
- -----------------------------------------------
TOTAL RETURN(2) 15.82% 15.74% 16.44% 14.18% 23.76% 23.31% (9.60)%
- -----------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------
Net assets, end of period (000's omitted) $ 73,896 $ 3,946 $ 709 $ 73,144 $ 76,999 $ 70,456 $ 63,852
Ratios (As a percentage of average daily net
assets):
Expenses(3) 1.23% 2.09% 2.11% 1.12% 1.04% 1.08% 1.02%
Net investment loss (0.76)% (1.25)% (1.24)% (0.46)% (0.10)% (0.12)% (0.17)%
Portfolio turnover(5) -- -- -- -- -- -- 37%
- -----------------------------------------------
</TABLE>
(1) Computed using average shares outstanding.
(2) 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
reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.
(3) Includes the Fund's share of the Portfolio's allocated expenses for the
period the Fund was investing in the Portfolio.
(4) Annualized.
(5) Portfolio Turnover represents the rate of portfolio activity for the period
while the Fund was making investments directly in securities. The portfolio
turnover rate for the period since the Fund transferred all of its
investable assets to the Portfolio is shown in the Portfolio's financial
statements which are included elsewhere in this report.
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
EATON VANCE SPECIAL EQUITIES FUND AS OF JUNE 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1 Significant Accounting Policies
- -------------------------------------------
Eaton Vance Special Equities 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 Investment Company Act of 1940, as amended, as an open-end
management investment company. The Fund offers three classes of shares: Class
A, Class B and Class C shares. Class A shares are generally sold subject to a
sales charge imposed at time of purchase. Class B and Class C shares are sold
at net asset value and are subject to a contingent deferred sales charge (see
Note 6). Each class represents a pro rata interest in the Fund, but votes
separately on class-specific matters and (as noted below) is subject to
different expenses. Realized and unrealized gains and losses and net
investment income, other than class specific expenses, are allocated daily to
each class of shares based on the relative net assets of each class to the
total net assets of the Fund. Each class of shares differs in its
distribution plan and certain other class specific expenses. The Fund invests
all of its investable assets in interests in the Special Equities 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 (99.9% at
June 30, 1999). 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 Valuation -- Valuation 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 determined in accordance with generally accepted
accounting principles. Prior to the Fund's investment in the Portfolio, the
Fund held its investments directly.
C Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal
income or excise tax is necessary.
D Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on
the straight-line basis over five years.
E Other -- Investment transactions are accounted for on a trade date basis.
F Use of Estimates -- The preparation of 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 revenue and expense during the reporting period. Actual results could
differ from those estimates.
G Interim Financial Statements -- The interim financial statements relating to
June 30, 1999 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders
- -------------------------------------------
The Fund's 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
substantially all of the 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
temporary over-distributions for financial statement purposes are classified
as distributions in excess of net investment income or net realized gain on
investments. Permanent differences between book and tax accounting relating
to distributions are reclassified to paid-in capital.
6
<PAGE>
EATON VANCE SPECIAL EQUITIES FUND AS OF JUNE 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
3 Shares of Beneficial Interest
- -------------------------------------------
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Such shares may be issued in a number of different series (such as
the Fund) and classes. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
CLASS A (UNAUDITED) DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
Sales 402,865 256,223
Issued to shareholders electing to
receive payment of distributions in
Fund shares 237,114 653,229
Redemptions (652,963) (1,529,766)
- ------------------------------------------------------------------------------
NET DECREASE (12,984) (620,314)
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
CLASS B (UNAUDITED) DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
Sales 34,304 120,423
Issued to shareholders electing to
receive payment of distributions in
Fund shares 2,838 9,385
Redemptions (63,319) (126,187)
Issued to EV Marathon Special Equities
Fund shareholders -- 262,666
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) (26,177) 266,287
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
CLASS C (UNAUDITED) DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
Sales 33,859 172,684
Issued to shareholders electing to
receive payment of distributions in
Fund shares 1,383 3,262
Redemptions (10,794) (252,164)
Issued to EV Classic Special Equities
Fund shareholders -- 140,683
- ------------------------------------------------------------------------------
NET INCREASE 24,448 64,465
- ------------------------------------------------------------------------------
</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 2 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. Eaton Vance Distributors, Inc. (EVD), a subsidiary of
EVM and the Fund's principal underwriter, received $2,497 from the Fund as
its portion of the sales charge on sales of Class A shares for the six months
ended June 30, 1999.
Certain officers and Trustees of the Fund and of the Portfolio are officers
of the above organizations.
5 Distribution and Service Plans
- -------------------------------------------
The Fund has adopted distribution plans (Class B Plan and Class C Plan)
pursuant to Rule 12b-1 under the Investment Company Act of 1940 and a service
plan (Class A Plan) (collectively, the Plans). The Plans require the Fund to
pay EVD amounts equal to 1/365 of 0.75% of the Fund's average daily net
assets attributable to Class B and Class C shares for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no
outstanding Uncovered Distribution Charges, which are equivalent to the sum
of (i) 5% and 6.25% of the aggregate amount received by the Fund for the
Class B and Class C shares sold, respectively plus, (ii) interest calculated
by applying the rate of 1% over the prevailing prime rate to the outstanding
balance of Uncovered Distribution Charges of EVD of each respective class,
reduced by the aggregate amount of contingent deferred sales charges (see
Note 6) and amounts theretofore paid to EVD by each respective class. The
Fund paid or accrued $13,008 and $3,042 for Class B and Class C shares,
respectively to or payable to EVD for the six months ended June 30, 1999,
representing 0.75% (annualized) of the average daily net assets for Class B
and Class C shares. At June 30, 1999, the amount of Uncovered Distribution
Charges of EVD calculated under the Plans were approximately $71,000 and
$273,000 for Class B and Class C shares, respectively.
7
<PAGE>
EATON VANCE SPECIAL EQUITIES FUND AS OF JUNE 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
In addition, the Plans also authorize each class to make payments of service
fees to EVD, investment dealers or other persons in amounts not exceeding
0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees have initially implemented the Plans by authorizing the Fund to make
quarterly payments of service fees to EVD and investment dealers in amounts
not expected to exceed 0.25% per annum of the Fund's average daily net assets
attributable to Class A and Class B shares based on the value of the Fund
shares sold by such persons and remaining outstanding for at least twelve
months. The Class C Plan requires the Fund to make monthly payments of
service fees in amounts not expected to exceed 0.25% of the Fund's average
daily net assets attributable to Class C shares for any fiscal year. Service
fee payments are made for personal services and/or the maintenance of
shareholder accounts. 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 when there are no outstanding
Uncovered Distribution Charges of EVD. Service fee payments for the six
months ended June 30, 1999 amounted to $42,541, $4,102 and $1,016 for Class
A, Class B and Class C shares, respectively.
Certain officers and Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
- -------------------------------------------
A contingent deferred sales charge (CDSC) generally is imposed on redemptions
of Class B shares made within six years of purchase and on redemptions of
Class C shares made within one year of purchase. A CDSC of 1% is imposed on
any redemption of Class A shares made within 12 months of purchase that were
acquired at net asset value if the purchase amount was $1 million or more.
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
reinvestment of dividends or capital gains distributions. The Class B CDSC is
imposed at declining rates that begin at 5% in the case of redemptions in the
first and second year after purchase, declining one percentage point each
subsequent year. Class C shares will be subject to a 1% CDSC if redeemed
within one year of purchase. No CDSC is levied on shares which have been sold
to EVM or its affiliates or to their respective employees or clients and may
be waived under certain other circumstances. CDSC charges are paid to EVD to
reduce the amount of Uncovered Distribution Charges calculated under the
Fund's Class B and Class C Distribution Plans (see Note 5). CDSC charges
received when no Uncovered Distribution Charges exist will be retained by the
Fund. EVD received approximately $17,000 and $0 of CDSC paid by shareholders
for Class B shares and Class C shares, respectively, for the six months ended
June 30, 1999.
7 Investment Transactions
- -------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio aggregated
$4,417,349 and $6,789,703, respectively, for the six months ended June 30,
1999.
8 Transfer of Net Assets
- -------------------------------------------
On January 1, 1998, EV Traditional Special Equities Fund acquired the net
assets of the EV Marathon Special Equities Fund and the EV Classic Special
Equities Fund pursuant to an Agreement and Plan of Reorganization dated June
23, 1997. In accordance with the agreement, EV Traditional Special Equities
Fund, at the closing, issued 262,666 Class B shares and 140,683 Class C
shares of the Fund having an aggregate value of $3,498,869 and $1,401,510,
respectively. As a result, the Fund issued one Class B share and one Class C
share for each share of EV Marathon Special Equities Fund and EV Classic
Special Equities Fund, respectively. The transaction was structured for tax
purposes to qualify as a tax free reorganization under the Internal Revenue
Code. The EV Marathon Special Equities Fund's and EV Classic Special Equities
Fund's net assets at the date of the transaction were $3,498,869 and
$1,401,510, respectively, including $605,373 and $372,397 of unrealized
appreciation. Directly after the merger, the combined net assets of the Eaton
Vance Special Equities Fund (formerly EV Traditional Special Equities Fund)
were $78,043,966 with a net asset value of $6.99, $13.32 and $9.96 for Class
A, Class B and Class C shares, respectively.
8
<PAGE>
EATON VANCE SPECIAL EQUITIES FUND AS OF JUNE 30, 1999
INVESTMENT MANAGEMENT
EATON VANCE SPECIAL EQUITIES FUND
Officers
James B. Hawkes
President and Trustee
Edward E. Smiley, Jr.
Vice President
Michael B. Terry
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of
Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
SPECIAL EQUITIES PORTFOLIO
Officers
James B. Hawkes
President and Trustee
Edward E. Smiley, Jr.
Vice President and
Portfolio Manager
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate School of
Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
19
<PAGE>
INVESTMENT ADVISER OF
SPECIAL EQUITIES PORTFOLIO
Boston Management and Research
The Eaton Vance Building
255 State Street
Boston, MA 02109
ADMINISTRATOR OF
EATON VANCE SPECIAL EQUITIES FUND
Eaton Vance Management
The Eaton Vance Building
255 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
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
EATON VANCE SPECIAL EQUITIES FUND
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
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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.
3-4262 SESRC-8/99
