<PAGE>
TO SHAREHOLDERS
SECOND FIDUCIARY EXCHANGE FUND HAD A TOTAL RETURN OF 1.1 PERCENT DURING THE YEAR
THAT ENDED DECEMBER 31, 1994. That return represented a decrease in net asset
value per share to $125.59 from $126.26, and the reinvestment of $2.05 in income
dividends. By comparison, the S&P 500 Index, an unmanaged index of common
stocks, had a return of 1.4 percent during the same period.
SHAREHOLDERS RECEIVED INCOME DIVIDENDS TOTALING $2.05 PER SHARE DURING THE 12
MONTHS THAT ENDED DECEMBER 31, 1994.
THE ECONOMY CONTINUED TO POST SOLID GROWTH IN 1994. THIRD-QUARTER GROSS DOMESTIC
PRODUCT ROSE 3.4 PERCENT, FOLLOWING A 4.1 PERCENT GAIN IN THE FIRST QUARTER. The
economy was fueled by increases in capital spending by business.Such spending
was up significantly in the past year, according to the U.S. Department of
Commerce. The improved economic activity was reflected in brisk job growth as
well, with November unemployment down to 5.6 percent.
BY MOST MEASURES, INFLATION CONTINUES TO BE MODEST. However, the Federal Reserve
- - having already raised short-term rates on six occasions in 1994 - is
maintaining a close watch on inflation indices and commodity prices. Core
inflation - which excludes the volatile energy and food categories - remained in
the range of 2.7 percent.
ON THE COMMODITY FRONT, A STRONGER U.S. ECONOMY AND AN IMPROVING ECONOMY ABROAD
INCREASED PRICES FOR KEY BASE METALS. After drifting for some time, crude oil
prices jumped considerably during the summer, leading to a rise in oil stock
prices. These inflation concerns - together with the Fed actions and a
stubbornly weak dollar - pushed long-term Treasury yields to 8.1 percent on
November 30, their highest level since early 1992.
CYCLICAL STOCKS WERE AMONG THE BETTER PERFORMERS DURING THE FIRST HALF OF 1994.
However, during the second six months, growth stocks rallied for the first time
in more than a year. This shift benefited the Fund's growth and cyclical growth
stocks. Growth companies with international operations should show better
earnings if there is an economic slowdown in the U.S. next year.
<PAGE>
DURING THE YEAR THAT ENDED DECEMBER 31, 1994, THE STRONG FUNDAMENTALS AND
UNDERVALUATION OF TECHNOLOGY STOCKS CAUSED THIS SECTOR TO APPRECIATE. Within the
Fund, the greatest gains were registered in business products and services,
consumer services and consumer non-durables. Utilities suffered steep losses
during the period, while basic industries and industrial electronics also
declined.
[Photograph Landon T. Clay]
"OVER THE LONG-TERM, INVESTMENTS THAT FOCUS ON A REPRESENTATIVE PORTFOLIO OF
HIGH QUALITY COMMON STOCKS ARE LIKELY TO DELIVER SOUND PERFORMANCE."
INTEREST RATE-SENSITIVE STOCKS, INCLUDING THOSE OF INSURANCE AND FINANCE
COMPANIES, WERE AMONG THE MARKET'S WEAKER PERFORMERS DURING THE PERIOD. Bank and
finance company margins are likely to face increasing pressure due to softer
loan demand.
IN THE SHORT TERM, THE MARKET REMAINS VULNERABLE TO FURTHER INCREASES IN
INTEREST RATES. However, over the long-term, investments that focus on a
representative portfolio of high- quality common stocks are likely to deliver
sound performance. Because this remains the strategy of Second Fiduciary
Exchange Fund, I have confidence that the Fund will continue to participate in
the growth of the economy.
Sincerely,
/s/Landon T. Clay
Landon T. Clay
President
February 21, 1995
<PAGE>
SECOND FIDUCIARY
EXCHANGE FUND, INC.
DECEMBER 31, 1994
(UNAUDITED)
INVESTMENT CHANGES
SIX MONTHS ENDED DECEMBER 31, 1994
-----------------------------------------------------------------------------
Shares Owned
INCREASES 6/30/94 12/31/94
-----------------------------------------------------------------------------
Harcourt General, Inc. 300 20,000
-----------------------------------------------------------------------------
Illinois Tool Works Inc. --0-- 5,000
-----------------------------------------------------------------------------
Lotus Development Corp. 5,750 33,250
-----------------------------------------------------------------------------
Stride Rite Corp. --0-- 60,000
-----------------------------------------------------------------------------
Wheelabrator Technologies Inc. --0-- 60,000
-----------------------------------------------------------------------------
Bayer AG ADR 4,000 40,000
-----------------------------------------------------------------------------
DECREASES*
-----------------------------------------------------------------------------
Baxter International Inc. 54,550 50,750
-----------------------------------------------------------------------------
Dupont (E.I.) de Nemours & Co., Inc. 58,295 46,235
-----------------------------------------------------------------------------
Intel Corp. 47,550 38,980
-----------------------------------------------------------------------------
Novell Inc. 53,500 22,500
-----------------------------------------------------------------------------
Provident Life and Accident Insurance Co.
of America, Class B 25,289 20,889
-----------------------------------------------------------------------------
Warner-Lambert Co. 11,502 9,442
-----------------------------------------------------------------------------
Telefonos De Mexico, S.A. de C.V. 12,000 8,000
-----------------------------------------------------------------------------
Apple Computer, Inc. 6,250 --0--
-----------------------------------------------------------------------------
MacDermid, Inc. 76,200 --0--
-----------------------------------------------------------------------------
Nanometrics, Inc. 309,850 --0--
-----------------------------------------------------------------------------
*Includes investments paid in kind on redemptions.
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
NAME OF COMPANY SHARES VALUE
- ---------------------------------------------------------------------------------------------------
COMMON STOCKS - 93.2%
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
BANKS - 1.0%
Wells Fargo & Co. 4,265 $ 618,425
-----------
BUSINESS PRODUCTS AND SERVICES - 8.6%
Banyan Inc.<F1> 40,000 $ 715,000
DeLuxe Corp. 57,150 1,514,475
General Motors Corp., Class E 25,000 962,500
Lotus Development Corp.<F1> 33,250 1,363,250
Microsoft Corp.<F1> 12,000 733,500
-----------
$ 5,288,725
-----------
CHEMICALS - 9.9%
Bayer AG ADR 40,000 $ 926,436
DuPont (E.I.) de Nemours & Co., Inc. 46,235 2,600,719
Great Lakes Chemical Corp. 45,100 2,570,700
-----------
$ 6,097,855
-----------
CHEMICALS - SPECIALTY - 5.8%
International Specialty Products, Inc. 87,500 $ 612,500
Loctite Corp. 23,000 1,069,500
Sealed Air Corp.<F1> 40,000 1,450,000
Wellman Inc. 15,000 423,750
-----------
$ 3,555,750
-----------
COMPUTER SERVICES - 0.6%
Novell Inc.<F1> 22,500 $ 385,312
-----------
CONSTRUCTION & REAL ESTATE - 1.8%
Gilbert Associates, Inc., Class A 78,125 $ 1,113,281
-----------
CONSUMER PRODUCTS - 5.2%
PepsiCo, Inc. 69,996 $ 2,537,355
Stride Rite Corp. 60,000 667,500
-----------
$ 3,204,855
-----------
DRUGS & MEDICAL - 6.3%
Bausch & Lomb, Inc. 14,680 $ 497,285
Baxter International Inc. 50,750 1,433,687
Caremark, Inc. 14,625 250,453
Merck & Co., Inc. 25,000 953,125
Warner-Lambert Co. 9,442 727,034
-----------
$ 3,861,584
-----------
<PAGE>
<CAPTION>
NAME OF COMPANY SHARES VALUE
- ---------------------------------------------------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 4.8%
General Electric Co. 57,680 $ 2,941,680
-----------
ELECTRONICS - 7.2%
Intel Corp. 38,980 $ 2,489,848
Raytheon Co. 30,900 1,973,738
-----------
$ 4,463,586
-----------
FOREST PRODUCTS - 2.9%
Union Camp Corp. 37,800 $ 1,781,325
-----------
GAS DISTRIBUTION & TRANSMISSION - 1.2%
Sonat, Inc. 27,200 $ 761,600
-----------
INSURANCE - 4.9%
Chubb Corp. 33,060 $ 2,558,017
Provident Life and Accident Insurance Co.
of America, Class B 20,889 454,336
-----------
$ 3,012,353
-----------
LEISURE/ENTERTAINMENT - 2.5%
Disney (Walt) Company 34,000 $ 1,568,250
-----------
MACHINERY & EQUIPMENT - 4.3%
Illinois Tool Works Inc. 5,000 $ 218,750
Tecumseh Products Co., Class A 40,350 1,815,750
Tecumseh Products Co., Class B 13,450 611,975
-----------
$ 2,646,475
-----------
OFFICE EQUIPMENT - 3.1%
Digital Equipment Corp.<F1> 23,100 $ 768,075
International Business Machines Corp. 15,590 1,145,865
-----------
$ 1,913,940
-----------
PETROLEUM - 4.5%
Chevron Corp. 40,000 $ 1,785,000
Mobil Corp. 11,898 1,002,406
-----------
$ 2,787,406
-----------
PETROLEUM SERVICES AND EQUIPMENT - 3.5%
Schlumberger Ltd. 42,274 $ 2,129,553
-----------
POLLUTION CONTROL - 1.8%
International Technology Corp. 10,576 $ 31,728
WMX Technologies, Inc. 40,000 1,050,000
-----------
$ 1,081,728
-----------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
<CAPTION>
NAME OF COMPANY SHARES VALUE
- ---------------------------------------------------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------------------------------------------------
PUBLISHING & PRINTING - 7.3%
Dun & Bradstreet Corp. 25,700 $ 1,413,500
McGraw-Hill Inc. 12,804 856,268
Times Mirror Co., Class A 49,576 1,555,447
Harcourt General, Inc. 20,000 705,000
-----------
$ 4,530,215
-----------
SPECIAL PRODUCTS AND SERVICES - 6.0%
Corning Inc. 35,000 $ 1,045,625
Millipore Corp. 30,000 1,451,250
Telefonos De Mexico, S.A. de C.V. 8,000 328,000
Wheelabrator Technologies Inc.<F1> 60,000 885,000
-----------
$ 3,709,875
-----------
-----------
TOTAL COMMON STOCKS
(Identified cost, $16,936,245) $57,453,773
-----------
-----------
<CAPTION>
FACE AMOUNT
(000 OMITTED)
-------------------------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 7.0%
-------------------------------------------------------------------------------------------------
American Express Credit Corp., 5.87% 1/03/95 $1,406 $ 1,405,541
CXC Inc., 5.95% 1/03/95 112 111,963
Ford Motor Credit Co., 5.95% 1/27/95 500 497,852
General Electric Capital Corp., 5.82% 1/09/95 2,300 2,297,025
-----------
TOTAL SHORT-TERM OBLIGATIONS, at amortized cost $ 4,312,381
-----------
TOTAL INVESTMENTS -- 100.2%
(Identified cost, $21,248,626) $61,766,154
OTHER ASSETS, LESS LIABILITIES -- (0.2%) (122,420
-----------
NET ASSETS -- 100.0% $61,643,734
-----------
-----------
<FN>
<F1>Non-income producing security.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investments, at value (Note 1A) (identified cost, $21,248,626) $61,766,154
Cash 695
Dividends receivable 123,258
Other assets 12,293
-----------
Total assets $61,902,400
LIABILITIES:
Federal tax on undistributed net realized long-term gain,
payable on behalf of shareholders (Note 1B) $245,003
Payable for capital stock redeemed 543
Payable to affiliates --
Custodian fee 4,355
Directors' fees 1,519
Accrued expenses 7,246
--------
Total liabilities 258,666
-----------
NET ASSETS for 490,821 shares of capital stock outstanding $61,643,734
-----------
-----------
SOURCES OF NET ASSETS:
Accumulated net realized gain on investment transactions (computed on the
basis of identified cost), less the excess of cost of capital stock
redeemed over proceeds from sales of capital stock (including shares
issued to shareholders electing to receive payment of distributions in
capital stock) $30,828,562
Accumulated distributions of net realized gain on investments as computed
for federal income tax purposes (529,808)
Unrealized appreciation of investments (computed on the basis of identified
cost) 40,517,528
Provision for federal tax on undistributed net realized long-term capital
gain, paid on behalf of shareholders (9,249,025)
Undistributed net investment income 76,477
-----------
Total $61,643,734
-----------
-----------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($61,643,734 / 490,821 shares of capital stock outstanding) $125.59
------
------
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS (Continued)
<CAPTION>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------------------------
For the Year Ended December 31, 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Income --
Dividends $ 1,385,470
Interest 183,494
-----------
Total income $ 1,568,964
Expenses --
Investment adviser fee (Note 4) $ 399,325
Compensation of Directors not members of the Investment
Adviser's organization 6,170
Custodian fees (Note 4) 44,001
Legal and accounting services 26,142
Printing and postage 23,759
Transfer and dividend disbursing agent fees 15,000
Miscellaneous 5,811
-----------
Total expenses 520,208
-----------
Net investment income $ 1,048,756
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments, computed on the basis of
identified cost
($700,008 net gain as computed for federal income tax
purposes) $ 4,245,415
Decrease in unrealized appreciation of investments (4,356,973)
-----------
Net realized and unrealized loss on investments (111,558)
-----------
Net increase in net assets from operations $ 937,198
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------
1994 1993
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,048,756 $ 927,910
Net realized gain on investments 4,245,415 4,434,111
Decrease in unrealized appreciation of investments (4,356,973) (1,881,977)
------------ ------------
Increase in net assets from operations $ 937,198 $ 3,480,044
Undistributed net investment income included in net asset
value of shares redeemed and issued -- (5,896)
Dividends to shareholders from net investment income (1,025,956) (889,652)
Provision for federal tax on undistributed net realized
long-term gain (Note 1B) (245,003) (219,119)
Net decrease from capital stock transactions (exclusive of
amounts allocated to net
investment income) (Note 2) (3,742,321) (4,174,498)
------------ ------------
Net decrease in net assets $ (4,076,082) $ (1,809,121)
NET ASSETS:
At beginning of year 65,719,816 67,528,937
------------ ------------
At end of year (including undistributed net investment
income of $76,477 and $53,677,
respectively) $61,643,734 $65,719,816
============= ============
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS (Continued)
<CAPTION>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
-------- -------- -------- -------- --------
NET ASSET VALUE, beginning of year $126.260 $121.950 $118.850 $ 94.790 $ 97.820
-------- -------- -------- -------- --------
INCOME FROM OPERATIONS:
Net investment income $ 2.103 $ 1.745 $ 1.688 $ 1.803 $ 1.840
Net realized and unrealized
gain (loss) on investments (0.224) 4.666 3.836 24.171 (2.690)
-------- -------- -------- -------- --------
Total income (loss) from
operations $ 1.879 $ 6.411 $ 5.524 $ 25.974 $ (0.850)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
From net investment income $ (2.05) $ (1.680) $ (1.710) $ 1.770) $ (2.180)
From net realized gain on
investments -- -- -- -- --
-------- -------- -------- --------- --------
Total distributions $ (2.05) $ (1.680) $ (1.710) $ (1.770) $ (2.180)
-------- -------- -------- -------- --------
PROVISION FOR FEDERAL TAX ON
UNDISTRIBUTED NET REALIZED
LONG-TERM GAIN (NOTE 1B) $ (0.499) $ (0.421) $ (0.714) $ (0.144) $ --
--------- ---------- ---------- -------- --------
NET ASSET VALUE, end of year $125.590 $126.260 $121.950 $ 118.850 $ 94.790
======== ======== ======== ======== ========
TOTAL RETURN (1) 1.09% 4.92% 4.27% 27.18% (0.85%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000's omitted) $ 61,644 $ 65,720 $ 67,529 $ 69,959 $60,645
Ratio of expenses to average
net assets 0.82% 0.81% 0.81% 0.82% 0.87%
Ratio of net investment income
to average net assets 1.65% 1.40% 1.42% 1.64% 1.93%
PORTFOLIO TURNOVER 12% 9% 5% 6% 7%
(1) Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset
value on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at the net
asset value on the payable date.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end, management investment company. 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 - Investments listed on security exchanges or in the
NASDAQ National Market are valued at closing sale prices. Listed or unlisted
investments for which closing sale prices are not available are valued at
closing bid prices. Short-term obligations, maturing in 60 days or less, are
valued at amortized cost, which approximates value.
B. FEDERAL TAXES - The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders each year all of its taxable income from dividends,
interest and net realized short-term capital gain. Accordingly, no provision for
federal income or excise tax is necessary on such income. The Fund generally
designates as undistributed any taxable net realized long-term gain (but
reserves the right to distribute such gain in any year) and pays the federal tax
thereon on behalf of shareholders. Provision for such tax is recorded on the
Fund's records on the last business day of the Fund's fiscal year because the
Internal Revenue Code provides that such tax is allocated among shareholders of
record on that date.
C. EQUALIZATION - Prior to January 1, 1994, the Fund followed the accounting
practice known as equalization by which a portion of the proceeds from the sales
and costs of reacquisitions of Fund shares was allowed to undistributed net
investment income. As a result, undistributed net investment income per share
was unaffected by sales or reacquisitions of Fund shares. As of January 1, 1994,
the Fund discontinued the use of equalization. This change had no effect on the
Fund's net assets, net asset value per share, or its net increase or decrease in
net assets from operations. Discontinuing the use of equalization will result in
a simpler and more meaningful financial statement presentation.
D. OTHER - Investment transactions are accounted for on a trade date basis.
Dividend income and dividends to shareholders are recorded on the ex-dividend
date.
E. DISTRIBUTIONS - Generally accepted accounting principles require that
differences in the recognition or classification of income between the financial
statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(2) CAPITAL STOCK
At December 31, 1994, there were 3,640,001 shares of $1.00 par value capital
stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1994 1993
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ---------- ----------------
<S> <C> <C> <C> <C>
Redemptions (31,008) $(3,910,059) (34,329) $(4,310,781)
Issued to shareholders electing to
receive payment of distributions
in capital stock 1,325 167,738 1,090 136,283
---------- --------------- ---------- ---------------
Net decrease (29,683) $(3,742,321) (33,239) $(4,174,498)
========== ================ ========== ================
</TABLE>
- --------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than
short-term obligations, aggregated $6,922,205 and $8,033,835, respectively. In
addition, investments having an aggregate market value of $3,723,065 at dates of
redemption were distributed in payment for capital stock redeemed.
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee, computed at the monthly rate of 5/96 of 1% ( 5/8 of
1% annually) of the Fund's average monthly net assets, was paid to Eaton Vance
Management (EVM) as compensation for management and investment advisory services
rendered to the Fund. Except as to directors of the Fund who are not members of
EVM's organization, officers and directors receive remuneration for their
services to the Fund out of such investment adviser fee. The custodian fee was
paid to Investors Bank & Trust Company (IBT), an affiliate of EVM, for its
services 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. Certain of the officers and
directors of the Fund are officers and directors/trustees of the above
organizations.
<PAGE>
- --------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Fund participates with other funds managed by EVM in a $120 million
unsecured line of credit agreement with a bank. The line of credit consists of a
$20 million committed facility and an $100 million discretionary facility.
Borrowings will be made by the Fund solely to facilitate the handling of unusual
and/or unanticipated short-term cash requirements. Interest is charged to each
fund based on its borrowings at an amount above either the bank's adjusted
certificate of deposit rate, a variable adjusted certificate of deposit rate, or
a federal funds effective rate. In addition, a fee computed at an annual rate of
1/4 of 1% on the $20 million committed facility and on the daily unused portion
of the $100 million discretionary facility is allocated among the participating
funds at the end of each quarter. The Fund did not have any significant
borrowings or allocated fees during the year.
<PAGE>
- --------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at December 31, 1994, as computed on a federal income tax basis, are as
follows:
Aggregate cost $21,248,626
==========
Gross unrealized appreciation $41,125,382
Gross unrealized depreciation 607,854
----------
Net unrealized appreciation $40,517,528
==========
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------------------------------------------------------
To the Board of Directors and Shareholders of
Second Fiduciary Exchange Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Second Fiduciary Exchange Fund, Inc. as of
December 31, 1994, and the related statement of operations for the year then
ended, the statement of changes in net assets for the years ended December 31,
1994 and 1993, and the financial highlights for each of the years in the
five-year period ended December 31, 1994. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1994, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Second Fiduciary
Exchange Fund, Inc. as of December 31, 1994, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 3, 1995
<PAGE>
INVESTMENT MANAGEMENT
SECOND FIDUCIARY OFFICERS AND STAFF INDEPENDENT DIRECTORS
EXCHANGE FUND, INC. LANDON T. CLAY DONALD R. DWIGHT
24 Federal Street President, Director
Boston, MA 02110 Vice President, Dwight Partners,
PETER F. KIELY President, Inc.
Director Chairman,
JAMES B. HAWKES Newspapers of
Vice President New England, Inc.
ROBERT S. GOODOF SAMUEL L. HAYES, III
Vice President, Jacob H. Schiff
Portfolio Manager Professor of
JAMES L. O'CONNOR Investment
Treasurer Banking, Harvard
JAMES F. ALBAN University
Assistant Treasurer Graduate School of
THOMAS OTIS Business
Clerk Administration
JANET E. SANDERS NORTON H. REAMER
Assistant Treasurer President and
and Assistant Director, United
Clerk Asset
Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary
Trust Company
JACK L. TREYNOR
Investment Adviser
and Consultant
----------------------------------------------------------
SECOND FIDUCIARY TRANSFER AND
EXCHANGE DIVIDEND
FUND, INC. DISBURSING AGENT
24 Federal Street The Shareholder
Boston, MA 02110 Services Group,
INVESTMENT ADVISER Inc.
Eaton Vance BOS725
Management P.O. Box 1559
24 Federal Street Boston, MA 02104
Boston, MA 02110 800-262-1122
CUSTODIAN AUDITORS
Investors Bank & Deloitte & Touche
Trust Company LLP
24 Federal Street 125 Summer Street
Boston, MA 02110 Boston, MA 02110
<PAGE>
SECOND FIDUCIARY
EXCHANGE FUND, INC.
SUMMARY
NET ASSET VALUE PER SHARE
----------------------------------------------
PAST SIX MONTHS
----------------------------------------------
December 31, 1994 $125.59
----------------------------------------------
June 30, 1994 $122.15
----------------------------------------------
PAST YEAR
----------------------------------------------
December 31, 1994 $125.59
----------------------------------------------
December 31, 1993 $126.26
----------------------------------------------
LIFE OF FUND
----------------------------------------------
December 31, 1994 $125.59
----------------------------------------------
June 5, 1967 $ 27.50
----------------------------------------------
CHANGE (6/5/67 TO 12/31/94)
----------------------------------------------
Share value + 356.7%
----------------------------------------------
Share value plus cumulative + 382.1%
federal taxes paid by Fund*
-----------------------------------------------
Dow Jones Industrial Average + 352.3%
----------------------------------------------
Standard & poor's 500 + 419.4%
----------------------------------------------
*Realized capital gains are generally retained
by the Fund and the federal tax thereon is
paid on behalf of shareholders. Such taxes
aggregated $6.992 per share over the life of
the Fund.
The Dow Jones industrial Average and the
Standard & Poor's 500 are unmanaged lists of
common stocks.
Eaton VANCE
The Boston Tradition
24 Federal Street, Boston, Massachusetts 02110
SECOND FIDUCIARY
EXCHANGE FUND
An Eaton Vance
Exchange Fund
Annual Report
December 31, 1994
