<PAGE>
SECOND FIDUCIARY
EXCHANGE FUND
An Eaton Vance
Exchange Fund
Semi-Annual Report
June 30, 1996
[logo]
<PAGE>
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TO SHAREHOLDERS
AT A SPECIAL MEETING OF THE SHAREHOLDERS HELD ON JUNE 4, 1996, SHAREHOLDERS OF
SECOND FIDUCIARY EXCHANGE FUND voted to adopt several important changes in the
Fund's organization and operations recommended by the Fund's Board of Directors.
As a result, effective July 1, 1996, the Fund has adopted the Hub-and-Spoke(R)
mutual fund structure and is pursuing its investment objective through investing
in the Tax-Managed Growth Portfolio (the "Portfolio"), a separate open-end
management investment company with substantially the same investment objective,
policies and restrictions as the Fund as newly revised. Investing through the
Portfolio enables the Fund to participate in an investment portfolio that is
substantially larger, more diversified and potentially more attractive, and to
achieve cost savings over time. As of July 1, 1996, net assets of the Portfolio
totalled $561.0 million.
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SECOND FIDUCIARY EXCHANGE FUND HAD A TOTAL RETURN OF 11.5% DURING THE SIX
MONTHS ENDED JUNE 30, 1996.
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SECOND FIDUCIARY EXCHANGE FUND HAD A TOTAL RETURN OF 11.5% DURING THE SIX MONTHS
ENDED JUNE 30, 1996. That return represented a rise in net asset value per share
to $178.30 from $161.10, and the reinvestment of $1.05 per share in income
dividends.
IN THE PAST SIX MONTHS, THE STOCK MARKET HAS BENEFITED FROM A COMBINATION OF
RELATIVELY STRONG ECONOMIC GROWTH, MODERATE INTEREST RATES, AND LOW INFLATION.
On January 31, the Federal Reserve lowered the Federal funds rate (a key
short-term interest rate benchmark) for the third time in six months to 5.25%,
where it remains. Equities have responded well to these favorable conditions.
The S&P 500, an unmanaged index of large capitalization stocks, had a total
return of 10.1% from December 31, 1995 to June 30, 1996.
WHILE PRICE/EARNINGS MULTIPLES ARE HISTORICALLY HIGH, THERE REMAIN ATTRACTIVE
SECTORS IN THE STOCK MARKET. The price/earnings multiple - a measure of how much
investors are willing to pay for a dollar of current earnings - has reached an
average of 17 for the S&P 500. This is higher than a year ago, when the average
was at 15.5, but not remarkably higher. Although large capitalization stocks in
general do not appear to be excessively valued, certain market sectors - notably
small capitalization, aggressive growth stocks (and particularly those with a
connection to the Internet) - are quite richly valued and may be vulnerable to a
substantial correction if economic or market conditions deteriorate.
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[Photo of Landon T. Clay]
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"THROUGHOUT ITS 29-YEAR HISTORY, SECOND FIDUCIARY EXCHANGE FUND HAS BEEN MANAGED
FOR THE LONG TERM, AND WITH CONSIDERATION TO SHAREHOLDER TAXES AND AFTER-TAX
RETURNS."
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THE BLUE-CHIP GROWTH COMPANIES IN WHICH THE FUND AND THE PORTFOLIO TYPICALLY
INVEST HAVE BEEN STRONG PERFORMERS AND CONTINUE TO LOOK ATTRACTIVE FOR THE
MONTHS AND YEARS AHEAD. The largest holdings of the Portfolio as of July 1, 1996
include such well-regarded companies as Intel Corp., PepsiCo, Inc.,
Hewlett-Packard Co., Johnson &Johnson and Merck & Co., Inc. Each of these
companies is well established as an industry leader and has attractive financial
characteristics and excellent growth prospects. The Portfolio holds investments
in a diverse group of over 120 companies.
THROUGHOUT ITS 29-YEAR HISTORY, SECOND FIDUCIARY EXCHANGE FUND HAS BEEN MANAGED
FOR THE LONG TERM, AND WITH CONSIDERATION TO SHAREHOLDER TAXES AND AFTER-TAX
RETURNS. Investing in the Portfolio through the Hub and Spoke structure will not
alter this focus, but will enable the Fund to benefit from the Portfolio's
greater size and broader diversification. Looking ahead, Iam confident the Fund
will benefit from the changes being made in its organization and operations, as
well as from the long-term growth of the economy and of stocks of companies
positioned to take advantage of that growth.
Sincerely,
/s/ Landon T. Clay
LANDON T. CLAY
President
August 5, 1996
<PAGE>
SECOND FIDUCIARY
EXCHANGE FUND, INC.
JUNE 30, 1996
(UNAUDITED)
INVESTMENT CHANGES
SIX MONTHS ENDED JUNE 30, 1996
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SHARES OWNED
INCREASES 12/31/95 06/30/96
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Anadarko Petroleum Corp. 20,000 25,000
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Enron Oil & Gas Co. -- 50,000
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Nokia Corp. -- 25,000
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DECREASES*
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Baxter International Inc. 47,650 40,000
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Dun & Bradstreet Corp. 25,700 24,030
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DuPont (E.I.) de Nemours & Co., Inc. 45,000 44,800
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General Electric Co. 52,030 51,470
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Great Lakes Chemical Corp. 45,100 43,830
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Houghton Mifflin Co. 8,000 --
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Intel Corp. 54,190 48,440
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International Specialty Products Inc. 87,500 59,000
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Provident Companies, Inc. 20,889 18,789
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Schlumberger Ltd. 40,864 38,824
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Warner-Lambert Co. 9,442 18,884
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Wheelabrator Technologies Inc. 70,000 --
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*Includes investments paid in kind on redemptions.
OTHER CHANGES
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SHARES
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33,060 Chubb Corp. in a 2 for 1 stock split
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25,000 General Motors Corp., Class E underwent a name change
to Electronic Data Systems Corp.
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12,804 McGraw-Hill Inc. in a 2 for 1 stock split
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69,996 PepsiCo, Inc. in a 2 for 1 stock split
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<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
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COMMON STOCKS - 96.7%
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NAME OF COMPANY SHARES VALUE
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AEROSPACE/DEFENSE - 3.8%
Raytheon Co. 61,800 $ 3,190,425
-----------
BANKS - 1.2%
Wells Fargo & Co. 4,265 $ 1,018,802
-----------
BROADCAST-CABLE - 0.8%
Cox Communications - Class A* 30,503 $ 659,627
-----------
BUSINESS PRODUCTS & SERVICES - 2.4%
DeLuxe Corp. 57,150 $ 2,028,825
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CHEMICALS - 9.1%
Bayer AG Sponsored ADR's 40,000 $ 1,412,484
DuPont (E.I.) de Nemours & Co., Inc. 44,800 3,544,800
Great Lakes Chemical Corp. 43,830 2,728,418
-----------
$ 7,685,702
-----------
CHEMICALS - SPECIALTY - 11.5%
Corning Inc. 35,000 $ 1,343,125
International Specialty Products Inc. 59,000 649,000
Loctite Corp. 23,000 1,069,500
Memtec LTD Sponsored ADR 38,750 1,424,063
Millipore Corp. 60,000 2,512,500
Sealed Air Corp.* 80,000 2,690,000
-----------
$ 9,688,188
-----------
COMMUNICATIONS EQUIPMENT - 2.2%
Ericcson L M Telephone 44,000 $ 946,000
Nokia Corp. 25,000 925,000
-----------
$ 1,871,000
-----------
COMPUTER AND BUSINESS EQUIPMENT - 3.0%
Digital Equipment Corp.* 23,100 $ 1,039,500
International Business Machines Corp. 15,590 1,543,410
-----------
$ 2,582,910
-----------
COMPUTER SOFTWARE TECHNOLOGY - 1.6%
Electronic Data Systems 25,000 $ 1,343,750
-----------
CONSTRUCTION & REAL ESTATE - 1.2%
Gilbert Associates, Inc. Class A 78,125 $ 996,094
-----------
CONSUMER PRODUCTS - 5.9%
PepsiCo, Inc. 139,992 $ 4,952,217
-----------
DRUGS & MEDICAL - 8.1%
Astra AB ADR - Series B 30,000 $ 1,306,608
Bausch & Lomb, Inc. 14,680 623,900
Baxter International Inc. 40,000 1,890,000
Caremark, Inc. 14,625 369,281
Merck & Co., Inc. 25,000 1,615,625
Warner-Lambert Co. 18,884 1,038,620
-----------
$ 6,844,034
-----------
ELECTRICAL EQUIPMENT - 5.3%
General Electric Co. 51,470 $ 4,452,155
-----------
ELECTRONICS/SEMI CONDUCTORS - 5.7%
Intel Corp. 48,440 $ 3,557,313
Motorola, Inc. 20,000 1,257,500
-----------
$ 4,814,813
-----------
ENERGY - 11.6%
Anadarko Petroleum Corp. 25,000 $ 1,450,000
Chevron Corp. 40,000 2,360,000
Enron Oil & Gas Co. 50,000 1,393,750
Mobil Corp. 11,898 1,334,063
Schlumberger Ltd. 38,824 3,270,922
-----------
$ 9,808,735
-----------
FOREST PRODUCTS - 2.2%
Union Camp Corp. 37,800 $ 1,842,750
-----------
GAS DISTRIBUTION & TRANSMISSION - 1.4%
Sonat, Inc. 27,200 $ 1,224,000
-----------
INSURANCE - 6.4%
Chubb Corp. 66,120 $ 3,297,735
MGIC Investment Corp. 25,000 1,403,125
Provident Companies, Inc. 18,789 695,193
-----------
$ 5,396,053
-----------
LEISURE/ENTERTAINMENT - 2.1%
Disney (Walt) Company 29,000 $ 1,823,375
-----------
MACHINERY & EQUIPMENT - 3.4%
Illinois Tool Works Inc. 10,000 $ 676,250
Tecumseh Products Co., Class A 40,350 2,168,813
-----------
$ 2,845,063
-----------
POLLUTION CONTROL - 1.5%
WMX Technologies, Inc. 40,000 $ 1,310,000
-----------
PUBLISHING AND PRINTING - 6.3%
Dun & Bradstreet Corp. 24,030 $ 1,501,875
McGraw-Hill Inc. 25,608 1,171,566
Times Mirror Co., Class A 49,576 2,156,556
Harcourt General, Inc. 10,000 500,000
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$ 5,329,997
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TOTAL COMMON STOCKS
(IDENTIFIED COST, $19,195,082) $81,708,514
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SHORT-TERM OBLIGATION - 3.0%
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FACE AMOUNT
(000 OMITTED)
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Ford Motor Credit Corp., 5.37%
due 7/03/96 at amortized cost $2,500 $ 2,499,254
-----------
TOTAL INVESTMENTS - 100.0%
(IDENTIFIED COST, $21,694,336) - 99.7% $84,207,768
OTHER ASSETS, LESS LIABILITIES - 0.3% 242,773
-----------
NET ASSETS - 100% $84,450,541
===========
*Non-income producing security.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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June 30, 1996 (Unaudited)
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ASSETS:
Investments, at value (Note 1A) (identified cost,
$21,694,336) $84,207,768
Cash 137,939
Receivable for investments sold 36,855
Dividends receivable 113,693
Other assets 10,962
-----------
Total assets $84,507,217
LIABILITIES:
Payable for capital stock redeemed $37,797
Payable to affiliate --
Directors' fees 1,680
Accrued expenses 17,199
------
Total liabilities 56,676
-----------
NET ASSETS for 473,656 shares of capital stock outstanding $84,450,541
===========
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) $32,576,830
Accumulated distributions of net realized gain on
investments as computed for federal income tax
purposes (1,088,092)
Unrealized appreciation of investments (computed on
the basis of identified cost) 62,513,432
Provision for federal tax on undistributed net
realized long-term capital gain, paid on behalf
of shareholders (9,542,602)
Accumulated distributions in excess of net
investment income (9,027)
-----------
Total $84,450,541
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NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($84,450,541 / 473,656 shares of capital stock
outstanding) $178.30
=======
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
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For the Six Months Ended June 30, 1996 (Unaudited)
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INVESTMENT INCOME:
Income --
Dividends (net of foreign withholding tax of
$7,994) $ 703,178
Interest 73,441
----------
Total income $ 776,619
Expenses --
Investment adviser fee (Note 4) $ 256,322
Compensation of Directors not members of the
Investment Adviser's organization 3,534
Custodian fees 21,782
Legal and accounting services 21,859
Printing and postage 16,111
Transfer and dividend disbursing agent fees 7,500
Miscellaneous 4,745
----------
Total expenses 331,853
----------
Net investment income $ 444,766
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments, computed on the
basis of identified cost $1,174,490
Increase in unrealized appreciation of investments 7,103,433
----------
Net realized and unrealized gain on investments 8,277,923
----------
Net increase in net assets from operations $8,722,689
==========
STATEMENTS OF CHANGES IN NET ASSETS
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INCREASE (DECREASE) IN NET ASSETS: SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
---------------- -----------------
From operations --
Net investment income $ 444,766 $ 1,051,467
Net realized gain on investments 1,174,490 3,167,576
Increase in unrealized appreciation
of investments 7,103,433 14,892,471
------------- -------------
Increase in net assets from operations $ 8,722,689 $ 19,111,514
------------- -------------
Distributions to shareholders --
From net investment income $ (444,766) $ (1,051,467)
In excess of net investment income (53,947) (31,557)
From net realized gain on investments -- (558,284)
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Total distributions to shareholders $ (498,713) $ (1,641,308)
------------- -------------
Provision for federal tax on
undistributed net realized
long-term gain (Note 1B) $ -- $ (293,577)
------------- -------------
Net decrease from capital stock
transactions (Note 2) $ (932,273) $ (1,661,525)
------------- -------------
Net increase in net assets $ 7,291,703 $ 15,515,104
NET ASSETS:
At beginning of period 77,158,838 61,643,734
------------- -------------
At end of period (including
accumulated undistributed
(distributions in excess of) net
investment income of $(9,027) and
$44,920, respectively) $ 84,450,541 $ 77,158,838
============= =============
See notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
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<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 -------------------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
-------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $161.100 $125.590 $126.260 $121.950 $118.850 $ 94.790
-------- -------- -------- -------- -------- --------
INCOME FROM OPERATIONS:
Net investment income $ 0.937 $ 2.188 $ 2.103 $ 1.745 $ 1.688 $ 1.803
Net realized and unrealized
gain (loss) on investments 17.313 37.355 (0.224) 4.666 3.836 24.171
-------- -------- -------- -------- -------- --------
Total income from operations $ 18.250 $ 39.543 $ 1.879 $ 6.411 $ 5.524 $ 25.974
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
From net investment income (0.937) $ (2.184) $ (2.050) $ (1.680) $ (1.710) $ (1.770)
In excess of net investment income (0.113) (0.066) -- -- -- --
From net realized gain on
investments -- (1.170) -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions $ (1.050) $ (3.420) $ (2.050) $ (1.680) $ (1.710) $ (1.770)
-------- -------- -------- -------- -------- --------
PROVISION FOR FEDERAL TAX ON
UNDISTRIBUTED NET REALIZED
LONG-TERM GAIN (NOTE 1B) $ -- $ (0.613) $ (0.499) $ (0.421) $ (0.714) $ (0.144)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, end of period $178.300 $161.100 $125.590 $126.260 $121.950 $118.850
======== ======== ======== ======== ======== ========
TOTAL RETURN(1) 11.48% 31.48% 1.49% 5.28% 4.87% 27.34%
RATIOS/SUPPLEMENTAL DATA
(to average daily net assets):
Net assets, end of period
(000's omitted) $84,451 $77,159 $61,644 $65,720 $67,529 $69,959
Expenses 0.81%+ 0.80% 0.82% 0.81% 0.81% 0.82%
Net investment income 1.09%+ 1.50% 1.65% 1.40% 1.42% 1.64%
PORTFOLIO TURNOVER 3% 12% 12% 9% 5% 6%
AVERAGE COMMISSION RATE PAID(2) $0.0600 -- -- -- -- --
<FN>
+ Annualized.
(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. Total return is not computed on an annualized basis.
(2) For fiscal years beginning on or after September 1, 1995, a Fund is required to disclose its average commission rate per
share for security trades on which commissions are charged. Average commission rate paid is computed by dividing the total
dollar amount of commissions paid during the fiscal year by the total number of shares purchased and sold during the fiscal
year for which commissions were charged.
</TABLE>
See notes to financial statements
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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(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. OTHER -- Investment transactions are accounted for on a trade date basis.
Dividend income and dividends to shareholders are recorded on the ex-dividend
date.
D. 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.
E. 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.
F. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
June 30, 1996 and for the six month period 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.
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(2) CAPITAL STOCK
At June 30, 1996, there were 3,640,001 shares of $1.00 par value capital stock
authorized. Transactions in capital stock were as follows:
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED DECEMBER
(UNAUDITED) 31, 1995
------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------- -------- ------------
Redemptions (7,114) $(1,235,531) (14,449) $(2,061,373)
Issued to shareholders
electing to receive
payment of distributions
in capital stock 1,832 303,258 2,566 399,848
------- ------------ ------ -----------
Net decrease (5,282) $ (932,273) (11,883) $(1,661,525)
====== ============ ======= ===========
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(3) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than
short-term obligations, aggregated $3,120,693 and $2,466,616, respectively. In
addition, investments having an aggregate market value of $1,159,175 at dates of
redemption were distributed in payment for capital stock redeemed resulting in
realized capital gains of $1,116,219 for book purposes.
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(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. Certain of the officers
and directors of the Fund are officers and directors/trustees of the above
organizations. Directors of the Fund 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, 1996, no significant amounts have been deferred.
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(5) LINE OF CREDIT
The Fund participates with other funds managed by EVM and affiliates in a $120
million unsecured line of credit agreement with a bank. The line of credit
consists of a $20 million committed facility and a $100 million discretionary
facility. Borrowings will be made by the 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 period.
- ------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at June 30, 1996, as computed on a federal income tax basis, are as
follows:
Aggregate cost $21,694,336
===========
Gross unrealized appreciation $62,524,802
Gross unrealized depreciation 11,370
-----------
Net unrealized appreciation $62,513,432
===========
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(7) SUBSEQUENT EVENT
On July 1, 1996, the Fund transferred substantially all of its investable assets
to the Tax-Managed Growth Portfolio (the Portfolio) for an interest in the
Portfolio. The Portfolio has substantially the same investment objective,
policies and restrictions as the Fund. In addition, the Fund changed its fiscal
year end to October 31.
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(8) SPECIAL MEETING OF STOCKHOLDERS (UNAUDITED)
Second Fiduciary Exchange Fund, Inc. (the "Fund") held a special meeting of
stockholders on June 4, 1996. On April 15, 1996, the record date of the meeting,
the Fund had 475,711.586 shares outstanding, of which 276,907.912 shares were
represented at the meeting. The votes at the meeting were as follows:
Item 1: To adopt a new investment policy to authorize the Fund to invest its
investable assets in a specific corresponding open-end management
investment company having substantially the same investment objective,
policies and restrictions as the Fund, and to supplement investment
restrictions to permit such investment.
NUMBER OF SHARES
----------------
Affirmative 252,327.794
Against 5,085.784
Abstain 5,159.334
Item 2: To approve an Amendment to the By-Laws of the Fund to change the
fiscal year end of the Fund to October 31.
NUMBER OF SHARES
----------------
Affirmative 257,553.077
Against 6,479.078
Abstain 7,809.757
Item 3: To approve the revision of the Fund's investment objective and
certain of the Fund's investment policies as follows:
A. Reclassification and amendment of the investment objective.
NUMBER OF SHARES
----------------
Affirmative 249,790.816
Against 8,516.218
Abstain 4,265.878
B. Eliminate the restriction concerning investment in other
investment companies.
NUMBER OF SHARES
----------------
Affirmative 246,385.581
Against 10,506.696
Abstain 5,680.635
C. Eliminate the restriction concerning pledging.
NUMBER OF SHARES
----------------
Affirmative 244,710.101
Against 12,182.176
Abstain 5,680.635
- ------------------------------------------------------------------------------
D. Reclassify the restriction concerning investment in unseasoned
issuers.
NUMBER OF SHARES
----------------
Affirmative 244,631.698
Against 12,260.579
Abstain 5,680.635
E. Reclassify the restriction concerning investing for control.
NUMBER OF SHARES
----------------
Affirmative 249,285.861
Against 7,606.416
Abstain 5,680.635
F. Amend the restriction concerning diversification.
NUMBER OF SHARES
----------------
Affirmative 250,292.385
Against 8,014.649
Abstain 4,265.878
G. Amend the restriction concerning borrowing and senior securities.
NUMBER OF SHARES
----------------
Affirmative 244,998.717
Against 10,657.894
Abstain 6,916.301
H. Amend the restriction concerning lending.
NUMBER OF SHARES
----------------
Affirmative 243,564.596
Against 10,677.258
Abstain 8,331.058
I. Amend the restriction concerning real estate and commodities.
NUMBER OF SHARES
----------------
Affirmative 243,481.642
Against 12,174.969
Abstain 6,916.301
- ------------------------------------------------------------------------------
Item 4: To approve an amendment to the Articles of Organization.
NUMBER OF SHARES
----------------
Affirmative 320,412.407
Against 7,818.416
Abstain 6,827.210
Item 5: To elect Landon T. Clay, Donald R. Dwight, Samuel L. Hayes, III,
Norton H. Reamer, John L. Thorndike, and Jack L. Treynor as Directors
of the Fund
NUMBER OF SHARES
NOMINEES FOR ------------------------------
DIRECTOR AFFIRMATIVE WITHHELD
------------ ----------- --------
Landon T. Clay 274,722.855 2,185.057
Donald R. Dwight 274,722.855 2,185.057
Samuel L. Hayes, III 274,722.855 2,185.057
Norton H. Reamer 274,722.855 2,185.057
John L. Thorndike 274,722.855 2,185.057
Jack L. Treynor 274,722.855 2,185.057
Item 6: To ratify the selection of Deloitte & Touche LLP as independent
certified public accountants of the Fund.
NUMBER OF SHARES
----------------
Affirmative 271,746.229
Against 486.985
Abstain 4,674.698
<PAGE>
INVESTMENT MANAGEMENT
SECOND FIDUCIARY OFFICERS AND STAFF INDEPENDENT DIRECTORS
EXCHANGE
FUND, INC. LANDON T. CLAY DONALD R. DWIGHT
24 Federal Street President, Director President, Dwight Partners,
Boston, MA 02110 Inc.
JAMES B. HAWKES Chairman, Newspapers of
Vice President New England, Inc.
THOMAS E. FAUST, JR. SAMUEL L. HAYES, III
Vice President and Jacob H. Schiff Professor
Portfolio Manager of Investment Banking,
Harvard University Graduate
JAMES L. O'CONNOR School of Business
Treasurer Administration
THOMAS OTIS NORTON H. REAMER
Clerk President and Director,
United Asset Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
--------------------------------------------------------
SECOND FIDUCIARY EXCHANGE TRANSFER AND DIVIDEND
FUND, INC. DISBURSING AGENT
24 Federal Street First Data Investor
Boston, MA 02110 Services Group, Inc.
BOS725
INVESTMENT ADVISER P.O. Box 1559
Eaton Vance Management Boston, MA 02104
24 Federal Street 800-262-1122
Boston, MA 02110
CUSTODIAN
Investors Bank & Trust
Company
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
6/96
<PAGE>
SECOND FIDUCIARY
EXCHANGE FUND, INC.
PERFORMANCE RESULTS+
- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(STANDARDIZED SEC PERFORMANCE DATA
FOR THE PERIODS ENDED JUNE 30, 1996)
- ------------------------------------------------------------------------------
One year 24.4%
- ------------------------------------------------------------------------------
Five years 12.4%
- ------------------------------------------------------------------------------
Ten years 10.8%
- ------------------------------------------------------------------------------
Life of Fund (6/5/67) 9.7%
- ------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN
LIFE OF FUND
(6/5/67 TO 6/30/96)
- ------------------------------------------------------------------------------
Second Fiduciary Exchange Fund 1,385.06%
- ------------------------------------------------------------------------------
Dow Jones Industrial Average 2,162.2%
- ------------------------------------------------------------------------------
Standard & Poor's 500 2,204.1%
- ------------------------------------------------------------------------------
+Past performance is no guarantee of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
The Dow Jones Industrial Average and the Standard & Poor's 500 are unmanaged
lists of common stocks.
This report must be preceded or accompanied by a prospectus which contains more
complete information on the Fund including its distribution plan, sales charges
and expenses. Please read the prospectus carefully before investing.
[logo]
EATON VANCE
The Boston Tradition
Funds offered through
Eaton Vance Distributors, Inc.
24 Federal Street, Boston, Massachusetts 02110
6/96
