<PAGE>
The Eaton Vance Special Investment Trust
For the Total Return Portfolio
[Logo]
Annual Shareholder Report
December 31, 1996
Investment Adviser of Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Administrator
Eaton Vance Management
24 Federal Street
Boston, MA 02110
(617) 482-8260
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
Custodian
Investors Bank & Trust Company
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
Transfer Agent
First Data Investor Services Group, Inc.
P.O. Box 5123
Westborough, MA 01581-5123
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Ma 02109
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PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
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COMMON STOCKS - 83.8%
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NAME OF COMPANY SHARES VALUE
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ELECTRIC UTILITIES - 48.1%
Carolina Power & Light Co. 200,000 $ 7,300,000
Central Louisiana Electric Co. 215,600 5,955,950
Cilcorp Inc. 227,200 8,321,200
CINergy Corp. 525,000 17,521,875
DPL Inc. 775,000 18,987,500
DQE, Inc. 400,000 11,600,000
Edison International 800,000 15,900,000
Florida Progress Corp. 700,000 22,575,000
FPL Group, Inc. 325,000 14,950,000
Illinova Corp. 100,000 2,750,000
LG & E Energy Corp. 198,000 4,851,000
Long Island Lighting Co. 100,000 2,212,500
National Grid Holdings* 706,156 2,362,445
NIPSCO Industries, Inc. 375,000 14,859,375
PECO Energy Co. 250,000 6,312,500
Pinnacle West Capital Corp. 350,000 11,112,500
PowerGen PLC* 1,506,024 14,754,668
Sierra Pacific Resources 150,000 4,312,500
Southern Electric* 200,000 2,724,380
Teco Energy, Inc. 300,000 7,237,500
Texas Utilities Co. 300,000 12,225,000
WPS Resources Corp. 350,000 9,975,000
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$218,800,893
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FINANCIAL SERVICES - 5.4%
Bank Plus Corp 475,000 $ 5,462,500
Echelon International Corp.* 46,667 729,166
GCR Holdings Ltd. 437,000 9,723,250
Security First Network Bank* 40,000 425,000
Surety Capital Corp.* 91,900 373,344
Wells Fargo & Co 30,000 8,092,500
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$ 24,805,760
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MEDIA - 0.5%
Ovation Inc. 238,168 $ 2,214,962
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NATURAL GAS UTILITIES - 7.6%
Enserch Corp. 1,025,000 $ 23,575,000
K N Energy 150,000 5,887,500
Wicor Inc. 150,000 5,381,250
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$ 34,843,750
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REITS - 10.6%
Beacon Properties Corp. 80,000 $ 2,930,000
Cali Realty Corp. 600,000 18,525,000
First Industrial Realty Trust, Inc. 100,000 3,037,500
Homestead Village, Inc. Warrants 5,504 44,720
LTC Properties, Inc. 150,000 2,775,000
Prime Retail, Inc. 300,000 3,693,750
Redwood Trust, Inc. 146,500 5,457,125
Security Capital US Realty Trust* 300,000 3,810,000
Vornado Realty Trust 150,000 7,875,000
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$ 48,148,095
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TELEPHONE UTILITIES - 11.6%
ACC Corp. 264,000 $ 7,986,000
Bellsouth Corp. 250,000 10,093,750
Cellnet Data Systems* 100,000 1,468,750
GTE Corp. 50,000 2,275,000
Intercel Inc.* 125,000 1,531,250
LCI International, Inc.* 150,000 3,225,000
Midcom Communications, Inc.* 190,000 1,615,000
Premiere Technologies, Inc.* 90,000 2,272,500
Smartalk Teleservices, Inc.* 260,000 4,517,500
Telco Communications Group, Inc.* 180,000 3,150,000
Tele Save Holdings, Inc. 265,000 7,685,000
Trescom International, Inc.* 859,200 6,873,600
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$ 52,693,350
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TOTAL COMMON STOCKS
(IDENTIFIED COST, $326,567,054) $381,506,810
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CONVERTIBLE PREFERRED STOCKS - 3.5%
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First Washington Realty Trust, 9.75s 45,000 $ 1,226,250
Philippines Long Distance
Telephone, 7s 150,000 7,650,000
Prime Retail Inc. Series B 33,206 722,230
SunAmerica Inc., 3.188s* 40,000 1,690,000
Walden Residential, 9.16s Series B 153,000 4,417,875
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TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST, $14,532,091) $ 15,706,355
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PREFERRED STOCKS - 3.5%
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Fidelity Federal Bank, 12s* 250,000 $ 7,062,500
Walden Residential Properties 340,000 8,670,000
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TOTAL PREFERRED STOCKS
(IDENTIFIED COST, $14,762,500) $ 15,732,500
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CONVERTIBLE BONDS - 7.9%
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FACE AMOUNT
NAME OF COMPANY (000'S OMITTED) VALUE
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Assisted Living, 7s, 8/15/05 $ 2,000 $ 2,175,000
Cirrus Logic, 6s, 12/15/03 2,500 2,290,625
Emeritus Corp., 6.25s, 1/1/06 4,750 3,859,375
Midcom Communications,
8.25s, 8/15/03* 10,000 9,200,000
Novacare Inc. 5.5s, 1/15/00 5,000 4,575,000
Ovation Inc., 9.75s, 2/22/01* 2,000 2,000,000
SA Telecommunications,
10s, 8/15/06 3,000 2,925,000
Sterling House, 6.75s, 6/30/06* 3,000 2,160,000
U.S. Filter Corp., 4.5s, 12/15/99* 2,000 2,042,500
VLSI Technology, 8.25s, 10/1/05* 5,000 4,975,000
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TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST, $38,409,222) $ 36,202,500
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CORPORATE BONDS - 1.1%
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Bank United, 10.25s, 12/31/26 $ 3,000 $ 3,000,000
Mego Mortgage Corp., 12.5s, 12/1/01 2,000 2,000,000
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TOTAL CORPORATE BONDS
(IDENTIFIED COST, $5,000,000) $ 5,000,000
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SHORT-TERM OBLIGATION - 0.6%
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Associates Corp. of North America,
6.5s, 1/2/97 $ 2,640 $ 2,639,523
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TOTAL SHORT-TERM OBLIGATION,
AT AMORTIZED COST $ 2,639,523
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TOTAL INVESTMENTS - 100.4%
(IDENTIFIED COST, $401,910,390) $456,787,688
OTHER ASSETS, LESS LIABILITIES - (0.4%) (1,720,693)
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NET ASSETS - 100% $455,066,995
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*Non-income producing security.
The accompanying notes are an integral part
of the financial statements
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FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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December 31, 1996
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ASSETS:
Investments, at value (Note 1A) (identified cost,
$401,910,390) $456,787,688
Cash 1,841
Receivable for investments sold 30,625
Dividends receivable 1,140,527
Interest receivable 1,080,620
Deferred organization expenses (Note 1H) 7,621
Foreign tax reclaim receivable 45,260
Other receivables 15,213
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Total assets $459,109,395
LIABILITIES:
Payable for investments purchased $3,939,797
Payable to affiliate --
Trustees' fees 5,224
Accrued expenses 97,379
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Total liabilities 4,042,400
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NET ASSETS applicable to investors' interest in Portfolio $455,066,995
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SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $400,174,992
Unrealized appreciation of investments and
foreign currencies (computed on the basis
of identified cost) 54,892,003
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Total net assets $455,066,995
============
The accompanying notes are an integral part of the financial statements
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<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
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For the Year Ended December 31, 1996
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INVESTMENT INCOME:
<S> <C> <C>
Dividend income (net of withholding taxes, $1,559,681) $ 29,112,169
Interest income 4,332,092
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Total income $ 33,444,261
Expenses --
Investment adviser fee (Note 3) $ 3,690,566
Compensation of Trustees not members of the
Investment Adviser's organization (Note 3) 21,333
Custodian fee 214,625
Commitment fee (Note 4) 142,463
Legal and accounting services 57,359
Amortization of deferred organization expenses
(Note 1H) 4,209
Miscellaneous 65,788
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Total expenses 4,196,343
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Net investment income $ 29,247,918
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (identified cost basis) --
Investment transactions $ 46,853,646
Foreign currency and forward foreign currency
exchange contracts 14,700
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Net realized gain on investments and foreign
currency $ 46,868,346
Change in unrealized appreciation --
Investment transactions $(41,696,594)
Foreign currency transactions and forward foreign
currency contracts (2,255)
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Net change in unrealized appreciation (41,698,849)
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Net realized and unrealized gain on investments 5,169,497
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Net increase in net assets resulting from operations $ 34,417,415
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</TABLE>
The accompanying notes are an integral part of the financial statements
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STATEMENTS OF CHANGES IN NET ASSETS
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YEAR ENDED DECEMBER 31,
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1996 1995
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INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 29,247,918 $ 24,296,939
Net realized gain on investment
transactions 46,868,346 16,628,404
Change in unrealized appreciation
(depreciation) of investments (41,698,849) 82,965,652
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Net increase in net assets resulting
from operations $ 34,417,415 $ 123,890,995
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Capital transactions --
Contributions $ 18,255,080 $ 29,142,153
Withdrawals (119,275,825) (136,929,715)
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Decrease in net assets resulting from
capital transactions $(101,020,745) $(107,787,562)
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Net increase (decrease) in net assets $ (66,603,330) $ 16,103,433
NET ASSETS:
At beginning of year 521,670,325 505,566,892
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At end of year $ 455,066,995 $ 521,670,325
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The accompanying notes are an integral part of the financial statements
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<TABLE>
<CAPTION>
SUPPLEMENTARY DATA
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YEAR ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994 1993*
---- ---- ---- -----
RATIOS (to average daily net assets):
<S> <C> <C> <C> <C>
Expenses 0.85% 0.84% 0.85% 0.91%+
Net investment income 5.94% 4.83% 5.22% 4.57%+
PORTFOLIO TURNOVER 166% 103% 107% 16%
AVERAGE COMMISSION RATE PAID(1) $0.0374 -- -- --
LEVERAGE ANALYSIS:
Average daily balance of debt outstanding
during period (000'somitted) $217 $232 $3,137 $15,452
</TABLE>
+Computed on an annualized basis.
*For the period from the start of business, October 28, 1993, to December 31,
1993.
(1) 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.
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NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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(1) SIGNIFICANT ACCOUNTING POLICIES
Total Return Portfolio (the Portfolio) is registered under the Investment
Company Act of 1940 as a diversified open-end investment company which was
organized as a trust under the laws of the State of New York on May 1, 1992. The
Declaration of Trust permits the Trustees to issue beneficial 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 securities exchanges or in the
NASDAQ National Market are valued at closing sales prices or, if there has been
no sale, at the mean between the closing bid and asked prices. Unlisted
securities are valued at the mean between the latest available bid and asked
prices. Options and financial futures contracts are valued at the last sale
price, as quoted on the principal exchange or board of trade on which such
options or contracts are traded or, in the absence of a sale, the mean between
the last bid and asked prices. Short-term obligations, maturing in 60 days or
less, are valued at amortized cost, which approximates value. Securities for
which market quotations are unavailable are appraised at their fair value as
determined in good faith by or at the direction of the Trustees.
B. INCOME TAXES -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally must
satisfy the applicable source of income and diversification requirements (under
the Code) in order for its investors to satisfy them. The Portfolio will
allocate at least annually among its investors each investors' distributive
share of the Portfolio's net investment income, net realized capital gains, and
any other items of income, gain, loss, deduction or credit.
C. EXPENSE REDUCTION -- The Portfolio has entered into an arrangement with its
custodian agent whereby interest earned on uninvested cash balances are used to
offset custody fees. All significant reductions are reported as a reduction of
expenses in the Statement of Operations.
D. OPTION ACCOUNTING PRINCIPLES -- Upon the writing of a covered call option, an
amount equal to the premium received by the Portfolio is included in the
Statement of Assets and Liabilities as a liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written in accordance with the Portfolio's policies on investment
valuations discussed above. Premiums received from writing call options which
expire are treated as realized gains. Premiums received from writing call
options which are exercised or are closed are added to or offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. The Portfolio, as writer of a call option, may have no control over
whether the underlying securities may be sold and, as a result, bears the market
risk for an unfavorable change in the price of the securities underlying the
written option.
E. FINANCIAL FUTURES CONTRACTS -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit an amount ("initial margin")
either in cash or securities equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by the Portfolio ("margin maintenance") each day, dependent on the
daily fluctuations in the value of the underlying security, and are recorded for
book purposes as unrealized gains or losses by the Portfolio. When the Portfolio
enters into a closing transaction, the Portfolio will realize for book purposes
a gain or loss equal to the difference between the value of the financial
futures contract to sell and the financial futures contract to buy. The
Portfolio's investment in financial futures contracts is designed only to hedge
against anticipated future changes in interest rates, security prices, commodity
prices or currency exchange rates. Should interest rates, security prices,
commodity prices or currency exchange rates move unexpectedly, the Portfolio may
not achieve the anticipated benefits of the financial futures contracts and may
realize a loss.
F. FOREIGN CURRENCY TRANSLATION -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to foreign currency rates are recorded
for financial statement purposes as net realized gains and losses on
investments. That portion of unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates are not separately
disclosed.
G. DELAYED DELIVERY TRANSACTIONS -- The Portfolio may purchase or sell
securities on a when-issued or forward commitment basis. Payment and delivery
may take place at a period in time after the date of the transaction. At the
time the transaction is negotiated, the price of the security that will be
delivered and paid for are fixed. Losses may arise due to changes in the
market value of the underlying securities if the counterparty does not perform
under the contract.
H. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
I. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the ex-
dividend date. Realized gains and losses on the sale of investments are
determined on the identified cost basis.
J. USE OF ESTIMATES -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Actual results
could differ from those estimates.
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(2) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregated $794,432,128 and $857,511,361, respectively.
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(3) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES The investment
adviser fee is earned by Boston Management and Research (BMR), a wholly-owned
subsidiary of Eaton Vance Management (EVM), as compensation for management and
investment advisory services rendered to the Portfolio. The fee is based upon a
percentage of average daily net asets. For the year ended December 31, 1996, the
fee was equivalent to 0.75% of the Portfolio's average net assets for such
period and amounted to $3,690,566. Except as to Trustees of the Portfolio who
are not members of EVM's or BMR's organization, officers and Trustees receive
remuneration for their services to the Portfolio out of such investment adviser
fee. Certain of the officers and Trustees of the Portfolio are officers and
directors/trustees of the above organizations. Trustees of the Portfolio that
are not affiliated with the Investment Adviser may elect to defer receipt of all
or a percentage of their annual fees in accordance with the terms of the
Trustees Deferred Compensation Plan. For the year ended December 31, 1996, no
significant amounts have been deferred.
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(4) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a committed $120 million unsecured line of credit
agreement with a group of banks. The Portfolio may temporarily borrow from the
line of credit to satisfy redemption requests or settle investment
transactions. Interest is charged to each portfolio or fund based on its
borrowings at an amount above the banks' adjusted certificate of deposit rate,
eurodollar rate or federal funds rate. In addition, a fee computed at an
annual rate of 0.15% on the daily unused portion of the line of credit is
allocated among the participating portfolios and funds at the end of each
quarter. The Portfolio did not have any significant borrowings or allocated fees
during the year ended December 31, 1996.
<PAGE>
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(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at December 31, 1996, as computed on a federal income tax basis, are as
follows:
Aggregate cost $402,571,302
============
Gross unrealized appreciation $ 66,577,466
Gross unrealized depreciation 11,039,667
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Net unrealized appreciation $ 55,537,739
============
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(6) 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 December 31, 1996 there were no outstanding obligations under these
financial instruments.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
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TO THE TRUSTEES AND INVESTORS OF
TOTAL RETURN PORTFOLIO:
We have audited the accompanying statement of assets and liabilities of Total
Return Portfolio, including the portfolio of investments, as of December 31,
1996, the related statement of operations for the year then ended and the
statement of changes in net assets for each of the two years then ended and
supplementary data for each of the three years then ended and for the period
from October 23, 1993 (start of business) to December 31, 1993. These financial
statements and supplementary data are the responsibility of the Portfolio's
management. Our responsibility is to express an opinion on these financial
statements and supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and supplementary data referred to
above present fairly, in all material respects, the financial position of Total
Return Portfolio as of December 31, 1996, the results of its operations for the
year then ended and the changes in its net assets for each of the two years then
ended and the supplementary data for each of the three years then ended, and for
the period from October 23, 1993 (start of business), to December 31, 1993, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
JANUARY 30, 1997
<PAGE>
INVESTMENT MANAGEMENT FOR TOTAL RETURN PORTFOLIO
OFFICERS DIRECTORS
M. DOZIER GARDNER DONALD R. DWIGHT
President, Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of
JAMES B. HAWKES New England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
TIMOTHY O'BRIEN Jacob H. Schiff Professor of
Vice President and Investment Banking,
Portfolio Manager Harvard University Graduate School
of Business Administration
JAMES L. O'CONNOR
Treasurer NORTON H. REAMER
President and Director, United Asset
THOMAS OTIS Management Corporation
Secretary
JOHN L. THORNDIKE
Director,
Fiduciary Company Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
