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The Eaton Vance Special Investment Trust
For the Emerging Markets Portfolio
[LOGO]
Annual Shareholder Report
December 31, 1995
Investment Adviser of Emerging Markets Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Fund 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 Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
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EMERGING MARKETS PORTFOLIO
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1995
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COMMON STOCKS - 85.8%
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SHARES VALUE
BRAZIL - 6.6%
Banco Bradesco S.A. Pfd. 6,683,067 $ 58,445
Banco Bradesco S.A. Rights(1) 156,263 243
Brasmotor S.A. Pfd. 310,000 61,557
Compania Brasileira de Distrib. GDR(1) 7,800 81,900
Usiminas Siderurg Minas ADR 4,325 35,141
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$ 237,286
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CHILE - 3.8%
Banco Osorno Y La Union 4,360 $ 60,495
Compania de Telecomunicaciones 900 74,475
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$ 134,970
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HONG KONG - 24.5%
Cheung Kong(1) 14,000 $ 85,280
Citic Pacific Ltd. 21,000 72,137
CP Pokphand Co. Ltd. 220,000 88,203
First Pacific Co. 70,000 77,857
Florens International Group Ltd. 118,000 74,709
Henderson Land Development 12,000 72,390
HSBC Holdings PLC 4,000 60,526
Hutchison Whampoa 23,000 140,102
Li & Fung Ltd.(1) 80,000 71,390
QPL International Oldings Ltd.(1) 50,000 56,258
Varitronix International Ltd.(1) 43,000 79,803
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$ 878,655
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INDIA - 6.9%
Hindalco Industries Ltd. 2,200 $ 74,250
Mahindra & Mahindra GDR 6,800 86,700
Tata Engineering & Locomotion GDR 6,720 87,360
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$ 248,310
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INDONESIA - 12.1%
PT HM Sampoerna (Foreign) 8,000 $ 83,271
PT Matahari Putra Prima(1) 40,000 70,413
PT Mulia Industrindo(1) 32,000 90,269
PT Telecomunikasion(1) 85,000 111,524
Wicaksana(1) 29,500 78,701
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$ 434,178
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REPUBLIC OF KOREA - 5.3%
Korea Electric Power ADR 3,000 $ 79,500
Korea Mobile Telecom Corp.(1) 2,500 111,875
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$ 191,375
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MAYLASIA - 5.5%
DCB Holdings Behard 30,000 $ 87,436
Sistem Televisyen Malaysia BHD(1) 30,000 108,113
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$ 195,549
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SHARES VALUE
MEXICO - 5.4%
Pan American Beverages, Inc. 2,400 $ 76,800
Sigma Alimentos S.A.(1) 8,200 52,216
Telefonos de Mexico ADR 2,050 65,344
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$ 194,360
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PERU - 2.1%
Cerveceria Backus & Johnston 44,331 $ 76,270
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PHILIPPINES - 4.1%
Benpres Holdings(1) 12,800 $ 64,000
Philippine Long Distance Telephone 700 38,029
Philippine Long Distance Telephone ADR 800 43,300
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$ 145,329
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SRI LANKA - 1.4%
John Keells Holdings GDR 10,000 $ 50,000
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THAILAND - 8.1%
Electricity Generating (Foreign)(1) 17,600 $ 60,087
Industrial Finance Corp. 21,200 72,817
Siam Cement Co. Ltd. (Foreign) 1,400 77,586
Siam Commercial Bank(1) 8,300 81,715
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$ 292,205
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TOTAL COMMON STOCKS
(IDENTIFIED COST, $2,803,317) $3,078,487
OTHER ASSETS, LESS LIABILITIES - 14.2% 508,782
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NET ASSETS - 100% $3,587,269
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(1) Non-income producing securities
See notes to financial statements
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EMERGING MARKETS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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December 31, 1995
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ASSETS:
Investment, at value (Note 1A) (identified cost, $2,803,317) $3,078,487
Cash 652,451
Cash denominated in foreign currencies (cost $100,000) 99,597
Dividends and interest receivable 894
Receivable from Administrator 61,361
Deferred organization expenses (Note 1C) 29,781
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Total assets $3,922,571
LIABILITIES:
Payable for investments purchased $292,053
Accrued expenses and other liabilities 43,249
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Total liabilities 335,302
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NET ASSETS applicable to investors' interest in Portfolio $3,587,269
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SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $3,312,511
Net unrealized appreciation of investments
(computed on the basis of identified cost) 275,170
Net unrealized depreciation of foreign currencies (412)
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Total $3,587,269
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See notes to financial statements
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STATEMENT OF OPERATIONS
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Year Ended December 31, 1995
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INVESTMENT INCOME:
Dividend income (net of foreign withholding tax, $1,466) $ 29,122
Expenses-
Investment adviser fee (Note 2) $ 17,297
Administration fee (Note 2) 5,762
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 15,000
Custodian fees (Note 2) 52,692
Legal and accounting services 17,296
Amortization of organization expenses (Note 1C) 7,665
Miscellaneous 5,307
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Total expenses $121,019
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Deduct -
Allocation of expenses to the Administrator % 61,361
Reduction of custodian fee (Note 2) 7,319
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Total deducted 68,680
Net expenses 52,339
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Net investment loss $ (23,217)
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss -
Investments $(140,905
Foreign currency (6,543)
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Net realized loss $(147,448)
Change in unrealized appreciation (depreciation) -
Investments $ 281,832
Foreign currency (369)
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Net unrealized appreciation 281,463
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Net realized and unrealized gain on investments $ 134,015
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Net increase in net assets from operations $ 110,798
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See notes to financial statements
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994*
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations-
Net investment loss $ (23,217) $ -
Net investment gain (loss) on investments and
foreign currency transactions (147,448) 1,132
Change in unrealized appreciation 281,463 (6,705)
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Net increase (decrease) in net assets
from operations $ 110,798 $ (5,573)
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Capital transactions:
Contributions $3,550,731 $1,107,223
Withdrawals (1,269,530) (6,400)
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Increase in net assets from capital transactions $2,281,201 $1,100,823
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Total increase in net assets $2,391,999 $1,095,250
NET ASSETS:
At beginning of year 1,195,270 100,020
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At end of year $3,587,269 $1,195,270
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</TABLE>
* For the period from the start of business, November 30, 1994, to December 31,
1994.
See notes to financial statements
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SUPPLEMENTARY DATA
YEAR ENDED DECEMBER 31,
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1995 1994*
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RATIOS (to average daily net assets):
Net expenses 2.58% 0.00%
Net investment income (1.00%) 0.00%
PORTFOLIO TURNOVER 98% 0%
Net assets, end of period (000's omitted) $3,587 $1,195
The operating expenses of the Portfolio reflect an allocation of expenses to
the Administrator. Had such action not been taken, the ratios would have been
as follows:
Expenses 5.24% 2.21%+
Net investment income (3.98%) (2.21%)+
+ Annualized
* For the period from the start of business, November 30, 1994, to December 31,
1994.
See notes to financial statements
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NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
Emerging Markets Portfolio (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. The Declaration of
Trust permits the Trustees to issue interests in the Portfolio. The following is
a summary of the significant accounting policies of the Portfolio. The policies
are in conformity with generally accepted accounting principles.
A. Investment Valuations - Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National Market
System are valued at closing sale prices, on the exchange where such securities
are principally traded. Futures positions on securities or currencies are
generally valued at closing settlement prices. Unlisted or listed securities for
which closing sale prices are not available are valued at the mean between the
latest bid and asked prices. Short-term debt securities with a remaining
maturity of 60 days or less are valued at amortized cost. 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. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods determined in
good faith by or at the direction of the Trustees
B. Federal 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 individually responsible for the payment of any taxes on its share
of such income. 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.
C. Deferred Organization Expenses - Costs incurred by the Portfolio in
connection with its organization, including registration costs, are being
amortized on the straight-line basis over five years.
D. Futures Contracts - Upon the entering of a financial futures contract, the
Portfolio is required to deposit (initial margin) either in cash or securities
an amount 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 daily fluctuations in the
value of the underlying security, and are recorded for book purposes as
unrealized gains or losses by the Portfolio. The Portfolio's investment in
financial futures contracts is designed only to hedge against anticipated future
changes in interest or currency exchange rates. Should interest or currency
exchange rates move unexpectedly, the Portfolio may not achieve the anticipated
benefits of the financial futures contracts and may realize a loss. If 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 financial futures contract to buy.
E. 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.
F. Forward Foreign Currency Exchange Contracts The Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering these contracts from the potential inability of counter parties to
meet the terms of their contracts and from movements in the value of a foreign
currency relative to the U.S. dollar. The Portfolio will enter into forward
contracts for hedging purposes as well as non-hedging purposes. The forward
foreign currency exchange contracts are adjusted by the daily exchange rate of
the underlying currency and any gains or losses are recorded for financial
statement purposes as unrealized until such time as the contracts have been
closed or offset.
G. Other - Investment transactions are accounted for on the date the investments
are purchased or sold. Dividend income is recorded on the ex-dividend date.
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.
Interest income is recorded on the accrual basis.
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Lloyd George Management (Bermuda)Limited
(the Adviser) as compensation for management and investment advisory services
rendered to the Portfolio. Under the advisory agreement, the Adviser receives a
monthly fee of 0.0625% (0.75% annually) of the average daily net assets of the
Portfolio up to $500,000,000, and at reduced rates as daily net assets exceed
that level. For the year ended December 31, 1995 the adviser fee was 0.75%
(annualized) of average net assets. In addition, an administrative fee is earned
by Eaton Vance Management (EVM) for managing and administering the business
affairs of the Portfolio. Under the administration agreement, EVM earns a
monthly fee in the amount of 1/48th of 1% (equal to 0.25% annually) of the
average daily net assets of the Portfolio up to $500,000,000, and at reduced
rates as daily net assets exceed that level. For the year ended December 31,
1995, the administration fee was 0.25% (annualized) of average net assets. To
enhance the net income of the Portfolio, the administrator was allocated
expenses in the amount of $61,361. Except as to Trustees of the Portfolio who
are not members of the Adviser or EVM's organization, officers and Trustees
receive remuneration for their services to the Portfolio out of such investment
adviser and administrative fees. Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Prior to November 10, 1995, IBT was an affiliate of
EVM. Pursuant to the custodian agreement, IBT receives a fee reduced by credits
which are determined based on the average daily cash balances the Portfolio
maintains with IBT. All significant credit balances used to reduce the Fund's
custody fees are reported as a reduction of expenses in the statement of
operations. Certain of the officers and Trustees of the Portfolio are officers
or directors/trustees of the above organizations.
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(3) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregated $4,402,678 and $1,886,014, respectively.
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(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in the value of the
investments owned at December 31, 1995, as computed on a Federal income tax
basis, are as follows:
Aggregate cost $ 2,803,317
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Gross unrealized appreciation $ 358,918
Gross unrealized depreciation (83,748)
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Net unrealized appreciation $ 275,170
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(5) RISKS 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.
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(6) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by EVM and
its 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 Portfolio solely
to facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Interest is charged to each portfolio 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 and portfolios
at the end of each quarter. The Portfolio did not have any significant
borrowings or allocated fees during the period.
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INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS OF
EMERGING MARKETS PORTFOLIO:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Emerging Markets Portfolio as of December 31,
1995, and the related statement of operations for the year then ended, the
statements of changes in net assets and the supplementary data for the year
ended December 31, 1995 and for the period from the start of business November
30, 1994, to December 31, 1994. 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 audits 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 the securities owned at
December 31, 1995, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
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 supplementary data present fairly,
in all material respects, the financial position of Emerging Markets Portfolio
at December 31, 1995, and the results of its operations, the changes in its net
assets, and its supplementary data for the respective stated periods, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 9, 1996
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INVESTMENT MANAGEMENT FOR EMERGING MARKETS PORTFOLIO
OFFICERS INDEPENDENT TRUSTEES
JAMES B. HAWKES DONALD R. DWIGHT
President, Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
LANDON T. CLAY
Vice President, Trustee SAMUEL L. HAYES, III
Jacob H. Schiff Professor of
M. DOZIER GARDNER Investment Banking,
Vice President Harvard University Graduate School
of Business Administration
PETER F. KIELY NORTON H. REAMER
Vice President and President and Director, United
Portfolio Manager Asset Management Corporation
JAMES L. O'CONNOR
Treasurer JOHN L. THORNDIKE
Vice President and Director,
THOMAS OTIS Fiduciary Company Incorporated
Secretary
JACK L. TREYNOR
Investment Adviser and Consultant
