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The Eaton Vance Special Investment Trust
For the Stock Portfolio
[LOGO]
Annual Shareholder Report
December 31, 1996
INVESTMENT ADVISER OF
STOCK PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV STOCK PORTFOLIO
Eaton Vance Management
24 Federal Street
Boston, MA 02110
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 AND DIVIDEND
DISBURSING AGENT
First Data Investor Services Group
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
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STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
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COMMON STOCKS -- 84.7%
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SHARES SECURITY VALUE
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AEROSPACE - 3.0%
35,000 Boeing Co. $ 3,723,125
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BANKS - 5.2%
30,000 Bank of Boston Corp. $ 1,927,500
30,332 Citicorp 3,124,196
26,766 Fleet Financial Group, Inc. 1,334,954
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$ 6,386,650
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BASIC MATERIALS - 0.8%
80,000 J & L Specialty Steel, Inc. $ 910,000
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BROADCASTING - 0.4%
25,000 Comcast Corp., Class A $ 445,313
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BUSINESS PRODUCTS & SERVICES - 9.2%
65,000 Automatic Data Procesing, Inc. $ 2,786,875
40,000 Corning, Inc. 1,850,000
60,000 Crown Cork & Seal, Inc. 3,262,500
20,000 Electronic Data Systems Corp. 865,000
30,000 Potash Corp. 2,550,000
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$ 11,314,375
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COMPUTER & BUSINESS EQUIPMENT - 2.1%
50,000 Xerox Corp. $ 2,631,250
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CONSUMER NON-DURABLES - 12.0%
76,063 Conagra, Inc. $ 3,784,134
35,000 Duracell International, Inc. 2,445,625
65,000 Eastman Kodak Co. 5,216,250
70,000 Pepsico, Inc. 2,047,500
12,100 Procter & Gamble Co. 1,300,750
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$ 14,794,259
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ENERGY - 4.3%
10,000 Exxon Corp. $ 980,000
40,000 Occidental Petroleum Corp. 935,000
70,000 Triton Energy Ltd.* 3,395,000
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$ 5,310,000
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FINANCE & INSURANCE - 12.5%
60,540 Allstate Corp. $ 3,503,753
25,000 American International Group 2,706,250
75,000 Federal National Mortgage Association 2,793,750
20,000 Marsh & McLennan Cos., Inc. 2,080,000
30,000 MGIC Investment Corp. 2,280,000
30,000 Progressive Corp. 2,021,250
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$ 15,385,003
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HEALTHCARE - 10.4%
25,000 Astra AB, A Shares, ADR $ 1,225,000
30,000 Astra AB, B Shares, ADR 1,445,511
55,000 Baxter International, Inc. 2,255,000
30,000 Johnson & Johnson Co. 1,492,500
20,000 Lilly (Eli) & Co. 1,460,000
10,000 Pfizer, Inc. 828,750
30,000 Pharmacia & Upjohn, Inc. 1,188,750
90,000 Vencor, Inc.* 2,846,250
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$ 12,741,761
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HOUSING - 1.5%
60,000 Newell Co. $ 1,890,000
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LODGING & GAMING - 1.7%
70,000 Promus Hotel Corp.* $ 2,073,750
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PAPER & FOREST PRODUCTS - 1.6%
50,000 Rayonier, Inc. $ 1,918,750
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PUBLISHING - 2.3%
60,000 McGraw-Hill, Inc. $ 2,767,500
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REITS - 6.8%
30,000 Beacon Properties Corp. $ 1,098,750
11,000 Cali Realty Corp. 339,625
20,000 Equity Residential Properties Trust 825,000
25,000 Highwood Properties, Inc. 843,750
40,000 Nationwide Health Properties, Inc. 970,000
20,000 Post Properties, Inc. 805,000
18,000 Redwood Trust, Inc. 670,500
25,000 ROC Communities, Inc. 693,750
20,000 Storage USA, Inc. 752,500
25,000 Sun Communities, Inc. 862,500
14,200 Trinet Corporate Realty Trust, Inc. 504,100
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$ 8,365,475
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RETAIL - 4.6%
65,000 CVS Corp. $ 2,689,375
60,000 The Home Depot, Inc. 3,007,500
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$ 5,696,875
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SEMICONDUCTORS - 3.7%
35,000 Intel Corp. $ 4,582,812
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TELECOMMUNICATIONS EQUIPMENT - 2.6%
55,000 Nokia Corp., ADR $ 3,169,375
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TOTAL COMMON STOCKS
(IDENTIFIED COST, $79,726,807) $104,106,273
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CONVERTIBLE PREFERRED STOCKS - 5.6%
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140,000 Freeport McMoRan Copper & Gold, 5s $ 3,885,000
15,000 Frontier Financing Trust, 6.25s* 768,750
10,000 Tejas Gas Corp., 5.25s 597,500
10,000 Valero Energy Corp., 6.25s 577,500
25,000 Sun America, Inc., 3.188s 1,056,250
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TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST, $5,716,186) $ 6,885,000
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CONVERTIBLE BONDS - 3.5%
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FACE AMOUNT
(000'S OMITTED)
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$2,920 INCO Ltd., 5.75s, 7/1/04 $ 3,533,200
840 Scandinavian Broadcasting System,
7.25s, 8/1/05 789,600
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TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST, $4,055,000) $ 4,322,800
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CORPORATE BOND - 0.0%
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$ 50 H. P. Hood & Son, 7.50s, 2/1/01 $ 39,400
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TOTAL CORPORATE BOND
(IDENTIFIED COST, $50,000) $ 39,400
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SHORT TERM INVESTMENTS - 5.7%
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FACE AMOUNT
(000'S OMITTED) SECURITY VALUE
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$3,951 Associates Corp. of North America,
6.5s, 1/2/97 $ 3,950,287
3,023 General Electric Capital Co., 6s, 1/2/97 3,022,496
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TOTAL SHORT TERM INVESTMENTS
AT AMORTIZED COST $ 6,972,783
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TOTAL INVESTMENTS - 99.5%
(IDENTIFIED COST, $96,520,776) $122,326,256
OTHER ASSETS, LESS LIABILITIES - 0.5% 636,892
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NET ASSETS - 100% $122,963,148
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*Non-income producing security.
REIT -- Real Estate Investment Trust
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements
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<TABLE>
<CAPTION>
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STOCK PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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December 31, 1996
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<S> <C> <C>
ASSETS:
Investments, at value (Note 1A) (identified cost, $96,520,776) $122,326,256
Cash 1,519
Receivable for investments sold 641,278
Interest receivable 110,888
Dividends receivable 231,896
Deferred organization expenses (Note 1D) 8,461
Tax reclaim receivable 21,656
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Total assets $123,341,954
LIABILITIES:
Payable for investments purchased $120,500
Written options, at value (premium received $61,335) 243,125
Payable to affiliate --
Trustees fees 2,065
Accrued expenses 13,116
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Total liabilities 378,806
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NET ASSETS applicable to investors' interest in Portfolio $122,963,148
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SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $ 97,339,457
Unrealized appreciation of investments and written options
(computed on the basis of identified cost) 25,623,691
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Total net assets $122,963,148
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</TABLE>
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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<S> <C> <C>
INVESTMENT INCOME:
Interest $ 346,215
Dividends (net of withholding tax of $8,319) 2,692,262
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Total income 3,038,477
Expenses --
Investment adviser fee (Note 3) $ 706,803
Compensation of Trustees, not members of the Investment Adviser's
organization (Note 3) 9,090
Custodian fee 79,008
Legal and accounting services 28,096
Amortization of organizational expenses (Note 1D) 3,258
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Total expenses $ 826,255
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Net investment income 2,212,222
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain (identified cost basis) --
Investment transactions $14,593,864
Written option transactions 122,298
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Net realized gain on investment transactions $14,716,162
Change in unrealized appreciation of investments and written options 4,346,638
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Net realized and unrealized gain on investments $19,062,800
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Net increase in net assets resulting from operations $21,275,022
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</TABLE>
The accompanying notes are an integral part of the financial statements
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FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
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YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 2,212,222 $ 2,228,398
Net realized gain on investment transactions 14,716,162 10,222,803
Change in unrealized appreciation of investments 4,346,638 14,953,494
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Net increase in net assets resulting from operations $ 21,275,022 $ 27,404,695
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Capital transactions --
Contributions $ 9,663,514 $ 13,753,042
Withdrawals (15,692,663) (18,959,497)
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Net decrease in net assets resulting from capital transactions $ (6,029,149) $ (5,206,455)
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Net increase in net assets $ 15,245,873 $ 22,198,240
NET ASSETS:
At beginning of year 107,717,275 85,519,035
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At end of year $122,963,148 $107,717,275
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<CAPTION>
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SUPPLEMENTARY DATA
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YEAR ENDED DECEMBER 31,
---------------------------------------------------
1996 1995 1994*
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<S> <C> <C> <C>
RATIOS (to average daily net assets):
Expenses 0.73% 0.75% 0.73%+
Net investment income 1.96% 2.30% 2.45%+
PORTFOLIO TURNOVER 114% 108% 28%
AVERAGE COMMISSION RATE PAID(1) $0.0579 -- --
+Computed on an annualized basis.
*For the period from the start of business, August 1, 1994, to December 31, 1994.
(1)For fiscal year 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 commissions 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>
The accompanying notes are an integral part of the financial statements
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NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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(1) SIGNIFICANT ACCOUNTING POLICIES
Stock 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. SECURITY VALUATIONS -- Investments in securities traded on a national
securities exchange or in the NASDAQ National Market are valued on the basis of
the last reported sales prices on the last business day of the period. If no
sale is reported on that date, a security is valued, if quoted on such a day, at
not lower than the old bid price nor higher than the asked prices. Prices on
such exchanges will not be used for valuing debt securities if in the Trustees
judgment, some other valuation method more accurately reflects the fair market
value of such a security. Securities for which over-the-counter market
quotations are readily available are valued on the basis of the mean between the
last bid and asked prices. Short-term securities are valued at amortized cost,
which approximates market value. All other securities and assets are appraised
to reflect their fair value as determined in good faith by 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 Internal Revenue 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. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line basis
over five years.
E. OTHER -- Investment transactions are accounted for on a trade date basis.
F. WRITTEN OPTIONS -- The Portfolio may write call or put options for which
premiums are received and are recorded as liabilities, and are subsequently
adjusted to the current value of the options written. Premiums received from
writing options which expire are treated as realized gains. Premiums received
from writing options which are exercised or are closed are offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
securities purchased by the Portfolio. The Portfolio as a writer of an option
may have no control over whether the underlying securities may be sold (call) or
purchased (put) and as a result bears the market risk of an unfavorable change
in the price of the securities underlying the written option.
G. 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
income and expenses 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 $124,512,639 and $131,656,035, 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 at the annual rate of 5/8 of 1% of average daily net assets. For the year
ended December 31, 1996, the fee amounted to $706,803. 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 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.
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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, were as
follows:
Aggregate cost $96,450,080
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Gross unrealized appreciation $26,380,933
Gross unrealized depreciation 504,757
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Net unrealized appreciation $25,876,176
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(6) FINANCIAL INSTRUMENTS
The Portfolio regularly trades in financial instruments with off-balance-sheet
risk in the normal course of its investing activities and to assist in managing
exposure to market risks such as interest rates and foreign currency exchange
rates. These financial instruments include written options. The notional or
contractual amounts of these instruments represent the investment the Portfolio
has in particular classes of financial instruments and do 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. A summary of obligations under these
financial instruments at December 31, 1996 is as follows:
Written Option Transactions
Transactions in written options for the year ended December 31, 1996 were as
follows:
NUMBER
OF CONTRACTS
(000'S OMITTED) PREMIUMS
--------------- --------
Outstanding, beginning of year -- --
Options written 500 $184,960
Options exercised (300) (32,750)
Options expired (100) (90,875)
--- --------
Outstanding, end of year 100 $ 61,335
=== ========
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REPORT OF INDEPENDENT ACCOUNTANTS
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TO THE BOARD OF TRUSTEES AND INVESTORS OF
STOCK PORTFOLIO:
We have audited the accompanying statement of assets and liabilities of Stock
Portfolio, including the portfolio of investments, as of December 31, 1996, the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years then ended and the supplementary
data for each of the two years then ended and for the period from August 1, 1994
(start of business) 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 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 Stock
Portfolio, as of December 31, 1996, the results of its operations for the year
then ended, the changes in its net assets for each of the two years then ended
and the supplementary data for each of the two years then ended and for the
period from August 1, 1994 (start of business) to December 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
JANUARY 31, 1997
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INVESTMENT MANAGEMENT FOR STOCK PORTFOLIO
--------------------------------------------------------
STOCK PORTFOLIO OFFICERS TRUSTEES
24 Federal Street
Boston, MA 02110 JAMES B. HAWKES DONALD R. DWIGHT
President, Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of
DUNCAN W. RICHARDSON New England, Inc.
Vice President and
Portfolio Manager SAMUEL L. HAYES, III
Jacob H. Schiff Professor of
JAMES L. O'CONNOR Investment Banking, Harvard
Treasurer University Graduate School of
Business Administration
THOMAS OTIS
Secretary NORTON H. REAMER
President, United Asset
Management Corporation
JOHN L. THORNDIKE
Director, Fiduciary
Company Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
