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The Eaton Vance Special Investment Trust
For the Special Investment Portfolio
[Logo]
Annual Shareholder Report
December 31, 1996
INVESTMENT ADVISER OF
SPECIAL INVESTMENT PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV TRADITIONAL
SPECIAL EQUITIES FUND
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, Inc.
P.O. Box 5123
Westborough, MA 01581-5123
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
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SPECIAL INVESTMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
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COMMON STOCKS - 82.6%
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NAME OF COMPANY SHARES VALUE
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<S> <C> <C>
AIRLINES - 1.2%
Comair Holdings, Inc. 40,000 $ 960,000
Regional airline holding company. -----------
BROADCASTING & CABLE - 1.9%
Lin Television Corp. 25,000 $ 1,056,250
Commercial television broadcast company.
Young Broadcasting, Inc. Class A* 17,500 511,875
Owns and operates network affiliated TV stations.
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$ 1,568,125
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BUSINESS PRODUCTS & SERVICES - 9.5%
BISYS Group, Inc.* 22,000 $ 815,375
Services financial institutions with computer, administrative and
marketing support data processing services.
Ceridian Corp.* 40,000 1,620,000
Provides payroll processing and other employer services, media and
market research.
FIserv Incorporated* 75,000 2,756,250
Provider of data processing services to banks and savings
institutions, benefiting from outsourcing trend.
G&K Services, Inc. 40,000 1,510,000
Rents and launders uniforms and other textile products.
Personnel Group America, Inc.* 50,000 1,206,250
Temporary employment company.
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$ 7,907,875
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COMPUTER SERVICES - 4.2%
Affiliated Computer Services, Inc. Class A* 15,000 $ 446,250
Nationwide provider of information processing services.
Cambridge Technology Partners, Inc.* 31,000 1,040,437
Software consulting company.
Cognos Inc.* 20,000 562,500
Computer tool developer and supporter.
SunGard Data Systems, Inc.* 30,000 1,185,000
Computer services company.
Veritas Software Co.* 5,000 248,750
Develops, markets and supports storage management products and
software systems.
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$ 3,482,937
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COMPUTER SOFTWARE - 0.7%
3Com Corp.* 8,000 $ 587,000
Designs, manufactures and distributes intelligent hubs and other -----------
computer networking products.
ELECTRONICS & INSTRUMENTATION - 2.9%
Cisco Systems, Inc.* 20,000 $ 1,272,500
Manufacturer of routers that connect computer networks.
Linear Technology Corp. 20,000 877,500
Manufacturer of high performance linear integrated circuits.
MEMC Electronic Materials, Inc.* 12,000 270,000
Leading producer of silicon wafers used to create integrated
circuits.
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$ 2,420,000
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ENERGY - 7.9%
Anadarko Petroleum Corp. 30,000 $ 1,942,500
A leading independent company in oil and gas exploration,
development and production.
BJ Services Co.* 23,000 1,173,000
Provides oilfield services for the petroleum industry.
Enron Oil & Gas Co. 30,000 757,500
Independent oil & gas company.
Noble Drilling Corp.* 48,000 954,000
Oil and gas well drilling.
Triton Energy Ltd.* 30,000 1,455,000
International oil and gas exploration and development.
USX Delhi Group 14,300 227,013
Purchases, gather, processes, transports and markets
natural gas.
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$ 6,509,013
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ENTERTAINMENT & LEISURE - 3.6%
Gaylord Entertainment 46,000 $ 1,052,250
Producer of The Nashville Network and Country Music Television
Network and operator of the Opryland amusement park.
MGM Grand, Inc.* 25,000 871,875
Operator of MGM Grand Hotel in Las Vegas.
Mirage Resorts, Inc.* 50,000 1,081,250
Nevada based gaming resort operator.
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$ 3,005,375
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ENVIRONMENTAL SERVICES - 2.3%
USA Waste Services, Inc.* 59,200 $ 1,887,000
Operator of solid-waste land fills and collection services, -----------
integrating several large recent acquisitions.
FINANCE - 8.7%
Federal National Mortgage Association 25,000 $ 931,250
Leading factor in the secondary mortgage market.
First USA Inc. 30,000 1,038,750
Credit card issuer and processor.
First USA Paymentech, Inc.* 22,000 745,250
Payment processor of merchant credit card transactions.
Franklin Resources, Inc. 20,000 $ 1,367,500
One of the largest mutual fund organizations in the U.S.
Nova Corp. Georgia* 24,000 531,000
Nation largest bankcard processor.
T. Rowe Price Associates, Inc. 60,000 2,610,000
Investment adviser to mutual funds, institutions and individuals.
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$ 7,223,750
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HEALTHCARE - 20.9%
Astra AB ADR Series B 15,000 $ 722,756
Swedish based, multinational pharmaceutical company.
Boston Scientific Corp.* 35,000 2,100,000
Medical device manufacturer focusing primarily on disposable
products in less invasive surgery procedures.
Clintrials Research, Inc.* 20,000 455,000
Pharmaceutical research company.
CRA Managed Care, Inc.* 3,000 135,000
Workers compensation company.
Elan Corp. PLC ADR* 50,000 1,662,500
Drug delivery company.
Galileo Corp.* 15,500 389,437
Develops and manufactures fiber optic equipment.
Genesis Health Ventures, Inc.* 40,000 1,245,000
Nursing home chain.
Genzyme Corp.* 22,000 478,500
Leading researcher in gene therapy.
HBO & Co. 18,000 1,068,750
Health information service provider.
Health Management Associates, Inc. Class A* 50,000 1,125,000
Hospital chain.
IDX System Corp.* 37,000 1,059,125
Healthcare information systems.
Medic Computer System, Inc.* 32,000 1,290,000
Physicans information company.
MiniMed Inc.* 35,000 1,128,750
Developer and manufacturer of medical devices focusing on
diabetics.
Pfizer Inc. 10,000 828,750
International health care and pharmaceutical products.
PhyCor Inc.* 40,000 1,135,000
Physicans practice management.
Sofamor Danek Group, Inc.* 55,000 1,677,500
Leading developer/manufacturer of spinal implant devices. Company
markets products internationally.
Transition System, Inc.* 60,000 847,500
Healthcare information systems.
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$17,348,568
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HOTELS & RESTAURANTS - 4.4%
LaQuinta Inns, Inc. 45,000 $ 860,625
Owner/operator of modestly priced lodging chain.
Outback Steakhouse, Inc.* 45,000 1,203,750
Restaurant theme chain.
Promus Hotel Corp.* 15,000 444,375
Owner and operator of Embassy Suite and Hampton Inn hotels.
Red Roof Inns, Inc.* 55,000 852,500
Owns and operates economy hotels in U.S.
Sonic Corp.* 10,000 255,000
Large chain of quick service drive ins.
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$ 3,616,250
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INSURANCE - 4.7%
Mutual Risk Management Ltd. 53,332 $ 1,973,333
Specialty insurer focusing on workmen's compensation.
PMI Group, Inc. 23,000 1,273,625
Private mortgage insurer.
Progressive Corp. 10,000 673,750
Insurer focusing on high risk and standard auto coverage.
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$ 3,920,708
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PUBLISHING - 4.0%
Providence Journal Co. Class A* 86,100 $ 2,636,812
Operates television stations and publishes newspapers.
Scholastic Corp.* 10,000 672,500
Publisher/distributor of children's books.
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$ 3,309,312
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RETAILING - 1.2%
Consolidated Stores Corp.* 31,250 $ 1,003,906
Chain of close-out merchandise stores operating primarily under -----------
the Odd/Big Lots name
SEMICONDUCTORS - 1.5%
Analog Devices, Inc.* 22,000 $ 745,250
Leading manufacturer of semiconductors.
Level One Communications, Inc.* 13,000 464,750
Designs and sells integrated circuits.
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$ 1,210,000
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TELECOMMUNICATIONS - 3.0%
Adtran Inc.* 21,000 $ 871,500
Company helps modern telephone equipment work with older
equipment.
Ascend Communications, Inc.* 12,000 745,500
Leading developer of products that connect computer networks.
Cascade Communications Corp.* 8,000 441,000
Designs equipment which links computers and networks.
Jacor Communications, Inc.* 16,500 451,688
Operator of radio and TV stations.
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$ 2,509,688
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TOTAL COMMON STOCKS
(IDENTIFIED COST, $49,564,465) $68,469,507
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<CAPTION>
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SHORT-TERM OBLIGATIONS - 17.4%
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FACE AMOUNT
(000 OMITTED)
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<S> <C> <C>
Associates Corp. of North America, $3,746 $ 3,745,324
6.5s, 1/2/97
Delaware Funding Corp., 6s, 1/6/97 3,740 3,736,883
Ford Motor Credit Corp., 5.65s, 1/8/97 4,000 3,995,606
General Electric Capital Co., 5.9s, 1/2/97 2,993 2,992,509
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TOTAL SHORT-TERM OBLIGATIONS
AT AMORTIZED COST $14,470,322
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TOTAL INVESTMENTS - 100.0%
(IDENTIFIED COST, $64,034,787) $82,939,829
OTHER ASSETS, LESS LIABILITIES - 0.0% 7,445
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TOTAL NET ASSETS - 100% $82,947,274
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*Non-income producing security.
</TABLE>
The accompanying notes are an
integral part of the financial statements
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<TABLE>
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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, $64,034,787) $82,939,829
Cash 1,553
Dividends receivable 13,010
Deferred organization expenses (Note 1E) 8,153
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Total assets $82,962,545
LIABILITIES:
Payable to affiliate --
Trustees' fees $ 2,540
Accrued expenses 12,731
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Total liabilities 15,271
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NET ASSETS applicable to investors' interest in Portfolio $82,947,274
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SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $64,042,232
Unrealized appreciation of investments (computed on the basis of
identified cost) 18,905,042
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Total net assets $82,947,274
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</TABLE>
The accompanying notes are an integral part of the financial statements
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<TABLE>
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STATEMENT OF OPERATIONS
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FOR THE YEAR ENDED DECEMBER 31, 1996
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<S> <C> <C>
INVESTMENT INCOME:
Dividend income (net of foreign taxes, $247) $ 288,670
Interest income 424,785
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Total income $ 713,455
Expenses --
Investment adviser fee (Note 3) $477,560
Compensation of Directors not members of the Investment Adviser's
organization (Note 3) 7,615
Custodian fees 61,252
Legal and accounting services 21,618
Amortization of organization expenses (Note 1E) 3,166
Miscellaneous 6,520
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Total expenses 577,731
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Net investment income $ 135,724
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments (identified cost basis) $18,226,741
Change in unrealized appreciation on investments (1,762,538)
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Net realized and unrealized gain on investments 16,464,203
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Net increase in net assets resulting from operations $16,599,927
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The accompanying notes are an integral part of the financial statements
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<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
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YEAR ENDED DECEMBER 31,
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1996 1995
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 135,724 $ 134,736
Net realized gain on investment transactions 18,226,741 4,131,300
Change in unrealized appreciation (depreciation) of investments (1,762,538) 10,473,926
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Net increase in net assets from operations $16,599,927 $14,739,962
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Capital transactions --
Contributions $10,738,468 $14,400,870
Withdrawals (18,331,396) (19,642,929)
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Decrease in net assets resulting from capital transactions $(7,592,928) $(5,242,059)
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Total increase in net assets $ 9,006,999 $ 9,497,903
NET ASSETS:
At beginning of year 73,940,275 64,442,372
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At end of year $82,947,274 $73,940,275
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</TABLE>
The accompanying notes are an integral part of the financial statements
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SUPPLEMENTARY DATA
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YEAR ENDED DECEMBER 31,
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1996 1995 1994*
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<S> <C> <C> <C>
RATIOS (As a percentage of average net assets):
Expenses 0.76% 0.77% 0.74%+
Net investment income 0.18% 0.19% 0.20%+
PORTFOLIO TURNOVER 91% 81% 19%
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 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>
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
Special Investment 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 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 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 Additional Information.
D. 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.
E. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line basis
over five years.
F. 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,
aggregrated $62,868,221 and $79,119,712, 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 $477,560. 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.
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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 $64,034,787
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Gross unrealized appreciation $19,905,582
Gross unrealized depreciation 1,000,540
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Net unrealized appreciation $18,905,042
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REPORT OF INDEPENDENT ACCOUNTANTS
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TO THE TRUSTEES AND INVESTORS OF
SPECIAL INVESTMENT PORTFOLIO:
We have audited the accompanying statement of assets and liabilities of
Special Investment Portfolio, including the portfolio of investments, as of
December 31, 1996, the related statement of operations for the year then
ended, changes in net assets for each of the two years then ended and
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 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
Special Investment Portfolio as of December 31, 1996, the results of its
operations for the year then ended, changes in its net assets for each of the
two years then ended and 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 SPECIAL EQUITIES PORTFOLIO
-----------------------------------------------------------
SPECIAL INVESTMENT OFFICERS TRUSTEES
PORTFOLIO
JAMES B. HAWKES M. DOZIER GARDNER
24 Federal Street President, Trustee Vice Chairman, Eaton Vance
Boston, MA 02110 Management
EDWARD E. SMILEY, JR.
Vice President and DONALD R. DWIGHT
Portfolio Manager President, Dwight Partners, Inc.
Chairman, Newspapers of
JAMES L. O'CONNOR New England, Inc.
Treasurer
SAMUEL L. HAYES, III
THOMAS OTIS Jacob H. Schiff Professor of
Secretary Investment Banking,
Harvard University
Graduate School of
Business Administration
NORTON H. REAMER
President and Director, United
Asset
Management Corporation
JOHN L. THORNDIKE
Director,
Fiduciary Trust Company
JACK L. TREYNOR
Investment Adviser and Consultant